GlobeNewswire Inc | May 6, 2021 07:00AM EDT

May 06, 2021

GARDEN CITY, N.Y., May 06, 2021 (GLOBE NEWSWIRE) -- Lifetime Brands, Inc. (NasdaqGS: LCUT), a leading global designer, developer and marketer of a broad range of branded consumer products used in the home, today reported its financial results for the quarter ended March31, 2021.

Robert Kay, Lifetimes Chief Executive Officer, commented, Lifetime Brands is off to an excellent start in 2021 with top line growth of 34.9% driving net income of $3.1 million and year-over-year growth in Adjusted EBITDA of 418% or $13.6million. This represents the seventh consecutive quarter of year-over-year growth from our core US business, which continues to lead our overall business. Our strong results this quarter demonstrate Lifetimes ability to consistently outperform across our categories in the many channels which we sell our products. We continue to gain market share across a majority of our categories, driven by robust consumer demand, strong brands and product offerings and vendor consolidation at our largest customers. Additionally, we benefited in the first quarter from our strategy to invest in increased inventory levels to assure product availability to our customers and consumers. Importantly, we also saw significant year-over-year improvement in our international business, which can be attributed to increased efficiencies and capabilities as a result of the reorganization of that business commencing in Q4 2019. We also are benefiting from our ability to add new products, grow into adjacent categories, and expand brands such as our KitchenAid line, which we recently extended into cutlery and in international markets. Our strong top line growth, the benefits of better utilization of our infrastructure, and a disciplined focus on cost efficiencies all contributed to our strong results for the quarter.

Mr. Kay continued, Looking ahead, 2021 will be a year of growth investments as we strengthen our focus on strategic initiatives, including enhancing our digital capabilities, expanding our presence in food service and supporting brands that will drive future growth. We are also actively pursuing new product launches to gain foothold in new categories including barbecue, pet, and storage and organization. We will continue to leverage the strength of our balance sheet to capitalize on opportunities to drive long-term growth and profitability. While 2021 will see an increase in investments to support these growth initiatives, we expect to be able to achieve meaningful growth in our top and bottom line.

First Quarter Financial Highlights:

Consolidated net sales for the three months ended March31, 2021 were $195.7 million, representing an increase of $50.6 million, or 34.9%, as compared to net sales of $145.1 million for the corresponding period in 2020. In constant currency, a non-GAAP financial measure, consolidated net sales increased by $49.6 million, or 34.0%, as compared to consolidated net sales in the corresponding period in 2020.

Gross margin for the three months ended March31, 2021 was $66.0 million, or 33.7%, as compared to $52.9 million, or 36.5%, for the corresponding period in 2020.

Income from operations was $9.2 million, as compared to a loss from operations of $(25.2) million for the corresponding period in 2020. Excluding a $20.1 million non-cash charge for goodwill impairment, and a $2.8 million non-cash charge for bad debt reserves to establish a provision against potential credit problems from certain retail customers due to the COVID-19 pandemic, loss from operations would have been $(2.3) million, for the corresponding period in 2020.

Net income was $3.1 million, or $0.14 per diluted share, as compared to a net loss of $(28.2) million, or $(1.36) per diluted share, in the corresponding period in 2020.

Adjusted net income was $2.8 million, or $0.13 per diluted share, as compared to adjusted net loss, of $(5.7) million, or $(0.27) per diluted share, in the corresponding period in 2020. A table which reconciles this non-GAAP financial measure to net income (loss), as reported, is included below.

Adjusted EBITDA, after giving effect to certain adjustments as permitted and defined under our debt agreements, was $90.9 million for the twelve months ended March31, 2021. A table which reconciles thisnon-GAAPfinancial measure to net income (loss), as reported, is included below.

