Q4 2023 Lifetime Brands Inc Earnings Call

Operator: Good morning, ladies and gentlemen, and welcome to the Lifetime Brands fourth quarter and full year 2023 earnings conference call. At this time, I would like to inform all participants that their lines will be in a listen-only mode.

Good morning, ladies and gentlemen, and welcome to the lifetime brands fourth quarter and full year 2023 earnings conference call.

At this time I would like to inform all participants that their lines will be in a listen only mode.

Operator: After the speaker's remarks, there will be a question and answer portion of the call. If you would like to ask a question during this time, please press star 1 on your telephone keypad. I would now like to introduce your host for today's conference, T.J. O'Sullivan.

After the Speakers' remarks, there will be a question and answer portion of the call. If you would like to ask a question. During this time. Please press star one on your telephone keypad.

I would now like to introduce your host for today's conference T. J L. Sullivan Mr. Sullivan you may begin.

Unknown Executive: Mr. O'Sullivan, you may begin. Thank you. Good morning, and thank you for joining Lifetime Brands' fourth quarter and full year 2023 earnings call. With us today from management are Rob Kay, Chief Executive Officer, and Larry Winoker, Chief Financial Officer. Before we begin the call, I'd like to remind you that our remarks this morning may contain forward-looking statements that relate to the future performance of the company, and these statements are intended to qualify for the safe harbor protection from liability established by the Private Securities Litigation Reform Act.

Thank you.

Good morning, and thank you for joining lifetime brands fourth quarter and full year of 2023 earnings call.

With us today from management are Rob Kay Chief Executive Officer, and Larry went up our Chief Financial Officer.

Before we begin the call I'd like to remind you that our remarks. This morning may contain forward looking statements that relate to the future performance of the company.

These statements are intended to qualify for the Safe Harbor protection from liability established by the private Securities Litigation Reform Act.

Unknown Executive: Any such statements are not guarantees of future performance, and factors that could influence our results are highlighted in today's press release, and other factors are contained in our filings with the Securities and Exchange Commission. Such statements are based upon information available to the company as of the date hereof and are subject to change due to future developments. Except as required by law, the company does not undertake any obligation to update such statements. Our remarks this morning and in today's press release also contain non-GAAP financial measures within the meaning of Regulation G promulgated by the Securities and Exchange Commission, www.LifetimeBrands.com. Included in such release is a reconciliation of these non-GAAP financial measures with the comparable financial measures calculated in accordance with, With that introduction, I'd like to turn the call over to Rob. Please go ahead, Robert.

Any such statements are not guarantees of future performance and factors that could influence our results are highlighted in today's press release.

And other factors are contained in our filings with the Securities and Exchange Commission.

Such statements are based upon information available to the company as of the date hereof and are subject to change for future developments.

Except as required by law the company does not undertake any obligation to update such statements.

Our remarks this morning and in today's press release also contains non-GAAP financial measures within the meaning of regulation G.

Promulgated by the secured by the Securities and Exchange Commission.

Yeah.

[laughter].

Okay.

Included in such release is a reconciliation of these non-GAAP financial measures with the comparable financial measures calculated in accordance with GAAP.

With that introduction I'd like to turn the call over to Rob Kay.

Please go ahead Rob.

Robert Bruce Kay: Thank you, TJ. Good morning, everyone, and thank you for joining us. We had a strong fourth quarter, delivering results that helped us to meet or exceed net sales, income from operations, and adjusted EBITDA targets from the revised full-year guidance metrics we provided last quarter, as well as analyst estimates. We are pleased with the strong net sales growth. We are driving across categories, especially in our e-commerce channel, which continues to gain share, coupled with our continued focus on driving efficiencies across the business. This outperformance has translated to meaningful operating income growth that we expect will continue in 2021. To start, I'd like to walk you through our fourth quarter and full year results at a high level.

Thank you T J.

Good morning, everyone and thank you for joining us today.

We had a strong fourth quarter delivering results that helped us to meet or exceed net sales income from operations and adjusted EBITDA targets from the revised full year guidance metrics, we provided last quarter as well as analyst estimates.

We are pleased with the strong net sales growth we are driving across categories.

Especially in our E Commerce channel, which continues to gain share.

When coupled with our continued focus on driving efficiencies across the business.

This outperformance translate into meaningful operating income growth that we expect will continue in 2024.

To start I'd like to walk you through our fourth quarter and full year results at a high level.

Robert Bruce Kay: In the fourth quarter, we delivered $203.1 million in net sales and $21.5 million in adjusted EBITDA, compared to $207 million in net sales and $19.7 million in adjusted EBITDA in the prior year period. For the full year, we generated $57.3 million in adjusted EBITDA, compared to $58.2 million in 2022, coming in ahead of our internal estimates, thanks to diligent expense management and a focus on incremental revenue opportunities throughout the year Of note, our performance was notwithstanding $3.6 million of one-time charges in 2020.

In the fourth quarter, we delivered $203 $1 million in net sales and $21 $5 million and adjusted EBITDA compared to $207 million in net sales and $19 $7 million and adjusted EBITDA in the prior year period.

For the full year, we generated $57 3 million and adjusted EBITDA compared to $58. Two main in 2022 coming in ahead of our internal estimates thanks to diligent expense management and a <unk>.

Focus on incremental revenue opportunities throughout the year.

Of note our performance was notwithstanding $3 $6 million of one time charges in 2023.

