GlobeNewswire Inc | Nov 4, 2021 07:00AM EDT

November 04, 2021

Strong performance driven by 5.5% growth in gross profitDeclares Regular Quarterly Dividend

GARDEN CITY, N.Y., Nov. 04, 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 September30, 2021.

Robert Kay, Lifetimes Chief Executive Officer, commented, We are pleased to report another strong quarter of growth in a challenging macroeconomic environment, as we continue to see robust demand for our products. Our growth has been achieved as a result of the Lifetime 2.0 strategy the company implemented over the past two plus years and aided by the mitigating actions we have taken to offset inflationary and supply chain disruptions. Compared to a very strong quarter last year, gross profit increased 5.5%. This strong performance has resulted in our ability to generate adjusted EBITDA of $96.7 million over the trailing twelve month period ended September 30, 2021, an increase of 25.1% compared to adjusted EBITDA over the trailing twelve month period ended December 31, 2020. The transformation of our international business continues to deliver improved profitability and year over growth in net sales of 16.8%. In addition, we believe that we are making good progress on our strategic growth initiatives, which have now been formalized into our next five-year plan and from which we expect to drive significant growth and long-term value creation.

Mr. Kay continued, Our team has done an excellent job mitigating the impact from global supply chain disruptions, as evidenced by our strong gross margin improvement in the third quarter. Our proactive actions to manage inventory levels and implement price increases, coupled with our best-in-class supply chain and logistics capabilities, have enabled us to continue meeting strong customer demand and positioned us well for the fourth quarter despite shipping challenges. As a result of these actions, and notwithstanding continued supply chain disruptions that have caused some missed shipments, we have once again raised our adjusted EBITDA guidance for the full year.

Third Quarter Financial Highlights:

Consolidated net sales were $224.8 million for both the three months ended September30, 2021 and 2020. In constant currency, a non-GAAP financial measure, consolidated net sales decreased by $1.4 million, or 0.6%, as compared to consolidated net sales in the corresponding period in 2020. A table reconciling this non-GAAP financial measure to consolidated net sales, as reported, is included below.

Gross margin for the three months ended September30, 2021 was $83.1 million, or 37.0%, as compared to $78.8 million, or 35.1%, for the corresponding period in 2020.

Income from operations was $21.7 million, as compared to $21.5 million for the corresponding period in 2020.

Net income was $12.6 million, or $0.57 per diluted share, as compared to a net income of $13.9 million, or $0.65 per diluted share, in the corresponding period in 2020.

Adjusted net income was $13.4 million, or $0.61 per diluted share, as compared to adjusted net income, of $13.9 million, or $0.65 per diluted share, in the corresponding period in 2020. A table reconciling this non-GAAP financial measure to net income, as reported, is included below.

Nine Months Financial Highlights:

Consolidated net sales for the nine months ended September30, 2021 were $607.1 million, an increase of $87.1 million, or 16.8%, as compared to net sales of $520.0 million for the corresponding period in 2020. In constant currency, a non-GAAP financial measure, consolidated net sales increased by $82.5 million, or 15.7%, as compared to consolidated net sales in the corresponding period in 2020.

Gross margin for the nine months ended September30, 2021 was $215.3 million, or 35.5%, as compared to $185.9 million, or 35.8%, for the corresponding period in 2020.

Income from operations was $41.9 million, as compared to income from operations of $0.6 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, income from operations would have been $23.5 million, for the corresponding period in 2020.

Net income was $21.4 million, or $0.98 per diluted share, as compared to a net loss of $(18.2) million, or $(0.87) per diluted share, in the corresponding period in 2020.

Adjusted net income was $22.4 million, or $1.02 per diluted share, as compared to adjusted net income, of $5.1 million, or $0.24 per diluted share, in the corresponding period in 2020. A table reconciling 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 $96.7 million for the twelve months ended September30, 2021. A table reconciling thisnon-GAAPfinancial measure to net income, as reported, is included below.

Full Year 2021 Guidance Update

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

Year Ended Guidance for the December 31, Year Ending 2020 December 31, 2021Netsales $769.2 million $870 to $890 millionIncomefromoperations $25.0 million $59 to $62.5 millionAdjusted income from operations $47.9 million $59.5 to $63 millionNet (loss)income $(3.0) million $30.9 to $33.6 millionAdjustednetincome $20.2 million $31.2 to $33.9 millionDiluted(loss) $(0.14) per $1.40 to $1.53 perincomepercommonshare share shareAdjusteddilutedincomepercommon $0.95 per share $1.42 to $1.54 pershare shareWeighted-averagedilutedshares 20.9 million 22 millionAdjustedEBITDA $77.3 million $88 to $92 million

This guidance is based on a forecasted GBP to USD rate of $1.35. 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, are 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 has revised those objectives upward, including the following forward-looking financial measures:

Five Year Financial ObjectivesSales $1.25 billionAdjusted EBITDA^(1) $145 million

(1)The Company is not providing a quantitative reconciliation with respect to this forward-looking non-GAAP measure in reliance on the unreasonable efforts exception set forth in SEC rules because certain financial information, the probable significance of which cannot be determined, is not available and cannot be reasonably estimated. For example, unusual, one-time, non-ordinary, or non-recurring costs, which cannot be reasonably estimated.

