Lifetime Brands(LCUT) - 2025 Q2 - Quarterly Report

Part I. Financial Information This section provides the unaudited condensed consolidated financial statements and management's discussion and analysis of financial condition and results of operations Item 1. Financial Statements This section presents the unaudited condensed consolidated financial statements, including balance sheets, statements of operations, comprehensive loss, stockholders' equity, and cash flows, along with detailed notes explaining the basis of presentation, accounting policies, and specific financial items for the periods ended June 30, 2025 and December 31, 2024 Condensed Consolidated Balance Sheets This section presents the company's financial position, including assets, liabilities, and equity, at specific points in time Table: Condensed Consolidated Balance Sheets Summary | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------------- | :----------------------------- | :----------------------------- | | Cash and cash equivalents | $12,045 | $2,929 | | Accounts receivable, net | $89,554 | $156,743 | | Inventory | $218,208 | $202,408 | | Total Current Assets | $336,981 | $373,568 | | Total Assets | $551,877 | $634,310 | | Total Current Liabilities | $126,926 | $151,743 | | Revolving Credit Facility | $37,683 | $42,693 | | Term Loan | $128,456 | $130,949 | | Total Stockholders' Equity | $185,768 | $229,923 | - Total assets decreased by $82.4 million from December 31, 2024, to June 30, 2025, primarily due to a significant reduction in accounts receivable and intangible assets[11] - Total stockholders' equity decreased by $44.1 million, largely driven by an accumulated deficit increase[11] Condensed Consolidated Statements of Operations This section details the company's revenues, expenses, and net loss over specific periods Table: Condensed Consolidated Statements of Operations Summary | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net sales | $131,862 | $141,666 | $271,947 | $283,908 |\n| Gross margin | $50,839 | $54,550 | $101,476 | $112,097 |\n| (Loss) income from operations | $(37,207) | $1,167 | $(36,108) | $2,997 |\n| Net loss | $(39,699) | $(18,167) | $(43,900) | $(24,427) |\n| Basic loss per common share | $(1.83) | $(0.85) | $(2.03) | $(1.14) |\n| Diluted loss per common share | $(1.83) | $(0.85) | $(2.03) | $(1.14) | - The company reported a significant net loss of $39.7 million for the three months ended June 30, 2025, compared to $18.2 million in the prior year, primarily due to a $33.2 million goodwill impairment charge[13] - Net sales decreased by 6.9% for the three months and 4.2% for the six months ended June 30, 2025, compared to the respective prior periods[13] Condensed Consolidated Statements of Comprehensive Loss This section presents the company's net loss and other comprehensive income/loss, leading to total comprehensive loss Table: Condensed Consolidated Statements of Comprehensive Loss Summary | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss | $(39,699) | $(18,167) | $(43,900) | $(24,427) |\n| Other comprehensive (loss) income, net of taxes | $(262) | $14,239 | $30 | $14,493 |\n| Comprehensive loss | $(39,961) | $(3,928) | $(43,870) | $(9,934) | - Comprehensive loss significantly increased to $39.96 million for the three months ended June 30, 2025, from $3.93 million in the prior year, mainly due to the higher net loss and a shift from other comprehensive income to loss[16] Condensed Consolidated Statements of Stockholders' Equity This section outlines changes in the company's equity, including common stock and accumulated deficit Table: Condensed Consolidated Statements of Stockholders' Equity Summary | Metric (in thousands) | December 31, 2024 | June 30, 2025 | | :-------------------- | :---------------- | :------------ | | Total Stockholders' Equity | $229,923 | $185,768 |\n| Accumulated deficit | $(32,550) | $(78,426) |\n| Common stock shares outstanding | 22,155,735 | 22,657,435 | - Total stockholders' equity decreased by $44.155 million from December 31, 2024, to June 30, 2025, primarily due to net losses and dividend payments[19] - The accumulated deficit increased significantly from $(32.550) million at December 31, 2024, to $(78.426) million at June 30, 2025[19] Condensed Consolidated Statements of Cash Flows This section reports the cash generated and used by operating, investing, and financing activities Table: Condensed Consolidated Statements of Cash Flows Summary | Metric (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $26,057 | $20,930 |\n| Net cash used in investing activities | $(2,746) | $(1,098) |\n| Net cash used in financing activities | $(14,363) | $(32,546) |\n| Increase (decrease) in