EX-99.1 2 d305262dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

 

LOGO

Lifetime Brands, Inc. Reports Fourth Quarter 2016 Financial Results

Company Reports Record Fourth Quarter Revenues and Income from Operations

Declares Regular Quarterly Dividend

GARDEN CITY, NY, March 13, 2017 – Lifetime Brands, Inc. (NasdaqGS: LCUT), a leading global provider of branded kitchenware, tableware and other products used in the home, today reported its financial results for the fourth quarter and year ended December 31, 2016.

Fourth Quarter Financial Highlights:

Consolidated net sales were $193.5 million in the quarter ended December 31, 2016; an increase of $7.6 million, or 4.1%, as compared to consolidated net sales of $185.9 million for the corresponding period in 2015. In constant currency, which excludes the impact of foreign exchange fluctuations, consolidated net sales increased $13.0 million, or 7.2%, as compared to consolidated net sales in the corresponding period in 2015.

Gross margin was $75.0 million, or 38.8%, as compared to $69.0 million, or 37.1%, for the corresponding period in 2015.

Income from operations was $21.8 million, as compared to $17.6 million in the prior year’s quarter.

Net income was $14.7 million, or $1.00 per diluted share, in the quarter ended December 31, 2016, as compared to net income of $11.0 million, or $0.77 per diluted share, in the corresponding period in 2015.

Adjusted net income was $15.2 million, or $1.03 per diluted share, in the quarter ended December 31, 2016, as compared to adjusted net income of $10.8 million, or $0.75 per diluted share, in the corresponding period in 2015.

Consolidated adjusted EBITDA was $25.1 million, equal to 13.0% of consolidated net sales, in the quarter ended December 31, 2016, as compared to $23.9 million, or 12.9% of consolidated net sales, for the corresponding 2015 period.

Equity in earnings, net of taxes, was $1.0 million for the three months ended December 31, 2016, as compared to equity in earnings, net of tax, of $743 thousand for the three months ended December 31, 2015.

Full Year Financial Highlights:

Consolidated net sales were $592.6 million in the year ended December 31, 2016; an increase of $4.9 million, or 0.8%, as compared to consolidated net sales of $587.7 million for the corresponding period in 2015. In constant currency, consolidated net sales increased $17.4 million, or 3.0%.

Gross margin was $216.9 million, or 36.6%, in the year ended December 31, 2016 as compared to $214.4 million, or 36.5%, for the corresponding period in 2015.

 

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Income from operations was $27.1 million, as compared to $24.2 million in the prior year.

Net income was $15.7 million, or $1.08 per diluted share, in the year ended December 31, 2016, as compared to net income of $12.3 million, or $0.86 per diluted share, in the corresponding period in 2015.

Adjusted net income was $19.2 million, or $1.32 per diluted share, in the year ended December 31, 2016, as compared to adjusted net income of $14.2 million, or $1.00 per diluted share, in the corresponding period in 2015.

Consolidated adjusted EBITDA was $47.2 million in the year ended December 31, 2016, as compared to $44.9 million for the corresponding 2015 period.

Equity in earnings, net of taxes, was $748 thousand for the year ended December 31, 2016, as compared to equity in earnings, net of taxes, of $574 thousand for the corresponding 2015 period.

Jeffrey Siegel, Lifetime’s Chairman and Chief Executive Officer, commented,

“Lifetime finished 2016 on a very strong note, reporting record revenues and income from operations. For the quarter, excluding the impact of foreign currency fluctuations, consolidated net sales rose 7.2% on an actual basis and 3.4% on an organic basis. The Wilton Armetale®, Amco Houseworks®, Chicago™ Metallic, Swing-A-Way® and Copco® brands that we acquired in 2016 all were accretive and contributed to our exceptional performance.

“Our strong fourth-quarter results reflect excellent progress in Lifetime’s journey to simplify and strengthen our organization for growth regardless of the economic environment. We also made notable progress in building our e-commerce presence as we benefited from investments we made in recent years to capitalize on ongoing shifts in consumer shopping. In addition, our strategic initiatives to enhance our Tableware and Home Solutions offerings, as well as to continue building Lifetime’s leading position in Kitchenware, contributed to our strong showing. Our international segment, now known as Lifetime Brands Europe, performed well in spite of strong headwinds from both the economy and exchange rates.