Robert Bruce Kay: We have been encouraged by the improving supply chain environment in recent quarters and experienced no disruptions in the fourth quarter, though we are monitoring potential issues stemming from ongoing geopolitical challenges in the Red Sea, which have had some initial impact on ocean freight costs and shipping time. Furthermore, with another quarter of normalized shipment and ordering activity. Now behind us, we believe that the oversupply issues our retailers experienced coming out of the pandemic have dissipated.

We have been encouraged by the improving supply chain environment in recent quarters.

And experienced no disruptions in the fourth quarter.

We are monitoring potential issues stemming from ongoing geopolitical challenges in the Red Sea.

<unk> had some initial impact on ocean freight cost and shipping times.

Further with another quarter of normalized shipment in ordering activity.

Now behind US, we believe that the oversupply issues are retailers experience coming out of the pandemic have dissipated.

Yeah.

Robert Bruce Kay: Turning now to our international business, throughout 2023. We remain diligent in the execution of our international turnaround strategy, and we are pleased with the meaningful progress we have made, including market share gains in these end markets, in Australia and New Zealand. The direct go-to-market strategy we implemented earlier this year is translating to increased listings with additional accounts, Products, and Brand List. Additionally, we continue to drive incremental revenue opportunities as we roll out new product lines into our international market. This was driven by our highly successful KitchenAid office.

Turning now to our international business.

Throughout 2023.

We remain diligent in the execution of our international turnaround strategy.

And we are pleased with the meaningful progress we have made including market share gains in these end markets.

In Australia, and New Zealand.

The drag could go to market strategy, we implemented earlier this year is translating to increased listings with additional accounts.

Products and brand listings.

Additionally, we continue to drive incremental revenue opportunities as we rollout new product lines into our international markets driven by our highly successful kitchenaid offering.

Robert Bruce Kay: As a result of these factors, in the fourth quarter, we saw the first turnaround in year-over-year international revenues since 2021. As part of our international turnaround plan, we took a non-cash inventory write-off in the fourth quarter, which impacted our bottom-line performance. But we expect that the aforementioned initiatives will have a meaningful impact on our international channels' bottom line in 2024, in our food service business. We remain on track to achieve significant growth in 2024 as MACASA Hospitality continues to gain traction and capitalize on the market positioning achieved in 2023. While this business is still in its early stages, we are confident that Lifetime is now recognized as an important participant in the food service industry and will continue to expand its product placement across North America.

As a result of these factors in the fourth quarter, we saw the first turnaround in year over year International revenues since 2021.

As part of our international turnaround plan, we took a noncash inventory write off in the fourth quarter, which impacted our bottom line performance.

We expect that the aforementioned initiatives will have a meaningful impact on our international channels bottom line in 2024.

In our foodservice business.

We remain on track to achieve significant growth in 2020 for asthma Casa hospitality continues to gain traction.

Capitalize on the market positioning achieved in 2023.

While this business is still in its early stages.

We are confident that lifetime is now recognized as an important participant in the foodservice industry and will continue to expand its product placement across North America.

Robert Bruce Kay: We maintain our long-term view that we can grow our total food service business to $60 million in revenues by 2020. Refining and building out our e-commerce strategy remains a key strategic priority for Lifetime. This quarter, e-commerce net sales exceeded 23% of our total net sales for the quarter, contributing meaningfully to our overall outperformance. This represents an increase of nearly 3.5% from the comparable quarter a year ago, when our e-commerce net sales were slightly below 20%. We are continuing to hone our online strategy to ensure we are best positioned to capitalize on the significant opportunities we see in the channel. We maintain a strong focus on new product development and channel expansion to bolster our market position. Looking ahead, we are excited about our robust new product pipeline, many of which are incremental revenue opportunities. Production of our previously announced Dolly Parton-branded products is well underway, with shipments on track to begin in April and the majority of products slated for the second half of the year.

We maintain our long term view that we can grow our total foodservice business to $60 million in revenues by 2020.

Yeah.

Refining and building out our <unk>.

E Commerce strategy remains a key strategic priority for lifetime.

This quarter E Commerce net sales exceeded 23% of our total net sales for the quarter.

Contributing meaningfully to our overall outperformance.

This represents an increase of nearly three 5% from the comparable quarter a year ago, when our E. Commerce net sales were slightly below 20%.

We are continuing to hone our online strategy to ensure we are best positioned to capitalize on the significant opportunities we see in the channel.

Yeah.

We maintain a strong focus on new product development and channel expansion to bolster our market position.

Looking ahead, we are excited about our robust new product pipeline.

Many of which are incremental revenue opportunities.

Production of our previously announced Dolly Parton branded products is well underway with shipments are on track to begin in April and the majority of products slated for the second half of the year.

Robert Bruce Kay: This launch is across four different product categories, all in the dollar channel, which is a new channel for Lifetime. We are also reinvigorating our robust pipeline of swell products with new items being launched in the first quarter of 2024. These will initially be available online on squelv.com as well as across e-commerce channels, in line with our commitment to reduce our exposure to supply chain issues in China.

This launch is across four different product categories. All in the dollar channel, which is a new channel for lifetime.

We are also reinvigorating our robust pipeline of swell products with new items being launched in the first quarter of 'twenty 'twenty four.

These will initially be available online on small dot com as well as across e-commerce channels.

In line with our commitment to reduce our exposure to supply chain issues in China.

