Lifetime Brands (LCUT) 9 Mar 232022 Q4 Earnings call transcript

Good morning, ladies and gentlemen, and welcome to Lifetime Brands' Fourth Quarter and Full Year 2022 Earnings Conference Call. At this time I’d like to inform all participants that their lines will be in a listen-only mode. After the speakers' remarks, there’ll 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,

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 liability statements to you forward-looking that to we by and intended from to relate harbor for the this Before the Act. of like may these the are remarks company, morning remind Private the Securities qualify safe call, the Reform established contain that our future performance protection statements Litigation

such Such and performance our results in are could future are are available information statements hereof and Any company are statements for developments. factors our contained Commission. not are filings guarantees based of upon with release future influence the the press date others and subject to of the highlighted Securities as change today's in to Exchange that and

law, as the statements. such company by undertake to update not does Except required any obligation

and in morning Exchange Commission. release of is by financial measures and Securities this to within non-GAAP also the these Regulation in GAAP. calculated G the remarks such meaning of measures financial in measures a Included release the Our accordance financial non-GAAP with promulgated contain press reconciliation comparable today's

turn introduction, I'd Rob that go call Please ahead, Kay. With Rob. like the to to over

you, Andrew. Thank Good morning, you for everyone, us today. thank joining and

in quarter across the despite performance fourth macroeconomic specific the solid continued industry our companies delivered to challenges industry business that core fix. Our and

continue rightsizing levels. from our market Our of orders ongoing as as the management helped retailers well impact strong actions to offset market share demand to weaker their end and position cost on proactive reduced inventory focus customers as

the dynamic own identify improved restructure operations environment and our business margins a with continued in margins cash flow internal to our reduce and analysts operating estimates. costs both and efficiencies Our free proactive strong drove gross exceeding efforts generation gross European throughout

$XXX.X the million reflect These million compared in adjusted In for net period. sales and $XX.X $XX.X keep the while challenges peers. million continues and overall down, quarter, in $XXX and sales well throughout to adjusted to comparison it its but results million that the is U.S. fourth in mind quarter, Lifetime industry important EBITDA EBITDA in market to persisted in the XXXX market we the net the delivered to that is perform in

our generate For $XX.X adjusted to in million full in the with million environment us year, $XX.X strong enabled EBITDA challenging of execution compared XXXX. a

the expected with retailers XXXX. to As in we a and fourth signs the Ukraine, other in move factors, normalization Europe order including inflationary we're impact significantly to in major pressures war second in a start seeing more quarter quarter. the flow macroeconomic in the continue and inventory into abate at XXXX, while of of buildup demand turnaround Also,

expect improved and now restructuring we operations our complete, profitability The more international is forward, this of drive which moving later I'll on. speak will that about

U.S. is we important it last that our several the core our market share In business, from maintained gains years. to note

distribution is not our business. While in lost our we revenue down, have core

at a chance, more customers. discretionary we holiday at decline which in Lifetime's disappointing across from holiday saw season, the in consumers our During season resulted especially a retail spending largest

reduced factors. the This quarter demand of to largest as decline market of to our as end orders rightsize a customers across was saw retailers driver retailers the and reduced inflation declines in in industry continue revenue from as consumer inventory. large spending other result the their felt continued But be larger

quarter. result, our shipments As the in exceeded a again data point-of-sale fourth

in order a yet flow, of While to order see turnaround this in in by the we signs quarter see to began have normalization customer orders, encouraged we're we full flow.

there corresponding growth. will market, a with impact to increase we shipments line normalizing expect bottom a be As

profitable. remains our and business. our international in of share to international We Europe XXXX, market Europe throughout turning business gained Now outside

War resulted the business. However, in to current which for Pacific, quarter environment and the U.K. a retailers another by continue tough impact extent, lesser Brexit our on Europe economy, for turn, the and on impact in we Ukraine Asia the and, in exacerbated to sustained consumer also see in demand economic the of of European

a As business XX% international of U.K. our reminder, business. represents our over

to As took that last We're international restructuring business implemented in to this in international in meaningful profitability we fully by was our quarter, in restructuring see as Europe-based these of to implementing the in quarter step increase we an fourth we report pressures discussed and important operations. response result. a the a XXXX expect a pleased

near-term, important. demand the which the increase is to normalize this decision don't business in the restructure We why market to or expect so was

several will allow past and restructuring the rebuilt that realize European from additional business coming the years, up, us our years. this we've in ground Over fully benefits to the

