Exhibit 99.1
Lifetime Brands Announces Second Quarter 2010 Results
Consolidated EBITDA Increases 41.9% to $6.1 Million
Garden City, NY, August 5, 2010 -- Lifetime Brands, Inc. (NASDAQ: LCUT), North America's leading resource for nationally branded kitchenware, tabletop and home décor products, today announced its results for the second quarter ended June 30, 2010.
Consolidated net sales for the three months ended June 30, 2010 were $86.9 million, an increase of 1.9% compared to consolidated net sales of $85.3 million for the 2009 period. Net sales in the 2009 period included approximately $1.3 million of net sales into the going-out-of-business sale of a customer that was liquidated. Excluding those net sales, consolidated net sales increased approximately $2.9 million or 3.5% in the 2010 period. Net sales for the Wholesale Segment for the second quarter of 2010 were $81.5 million, as compared to net sales of $80.9 million for the 2009 period. Direct-to-Consumer Segment net sales increased to $5.4 million in the second quarter of 2010 from $4.4 million in the 2009 period.
Consolidated gross margin as a percentage of net sales for the three months ended June 30, 2010 increased to 39.1% from 37.7% in the 2009 period. Wholesale gross margin increased by 120 basis points to 37.2% from 36.0% in the 2009 period, due to more favorable product mix. Gross margin for the Direct-to-Consumer Segment decreased to 66.8% from 70.8%, largely as a result of increased promotional activity and free shipping in the second quarter of 2010.
Consolidated EBITDA for the second quarter of 2010 was $6.1 million, as compared to $4.3 million for the 2009 period. Consolidated EBITDA for the twelve months ended June 30, 2010 was $39.0 million, as compared to $20.5 million for the twelve months ended June 30, 2009. Consolidated EBITDA is a non-GAAP measure that the Company defines as net income (loss), adjusted to exclude undistributed earnings of Grupo Vasconia, interest, taxes, depreciation and amortization, restructuring expenses, stock compensation expense, and loss on early retirement of debt as shown in the table below.
Consolidated net loss for the quarter was $1.0 million, or $0.08 per diluted share, as compared to a consolidated net loss of $1.3 million, or $0.10 per diluted share, for the second quarter of 2009. During the 2010 quarter, the Company refinanced its bank debt and repurchased $50.9 million principal amount of its Convertible Senior Notes. This early retirement of debt resulted in a non-cash expense of $1.3 million (including income taxes). Excluding the effects of these transactions, the Company would have reported net income of $0.03 per diluted share.
Jeffrey Siegel, Chairman, Chief Executive Officer and President, commented, “Lifetime’s business during the quarter continued to improve, reflecting cautious optimism by retailers and stronger confidence among consumers. Based on our current order flow, we expect these trends to continue during the second half of the year.
“The Company’s commitment to lower overall merchandise inventories by reducing the number of SKU’s and by shortening the period between procurement and sale is ongoing; however, in recent months, global trade conditions have resulted in longer lead times at factories in Asia and in shortages of containers and ships. To assure that we will have sufficient levels of merchandise on hand to fulfill customers’ orders in the third and fourth quarters, we temporarily accelerated the timing of our imports. Even with the accelerated inventory build, inventories of finished goods at June 30, 2010 declined to $111.8 million, as compared to $119.2 million at June 30, 2009. We foresee carrying somewhat higher than normal inventory levels into the f ourth quarter of 2010.
“As previously announced, we refinanced our bank credit facility and arranged financing to repay our Convertible Senior Notes. Together with our strong cash flow and the anticipated benefits of the continuation of our inventory reduction program, these new facilities provide us with sufficient liquidity to operate and grow our business.”
Second-Quarter 2010 Conference Call
Lifetime has scheduled a conference call for Thursday, August 5, 2010 at 11:00 a.m. ET to discuss its second-quarter 2010 results. The dial-in number for the call is 706-679-7464; the conference ID is #83823427. A live webcast of the call will be broadcast at the Company’s web site, www.lifetimebrands.com.
A replay of the call will also be available through Thursday, August 12, 2010 and can be accessed by dialing 706-645-9291, conference ID #83823427. For those who cannot listen to the live broadcast, an audio replay of the call will also be available on the site.
