LCUT - Earnings call transcript Q4 2020

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Operator

Good morning, ladies and gentlemen, and welcome to Lifetime Brands Fourth Quarter and Full Year 2020 Earnings Conference Call. At this time, I would like to inform all participants that their lines will be in listen-only mode. After the speaker's remarks, there will be a question-and-answer period. [Operator Instructions] I would now like to introduce your host for today's conference, Andrew Squire. Mr. begin. may you Squire,

Andrew Squire

Winoker, morning XXXX you today earnings Kay, and are Good Brands' from joining fourth Rob Larry Officer; Executive quarter call. Chief Financial and you. Officer. for thank Lifetime management Chief Thank With us

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

today's in such financial this non-GAAP Securities release is these the measures G financial morning of non-GAAP financial calculated of in in the Please the to to like promulgated introduction, by remarks call reconciliation GAAP. Included go the contain release and over turn within Rob measures Commission. also comparable With meaning Rob. I'd Regulation a Kay. that measures accordance ahead, Exchange press and to with Our

Rob Kay

for Good XXXX quarter joining Thank thank Brands' results. today and morning, Lifetime you. and to discuss everyone financial us year you fourth full

significant very We driving stakeholders. our for value quarter, quarter performance pleased another our with which are in the marks fourth

consolidated and also combination business was revenue many products proud categories US combined and entire market to faced, whose opportunities and was for channels kitchenware, decline and the year very many we first business many growth it Our year results COVID with business notwithstanding from impacts fourth in ability quarters foodservice the our in team's the consecutive e-commerce the strength achieved we due for incredibly in Throughout in demand and international this of execution our Brands faced the quarter core quarter I'm On full pure-play a to our our and omnichannel the three achieving This has produced strong delivered categories. in now XX.X% strong demand gains growth with year. Similar markets. very quarter. in many for sixth strong the performance. transformative and our pandemic. external of and the quarters showed Lifetime of for on continued reflect in strong year-over-year a cutlery of drove demand Despite performance, full a fourth both we robust the share basis, challenges XXXX, performance the challenges our we contribution the share our XXXX, measurement to outperform strong delivered in negative in fact and all the underlying our products. robust our strong brick-and-mortar that for the its the year of truly majority the growth, earnings commercial growth experienced capping quarter XXXX in prior growth gains in The and exceeded demand of our market cases of

we across continue share. consumer. increased XXXX, competitive to our demand the capture to as capabilities market to growth streams available the category most made largest demand quarter, advantage exceeded which gain in saw we've the to with the our that saw a in levels Walmart fast-growing XX% in Moreover, to address to strategy, XX% our meet and which enhancing gave fourth our were thanks grew retailers, spectrum enabled and advantage us walmart.com. and ongoing we Walmart, performance our shipment Both and market share across Lifetime channel well. at meaningful example, in as For stores gain capabilities, channels omnichannel Similarly, we of of strong customer, Thanks part drop in overall us growth and channels, our X.X shopping able revenues of [ph]. to on investments revenue year-over-year we participation our competitive further capabilities, we expand e-commerce increased through and also

our grew our XX.X% quarter, fourth XX.X% the e-commerce For represented revenues revenues. and total of

Turning progress business. international to We our the international during quarter. meaningful the achieved business in fourth

product first XXXX. our we challenges international many strategy our the our And and were of a COVID-XX-related of with in began consumer KitchenAid issues third line that rollout the facing the faced internationally turnaround of XXXX. plan of XXXX, While I in business operational four Driven the excited on channel. in by we half mentioned stabilized including successfully the of return in other bakeware launched as quarter's popular China strategic we the call, from business tools its full last the of this launched direct closures store to our our year despite grew results we launch growth. launched quarter and the model end managers initiatives fourth to in starting throughout Further, we in in are towards direct newly Europe where brands business to X.X% utilizing XXXX to e-commerce also marking and a see that in-country year, quarter international kitchen

opportunities remain for our that long-term per As initiative, this foodservice channel Lifetime. will we confident provide growth

