Lifetime brands, inc. reports fourth quarter 2015 financial results
Garden city, n.y.--(business wire)--lifetime brands, inc. (nasdaqgs: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, 2015. fourth quarter financial highlights: consolidated net sales were $185.9 million in the quarter ended december 31, 2015; a decrease of $4.1 million, or 2%, as compared to consolidated net sales of $190.0 million for the corresponding period in 2014. in constant currency, which excludes the impact of foreign exchange fluctuations, consolidated net sales decreased 1.2%, as compared to consolidated net sales in the corresponding period in 2014. gross margin was $69.0 million, or 37.1%, in the quarter ended december 31, 2015 as compared to $69.8 million, or 36.7%, for the corresponding period in 2014. income from operations was $17.6 million, as compared to $18.3 million in the prior year’s quarter. net income was $11.0 million, or $0.77 per diluted share, in the quarter ended december 31, 2015, as compared to net income of $9.3 million, or $0.66 per diluted share, in the corresponding period in 2014. adjusted net income was $10.8 million, or $0.75 per diluted share, in the quarter ended december 31, 2015, as compared to adjusted net income of $9.4 million, or $0.66 per diluted share, in the corresponding period in 2014. consolidated ebitda was $23.9 million, equal to 12.9% of consolidated net sales, in the quarter ended december 31, 2015, as compared to $20.9 million, or 11.0% of consolidated net sales, for the corresponding 2014 period. equity in earnings, net of taxes, was $0.7 million for the three months ended december 31, 2015, as compared to equity in losses of $1.1 million for the three months ended december 31, 2014. full year financial highlights: consolidated net sales were $587.7 million in the year ended december 31, 2015; an increase of $1.7 million, or 0.3%, as compared to consolidated net sales of $586.0 million for the corresponding period in 2014. in constant currency, consolidated net sales increased 2.3%. gross margin was $214.4 million, or 36.5%, in the year ended december 31, 2015 as compared to $212.9 million, or 36.3%, for the corresponding period in 2014. income from operations was $24.2 million, as compared to $21.4 million in the prior year. net income was $12.3 million, or $0.86 per diluted share, in the year ended december 31, 2015, as compared to net income of $1.5 million, or $0.11 per diluted share, in the corresponding period in 2014. adjusted net income was $14.2 million, or $1.00 per diluted share, in the year ended december 31, 2015, as compared to adjusted net income of $10.3 million, or $0.73 per diluted share, in the corresponding period in 2014. consolidated ebitda was $44.9 million in the year ended december 31, 2015, as compared to $42.5 million for the corresponding 2014 period. equity in earnings, net of taxes, was $0.6 million for the year ended december 31, 2015, as compared to equity in losses, net of taxes, of $6.5 million. the 2014 period includes a charge of $6.0 million, net of tax, for the reduction in the fair value of the company’s investment in gs internacional s/a. jeffrey siegel, lifetime's chairman and chief executive officer, commented, “in 2015, net sales in the company’s u.s. wholesale segment grew by 3.9%. sales of kitchenware, tableware and home solutions products all rose, with a particularly strong increase in our home dÉcor product category, where we leveraged the bombay® license for giftables. in kitchenware, we benefited from strong increases in cutlery and the expansion of our important farberware® brand, which is increasingly accepted as ‘america’s housewares brand.’ tableware sales also rose, reflecting good reception of several new programs for dinnerware and flatware. “the strength in the company’s u.s. operations was offset by currency challenges in the u.k., where our businesses were adversely affected by weakness of the british pound relative to the dollar, which on a relative basis increased cost of goods, which are sourced in dollars, and by weakness of the euro relative to the pound, which hurt export sales. nevertheless, improved operating margins produced a 5.5% increase in consolidated ebitda, which grew to $44.9 million. “with the assistance of a major international consulting firm, we recently began an in-depth review of lifetime’s u.s. wholesale businesses to ensure that we have the right structure to grow and thrive in today’s complex business environment. the study -- which includes evaluations of our divisional organization structure, product pipeline and brand management, as well as sku rationalization and sg&a spending -- will serve as a blueprint to right size lifetime’s sg&a expense base, realign our operating structure and redirect our operating activities to increase our efficiency and effectiveness. when fully implemented, we believe our business will be in a stronger position to achieve future growth and improved profitability. “so far this year, we have shown our line-up of new products for 2016 at the birmingham spring fair, at ambiente in frankfurt and, just this week, in chicago at the international home + housewares show. i am very pleased to report that the reaction to our new products was overwhelmingly