“As we move through 2017, we are confident in Lifetime’s ability to grow and thrive in today’s complex business environment. We are also as committed as ever to delivering five-star experiences to consumers through innovative products, services and solutions for the home. We expect low-to mid-single digit overall organic sales growth in 2017, and expect to reap even further benefits from Lifetime Next, our drive to enhance our company’s operations.”

Dividend

On Wednesday, March 8, 2017, the Board of Directors declared a quarterly dividend of $0.0425 per share payable on May 15, 2017 to shareholders of record on May 1, 2017.

Conference Call

The Company has scheduled a conference call for Monday, March 13, 2017 at 11:00 a.m. ET. The dial-in number for the conference call is (844) 787-0801 or (661) 378-9632, passcode #62208978. A live webcast of the conference call will be accessible through http://edge.media-server.com/m/p/6a7s28k4/lan/en. For those who cannot listen to the live broadcast, an audio replay of the webcast will be available.

 

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Non-GAAP Financial Measures

This earnings release contains non-GAAP financial measures. A non-GAAP financial measure is a numerical measure of a company’s historical or future financial performance, financial position or cash flows that excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the most directly comparable measure calculated and presented in accordance with GAAP in the statements of income, balance sheets, or statements of cash flows of the Company; or includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the most directly comparable measure so calculated and presented. As required by SEC rules, the Company has provided reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures. These non-GAAP measures are provided because management of the Company uses these financial measures in evaluating the Company’s on-going financial results and trends, and management believes that exclusion of certain items allows for more accurate comparison of the Company’s operating performance. Management uses this non-GAAP information as an indicator of business performance. These non-GAAP measures should be viewed as a supplement to, and not a substitute for, GAAP measures of performance.

Forward-Looking Statements

In this press release, the use of the words “believe,” “could,” “expect,” “may,” “positioned,” “project,” “projected,” “should,” “will,” “would” or similar expressions is intended to identify forward-looking statements that represent the Company’s current judgment about possible future events. The Company believes these judgments are reasonable, but these statements are not guarantees of any events or financial results, and actual results may differ materially due to a variety of important factors. Such factors might include, among others, the Company’s ability to comply with the requirements of its credit agreements; the availability of funding under such credit agreements; the Company’s ability to maintain adequate liquidity and financing sources and an appropriate level of debt; changes in general economic conditions which could affect customer payment practices or consumer spending; the impact of foreign exchange fluctuations; the impact of changes in general economic conditions on the Company’s customers; changes in demand for the Company’s products; shortages of and price volatility for certain commodities; significant changes in the competitive environment and the effect of competition on the Company’s markets, including on the Company’s pricing policies, financing sources and an appropriate level of debt.

Lifetime Brands, Inc.

Lifetime Brands is a leading global provider of kitchenware, tableware and other products used in the home. The Company markets its products under well-known kitchenware brands, including Farberware®, KitchenAid®, Sabatier®, Amco Houseworks®, Chicago™ Metallic, Copco®, Fred® & Friends, Kitchen Craft®, Kamenstein®, Kizmos™, La Cafetière®, Misto®, Mossy Oak®, Reo®, Savora™, Swing-A-Way® and Vasconia®; respected tableware and giftware brands, including Mikasa®, Pfaltzgraff®, Creative Tops®, Empire Silver™, Gorham®, International® Silver, Kirk Stieff®, Towle® Silversmiths, Tuttle®, Wallace®, Wilton Armetale®,

 

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V&A® and Royal Botanic Gardens Kew®; and valued home solutions brands, including Bombay®, BUILT NY®, Debbie Meyer® and Design for Living™. The Company also provides exclusive private label products to leading retailers worldwide.

The Company’s corporate website is www.lifetimebrands.com.