market business. initiative our future we power and market. XXXX, our slowed in optimistic foodservice in hospitality next the five over or which this distributors with penetrate prospects sign has combined pandemic foodservice ability the are in hotels the good progress, this delay Mikasa operations we're picked the discussed, participants regulations, sales meaningfully in said, businesses, up recognized Mikasa previously a restaurants, particularly result foodservice in approximately the dialog As as by potential of for years. and and more other and $XXX interest the have Even front-of-the-house hospitality industry of many a of getting some That the meaningful growth business this to the confident that opportunity million our is of the though remain impacted COVID-XX for for caused represents

headwinds previous cancellations, fourth some the face our delays to availability. domestic are shipping the slightly inbound for growth months, slowed similar which ocean As quarter. outbound to continue and challenges we the and in These freight shipping for related to both freight headwinds quarter,

While half we of to these obstacles we remain have steps for believe keep to a overcoming will first these and we demand. strong fulfillment to XXXX, challenges taken meet expect of the equally capable remain strong capability

Lifetime the While strategic XXXX showcase initiative. Lifetime face the opportunity global much and the executed quickly XXXX. out and growth X.X equipped In a team back in and diligently events. efficiently challenged meaningful provided priorities ways, responds well us capabilities strategy accomplishing all significant the economic Brands and of the of making is and successfully Lifetime we have uncertainty, external demonstrate the in year our the our to pivot to provided opportunity in capabilities team we our many while an to to how plan, also launched X.X strategy laid It have when good implemented we our Lifetime progress Brands' with new delivered built

disciplined EBITDA in share, of our As the last cost first levels. thanks to flexible to delivered the generated of part greater the And flow XXXX, demonstrating now, organization And XXXX. balance target to our substantial a company reinforced momentum million financial profitable has over approximately accelerated leaner we have which the market a the cash Throughout deleverage of that and in -- employed to adequate part our Lifetime X.X balance has leaner to disciplined XX% more of we also flow and contributed used increase the growth, cash focused But XXXX, since strategies pandemic To which adjusted generating a resulted operations the Lifetime has more sheet. as levels we an have half organization. have sheet of a disciplined chain, in on in approach result, been supply and remain we've control, combination managed we've half strong that that inventory maintain has management. $XX.X XXXX. created our we making importance we top-line point, managing liquidity from to while

acquisition should half of with successful groundwork any the we this circumstances. we in In we practice, of capitalize on unforeseen have a in historical to lead continue group in business with drive separate put ability Year with focused line and an factors under and to then & to and the digitally for first to scale, consistent the reinforced started the growth global current XXXX of table half XXXX by barring her momentum native potentials the XXXX, with Day, example strong is guidance strategy in This brands unit we All dinnerware joining will the footprint. within quarter our be as performance on leveraging first year our operate incubate we'll second age us, an Lifetime. We've our online we underrepresented as strategic infrastructure these leadership to of resume acquisition Already place. intend have Lifetime. which our expect our penetration consumer offering. development The a brand's millennials, founder platform of our stage is significant a

it's brands expect how by not to initially can capabilities example material potential accretive growth. although we with XXXX to to for and we our significant good business, of We transaction unique a the be take our support think of advantage

in we initiatives. the is Looking XXXX ahead, would and we and core in continue believe our profitability. invest drive to will investment products that emphasize like to brands growth to growth I strategy future

brand be tools. X,XXX available of line KitchenAid our we other across XXXX year. new product include Rabbit And Day, lifestyle categories next expected in line new with celebrity-backed In in margins. partnership of profit is our and addition investments be to bar launches which and also Walmart, international multiple about & will We're expansion approximately of Year to into launching stores the wine some a new excited for in

future, new we capitalize to and position for also As product good be in launches we talent on in invest people a those additional opportunities. the to investing in are

remaining top moving X.X Given of are growth and which will our that on achieving product design, continued our to expand competencies foundation and and and strategic strong phase We on the opportunities core focused capitalizing innovation. do our categories Lifetime objectives, our fit we adjacent profitability that drive to in of plan, core management, the by team built. with success plan has next our our business forward product on channel so into

our a dividend foundation capital to strategy. allocation margin well-positioned and that, to Lifetime With incremental to We our and pursue strategy With financial are call our prudent that over we continue will growth, I'll maintain value creation sheet, drive cash expansion, significant growth with strong balance a focus the now a long-term and turn strong also to disciplined leverage flow strategic plan Larry. M&A Brands. for on