Pacific, our we Asia also a change strategy. In go-to-market implemented to

change We highest and the with lifetime have with profitability will managers, across operating direct them substantially we're distribution the in serve. geographies agents important country an ensure eliminated efficiency selling is markets with all major replace and strategy. This third-party we and consistent our

a quarter, sales make during lower improved We progress heart Global dollar sales a peak on percentage although growth other than strategic still continue to the to in our on XX.X% basis revenues as of the initiatives. levels our of e-commerce the pandemic. fourth

growth U.S. e-commerce our and international. as which progress great core our Lifetime, expanding continue on market focused is make as for well we important business, driver remain to both in We an

in quarter, we fourth in XXXX. Hospitality believe poised continued growth meaningful the are to gain traction, Mikasa the we for division During and

$XX this Taylor, expect to revenues and by and as business We business the XXXX who Hospitality by $XX foodservice of reach a to end of in million Mikasa million our continue XXXX. continue see

M&A avenue our categories are to our we areas product new category. strategic on remains core for cash focused a where Given or tap our opportunities into product And potential an have and/or adjacent growth. in global opportunity activity accretive a scale strong we position, leverage

use have of will allocation. approach our opportunities with capital. the in continue potential balanced enhancing to capital and extremely with pipeline robust of and opportunistic our Consistent a We disciplined market, be value to we

revenues. expenses our cost operating a on decrease due a Overall to were quarter, basis unfavorable Turning dollar favorable to on efforts. in management the basis in although a percentage now

we spoke of high Larry were due labor and expenses wage increases the quarter, efficient to labor. about Last use less experiencing

focused program. and labor expenses successfully are quarter, We primarily ongoing distribution driven efficiency lowering this by reduced an $X.X by we on these costs million,

charges infrastructure. effective Excluding well effort bad operating incremental an to spending, debt expense this and as saw for of costs also due SG&A related the in discretionary reduce as reductions to cost we to S'well, quarter management

of Active a of for historically XXXX. of the Larry balance end management as of the and this aided which quarter. we own levels, balance levels speak of remained achievement about will our as inventory XXXX, key us focus our end had our rightsized By more liquidity sheet sheet liquidity high well.

serve knowledge Jeffrey with Siegel, to in has also Jeff to a The And and role benefit benefit Chairman our Lifetime's in Filament been guidance, Executive the the XXXX. retirement from of ongoing continue from We of with Board his will Executive the as leadership of Directors. forward to cost role was deep our Chairman Brands of non-Executive Board. of business conjunction who continuing Chairman. merger we of serving look our created expect in

but ahead. in in continue first results. to we we today. on results year factors will color XXXX our me business macroeconomic fundamentals will the let quarter XXXX believe limited company In We provide that what the guidance, some to ahead, full intend provide certain driving Looking meantime, business, visibility as into as impact outperform have we report we our it normally is our the do, when stands the

international do the we And expect normalization chains, normalized ordering fully as in I business customer including ocean mentioned, our improved since supply restructured Global pandemic. freight patterns XXXX. and costs, from have of profitability

strong are shareholder of uncertainty. on and We long-term well-positioned trajectory to to in am drive sheet relative value XXXX. a get have business a back we at continues balance with time model And confident I resilient. track prove our economic growth our

Lifetime have all team We of times. another their during are hard to for proud grateful our and year talented challenging achieved for these to work progress

now that, financial With call in I'll to Larry more results detail. over the discuss to turn our

Rob. Thanks,

fourth a XXXX $X.XX income loss in diluted income quarter morning, $X.XX As quarter we the per $XX.X per of in 'XX this in versus or $XXX,XXX for the of $X.X the 'XX. compared 'XX million was fourth as from million net quarter or the million compared to per period. per Adjusted million quarter, 'XX. reported operations diluted diluted diluted was share Income $X.XX or fourth net share of for the $X.XX in of $XX.X share fourth to million was $X.X share $X.X

measures in Adjusted 'XX the 'XX adjusted in that million from million Adjusted agreement was adjusted reconciled before are fourth million operations EBITDA full financial net year adjusted are period. income measures quarter EBITDA GAAP the to XXXX from operations release. to income And income, net and the for was $XX.X compared earnings the our $XX.X limitations. of non-GAAP for credit $XX.X

otherwise. and Following stated fourth net sales, Net quarter consolidated by comments declined XXXX, of are sales the XXXX. for XX% XXXX from unless

retail our markets. Pacific discussed, levels high and Rob inventory Europe especially high and affected a current market in the other weaker to factors inflation Asia economic As end contributed and quarter shipments adversely demand, in

weeks to distribution lower channels. of retailers hand. attributable sales their on decrease all segment to continue XX% This decreased supply reduce by in U.S. The million. $XXX was to replenishment occurred as orders

as which offset March. housewares. including declined decline consumers we spending the S'well, The in sales retail addition, inclusion acquired their partially In goods, of services shifted from was by to

as million. energy USD The $X.X spending. in experienced and due Europe, decrease International the impact $XX.X This exacerbated was million consumer substantially experienced similar million to in segment reduced was was or sales by inflation to food were higher factors of down the which constant discretionary $XX.X U.S. and

agent a more in Asia distributor one. a addition, decrease we In to move from direct model away a selling as

