Lifetime Brands, Inc. (Nasdaq: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, 2017.
Fourth Quarter Financial
Highlights:
Consolidated net sales were $182.8 million in
the quarter ended December 31, 2017; a decrease of $10.7 million,
or 5.6%, as compared to consolidated net sales of $193.5 million
for the corresponding period in 2016. In constant currency, which
excludes the impact of foreign exchange fluctuations, consolidated
net sales decreased $12.7 million, or 6.5%, as compared to
consolidated net sales in the corresponding period in 2016.
Gross margin was $71.2 million, or 39.0%, as
compared to $75.0 million, or 38.8%, for the corresponding period
in 2016.
Income from operations was $10.9 million, as
compared to $21.8 million in the prior year’s quarter.
The income tax provision for the quarter ended
December 31, 2017 was $8.2 million, as compared to $6.8 million in
the corresponding period in 2016. The 2017 income tax provision
includes provisional adjustments for U.S. tax reform of
approximately $3.3 million.
Net income was $1.3 million, or $0.08 per
diluted share, in the quarter ended December 31, 2017, as compared
to net income of $14.7 million, or $1.00 per diluted share, in the
corresponding period in 2016.
Adjusted net income was $7.1 million, or $0.47
per diluted share, in the quarter ended December 31, 2017, as
compared to adjusted net income of $14.9 million, or $1.01 per
diluted share, in the corresponding period in 2016.
Consolidated adjusted EBITDA was $19.2 million,
equal to 10.5% of consolidated net sales, in the quarter ended
December 31, 2017, as compared to $24.7 million, or 12.8% of
consolidated net sales, for the corresponding 2016 period.
Equity in losses, net of taxes, was $0.3 million
for the three months ended December 31, 2017, as compared to equity
in earnings, net of tax, of $1.0 million for the three months ended
December 31, 2016.
Full Year Financial
Highlights:
Consolidated net sales were $579.5 million in
the year ended December 31, 2017; a decrease of $13.1 million, or
2.2%, as compared to consolidated net sales of $592.6 million for
the corresponding period in 2016. In constant currency,
consolidated net sales decreased $9.7 million, or 1.6%.
Gross margin was $215.2 million, or 37.1%, in
the year ended December 31, 2017 as compared to $216.9 million, or
36.6%, for the corresponding period in 2016.
Income from operations was $15.2 million, as
compared to $27.1 million in the prior year.
The income tax provision for the year ended
December 31, 2017 was $9.0 million, as compared to $7.0 million in
the corresponding period in 2016. The 2017 income tax provision
includes provisional adjustments for U.S. tax reform of
approximately $3.3 million.
Net income was $2.2 million, or $0.14 per
diluted share, in the year ended December 31, 2017, as compared to
net income of $15.7 million, or $1.08 per diluted share, in the
corresponding period in 2016.
Adjusted net income was $10.6 million, or $0.71
per diluted share, in the year ended December 31, 2017, as compared
to adjusted net income of $18.6 million, or $1.28 per diluted
share, in the corresponding period in 2016.
Consolidated adjusted EBITDA was $40.2 million
in the year ended December 31, 2017, as compared to $46.5 million
for the corresponding 2016 period.
Equity in earnings, net of taxes, was $407
thousand for the year ended December 31, 2017, as compared to
equity in earnings, net of taxes, of $748 thousand for the
corresponding 2016 period.
Jeffrey Siegel, Lifetime's Executive Chairman,
commented,
“While generally consistent with prior
disclosure, our fourth quarter operating results were
disappointing, resulting in full year 2017 performance that was
below our expectations. The fourth quarter shortfall was directly
attributable to sales declines at two key retailers; one reflecting
a storewide reduction of inventory weeks on hand and the other due
to two 2016 promotions that were not repeated in 2017. In addition,
we decided not to fulfill orders due to credit concerns at two
other retailers.
“We believe the changes we have made in our U.K.
operations, including combining Kitchen Craft and Creative Tops and
closing our Netherlands operations, will create operating
efficiencies and enable each business effectively to leverage the
other’s traditional customer base, thereby resulting in
significantly improved results for 2018.
“Our recent acquisition of Fitz and Floyd, with
its popular assortment of tabletop products and decorative ceramic
collections, added to fourth-quarter sales in our Tableware
division. As we expected, Fitz and Floyd was accretive to our 2017
results.
