Q2 2025 Lifetime Brands Inc Earnings Call
Good morning, ladies and gentlemen, and welcome to Lifetime Brands' second quarter 2025 earnings conference call.
At this time, I would like to inform all participants that the lines will be in less than only mode.
After the speaker is remarked, there will be a question and answer portion of the call.
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I would now like to turn. I would now like to introduce your host for today's conference. Jamie kirchin Mr. Kirchen. You may begin.
Good morning and thank you for joining lifetime. Brand second quarter, 2025 earnings call.
With us today from management are Robert Kay, Chief Executive Officer, and Laurence 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. These statements are intended to qualify for the Safe Harbor protection from liability established by the Private Securities Litigation Reform Act.
Any such statements are not guaranteed of future performance and factors that could influence our results or highlighted, in our earnings 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 development, except as required by law. The company does not undertake any obligation to update such statements.
Our remarks this morning, and in our earnings release also contain non-gaap Financial measures within the meaning of Regulation, G ProMag by the Securities and Exchange Commission. 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 k. Please go ahead Rob.
Thank you and good morning.
The second quarter presented a number of challenges, some anticipated and others that emerged quickly.
I'll start by discussing how we invest mitigated the challenges.
The impact on the second quarter. And before I turn the call over to Larry, I'll speak at a high level on our expectations for the third quarter.
Despite the dynamic macro environment.
We have and will remain focused on execution and positioning lifetime to emerge stronger over the medium and long term.
During our first quarter call, I walked through the proactive steps. We've taken over the past 2 years to stay ahead of evolving us trade policy.
This includes shifting parts of our manufacturing for print outside of China.
Acquiring and now expanding our facility in Mexico.
And diversifying sourcing across key geographies, like Vietnam Cambodia, India and other parts of Southeast Asia.
Thanks to the proactive steps. We have taken we're well positioned to manage ongoing tariff related, uncertainty.
That said, our second-quarter results were not immune to near-term macro headwinds tied to the evolving trade environment.
This was driven by meaningful swings in tariff rates across many geographies that caused a temporary stoppage of shipping until more clarity emerged.
These changes led to unplanned shipment delays, particularly with key accounts in the e-commerce and club channels.
That crusher was most acutely felt in our top line, which declined approximately $10 million year over year.
We see this as mostly an unusual event as in response to the Tariff environment, particularly the uncertainty and magnitude of Liberation day and the 145% China tariffs imposed in April.
Many of our customers and lifetime halted shipments and delayed orders which directly affected our second quarter performance.
Normalization of ship shipment Cadence by the beginning of the third quarter.
Some of the shipments that were delayed during this period have been rescheduled for the second half of this year while a portion will not resume until 2026.
While we undoubtedly experienced headwinds in the club and e-commerce channels, we did benefit from strong gains in cutlery, kitchen measurement, and continued growth in our international business.
Which helped offset some of the declines. And underscores are strategically Diversified platform.
Speaking to the strength of our Diversified platform. I want to take a moment to remind investors that we meet consumers where they shop across a wide range of channels. This intentional diversification, helps ensure we're not overly reliant on any single outlet which we view as a key strategic advantage.
As part of our response, we acted quickly, introducing targeted pricing adjustments.
Implementing structural cost, reductions.
And moving forward with our previously outlined resourcing strategy.
As we move, swiftly, swiftly on the price increases.
As mentioned previously, lifetime, put a temporary.
And additional pause on some shipments.
We view this as a necessary. Tariff mitigation technique.
temporarily impacting shipments as we fully implemented these price increases
As of today, we have completed our intended targeting actions related to the current tariff environment.
What's more important and what we are choosing to focus on is what we can control.
No worthy. While we saw a decline in our Top Line in the second quarter. Our ibida performance remained stable.
Our adjusted EBA was consistent with the last quarter.
Underlying the strength in our core operations.
This was aided by the actions. I referred to a moment ago including cost efficiency actions which amount to over million dollars on an annualized basis.
Casual from operations exceeded 25 million year to date.
And liquidity remains strong with over 90 million on hand, to support both near-term needs and longer term strategic initiatives.
We also continue to see traction where our investments are aligned with Market opportunity.
International markets, especially Europe, delivered, another quarter of growth.
Partly was supported by new product, introductions and performed. Well with continued gains in market, share and Innovation remains Central to our category approach.
The response to build the board, for example.
Is a reminder of our ability to identify Trends and bring compelling ideas to Market at scale.
Turning to some segments highlights in addition to building the board, we continue to see growth in areas such as our tailors division, particularly in kitchen and weather measurement.
Our Fred product line of unique gift and accessory items.
And our international business which had another quarter of growth driven by e-commerce and a continued push International accounts.
As I mentioned on the supply chain front, we we remain on track to have the capability to move. 80% of production, outside of China by year end.
With new Partnerships and capacity ramping up in North America and throughout Southeast Asia.
This is a fundamental repositioning of our sourcing footprint, not a short-term hedge.
It enhances flexibility, improves cost, efficiency and securely, reduces exposure to tariff volatility.
Turning to potential m&a activity.
We've seen a meaningful pickup in unsolicited inbound interests.
Driven in part by Financial pressure on many industry players.
While it's still early. We are actively evaluating several highly attractive opportunities.
We plan to share more here in the coming weeks as our diligence progresses.
Looking ahead.
While we remain cautious on the broader demand environment.
Shipments resume and our cost base, reflects the full benefit of our early decisions.
We continue to make strides in our international business and will continue to report on our progress as we work through the second half of this year.
In summary. This was a tough quarter but not a surprising 1.
And not 1 that changes our longer term View.
We have a solid foundation, a healthy balance sheet, and a clear operational roadmap.
For confident in our ability to manage through this period and create long-term value for all stakeholders.