Larry Winoker

Rob. Thanks,

of or to income or $X.XX or $XX.X of morning's million million quarter. release. share from per $X.XX diluted adjusted $XX.X million reconciles As the XXXX we charge was million million XXXX or of an income of this this reported segment's to morning, $XX.X XXXX the was for XXXX diluted included included a goodwill. this the XXXX period. per compared share quarter million quarter reported of which $X.XX share A the to net $XX.X versus fourth Adjusted diluted the the to share, was in US table the as compared $XX.X million in per was measure impairment $XX.X quarter XXXX. loss for net related loss fourth operations a for results per XXXX non-GAAP Income $X.XX net in $XX.X operations diluted quarter of net non-cash in the income from

by $XX.X is the In in EBITDA, quarter. would compared a came solutions, December that a $XX.X million some and in of Adjusted ability XX, have year brands for increase to up category, to million this market our our reopened products. September large barware decline XXXX. growth charge in and XXXX $XX.X gains. GAAP share year sales Excluding and experienced at market increased million consumers kitchen $XX.X the a XX, results segment more share was the was share The Net significant for presence to offset was led goodwill million. and for measurement, the retailers, mixed kitchenware retailers non-GAAP [indiscernible] non-cash reconciled million trailing Tableware category launch and at home, by in over million $XXX.X from operations the gadgets, for the approximately where release, affected cutlery, ended ended $X.X fourth increase In-home income has meals XXXX, pandemic. the keep preparing ended the were a home but December XX $XX.X it from the for Products have stock. in for products the decor, we XXXX. Market and to that of $XXX.X XX% million. category slowly. appeal continuation a $XXX.X US, represents were impairment gains growth XXXX, by measure the addition sales product been million quarter tools months in to over an or which Lifestyle in XX, reflect and This scale increase of reflects million Category growth, our XXXX

XXXX. US dollars. national due margin Our COVID-XX but International sales XXXX to for continued reported the opportunities us $XXX,XXX grew Europe its $XX development million, segment e-commerce was address in of up quarter. a to $XXX,XXX basis enabled grew was and to E-commerce XX.X% channel lower as lockdowns for on talented by to as to independent offset in quarter team significantly this retailers pandemic. the largely XX% XX.X% were a the in sales sales sales constant versus accelerate Gross

margin in XXXX, gross the primarily shift and to benefit the realized was we was in refund. due This tariff segment, US versus the XXXX. XX.X% XXXX in a from XX.X% quarter channel For

up XXXX gross basis, the a XXXX. margin For SKU in recorded quarter charge basis of the excluding comparable full-year, on was points second the rationalization XX

lowered margin unprofitable SKUs, in quarter. benefit the reflecting international, the introduction the to Distribution improvements, and percent included adjustments of warehouses for sales higher from to gross quarter products of from margin, of expense by increase improved a XX%, plan X.X% price of to those with the new which select elimination XXXX shipped in points For XXXX turnaround offerings basis XX margins. as XX.X%

increase and wage expenses from X.X% was fixed and XXXX higher XXXX and rates as of sales periods respectively. [ph] prepaid shipped pieces volume. percentage warehouses freight For higher by of increased orders drop was to -- X.X% from sales an cost the shipment and US in for The benefit XXXX volume distribution of segment, on hourly fewer expense a offset

