Lifetime Brands, Inc. Reports Third Quarter Financial 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 third quarter ended September 30, 2015.

Third Quarter Financial Highlights:

• Consolidated net sales were $163.2 million in the quarter ended September 30, 2015; an increase of $1.0 million, or 0.6%, as compared to consolidated net sales of $162.2 million in the corresponding period in 2014. In constant currency, which excludes the impact of foreign exchange fluctuations, consolidated net sales increased 2.9%, as compared to consolidated net sales in the corresponding period in 2014.
• Gross margin was $57.0 million, or 34.9%, in the quarter ended September 30, 2015, as compared to $57.9 million, or 35.7%, for the corresponding period in 2014. The decrease in consolidated gross margin was primarily due to the unfavorable impact of foreign currency fluctuations and a lower margin product and channel sales mix.
• Income from operations was $9.8 million in the quarter ended September 30, 2015, as compared to $8.4 million in the corresponding period in 2014.
• Net income (loss) was $5.1 million, or $0.36 per diluted share, in the quarter ended September 30, 2015, as compared to net income (loss) of $(1.6) million, or $(0.12) per diluted share, in the corresponding period in 2014.
• Adjusted net income was $5.9 million, or $0.41 per diluted share, in the quarter ended September 30, 2015, as compared to $5.7 million, or $0.41 per diluted share, in the corresponding period in 2014.
• Consolidated EBITDA was $14.1 million, in the quarter ended September 30, 2015, as compared to $16.5 million for the corresponding 2014 period.
• Equity in earnings (losses), net of taxes, was $(0.5) million in the quarter ended September 30, 2015, as compared to $(5.2) million in the corresponding 2014 period. Excluding the impact of a $(0.8) million deferred tax expense related to foreign currency translation, equity in earnings (losses), net of taxes, was $0.3 million. The 2014 period includes a charge of $(5.2) million, net of tax, for the reduction in the fair value of the Company’s investment in GS Internacional S/A.

Nine Months Financial Highlights:

• Consolidated net sales were $401.8 million in the nine months ended September 30, 2015; an increase of $5.8 million, or 1.5%, as compared to net sales of $396.0 million for the corresponding period in 2014. In constant currency, consolidated net sales increased 4.0%.
• Gross margin was $145.4 million, or 36.2%, in the nine months ended September 30, 2015 as compared to $143.1 million, or 36.1%, for the corresponding period in 2014.
• Income from operations was $6.6 million in the nine months ended September 30, 2015, as compared to $3.1 million, for the corresponding period in 2014.
• Net income (loss) was $1.3 million, or $0.09 per diluted share, in the nine months ended September 30, 2015, as compared to net income (loss) of $(7.7) million, or $(0.57) per diluted share, in the 2014 period.
• Adjusted net income was $3.4 million, or $0.24 per diluted share, in the nine months ended September 30, 2015, as compared to $0.9 million, or $0.06 per diluted share, in the 2014 period.
• Consolidated EBITDA was $21.0 million in the nine months ended September 30, 2015, as compared to $21.6 million for the corresponding 2014 period.
• Equity in earnings (losses), net of taxes, was $(0.2) million, in the nine months ended September 30, 2015, as compared to equity in earnings (losses), net of taxes, of $(5.4) million in the corresponding 2014 period. Excluding the impact of a $(1.3) million deferred tax expense related to foreign currency translation, equity in earnings (losses) for the nine months ended September 30, 2015 was $1.2 million. The 2014 period includes a charge of $(5.2) million, net of tax, for the reduction in the fair value of the Company’s investment in GS Internacional S/A.

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

“The strong performance of Lifetime’s U.S. wholesale business in the third quarter was partially offset by the impact of foreign currency exchange rate fluctuations, which reduced reported net sales by approximately $3.6 million or 2.3% year-over-year.

“The depreciation of the British pound, the Canadian dollar, the Mexican peso and the Brazilian real against the U.S. dollar decreased gross margins at our U.K. subsidiaries and our Partner Companies in Canada, Mexico and Brazil by increasing their costs of goods imported from Asia, where purchases are denominated in U.S. dollars, and hurt sales due to higher prices being passed along to customers and consumers. Moreover, these exchange rate fluctuations produce unfavorable comparisons when the results of our non-U.S. business are translated into U.S. dollars.

“Our U.S. business remains strong and we continue to expect growth in both sales and margins in the fourth quarter, which should benefit from strong holiday shipments.

“As a result, we are revising our guidance for full-year 2015 results. We now foresee reported net sales to increase 2% to 3% year-over-year. We expect our operating margin to be in the range of 4.0 to 4.5%.”

Dividend

On Tuesday, November 3, 2015, the Board of Directors declared a quarterly dividend of $0.0425 per share payable on February 15, 2016 to shareholders of record on February 1, 2016.

Conference Call

The Company has scheduled a conference call for Thursday, November 5, 2015 at 11:00 a.m. ET. The dial-in number for the conference call is (877) 415-3185 or (857) 244-7328 passcode #37648519. A replay of the call will also be available through Friday, November 6, 2015 and can be accessed by dialing (888) 286-8010 or (617) 801-6888, conference ID #24424431. 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. 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 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.

(1) Consolidated EBITDA for the four quarters ended September 30, 2014 excludes the effect of a pro forma acquisition adjustment of $3.0 million.

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

Adjusted net income in the three and nine months ended September 30, 2015 excludes the fair value adjustment of certain contingent consideration, acquisition related expenses, the recovery of acquisition related expenses for an acquisition not completed, financing expenses 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 and nine months ended September 30, 2014 excludes certain acquisition related expenses, the loss on retirement of debt, restructuring expenses, intangible asset impairment and the impairment of the Company’s investment in GS Internacional S/A.

⁽¹⁾ "Constant Currency" is determined by applying the 2015 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.

View source version on businesswire.com: http://www.businesswire.com/news/home/20151105005404/en/