Lifetime Brands (LCUT) 9 May 242024 Q1 Earnings call transcript

Good morning, ladies and gentlemen, and welcome to the Lifetime Brands First Quarter 2024 Earnings Conference Call. [Operator Instructions] I would like to introduce your host for today's conference, Karli King. Ms. King, please go ahead.

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

you available are Reform from contain forward-looking future the to Litigation that that the filings Private guarantees like Any the of call, other press the developments. Before performance in performance based for the qualify and liability factors and to and safe hereof statements statements are of the remarks Such date statements information and the company Securities we may to for with and relate begin future could subject the factors these remind influence release established such company Commission. to our morning by our this that Act. future I'd change results are protection Exchange of to harbor highlighted our intended as are are are Securities in contained statements today's upon not

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

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

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

our XXXX, for first expectations thank with above us solid pleased and you. I were you to report joining broader start market. in that came in quarter Good delivering everyone, morning, the year Thank a to and today. results line fiscal am

conditions. we testament in to last the few work have market to gain performance we ensure quarter positioned the Our to well and notwithstanding is compete direct share, years this a are done

decrease drive business delivered ahead and economic to will strategic decrease this our and in efforts impact net slight the the our excellence in elaborate we quarter, we both reflects I $XXX.X We shareholders. This confident driving retailers, rationalization fiscal As later year-over-year. for on in headwinds year, remarks. continue investing our a my our which select growth inventory value million the rest ability initiatives to sales among of are of to X.X% operational of look in advancing

of is Lifetime's strong approximately quarter, macro line delivered data, we these exceeding of our top that that chain. first in broader growth noting quarter the It the was worth financial expectations indicating markets. we which last revenues, gross and reported new categories. increased our product our introduction, stability third-party delivering that market exceeded margin track results. for performance supply we decline bottom in a disciplined margin market focus our driven continued XX.X% line management expense from underscores result a point-of-sale and challenges on X.X% surpassing of across benefits the mix, investment product as Despite Further, pressures, underlying expansion and year. with profitability balance despite This growth of in favorable our in by

well performed solid U.S. We and first peers. and our the in core our with delivered comparison in the Beginning quarter business. to results market

e-commerce. at quarter, in retailers. among our widely industry One to in lowering our levels factor decrease contributed end As retailers, for the demand certain shipping was particularly leading reported a markets decline to volume experienced in-stock of a which dip across shipments in

these continued speaks products. the noticeable sell-through rains with to customer a to which shipments between retailers, and our consumer receptivity tracked Lifetime divergence and

focus improving in our each -- a growth confident continue where to corresponding levels. that markets. of we across investing I'll we our discuss shipment rebound will in invest continue are see as on now and demand business, We end our to activities normal returns international performance to

saw the supporting decline put U.K. and decrease volume share specialty in broadly for we investments a during retail order channels. major bearing shipment resulting independent significant temporary on our the the market. environment volume pressure and quarter, sluggishness from period, in the customer in fruit U.K. continues In and the the to a first in recessionary While are substantial gains, demand from a ongoing

we to levels which e-commerce to particularly recent However, rebound in months, retailers placements driven the experience. return have coming expect by in volume will begun the incremental a national at channel, normal and we

in continue our Turning and margins. Zealand, are realize to gaining consistently in Asia Pacific, Australia the of In benefits other international to significant New where go-to-market seeing customers we our we markets. the higher strategy. new and change

the from are infrastructure seeing throughout are markets over our quarters, will volume sell-through solid in the throughout growth Southeastern and and confident that in we made investments regions several those the XXXX. we've Additionally, continue last rates benefiting Asia pickup are we

channels quarter, In is drop-off in e-commerce and for the expectations. a sales impact predominantly X-week an core shipments our markets the market flat to we in a meaningful This in segment a the our which international and European in customer, shutdown March, largest the basically saw a all were results start after prior our U.K. shipments to year, driven by to below retail strong across channel, which core but our for period. adverse had nearly for year in

the starting for taken favorable contribution about will the a confident actions are upon full not meaningful a in margin share contribution in Although we remain have segment gains, some our the of to international I and produce we see based which year. terms talk this for market momentum segment moment. quarter, in will we in improvement was margin previously

Turning to initiatives. our growth

First, our address let me foodservice progress our in business.

