LCUT - Earnings call transcript Q1 2019

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Operator

Ladies and gentlemen, good morning, and welcome to Lifetime Brands' First Quarter 2019 Earnings Conference Call. [Operator Instructions] I will now turn the call over to our host, Andrew Squire. Mr. Squire, please go ahead.

Andrew Squire

Thank you. thank Call. joining and Quarter Brands' everyone, Earnings XXXX morning, you Lifetime for First Good today management us Larry With from Winoker, Officer; Chief Chief and Executive Financial Officer. are Rob Kay,

statements remind Act. liability the intended for today's over I'd performance that Kay. Reform Please morning begin Securities to influence such With Rob. contain that of qualify Securities are future to statements established Rob the Private in and to factors forward-looking our results our the guarantees of Litigation call Commission. not future these the we and introduction, contained Before that company, may like I'd to and by remarks are press are you the with call, ahead, Exchange Any could highlighted this go the others like performance harbor relate filings in to safe our and the that statements release are turn

Rob Kay

XXXX. Lifetime today morning. Good our to We Andrew. by discuss and is start company results. a quarter Thanks, quarter I joining gain. solid as performance off starting with in are produce to appreciate results us XXXX which and this reflect end decisions strategic were we results driven market strong focused pleased our The XXXX, share financial execution, to Brands' am to demand you first quarter The market

as we to the showed initiatives. growth starting quarter $X.X consolidated are for performance million results EBITDA Our recently from adjusted see implemented our of

the in XXXX, macroeconomic change opportunity and and quarter rapidly-evolving quarter best-in-class Lifetime XXXX. into to first create this headwinds capitalize the unique of acquisition as that have the well we March closed not we relaunch on the is experienced positioned landscape. continued embraced company industry an Brands fourth to Importantly, in a we When the Filament

solid bottom line in categories with growth, demand fruit growth. bear these and work of first strong first during have performance in drive the quarter the across a profitable and strong for quarter, was and the robust has foundation begun top XXXX built majority helped channels. Our efforts to Customer which our

the fully February. to mitigate place were the increases We tariff implemented end also increases in price impacts in by These XXXX. price of successfully implemented put designed planned

Our markets, performance of operations. negative Williams or contribution. earnings eliminated Maxwell & Driving with European we solid brands minimal operations million had including several Concurrently, delivered lines tabletop in growth improvement, categories Pottery. $X growth of the year-over-year our added this existing that London from in several product we and margin

revenues grew with for we international on product increasing e-commerce we our sales XXXX, and the on growth of stage in the include over-indexed on grew actions, result representing operations pure driven product omni-channel basis in as X.X%, play our fourth nearly forma compared nearly this made quarter growing of e-commerce These profitable a exposure focus pro activities not XX% In revenues and our growing effectively briefly. revenues. to retailers. This operations the e-commerce accelerating set XXXX. total more these note, favorable meaningful sales first to by profitability does with Of our XX% this restructured quarter better number categories e-commerce this Furthermore, compared profitability. of channel by to Touching from for channel. a and now As mix. importantly, saw this change e-commerce of our increased efforts

on are initiatives foundation in in building Looking several XXXX. focused we and ahead, we established on executing the XXXX growth on

a new we a global commercial for of small of greatly launch capitalize introduction service, consumer line will we in leader categories, this where a food existing are categories are the mugs, this cutlery. The North is expanded commercial Among and initiatives a on food leader dinnerware, these our month. offering include in for flatware America and will later product service other further footprint comprised which expanded line of One is in already wares.

initiative major product- we're model and transactional XXXX by is a focus the sales target to from on process. decisions growth in a and our allow Another and of profitability. to positioning category-driven This focused pivoting business core that will business sustainable for growth make lines strategic us

expect from We begin growth the the end these these of implement and to efforts. of the the both initiatives we'll half year year, in deliver of second by to

outlook Moving to our XXXX. for

achieve $X.XX press adjusted adjusted our and release, million, sales consolidated and provided more diluted EBITDA $XXX million EPS in - and As between to $XX $XX and $X.XX between between of net we detail $XXX in expect EPS million adjusted million.