Non-GAAP Financial Measures
This earnings release contains non-GAAP financial measures. For purposes of Regulation G, a non-GAAP financial measure is a numerical measure of a company's historical or future financial performance, financial position or cash flows that excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the most directly comparable measure calculated and presented in accordance with GAAP in the statements of income, balance sheets, or statements of cash flows of the Company; or includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the most directly comparable measure so calculated and presented. Pursuant to the requirements of Regulation G, the Company has provided reconciliations of the non-GAAP financial measures to the most direct ly comparable GAAP financial measures. These non-GAAP measures are provided because management of the Company uses these financial measures in maintaining and evaluating the Company's on-going financial results and trends. Management uses this non-GAAP information as an indicator of business 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 agreement; the availability of funding under that credit agreement; the Company’s ability to maintain adequate liquidity and financing sources and an appropriate level of debt; changes in general economi c conditions which could affect customer payment practices or consumer spending; the impact of changes in general economic conditions on the Company’s customers; changes in demand for the Company’s products; shortages of and price volatility for certain commodities; significant changes in the competitive environment and the effect of competition on the Company’s markets, including on the Company’s pricing policies, financing sources and an appropriate level of debt.
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Lifetime Brands, Inc.
Lifetime Brands is North America’s leading resource for nationally branded kitchenware, tabletop and home décor products. The Company markets its products under many of the industry’s best known brands, including Farberware®, KitchenAid®, Pfaltzgraff®, Mikasa®, Cuisinart®, Calvin Klein®, CasaMōda®, Design for Living®, Gorham®, Hoffritz®, International® Silver, Kirk Stieff®, Nautica®, Pedrini®, Roshco®, Sabatier®, Sasaki®, Towle® Silversmiths, Tuttle®, Wallace® and Vasconia®. Lifetime’s products are distributed through most major retailers in North America.
Contacts:
| Lifetime Brands, Inc. | Lippert/Heilshorn & assoc. |
| Laurence Winoker, Chief Financial Officer | Harriet Fried, SVP |
| 516-203-3590 | 212-838-3777 |
| investor.relations@lifetimebrands.com | hfried@lhai.com |
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LIFETIME BRANDS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(unaudited)
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
| Net sales | $ | 86,889 | $ | 85,334 | $ | 175,625 | $ | 175,548 | ||||||||
| Cost of sales | 52,942 | 53,106 | 106,894 | 111,254 | ||||||||||||
| Distribution expenses | 9,597 | 9,502 | 19,730 | 20,550 | ||||||||||||
| Selling, general and administrative expenses | 21,828 | 21,955 | 43,952 | 45,522 | ||||||||||||
| Restructuring expenses | ― | (663 | ) | ― | 161 | |||||||||||
| Income (loss) from operations | 2,522 | 1,434 | 5,049 | (1,939 | ) | |||||||||||
| Interest expense | (2,644 | ) | (2,894 | ) | (5,073 | ) | (5,767 | ) | ||||||||
| Loss on early retirement of debt | (764 | ) | ― | (764 | ) | ― | ||||||||||
| Loss before income taxes and equity in earnings of Grupo Vasconia, S.A.B. | (886 | ) | (1,460 | ) | (788 | ) | (7,706 | ) | ||||||||
| Income tax provision | (573 | ) | (281 | ) | (612 | ) | (416 | ) | ||||||||
| Equity in earnings of Grupo Vasconia, S.A.B., net of taxes | 478 | 488 | 1,148 | 910 | ||||||||||||
| NET LOSS | $ | (981 | ) | $ | (1,253 | ) | $ | (252 | ) | $ | (7,212 | ) | ||||
| BASIC AND DILUTED LOSS PER COMMON SHARE | $ | (0.08 | ) | $ | (0.10 | ) | $ | (0.02 | ) | $ | (0.60 | ) | ||||
| WEIGHTED AVERAGE SHARES OUTSTANDING – BASIC AND DILUTED | 12,027 | 11,997 | 12,021 | 11,993 | ||||||||||||
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LIFETIME BRANDS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
| June 30, | December 31, | |||||||