Robert Bruce Kay: We continue to ramp up production capacity in our Mexico facility, with the facility now operational and on track to reach full capacity in 2024. Combined with other sourcing initiatives, we are well on our way to meeting our previously stated target of approximately 25% of our spend on goods being outside of China by the end of the year. Active Balance Sheet Manager remains a priority for us, and we are pleased with our financial position as we enter 2024. Our disciplined cash management throughout 2023 led to a noticeable improvement in working capital year over year in both our US and international businesses, which Larry will discuss in further detail shortly. We remain prudent in our approach to capital allocation and are open-minded to value-enhancing M&A opportunities that align with our strategic priorities. We will continue to evaluate opportunities as they arise, especially in the current market, which favors strategic buyers.

We continue to ramp up production capacity in our Mexico facility.

With the facility now operational and on track to reach full capacity in 2024.

And combined with other sourcing initiatives.

We are well on our way to meeting our previously stated target of approximately 25% of our spend on goods being outside of China by the end of the year.

Active balance sheet management remains a priority for us and we are pleased with our financial position as we enter 2024.

Our disciplined cash management throughout 2023 led to a noticeable improvement in working capital year over year in both our U S and international businesses, which Larry will discuss in further detail shortly.

We remain prudent in our approach to capital allocation and.

And are open minded to value enhancing M&A opportunities that align with our strategic priorities.

We will continue to evaluate opportunities as they arise, especially in the current market, which favors strategic buyers.

Laurence Winoker: In summary, we are pleased with the strong momentum across our business as we close out 2023. The significant work we have done over the past several years to transform and reposition our business is paying off, and we are entering 2024 as a more focused, agile company. Looking ahead, we are excited by the meaningful work already underway across our organization to continue innovating new products, expanding into new channels, and growing market share, generating significant value for our shareholders. With that, I'll now turn the call over to Larry. Thanks, Rob.

In summary, we are pleased with the strong momentum across our business as we close out 2023.

There's significant work we have done over the past several years to transform and reposition our business is paying off and we are entering 2024.

A more focused agile company.

Looking ahead, we are excited by the meaningful work already underway across our organization.

Continue innovating new products expanding into new channels and growing market share generating significant value for our shareholders.

With that I'll now turn the call over to Larry.

Thanks, Rob.

Laurence Winoker: As we reported this morning, net income for the fourth quarter of 2023 was $2.7 million, or $0.13 per diluted share, versus $3.3 million, or $0.15 per diluted share, in the fourth quarter of 2022. Justin Ed Income was $6.3 million for the fourth quarter of 2023, or $0.29 per diluted share as compared to $7.5 million or $0.35 per diluted share; income from operations was 15.7 million for the fourth quarter of 2023 as compared to 12.8 million in the 2022 period. Adjusted income from operations for the fourth quarter of 2023 was $19.4 million compared to $18.2 million, period, and adjusted EBITDA for the full year 2023 was $57.3 million. Adjusted Net Income, Adjusted Income from Operations, and Adjusted EBITDA are non-GAAP measures which are reconciled to our GAAP financial measures in the earnings release.

We reported this morning net income for the fourth quarter of 2023 was $2 $7 million or 13 cents per diluted share versus $3 $3 million was 15 cents per diluted share in the <unk>.

Fourth quarter of 2022.

Adjusted net income was $6 3 million for the fourth quarter of 2023.

29 cents per diluted share as compared to $7 5 billion was <unk> 35 per diluted share in 2022.

Income from operations was $15 7 million for the fourth quarter of 'twenty, three as compared to $12 8 million in 2022 period.

Adjusted income from operations for the fourth quarter of 'twenty, three was $19 4 million compared to $18 2 million in the 2022 period.

And adjusted EBITDA for the full year 2023 was $57 3 million.

Adjusted net income adjusted income from operations and adjusted EBITDA, Our non-GAAP measures, which are reconciled to our GAAP financial measures in the earnings release.

Laurence Winoker: Following comments for the fourth quarter of 2023 and 2022, unless stated otherwise. Consolidated sales declined by 1.9 percent. U.S. segment sales decreased by 4 percent to 185.2 million. The decrease occurred in the tableware and home solutions categories. Tableware was lower as most of its warehouse programs shipped during the first nine months of the year.

Following comments after the fourth quarter of 2023, and 2022 unless stated otherwise.

Consolidated sales declined by one 9% U S segment sales decreased by 4% to $185 2 million. The decrease occurred in the tableware and home solutions categories Tableware was lower as most of its warehouse program shifts during the first nine months of the year in home solutions declined.

Laurence Winoker: The decline in home solutions was due to lower hydration products in the corporate sales channel. However, the decrease was partially offset by strong sales in the kitchenware category. International segment sales increased by $3.8 million or $2.9 million in constant U.S. dollars to $17.9 million. As Rob discussed, in the fourth quarter, International had its first upturn in sales since the fourth quarter of 2021. The increase was attributable to higher e-commerce sales and market share gains from the launch of the go-to-market strategy and an increase in Asian sales. Gross margin increased to 36.4% from 34.9%. The U.S. segment gross margin increased to 37.2% from 35.8%. The improvement is due to lower inbound freight rates and favorable product mix. For International, Gross Margin decreased to 27.2 from 37.1%, most notably from reserves to certain slow-moving immigrants.

Due to low of hydration products and our corporate sales channel.

The decrease was partially offset by offset by strong sales in the kitchenware category.

International segment sales increased by $3 8 million or $2 9 million in constant U S dollars to $17 $9 million as Rob discussed in the fourth quarter International had its first upturn in sales since the fourth quarter of 2021.

The increase was attributable to higher e-commerce sales and market share gains from the launch of the go to market strategy and an increase in Asia sales too.