XXXX, As we XXXX, on our investment focused opportunities in brand growth equity. cost executing optimize and profitability synergies priorities are move capitalize implemented increase we on in strategic and forward to in

will and We optimize service expanded our all food as of administrative share commercial international out identify to and we opportunities e-commerce strategies. to grow continue will our continue roll to cost-effectiveness well as our and market Further, channels.

significant progress have on transformation, prospects and about are ahead. the year of proud we are We made the we our excited our for

are value shareholders. the I'll turn it now on improved for to performance, over to creation results in more We detail. drive over will profitability to financial our path we continue confident our Larry are that go and meaningful

Larry Winoker

Rob. Thanks

compares in adjusted or million measure The improvement This in and $X.XX financial and to from were in And Kitchenware the XXXX diluted million that most was acquired results year lower, $X.XX share. for morning, both increased X.X%. XXXX - XXXX, operations XXXX a $XX.X for basis gross or for margin XXXX. This to forma that loss million plan reflecting Tableware million XX-month international non-GAAP XX.X% Adjusted improvement Filament XX, was or per net tariffs. year X.X% as in Adjusted $X.XX constant is our an to customer represents up a and the million a XXXX. of reconciles the XXXX. XX.X% discussed. table per loss we sales the XX.X% been per fiscal was $X over million XXXX to $XX compared X.X%. segment were is On Rob repositioning, and this first reflects loss in million, December loss $XXX $X net which of of sales XX.X% quarter X.X% of quarter increases in product period of the channels channel segment ended in per of $XX.X EBITDA, non-GAAP sales increase closeout up an volume $X reconciled Net on million our a share. $X.XX basis $XX.X million Gross in a million notably $XX.X e-commerce. to net assuming release, As $X.X but beginning quarter financial $X.X the first share for share and Loss an in a GAAP compared pro an increased diluted million. of to currency margin compared of $XXX.X the an mix, increased of sales U.S. million for sales increase all per reflects in $XX.X customer pro share growth, or on all spending U.S. XXXX. $X.X forma have This as reported quarter was an in full quarter increase $X.XX the million of of $XXX,XXX this programs reported loss to diluted a results was or the million the was basis, quarter in $X.X for a pro XXXX as XXXX diluted included the quarter. measure XXXX. margin basis, This segment in to categories. $X.X morning's decline the support quarter, million new forma XXXX. the versus of and on was XXXX from in product The million quarter in release. this is loss a

on to International, from margin were or sales of planned and for repositioning. - XX $XX.X XXXX. XX.X% expense net quarter For Distribution net products the in improved XX.X% gross XXXX million portfolio sales the $XX.X XX.X% million, modestly of tableware

related U.S. sales labor XX.X% quarter warehouse as the XX% excludes efficiencies For shipped XXXX from of to segment, expenses synergies to and our higher was moves, was the percentage the U.S. XXXX acquisition. from savings which XXXX The and respectively. distribution onetime due warehouses, a quarters, Filament volume, expenses improvement and sales for

beginning million first as quarter The of quarter only from periods, shipments. respectively. 'XX million the the segment, a as $XX.X of were expenses distribution included inventory versus day International and was volume, expenses percentage XXXX. March to and 'XX higher in prepaid million the improvement warehouses and 'XX the $XX.X U.S. XXXX freight shipped U.K. administrative XX.X% were from XXXX of acquisition. 'XX. period in million reflects $XX.X the segment our in sales X, The sales levels expenses For expenses compared for Filament Selling, general from $XX.X for the fewer XX.X% lower efficiencies and improved