| 2010 | 2009 | |||||||
| (unaudited) | ||||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash and cash equivalents | $ | 886 | $ | 682 | ||||
| Accounts receivable, less allowances of $13,532 at 2010 and $16,557 at 2009 | 52,609 | 61,552 | ||||||
| Inventory | 114,693 | 103,931 | ||||||
| Prepaid expenses and other current assets | 8,481 | 7,685 | ||||||
| Prepaid income taxes | 951 | ― | ||||||
| TOTAL CURRENT ASSETS | 177,620 | 173,850 | ||||||
| PROPERTY AND EQUIPMENT, net | 38,955 | 41,623 | ||||||
| INTANGIBLE ASSETS, net | 37,281 | 37,641 | ||||||
| INVESTMENT IN GRUPO VASCONIA, S.A.B. | 21,155 | 20,338 | ||||||
| OTHER ASSETS | 4,673 | 3,271 | ||||||
| TOTAL ASSETS | $ | 279,684 | $ | 276,723 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| CURRENT LIABILITIES | ||||||||
| Bank borrowings | $ | ― | $ | 24,601 | ||||
| Accounts payable | 32,853 | 21,895 | ||||||
| Accrued expenses | 25,105 | 29,827 | ||||||
| Deferred income tax liabilities | 620 | 207 | ||||||
| Income taxes payable | ― | 680 | ||||||
| TOTAL CURRENT LIABILITIES | 58,578 | 77,210 | ||||||
| DEFERRED RENT & OTHER LONG-TERM LIABILITIES | 20,664 | 20,527 | ||||||
| DEFERRED INCOME TAXES | 4,375 | 4,447 | ||||||
| REVOLVING CREDIT FACILITY | 58,828 | ― | ||||||
| TERM LOAN | 10,000 | ― | ||||||
| 4.75% CONVERTIBLE SENIOR NOTES | 23,113 | 70,527 | ||||||
| STOCKHOLDERS’ EQUITY | ||||||||
| Common stock, $0.01 par value, shares authorized: 25,000,000; shares issued and outstanding: 12,046,293 in 2010 and 12,015,273 in 2009 | 120 | 120 | ||||||
| Paid-in capital | 129,582 | 129,655 | ||||||
| Accumulated deficit | (19,200 | ) | (18,949 | ) | ||||
| Accumulated other comprehensive loss | (6,376 | ) | (6,814 | ) | ||||
| TOTAL STOCKHOLDERS’ EQUITY | 104,126 | 104,012 | ||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 279,684 | $ | 276,723 | ||||
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LIFETIME BRANDS, INC.
Supplemental Information
(In thousands)
Consolidated EBITDA – Cumulative Trailing Twelve Months
| Consolidated EBITDA for the three months ended: | ||||
| June 30, 2010 | $ 6,117 | |||
| March 31, 2010 | 5,728 | |||
| December 31, 2009 | 15,558 | |||
| September 30, 2009 | 11,611 | |||
| Consolidated EBITDA – cumulative trailing twelve months | $39,014 | |||
Reconciliation of GAAP to Non-GAAP Operating Results
| Three Months Ended | ||||||||||||||||
| June 30, 2010 | March 31, 2010 | December 31, 2009 | September 30, 2009 | |||||||||||||
| Net income (loss) reported | $ (981 | ) | $ 729 | $ 5,048 | $ 4,879 | |||||||||||
| Less: Undistributed earnings of Grupo Vasconia, S.A.B. | (82 | ) | (670 | ) | (534 | ) | (703 | ) | ||||||||
| Add: | ||||||||||||||||
| Provision for income taxes | 573 | 39 | 1,311 | 153 | ||||||||||||
| Interest expense | 2,644 | 2,429 | 4,124 | 3,294 | ||||||||||||
| Depreciation and amortization | 2,458 | 2,542 | 3,214 | 2,770 | ||||||||||||
| Restructuring expenses | ― | ― | 1,784 | 671 | ||||||||||||
| Stock compensation expense | 741 | 659 | 611 | 547 | ||||||||||||
| Loss on early retirement of debt | 764 | ― | ― | ― | ||||||||||||
| Consolidated EBITDA | $6,117 | $5,728 | $15,558 | $11,611 | ||||||||||||
| Three months ended June 30, 2009 | |||
| Net loss reported | $ (1,253 | ) | |
| Less: Undistributed earnings of Grupo Vasconia, S.A.B. | (294 | ) | |
| Add: | |||
| Provision for income taxes | 281 | ||
| Interest expense | 2,894 | ||
| Depreciation and amortization | 2,810 | ||
| Restructuring expenses | (663 | ) | |
| Stock compensation expense | 483 | ||
| Consolidated EBITDA | $ 4,258 | ||
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Net income per diluted share excluding the effect of early retirement of debt
| Three months ended June 30, 2009 | ||||
| Net loss reported | $ (981 | ) | ||
| Add: | ||||
| Loss on early retirement of debt | 764 | |||
| Income tax expense related to early retirement of debt | 530 | |||
| Net income excluding the effect of early retirement of debt | $ 313 | |||
| Diluted weighted average shares outstanding | 12,027 | |||
| Net income per diluted share excluding the effect of early retirement of debt | $ 0.03 | |||
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