Gross margin increased to 36, 4% from $34 nine.

U S segment gross margin increased to 37, 2% from 35, 8% the improvement is due to lower inbound freight rates and favorable product mix <unk>.

For international gross margin decreased to 27 point too.

From 37, 1%, most notably from reserves to certain slow moving inventory.

Laurence Winoker: U.S. segment distribution expenses as a percent of goods shipped from its warehouses, excluding warehouse redesign expenses, were 8.7% versus 9.2%. The improvement was attributable to the significant reduction in inventory which eliminated the need for outside storage and improved operating efficiency. In addition, better safety experience, lowered insurance costs, and abating inflation reduced some other expenses, such as for palliative care. These inductions more than offset the cost of higher labor rates

U S segment distribution expenses as a percent of goods shipped from its warehouses, excluding warehouse redesign expenses were eight 7% versus nine 2%. The improvement was attributable attributable to the significant reduction in inventory, which eliminated the need for outside star storage and improve.

<unk> operating efficiency. In addition, better safety experience lower insurance costs, and abating inflation to be to some other expenses such as for pallets. These reductions more than offset the cost of higher labor rates.

Laurence Winoker: International segment distribution expenses as a percent of goods shipped from its warehouses were 19.1% versus 19.6%. The improvement was due to lower outbound freight rates and more shipments from the Netherlands warehouse. Selling general and administrative expenses decreased by 4.1% to $38.7 million. U.S. segment expenses decreased by $3.2 million to $29.1 million. And as a percentage of net sales, expenses decreased to 15.7% from 16.7%. The decrease was attributable to lower allowances for bad debt and a decrease in acquisition-related contingent considerations. However, international SG&A expenses increased by $700,000 to $4.5 million. As a percentage of net sales, expenses decreased to 25% from 2016, due to the effect of period expenses on higher sales volume. However, unallocated corporate expenses increased by $0.8 million to $5.1 million.

International segment distribution expenses as a percent of goods shipped from its warehouses were 19, 1% versus 19, 6%.

The improvement was due to lower outbound freight rates and more shipments from the Netherlands warehouse.

Selling general and administrative expenses decreased by four 1% to $38 $7 million.

U S segment expenses decreased by $3 2 million to 29 point.

$1 million.

As a percentage of net sales expenses decreased to 15, 7% from 16, 7% the.

The decrease was attributable to lower allowances for bad debt and a decrease in acquisition related contingent consideration.

International SG&A expenses increased by 700000 to $4 5 million.

As a percentage of net sales expenses decreased to 25% from 26, 7% due to the effect of period expenses on higher sales volume.

Unallocated corporate expenses increased by one 8 million to $5 1 million.

Laurence Winoker: The prior year reflected an expense reduction for performance stock awards not expected to be earned. Interest expense, excluding a mark-to-mark adjustment for swaps, increased by $0.5 million due to higher interest rates on our variable rate debt, substantially offset by lower average borrowings. The loss on extinguishment of debt was for the write-off of unamortized term loan fees due to the loan amendment. For income taxes, in both Q4'23 and Q4'22, the rate exceeded the statutory rate, primarily due to state and local tax expense, non-deductible expenses, and Foreign Losses for which no benefit is reported.

The prior year reflected as an expense reduction.

Performance stock awards that are expected to be earned.

Interest expense, excluding a mark to mark adjustments of swaps decreased by $5 million due to higher interest rates on our variable rate debt substantially offset by lower average borrowings.

The loss of excuse me the loss on extinguishment of debt for the write off of unamortized term loan fees due to the loan amendment.

For income taxes in both Q4, 'twenty three and 'twenty two the rate exceeded the statutory rate primarily due to state and local tax expense non deductible expenses and foreign losses for which no benefit is recorded.

Laurence Winoker: And related to our 24.7% equity interest in Grupo Basconia, we recorded our proportional share of its losses. Grupo Basconia is a passive investor. Finally, turning to the balance sheet, in November, we amended and extended our term. We now have no debt maturities until August 2027.

And related to our 24, 7% equity interest in <unk> group about sooner.

Sonya, we recorded our proportional share of its losses Grupo <unk> is a passive investment for us.

Finally, turning to our balance sheet.

In November we amended and extended our term loan.

Now have no debt maturities until August 2027.

Laurence Winoker: In connection with the term loan, amend, and extend, we repaid $48.7 million of principal, and as a reminder, in June 23, we repaid $47.2 million of principal too. Notwithstanding this $97 million reduction in permanent debt, our balance sheet continues to be very strong with $134 million of accquittal. Liquidity includes cash plus availability under our credit facility and receivable purchase. Our adjusted EBITDA to net debt ratio at BRN was 3.4 times, a considerable improvement from 4.0 times at BRN. This concludes our prepared comments. Operator, please open the line.

In connection with the term loan amend and extend we repaid $48 $7 million of principle and as a reminder, in June of 'twenty, three we repaid $47 2 billion of principal too.

Notwithstanding this $97 million reduction in permanent debt our balance sheet continues to be very strong with $134 billion of liquidity.

Liquidity includes cash plus availability under our credit facility and receivable purchase agreement.

Our adjusted EBITDA to net debt ratio at year end was three four times a considerable improvement from 4.0 times at year end 2022.

This concludes our prepared comments operator, please open the line for questions.

Operator: Thank you. And ladies and gentlemen, at this time, we'll open up for a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate that your line is active. You may press star 2 if you would like to remove your question from the queue, for participants using the speaker. It may be necessary to pick up your handset before pressing the start button.