“Inventory levels at December 31, 2017 declined,
reflecting a company-wide effort eliminate less productive SKU’s as
part of an ongoing effort to improve our inventory turns.
“As noted above, the U.S. Tax Reform Act that
was signed into law in December had a significant effect on
reported tax expense. The impact of the change in the law increased
our tax expense for the quarter by $3.3 million. Of this amount
$3.0 million was a non-cash charge to adjust deferred taxes. The
balance of $300 thousand is our current estimate of the U.S. tax
owed on previously unremitted foreign earnings and will be paid
over eight years. The overall impact of the Tax Reform Act is quite
favorable to us, and excluding further one-time charges related to
the Tax Act, will reduce our effective tax rate beginning in
2018.”
Robert Kay, Lifetime's Chief Executive Officer,
added,
“As Lifetime’s new CEO, I am excited to be
working with Jeff and the combined Lifetime and Filament team to
drive value creation through growth and increased
efficiencies. We have just brought together two industry
leaders that represent innovation, execution and best in class
capabilities in sales, marketing, design, creative, finance and
operations. During our first quarter earnings report, we will
provide a roadmap laying out our strategy and guidance for the full
year 2018. This will include a discussion of ongoing
initiatives such as Lifetime Next as well as the implementation of
over $8 million of cost savings resulting from the Filament merger,
which closed on March 2nd.”
Dividend
On Thursday, March 8, 2018, the Board of
Directors declared a quarterly dividend of $0.0425 per share
payable on May 15, 2018 to shareholders of record on May 1,
2018.
Conference Call
The Company has scheduled a conference call for
Thursday, March 15, 2018 at 11:00 a.m. The dial-in number for the
conference call is (844) 787-0801 or (661) 378-9632, passcode
#4479898. A live webcast of the conference call will be accessible
through https://edge.media-server.com/m6/p/2rdt77c9. For
those who cannot listen to the live broadcast, an audio replay of
the webcast will be available.
Non-GAAP Financial Measures
This earnings release contains non-GAAP
financial measures, including consolidated net sales in constant
currency, adjusted net income, adjusted diluted income per common
share, and consolidated adjusted EBITDA. 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
U.S. or foreign tax law and policy; 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; expenses and other
challenges relating to the integration of the Filament Brands
business and future acquisitions; changes in demand for the
Company’s products; changes in the Company’s management team; the
significant influence and consent rights of the Company’s largest
stockholder; fluctuations in foreign exchange rates; 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®,
Chef'n® Chicago™ Metallic, Copco®, Fred® & Friends, Houdini™,
KitchenCraft®, Kamenstein®, Kizmos™, La Cafetière®, MasterClass®,
Misto®, Mossy Oak®, Swing-A-Way® Taylor® Kitchen and Vasconia®;
respected tableware and giftware brands, including Mikasa®,
Pfaltzgraff®, Fitz and Floyd®, Creative Tops®, Empire Silver™,
Gorham®, International® Silver, Kirk Stieff®, Rabbit® Towle®
Silversmiths, Tuttle®, Wallace®, Wilton Armetale®, V&A® and
Royal Botanic Gardens Kew®; and valued home solutions brands,
including Bombay®, BUILT NY®, Taylor® Bath and Taylor® Weather. 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.