cash and cash equivalents | $9,116 | $(12,793) |\n| Cash and cash equivalents at end of period | $12,045 | $3,396 | - Net cash provided by operating activities increased to $26.06 million for the six months ended June 30, 2025, from $20.93 million in the prior year, driven by a net legal settlement gain and improved accounts receivable collection[21][246] - Cash and cash equivalents at the end of the period increased to $12.05 million from $3.40 million year-over-year[21] Notes to Condensed Consolidated Financial Statements This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements NOTE 1 — Basis of Presentation and Summary of Accounting Policies This note describes the basis of financial statement presentation and significant accounting policies - The Company designs, sources, and sells branded kitchenware, tableware, and other home products, marketing them under owned or licensed brands and private labels[24] - The business is seasonal, with a majority of sales (57-58%) occurring in the third and fourth quarters, leading to increased inventory levels from June to October[27] - A $33.2 million non-cash goodwill impairment charge was recognized in Q2 2025 for the U.S. reporting unit due to a sustained decline in market valuation and revised downward near-term forecasts impacted by U.S. tariff policies[45][46] - New accounting pronouncements, ASU 2023-09 (Income Taxes) and ASU 2024-03 (Expense Disaggregation), are being evaluated for their impact on financial statements, with effective dates in 2024 and 2026, respectively[57][59][60] NOTE 2 — Revenue This note details the company's revenue recognition policies and disaggregated revenue by segment and product category - Revenue is primarily recognized at the point of shipment (FOB Shipping Point) when the customer obtains control of the products[61] Table: NOTE 2 — Revenue Summary | Segment/Category | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :----------------- | :-------------------------------------------- | :-------------------------------------------- | :------------------------------------------ | :------------------------------------------ | | Net Sales | | | | |\n| U.S. segment | $119,315 | $130,503 | $247,825 | $260,983 |\n| International segment | $12,547 | $11,163 | $24,122 | $22,925 |\n| Total net sales | $131,862 | $141,666 | $271,947 | $283,908 |\n| | | | | |\n| U.S. Product Categories | | | | |\n| Kitchenware | $82,549 | $80,787 | $162,070 | $164,317 |\n| Tableware | $21,323 | $26,341 | $48,900 | $52,100 |\n| Home Solutions | $15,443 | $23,375 | $36,855 | $44,566 |\n| | | | | |\n| Geographic Region | | | | |\n| United States | $115,046 | $123,695 | $239,251 | $249,829 |\n| United Kingdom | $7,233 | $7,150 | $14,187 | $14,616 |\n| Rest of World | $9,583 | $10,821 | $18,509 | $19,463 | - For the three months ended June 30, 2025, U.S. segment net sales decreased by 8.6%, while International segment net sales increased by 12.5% (6.6% in constant currency)[65][175][179] NOTE 3 — Leases This note provides information on the company's lease arrangements and related expenses Table: NOTE 3 — Leases Summary | Lease Expense (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Fixed lease expense | $4,318 | $4,265 | $8,576 | $8,528 |\n| Variable lease expense | $1,812 | $1,650 | $3,565 | $3,018 |\n| Total lease expense | $6,130 | $5,915 | $12,141 | $11,546 | - The Company entered into a new lease agreement for a distribution center in Hagerstown, Maryland, with a term of 180 months starting Q1 2026, including $7.2 million in rent abatement and $5.1 million in tenant improvement allowance[69] - Operating cash flows for operating leases were $9.71 million for the six months ended June 30, 2025, up from $9.49 million in the prior year[67] NOTE 4 — Investment This note describes the company's investment in Grupo Vasconia S.A.B. and related accounting treatment - The Company holds a 24.7% interest in Grupo Vasconia S.A.B., a Mexican housewares company[70] - In Q2 2024, the Company lost significant influence over Vasconia due to bankruptcy proceedings, discontinuing the equity method and reclassifying accumulated other comprehensive losses, resulting in a $14.2 million non-cash loss on equity securities[70][192][213] - The fair value of the Vasconia investment was not material as of June 30, 2025, and was measured using the income approach based on Level 3 unobservable inputs[70][71] NOTE 5 — Intangible Assets This note details the company's intangible assets, including goodwill, and any impairment charges Table: NOTE 5 — Intangible Assets Summary | Intangible Asset (in thousands) | June 30, 2025 Net | December 31, 2024 Net | | :------------------------------ | :---------------- | :-------------------- | | Goodwill | $0 | $33,237 |\n| Licenses | $3,053 | $3,281 |\n| Trade names | $72,591 | $75,840 |\n| Customer relationships | $64,733 | $69,652 |\n| Other | $1,280 | $1,517 |\n| Total | $141,657 | $183,527 | - A $33.2 million non-cash goodwill impairment charge was recognized in Q2 2025 for the U.S. reporting unit, fully reducing its goodwill carrying value to zero, due to declining market valuation and revised forecasts impacted by U.S. tariff policies[75][76] - The impairment test was performed using discounted cash flow and market multiple methods, classified as Level 3 fair value measurement[76] NOTE 6 — Debt This note provides information on the company's debt facilities, including revolving credit and term loans - The Company has a $200.0 million senior secured asset-based revolving credit facility (ABL Agreement) and a $150.0 million Term Loan, both maturing on August 26, 2027[77][78] Table: NOTE 6 — Debt Summary | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Total availability under ABL Agreement | $110,867 | $124,808 |\n| ABL availability limited by Term Loan covenant | $65,700 | N/A |\n| Current portion of Term Loan | $4,952 | $4,891 |\n| Non-current portion of Term Loan | $128,456 | $130,949 | - Interest rates at June 30, 2025, were between 3.30% and 5.79% for the ABL Agreement and 9.93% for the Term Loan[88][89] - The Company was in compliance with all debt covenants at June 30, 2025, including a Total Net Leverage Ratio not exceeding 5.00 to 1.00[90][91] NOTE 7 — Derivatives This note describes the company's use of interest rate swaps and foreign exchange contracts to manage market risks - The Company uses interest rate swaps to manage exposure to interest rate movements and foreign exchange contracts to reduce volatility from currency exchange rates on inventory purchases[92][96][98] - Total outstanding notional value of interest rate swaps was $50.0 million at June 30, 2025, and the aggregate gross notional value of foreign exchange contracts was $6.1 million[97][98] Table: NOTE 7 — Derivatives Summary | Derivative Type | Balance Sheet Location | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------- | :--------------------- | :--------------------------- | :------------------------------- | | Foreign exchange contracts (hedging) | Accrued expenses | $385 | $0 |\n| Foreign exchange contracts (hedging) | Prepaid expenses and other current assets | $0 | $256 |\n| Interest rate swaps (non-hedging) | Other long-term liabilities | $430 | $154 |\n| Interest rate swaps (non-hedging) | Other assets | $10 | $379 | - Mark to market loss on non-designated interest rate derivatives was $0.2 million for the three months and $0.7 million for the six months ended June 30, 2025[103][191][211] NOTE 8 — Stock Compensation This note details the company's stock-based compensation plans and related expenses Table: NOTE 8 — Stock Compensation Summary | Stock Compensation Expense (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Equity based stock option expense | $64 | $60 | $134 | $110 |\n| Restricted and performance-based stock awards expense | $980 | $984 | $1,973 | $1,733 |\n| Liability based stock option expense | $0 | $(7) | $(1) | $1 |\n| Total Stock Compensation Expense | $1,044 | $1,037 | $2,106 | $1,844 | - As of June 30, 2025, there were 827,000 stock options outstanding, 889,153 non-vested restricted shares, and 732,172 non-vested performance-based awards (target shares)[105][108][110] - Total unrecognized compensation expense remaining for restricted and performance-based awards was $4.776 million and $2.606 million, respectively, as of June 30, 2025[108][110] NOTE 9 — Loss Per Common Share This note presents the calculation of basic and diluted loss per common share Table: NOTE 9 — Loss Per Common Share Summary | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss – Basic and Diluted (in thousands) | $(39,699) | $(18,167) | $(43,900) | $(24,427) |\n| Weighted-average shares outstanding – Basic (in thousands) | 21,686 | 21,421 | 21,639 | 21,399 |\n| Basic loss per common share | $(1.83) | $(0.85) | $(2.03) | $(1.14) |\n| Diluted loss per common share | $(1.83) | $(0.85) | $(2.03) | $(1.14) | - Basic and diluted loss per common share increased significantly to $(1.83) for the three months and $(2.03) for the six months ended June 30, 2025, compared to the prior year periods, reflecting the higher net losses[115] - Anti-dilutive securities, totaling 1.583 million for the three months and 1.500 million for the six months ended June 30, 2025, were excluded from diluted EPS calculation[115] NOTE 10 — Income Taxes This note provides information on the company's income tax