positive. to succeed with today’s consumers, housewares manufacturers need to deliver improved performance, expanded function and great design. the wide array of new products we offered clearly showed that lifetime is leading this effort, keeping ahead of the curve on the ever-evolving kitchenware industry. “while we believe that our strong position with major retailers in the u.s. and the u.k., our expanding footprint with independent retailers world-wide and the breadth of new product offerings should enable us to grow at an accelerated pace, we are mindful of the risks posed by the possibility of some weakness in the u.s. retail sector, continued foreign exchange challenges and economic uncertainty in some key international markets. consequently, at this point in the year, we expect low- to mid- single digit overall sales growth for 2016.” dividend on thursday, march 3, 2016, the board of directors declared a quarterly dividend of $0.0425 per share payable on may 16, 2016 to shareholders of record on may 2, 2016. conference call the company has scheduled a conference call for friday, march 11, 2016 at 11:00 a.m. et. the dial-in number for the conference call is (866) 271-6130 or (617) 213-8894 passcode #85615758. a live webcast of the conference call will be accessible through http://edge.media-server.com/m/p/hnrtzbon. 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. 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 general economic conditions which could affect customer payment practices or consumer spending; the impact of foreign exchange fluctuations; 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. 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 such well-known kitchenware brands as farberware®, kitchenaid®, cuisine de france®, fred® & friends, guy fieri®, kitchen craft®, kizmos™, la cafetiÈre®, misto®, mossy oak®, pedrini®, sabatier®, savora™ and vasconia®; respected tableware brands such as mikasa®, pfaltzgraff®, creative tops®, gorham®, international® silver, kirk stieff®, sasaki®, towle® silversmiths, tuttle®, wallace®, v&a® and royal botanic gardens kew®; and home solutions brands, including kamenstein®, bombay®, built®, debbie meyer® and design for living™. the company also provides exclusive private label products to leading retailers worldwide. the company’s corporate website is www.lifetimebrands.com. lifetime brands, inc.consolidated statements of operations(in thousands - except per share data) three months ended december 31, year ended december 31, lifetime brands, inc.consolidated balance sheets(in thousands - except share data) 2014 december 31, 2014 preferred stock, $.01 par value, shares authorized: 100 shares of series a and2,000,000 shares of series b; none issued and outstanding common stock, $.01 par value, shares authorized: 25,000,000; shares issued andoutstanding: 14,030,221 at december 31, 2015 and 13,712,081 at december 31, 2014 lifetime brands, inc.consolidated statements of cash flows(in thousands) year ended december 31, net cash (used in) provided by financing activities lifetime brands, inc.supplemental information(in thousands) reconciliation of gaap to non-gaap operating results consolidated ebitda: three months ended december 31, year ended december 31, consolidated ebitda is a non-gaap measure that the company defines as net income (loss), adjusted to exclude undistributed equity in earnings (losses), income taxes, interest, losses on early retirement of debt, depreciation and amortization, stock compensation expense, intangible asset impairment, certain contingent consideration, certain acquisition related expenses and restructuring expenses, as shown in the tables above. 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 ended december 31, year ended december 31, adjusted net income in the three months and year ended december 31, 2015 excludes the fair value adjustment of certain contingent consideration, acquisition related expenses, the recovery of acquisition related expenses for an acquisition not completed, financing expenses and deferred tax expense related to our equity earnings of vasconia due to recording the tax benefit of cumulative translation losses through other comprehensive income. adjusted net income in the three months and year ended december 31, 2014 excludes certain acquisition related expenses, the loss on retirement of debt, restructuring expenses, intangible asset impairment, the impairment of the company’s investment in gs internacional s/a and deferred tax expense related to our equity earnings of vasconia due to recording the tax benefit of cumulative translation losses through other comprehensive income. lifetime brands, inc. supplemental information (in thousands- except per share data) reconciliation of gaap to non-gaap operating results (continued) constant currency: increase (decrease) increase (decrease) currency impact excluding currency including currency currency impact increase (decrease) increase (decrease) currency impact excluding currency including currency currency impact (1) "constant currency" is determined by applying the 2015 average exchange rates to the prior year local currency net 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 net sales growth excludes the impact of currency.