continues year. our Mikasa our about for to gain to foreseeable book will future. base deliver and fiscal business, the a a million to solid excited traction for in from which gain business a this continuing remain the We foodservice customers We line are build in $XX as serve opportunity and through business on path with remain revenue Hospitality that product of share this

up rationalization reduced to and were as performance in decreases our meaningful inventory were by XXXX. temporary throughout volume. pause efforts order our this this nearly in e-commerce, will share be all all as stock largest Accordingly, in We sell-through customer sales channel robust our picked was of expect In our at a data see impacted of safety we leading significantly categories across quarter to believe levels we categories. for e-commerce strong, the

product which product competitors. development a Lifetime to is market remain in one have that New for We continued competitive of capabilities where us with many further Lifetime's a robust of core we end differentiated invest about challenging environment, has advantage. our our provides excited pipeline,

The now garnering to and is our Dolly products introduced customers has announced year last Parton interest. been line of we significant

second some shipment in line due will mechanics. being categories. about channel, quarter several point, to a other in the the and the Further, third expansion our quarter this is this across begin expected exceed retailers While initial we originally while change having estimates. with dollar will we Shipments meaningful are shipments in launched in conversations at

is line Europe traction international gaining KitchenAid in notably Our strong end Continental and New markets our in Zealand. and Australia

are numerous either there expanded established result, or we we where listings listings have customers. shelf that a gained have a now customers at on As these beachhead

We this will year. of the see this strategy benefit

preparing partnership international geographies. particularly a to our about we are new are ahead, we for that Looking announce excited

front, later XXXX. launch We on new segment introductions these this than in growth brand to in our product but will top translate line expect International year, we More no to that and next but believe it to likely come year.

e-commerce our relaunch of relaunch product we expectations. and through reception platforms. Swell many line, sales good our shipments we and above Notably, products, For brand as we on sold swell.com these following online solely this exclusively received as delivering out were pursue

direction to continue out will with the Swell line roll and We channels across product this this of multiple line. are pleased reenergized

touch Let our briefly me chain. supply on

packet. offering As continued production in in we with contract quarter. comparable solid pleased To our were that end, this this online. for margin stability progress plastics was were levels to The our full on rates bringing year, freight to supply I reach remains to cost ocean last Mexico, we at track are year. In deliver able the noted, in to pleased facility chain a lock capacity to us our manufacturing stability we contributor our this expansion facility key

many our of active chain efforts strengthen Asia. of XX% our supply moving sourcing and Mexico be moving us by supply to and our derisk including continue will China. diversification geographies, priority continued outside goods We for towards forward to in of part remain a Product across as

to now our Turning balance sheet.

strong term our Our reduce the over earnings balance loan to and flexibility cash provided almost have us the by million XX months. $XXX flows past

of maintaining liquidity, leverage below. levels are While our high historical ratio approaching be Xx to of target we or pleased

expense has with levels disciplined allocation. strong above us historical management helped to Our ample focus flexibility affords which maintain us capital on norms, of respect continued liquidity

that priorities. opportunities align strategic as We view and for continue value-enhancing the acquisitions market for to our with acquisitions remain open to favorable

arise. will to continue as they evaluate opportunities these We

this our to turn in now me XXXX, let we release guidance note, issued our which that On financial for morning.

observed monitoring closely quarter, on creating initial regardless are the retailer conditions. positioned of that end While and we market outlook signs market value we executing pressure this are that reflects confidence continue we of our to our demand

market We categories. pipeline are for share to and the eager continue in have year products gaining new growth already and opportunities our bringing to across

diligent and decline net based second on our to share guidance and grow markets for be our We in timing growth operational can to quarter into expansion our and the expectations that our management. quarters top Our built X the bottom year lines with is X year. and end and expense factors, is rebound full for guidance due belief in guidance. A will market through our that the note slight full accretive a in we

strong and our position flexibility value are business, the we in our improves In a are With invest capture summary, create operating to and into XXXX. positioned we demand head we across growth, continued of as momentum meaningful from our the for as opportunities well remainder fiscal shareholders. to of strength