Mr. Kay added, Since launching Lifetime 2.0 in 2018, we have taken significant steps to optimize our business model, utilize our infrastructure more efficiently, and invest in meaningful growth opportunities. Our strategy is working, and thanks to the hard work of our team, we have made incredible progress improving our operations and taking our business to the next level. As we embark on our next stage of growth at Lifetime, we are pleased to announce our new five-year financial objectives, demonstrating our confidence in the prospects for the business. Our revised targets, which were recently finalized and approved by our Board of Directors, reflect our progress to date as well as greater visibility into key growth opportunities, including commercial foodservice, our Year & Day brand and new product categories that already are or will be shipping this year. In addition to these growth drivers, we also plan to undertake an expansion and redesign of our U.S. distribution operations that will support our planned growth and drive further efficiencies and incremental profitability moving forward. We are proud of what we have accomplished over the past few years, and look forward to continuing to execute the next phase of our strategy, which we believe will enable us to achieve these long-term financial objectives to the benefit of our shareholders.

Dividend

On November2, 2021, the Board of Directors declared a quarterly dividend of $0.0425 per share payable on February14, 2022 to shareholders of record on January31, 2022.

Conference Call

The Company has scheduled a conference call for Thursday, November4, 2021 at 11:00 a.m. The dial-in number for the conference call is (877) 876-9177 (U.S.) or (785) 424-1672 (International), Conference ID: LCUTQ321.

A live webcast of the conference call will be accessible through: https://event.on24.com/wcc/r/3492211/A3C2AC18245173CCAC310C2D77C2058B

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, adjusted income from operations, adjusted net income, adjusted diluted income 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, including our five-year strategic plan, 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; our ability to execute on the goals and strategies set forth in our five-year plan; 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 Nine Months Ended September 30, September 30, 2021 2020 2021 2020Net sales $ 224,777 $ 224,750 $ 607,066 $ 519,960 Cost of sales 141,662 145,958 391,790 334,066 Gross margin 83,115 78,792 215,276 185,894 Distribution 18,893 18,961 56,470 50,710 expensesSelling, generaland 42,542 38,325 116,879 114,274 administrativeexpensesRestructuring ? ? ? 253 expensesGoodwill and ? ? ? 20,100 other impairmentsIncome from 21,680 21,506 41,927 557 operationsInterest expense (3,835 ) (4,128 ) (11,668 ) (13,094 ) Mark to marketgain (loss) on 120 99 664 (2,316 ) interest ratederivativesIncome (loss)before incometaxes and equity 17,965 17,477 30,923 (14,853 ) in earnings(losses)Income tax (5,589 ) (3,711 ) (9,837 ) (3,013 ) provisionEquity inearnings 195 147 341 (362 ) (losses), net oftaxesNET INCOME (LOSS) $ 12,571 $ 13,913 $ 21,427 $ (18,228 ) BASIC INCOME(LOSS) PER COMMON $ 0.58 $ 0.66 $ 1.00 $ (0.87 ) SHAREDILUTED INCOME(LOSS) PER COMMON $ 0.57 $ 0.65 $ 0.98 $ (0.87 ) SHARE

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

September 30, December 31, 2021 2020 (unaudited) ASSETS CURRENT ASSETS Cash and cash equivalents $ 8,682 $ 35,963 Accounts receivable, less allowances of $17,968at September30, 2021 and $17,013 at December31, 169,223 170,037 2020Inventory 256,922 203,164 Prepaid expenses and other current assets 8,991 12,129 TOTAL CURRENT ASSETS 443,818 421,293 PROPERTY AND EQUIPMENT, net 21,629 23,120 OPERATING LEASE RIGHT-OF-USE ASSETS 89,211 96,543 INVESTMENTS 22,144 20,032 INTANGIBLE ASSETS, net 231,014 244,025 OTHER ASSETS 1,991 2,468 TOTAL ASSETS $ 809,807 $ 807,481 LIABILITIES AND STOCKHOLDERS? EQUITY CURRENT LIABILITIES Current maturity of term loan $ 8,549 $ 17,657 Accounts payable 60,594 66,095 Accrued expenses 108,579 80,050 Income taxes payable 2,152 4,788 Current portion of operating lease liabilities 12,397 11,480 TOTAL CURRENT LIABILITIES 192,271 180,070 OTHER LONG-TERM LIABILITIES 14,779 16,483 INCOME TAXES PAYABLE, LONG-TERM 1,444 1,444 OPERATING LEASE LIABILITIES 93,978 102,355 DEFERRED INCOME TAXES 11,031 10,714 REVOLVING CREDIT FACILITY 1,600 27,302 TERM LOAN 238,729 238,977 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 September30, 2021 and December31,2020; shares issued and outstanding: 22,018,193 220 218 at September30, 2021 and 21,755,195 atDecember31, 2020Paid-in capital 270,309 268,666 Retained earnings 18,999 424 Accumulated other comprehensive loss (33,553 ) (39,172 ) TOTAL STOCKHOLDERS? EQUITY 255,975 230,136 TOTAL LIABILITIES AND STOCKHOLDERS? EQUITY $ 809,807 $ 807,481