Full Year 2021 Guidance

For the full fiscal year ending December31, 2021, the Company is providing the following financial guidance:

Year Ended Guidance for the December 31, Year Ending 2020 December 31, 2021Netsales $769.2 million $847 to $856 millionIncomefromoperations $25.0 million $53.5 to $56 millionAdjusted income from operations $47.9 million $53.5 to $56 millionNet (loss)income $(3.0) million $27 to $29 millionAdjustednetincome $20.2 million $27 to $29 millionDiluted(loss) $(0.14) per $1.24 to $1.33 perincomepercommonshare share shareAdjusteddilutedincomepercommon $0.95 per share $1.24 to $1.33 pershare shareWeighted-averagedilutedshares 20.9 million 21.8 millionAdjustedEBITDA $77.3 million $82.5 to $85.5 million

This guidance is based on a forecasted GBP to USD rate of $1.30. Net income and diluted income per common share were calculated based on an effective tax rate of 30%. Tables reconciling non-GAAP financial measures to GAAP financial measures, as reported, is included below.

The Company has previously provided long term financial objectives within its investor presentations, available on the Company's website in the 'Investor Relations' section. Based upon the Company's accelerated growth and success in achieving its previously disclosed long term financial objectives, the Company will be revising those objectives upward.

Conference CallThe Company has scheduled a conference call for Thursday, May6, 2021 at 11:00 a.m. The dial-in number for the conference call is (866) 610-1072 (U.S.) or (973) 935-2840 (International), Conference ID: 7117416.

A live webcast of the conference call will be accessible through: https://event.on24.com/wcc/r/3152139/7349A42078F1F4A138F6F93840ADD392

For those who cannot listen to the live broadcast, an audio replay of the webcast will be available.

Non-GAAPFinancial MeasuresThis earnings release containsnon-GAAPfinancial measures, including consolidated net sales in constant currency, income from operations excluding certain non-cash charges, adjusted net income (loss), adjusted diluted income (loss) per common share, and adjusted EBITDA. Anon-GAAPfinancial measure is a numerical measure of a companys 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 a 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 thenon-GAAPfinancial measures to the most directly comparable GAAP financial measures. Thesenon-GAAPfinancial measures are provided because management of the Company uses these financial measures in evaluating the Companyson-goingfinancial results and trends, and management believes that exclusion of certain items allows for more accurate period-to-period comparison of the Companys operating performance by investors and analysts. Management uses thesenon-GAAPfinancial measures as indicators of business performance.Thesenon-GAAPfinancial measures should be viewed as a supplement to, and not a substitute for, GAAP financial measures of performance.

Forward-Looking StatementsIn this press release, the use of the words believe, could, expect, intend, may, positioned, project, projected, should, will, would or similar expressions is intended to identify forward-looking statements. Such statements include all statements regarding the growth of the Company, our financial guidance, our ability to navigate the current environment and advance our strategy, our commitment to increasing investments in future growth initiatives, our initiatives to create value, our efforts to mitigate geopolitical factors and tariffs, our current and projected financial and operating performance, results, and profitability and all guidance related thereto, including forecasted exchange rates and effective tax rates, as well as our continued growth and success, future plans and intentions regarding the Company and its consolidated subsidiaries. Such statements represent the Companys current judgments, estimates, and assumptions about possible future events. The Company believes these judgments, estimates, and assumptions are reasonable, but these statements are not guarantees of any events or financial or operational results, and actual results may differ materially due to a variety of important factors. Such factors might include, among others, the Companys ability to comply with the requirements of its credit agreements; the availability of funding under such credit agreements; the Companys ability to maintain adequate liquidity and financing sources and an appropriate level of debt, as well as to deleverage its balance sheet; the possibility of impairments to the Companys goodwill; the possibility of impairments to the Companys intangible assets; changes in U.S. or foreign trade or tax law and policy; the impact of tariffs on imported goods and materials; changes in general economic conditions which could affect customer payment practices or consumer spending; the impact of changes in general economic conditions on the Companys customers; customer ordering behavior; the performance of our newer products; expenses and other challenges relating to the integration of any future acquisitions; changes in demand for the Companys products; changes in the Companys management team; the significant influence of the Companys largest stockholder; fluctuations in foreign exchange rates; changes in U.S. trade policy or the trade policies of nations in which we or our suppliers do business; uncertainty regarding the long-term ramifications of the U.K.s exit from the European Union; shortages of and price volatility for certain commodities; global health epidemics, such as the COVID-19 pandemic; social unrest, including related protests and disturbances; our expectations regarding the future level of demand for our products; and significant changes in the competitive environment and the effect of competition on the Companys markets, including on the Companys pricing policies, financing sources and ability to maintain an appropriate level of debt. The Company undertakes no obligation to update these forward-looking statements other than as required by law.