benefit/provision and effective tax rates Table: NOTE 10 — Income Taxes Summary | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Income tax benefit (provision) (in thousands) | $2,782 | $57 | $2,924 | $(153) |\n| Effective income tax benefit (provision) rate | 6.5% | 0.3% | 6.2% | (0.7)% | - The effective tax rate for Q2 2025 was 6.5% (benefit), differing from the 21.0% federal statutory rate primarily due to a partial valuation allowance on U.S. deferred tax assets resulting from goodwill impairment[117] - The recently enacted One Big Beautiful Bill Act (OBBBA) in the U.S., which includes tax reform provisions, is currently being evaluated for its impact on the Company's financial statements[120] NOTE 11 – Business Segments This note presents financial information disaggregated by the company's operating segments - The Company operates in two reportable segments: U.S. (domestic design, marketing, and distribution) and International (sales and distribution primarily in the U.K., EU, and Asia Pacific)[123] Table: NOTE 11 – Business Segments Summary | Segment Performance (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net Sales: | | | | |\n| U.S. | $119,315 | $130,503 | $247,825 | $260,983 |\n| International | $12,547 | $11,163 | $24,122 | $22,925 |\n| Gross Margin: | | | | |\n| U.S. | $46,769 | $50,478 | $93,333 | $103,761 |\n| International | $4,070 | $4,072 | $8,143 | $8,336 |\n| (Loss) income from operations: | | | | |\n| U.S. | $(29,620) | $9,189 | $(27,722) | $18,631 |\n| International | $(3,328) | $(2,932) | $(6,280) | $(6,021) |\n| Unallocated corporate expenses | $(4,259) | $(5,090) | $(2,106) | $(9,613) | - U.S. segment operating income shifted to a loss of $29.62 million in Q2 2025 from an income of $9.19 million in Q2 2024, largely due to the goodwill impairment charge[126] - Unallocated corporate expenses decreased significantly for the six months ended June 30, 2025, to $2.11 million from $9.61 million, primarily due to a $6.4 million net legal settlement gain[126][208] NOTE 12 — Contingencies This note describes the company's legal proceedings and other contingent liabilities - The Company's subsidiary, WSPR, is involved in the Wallace EPA Matter concerning groundwater contamination in Puerto Rico, with a reserved liability of $5.4 million as of June 30, 2025, for remedial design and action[133][141] - A net legal settlement gain of $6.4 million was recognized in Q1 2025 from a 2015 legal action related to a prior acquisition, which consisted of a $7.0 million settlement less $0.6 million in legal fees[142] NOTE 13 — Other This note includes information on dividends, stock repurchase programs, and supplemental cash flow data Table: NOTE 13 — Other Summary | Dividend per share | Date declared | Date of record | Payment date | | :----------------- | :------------ | :------------- | :----------- | | $0.0425 | 3/11/2025 | 5/1/2025 | 5/15/2025 |\n| $0.0425 | 6/18/2025 | 8/1/2025 | 8/15/2025 | - The Company paid $1.9 million in dividends during the six months ended June 30, 2025[146] - The Board authorized a $20.0 million stock repurchase program on March 14, 2022, with $11.1 million remaining available as of June 30, 2025; no shares were repurchased in the first six months of 2025[148][249] Table: NOTE 13 — Other Summary | Supplemental Cash Flow (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :----------------------------- | :----------------------------- | | Cash paid for interest | $8,922 | $9,853 |\n| Cash paid for taxes, net of refunds | $2,980 | $4,193 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the Company's financial condition and results of operations, including an overview of the business, recent developments, segment performance, and liquidity. It highlights key financial trends, the impact of tariffs, and strategic initiatives Forward-Looking Statements This section highlights the inherent risks and uncertainties associated with forward-looking statements in the report - The report contains forward-looking statements subject to risks and uncertainties, including macroeconomic conditions, supply chain costs, tariffs, indebtedness, market competition, and geopolitical conditions[152][153][156] About the Company This section provides an overview of the company's business, product categories, brands, and growth strategy - The Company designs, sources, and sells branded kitchenware, tableware, and other home products across three categories: Kitchenware, Tableware, and Home Solutions[159] - Key brands include Farberware, KitchenAid, Mikasa, Taylor, Pfaltzgraff, Built NY, S'well, Fred & Friends, KitchenCraft, Rabbit, Kamenstein, and Dolly[160] - Growth strategy focuses on expanding product