Thank you.

And ladies and gentlemen at this time, we'll open up for a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate that your line is in the question queue.

You May press Star two if you would like to remove your question from the queue.

For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Once again to ask a question press Star one we'll pause for a moment, while we poll for questions.

Okay.

Anthony Chester Lebiedzinski: Once again, to ask a question, press star 1. We'll pause for a moment while we... And our first question comes from Anthony Lebiedzinski with Sidonian Company. Good morning, and thank you for taking the questions. So first, just a quick follow-up on terms of the fourth quarter sales. As you know, on your last conference call in November, you guys talked about a timing shift for shipments to a certain large warehouse club customer. So was the U.S. segment sales hurt? Was that the primary reason why U.S. segment sales were down from a year ago? Was it because of this timing shift, or was there something else that happened there?

And our first question comes from Anthony <unk> with Sidoti and company. Please state your question.

Good morning, and thank you for taking the questions.

So.

First the <unk>.

So firstly just a quick follow up in terms of the fourth quarter sales. So I know.

On your last conference call are in November you, guys talked about a timing shift for shipments to a large warehouse clubs.

So it was the U S segment sales.

Was that the primary reason why U S segment sales were down from a year ago was because of this timing shift or is there anything else that happened there.

Robert Bruce Kay: I'm, Yes, so the fourth quarter came in above our revised guidance, right? If you look at it on a year-over-year basis, there was a club program that didn't repeat, and that's driving year-over-year performance. But the outperformance versus our revised upward guidance that we issued last quarter was not related to that. Okay, gotcha. Thanks for that clarification, Rob.

Yeah. So the fourth quarter came in above our revised guidance right.

If you look at it on a year over year basis, There was a club program, which didn't repeat and thats driving year over year performance.

The outperformance versus our revised upward guidance that we issued last quarter. It was not related to the club channel.

Okay Gotcha, thanks for that clarification, Rob So and then just to follow up in regards to the.

Robert Bruce Kay: So, and then just to follow up in regards to the overall, Unknown Speaker Overall, the e-commerce strategy. You mentioned that it was 23% of your sales in the fourth quarter. Do you have that number for the full year? And then, as you look forward, I mean, do you guys have a goal in mind in terms of how high you want to get this to, and just wondering about the margin profile for that channel versus others? Yeah, Anthony. Let me start, and then Larry will give you the particulars.

But overall the ecommerce strategy. So you mentioned that it was 23% of your sales in the fourth quarter do you have that number for the full year.

Then as you look forward I mean, do you guys have a <unk>.

Goal in mind in terms of how high are you want to get this too and just wondering about the margin profile for that channel versus others.

Yeah, Anthony let me start and then Larry will give you the particulars Sideway 23, 2% a quarter.

Laurence Winoker: By the way, 23.2%, I believe. So, we do not have a target number in mind. Our sales philosophy is to sell wherever the consumer is and to maximize those opportunities. So we did reorient. In terms of how we spend in our approach, which is why we've been successful across all channels growing and growing our share in each channel. So we tweaked that a little bit about six to eight months ago, and it's paying off nicely for us in gaining market share. So we're trying to maximize the pie in every channel for us. But there's no specific target, and part of that is based on the overall market and again, where the consumer is spending, right? So if the consumer spends 50% of their dollars in the e-commerce channel, we want to be at least 50%, right? So that'll drive it more than what we're experiencing now, which isn't being driven by a shift in the quarter, or the last six months, really, towards e-commerce in the total market. It's more than just a lifetime, www.

So we do not have a target number in mind.

Sure.

Sales philosophy is too.

Sal wherever the consumer is.

And to maximize those opportunities.

So are we good re orient.

In terms of how we spend and our approach which is why we've been successful across all channels growing and growing our share any channel. So we tweak that a little bit about six to eight months ago, and it's paying off nicely for us in gaining market share. So we're trying to maximize the pie in every channel.

<unk> for us.

But there's no specific target and part of that is based upon the overall market and again, where the consumer spending right. So if the consumer spend 50% of their dollars in the E. Commerce channel, we wanted to be at least 50% right.

So that will drive it more than than what we're experiencing now which isn't being driven by a shift in the quarter or the last six months really towards E. Commerce in the total market. It's more just light times approach to that channel, which has been giving.

Robert Bruce Kay: LifetimeBrands.com and Larry, you want to give? So for the full year, e-commerce sales increased in 2022 with 18.7%. Sales, and 23 full year with 19. Gotcha. Yes. Thanks for that.

Enhanced success.

Mary you want to give.

So number of intra year, yeah. So for the full year E Commerce sales increased.

2022 was 18, 7%.

Sales and 23 full year was $19 three.

Gotcha. So thanks for that Okay, perfect and then so as far as the you know.

Anthony Chester Lebiedzinski: Okay. Perfect. And so as far as the, you know, the margin profiles were for e-commerce versus others, is that comparable? Yes, sorry, I forgot to answer that. Yes. Yeah, again. It is comparable.

The margin profiles for for e-commerce versus others is that comparable.

Yes, sorry, I forgot to answer that yes.

Yeah, Okay perfect. That's it is comparable but there are different channels, which which have different dynamics as we've talked about the club channel, which is a very healthy and good channel for US does usually run at a lower gross margin.

Robert Bruce Kay: But you know, there are different channels, which have different dynamics. As we talked about, the club channel, which is a very healthy and good channel for us, does usually run at a lower gross margin. www.LifetimeBrands.com, Gotcha.

