Lifetime Brands(LCUT)2022-08-04 20:19Financial Performance - Consolidated net sales for Q2 2022 were $151.3 million, a decrease of $35.3 million or 18.9% compared to $186.6 million in Q2 2021[159]. - U.S. segment net sales for Q2 2022 were $137.2 million, down $29.4 million or 17.6% from $166.6 million in Q2 2021[160]. - Consolidated net sales for the six months ended June 30, 2022 were $334.0 million, a decrease of $48.3 million, or 12.6%, compared to $382.3 million for the same period in 2021[180]. - Net sales for the U.S. segment for the six months ended June 30, 2022 were $303.4 million, a decrease of $39.4 million, or 11.5%, compared to $342.8 million for the same period in 2021[181]. - Net sales for the International segment for the six months ended June 30, 2022 were $30.6 million, a decrease of $8.9 million, or 22.5%, compared to $39.5 million for the same period in 2021[186]. Product Category Sales - Kitchenware product category sales in the U.S. segment for Q2 2022 were $84.3 million, a decrease of $19.3 million or 18.6% compared to $103.6 million in Q2 2021[161]. - Tableware product category sales in the U.S. segment for Q2 2022 were $29.9 million, down $7.4 million or 19.8% from $37.3 million in Q2 2021[162]. - Home Solutions product category sales in the U.S. segment for Q2 2022 were $23.0 million, a decrease of $2.7 million or 10.5% compared to $25.7 million in Q2 2021[163]. Profitability and Margins - Gross margin for Q2 2022 was 36.5%, an increase from 35.4% in Q2 2021[158]. - Gross margin for the six months ended June 30, 2022 was $118.2 million, or 35.4%, compared to $132.2 million, or 34.6%, for the same period in 2021[187]. - Gross margin for the U.S. segment was $108.7 million, or 35.8%, for the six months ended June 30, 2022, compared to $119.4 million, or 34.8%, for the same period in 2021[188]. Expenses - Distribution expenses as a percentage of net sales increased to 11.5% in Q2 2022 from 10.1% in Q2 2021[158]. - Selling, general and administrative expenses as a percentage of net sales rose to 25.3% in Q2 2022 from 19.4% in Q2 2021[158]. - Selling, general and administrative expenses for the six months ended June 30, 2022 were $77.7 million, an increase of $3.4 million, or 4.6%, compared to $74.3 million for the same period in 2021[193]. - Selling, general and administrative expenses for the U.S. segment were $57.6 million for the six months ended June 30, 2022, compared to $53.8 million for the same period in 2021, with expenses as a percentage of net sales increasing to 19.0% from 15.7%[194]. Net Income and Loss - The company experienced a net loss of 2.3% in Q2 2022 compared to a net income of 3.1% in Q2 2021[158]. - The company reported a net income of $8.9 million for the twelve months ended June 30, 2022, compared to a net loss of $3.5 million for the quarter ended June 30, 2022[221]. Cash Flow and Liquidity - Cash and cash equivalents decreased to $7.2 million as of June 30, 2022, down from $28.0 million at December 31, 2021, with working capital at $247.0 million compared to $270.8 million[204]. - Net cash used in operating activities was $8.9 million for the six months ended June 30, 2022, a decrease from net cash provided of $42.1 million in the same period of 2021[231]. - The company incurred $19.4 million in net cash used in investing activities for the six months ended June 30, 2022, primarily due to the acquisition of S'well for $18.0 million[232]. - The company experienced a significant decrease in cash flow from financing activities, providing $7.7 million in 2022 compared to a net cash used of $42.2 million in 2021[233]. Supply Chain and Operational Challenges - The company is facing challenges due to global supply chain disruptions and inflation, impacting costs and delivery times[146]. - Inventory turnover for the three months ended June 30, 2022, was 1.4 times (270 days), down from 2.3 times (162 days) in the same period of 2021, attributed to supply chain disruptions and inflation[205]. Debt and Interest - Interest expense for the six months ended June 30, 2022 was $7.5 million, a decrease from $7.8 million for the same period in 2021, due to lower debt outstanding on the Term Loan[197]. - The interest rate on outstanding borrowings under the ABL Agreement at June 30, 2022, ranged from 2.44% to 5.00%[213]. - The Term Loan facility bore interest at 4.6% as of June 30, 2022[214]. - The Company was in compliance with the covenants of the Debt Agreements at June 30, 2022[216]. Other Financial Metrics - Adjusted EBITDA for the last twelve months ended June 30, 2022, was $83.4 million, with capital expenditures of $1.5 million for the six months ended June 30, 2022[217]. - For the twelve months ended June 30, 2022, the adjusted EBITDA was $79.9 million, with a pro forma adjusted EBITDA of $83.4 million after accounting for projected synergies from the S'well acquisition[221]. - Mark to market gain on interest rate derivatives increased to $1.4 million for the six months ended June 30, 2022, compared to $0.5 million for the same period in 2021, due to rising interest rates[198]. - Income tax provision was $1.6 million for the six months ended June 30, 2022, with an effective tax rate of (69.8)%, compared to $4.2 million and 32.8% for the same period in 2021[199]. - Equity in earnings from Vasconia was $0.8 million for the six months ended June 30, 2022, up from $0.5 million in 2021, while Vasconia's income from operations decreased to $5.2 million from $10.3 million[200]. Shareholder Actions - The company authorized a stock repurchase program of up to $20.0 million, repurchasing 336,791 shares for a total cost of $4.2 million during the six months ended June 30, 2022[235].