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

Rob. Thanks,

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

first period million 'XX for was $X.X adjusted of the for the earnings XXXX, increase 'XX measure non-GAAP million an release. our to and ended $X.X adjusted loss, financial EBITDA year in financial operations for GAAP to reconciled full from the was $XX.X from or operations trailing the March income period. adjusted are compared in EBITDA measures, Adjusted net quarter $XX.X which income $X.X from million XXXX. million, And million XX, of XX-month Adjusted

otherwise. stated unless Following are XXXX, comments the XXXX first quarter of for and

by by sales decreased U.S. million. Consolidated X.X%. segment to declined sales $XXX.X X.X%

tools the lower Solutions Kitchenware Within Rob was lower decrease was measurement factor an cutlery levels products. Kitchenware club decrease kitchen due As partially was certain in-stock decline categories. and occurred category partially offset in at the a increase the hydration decline Solutions from due commented, to offset Home key retailers. the program. segment's segment, and in increase new tableware was for This this to and an warehouse by products tailored boards. barware, bath and Home by

International or to were $XXX,XXX dollars $XX.X in constant down sales segment U.S. or $XXX,XXX X.X% million.

XX% to year higher was commented, Rob in increased margin drop-off in XX.X% decreased product to to favorable and partially a recessionary ongoing a International shipments segment slight prior was lower in to from favorable to to by freight the major environment gross due gross the U.K. this XX.X%. currency The due decrease decrease benefited a from mix. of March the as XX%. increased offset margin improvement and temporary was in from from very a Asia. costs As Gross customer. shipments XX.X% margin of XX.X% U.S. sales inbound The hedge. decrease

Excluding benefit, and from current margin better the quarter's product gross lower improved the container costs. mix hedge

expenses from second during in expenses surcharge U.S. the in offset order on were efficient temporary percentage goods a a current of domestic quarters. lower The and 'XX benefits quarter. reduction of distribution labor by These benefits inventory utilization warehouses were both shipped its as facility shipments. more rate resulted significant XX.X% in

$XX.X The administrative International a rates as $XX.X new increased improvement expenses by to carrier. $X.X XX%. versus outbound lower segment to Selling, to percentage freight million. general its from distribution from segment goods is and of a increased shipped warehouses expenses by U.S. obtained due expenses X.X% The was million XX.X% million.

the company's and increased the As manufacturing start-up to as expenses mostly million net included International [indiscernible] SG&A increased component from a inflationary to sales, legal bad charge-off $X.X last by $XXX,XXX XX%. related The expenses was percentage driven and by a operations expenses increases Other of XX.X%. a of year in of beyond. Mexico. net expenses and debt declines to increase expense as affecting factors for of percentage SG&A. XX.X% to increased for Allowances the XX.X% employee sales and included largest

As U.S., affected mostly increase and inflationary factors expenses. the by in the was by driven employee

reflects million expenses. our excluding current decreased currency lower professional for due offset In quarter Unallocated to partially addition, due average $XXX,XXX interest by $X.X corporate foreign an by of adjustment unfavorable expense, rates the expenses increased to Interest swaps, by debt a $XXX,XXX lower borrowings. translation. mark-to-market to on impact variable rate higher

benefit and the tax losses rate recognized. equity-based For tax due awards the taxes for was federal exceeded the tax foreign impact expense deduction income to differs where provision which book from for statutory primarily the no rate current quarter, the

quarter The local well a losses effective tax primarily of the our to state of statutory loss is Grupo federal and from impact rate benefit passive the recorded differs year's as tax tax no as we nondeductible [indiscernible] recognized. million. Vasconia, interest in $X.X the for prior and which rate to investment, XX.X% due Related expenses the for

a is in in in investment April only Mexico. process with commercial [indiscernible] written this approved of law XX reorganization the Our Vasconia On year, of bankruptcy now to fully accordance a off. shareholders Grupo resolution

loss We evaluate statement from noting a operations. $XX.X the Grupo the on of our that be other over may of of significant Vasconia loss that reclassified a of million this influence for the to comprehensive will will investment, loss the result noncash a in impact statement accounting of

our to balance sheet, be strong. continue Turning to quite

the 'XX 'XX, As facility our of quarter XX, loan fees. is to term XX versus at million, credit March loan over At approximately XX, and X.Xx $XX of original leverage at from X.Xx plus $X.X by included and and months our end, purchase term agreement. of liquidity million notwithstanding $XXX our cash the improved was This EBITDA million plus availability year-end issued X.Xx March debt adjusted which receivable the XXXX. achieved, significantly under past discount was reduction ratio

$XXX year we income to adjusted as $XX issuing $XX release, sales adjusted Finally, the of adjusted guidance discussed million million the $XXX for $XX of million to $XX.X XXXX follows: operations net from to financial of as are in and $XX.X EBITDA million to net $XX full million; of of million, income million million.