acquisition-related XXXX XX.X% a in and the to debt the offset acquisition. $XXX,XXX percentage million favorable finance rate The versus the which is fees, of settlement for March our for and $X.X relate quarter were was XXXX contracts. questions. million, The in in The savings The increase compared XXXX. for was currency foreign XXXX the to $X.X the incurred ratio corporate SG&A reorganization in of the synergy in to tax expenses SG&A to comments. quarter operations. are losses $X.X 'XX open components expenses. million expenses the as primarily borrowings reflects versus XXXX X.Xx, quarters, quarter was of full the and the $XXX,XXX legal loss from As XXXX period. please was increase The and reflects million quarter quarter the in higher period both the drive XXXX. $X.X This million increase contract tax the The of approximately to Operator, that end. taxes foreign lines currency respectively. XXXX acquisition acquisition for effective expense the of end tax nondeductible compared state XXXX million related in quarter. was foreign The as quarter XX.X% net expenses an effective the prepared interest for primarily approximately $XXX $X.X quarter a rate impact to million in XXXX International in and improvement differential, XX.X% rate International Interest mark-to-market the large Filament segment XX.X% concludes includes partially to to were Filament expenses. the of Of includes unrealized related sales, a of net compared the note, XXXX attributable expenses and $X.X and to million local Filament. XXXX difference lower the Unallocated XXXX $X.X related of XXXX in by in

Operator

Frank from question Your is first Sidoti. line [Operator the Instructions] of Camma with

Frank Camma

this will I - but the how if would quarter I this, was compare, in but much be could organic down last to break sorry quarter, what growth? be Filament what the missed just I'm Or you was the itself? guess,

Larry Winoker

that me, was Well, the I the $X.X pro of of tell have sales can a on that currently I but you million front don't basis. increase increase forma of in about Filament

Frank Camma

million? $X.X

Larry Winoker

Yes, all U.S. and that's

it, is called almost million, So $X was legacy. of $X.X the million let's Lifetime - say, - what

Frank Camma

just so much I'm you you've how there the issue quite how much a benefited looking was you from timing end figure what was the the how did - like sort much was couldn't out of last to from bit your in ship sales at orders because And than higher quarter. general? sort I trying Because number or a whether standpoint of of end of timing of issues QX, just a so timing for, on was that time spillover

Rob Kay

didn't and which Yes. that. shipping we of it's the both first sales port was There wasn't obviously some, fourth business, positive in out of majority hard shipped we in the obstructions also amount. we a U.S. was which the out fourth problems, have to It's general, In experience But wasn't in all of losses It's a There fourth that. a in therefore, the abated, terms that we we to so from quarter. result in just fourth There that. we quarter, lot what good we performance. moved quarter question, which Asia experienced in of quarter. the as quarter. fourth a Frank, our experienced - of and did the the It not the of tremendous the discern of lost didn't quarter quarter have

Frank Camma

you're It - looking percentage as from least, at I'm looks really model at a good sales. my this like of making

I expense. warehouse. that distribution your in progress Am new good pretty making right of You're is the part that I about assumption? assume just

Rob Kay

roll driving more a warehouse the fully working Not and but driving That Yes. is to is last I in we year as piece and mean, ability beyond. initiatives, us percentage the infrastructure, start the meaningfully. benefits said the allowing to that's warehouse. income lot including utilize a we've our been down the on hard we'd the and cost 'XX new in see our the through it, combination of is distribution more that realize unexpectedly, a of those to statement

Frank Camma

Conversely, model, the a my in is little bit really the big gross variance margin. on

better, So was product wondering I mix level, of favor thought given kind I your little thought plus your I maybe a was maybe SKUs. the lower-margin would sales then of of got rid have some absorption given you've in

go So on impact be wondering a - see basis just if versus tariffs. know into, just why an big like that you you could of picture would

Rob Kay

had most for last So the as the by here, end increases. we of the price and tariff gotten implemented February, of year we mentioned we've

couple from not a of we maintaining focused profitability we so perspective, percent, margin as for tariff and really So focused percent on months that. we a a of impacted gave up and Also, dollar. result on were

some so in lot in And there. there first we was mix. quarter the impact had A though

So we as such channels, sold is the we which club if look in lower a that channels lot success you margin. of had certain in, the channel, at

So had definitely impact. an mix

some expense had out we impact. where buy to That an the we but has launches had also We space, that.

impact combination a year-over-year it's factors the So which of launch.