 

Contacts:   
Lifetime Brands, Inc.    LHA
Laurence Winoker, Chief Financial Officer    Harriet Fried, SVP
516-203-3590    212-838-3777
investor.relations@lifetimebrands.com    hfried@lhai.com

 

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LIFETIME BRANDS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands - except per share data)

 

     Three Months Ended     Year Ended  
     December 31,     December 31,  
     2016     2015     2016     2015  

Net sales

   $ 193,520     $ 185,880     $ 592,619     $ 587,670  

Cost of sales

     118,487       116,865       375,719       373,284  
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross margin

     75,033       69,015       216,900       214,386  

Distribution expenses

     16,781       15,437       57,006       54,815  

Selling, general and administrative expenses

     35,735       35,514       130,397       134,903  

Restructuring expenses

     719       437       2,420       437  
  

 

 

   

 

 

   

 

 

   

 

 

 

Income from operations

     21,798       17,627       27,077       24,231  

Interest expense

     (1,257     (1,402     (4,803     (5,746

Financing expense

     —         —         —         (154

Loss on early retirement of debt

     —         —         (272     —    
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes and equity in earnings

     20,541       16,225       22,002       18,331  

Income tax provision

     (6,812     (5,962     (7,030     (6,627

Equity in earnings, net of taxes

     1,018       743       748       574  
  

 

 

   

 

 

   

 

 

   

 

 

 

NET INCOME

   $ 14,747     $ 11,006     $ 15,720     $ 12,278  
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted-average shares outstanding- basic

     14,310       13,929       14,174       13,850  
  

 

 

   

 

 

   

 

 

   

 

 

 

BASIC INCOME PER COMMON SHARE

   $ 1.03     $ 0.79     $ 1.11     $ 0.89  
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted-average shares outstanding- diluted

     14,712       14,336       14,549       14,266  
  

 

 

   

 

 

   

 

 

   

 

 

 

DILUTED INCOME PER COMMON SHARE

   $ 1.00     $ 0.77     $ 1.08     $ 0.86  
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash dividends declared per common share

   $ 0.0425     $ 0.0425     $ 0.17     $ 0.16  

 

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LIFETIME BRANDS, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands - except share data)

 

     December 31,  
     2016     2015  

ASSETS

    

CURRENT ASSETS

    

Cash and cash equivalents

   $ 7,883     $ 7,131  

Accounts receivable, less allowances of $5,725 at December 31, 2016 and $5,300 at December 31, 2015

     104,556       90,576  

Inventory

     135,212       136,890  

Prepaid expenses and other current assets

     8,796       8,783  
  

 

 

   

 

 

 

TOTAL CURRENT ASSETS

     256,447       243,380  

PROPERTY AND EQUIPMENT, net

     21,131       24,877  

INVESTMENTS

     22,712       24,973  

INTANGIBLE ASSETS, net

     89,219       96,593  

DEFERRED INCOME TAXES

     8,459       6,486  

OTHER ASSETS

     1,886       2,022  
  

 

 

   

 

 

 

TOTAL ASSETS

   $ 399,854     $ 398,331  
  

 

 

   

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

    

CURRENT LIABILITIES

    

Current maturity of Credit Agreement Term Loan

   $ 9,343     $ 19,646  

Short term loan

     113       252  

Accounts payable

     29,698       27,245  

Accrued expenses

     45,212       40,154  

Income taxes payable

     6,920       4,064  
  

 

 

   

 

 

 

TOTAL CURRENT LIABILITIES

     91,286       91,361  

DEFERRED RENT & OTHER LONG-TERM LIABILITIES

     18,973       18,556  

DEFERRED INCOME TAXES

     5,666       8,596  

REVOLVING CREDIT FACILITY

     86,201       65,617  

CREDIT AGREEMENT TERM LOAN

     —         14,733  

STOCKHOLDERS’ EQUITY

    

Preferred stock, $1.00 par value, shares authorized: 100 shares of Series A and 2,000,000 shares of Series B; none issued and outstanding

     —         —    

Common stock, $.01 par value, shares authorized: 50,000,000 at December 31, 2016 and 25,000,000 at December 31, 2015; shares issued and outstanding: 14,555,936 at December 31, 2016 and 14,030,221 at December 31, 2015

     146       140  

Paid-in capital

     173,600       165,780  

Retained earnings

     60,981       47,733  

Accumulated other comprehensive loss

     (36,999     (14,185
  

 

 

   

 

 

 

TOTAL STOCKHOLDERS’ EQUITY

     197,728       199,468  
  

 

 

   

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

   $ 399,854     $ 398,331  
  

 

 

   

 

 

 

 

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LIFETIME BRANDS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

 

     Year ended  
     December 31,  
     2016     2015  

OPERATING ACTIVITIES

    

Net income

   $ 15,720     $ 12,278  

Adjustments to reconcile net income to net cash provided by operating activities:

    