offerings, developing existing brands, acquiring new brands, and establishing new product categories, supported by in-house design and development[160] Recent Developments This section outlines recent significant events impacting the company, including tariffs, facility relocation, and strategic initiatives - New U.S. tariffs on imports from China (145% initially, reduced to 30%) and universal/reciprocal tariffs are impacting the Company's supply chain and cost structure, leading to mitigation efforts like price negotiations and import diversification[161][162] - The Company is relocating its east coast distribution facility to Hagerstown, Maryland, incurring up to $7.0 million in one-time exit costs (2025-2026) and $7.0 million in relocation costs (2026), but expects $13.1 million in tax abatements and incentives[163][164][165] - Project Concord, launched in January 2025, aims to propel growth and streamline the International segment's cost structure, including a workforce reorganization in July 2025 with estimated severance expenses of $0.3 million[166] - The One Big Beautiful Bill Act (OBBBA), enacted in July 2025, introduces tax reform provisions that the Company is currently evaluating for financial statement impact[167] Business Segments This section describes the company's operational structure across its U.S. and International business segments - The Company operates in two reportable segments: U.S. (domestic business) and International (U.K., European Union, and Asia Pacific)[168] Seasonality This section explains the seasonal nature of the company's business operations and its impact on sales and inventory - The Company's business is seasonal, with most sales occurring in the third and fourth quarters (58% and 57% of total annual net sales in 2024 and 2023, respectively)[170] - Inventory levels typically increase from June through October in anticipation of the pre-holiday shipping season[170] Critical Accounting Estimates This section confirms no material changes to the company's critical accounting estimates since the last annual report - There have been no material changes to the Company's critical accounting estimates discussed in the 2024 Annual Report on Form 10-K[172] Results of Operations This section analyzes the company's financial performance over specific periods, highlighting key drivers and changes Three Months Ended June 30, 2025 Compared to the Three Months Ended June 30, 2024 This section compares the company's financial results for the three-month periods ended June 30, 2025 and 2024 Table: Three Months Ended June 30, 2025 Compared to the Three Months Ended June 30, 2024 Summary | Metric (in thousands) | Q2 2025 | Q2 2024 | Change ($) | Change (%) | | :-------------------- | :------ | :------ | :--------- | :--------- | | Consolidated Net Sales | $131,862 | $141,666 | $(9,804) | (6.9)% |\n| U.S. Segment Net Sales | $119,315 | $130,503 | $(11,188) | (8.6)% |\n| International Segment Net Sales | $12,547 | $11,163 | $1,384 | 12.5)% |\n| Consolidated Gross Margin | $50,839 | $54,550 | $(3,711) | (6.8)% |\n| Distribution Expenses | $17,314 | $15,052 | $2,262 | 15.0)% |\n| Selling, General and Administrative Expenses | $37,495 | $38,331 | $(836) | (2.2)% |\n| Goodwill Impairment | $33,237 | $0 | $33,237 | N/A |\n| Interest Expense | $5,054 | $5,157 | $(103) | (2.0)% |\n| Mark to Market Loss on Interest Rate Derivatives | $220 | $82 | $138 | 168.3)% |\n| Loss on Equity Securities | $0 | $14,152 | $(14,152) | (100.0)% |\n| Income Tax Benefit | $2,782 | $57 | $2,725 | 4780.7)% | - U.S. Kitchenware sales increased by 2.1%, while Tableware and Home Solutions sales decreased by 19.0% and 33.8% respectively, for the three months ended June 30, 2025[176][177][178] - Consolidated gross margin percentage remained stable at 38.6% in Q2 2025 compared to 38.5% in Q2 2024, with U.S. segment gross margin percentage improving due to customer mix[180] - Distribution expenses as a percentage of net sales increased to 13.1% from 10.6% due to lower shipment volume, higher fixed expenses, new warehouse management system software costs, and increased freight-out expenses[182][183] Six Months Ended June 30, 2025 Compared to the Six Months Ended June 30, 2024 This section compares the company's financial results for the six-month periods ended June 30, 2025 and 2024 Table: Six Months Ended June 30, 2025 Compared to the Six Months Ended June 30, 2024 Summary | Metric (in thousands) | H1 2025 | H1 2024 | Change ($) | Change (%) | | :-------------------- | :------ | :------ | :--------- | :--------- | | Consolidated Net Sales | $271,947 | $283,908 | $(11,961) | (4.2)% |\n| U.S. Segment Net Sales | $247,825 | $260,983 | $(13,158) | (5.1)% |\n| International