Mhm does have work on capital benefits again, it's all priced accordingly, but in general yes. The answers your questions yes.

Anthony Chester Lebiedzinski: Okay. So I know you're not yet providing guidance. I know typically you do that in May.

Gotcha, Okay. So I know youre not yet provided guidance I know typically you do that it may but as far as just just just if you could what.

Robert Bruce Kay: But as far as just wondering if you guys could provide some additional color. So, as you have your conversations with your top customers, what are you hearing from them in regards to overall demand as far as retail traffic or online traffic? What can you share with us as we try to recalibrate our models here after the results? So the market seems to be stable. And, you know, retailers are definitely more comfortable. There's less discounting, she www.

If you guys could provide some additional color. So as you have your conversations with your top customers. What are you hearing from them in regards to overall demand, but you know.

As far as retail traffic our online traffic you know just just support what can you share with us as we try to recalibrate our models here after the results.

Yeah, so the market seems to be.

Stable.

And retailers are definitely more comfortable.

There is a less discounting.

C and.

When they're having trouble so there isn't discounting that we're seeing in the market there is healthy.

Robert Bruce Kay: LifetimeBrandsInc.com comfortable with the conversations we're having; we don't see there being a downward spiral. Got you. Okay. And then last question before I turn to others: So you did a nice job with improving your cash flows, you know, and it looks like you have healthy inventory levels as well. As we look forward, do you think you can further reduce inventories? I know there are some quarterly variations, obviously, but I mean, you know, as far as just when you look at managing inventories, do you think there's some further improvements you could make? Or do you think this is kind of like the bulk of that has already been realized? Anthony, again, just backing up a second lifetime financial profile is a very strong free cash flow.

Healthy dialogue the industry's Big show happens next week, we'll know more after that.

But we are.

Comfortable with the conversations we're having we don't see.

There being a downward discussion.

Got you, Okay, and then last question before I turn to others. So you did have done a nice job with improving your cash flows it looks like you know a healthy pace.

Inventory levels as well.

As we look forward do you say you can further reduce inventories are I know there are some quarterly variations, obviously, but I mean.

You know as far as just when you look at managing inventories do you think there is some further improvement. So you could make or you think this is kind of lucky that the bulk of that has already been realized.

Yeah, Anthony again, just backing up the second lifetimes financial profile is a very strong free cash flow. So we generate very good free cash flow and.

Robert Bruce Kay: So we generate a very good free cash flow. And we have a very strong balance, You know, in a lot of the macro-driven challenges over the last couple of years, including trade issues, ocean trade issues, availability, and, you know, COVID-related. We made a decision, as we were very public about, to invest heavily in inventory, and we used that to help gain market share, which we've retained, and by investing in higher inventory levels. In 2022-23, when the market wasn't as robust, we, on an orderly basis, because, as we said, this is always good inventory, reduced those inventory levels, and again, we point out that our margin maintained or grew, so it wasn't like we were dumping the inventory, and it wasn't excess, it was just, you know, an investment, and we monetized that. That helped us, you know, as Larry mentioned, it helped us be in a position to repay almost $100 million in term loans in 2023. So, just in general, it's very strong. Do we have the ability to further reduce inventory levels from where they are today?

And we have a very strong balance sheet.

In a lot of the macro driven challenges over the last couple of years, including a trade issues ocean freight issues availability and COVID-19 related.

We made a decision as we were very public about to invest heavy in inventory and we use that to help gain market share, which we have retained.

And by investing in more engines higher inventory levels.

In 2022 slide 23, when the market wasn't as robust.

We in an orderly basis, because as we said this is always good inventory, we reduced those inventory levels and again, we point out that our margin maintained or grew so it wasn't like we were dumping inventory than it was in excess of it was just an investment and we monetize that helped us.

As Larry mentioned it helps us be in a position to repay almost $100 million of term loans.

In 2023.

Yeah. So so just in general is very strong.

Do we have.

And ability to further reduce inventory allows us from where they are today, we do in our international markets more so in the U S.

Anthony Chester Lebiedzinski: We do in our international markets, more so in the U.S., um, with the one caveat that trade retailers in general have relied more, which has been beneficial to us, but they have relied more on vendors for replenishment inventory and less on their own distribution centers because they're smart, and they can push that down to strong people like us. In very robust economic times, that shifts where they want quicker turns in their stores. We're not in that environment now, in a high-growth environment, so that always helps us in terms of inventory turns because it's not in our DCs; it's in theirs. But the big numbers we've taken off of our balance sheet in the US, there is still room in Trinidad. Well, thank you very much for all that color, and best of luck going forward.

With the one caveat that.

The trade retailers in general are have relied more which has been beneficial to us, but it relied more on vendors for replenishment inventory and less in their D. Your own distribution centers.

Because they're smart and they can push that down to strong people like us.

In very robust economic times that shifts where they want quicker turns into their stores.

We're not in that environment now in a high growth environment. So that always helps us in terms of inventory turns because it's not an rd ceases and theirs.

But the big numbers, we've taken off of our balance sheet in the U S jurist room internationally.

Understood well. Thank you very much first of all that color at the best of luck going forward.

Robert Bruce Kay: Thanks. Thank you. Just a reminder to the audience to ask a question, press star to remove yourself. Our next question comes from Brian McNamara with Canaccord Genuity. Hey, good morning.

Thanks, Dan.

Thank you just a reminder to the audience to ask a question press Star one.

Yourself from that question Q Press Star two.

Our next question comes from Brian Mcnamara with Canaccord Genuity. Please state your question.