LHALaurence Winoker, Chief Financial Officer
Harriet Fried,
SVP516-203-3590
212-838-3777investor.relations@lifetimebrands.com
hfried@lhai.com
LIFETIME BRANDS,
INC.CONSOLIDATED STATEMENTS OF
OPERATIONS (In thousands - except per share data)
|
|
|
Three Months EndedDecember 31, |
|
Year Ended December
31, |
|
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
|
|
|
|
|
|
|
|
|
|
Net
sales |
$ |
182,770 |
|
|
$ |
193,520 |
|
|
$ |
579,476 |
|
|
$ |
592,619 |
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
sales |
|
111,539 |
|
|
|
118,487 |
|
|
|
364,319 |
|
|
|
375,719 |
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin |
|
71,231 |
|
|
|
75,033 |
|
|
|
215,157 |
|
|
|
216,900 |
|
|
|
|
|
|
|
|
|
|
|
|
Distribution expenses |
|
18,540 |
|
|
|
16,781 |
|
|
|
58,050 |
|
|
|
57,006 |
|
|
Selling,
general and administrative expenses |
|
41,331 |
|
|
|
35,735 |
|
|
|
140,903 |
|
|
|
130,397 |
|
|
Restructuring expenses |
|
498 |
|
|
|
719 |
|
|
|
1,024 |
|
|
|
2,420 |
|
|
|
|
|
|
|
|
|
|
|
|
Income from
operations |
|
10,862 |
|
|
|
21,798 |
|
|
|
15,180 |
|
|
|
27,077 |
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense |
|
(1,177 |
) |
|
|
(1,257 |
) |
|
|
(4,291 |
) |
|
|
(4,803 |
) |
|
Loss on early retirement of debt |
|
- |
|
|
|
- |
|
|
|
(110 |
) |
|
|
(272 |
) |
|
|
|
|
|
|
|
|
|
|
|
Income
before income taxes and equity in earnings |
|
9,685 |
|
|
|
20,541 |
|
|
|
10,779 |
|
|
|
22,002 |
|
|
|
|
|
|
|
|
|
|
|
|
Income tax
provision |
|
(8,169 |
) |
|
|
(6,812 |
) |
|
|
(9,032 |
) |
|
|
(7,030 |
) |
|
Equity in
earnings (losses), net of taxes |
|
(265 |
) |
|
|
1,018 |
|
|
|
407 |
|
|
|
748 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET
INCOME |
$ |
1,251 |
|
|
$ |
14,747 |
|
|
$ |
2,154 |
|
|
$ |
15,720 |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares outstanding- basic |
|
14,592 |
|
|
|
14,310 |
|
|
|
14,505 |
|
|
|
14,174 |
|
|
BASIC INCOME PER COMMON SHARE |
$ |
0.09 |
|
|
$ |
1.03 |
|
|
$ |
0.15 |
|
|
$ |
1.11 |
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares outstanding- diluted |
|
14,960 |
|
|
|
14,712 |
|
|
|
14,955 |
|
|
|
14,549 |
|
|
DILUTED INCOME PER COMMON SHARE |
$ |
0.08 |
|
|
$ |
1.00 |
|
|
$ |
0.14 |
|
|
$ |
1.08 |
|
|
|
|
|
|
|
|
|
|
|
|
Cash
dividends declared per common share |
$ |
0.0425 |
|
|
$ |
0.0425 |
|
|
$ |
0.17 |
|
|
$ |
0.17 |
|
|
|
|
|
|
|
|
|
|
|
|
LIFETIME BRANDS,
INC.CONSOLIDATED BALANCE SHEETS (In
thousands - except share data)
|
|
|
|
|
|
|
|
December 31, |
|
|
|
|
|
2017 |
|
2016 |
|
|
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
CURRENT ASSETS |
|
|
|
|
|
Cash and cash equivalents |
$ |
7,600 |
|
|
$ |
7,883 |
|
|
|
Accounts receivable, less allowances of $6,190 at December 31,
2017 and $5,725 at December 31, 2016 |
|
108,033 |
|
|
|
104,556 |
|
|
|
Inventory |
|
132,436 |
|
|
|
135,212 |
|
|
|
Prepaid expenses and other current assets |
|
10,354 |
|
|
|
8,796 |
|
|
|
|
TOTAL CURRENT ASSETS |
|
258,423 |
|
|
|
256,447 |
|
|
|
|
|
|
|
|
|
|
PROPERTY AND EQUIPMENT, net |
|
23,065 |
|
|
|
21,131 |
|
|
INVESTMENTS |
|
23,978 |
|
|
|
22,712 |
|
|
INTANGIBLE ASSETS, net |
|
88,479 |
|
|
|
89,219 |
|
|
DEFERRED INCOME TAXES |
|
5,826 |
|
|
|
8,459 |
|
|
OTHER ASSETS |
|
1,750 |
|
