Lifetime Brands Reports 2012 Financial Results

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Lifetime Brands Reports 2012 Financial Results

Announces a 25% Increase in its Quarterly Dividend

GARDEN CITY, N.Y.--(BUSINESS WIRE)-- Lifetime Brands, Inc. (NasdaqGS: LCUT), a global provider of branded products used to prepare, serve and consume foods in the home, today reported its financial results for the fourth quarter and year ended December 31, 2012.


Fourth Quarter Highlights:

  • Consolidated net sales were $154.8 million, an increase of 12.5%, as compared to consolidated net sales of $137.6 million in the fourth quarter of 2011.
  • Net income was $15.2 million, or $1.19 per diluted share, in the 2012 period, as compared to $5.4 million, or $0.43 per diluted share, in the prior-year period.
  • Adjusted net income was $8.7 million, or $0.67 per diluted share, in the 2012 period, as compared to $6.5 million, or $0.52 per diluted share, in the 2011 period.
  • Consolidated EBITDA for the three-month period ended December 31, 2012 was $17.9 million, as compared to $14.3 million for the corresponding 2011 period.

Full Year Highlights:

  • Consolidated net sales were $486.8 million, an increase of 9.5%, as compared to consolidated net sales of $444.4 million for 2011.
  • Net income was $20.9 million, or $1.64 per diluted share, in 2012, as compared to $14.1 million, or $1.12 per diluted share, in 2011.
  • Adjusted net income was $16.2 million, or $1.26 per diluted share, in 2012, as compared to $14.5 million, or $1.16 per diluted share, in 2011.
  • Consolidated EBITDA was $41.2 million, as compared to $38.1 million for the year ended December 31, 2011.

On March 12, 2013, the Board of Directors declared a quarterly dividend of $0.03125 per share payable on May 15, 2013 to shareholders of record on May 1, 2013.

Jeffrey Siegel, Lifetime's Chairman, President and Chief Executive Officer commented,

"Lifetime finished 2012 on a very positive note. For the quarter, Consolidated Net Sales increased 12.5% on an actual basis and 8.6% on an organic basis. During the quarter, we acquired the business and assets of Fred® & Friends, a line of innovative products featuring fun kitchen tools, tabletop accessories, party goods and giftware products.

"For the year, Consolidated Net Sales increased 9.5% (actual) and 1.4% (organic).

"Despite the increase in Consolidated Net Sales, the acquisition of Fred® and Friends and a planned, temporary build-up of inventory in the UK in anticipation of increased duties on Chinese ceramics, which are expected to be enacted later this year, total inventory at year-end decreased to $104.6 million, from $110.3 million, reflecting our improving inventory management practices.

"Earlier this month, we presented our new line-up of kitchenware products at the annual International Home + Housewares Show in Chicago. The reaction to our new products was overwhelmingly positive, which we believe foretells the successful placement of many of these new products later in the year.

"While the U.S. and European economies remain troubled, we nevertheless foresee our overall business increasing by 4-6% in 2013. The increased cash dividend we announced today demonstrates our positive outlook and confidence in our products."

Conference Call

Lifetime has scheduled a conference call for Thursday, March 14, 2013 at 11:00 a.m. ET to discuss its fourth quarter 2012 results. The dial-in number for the conference call is (800) 510-9836 or (617) 614-3670, passcode #15045565. A replay of the call will also be available through March 15, 2013 and can be accessed by dialing (888) 286-8010 or (617) 801-6888, conference ID #43636130. A live webcast of the conference call will be broadcast in the Investor Relations section of the Company's web site, www.lifetimebrands.com. For those who cannot listen to the live broadcast, an audio replay of the call will also be available on the site.

