Lifetime Brands, Inc. Reports First Quarter 2014 Results

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 first quarter ended March 31, 2014.

• Consolidated net sales for the quarter were $118.4 million, an increase of $19.7 million, or 20.0%, as compared to $98.7 million for the corresponding period in 2013.
• Consolidated net sales for the Company’s wholesale segment were $113.8 million, an increase of $20.7 million or 22.2%, as compared to net sales of $93.1 million for the corresponding period in 2013. Consolidated net wholesale sales in the 2014 period included $17.1 million of net sales from Kitchen Craft and other acquisitions that were completed in the first quarter of 2014.
• Gross margin was $44.3 million, or 37.4%, as compared to $36.3 million, or 36.8% for the corresponding period in 2013. Gross margin for the wholesale segment was 36.2% for the 2014 period, as compared to 34.9% for the corresponding period in 2013.
• Net loss for the quarter was $2.9 million, as compared to $0.6 million for the corresponding period in 2013.
• Diluted net loss per common share was $0.22, as compared to $0.05 for the corresponding period in 2013.
• Adjusted net loss was $1.7 million, or $0.13 per diluted share, in the 2014 period, as compared to adjusted net loss of $0.6 million, or $0.05 per diluted share, in the 2013 period.
• Consolidated EBITDA was $3.7 million, as compared to $3.1 million for the corresponding 2013 period, an increase of 18.9%.
• Equity in earnings (losses), net of taxes was $(0.2) million in the 2014 period as compared to $0.2 million in corresponding 2013 period.

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

“I am very pleased with the Company’s progress during the quarter, which includes the results of the four businesses we acquired during the period. These acquisitions necessitated significant non-recurring acquisition expenses and a write-off of debt financing fees that, combined with higher other SG&A expenses -- especially increased staffing levels to enable us to achieve our aggressive growth targets -- produced a decline in net results for the current quarter versus last year. However, as we reported, EBITDA increased 18.9% over the comparable quarter of last year. We expect the impact of the ongoing greater SG&A expenses to be mitigated by higher levels of sales during the second half of the year.

“In January, we acquired Thomas Plant (Birmingham) Limited. Trading as Kitchen Craft, Thomas Plant is one of the United Kingdom’s leading suppliers of kitchenware products and accessories. The company’s broad ranges of housewares products are marketed under well-known proprietary, customer-exclusive and private label brands to over 2,600 retailers in the U.K. and in over 70 countries worldwide.

“In February, we purchased the intellectual property and certain assets of Built NY, Inc., a designer and distributor of lunch boxes, wine bags and baby accessories. The acquisition of Built brings us new and exciting product classifications and provides us access to a broad base of independent retailers in over 60 countries worldwide.

“Also in February, we acquired the intellectual property and certain assets of Empire Silver Company, a U.S. manufacturer of sterling silver and pewter gift items, principally baby cups, rattles and hollowware.

“In March, we purchased the business and certain assets of La Cafetière Ltd., a supplier of products to brew and serve coffee and tea; further broadening our product classifications and strengthening our presence in the U.K. and Continental Europe.

“Of these acquisitions, only Kitchen Craft recorded any significant revenues during the first quarter. However, we expect all four to be running smoothly in the second half of the year and to add over $75 million in net sales and significantly to increase our net income and diluted earnings per share in 2014.

“In addition, we will begin supplying kitchenware products to almost 400 Walmart stores in China in the second half of this year.

“On our last conference call, we stated that, for all of 2014, we foresaw sales increasing by approximately 5% organically and approximately 15% from acquisitions, to a total of approximately $600 million. Today, we are reaffirming that guidance.”

Mr. Siegel added,

“Grupo Vasconia S.A.B., our 30%-owned Partner Company in Mexico, reported net income of $0.1 million ($0.8 million, excluding an income tax adjustment) for the 2014 period, as compared to $1.2 million in 2013. The reduction in income reflects continuing weak retail sales in Mexico and significant manufacturing inefficiencies associated with the integration of Almexa Alumino, S.A. de C.V., which it acquired in 2012. ”

Conference Call

The Company has scheduled a conference call for Thursday, May 1, 2014 at 11:00 a.m. ET. The dial-in number for the conference call is (877) 703-6107 or (857) 244-7306, passcode #81134143. A replay of the call will also be available through May 4, 2014 and can be accessed by dialing (888) 286-8010 or (617) 801-6888, conference ID #94792219. A live webcast of the conference call will be broadcast in the Investor Relations section of the Company’s web site, www.lifetimebrands.com. For those who cannot listen to the live broadcast, an audio replay of the call will also be available on the site.

Non-GAAP Financial Measures

This earnings release contains non-GAAP financial measures. For purposes of Regulation G, 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 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 such well-known kitchenware brands as Farberware®, KitchenAid®, Cuisine de France®, Fred® & Friends, Guy Fieri®, Kitchen Craft®, Kizmos™, La Cafetière®, Misto®, Mossy Oak®, Pedrini®, Sabatier®, Savora™ and Vasconia®; respected tableware brands such as Mikasa®, Pfaltzgraff®, Creative Tops®, Gorham®, International® Silver, Kirk Stieff®, Sasaki®, Towle® Silversmiths, Tuttle®, Wallace®, V&A® and Royal Botanic Gardens Kew®; and home solutions brands, including Kamenstein®, Bombay®, BUILT®, 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.

Consolidated EBITDA is a non-GAAP measure that the Company defines as net income (loss), adjusted to exclude undistributed equity (earnings) losses, income taxes, interest, depreciation and amortization, stock compensation expense, intangible asset impairment and acquisition related expenses, as shown in the table above.