Depreciation and amortization

     14,148       14,203  

Amortization of financing costs

     650       641  

Deferred rent

     (243     848  

Deferred income taxes

     (1,951     (1,440

Net loss on disposal of fixed assets

     84       —    

Stock compensation expense

     2,942       5,286  

Undistributed equity earnings

     (544     (348

Loss on early retirement of debt

     272       —    

Contingent consideration fair value adjustment

     —         650  

Changes in operating assets and liabilities (excluding the effects of business acquisitions)

    

Accounts receivable

     (17,977     15,527  

Inventory

     4,491       (308

Prepaid expenses, other current assets and other assets

     (1,199     1,087  

Accounts payable, accrued expenses and other liabilities

     12,255       (397

Income taxes receivable

     132       —    

Income taxes payable

     969       (1,517
  

 

 

   

 

 

 

NET CASH PROVIDED BY OPERATING ACTIVITIES

     29,749       46,510  
  

 

 

   

 

 

 

INVESTING ACTIVITIES

    

Purchases of property and equipment

     (3,380     (5,166

Equity investments

     567       112  

Acquisitions, net of cash acquired

     (21,699     —    

Net proceeds from sale of property

     64       26  
  

 

 

   

 

 

 

NET CASH USED IN INVESTING ACTIVITIES

     (24,448     (5,028
  

 

 

   

 

 

 

FINANCING ACTIVITIES

    

Proceeds from Revolving Credit Facility

     268,242       263,632  

Repayments of Revolving Credit Facility

     (246,756     (290,346

Repayments of Credit Agreement Term Loan

     (25,500     (10,000

Proceeds from Short Term Loan

     118       289  

Repayments of Short Term Loan

     (248     (802

Payments for stock repurchase

     (86     —    

Payment of financing costs

     (30     (212

Cash dividends paid

     (2,413     (2,150

Payment of capital lease obligations

     (68     (50

Payment of contingent consideration

     —         (391

Proceeds from the exercise of stock options

     2,353       843  

Excess tax benefits from stock options, net

     223       43  
  

 

 

   

 

 

 

NET CASH USED IN FINANCING ACTIVITIES

     (4,165     (39,144
  

 

 

   

 

 

 

Effect of foreign exchange on cash

     (384     (275
  

 

 

   

 

 

 

INCREASE IN CASH AND CASH EQUIVALENTS

     752       2,063  
  

 

 

   

 

 

 

Cash and cash equivalents at beginning of year

     7,131       5,068  
  

 

 

   

 

 

 

CASH AND CASH EQUIVALENTS AT END OF YEAR

   $ 7,883     $ 7,131  
  

 

 

   

 

 

 

 

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LIFETIME BRANDS, INC.

Supplemental Information

(In thousands)

Reconciliation of GAAP to Non-GAAP Operating Results

Consolidated adjusted EBITDA:

 

     Three Months Ended      Year Ended  
     December 31,      December 31,  
     2016      2015      2016      2015  
            (in thousands)         

Net income as reported

   $ 14,747      $ 11,006      $ 15,720      $ 12,278  

Subtract out:

           

Undistributed equity earnings, net

     (814      (517      (544      (348

Add back:

           

Income tax provision

     6,812        5,962        7,030        6,627  

Interest expense

     1,257        1,402        4,803        5,746  

Financing expense

     —          —          —          154  

Depreciation and amortization

     2,404        3,500        14,148        14,203  

Stock compensation expense

     827        2,972        2,942        5,286  

Loss on early retirement of debt

     —          —          272        —    

Contingent consideration

     —          (876      —          816  

Restructuring expenses

     719        437        2,420        437  

Permitted acquisition related expenses, net of recoveries and acquisition not completed

     (852      3        435        (314
  

 

 

    

 

 

    

 

 

    

 

 

 

Consolidated adjusted EBITDA

   $ 25,100      $ 23,889      $ 47,226      $ 44,885  
  

 

 

    

 

 

    

 

 

    

 

 

 

Consolidated adjusted EBITDA is a non-GAAP measure that the Company defines as net income, adjusted to exclude undistributed equity in earnings (losses), income taxes, interest, losses on early retirement of debt, depreciation and amortization, stock compensation expense, certain contingent consideration, certain acquisition related expenses and restructuring expenses, as shown in the tables above.

 

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LIFETIME BRANDS, INC.