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

Nine Months Ended September 30, 2021 2020OPERATING ACTIVITIES Net income (loss) $ 21,427 $ (18,228 ) Adjustments to reconcile net income (loss) to net cash provided by operating activities:Depreciation and amortization 17,560 18,385 Goodwill and other impairments ? 20,100 Amortization of financing costs 1,309 1,326 Mark to market (gain) loss on interest rate (664 ) 2,316 derivativesNon-cash lease expense (1,089 ) 2,915 Provision (recovery) for doubtful accounts (166 ) 3,011 Stock compensation expense 3,973 4,321 Undistributed (earnings) losses from equity (341 ) 362 investment, net of taxesChanges in operating assets and liabilities: Accounts receivable 659 (55,466 ) Inventory (54,117 ) (37,303 ) Prepaid expenses, other current assets and other 4,733 3,573 assetsAccounts payable, accrued expenses and other 24,093 100,798 liabilitiesIncome taxes receivable ? 1,577 Income taxes payable (2,779 ) 1,521 NET CASH PROVIDED BY OPERATING ACTIVITIES 14,598 49,208 INVESTING ACTIVITIES Purchases of property and equipment (3,361 ) (1,645 ) Proceeds from sale of shares of equity method 3,061 ? investmentAcquisition (178 ) ? NET CASH USED IN INVESTING ACTIVITIES (478 ) (1,645 ) FINANCING ACTIVITIES Proceeds from revolving credit facility 16,845 107,418 Repayments of revolving credit facility (42,531 ) (113,652 ) Repayments of term loan (10,478 ) (7,583 ) Payments for finance lease obligations (71 ) (75 ) Payments of tax withholding for stock based (3,186 ) (486 ) compensationProceeds from the exercise of stock options 877 ? Cash dividends paid (2,913 ) (1,862 ) NET CASH USED IN FINANCING ACTIVITIES (41,457 ) (16,240 ) Effect of foreign exchange on cash 56 (18 ) (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (27,281 ) 31,305 Cash and cash equivalents at beginning of period 35,963 11,370 CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 8,682 $ 42,675

LIFETIME BRANDS, INC.Supplemental Information(in thousands)

Reconciliation of GAAP toNon-GAAPOperating Results

Adjusted EBITDA for the twelve months ended September30, 2021:

Quarter Ended Twelve September Months December 31, March 31, June 30, 30, Ended 2020 2021 2021 2021 September 30, (in thousands) 2021

Net income as $ 15,221 $ 3,067 $ 5,789 $ 12,571 $ 36,648 reportedUndistributedequity (1,620 ) 247 (393 ) (195 ) (1,961 ) (losses)earnings, netIncome tax 6,853 2,416 1,832 5,589 16,690 provisionInterest 4,183 4,014 3,819 3,835 15,851 expenseMark tomarket gainon interest (172 ) (498 ) (46 ) (120 ) (836 ) ratederivativesDepreciationand 6,279 5,958 5,765 5,837 23,839 amortizationStockcompensation 1,630 1,444 1,328 1,201 5,603 expenseAcquisitionrelated 126 182 72 41 421 expensesRestructuring (42 ) ? ? ? (42 ) benefitWallacefacilityremedial ? ? ? 500 500 designexpenseAdjusted $ 32,458 $ 16,830 $ 18,166 $ 29,259 $ 96,713 EBITDA

Adjusted EBITDA is a non-GAAP financial measure which is defined in the Companys debt agreements. Adjusted EBITDA is defined as net income, adjusted to exclude undistributed equity in (losses) earnings, income tax provision, interest expense, mark to market 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 Nine Months Ended September September 30, 30, 2021 2020 2021 2020Net income (loss) as $ 12,571 $ 13,913 $ 21,427 $ (18,228 ) reportedAdjustments: Acquisition related 41 57 295 159 expensesRestructuring ? ? ? 253 expensesWarehouse relocation ? ? ? 1,093 Mark to market(gain) loss on (120 ) (99 ) (664 ) 2,316 interest ratederivativesGoodwill and other ? ? ? 20,100 impairmentsForeign currencytranslation lossreclassified from 1,362 ? 3,404 235 Accumulated OtherComprehensive LossGain on change inownership in equity (971 ) ? (2,703 ) ? method investmentWallace facilityremedial design 500 ? 500 ? expenseIncome tax effect on 43 11 116 (878 ) adjustmentsAdjusted net income $ 13,426 $ 13,882 $ 22,375 $ 5,050 Adjusted dilutedincome per common $ 0.61 $ 0.65 $ 1.02 $ 0.24 share^(1)