Gross XX.X% year. margin last increased to XX.X% from

due For The gross XX.X% lower XX.X%. is costs. from inbound margin increased the to segment, freight U.S. improvement

an to benefit from from the distributing duty me, Netherlands prices, favorable excuse warehouse some customers margin imported U.K. on an EU to selling and EU improvement goods of -- to XX.X%. the U.K. lower to increase the ongoing The international, mix. increased -- For directly reflected gross in lower versus customer duties XX.X% to

In shift partially continuous International good versus lower costs and expense This lower was was from offset warehouses fixed was general shift due efforts expenses distribution a percent higher distribution, of our increase labor variable XX.X% year. of U.S. hand. by its to on as X.X% carton, higher inventory sales, in its expense XX.X% of by resulting increase X.X% In revenue efficiency last good benefit higher a last warehouses The of distribution percent labor, reduced under-absorption per segment, versus as the expenses. was storage and the year. from segment driven the

due was lower for a freight EU improvement included as year The warehouse to shipped prior now adjustment. The goods occupancy are tax the Netherlands. from outbound customers

allowance higher the due the primarily to to million, bad general segment an expenses increased of than expenses in S'well and $XX.X inclusion administrative XXXX a support million quarter. U.S. in less increase for increased expense, Selling, X% and sales debt. $X.X

SG&A expenses international, to for $X.X For million lower an debt million headcount, net foreign on allowances currency operating lower bad $X.X decreased by and gain.

lower expenses related to period, corporate recorded for XXXX $X.X restructuring Unallocated executive restructuring million elimination the $X.X of senior the on incentive in In $X certain compensation. million expenses million the decreased positions. company to

result the approximately annual action expenses in were for workforce. savings of $XXX,XXX reorganization We will the this associated of restructuring the Also period, million. with segment's expect severance in $X.X of International recorded

was savings rate for reorganization. rates which of XXXX realignment expects from of structure due The management million the change an tax the this variable by in benefits rate annual a by partially due The to operating higher of exceeded and to of primarily debt income reorganization foreign rate on losses, response recognized result expense no our offset in million R&D market European effective and the conditions. increased credit. a $X.X business $X.X to Interest statutory tax the the company interest

Vasconia houseware to earnings similarly were investee. million segments. Group recorded our in equity-owned our and of quarter its a affected The of XX% $XXX,XXX XXXX. a of negatively XXXX Vasconia's international U.S. to loss versus Related in investment, $X.X company in results business

from exacerbated In in affected by was which adversely business, cost Ukraine of addition, procured the aluminum early which resulted Russia, the it demand also its XXXX aluminum in war. by lower was extremely high

very a liquidity be our to continues On very note, positive strong.

$XXX million plus under at all-time was we without environment. selling business year during achieved actively of high while it was $XX.X year-end, of of commitment, in an challenging by actively -- this our and cash million of million enhanced in facility our liquidity which inventory As down $XX credit by managing facility. level managing was approximately by comprised reducing an increase the And our availability this prices credit

ratio million, $XX was the liquidity $XXX.X XX, $X stock. was business of debt-to-EBITDA used S'well to repurchase Furthermore, X debt net was and million approximately net million to 'XX, our leverage and was the our used At purchase common December times.

This concludes for Operator, line open please the comments. our prepared questions.

line Please D.A. [Operator Bolton-Weiser Linda with the with question question. Davidson. Instructions] first proceed your Our from of comes

to news are the the end of about it's Hello, some tunnel inventory terms by hear in good So you? of the at hi. How retailers. light the the reductions

you'll So belt, is -- you've decline that could was that you couple your it quarter the in fourth to than quarter that to sales if we got of that first I be decline the have might say under it? what in the way in the a XXXX, a about quarter. months think being as wondering less little a the first of saw fair Is

not that to way good but Well, a over, the think. is is quarter

be of maybe Okay. of around XXXX. And hinting kind the I correctly? I that sales year-over-year that could Did thought understand then were quarter second you up in

levels, will a we'll do from quarter. the second the believe we inventory So continued would more benefit see in than a in of our we first of right, core quarter and U.S. there normalization business, be onwards

then level, an we'll as see And your in a about own level you through now? further XXXX? you as Okay. XXXX. appropriate do comfortable reduced was which in bit we said, go some Or feeling you just curious quite I that reduction Are that's inventory think inventory you it,

some do business in continue and grow additional appropriate that feel is the be business level. Europe, We to an business. in foodservice core the in In will will support 'XX. There U.S. growth the inventory reduction to

levels quite still still of Okay. back you in pre-pandemic industry food really is ramping it service the pre-pandemic restaurants mentioned that kind nicely. terms or that's of that whatnot? we the Is opening industry sounds -- And are just the to and of since up business, Or levels? like below

it's -- had the so of a So industry There's tremendous lot XXXX. a different.