Non-GAAP Financial Measures

This earnings release contains non-GAAP financial measures. For purposes of Regulation G, 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. Pursuant to the requirements of Regulation G, 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. Management uses this non-GAAP information as an indicator of business 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 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 provider of kitchenware, tabletop and other products used in the home. The Company markets its products under such well-known kitchenware brands as Farberware®, KitchenAid®, CasaMōda®, Cuisinart®, Cuisine de France®, Fred ®, Guy Fieri®, Hoffritz®, Kizmos™, Misto®, Pedrini®, Roshco®, Sabatier® and Vasconia®; respected tabletop 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 Elements®, Melannco®, Kamenstein® 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,

2012  20112012  2011
 
Net sales$154,812$137,611$486,842$444,418
 
Cost of sales 98,767  86,926  310,054  282,058 
 
Gross margin56,04550,685176,788162,360
 
Distribution expenses12,10313,28444,04643,882
Selling, general and administrative expenses29,40327,443104,33893,894
Intangible asset impairment -  -  1,069  - 
 
Income from operations14,5399,95827,33524,584
 
Interest expense(1,254)(1,951)(5,898)(7,758)
Loss on early retirement of debt -  -  (1,363) - 
 
Income before income taxes and equity in earnings13,2858,00720,07416,826
 
Income tax provision(2,596)(3,513)(5,208)(6,122)
Equity in earnings, net of taxes 4,465  925  6,081  3,362 
 
NET INCOME$15,154 $5,419 $20,947 $14,066 
 
BASIC INCOME PER COMMON SHARE$1.21 $0.45 $1.67 $1.16 
 
DILUTED INCOME PER COMMON SHARE$1.19 $0.43 $1.64 $1.12 
    
LIFETIME BRANDS, INC.
CONSOLIDATED BALANCE SHEETS

(In thousands - except share data)

 
December 31,
20122011
 
ASSETS
CURRENT ASSETS

Cash and cash equivalents

$1,871$2,972

Accounts receivable, less allowances of $3,996 at December 31, 2012 and $4,602 at

December 31, 2011

97,36977,749

Inventory

104,584110,337

Prepaid expenses and other current assets

5,3935,264

Deferred income taxes

 3,542  2,475 

TOTAL CURRENT ASSETS

212,759198,797
 
PROPERTY AND EQUIPMENT, net31,64634,324
INVESTMENTS43,68534,515
INTANGIBLE ASSETS, net57,84246,937
OTHER ASSETS 2,865  4,172 

TOTAL ASSETS

$348,797 $318,745 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES

Revolving Credit Facility

$7,000$15,000

Current maturity of Senior Secured Term Loan

4,375-

Accounts payable

18,55518,985

Accrued expenses

33,35433,877

Income taxes payable

 3,615  2,100 

TOTAL CURRENT LIABILITIES

66,89969,962
 
DEFERRED RENT & OTHER LONG-TERM LIABILITIES21,56514,598
DEFERRED INCOME TAXES3,5105,385
REVOLVING CREDIT FACILITY53,96842,625
SENIOR SECURED TERM LOAN30,625-
TERM LOAN-40,000
 
STOCKHOLDERS' EQUITY

Preferred stock, $.01 par value, shares authorized: 100 shares of Series A and 2,000,000 shares of Series B; none issued and outstanding

--

Common stock, $.01 par value, shares authorized: 25,000,000; shares issued and outstanding: 12,754,467 at December 31, 2012 and 12,430,893 at December 31, 2011

128124

Paid-in capital

142,489137,467

Retained earnings

33,84914,465

Accumulated other comprehensive loss

 (4,236) (5,881)

TOTAL STOCKHOLDERS' EQUITY

 172,230  146,175 

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$348,797 $318,745 
 
 

LIFETIME BRANDS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

   
Year ended

December 31,

2012  2011
OPERATING ACTIVITIES
Net income$20,947$14,066
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for doubtful accounts123(24)
Depreciation and amortization9,3248,397
Amortization of debt discount-543
Deferred rent(668)(133)
Deferred income taxes(3,011)(1,218)
Stock compensation expense2,7932,795
Undistributed equity earnings(5,665)(2,896)
Intangible asset impairment1,069-
Loss on early retirement of debt1,363-

Changes in operating assets and liabilities (excluding the effects of business acquisitions)

Accounts receivable(14,741)3,297
Inventory9,694(5,365)
Prepaid expenses, other current assets and other assets1201,120
Accounts payable, accrued expenses and other liabilities(166)(4,673)
Income taxes payable 1,515  (3,722)
NET CASH PROVIDED BY OPERATING ACTIVITIES 22,697  12,187 
 
INVESTING ACTIVITIES
Purchases of property and equipment(4,955)(4,959)
Equity investments(2,765)(5,123)
Business acquisition, net of cash acquired(14,500)(20,584)
Net proceeds from sale of property 27  31 
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