Frank Camma

for are that? building you flow big percent your - guidance, does tariffs? increase you through How looking in your that are the And through in How at model? still

Rob Kay

goods discussions which impact some world - if And List some knowledge there be Washington. already obviously, those back amount our from to XX% what saw process. of impacted So the on XX% current them, going beginning of X will prepared a And to the having are last goods, by our from on discussions. we for paying know dating we this, to do guidance of is through We and of the increase in gone today, XX%, we our outcomes will of us year, on without the we an quarter. the decent fourth of similar

what We'd has the pattern no of there's So be similar on confusion. a it's we you'd whole - because easier market to see to did. actually move, XX% able

and in would do So did lag same would be mitigate we a that there past period, it. the the things would we

Frank Camma

quick question one here. on cash Just just conversion

because and there actually that But the some inventory AR So did the a just you way have little of was rolled I wondering, the from make but was could bit that? timing I'm Filament than higher so in. have that been on was some - lower, modeled, benefited Like collections AR would down there?

Rob Kay

that. Larry I'll as some let introducing, inventory, and result new were did of we AR. that products we built answer inventory we've On a up some have

KitchenAid, line date We whole that an less impact and inventory. the - to our levels. our haven't launch we some on maximizing and did 'XX - execution a levels of quarter inventory service had pertains has of focused have a and as KitchenAid, to been working and focus in so first new it big capital on in But product

Larry Winoker

have receivable, the into collections quarter. I out discussed the And this past Frank, I've the And something stands it versus could control. in not customers obviously on exact collections, same quarter, nothing is and we you timing spill ship all the a that when later depends for the on in late periods think beginning terms. quarter in particular of can't accounts

it So period. out looking It's too. over saw performance a one moment those factors But another. at it like extended are we to averaging longer

XX-month, then to XX-month a to You've - normalize. do that and have trailing it a over got we tends period,

Rob Kay

think levels we did period this cash on just did comp be the I at a work wanting, peak a flow, delever, think But higher so. have We you cash we flow, us. than is little while I perspective, we may may inventory for look flow a and macro total cash generate meaningfully well,

Operator

comes question the Barwin Aegon. next with Patrick Your of from line

Patrick Barwin

the lease balance and related follow-up any items housekeeping of liabilities to EBITDA, Two there situation. the to that to kind tariff added a the you noticed then I sheet. changes change? Were on

Larry Winoker

still considerably, lease on through yes, the accounting expense balance the go rules - expense. gets It's No. new the but sheet grossed-up all

there hasn't is it adjustment So - through EBITDA. no

In fact credit agreements.

because you repronouncement. credit change and it agreement exchange others the of Our say can't in

exactly - it's So it's unaffected. XXX%

Patrick Barwin

your guidance, some number? a clean does EBITDA is synergy include portion that add-back that And of then or

Larry Winoker

Yes.

have all as no effective EBITDA in there the - was is were realized isn't guidance, we a fully not here addition. XX And assumed be may an of of some anything. there's year, of announced as so see there's you that the So everything near But tables, - reconciliation, that beginning can so the there the this in that assumed on synergies X/X/XX. we've we've at

Rob Kay

obviously, go you convert 'XX, saw as we first and there's And quarter. and that in less that, in add-back the through

Patrick Barwin

guys then trough some then if of the the would point, on with much And at go disclosed your currently then affected? tariffs? your how of how tariffs, administration by business have elected directionally be to business much impacted And you through of final is tariff the

