Lifetime Brands(LCUT) - 2025 Q1 - Quarterly Report

Part I Financial Information This section provides a comprehensive overview of the company's financial performance, condition, and cash flows Financial Statements The company reported an improved net loss of $4.2 million in Q1 2025, with total assets decreasing and operating cash flow increasing Condensed Consolidated Balance Sheets Total assets decreased to $594.6 million as of March 31, 2025, primarily due to reduced accounts receivable Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 (unaudited) | December 31, 2024 | | :--- | :--- | :--- | | Total Current Assets | $340,605 | $373,568 | | Total Assets | $594,593 | $634,310 | | Total Current Liabilities | $124,183 | $151,743 | | Total Liabilities | $368,917 | $404,387 | | Total Stockholders' Equity | $225,676 | $229,923 | Condensed Consolidated Statements of Operations Q1 2025 net loss improved to $4.2 million from $6.3 million in Q1 2024, despite slightly lower net sales Q1 2025 vs. Q1 2024 Statement of Operations (in thousands, except per share data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net sales | $140,085 | $142,242 | | Gross margin | $50,637 | $57,547 | | Income from operations | $1,099 | $1,830 | | Net Loss | $(4,201) | $(6,260) | | Diluted Loss per Share | $(0.19) | $(0.29) | Condensed Consolidated Statements of Cash Flows Operating cash flow increased to $16.7 million in Q1 2025, leading to a $7.4 million increase in cash and equivalents Q1 2025 vs. Q1 2024 Cash Flow Summary (in thousands) | Cash Flow Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | 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 | $7,446 | $(11,550) | Notes to Condensed Consolidated Financial Statements Notes detail accounting policies, revenue disaggregation, $63.2 million ABL availability, and a $6.4 million legal settlement gain Net Sales by Segment (in thousands) | Segment | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | U.S. segment | $128,510 | $130,480 | | International segment | $11,575 | $11,762 | | Total net sales | $140,085 | $142,242 | - The company recognized a net legal settlement gain of $6.4 million in Q1 2025, which consisted of a $7.0 million settlement less $0.6 million in legal fees[133] - As of March 31, 2025, the company was in compliance with its debt covenants, with ABL Agreement availability limited to $63.2 million by the Term Loan's maximum Total Net Leverage Ratio covenant, despite a total availability of $99.7 million[79][86] Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) MD&A discusses 1.5% net sales decrease, gross margin contraction, improved net loss, new tariffs, and distribution center relocation Recent Developments New 145% tariffs on Chinese imports and east coast distribution facility relocation are key recent developments - As of April 9, 2025, the U.S. imposed an aggregate 145% tariff on imports from China, which is expected to materially impact the company's supply chain and cost structure[153] - The company is relocating its east coast distribution facility to Hagerstown, Maryland, expecting to incur up to $7.0 million in exit costs, $10.0 million in capital expenditures, and $7.0 million in one-time relocation costs, offset by $13.1 million in tax abatements and incentives[154][155][156] Results of Operations Q1 2025 net sales decreased 1.5%, gross margin contracted, and SG&A fell due to a $6.4 million legal settlement gain Key Operational Metrics (% of Net Sales) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Gross margin | 36.1% | 40.5% | | Distribution expenses | 12.9% | 11.4% | | SG&A expenses | 22.4% | 27.8% | | Income from operations | 0.8% | 1.3% | - U.S. segment sales decreased by 1.5%, driven by a 4.8% decline in the Kitchenware category, partially offset by a 7.0% increase in the Tableware category[164][165][166] - Unallocated corporate income was $2.2 million in Q1 2025, compared to an expense of $4.5 million in Q1 2024, primarily driven by a $6.4 million net legal settlement gain[178] Liquidity and Capital Resources Total liquidity was $89.6 million as of March 31, 2025, with Adjusted EBITDA at $51.0 million for the trailing twelve months Liquidity Position as of March 31, 2025 (in millions) | Source | Amount | | :--- | :--- | | Cash and cash equivalents | $10.4 | | ABL Agreement availability (covenant limited) | $63.2 | | Receivables Purchase Agreement availability | $16.0 | | Total Liquidity | $89.6 | Reconciliation to Adjusted EBITDA (Trailing Twelve Months Ended Mar 31, 2025, in thousands) | Metric | Amount | | :--- | :--- | | Net loss as reported | $(13,106) | | Adjustments (Interest, Taxes, D&A, etc.) | $64,069 | | Adjusted EBITDA | $50,963 | - The company has a $20.0 million stock repurchase program with $11.1 million remaining available as of March 31, 2025, with no shares repurchased during the quarter[217] Quantitative and Qualitative Disclosures About Market Risk No material changes in market risk exposures since the 2024 Annual Report on Form 10-K disclosures - There were no material changes in market risk for changes in foreign currency exchange rates and interest rates from the information provided in the 2024 Annual Report on Form 10-K[218] Controls and Procedures CEO and CFO concluded disclosure controls were effective, with no material changes to internal controls during the quarter - The CEO and CFO concluded that as of March 31, 2025, the company's disclosure controls and procedures were effective[219] - No material changes were made to the company's internal controls over financial reporting during the most recent fiscal quarter[220] Part II Other Information This section covers legal proceedings, risk factors, equity sales, and other disclosures not included in Part I Legal Proceedings This section refers to Note 12 for details on legal proceedings, including an EPA matter and a settled case - For a description of legal proceedings, the report refers to NOTE 12 — CONTINGENCIES in the financial statements[221] Risk Factors New U.S. international trade policy tariffs on Chinese imports pose a material risk to the business - A key risk factor is the uncertainty of international trade agreements, particularly new tariffs on goods imported from China, which are expected to have a material impact on the business[223] - The company is taking mitigating actions, such as adjusting pricing, product configurations, and inventory management, but warns these may not fully offset the negative impact of the tariffs[225] Unregistered Sales of Equity Securities and Use of Proceeds No public share repurchases, but 80,247 shares acquired from employees at $5.18 to cover tax liabilities Issuer Purchases of Equity Securities (March 1 - March 31, 2025) | Period | Total Shares Purchased | Average Price Paid per Share ($) | Shares Purchased as Part of Public Program | Max Value Remaining for Repurchase ($) | | :--- | :--- | :--- | :--- | :--- | | Mar 1 - Mar 31, 2025 | 80,247 | $5.18 | — | $11,140,752 | Other Information No directors or officers adopted, modified, or terminated Rule 10b5-1 trading arrangements during Q1 2025 - No directors or officers adopted, modified, or terminated a Rule 10b5-1 trading arrangement during the fiscal quarter ended March 31, 2025[227] Exhibits This section indexes all exhibits filed with the Form 10-Q, including CEO/CFO certifications and key agreements - The Exhibit Index lists all documents filed with the report, including required CEO/CFO certifications, a lease agreement dated January 23, 2025, and an amendment to the Shares Subscription Agreement with Grupo Vasconia[229]