Hey, good morning, Thanks for taking the question guys. So Robyn November I, you mentioned that you did not expect much of a rebound in the U S end markets in either Q4 or 2024 as visibility remains pretty poor I'm curious if that view has changed at all relative to four months ago.

Brian Christopher McNamara: Thanks for taking the question, guys. So Rob, in November, you mentioned that you did not expect much of a rebound in the US end markets in either Q4 or 2024 as visibility remained pretty poor. I'm curious if that view has changed at all relative to four months ago. Yeah, a little bit.

Okay.

Yeah, Hi, tough to answer that Brian Yeah, a little bit I mean first starting with Q4.

Robert Bruce Kay: I mean, first, starting with Q4, we exceeded, you know, we had revised our guidance upwards, and we, you know, exceeded everyone's expectations, including our own. So the market performed stronger than what we expected positively, but you know, in terms of our expectations, and we were fairly on top of our business, it did better than we expected. And that's good. Obviously.

We exceeded right we have revised our guidance operates and we you know.

Exceeded everyone's expectations, including our own.

So the market performed stronger than what we expected positive in.

In terms of our expectations when we were fairly on top of our business. It did better than we expected and that's good.

Obviously.

So we're still getting the data points.

Robert Bruce Kay: So we're still getting the data points. Particularly this year, as we launch a whole new channel and a new line, there's a big market share pickup, so that's not end-market delivery. Results, we'll get results from that by all newness incremental. There is a little better clarity, but I think that we're still in a market where there are still unknowns in terms of the general economy, less so in North America than internationally. But there is absolute clarity about what we'd see in normal.

We are.

Particularly this year as we launch a whole new channel and a new line yet is a big market share pick up so that's not end market delivery.

Results will get results from that buy all new newness incremental.

There is a little better clarity, but I think that we're still in a market where there is still unknowns in terms of general economy less so in North America.

Internationally.

But there is an absolute clarity what we'd see in normal conditions.

Okay.

Robert Bruce Kay: That's helpful. It's nice to hear the new product launches for Swell and Q1. I guess I'm curious your views on the hydration segment overall, given the recent Stanley craze and how you intend to position the brand in the market with competitive intensity ramping here. If Stanley has been a phenomenon and gained tremendously, the whole category has grown driven primarily by Stanley and one other participant who's done particularly well, particularly at Walmart. They've been driving that category for years.

Well that's helpful. It's nice to hear the new product launches offers as well in Q1.

I guess I'm curious your views on the hydration segment overall, given the recent Stanley craze and how you intend to position the brand in the market with competitive intensity wrapping here.

Yes Stanley has been a phenomenon.

And has gained tremendously is the whole category has grown driven primarily by.

Stanley and one other participant who has done, particularly well, particularly at Walmart.

They have been driving that category is still very good category in a swell as a phenomenal brand.

Robert Bruce Kay: It's still a very good category, you know, Swell is a phenomenal brand, but it needed additional investment that, you know, from when we bought it, and we have done that, and while it's really a phenomenal brand with great equity, from a product development perspective, you know, we inherited a zero pipeline, and we just need to reinvigorate that. And we have, and actually, you can see just by going on Swell.com or, you know, one of the e-commerce channels, the pure play guys, you'll start to see our products. So, you know, Stanley, everyone, including us, has entrance into these, you know, to keep you very hydrated with really, really big bottles, right?

Was.

Needed additional investment.

From when we bought it and we have done that and <unk> is really a phenomenal brand with great equity from a product development perspective, we inherited a zero pipeline and we just need to reinvigorate that.

And we have and actually you can see just by going on style dot com or one of the E. Commerce channels are a pure play guys, you'll you'll start to see our products. So, but you know stanley everyone, including us.

Has entrants into these you know.

Keep you very high graded with very a really big bottles, right, which is what Stanley yes.

Robert Bruce Kay: Which is what Stanley... And look, they've done a phenomenal job. So, we are increasing our advertising because, you know, Stanley, as a good example, has done a tremendous job on social media. We need to get the story out. It's a great brand. We need to re-emphasize the story that people already know, particularly with Swell, but also Built. Built is a major participation in hydration.

And look we've done a phenomenal job.

So we are increasing our advertising because Stanley is a good example, who's done a tremendous job in social media, we need to get the story out it's a great brand.

We need to re emphasize the story that already people now, particularly with swell, but also built built as a major participation in hydration.

Robert Bruce Kay: So, we're spending more to reinforce our brand equity. We reinvigorated both at Bilt and Swell Product Development, and you'll see, go online. You will already see, and you will continue to see that come to market, which we are... Very enthusiastic. Great, that's helpful.

We're spending more to reinforced our brand equity.

We've reinvigorated both had built in scale product development, you'll see go online you will already see and you will continue to see that come to market, which.

Which we are.

Very enthusiastic about.

Great. That's helpful. I know youre, not providing obviously physical guidance still may but is it reasonable to expect top line growth this year.

Brian Christopher McNamara: I know you're not obviously providing fiscal guidance till May, but is it reasonable to expect top line growth this year? Yeah. I mean, wait till May, but, you know, one thing just mathematically to look at is that we are doing a major launch into a channel; the Dollar General has 20,000 stores. They'll have 23,000 very shortly, and we're going to be in every one of those. So, you know, that's going to happen. Part of that won't be until 25, but a decent amount will.

Yeah.

I mean wait wait till may but.

One thing just mathematically to look at is we are doing a major launch into a channel with dollar general as 20000 stores right.