|
|
1,886 |
|
|
|
|
|
TOTAL
ASSETS |
$ |
401,521 |
|
|
$ |
399,854 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
CURRENT LIABILITIES |
|
|
Current maturity of Credit Agreement Term Loan |
$ |
- |
|
|
$ |
9,343 |
|
|
|
Short term loan |
|
69 |
|
|
|
113 |
|
|
|
Accounts payable |
|
25,461 |
|
|
|
29,698 |
|
|
|
Accrued expenses |
|
44,121 |
|
|
|
45,212 |
|
|
|
Income taxes payable |
|
1,864 |
|
|
|
6,920 |
|
|
|
|
TOTAL CURRENT LIABILITIES |
|
71,515 |
|
|
|
91,286 |
|
|
|
|
|
|
|
|
|
|
DEFERRED RENT & OTHER LONG-TERM LIABILITIES |
|
20,249 |
|
|
|
18,973 |
|
|
DEFERRED INCOME TAXES |
|
4,423 |
|
|
|
5,666 |
|
|
INCOME TAXES PAYABLE, LONG-TERM |
|
311 |
|
|
|
- |
|
|
REVOLVING CREDIT FACILITY |
|
94,744 |
|
|
|
86,201 |
|
|
|
|
|
|
|
|
|
|
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, 2017 and 2016; shares issued and
outstanding: 14,902,527 at December 31, 2017 and 14,555,936
at December 31, 2016 |
|
149 |
|
|
|
146 |
|
|
|
Paid-in capital |
|
178,909 |
|
|
|
173,600 |
|
|
|
Retained earnings |
|
60,546 |
|
|
|
60,981 |
|
|
|
Accumulated other comprehensive loss |
|
(29,325 |
) |
|
|
(36,999 |
) |
|
|
|
TOTAL STOCKHOLDERS’ EQUITY |
|
210,279 |
|
|
|
197,728 |
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |
$ |
401,521 |
|
|
$ |
399,854 |
|
|
|
|
|
|
|
|
|
|
LIFETIME BRANDS,
INC.CONSOLIDATED STATEMENTS OF CASH
FLOWS(In thousands)
|
|
|
|
|
|
|
|
Year ended December
31, |
|
|
|
|
|
2017 |
|
2016 |
|
OPERATING ACTIVITIES |
|
|
|
|
|
Net
income |
$ |
2,154 |
|
|
$ |
15,720 |
|
|
|
Adjustments
to reconcile net income to net cash provided by operating
activities: |
|
|
|
|
|
|
Depreciation and amortization |
|
14,189 |
|
|
|
14,148 |
|
|
|
|
Amortization of financing costs |
|
519 |
|
|
|
650 |
|
|
|
|
Deferred
rent |
|
(642 |
) |
|
|
(243 |
) |
|
|
|
Deferred
income taxes |
|
1,030 |
|
|
|
(1,951 |
) |
|
|
|
Net loss on disposal of fixed assets |
|
- |
|
|
|
84 |
|
|
|
|
Stock
compensation expense |
|
3,390 |
|
|
|
2,942 |
|
|
|
|
Undistributed equity earnings |
|
(379 |
) |
|
|
(544 |
) |
|
|
|
Loss on
early retirement of debt |
|
110 |
|
|
|
272 |
|
|
|
Changes in
operating assets and liabilities (excluding the effects of business
acquisitions) |
|
|
|
|
|
|
Accounts
receivable |
|
1,481 |
|
|
|
(17,977 |
) |
|
|
|
Inventory |
|
10,818 |
|
|
|
4,491 |
|
|
|
|
Prepaid
expenses, other current assets and other assets |
|
(951 |
) |
|
|
(1,199 |
) |
|
|
|
Accounts
payable, accrued expenses and other liabilities |
|
(9,778 |
) |
|
|
12,255 |
|
|
|
|
Income
taxes receivable |
|
- |
|
|
|
132 |
|
|
|
|
Income
taxes payable |
|
(4,935 |
) |
|
|
969 |
|
|
|
|
|
NET CASH
PROVIDED BY OPERATING
ACTIVITIES |
|
17,006 |
|
|
|
29,749 |
|
|
|
|
|
|
|
|
|
|
INVESTING ACTIVITIES |
|
|
|
|
|
Purchases
of property and equipment |
|
(6,311 |
) |
|
|
(3,380 |
) |
|
|
Equity
investments |
|
- |
|
|
|
567 |
|
|
|
Acquisitions, net of cash acquired |
|
(9,072 |
) |
|
|
(21,699 |
) |
|
|
Net
proceeds from sale of property |
|
15 |
|
|
|
64 |
|
|
|
|
|
NET CASH USED
IN INVESTING ACTIVITIES |
|
(15,368 |
) |
|
|
(24,448 |
) |
|
|
|
|
|
|
|
|
|
FINANCING ACTIVITIES |
|
|
|
|
|
Proceeds
from Revolving Credit Facility |
|
237,658 |
|
|
|
268,242 |
|
|
|
Repayments of Revolving Credit Facility |
