Lifetime Brands(LCUT) - 2025 Q1 - Quarterly Results

First Quarter 2025 Financial Results This report details Lifetime Brands' financial performance for the first quarter of 2025, including management commentary, financial highlights, and reconciliations Management Commentary Q1 2025 sales declined slightly with lower gross margin, prompting expense controls and a strategic shift of manufacturing out of China - First quarter sales were slightly down, with a notable decrease in gross margin attributed to customer and product mix[2] - Sales declines in the mass channel were offset by gains in e-commerce, the dollar channel, and the club channel[2] - The company is tightening controls on variable expenses, with the impact expected in the second half of the year[2] - To mitigate risks and diversify, the company plans to move the majority of its manufacturing out of China by the end of 2025 to countries including Malaysia, Indonesia, Vietnam, Cambodia, India, and Mexico[3] First Quarter Financial Highlights Q1 2025 net sales decreased to $140.1 million, with a net loss of $4.2 million, improved by a legal settlement, while TTM Adjusted EBITDA reached $51.0 million Q1 2025 vs Q1 2024 Key Financial Metrics | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Sales | $140.1 million | $142.2 million | | Gross Margin | $50.6 million (36.1%) | $57.5 million (40.5%) | | Income from Operations | $1.1 million | $1.8 million | | Net Loss | $(4.2) million | $(6.3) million | | Diluted Loss Per Share | $(0.19) | $(0.29) | - Selling, general and administrative (SG&A) expenses decreased 20.3% to $31.5 million, primarily due to a net legal settlement gain of $6.4 million[5] - Adjusted EBITDA for the trailing twelve months ended March 31, 2025, was $51.0 million[8] - Total liquidity as of March 31, 2025, was $89.6 million, comprising cash, ABL availability, and available funding under the Receivables Purchase Agreement[8] 2025 Outlook The company withdrew its 2025 financial guidance due to macroeconomic shifts, while Project Concord remains on track and Investor Day is postponed - The Company has decided not to provide financial guidance for the Full Year 2025 due to the shifting macro environment[10] - Project Concord, aimed at improving the financial results of the International segment, remains on track[10] - The company has decided to pause its planned Investor Day[11] Financial Statements This section presents the condensed consolidated statements of operations, balance sheets, and cash flows for the period Condensed Consolidated Statements of Operations Q1 2025 net sales decreased to $140.1 million with lower gross margin, resulting in a net loss of $4.2 million, an improvement from prior year Condensed Consolidated Statements of Operations (in thousands) | | Three Months Ended March 31, | | :--- | :---: | :---: | | | 2025 | 2024 | | Net sales | $140,085 | $142,242 | | Cost of sales | 89,448 | 84,695 | | Gross margin | 50,637 | 57,547 | | Distribution expenses | 18,070 | 16,181 | | Selling, general and administrative expenses | 31,468 | 39,536 | | Income from operations | 1,099 | 1,830 | | Interest expense | (4,915) | (5,614) | | Mark to market loss on interest rate derivatives | (527) | (174) | | Loss before income taxes and equity in losses | (4,343) | (3,958) | | Income tax benefit (provision) | 142 | (210) | | Equity in losses, net of taxes | — | (2,092) | | NET LOSS | $(4,201) | $(6,260) | | BASIC/DILUTED LOSS PER COMMON SHARE | $(0.19) | $(0.29) | Condensed Consolidated Balance Sheets As of March 31, 2025, total assets and liabilities decreased, with total stockholders' equity slightly lower Condensed Consolidated Balance Sheets (in thousands) | | March 31, 2025 | December 31, 2024 | | :--- | :---: | :---: | | TOTAL