Lifetime Brands, Inc.Lifetime Brands is a leading global designer, developer and marketer of a broad range of branded consumer products used in the home. The Company markets its products under well-known kitchenware brands, including Farberware, KitchenAid, Sabatier, Amco Houseworks, Chefn Chicago Metallic, Copco, Fred & Friends, Houdini, KitchenCraft, Kamenstein, La Cafetire, MasterClass, Misto, Swing-A-Way, Taylor Kitchen, and Rabbit; respected tableware and giftware brands, including Mikasa, Pfaltzgraff, Fitz and Floyd, Empire Silver, Gorham, International Silver, Towle Silversmiths, Wallace, Wilton Armetale, V&A, Royal Botanic Gardens Kew and Year & Day; and valued home solutions brands, including BUILT NY, Taylor Bath, Taylor Kitchen, Taylor Weather and Planet Box. The Company also provides exclusive private label products to leading retailers worldwide.

The Companys corporate website iswww.lifetimebrands.com.

Contacts:

Lifetime Brands, Inc.Laurence Winoker, Chief Financial Officer516-203-3590investor.relations@lifetimebrands.com

or

Joele Frank, Wilkinson Brimmer KatcherEd Trissel / Andrew Squire / Rose Temple212-355-4449

LIFETIME BRANDS, INC.CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(in thousandsexcept per share data)(unaudited)

Three Months Ended March 31, 2021 2020Net sales $ 195,653 $ 145,070 Cost of sales 129,653 92,136 Gross margin 66,000 52,934 Distribution expenses 18,646 16,557 Selling, general and administrative expenses 38,108 41,522 Goodwill and other impairments ? 20,100 Income (loss) from operations 9,246 (25,245 ) Interest expense (4,014 ) (4,736 ) Mark to market gain (loss) on interest rate 498 (2,251 ) derivativesIncome (loss) before income taxes and equity in 5,730 (32,232 ) (losses) earningsIncome tax (provision) benefit (2,416 ) 3,729 Equity in (losses) earnings, net of taxes (247 ) 339 NET INCOME (LOSS) $ 3,067 $ (28,164 ) BASIC INCOME (LOSS) PER COMMON SHARE $ 0.15 $ (1.36 ) DILUTED INCOME (LOSS) PER COMMON SHARE $ 0.14 $ (1.36 )

LIFETIME BRANDS, INC.CONDENSED CONSOLIDATED BALANCE SHEETS(in thousandsexcept share data)

March 31, December 31, 2021 2020 (unaudited) ASSETS CURRENT ASSETS Cash and cash equivalents $ 30,641 $ 35,963 Accounts receivable, less allowances of $18,333at March31, 2021 and $17,013 at December31, 131,251 170,037 2020Inventory 210,265 203,164 Prepaid expenses and other current assets 10,128 12,129 TOTAL CURRENT ASSETS 382,285 421,293 PROPERTY AND EQUIPMENT, net 22,168 23,120 OPERATING LEASE RIGHT-OF-USE ASSETS 94,804 96,543 INVESTMENTS 21,135 20,032 INTANGIBLE ASSETS, net 239,927 244,025 OTHER ASSETS 2,109 2,468 TOTAL ASSETS $ 762,428 $ 807,481 LIABILITIES AND STOCKHOLDERS? EQUITY CURRENT LIABILITIES Current maturity of term loan $ 11,569 $ 17,657 Accounts payable 60,570 66,095 Accrued expenses 74,625 80,050 Income taxes payable 6,948 4,788 Current portion of operating lease liabilities 12,141 11,480 TOTAL CURRENT LIABILITIES 165,853 180,070 OTHER LONG-TERM LIABILITIES 15,694 16,483 INCOME TAXES PAYABLE, LONG-TERM 1,444 1,444 OPERATING LEASE LIABILITIES 100,349 102,355 DEFERRED INCOME TAXES 10,714 10,714 REVOLVING CREDIT FACILITY ? 27,302 TERM LOAN 234,968 238,977 STOCKHOLDERS? EQUITY Preferred stock, $1.00 par value, sharesauthorized: 100 shares of Series A and 2,000,000 ? ? shares of Series B; none issued and outstandingCommon stock, $0.01 par value, shares authorized:50,000,000 at March31, 2021 and December31,2020; shares issued and outstanding: 21,979,942 220 218 at March31, 2021 and 21,755,195 at December31,2020Paid-in capital 268,127 268,666 Retained earnings 2,548 424 Accumulated other comprehensive loss (37,489 ) (39,172 ) TOTAL STOCKHOLDERS? EQUITY 233,406 230,136 TOTAL LIABILITIES AND STOCKHOLDERS? EQUITY $ 762,428 $ 807,481