Supplemental Information

(In thousands- except per share data)

Reconciliation of GAAP to Non-GAAP Operating Results (continued)

Adjusted net income and adjusted diluted income per common share:

 

     Three Months Ended      Year Ended  
     December 31,      December 31,  
     2016      2015      2016      2015  
            (in thousands)         

Net income as reported

   $ 14,747      $ 11,006      $ 15,720      $ 12,278  

Adjustments:

           

Restructuring expenses

     719        437        2,420        437  

Acquisition related expenses (recoveries), net

     65        3        1,352        (382

Depreciation expense adjustment

     (86      —          1,241        —    

Loss on early retirement of debt

     —          —          272        —    

Contingent consideration

     —          (724      —          821  

Financing expenses

     —          —          —          154  

Gain on sale of GS International, net of tax

     —          —          (189      —    

Deferred tax for foreign currency translation for Grupo Vasconia

     —          (28      517        1,303  

Income tax effect on adjustments

     (279      114        (2,114      (412
  

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted net income

   $ 15,166      $ 10,808      $ 19,219      $ 14,199  
  

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted diluted income per common share

   $ 1.03      $ 0.75      $ 1.32      $ 1.00  
  

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted net income in the three months and year ended December 31, 2016 excludes restructuring expenses, acquisition related expenses, a charge to correct the accumulated depreciation balance relating to certain leasehold improvements at one of the Company’s U.S. warehouses, loss on early retirement of debt, the gain on the sale of GS International and deferred tax expense related to our equity earnings of Vasconia due to recording the tax benefit of cumulative translation losses through other comprehensive income. Adjusted net income in the three months and year ended December 31, 2015 excludes restructuring expenses, acquisition related expenses, the recovery of acquisition related expenses for an acquisition not completed, financing expenses, the fair value adjustment of certain contingent consideration and deferred tax expense related to our equity earnings of Vasconia due to recording the tax benefit of cumulative translation losses through other comprehensive income.

 

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LIFETIME BRANDS, INC.

Supplemental Information

(In thousands- except per share data)

Reconciliation of GAAP to Non-GAAP Operating Results (continued)

Constant Currency:

 

    As Reported
Three Months Ended
December 31,
    Constant Currency (1)
Three Months Ended
December 31,
          Year-Over-Year
Increase (Decrease)
 
    2016     2015     Increase
(Decrease)
    2016     2015     Increase
(Decrease)
    Currency
Impact
    Excluding
Currency
    Including
Currency
    Currency
Impact
 

Net sales

                   

U.S. Wholesale

  $ 156,368     $ 146,883     $ 9,485     $ 156,368     $ 146,889     $ 9,479     $ 6       6.5     6.5     —  

International

    29,101       31,359       (2,258     29,101       25,985       3,116       (5,374     12.0     (7.2 )%      (19.2 )% 

Retail Direct

    8,051       7,638       413       8,051       7,638       413       —         5.4     5.4     —  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

       

Total net sales

  $ 193,520     $ 185,880     $ 7,640     $ 193,520     $ 180,512     $ 13,008     $ (5,368     7.2     4.1     (3.1 )% 
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

       
    As Reported
Year Ended
December 31,
    Constant Currency (1)
Year Ended
December 31,
          Year-Over-Year
Increase (Decrease)
 
    2016     2015     Increase
(Decrease)
    2016     2015     Increase
(Decrease)
    Currency
Impact
    Excluding
Currency
    Including
Currency
    Currency
Impact
 
Net sales                    

U.S. Wholesale

  $ 470,981     $ 458,593     $ 12,388     $ 470,981     $ 458,498     $ 12,483     $ (95     2.7     2.7     —  

International

    101,070       108,000       (6,930     101,070       95,675       5,395       (12,325     5.6     (6.4 )%      (12.1 )% 

Retail Direct

    20,568       21,077       (509     20,568       21,077       (509     —         (2.4 )%      (2.4 )%      —  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

       

Total net sales

  $ 592,619     $ 587,670     $ 4,949     $ 592,619     $ 575,250     $ 17,369     $ (12,420     3.0     0.8     (2.2 )% 
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

       

 

(1)  “Constant Currency” is determined by applying the 2016 average exchange rates to the prior year local currency net sales amounts, with the difference between the change in “As Reported” net sales and “Constant Currency” net sales, reported in the table as “Currency Impact”. Constant currency net sales growth excludes the impact of currency.

 

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