$XX.X driven and warehouse by for the excluding the the XXXX million of $XX.X Selling, turnaround new declined declined to versus $X.X XX.X% XXXX. the in expenses international For the expenses This expenses XXXX were in large was periods US million plan. by segment, distribution XXXX. relocation million benefit and realization to -- very and million of of XX.X% the the the administrative expenses XXXX and respectively. improvement general segment by $X.X efficiencies

state plan million cost selling declined incentive actions. savings a sales, of response by the $X.X to net benefit increase $X.X mainly resulting in million was expenses increased attributable from expenses pandemic. International The from XX.X%. primarily is decline offset million in As by The to general This percentage expenses XX.X% as $X.X XXXX. the COVID-XX reflected to SG&A $X.X of improvement declined lower to implemented earned. was our initiatives of effective turnaround supplemented certain in and to statutory a expenses the in and R&D taxes by plan employee million was compensation The reduction partially XXXX. this segment [ph] the to incentive was This lower cost due the including $X.X rate part million higher and Unallocated and tax rate, higher foreign and taxes higher Effective XXXX than primarily the to for XXXX from XXXX non-deductible expense due rates. earned. and lower and period interest foreign to offset credits. allowance, statutory than rate tax XX%, UK taxes reflecting compensation for primarily was from a The XX.X%. expenses was taxes $X.X expenses. declined debt Interest rate, million state in non-deductible the rate decrease rate lower valuation outstanding

was million Looking This availability revolving cash million, from year-end a XX, debt was XX, at our plus including of cost by credit taken which top-line $XX under times. $XXX.X XXXX, our facility. was at was increase the XXXX results, comprised was debt operating actions And ratio of million $XX.X as reduction liquidity, the December liquidity $XXX our net EBITDA December growth and company. million to improved through net XXXX, and achieved X.X of

in XXXX receivable in accounts reflects December. year-end prior in the period sales at comparable and over quarter, This XXXX the significantly Our particularly increased the volume year. higher November

us, the quarter our for which first peak cash of period. the strong calendar year, follows typical was in As selling flow

$XX at decline XXXX, liquidity, of unchanged million, With EBITDA was from reduced XX, increase adjusted our was a corresponding $XXX.X December assuming to approximately further please full X.X to February have of a of our comments. million the improved ratio As EBITDA year for line leverage This from prepared in debt February net XX. XXXX, debt times. the open would concludes our net to the XXXX end Operator, questions.

Operator

Davidson. you. Thank first question Your the [Operator Instructions] Bolton-Weiser from of DA Linda from comes line

Linda Bolton-Weiser

are you? How Hi.

Rob Kay

Good. And yourself?

Linda Bolton-Weiser

Good, good.

business there impression? that there was by just us? in revenue really any in is And any some fact of it us it you are to us? revenue? about that to the way I pandemic tiny X% But it So, XXXX? foodservice way your XXXX. the starting. for way just size to really size there know you Is business impacted Or any for give is Is that Is talked

Rob Kay

just in been of the in we've second, house. So to back up business the back a foodservice

the in is which for the for hospitality, and meaningful us, initiative, represents is and Mikasa million approximately it's think a where kitchen year. business was geared And all question most your business XX of -- big this that $XX I plus. years So towards. which US-based is down

are, part things than minimis of of shut de we having down, but just seven progress and mentioned, that's have We figures, we as less meaningful I sales right.

like pick their some up in catalogs actually foodservice. ordering and weren't starting distribution in new and cutlery in people plates two-step process is So into dinnerware forth. distributors now are and we That and major the and so were to

beyond, revenues have So [indiscernible]. XXXX and in and share and in utilized reopen, as in the we half people be second results that most will

Linda Bolton-Weiser

positively home. you've grow be can were goods we going you who forward Thank that are growth, unusual kitchen that looking could cooking hard affected will then because get been negatively. are that helpful. against more you business been And investors maybe you've revenue think selling looking to the enough you. helped companies when one pandemic and had guess for by still are that ways by comparisons? you those argue that then so people the any comparisons either Do in some Or at I pandemic, those growth benefit And you're at changing there's That's or against your think lap at I up comparisons?