LIFETIME BRANDS, INC.CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(in thousands)(unaudited)

Three Months Ended March 31, 2021 2020OPERATING ACTIVITIES Net income (loss) $ 3,067 $ (28,164 ) Adjustments to reconcile net income (loss) to net cash provided by operating activities:Depreciation and amortization 5,958 6,234 Goodwill and other impairments ? 20,100 Amortization of financing costs 443 441 Mark to market (gain) loss on interest rate (498 ) 2,251 derivativesNon-cash lease expense (409 ) 702 Provision for doubtful accounts 17 2,844 Stock compensation expense 1,444 1,326 Undistributed equity in losses (earnings), net of 247 (339 ) taxesChanges in operating assets and liabilities: Accounts receivable 38,961 43,957 Inventory (6,479 ) 6,788 Prepaid expenses, other current assets and other 2,121 (401 ) assetsAccounts payable, accrued expenses and other (10,746 ) (18,148 ) liabilitiesIncome taxes receivable ? (3,904 ) Income taxes payable 2,156 ? NET CASH PROVIDED BY OPERATING ACTIVITIES 36,282 33,687 INVESTING ACTIVITIES Purchases of property and equipment (674 ) (1,222 ) Acquisition (178 ) ? NET CASH USED IN INVESTING ACTIVITIES (852 ) (1,222 ) FINANCING ACTIVITIES Proceeds from revolving credit facility 7,845 67,115 Repayments of revolving credit facility (35,131 ) (23,436 ) Repayments of term loan (10,477 ) (688 ) Payments for finance lease obligations (45 ) (25 ) Payments of tax withholding for stock based (2,160 ) (299 ) compensationProceeds from the exercise of stock options 184 ? Cash dividends paid (1,010 ) (934 ) NET CASH (USED IN) PROVIDED BY FINANCING (40,794 ) 41,733 ACTIVITIESEffect of foreign exchange on cash 42 (285 ) (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (5,322 ) 73,913 Cash and cash equivalents at beginning of period 35,963 11,370 CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 30,641 $ 85,283

LIFETIME BRANDS, INC.Supplemental Information(in thousands)

Reconciliation of GAAP toNon-GAAPOperating Results

Adjusted EBITDA for the twelve months ended March31, 2021:

Adjusted EBITDA for the Four Quarters Ended March 31, 2021 (inthousands)Three months ended March 31, $ 16,830 2021Three months ended December 32,458 31, 2020Three months ended September 29,228 30, 2020Three months ended June 30, 12,388 2020Adjusted EBITDA $ 90,904

Three Months Ended Twelve June 30, September December March 31, Months 2020 30, 31, 2021 Ended 2020 2020 March 31, 2021 (in thousands)Net (loss)income as $ (3,977 ) $ 13,913 $ 15,221 $ 3,067 $ 28,224 reportedUndistributedequity losses 848 (147 ) (1,620 ) 247 (672 )(earnings), netIncome tax 3,031 3,711 6,853 2,416 16,011 provisionInterest expense 4,230 4,128 4,183 4,014 16,555 Mark to marketloss (gain) on 164 (99 ) (172 ) (498 ) (605 )interest ratederivativesDepreciation and 6,061 6,090 6,279 5,958 24,388 amortizationStockcompensation 1,420 1,575 1,630 1,444 6,069 expenseAcquisition 55 57 126 182 420 related expensesRestructuringexpenses 253 ? (42 ) ? 211 (benefit)Warehouserelocation 303 ? ? ? 303 expensesAdjusted EBITDA $ 12,388 $ 29,228 $ 32,458 $ 16,830 $ 90,904