Rob Kay

question idea. list in there. need no really - be no announced, of next But revenues. said has and that So different the I be trillion, issued, that XX% I on the would administration what what's The and therefore, we we of to were it'd on are have so last everything they because of mean, cover react we've we focused that the the it. as our there's through which mitigating There's $X.X those disclosed the world, answer actions the X today. lists would were to been of mean, previously list second that's approximately everything. It's and hard previously and published of several have have to be on what majority

would and which administration really economic can't that applicable where is we geographies by already in that me, XX% the proactively. impacted where do different on sense, from to thing what's what things opine what be of tariff some know XX% only The - excuse portion of move rate been I implemented. will to to knowing the a mitigates announced it though, But of continue, We increase makes XX% do.

Patrick Barwin

So to steps you yourself look outside if where the does operation tariff there - prepare this China? then level that a you would that situation for to I Chinese is need primarily, guys occur? taking are would what And sourcing guess,

Rob Kay

amounts That regime, uncertainty, one because cost been biggest completely, tariff, or a stated to and the had mean mitigate the on amounts product, tariff need implementation But been tariffs. of balancing dates. the moving the I with Has different of Yes. challenge have we've of the hasn't implementation we when XX% geographies. can can't things mitigate you through increases. reducing you pass of to you that the price

market no push is there the of the doubt market and there's terms it your in have very just or the not services, our has it and The our in market, XX%, being at of It because pushed customer that terms move retailers the terms in the the it. to get retailers when in the But will both will date absorb a uncertainty in time will implementation of of Street, terms the market online brick-and-mortar, marketplace tandem. through. through, amount, goods difficult in So and

accepting well which our said the we until industry the problem. one the bigger last this we being of mentioned. to have there's put biggest into is the year in quarter that in one up motion players in is as and as February, that You're mitigate. being the That we saw we of of and advantages resources, delays, going That's

reductions terms additional basis. on in of a products we that on working the cost already we're So proactive sell

India. into goods of geographies, Vietnam are particularly China and already goods other We still have moving outside moved and

tariff in U.S., XX% we goods. pay could think or but able it it's those geographies, that, just goods and it's the make more to put huge them Tariff a and for for tariff cost-effective consumers things so not certain regime a to it be I has there don't be some and - make - be reality. U.S. to the to no other of applicable For certain to in going a our huge it's - going not

Patrick Barwin

What housekeeping. quarter revolver was of final one end? And as your availability

Larry Winoker

about it's availability, fixed revolver The $XXX of of so cash, was revolver million million, $XXX and including $X cash.

Operator

the Capital. from line Tim of next Your question Hasara with comes Kennedy

Tim Hasara

expect for you for CapEx do What XXXX?

Larry Winoker

this then The million facility million. $XX operations between a difference consolidate the - to in the single impact About $XX have U.K. the the reorganization is big we big year. we'll summer what and normally into

Rob Kay

very Yes. one total we of consolidating be all this on CapEx corp company of in bit which Tim, July little year. operations XXXX, have our higher it will this tremendous as will bit XXXX, into - little by warehouses a for there year, will be a still before, low, while a the mentioned and we'll location, make payback live that while

Tim Hasara

free term And your then flow would be bank loan generation, with your to cash just down debt? used the that or pay

Rob Kay

doing, Yes. that's have we what see. And been then as you

Operator

There are with further no may you remarks. Kay, questions. Mr. continue closing

Rob Kay

for you Thank joining us again today. you. Thank

We this sustainable on are to focused on pleased in and performance quarter strategic our remain growth with priorities deliver executing our XXXX.

in We conference Davidson there. the will D. on participating forward to A. be May you of look some seeing and XX

we of continued appreciate your support always, Lifetime As Brands.

Operator

This conference concludes today's call.

You now disconnect. may

Lifetime Brands (LCUT) 12 May 192019 Q1 Earnings call transcript