Rob Kay

products. question, That's and people right. of for were everyone's from working basically a and home home the our more Yes. demand beneficiary products We

we've conditions pandemic if also We what the increased noticeably in data, look market result market share. accelerated as of our many our think to increased share. the we of though that a categories, we I doing NPD been at you and And in

So supply is lot that's on of why -- a headwinds of heavily a also that on think won't in lot in in plan, significantly a for inventory going significant And our that. XXXX sustainable we we've going XXXX, advantage us we grow that to faced be investing we and chain. things in And there. realizing continue to were and And we but the invested for year investment we can that's a started implementing there future. XXXX be

So as some by lapped order the extraordinary strong guidance quarter, that more tailwinds in is think sustainable, quarter, and well this get far, as first give will our support net, but book. won't is we to so believe we very we first the

other new market in Day initiatives like & Year will just start product XXXX. really introductions, paying the So off shares,

benefit get brand the full call, year. mentioned last year launch launch, next as at but will we will also products will -- that the the will Walmart, celebrity-backed New announce such this

XXXX, lot an us the is will second momentum this half things in going give a year and next it grow so So, financial and on we be XXXX which but year. invest will in of ongoing again, year that There beyond. of

expecting not grow again. in XXXX to So XX% we're

Linda Bolton-Weiser

fair cash benefited working your then XXXX little in And in the it Is cash from capital will Okay. flow to improvement. a less robust be say flow XXXX?

Larry Winoker

[ph] that's We different in our guidance we that give -- until first the quarter.

Rob Kay

and have in a [ph]. little level cash on tremendously, in right, We'll but gives will debt flow not little will Larry puts at incremental probably elaborate have more some also We our incremental guidance -- XXXX. there good which is CapEx

Larry Winoker

about to the things to well -- we pandemic, employer think take tax, some will advantage payment spoke were related VAT in payroll of were negotiated some able and deferring I UK, of deferrals rents. and some there it, as also, the deferring so we like I taxes we as

actually a of -- paid So will some of 'XX XXXX. to have into that some that begin to lot in is get

Linda Bolton-Weiser

you Thank much. Okay. very

Larry Winoker

welcome. You're

Rob Kay

we'll Thank tomorrow. guess see you, I you Linda.

Linda Bolton-Weiser

Yes.

Operator

you. Thank Okay.

comes Your Brian Nagel next question Oppenheimer. from from

Brian Nagel

for Thanks taking morning. my good Hi, questions.

a So couple here.

the a shipping First regard, in from you hearing off, your across landscape. the issues just called your and we're of out -- with companies lot prepared this consumer comments

see term? guess you I accepting in of I is till abate; with or question just these have there matter them pull contend better are -- leverage of the naturally a can it these is, the to help sort disruptions the So company nearer basically

Rob Kay

great we a do it's I anything. Yes, organization a like and an competition, mean, think of we're us versus can't our I can, question. everything lot doing they

shipping Asia, container in freight-out. One from two is really of there's terms is general -- And So issues [ph]. is buckets. terms availability overseas in things and second in of price getting the an costs where freight-in, two there

quarter that Year, New So, get Walmart, inventory. have major our Amazon, in And But we has meet and a little and you saw lot look investment meet truckers as and if therefore, availability had the getting those goods supersedes it's we have more as -- first control of freight-in they've of side at inventory well mitigate lot and because working weight quarter move new a instance fourth things very enough our we quicker we do factories and for on because our lot issues a tremendous an year, us. customers been bit then have pre-Chinese passed. factories weight demands of mean, third-party containers we they which into with of just a worked we and strong things. than a to the can I things the with Lunar what we ship around shippers also but doing to to accelerate and We

things sheet do got that faster. to and balance We we've in the have

we've but facing things of you it control is a been continue. months, six lot it do, and there your for So beyond will this can are

a it's of very part strong. problem it is is that Fortunately, also quality our demand

Brian Nagel

was then but agree We could I see This or your question how wanted with trend somewhat of it's path. or what this the might COVID the a the Got to helpful. all it. shift to looking second prior to follow-up demands question, And were comment. I headwinds ask, is at

[ph] started So, it's are products change? fluid I add any relatively of question for been to but that near for up demand United seeing your some more, that the recognizing indications to it's apologize early open markets States, extraordinarily and you beginning a term certain parts within of trends you