all, people result vendors are in more a as perform. up for who the there of we're actually picking first us there's opportunity So financially industry and challenged sell, share because can't good

the -- of years. as a delayed pent-up opening there's not than but are lot been more for demand the people hotel years. those couple openings there's in quite good, on many had New past purchases And have there side,

So boost we're from seeing a tremendous that.

hotels. Of course, the in the restaurants

Okay. And product how a for believe, Walmart, brand with on you kind then mentioned had And while update some going? Can wondering was also initiatives I those is particular lines. programs I new XXXX? back of just there you anything are plan us new

is And to beautiful, pieces Value like biggest mark brand offering tools. the new was Walmart, In the three True brands. there's that. One

long so Second, the categories. we as time good. in Walmart. Very very have has frankly. already been The branded tools Cutlery market cutlery. been They've at disappointing, And for large very a with it's placement is had leading happy selling been kind Farberware Walmart, great. that of those both of The haven't

Walmart. sell large we than stop as XXXX very tabletop in likelihood. enter in to our know, are a more the actually dinnerware And else, this anything -- while We prior tabletop to will supplier, don't you anything

So it's opportunity. all incremental

sales. Okay. just And about your one then e-commerce finally, question I had

if like of other curious through of almost of are sales are all of through certain do and that? a I your sales? e-commerce have You like you just type your all was percentage mentioned own sales DTC that your Amazon your that websites retailers specifically. much like pretty Or number pretty

Yes.

the majority pure-play with So Europe Amazon guy major Pacific, being player. internationally here isn't sales those and or are Asia both the in of Amazon the through big in e-commerce

our be outlet biggest Tmall would instance, for in China, So which there.

of websites the But continue versus growing year. south growth year, be our and XXXX and profitably a $XX branded the websites our to million we approximately this million, own that growing And own year-over-year $XX have been number. full again transactional grow little would for

much. pass I'll thank you it Well very on. Okay.

Company. Sidoti question. with next Our question of Please line Instructions] the & from comes your proceed with Anthony [Operator Lebiedzinski

thank questions. morning, taking you for and Good the

tableware, the results, So fourth first, so to demand your kitchenware, different wanted home product looking a at I solutions. for quarter perspective for just get better categories,

Just consistent wondering levels? you in was your demand or any variations if see demand did

that at affects No. over-inventory impact wholesale. And situation And on biggest again, us has the been everything. the

So It by the to impacting inventory it on on in They're back depends it's doesn't aren't at you it buy much channel even over and or when products That or have open channel to products. situation board. doesn't works. retail. your how not there over that anything the anything across is if on be it inventory buying too at, isn't cutting your

Okay. Got you.

Okay. of in And commentary quarter. second terms the then the just about

expect point when to that is So Is fair you the way? point-of-sale sales of data. data -- the shipment that match a

in Yes, we poor there's be. we but look. positively mention to in with in and also that I at mention what's very very do inventory looking customer terms going XXXX, or mean or whatever that at situation we visibility it's their club of do also close our know their base we're the are we DCs do

we a there at is So can't date definitively the on need point. but this put things

Understood.

you initiative? in you restructuring, quantify can And how of terms Okay. savings European in expect the much then that guys from

talking You're about in Europe?

Yes, please. Yes.

$XXX,XXX it Yes, said Larry. be it's we $X.X Yes, about restructuring. should million,

Some of come these from will attrition and warehouse labor. less savings

yes. the -- So again, for bang buck than we that's big international, a

we executed have it And completely.

no there's So on to the done additional work be structure.

Okay. And What X.X your your appetite? about shares million you stock. then of so repurchased is

just clarify. to you not shares. bought but $X.X know of to million we got I clarify, Well, million back X.X that, just stock,

we'll We're it goes currently on. hold the reassess in program, year as on that

right, much very and luck. thank Okay. you well best of it. Got All

Anthony. you, Thank

the There further to the are for call in back no queue. remarks. questions like closing hand management I'd to

Lifetime people's very first people Okay. forward call our Thank interest a you, us Have to Brands. continued look day. everyone. great We on look communication we you. and continued up to support conference soon. Thank forward quarter We of appreciate and joining coming

does gentlemen, you your Thank for today's and Ladies teleconference. conclude this participation.

wonderful a day. this You lines time, may have your and disconnect at