They'll have 23000 very shortly we're going to be in every one of those so that's going to have an impact.

Part of that won't be until 'twenty, five, but a decent amount will be in 'twenty four.

Okay.

Robert Bruce Kay: Okay, the stock's done quite well since your Q3 earnings. I'm curious, what should get investors excited for 2024 and moving forward? And then I'm done. Thanks, I appreciate you taking all the questions. No problem.

The stock's down quite well since your Q3 earnings I'm curious what shouldn't get investors excited for 2020 for them moving forward and then also thanks for thanks. So I appreciate you taking all the questions.

No problem so.

Robert Bruce Kay: So, um... As you know, Brian, and you know, and other people. Management and our key shareholders that are on the board own a lot of this company, and you know we're very committed with our own money in terms of a stake in the company, and we're very pleased with the run-up of the stock this year. But, just the math and everyone... Both with their own dollars.

As you know, Brian and you know than other people.

Management and our key shareholders that are on the board on a lot of this company.

We're very committed.

With our own money.

In terms of the stake in the company and we're very pleased.

With the run up of the stock this year.

We still think it's tremendously undervalued.

And just the math and everyone.

Both with their own dollars.

Robert Bruce Kay: So we are pleased. We think where we are today is particularly, you know, relatively so. It's undervalued if you look at the cash flow that we generate, you know, and just the math.

So we are pleased we think there is just where we are today is.

And particularly you know relatively soft.

There is a.

Undervalued, if you look at the cash flow that we generate and just the math.

Robert Bruce Kay: But, you know, we've been. Turning around our international business has got huge potential; there's a huge opportunity there. We're starting to see some traction. Macasa Hospitality, as we grew the business when we, you know, re-launched the business. Change Management in 2018, you know, we put something together, we streamlined the operation, but we also launched our food service initiative in Waukasa Hospitality, and that takes time. COVID delayed that, but we've... As we've talked about, gained real traction in 2023. We'll see real results in 2024 and beyond. In particular, that business is really annuity business. You know, once you're spec'd on, you're selling that same product for years. So that'll ramp up, and that's something that we have talked about being excited about. We see that now, tormenting, and remain very, very excited. You know, there's been some bumps.

But we've been.

Turning around our international business has got huge potential this huge opportunity there we're starting to see some traction Macarthur hospitality as we grew the business when we.

Relaunched the business changed.

Change management in 2018.

We put something together, we streamline the operation, but we also launched our foodservice initiatives from a cost of hospitality and that takes time covia to lay that but we've <unk>.

As we've talked about gained real traction in 2023, we will see real results in 2024 and beyond in particular that business is really.

And annuity business once you're specced on your selling that same product for years, so that will ramp up and that's something that we are.

<unk> talked about being excited about we see that now tormenting and remain very very excited.

There has been some bumps we haven't lost any market share, but there had been some bumps in 2022.

Robert Bruce Kay: We haven't lost any market share, but there have been some bumps in 2022 after COVID. You know, the company is very streamlined, and as we continue to grow, a lot of that falls disproportionately, which is a positive for the bottom line. Very excited about that.

After COVID-19.

The company is very streamlined and as we continue to grow a lot of that falls, just proportionately, which is a positive to the bottom line very excited about that.

Robert Bruce Kay: You know, we talked, we don't overemphasize in terms of the M&A opportunities, but strategics have an advantage for the first time in 20 years, and dozens of companies. So, you know, we're cautiously optimistic that will translate into opportunities for us. Frankly, if we wanted to be much more aggressive, we'd be buying a lot more businesses today, but we will maintain a, you know, very strict financial discipline. But we think there are opportunities, and hopefully we'll be able to transact it takes two, and we're not going to sacrifice our discipline to do that. So there are many different levers that excite us and hopefully excite the public in terms of the ability to continue to create value, let alone just from a cash flow generation basis. We continue to create equity value with the cash flow that we generate, even if we do not grow, and of course, we follow these levers, ample opportunity for nice growth above market.

We talk we don't overemphasize in terms of the M&A opportunities, but strategics have an advantage for the first time in 20 years and have bought.

A conference.

So we're cautiously optimistic that would translate in opportunities for us frankly, if we wanted to be much more aggressive we'd be buying a lot more businesses today, but we were maintained a very strict financial discipline.

And but we think the opportunities and hopefully we'll be able to transact. It takes two and we're not going to sacrifice our discipline to do that so there's many different levers.

That excite us and hopefully excites the public in terms of the ability to continue to create value let alone just from a cash flow generation basis, we continue to create equity value with the cash flow that we generate even if we did not grow and of course, we all these levers we think there's ample opportunity for <unk>.

Nice growth above market.

Operator: Thank you. I will thank you. There are no further questions at this time. I'll hand the floor back to management for closing remarks. Thank you, operator. Thank you everyone for attending our call. We look forward to issuing our full year guidance, as is our custom with our next call. Larry and I remain open to anyone who has questions or comments or wants to discuss any aspect with us. Thank you very much and have a great day. This concludes today's call. All parties may disconnect.

Yeah.

Great. Thank you.

Thank you Brian.

Thank you there are no further questions at this time I'll hand, the floor back to management for closing remarks.

Thank you all.

Operator, thank you everyone for attending our call.

Look forward to issuing our full year guidance as is our custom with our next call Larry and I remain open for anyone who has questions or comments or wanted discuss any aspect with us in the interim. Thank you very much and have a great day.

This concludes today's call all parties may disconnect have a good day.