|
(229,696 |
) |
|
|
(246,756 |
) |
|
|
Repayments of Credit Agreement Term Loan |
|
(9,500 |
) |
|
|
(25,500 |
) |
|
|
Proceeds
from Short Term Loan |
|
187 |
|
|
|
118 |
|
|
|
Repayments of Short Term Loan |
|
(239 |
) |
|
|
(248 |
) |
|
|
Payments for stock repurchase |
|
(644 |
) |
|
|
(86 |
) |
|
|
Payment of financing costs |
|
(31 |
) |
|
|
(30 |
) |
|
|
Cash
dividends paid |
|
(2,475 |
) |
|
|
(2,413 |
) |
|
|
Payment of capital lease obligations |
|
(94 |
) |
|
|
(68 |
) |
|
|
Proceeds
from the exercise of stock options |
|
2,537 |
|
|
|
2,353 |
|
|
|
Excess tax
benefits from stock options, net |
|
- |
|
|
|
223 |
|
|
|
|
|
NET
CASH USED IN FINANCING
ACTIVITIES |
|
(2,297 |
) |
|
|
(4,165 |
) |
|
|
|
|
|
|
|
|
|
Effect of
foreign exchange on cash |
|
376 |
|
|
|
(384 |
) |
|
|
|
|
|
|
|
|
|
(DECREASE) INCREASE IN CASH AND CASH
EQUIVALENTS |
|
(283 |
) |
|
|
752 |
|
|
|
|
|
|
|
|
|
|
Cash and
cash equivalents at beginning of year |
|
7,883 |
|
|
|
7,131 |
|
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS AT END OF YEAR |
$ |
7,600 |
|
|
$ |
7,883 |
|
|
|
|
|
|
|
|
|
|
LIFETIME BRANDS,
INC.Supplemental Information(In
thousands)
Reconciliation of GAAP to Non-GAAP
Operating Results
Consolidated adjusted EBITDA:
|
|
|
|
|
Three Months EndedDecember 31, |
|
Year Ended December
31, |
|
|
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
|
|
|
(in thousands) |
Net income as reported |
|
$ |
1,251 |
|
$ |
14,747 |
|
|
$ |
2,154 |
|
|
$ |
15,720 |
|
|
Subtract out: |
|
|
|
|
|
|
|
|
|
|
Undistributed equity losses (earnings), net |
|
265 |
|
|
(814 |
) |
|
|
(379 |
) |
|
|
(544 |
) |
|
Add back: |
|
|
|
|
|
|
|
|
|
|
Income tax
provision |
|
|
8,169 |
|
|
6,812 |
|
|
|
9,032 |
|
|
|
7,030 |
|
|
|
Interest
expense |
|
|
1,177 |
|
|
1,257 |
|
|
|
4,291 |
|
|
|
4,803 |
|
|
|
Depreciation and
amortization, net |
|
|
3,468 |
|
|
2,404 |
|
|
|
14,165 |
|
|
|
14,148 |
|
|
|
Stock compensation
expense |
|
|
908 |
|
|
827 |
|
|
|
3,390 |
|
|
|
2,942 |
|
|
|
Loss on early
retirement of debt |
|
|
- |
|
|
- |
|
|
|
110 |
|
|
|
272 |
|
|
|
Restructuring
expenses |
|
|
498 |
|
|
719 |
|
|
|
1,024 |
|
|
|
2,420 |
|
|
|
Severance expense |
|
|
166 |
|
|
- |
|
|
|
321 |
|
|
|
- |
|
|
|
Warehouse
relocation |
|
|
667 |
|
|
- |
|
|
|
667 |
|
|
|
- |
|
|
|
Unrealized loss (gain)
on foreign currency contracts |
|
|
169 |
|
|
(359 |
) |
|
|
2,817 |
|
|
|
(745 |
) |
|
|
Permitted acquisition
related expenses, net of acquisition not completed |
|
|
2,424 |
|
|
(852 |
) |
|
|
2,616 |
|
|
|
435 |
|
Consolidated adjusted EBITDA |
|
$ |
19,162 |
|
$ |
24,741 |
|
|
$ |
40,208 |
|
|
$ |
46,481 |
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated EBITDA is a non-GAAP measure that
the Company defines as net income, adjusted to exclude
undistributed equity in (losses) earnings, income taxes, interest,
losses on early retirement of debt, depreciation and amortization,
stock compensation expense, certain acquisition related expenses,
non-cash gains or losses associated with the Company’s foreign
currency contracts and certain one-time cash charges such as
restructuring expenses, non-restructuring severance expense and
warehouse relocation expenses, as shown in the tables above.