Segment Net Sales | $24,122 | $22,925 | $1,197 | 5.2)% |\n| Consolidated Gross Margin | $101,476 | $112,097 | $(10,621) | (9.5)% |\n| Distribution Expenses | $35,384 | $31,233 | $4,151 | 13.3)% |\n| Selling, General and Administrative Expenses | $68,963 | $77,867 | $(8,904) | (11.4)% |\n| Goodwill Impairment | $33,237 | $0 | $33,237 | N/A |\n| Interest Expense | $9,969 | $10,771 | $(802) | (7.4)% |\n| Mark to Market Loss on Interest Rate Derivatives | $747 | $256 | $491 | 191.8)% |\n| Loss on Equity Securities | $0 | $14,152 | $(14,152) | (100.0)% |\n| Income Tax Benefit (Provision) | $2,924 | $(153) | $3,077 | N/A |\n| Equity in Losses, net of taxes | $0 | $2,092 | $(2,092) | (100.0)% | - U.S. Kitchenware sales decreased by 1.4%, Tableware by 6.1%, and Home Solutions by 17.3% for the six months ended June 30, 2025[196][197][198] - Consolidated gross margin percentage decreased to 37.3% in H1 2025 from 39.5% in H1 2024, primarily due to unfavorable customer and product mix in both U.S. and International segments[200][201] - Selling, general and administrative expenses decreased by 11.4% for the six months ended June 30, 2025, largely due to a $6.4 million legal settlement gain and lower incentive compensation[205][208] Liquidity and Capital Resources This section discusses the company's ability to generate and manage cash, including its working capital and debt facilities Table: Liquidity and Capital Resources Summary | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Cash and cash equivalents | $12,045 | $2,929 |\n| Working capital | $210,100 | $221,800 |\n| Total liquidity | $96,900 | N/A |\n| ABL availability limited by Term Loan covenant | $65,700 | N/A |\n| Available for sale accounts receivable | $19,200 | N/A | - Inventory turnover slowed to 1.5 times (241 days) for the three months ended June 30, 2025, from 1.8 times (208 days) in the prior year, due to lower sales and higher inventory purchases to mitigate tariff impacts[218] - Adjusted EBITDA for the trailing twelve months ended June 30, 2025, was $50.7 million[233] - Net cash provided by operating activities increased to $26.1 million for the six months ended June 30, 2025, from $20.9 million in the prior year, driven by a legal settlement gain and improved accounts receivable collection[246] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section addresses the company's exposure to market risks, particularly foreign currency and interest rate fluctuations - No material changes in market risk for foreign currency exchange rates and interest rates from the 2024 Annual Report on Form 10-K[250] Item 4. Controls and Procedures This section reports on the effectiveness of the company's disclosure controls and internal controls over financial reporting - The Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective as of June 30, 2025[251] - There were no material changes in the Company's internal controls over financial reporting during the most recent fiscal quarter[252] Part II. Other Information This section covers legal proceedings, risk factors, other information, and exhibits Item 1. Legal Proceedings This section refers to detailed disclosures regarding the company's legal and environmental contingencies - Legal proceedings are described in detail in NOTE 12 — CONTINGENCIES of the financial statements[253] Item 1A. Risk Factors This section updates and highlights significant risks, especially those related to international trade and tariffs - The Company faces significant risks from uncertainty regarding international trade agreements and U.S. trade policies, especially new tariffs on imports from China[255] - New tariffs are expected to materially impact the business, market share, revenue, and gross margins, requiring mitigation actions that may not fully offset the impact[255][256][257] Item 5. Other Information This section reports on Rule 10b5-1 trading arrangements by directors and officers - No directors or officers adopted, modified, or terminated Rule 10b5-1 trading arrangements during the fiscal quarter ended June 30, 2025[258] Item 6. Exhibits This section lists all exhibits filed as part of the quarterly report, including certifications and XBRL data - The report includes certifications by the CEO and CFO (Exhibits 31.1, 31.2, 32.1) and Inline XBRL documents (Exhibits 101.INS, 101.SCH, 101.DEF, 101.CAL, 101.LAB, 101.PRE, 104)[261] Signatures This section contains the official signatures of the company's authorized officers for the report submission - The report is signed by Robert B. Kay, Chief Executive Officer and Director, and Laurence Winoker, Executive Vice President, Treasurer and Chief Financial Officer, on August 7, 2025[263]