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

comes Anthony from Sidoti [Operator Company. Lebiedzinski Instructions] question Our first &

in International first, in your first regards So to commentary quarter the segment.

there So it sounds March. like there was a big drop in off

sales by As segment see far flowed. the of did variations more how Or as the substantial U.S. about just wondering even the month? were and quarter core you kind any

is March while did them of a were U.S. primarily into the driven Unrelated, market beating and down having markets decline. the very no February, had stronger January we but customer, March bad shipments, well. a and softer as but then largest U.K. slight shut that and the their a we by by the start in very they strong a being year. put and about, U.K. business, see But sluggish, talked as the

Understood.

your then, of from second quarter Okay. Rob, else of the April that? sort third that anything ] Or the commentary sales is there mostly And in being is of Parton about shifting terms or merchandise driving down, quarter? fourth [ because Dolly the until

really related It's to not Anthony. that,

quarter, second It's or it it nothing that expect expected or $X.X to or in going $XXX,XXX maybe just to we're ship to so. ship wasn't initially start Dolly ship million the we we shipping While substantial. maybe

for decline in and in rolled this year seasonality It's it the how just it's of year is informational. and versus is different last the programs. terms So timing reason just business

this played comps out the quarter-to-quarter. versus different timing of so year, see why then how just it's Parton that's And are the off and last Dolly to drop related you'll that pick not year launch. So up.

certainly, it gross the is How then going improvement here the to think do And Okay. margin quarter. forward? in you see nice sustainable was that improving

how maintained with We that the to year. the be not having timing, the of quarter. balance was that for that's -- the first going don't -- recognize That's in inventory, do hit we savings to

[indiscernible].

about margin, talked you The gross about Excuse the margin. me, right? Anthony, comment gross

That's correct. margin. about Yes, I Yes. talking the gross was

So this this first should had better be big be because -- it in it quarter. will we pickup

should they'll year, at be that the higher, level increasing sustained be right? And than for of it's So better it to to things. be the remainder going to not but not talked we in last year. Year-over-year, locked as an trend. but we're we've see going

year. full the for XX% expect Don't Right.

on. Okay. before pass That's I lastly, it should clarify then that. And

That's and reflected -- in in that's guidance our reflected our guidance.

course, Right. Of right.

So on I before it I question guess pass others. my to last

And valuation is potential appetite out marketplace the about It's seeing that? now? then are there strong just your wondering of you what acquisitions. the in talked you for So terms in multiples, how

It's as -- So now, something we're maintain could us to announcing and the in we've while but -- it. public been we'll maintained we're as our have there's appetite you've a do is confident right? we do done not less but willing discipline do, discipline, lot a we just strong, seen to for

We down for have are much strategics. equity, given particularly they valuations than put in this they've decade, being edge for seen market. financials been an market lower, the valuations debt them. is the and for competitive because higher, is are less strategic a attractive of more to of that's Cost over availability to And in and so more helped whole have therefore, debt

cases, people not basis. we advantage out who an So is there. a need stand-alone a the add is can on again, for value interested strategic product and In are availability many you of

So we are active.

our We are discipline. looking, but maintain we'll

Brian question comes Our from Canaccord McNamara Genuity. from next

kind of kind waiting perspective? line as applies of from consistent after, have And look look the at how one, growth should investors on the when which pickup HX return year, a line I first of guidance that my predictive guess QX. kind for this at forward, growth to look I top we we your more of should we guess, Like like? top been

Brian, visibility, growth not we not have guidance. not assuming happens, in This big as about, Yes, we're the and have is that's accretive. still that factored we pipeline. there's talked markets If that stuff into and in by that tremendous driven end the our

launches So is growth new half. the product introduction second our gaining and in . driving and what is share new

on market a ] [ the since question, broader an -- but stock Okay. And day. period then is it's about shares X,XXX earnings on your opened probably

your to view pretty question I does not liquidity. make like a buy but about company? but a public be So because Larry, sense know is stock it's have been you've that it the are it can't vocal investors here, valued, big it

I'm and So to value guys you how you think just curious terms the that you that deserve? that about of you think in hard work getting

Yes. intrinsic recognize We there's will gap value. do realize . an management Board that and that the we to think But paths gap, that addressed. different and do to value assess be needs

do products product my marketplace in in then And so is, have And or terms what relative of your and now I been typical both surprises what's a X in have out hit that launches? miss you of good. new last pleasant year the guess, not rate right kind maybe