Consolidated adjusted EBITDA for the three
months and year ended December 31, 2016 presented above have been
re-cast to exclude the non-cash gains and losses related to the
Company’s derivative financial instruments not designated as
hedging instruments, recognized in earnings. These non-cash gains
or losses are permitted to be excluded from the EBITDA covenant in
the Company’s Credit Agreement.
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 EndedDecember 31, |
|
Year Ended December
31, |
|
|
|
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
|
|
|
|
(in thousands) |
|
Net income
as reported |
|
$ |
1,251 |
|
|
$ |
14,747 |
|
|
$ |
2,154 |
|
|
$ |
15,720 |
|
|
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
Restructuring
expenses |
|
|
498 |
|
|
|
719 |
|
|
|
1,024 |
|
|
|
2,420 |
|
|
|
|
Acquisition related
expenses |
|
|
2,424 |
|
|
|
65 |
|
|
|
2,616 |
|
|
|
1,352 |
|
|
|
|
Loss on early
retirement of debt |
|
|
- |
|
|
|
- |
|
|
|
110 |
|
|
|
272 |
|
|
|
|
Severance expenses |
|
|
166 |
|
|
|
- |
|
|
|
321 |
|
|
|
- |
|
|
|
|
Unrealized loss (gain)
on foreign currency contracts |
|
|
169 |
|
|
|
(359 |
) |
|
|
2,817 |
|
|
|
(745 |
) |
|
|
|
Warehouse
relocation |
|
|
667 |
|
|
|
- |
|
|
|
667 |
|
|
|
- |
|
|
|
|
Depreciation expense
adjustment |
|
|
- |
|
|
|
(86 |
) |
|
|
- |
|
|
|
1,241 |
|
|
|
|
Gain on sale of GS
International, net of tax |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(189 |
) |
|
|
|
Deferred tax for
foreign currency translation for GrupoVasconia |
|
|
(1 |
) |
|
|
- |
|
|
|
(239 |
) |
|
|
517 |
|
|
|
|
Transition tax on
non-U.S. subsidiaries' earnings |
|
|
338 |
|
|
|
- |
|
|
|
338 |
|
|
|
- |
|
|
|
|
Re-measurement of U.S.
deferred tax assets and liabilities |
|
|
2,981 |
|
|
|
- |
|
|
|
2,981 |
|
|
|
- |
|
|
|
|
Income tax effect on
adjustments |
|
|
(1,432 |
) |
|
|
(208 |
) |
|
|
(2,224 |
) |
|
|
(1,965 |
) |
|
Adjusted
net income |
|
$ |
7,061 |
|
|
$ |
14,878 |
|
|
$ |
10,565 |
|
|
$ |
18,623 |
|
|
Adjusted
diluted income per common share |
|
$ |
0.47 |
|
|
$ |
1.01 |
|
|
$ |
0.71 |
|
|
$ |
1.28 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income and adjusted diluted income
per common share in the three months and year ended December 31,
2017 excludes restructuring expenses, acquisition related expenses,
loss on early retirement of debt, non-restructuring severance
expense, the unrealized loss on foreign currency contracts and
deferred tax (benefit) expense related to our equity earnings of
Vasconia due to recording the tax benefit of cumulative translation
gains through other comprehensive income (loss). Adjusted net
income and adjusted diluted income per common share in the three
months and year ended December 31, 2017 also excludes the impact of
the transition tax and re-measurement of U.S. deferred tax assets
and liabilities included in the income tax provision as a result of
the U.S. tax reform. 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 months and year ended December 31,
2016 excludes acquisition related expenses, a charge to correct
accumulated depreciation balance relating to certain leasehold
improvements at one of the Company’s U.S. warehouses, loss on early
retirement of debt, restructuring expenses, the unrealized (gain)
loss on foreign currency contracts, deferred tax expense related to
our equity earnings of Vasconia due to recording the tax benefit of
cumulative translation losses through other comprehensive income
and the related income tax effect on adjustments.