Adjusted EBITDA is a non-GAAP financial measure which is defined in the Companys debt agreements. Adjusted EBITDA is defined as net (loss) income, adjusted to exclude undistributed equity in losses (earnings), income tax provision, interest expense, mark to market loss (gain) on interest rate derivatives, depreciation and amortization, stock compensation expense, and other items detailed in the table above that are consistent with exclusions permitted by our debt agreements.

LIFETIME BRANDS, INC.Supplemental Information(in thousandsexcept per share data)

Reconciliation of GAAP toNon-GAAPOperating Results (continued)

Adjusted net income (loss) and adjusted diluted income (loss) per common share (in thousands -except per share data):

Three Months Ended March 31, 2021 2020Net income (loss) as reported $ 3,067 $ (28,164 ) Adjustments: Acquisition related expenses 182 47 Warehouse relocation ? 790 Mark to market (gain) loss on interest rate (498 ) 2,251 derivativesGoodwill and other impairments ? 20,100 Income tax effect on adjustments 79 (727 ) Adjusted net income (loss) $ 2,830 $ (5,703 ) Adjusted diluted income (loss) per common share^(^ $ 0.13 $ (0.27 ) 1)

Adjusted net income and adjusted diluted income per common share in the three months ended March31, 2021 excludes acquisition related expenses and mark to market (gain) on interest rate derivatives. The income tax effect on adjustments reflects the statutory tax rates applied on the adjustments.

Adjusted net (loss) and adjusted diluted (loss) per common share in the three months ended March31, 2020 excludes acquisition related expenses, warehouse relocation expenses, mark to market loss on interest rate derivatives and goodwill and other impairments. The income tax effect on adjustments reflects the statutory tax rates applied on the adjustments.

(1) Adjusted diluted income (loss) per common share is calculated based on diluted weighted-average shares outstanding of 21,771 and 20,745 for the three month period ended March31, 2021 and 2020, respectively. The diluted weighted-average shares outstanding for the three month period ended March31, 2021 include the effect of dilutive securities of 685.

LIFETIME BRANDS, INC.Supplemental Information(in thousands)

Reconciliation of GAAP toNon-GAAPOperating Results (continued)

Constant Currency:

As Reported Constant Currency ^(1) Year-Over-Year Three Months Ended Three Months Ended Increase (Decrease) March 31, March 31,Net sales 2021 2020 Increase 2021 2020 Increase Currency Excluding Including Currency (Decrease) (Decrease) Impact Currency Currency ImpactU.S. $ 176,181 $ 129,208 $ 46,973 $ 176,181 $ 129,214 $ 46,967 $ (6 ) 36.3% 36.4% 0.1%International 19,472 15,862 3,610 19,472 16,813 2,659 (951 ) 15.8% 22.8% 7.0%Total net $ 195,653 $ 145,070 $ 50,583 $ 195,653 $ 146,027 $ 49,626 $ (957 ) 34.0% 34.9% 0.9%sales

(1) Constant Currency is determined by applying the 2021 average exchange rates to the prior year local currency 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 sales growth is intended to exclude the impact of fluctuations in foreign currency exchange rates.

LIFETIME BRANDS, INC.Supplemental Information

Reconciliation of GAAP toNon-GAAPGuidance

Adjusted EBITDA guidance for the full fiscal year ending December31, 2021 (in millions):

Net income guidance $27 to $29Add back: Income tax expense 11.5 to 12Interest expense 15Depreciation and amortization 23.5Stock compensation expense 5Other adjustments^(^1) 0.5 to 1Adjusted EBITDA guidance $82.5 to $85.5

(1) Includes estimates for acquisition related expenses, undistributed equity in (earnings) losses and other items that are consistent with exclusions permitted by our debt agreements.