Adjusted net income and adjusted diluted income per common share in the three and nine months ended September30, 2021 excludes acquisition related expenses, mark to market (gain) on interest rate derivatives, foreign currency translation loss reclassified from Accumulated Other Comprehensive Loss, gain on change in ownership in equity method investment and Wallace facility remedial design expense. The income tax effect on adjustments reflects the statutory tax rates applied on the adjustments.

Adjusted net income and adjusted diluted income per common share in the three and nine months ended September30, 2020 excludes acquisition related expenses, restructuring expenses, warehouse relocation, mark to market (gain) loss on interest rate derivatives, goodwill and other impairments, and foreign currency translation loss reclassified from Accumulated Other Comprehensive Loss. The income tax effect on adjustments reflects the statutory tax rates applied on the adjustments.

(1)Adjusted diluted income per common share is calculated based on diluted weighted-average shares outstanding of 22,085 and 21,285 for the three month period ended September30, 2021 and 2020, respectively. Adjusted diluted income per common share is calculated based on diluted weighted-average shares outstanding of 21,964 and 21,015 for the nine month period ended September30, 2021 and 2020, respectively. The diluted weighted-average shares outstanding for the three and nine month period ended September30, 2021 include the effect of dilutive securities of 536 and 621, respectively. The diluted weighted-average shares outstanding for the three and nine month period ended September 30, 2020 include the effect of dilutive securities of 350 and 180 shares, respectively.

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) September 30, September 30,Net sales 2021 2020 Increase 2021 2020 Increase Currency Excluding Including Currency (Decrease) (Decrease) Impact Currency Currency ImpactU.S. $ 197,724 $ 201,539 $ (3,815 ) $ 197,724 $ 201,620 $ (3,896 ) $ (81 ) (1.9 )% (1.9 )% 0.0 %International 27,053 23,211 3,842 27,053 24,588 2,465 (1,377 ) 10.0 % 16.6 % 6.6 %Total net $ 224,777 $ 224,750 $ 27 $ 224,777 $ 226,208 $ (1,431 ) $ (1,458 ) (0.6 )% 0.0 % 0.6 %sales

As Reported Constant Currency ^(1) Year-Over-Year Nine Months Ended Nine Months Ended Increase (Decrease) September 30, September 30,Net sales 2021 2020 Increase 2021 2020 Increase Currency Excluding Including Currency (Decrease) (Decrease) Impact Currency Currency ImpactU.S. $ 540,488 $ 463,338 $ 77,150 $ 540,488 $ 463,482 $ 77,006 $ (144 ) 16.6 % 16.7 % 0.1 %International 66,578 56,622 9,956 66,578 61,047 5,531 (4,425 ) 9.1 % 17.6 % 8.5 %Total net $ 607,066 $ 519,960 $ 87,106 $ 607,066 $ 524,529 $ 82,537 $ (4,569 ) 15.7 % 16.8 % 1.1 %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 $30.9 to $33.6Add back: Income tax expense 12.6 to 13.4Interest expense 15Depreciation and amortization 23.5Stock compensation expense 5Other adjustments^(1) 1 to 1.5Adjusted EBITDA guidance $88 to $92

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

Adjusted income from operations guidance for the full fiscal year ending December 31, 2021 (in millions):

Income from operations guidance $59 to $62.5Wallace facility remedial design expense 0.5Adjusted income from operations guidance $59.5 to $63.0 Adjusted net income and adjusted diluted income per common share guidance forthe full fiscal year endingDecember 31, 2021 (in millions - except per sharedata):Net income guidance $30.9 to $33.6Wallace facility remedial design expense 0.5Other adjustments ^(1) 0Income tax effect on adjustment (0.2)Adjusted net income guidance $31.2 to $33.9Adjusted diluted income per share guidance $1.42 to $1.54

(1) Includes estimates for acquisition related expenses, mark to market (gain) on interest rate derivatives, foreign currency translation loss reclassified from Accumulated Other Comprehensive Loss and gain on change in ownership in equity method investment.

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 31, December 31, 2020 2020 30, 2020 2020 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 tomarket loss(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 $ 3,252 $ 12,388 $ 29,228 $ 32,458 $ 77,326 EBITDA

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 of the impact of the COVID-19 pandemic on these accounts