CURRENT ASSETS | $340,605 | $373,568 | | TOTAL ASSETS | $594,593 | $634,310 | | TOTAL CURRENT LIABILITIES | $124,183 | $151,743 | | Revolving Credit Facility | 39,328 | 42,693 | | Term Loan | 129,707 | 130,949 | | TOTAL LIABILITIES | $368,917 | $404,387 | | TOTAL STOCKHOLDERS' EQUITY | $225,676 | $229,923 | | TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $594,593 | $634,310 | Condensed Consolidated Statements of Cash Flows Q1 2025 saw improved cash from operating activities at $16.7 million, leading to a $7.4 million increase in cash and cash equivalents Condensed Consolidated Statements of Cash Flows (in thousands) | | Three Months Ended March 31, | | :--- | :---: | :---: | | | 2025 | 2024 | | Net loss | $(4,201) | $(6,260) | | NET CASH PROVIDED BY OPERATING ACTIVITIES | $16,711 | $10,513 | | NET CASH USED IN INVESTING ACTIVITIES | $(1,573) | $(600) | | NET CASH USED IN FINANCING ACTIVITIES | $(7,767) | $(21,399) | | INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | $7,446 | $(11,550) | | CASH AND CASH EQUIVALENTS AT END OF PERIOD | $10,375 | $4,639 | Reconciliation of GAAP to Non-GAAP Measures This section reconciles reported GAAP financial measures to non-GAAP adjusted figures for a clearer operational view Adjusted EBITDA Reconciliation Trailing twelve months Adjusted EBITDA reached $51.0 million, derived by adjusting net loss for various non-cash and non-recurring items Adjusted EBITDA for the twelve months ended March 31, 2025 (in thousands) | | Twelve Months Ended March 31, 2025 | | :--- | :---: | | Net loss as reported | $(13,106) | | Loss on equity securities | 14,152 | | Income tax provision | 2,979 | | Interest expense | 21,509 | | Depreciation and amortization | 23,073 | | Mark to market loss on interest rate derivatives | 819 | | Stock compensation expense | 4,175 | | Legal settlement gain, net | (4,578) | | Acquisition related expenses | 994 | | Warehouse redesign expenses | 946 | | Adjusted EBITDA | $50,963 | Adjusted Net Loss and Adjusted Diluted Loss per Share Reconciliation Q1 2025 adjusted net loss was $5.3 million, or ($0.25) per share, compared to $3.2 million, or ($0.15) per share, in Q1 2024 Adjusted Net Loss Reconciliation (in thousands) | | Three Months Ended March 31, | | :--- | :---: | :---: | | | 2025 | 2024 | | Net loss as reported | $(4,201) | $(6,260) | | Adjustments: | | | | Acquisition intangible amortization expense | 4,365 | 3,778 | | Legal settlement gain, net | (6,400) | — | | Mark to market loss on interest rate derivatives | 527 | 174 | | Other adjustments | — | 113 | | Income tax effect on adjustments | 395 | (998) | | Adjusted net loss | $(5,314) | $(3,193) | | Adjusted diluted loss per common share | $(0.25) | $(0.15) | Adjusted (Loss) Income from Operations Reconciliation Q1 2025 adjusted loss from operations was $0.9 million, a decline from $5.7 million adjusted income in Q1 2024 Adjusted (Loss) Income from Operations Reconciliation (in thousands) | | Three Months Ended March 31, | | :--- | :---: | :---: | | | 2025 | 2024 | | Income from operations | $1,099 | $1,830 | | Adjustments: | | | | Acquisition intangible amortization expense | 4,365 | 3,778 | | Legal settlement gain, net | (6,400) | — | | Acquisition related expenses | — | 95 | | Warehouse redesign expenses | — | 18 | | Adjusted (loss) income from operations | $(936) | $5,721 | Constant Currency Net Sales Reconciliation Q1 2025 total net sales decreased by 1.4% on a constant currency basis, with U.S. and International segments showing declines Constant Currency Net Sales Year-Over-Year Change (Q1 2025) | Segment | As Reported Change | Constant Currency Change | | :--- | :---: | :---: | | U.S. | (1.5)% | (1.5)% | | International | (1.6)% | (0.2)% | | Total net sales | (1.5)% | (1.4)% |