LIFETIME BRANDS,
INC.Supplemental Information(In
thousands- except per share data)
Reconciliation of GAAP to Non-GAAP
Operating Results (continued)
Constant Currency:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As
Reported |
|
Constant Currency
(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Three Months Ended |
|
|
|
Year-Over-Year |
|
|
December 31, |
|
December 31, |
|
|
|
Increase (Decrease) |
|
Net
sales |
2017 |
|
2016 |
|
Increase(Decrease) |
|
2017 |
|
2016 |
|
Increase(Decrease) |
|
CurrencyImpact |
|
ExcludingCurrency |
|
|
IncludingCurrency |
|
|
CurrencyImpact |
|
|
U.S. Wholesale |
$ |
143,330 |
|
$ |
156,368 |
|
$ |
(13,038 |
) |
|
$ |
143,330 |
|
$ |
156,390 |
|
$ |
(13,060 |
) |
|
$ |
22 |
|
|
(8.4 |
) |
% |
|
(8.3 |
) |
% |
|
0.0 |
|
% |
|
International |
|
31,834 |
|
|
29,101 |
|
|
2,733 |
|
|
|
31,834 |
|
|
31,073 |
|
|
761 |
|
|
|
1,972 |
|
|
2.4 |
|
% |
|
9.4 |
|
% |
|
6.9 |
|
% |
|
Retail Direct |
|
7,606 |
|
|
8,051 |
|
|
(445 |
) |
|
|
7,606 |
|
|
8,051 |
|
|
(445 |
) |
|
|
- |
|
|
(5.5 |
) |
% |
|
(5.5 |
) |
% |
|
- |
|
% |
|
Total net
sales |
$ |
182,770 |
|
$ |
193,520 |
|
$ |
(10,750 |
) |
|
$ |
182,770 |
|
$ |
195,514 |
|
$ |
(12,744 |
) |
|
$ |
1,994 |
|
|
(6.5 |
) |
% |
|
(5.6 |
) |
% |
|
1.0 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As
Reported |
|
Constant Currency
(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended |
|
Year Ended |
|
|
|
Year-Over-Year |
|
|
December 31, |
|
December 31, |
|
|
|
Increase (Decrease) |
|
Net
sales |
2017 |
|
2016 |
|
Increase(Decrease) |
|
2017 |
|
2016 |
|
Increase(Decrease) |
|
CurrencyImpact |
|
ExcludingCurrency |
|
|
IncludingCurrency |
|
|
CurrencyImpact |
|
|
U.S. Wholesale |
$ |
462,588 |
|
$ |
470,981 |
|
$ |
(8,393 |
) |
|
$ |
462,588 |
|
$ |
471,032 |
|
$ |
(8,444 |
) |
|
$ |
51 |
|
|
(1.8 |
) |
% |
|
(1.8 |
) |
% |
|
0.0 |
|
% |
|
International |
|
97,757 |
|
|
101,070 |
|
|
(3,313 |
) |
|
|
97,757 |
|
|
97,552 |
|
|
205 |
|
|
|
(3,518 |
) |
|
0.2 |
|
% |
|
(3.3 |
) |
% |
|
(3.5 |
) |
% |
|
Retail Direct |
|
19,131 |
|
|
20,568 |
|
|
(1,437 |
) |
|
|
19,131 |
|
|
20,568 |
|
|
(1,437 |
) |
|
|
- |
|
|
(7.0 |
) |
% |
|
(7.0 |
) |
% |
|
- |
|
% |
|
Total net
sales |
$ |
579,476 |
|
$ |
592,619 |
|
$ |
(13,143 |
) |
|
$ |
579,476 |
|
$ |
589,152 |
|
$ |
(9,676 |
) |
|
$ |
(3,467 |
) |
|
(1.6 |
) |
% |
|
(2.2 |
) |
% |
|
(0.6 |
) |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Constant Currency" is determined by applying the
2017 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 currency.
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