Adjusted income from operations, adjusted net income and adjusted diluted income per common share guidance for the full fiscal year ending December 31, 2021 :

With respect to the guidance for adjusted income from operations, adjusted net income and adjusted diluted income per common share, there were no adjustments to the GAAP financial measures, therefore the amounts for adjusted income from operations, adjusted net income and adjusted diluted income per common share are consistent with the GAAP financial measures income from operations, net income and diluted income per common share.

Reconciliation of GAAP toNon-GAAP Operating Results

Adjusted EBITDA for the year ended December 31, 2020:

Three Months Ended Year Ended March 31, June 30, September December December 2020 2020 30, 2020 31, 2020 31, 2020 (in thousands)Net (loss)income as $ (28,164 ) $ (3,977 ) $ 13,913 $ 15,221 $ (3,007 )reportedUndistributedequity losses (339 ) 848 (147 ) (1,620 ) (1,258 )(earnings), netIncome tax(benefit) (3,729 ) 3,031 3,711 6,853 9,866 provisionInterest 4,736 4,230 4,128 4,183 17,277 expenseMark to marketloss (gain) on 2,251 164 (99 ) (172 ) 2,144 interest ratederivativesDepreciationand 6,234 6,061 6,090 6,279 24,664 amortizationGoodwill andother 20,100 ? ? ? 20,100 impairmentsStockcompensation 1,326 1,420 1,575 1,630 5,951 expenseAcquisitionrelated 47 55 57 126 285 expensesRestructuringexpenses ? 253 ? (42 ) 211 (benefit)Warehouserelocation 790 303 ? ? 1,093 expensesAdjusted EBITDA $ 3,252 $ 12,388 $ 29,228 $ 32,458 $ 77,326

Adjusted EBITDA is anon-GAAPfinancial measure which is defined in the Companys debt agreements. Adjusted EBITDA is defined as net income (loss), adjusted to exclude undistributed equity in (earnings) losses, income tax (benefit) provision, interest expense, depreciation and amortization, mark to market loss (gain) on interest rate derivatives, goodwill and other impairments, stock compensation expense, and other items detailed in the table above that are consistent with exclusions permitted by our debt agreements.

LIFETIME BRANDS, INC.Supplemental Information(in thousandsexcept per share data)

Reconciliation of GAAP toNon-GAAP Operating Results (continued)

Adjusted net income and adjusted diluted income per common share (in thousands - except per share data):

Year Ended December 31, 2020Net loss as reported $ (3,007 ) Adjustments: Acquisition related expenses 285 Restructuring expenses 211 Warehouse relocation expenses 1,093 Mark to market loss on interest rate derivatives 2,144 Goodwill and other impairments 20,100 Foreign currency translation loss reclassified from 235 Accumulated Other Comprehensive LossIncome tax effect on adjustments (858 ) Adjusted net income $ 20,203 Adjusted diluted income per share ^(1) $ 0.95

(1)Adjusted diluted income per common share is calculated based on diluted weighted-average shares outstanding of 21,179 for the year ended December 31, 2020. The diluted weighted-average shares outstanding for the year ended December 31, 2020 include the effect of dilutive securities of 319 shares.

Adjusted income from operations (in thousands):

Year Ended December 31, 2020 (in thousands)Income from operations $ 24,970 Excluded non-cash charges: Goodwill and other impairments 20,100 Bad debt reserve related to COVID-19 pandemic ^(1) 2,844 Total excluded non-cash charges $ 22,944 Adjusted income from operations $ 47,914

(1) Bad debt reserve recorded in the first quarter of fiscal 2020 to establish a provision against potential credit problems from certain retail customers who may have financial difficulty that has been caused or increased due to the COVID-19 pandemic. This reflects the Company's assessment of risk of not being able to collect such receivables from certain customers in the U.S. that are at risk of seeking or have already obtained bankruptcy protection and our international customer base which has a higher proportion of small and independent brick-and-mortar retailers. This charge was taken in response to the Company's assessment on the impact of the COVID-19 pandemic on these accounts