It totally and taken math, is white space, used reasons there's dollar that, as hard much what where which That's we which well, if right? in longer successful one. you we pretty right, sell, share It not us We're it say, to so Walmart, is should in just launched is all as we #X lipstick cutlery major its had now. the to things. already blue, to answer. and but So do hit in of Walmart of channel got highly [indiscernible]. incremental. you pace We at at in we channel. the different We've selling on confident categories. so you is I gets a launched why terms in that launched in sell just something we are sell look we many beautiful, where new that well. It no -- so on we highly it we multiple white look growing a some And to the so much we're did if provider also and refer launching at we're in levels, But different don't Dolly, tools in grown Beautiful into

But tremendous line gotten to Dolly even it. selling everyone we we've that from we're demand upon not on the very and stuff feedback based the we're of bullish speak

really but that think will So that that didn't think year, launched work. them. which were so were guarantee -- very that, in things We And they we much the to didn't talk doesn't success, we're there we smaller, again, last bullish. we

biggest seems we're our Fortunately, launching that to very traction. good have X

D. comes Next Linda Davidson. from question from Linda A. Weiser

Yes.

So marketing your your market consumer especially, are some particularly curious I you your the relatively items product consumer in merchandising in in price is the like but to weak, was know sort or mean, maybe about where are guess, point changing plans? making some plans, just I mix your U.K. the I lower you changes thinking point more weakness your introducing items. are I anyway, given sustaining that of how low price regions. plans,

very Yes. the call historically And dependent and specialty, and they what reposition Well, you we're was selling using selling. independents talked is what we've business what done where with cooktop. that we're to -- and on starting U.K. the about,

doing Carrefour picking next and geographies. up strategy larger We're we in there. Europe similar Continental more the Etica up we're So major and international with and doing players and the Dunelm a and picked -- in retailers

to So has price more it's implication the of a you're channel shifted and points your well -- selling. is as terms call that really in strategy what

that. had we for the product right have to So

the because complete because us selling in been that that When getting we're now portfolio. that's giving we exploiting there, and now didn't a we're that we've brand. we is know selling interested retailers -- want internationally. And and we're [indiscernible] been many positioning retailers now that, have now our got KitchenAid Kitchen are and Secondarily very particularly larger we're we we've and

past. main that is we X how which the different prongs we've our business from in are did implemented, those So

And XXXX? us rate telling And of roughly then Okay. in on you're Hospitality, then what expecting is sales growth way Mikasa roughly level any XXXX? kind the in there of is

That small in we of get upon we means Mikasa our million that close million us, the $XX believe, So that and already The grow Mikasa like minimum will of a believe achieved. at a which the neighborhood piece. rest piece $XX XXXX combined It XXXX. in to the the will talked. of of very will business was for foodservice fivefold we've Hospitality Hospitality what grow we business that -- yes, was based

So for $XX million total in XXXX?

Yes.

Great. then... And Okay.

Versus . in Linda? 'XX, $XX million right,

Yes, got the then there's in you. a Thank you. Did this Yes. channel Parton, the say catch understand. dollar And said even little I missed into bit I I beyond didn't you Dolly you retailer sorry, The didn't or a or possibility dollar of expanding that. it. channel. another quite

Yes.

us So get not but dollar when in dollar the an channel. we did launched allowed Dolly, channel, the exclusive it we into it's to

So it largest dollar first dollar in we retailer, the player X channel. in with launched the the channel

in We that are many outside channel. other the -- other sell in conversations do dollar too it business to customers many we traditionally with

Would expansion? be that year be not potential or? of until next And the XXXX would what timing it Okay.

there's Yes. chance might it There be that likely most XXXX. XXXX. ships of some but likely -- But a XXXX, in some

is you And side, freight next What mentioned the then fairly curious contracted on in be for cost good. the year, the flattish What are I to Okay. you things that the going that little was rest that had base? are you cost the that. the more given seeing increase like been oil commodity there's in just in and on you seeing of side some which

pressures this market that is that. not sold, on environment we translate can in goods of cost see our reducing into you in and end market inflationary don't of And in effective more cost. kind and just a very freight, on buyer's aggressive been being have We

back Kay final As of now right I'd now, don't like have hand Rob remarks. to raised we for to any over hands.

to your continued -- you, listening and our forward you we call, Thank great and time to for look on a and day. spending Have for thank everyone dialogue.

Thank for call. you attending wonderful much day. a today's Have so

disconnect. now may You