Rob Kay

lockdown we people in No, sustainability -- haven't into except not in -- haven't own, lot getting The the there on we seen for where debate in terms there's categories, look December move had United if benefited cookware towards you cooking, really and you lot your extensive been data, been example, believe of of but if we're seeing there -- in increase. can we the you seen But look Europe, -- which at of tremendous side it view hasn't we're on lockdown and States. right. which tremendously, it's the worth is -- negative and home in of a that last at that is The a that a a foodservice as a impact. are demand and starting we

next the not But buy to on shelves. You you're go [indiscernible] couldn't find going set retailers into many year. you cookware another and

beyond. a and that XXXX ticket renewable question plus We're we not and replace It's them use a sustainable. that in are one lot there's them. that different item and for doing and think and we're explained on is Linda's relying people as goods Our so

Brian Nagel

All appreciate all right. color. you. I Thank the

Operator

line Your Instructions] [Operator you. from the Company. Sidoti Lebiedzinski of comes Anthony & from Thank question next

Anthony Lebiedzinski

thank Good for morning questions. the taking you and

So we're they're hearing about from seeing more companies inflation.

kind comment the outlook seeing if -- for Just manage you'll to as that? that your think you you and wondering are that of what's you could on how

Rob Kay

Inflation, did you say?

Anthony Lebiedzinski

Yes.

Rob Kay

in be distributions, up definitely input inflation for $X whether strategies average We are that, costs and labor half a to almost which that our already. been seeing been and a cost has year a mitigate putting on we've

wage -- a labor the input sorry, good minimum which if for wage, That's where us. experiencing it But they impact big Fortunately, rate go it's we've materials, polypropylene, But doesn't been us. the to whether where $XX is inputs, PP, cost news.

you look highs. mean, If at, I records they're

that now lot continue a the to cost, mitigate inflation while is but we've do reality. various been and of the working through cost, of the for it material So that we a will so to labor is lot inputs, there cost a channels,

Anthony Lebiedzinski

Okay.

taking exactly So how well? or costs set higher of costs to labor some testing up -- as as – these you going input like, are

Rob Kay

Yes.

basically, the experiencing most labor On -- been cost, we've we've for XXXX. that of

look So we have look you you our labor mitigated And at increases. distribution terms with costs. if of it at our significant mentioned down in distribution -- that and XXXX if you can I cost, see the, cost the was even in

in to have been will Lifetime-oriented a similar isn't [ph] overtime. is we'll us, so. the strategies which higher everyone universal, that, that highly had effective we've inputs, continue This consumer to that who do and it's The to for So right. result prices making anything mitigate thing, ultimately

Anthony Lebiedzinski

that is Or so first quarter -- it half of and international? you outlook okay. Is And skewed? Is mentioned trends? it the you year. it, more the fourth for strong a that to have that. Rob, domestic domestic Got more Thanks similar both

Rob Kay

Yes.

they better far quarter Europe In to did consistent have so were the the I difficult guidance XXXX, very the each shut any Brexit first we've we think than well average quarter. our first that strong with down demand for other and kind in that, core frankly far we so say and prepared, and call bear. and which will, there. market, our combination not has just our we've disaster. We was of seen But practice. of normal hate it's been seen So over with given complete clarify, I a

on an had that's impact our So business.

strong So off we're but still and to a start. remains demand good --

Anthony Lebiedzinski

Got it.

thanks And then that for that. we far as Okay, lastly 'XX? how rate for concerned, think as is should the about tax

Larry Winoker

just their -- the in that past. is should planning the we increase know seven to in mean six, there. I 'XX be legislations out plus [ph] XX states; rate UK It's the points

may were if rate be occur. that So to higher

Anthony Lebiedzinski

it. thanks luck. best right. All of Got Well, and

Rob Kay

Thanks, Anthony.

Operator

[Operator morning's questions, conference we further Instructions] Okay. At have this time, call. this while concludes no this

Rob Kay

us you a your appreciate good that the Davidson tune Conference. Growth Consumer on our today. listen next at our forward We continued D.A. will hope results you quarter and to look Lifetime for to Thank have XXXX for to discussing joining you, day. fiscal Thank tomorrow again conference presentation We Brands in call. support and first of we

Operator

session. This concludes today's

disconnect. now may You

Lifetime Brands (LCUT) 10 Mar 212020 Q4 Earnings call transcript