As discussed above, we view, the extreme conditions in the second quarter to be largely mitigated as of today.
Based upon this environment, we see a notable portion of the revenue impact from our second quarter as not indicative of the rest of the year. Without additional macro-driven impacts, we should have a more normalized demand from our retail customers based on listings and market share.
With that, I'll turn it over to Larry to walk through the financials.
Thanks Rob.
As we report this morning, net loss for the second quarter of 2025 was 39.7 million, or $1.83, for diluted share as compared to 18.2 million loss or 85 cents for diluted share in the second quarter of, uh, 2024, the net loss.
The current period includes non-cash Goodwill impairment charge of 33.2 million related to the US segment.
The net loss for the prior period included a non-cash, charge of 14.2 million, due to the company's loss of significant influence in its Equity investment. Improved World Bonilla.
Addressing a net loss of $10.9 million for the second quarter, or 50 cents per diluted share, compared to $600,000, or 3 cents per diluted share in 2024.
Lost my operations was 37.2 million in the second quarter as compared to income from operations of 1.2 million in the 2024 period. Lost from operations for the current period included a non-cash Goodwill impairment charge of 32 33.2 million related to the US segment as of June 30th. 2025 companies, Goodwill balance has been reduced to zero and therefore we expect in the future a more consistent alignment between gaap accounting earnings and non-gaap adjusted earnings.
Adjusted income from operations. For the second quarter was 900,000 compared to 5.6 million and the 2024 period.
adjusted e with that for the trailing 12-month period ended June 30th, 2025 was 50.7 Million
Adjusted, net loss, adjusted income from operations and adjusted IBA. Are non-gaap Financial measures, which are reconciled to our gaap financial measure in the earnings release.
following comments for the second quarter or for the second quarter of 2025 and 24, unless stated otherwise,
Consolidated sales declined by 6.9% to $131.9 million.
US segment sales decreased by 8.6% to $119.3 million.
Sales were adversely affected by shipment delays, particularly due to the period in which the tariff on goods sourced from China was 145%, coupled with the Liberation Day announcements.
Within the segment, the major product line decreases were in Home Solutions and tableware.
Partially offset by increases in kitchen, wear driven by higher sales for cutlery and board products International segment sales increased by 12.4% to 12.6 million.
And excluding the impact of Foreign Exchange. Fluctuation, the increase was 6.6% 6%. Predominantly in the UK and Continental Europe.
Overall gross margin was consistent at 38.6% compared to 38.5% us segment gross margin increased to 39.1% from 38.7.
The the Improvement was driven by favorable product mix. The second quarter margin was not affected by tariffs.
International gross, margin decreased to 32.5 and 36.6 due to unfavorable customer product mix.
Us segment distribution expenses as a percentage of good ship from its warehouses were 11 11 11 points 11% versus 9.5%.
The increase was due to lower shipment volume resulting in lower absorption of fixed expenses.
Expense International segment distribution expenses as a percentage of good ship from its warehouses.
For 26.8 versus 25.1%.
The increase is attributable to higher Warehouse expense related to the expanded distribution in the asia-pacific region.
Selling General and administrative expense expenses decreased by 2.1% to 37.5 million.
You would segment expenses were even with last year increases in the provision for Dal accounts and amortization related to a definite life. Phrase name was offset by lower employee expenses, including incentive compensation.
International SG&A expenses were even with prior.
Allocated corporate expenses declined due to lower incentive compensation and reduced legal expenses.
The income tax rate for the, current period and prior period was 6.5% and 0.3% respectively.
In 2025 the rate differs from the federal statutory rate.
Due to a partial valuation allowance on us deferred tax assets due to the good rule impairment charge.
2024, the rate difference, due to foreign losses, for which no tax benefit is recognized, and to the expiration of non-qualified, stock options, and Equity based Awards with a book, expense exceeded tax deduction.
Our balance sheet continues to be strong, despite the challenges arising from high tariffs at quarter-end. Our liquidity was approximately $97 million, which includes cash plus availability under our credit facility and receivable purchase agreement.
Year to date. We have reduced net debt by 18 million and our adjusted Eva to net debt ratio as of June 30th was 3.5 times and improvement from the 3.6 times in March.
This concludes our prepared comments, operator, please open the line for questions.
Thank you.
We will now.
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1 moment, please while we pull for questions.
The first question comes from Anthony.
Libby dinsky of the CEO and Company, please go ahead.
Uh, good morning and thank you for taking the questions. Uh, so Rob, you you talked about taking up a a pricing in the quarter. Um, maybe if you could just give us some details as to
Give us a framework. Uh look how to think about pricing versus unit volumes. Uh how that was in the second quarter, that would be helpful.
I'm sure, I think hi. Um,
in the quarter, we
passed through price increases and as you might imagine you really, um, while it may differ, you know, from what you're selling, um, and customer uh, account and channel. Um, you need to really uniformly. Do that across the whole board, right? Because you can't be selling the products in 1 place, um, at a higher price. And not, not add another so you have to do it uniformly. Um, so we worked on doing that and implemented it all.
As of as of today, um, but in terms of the effective dates of those price increases no impact on the second.
Okay.
All right. And then um, can you give us an update on on the Dolly Parton? Uh, products at Dollar General. And I know you previously, you guys talked about um uh putting in some additional Brands through a Dollar General. So uh would be helpful to get an update on that.
Anthony, um,
1 of the misses in the second quarter versus our expectations, um, was Dollar General, uh, where um,
Continues to expand, uh, versus last year. Um, we are in discussions with launching additional Brands, um, at Dollar General. Um, but we have not finalized anything as of today.
Gotcha. All right. And then um,
Your International segment that certainly was a nice positive in terms of the sales growth, um can you give us an update on and maybe Larry already mentioned this. But as far as the operating um income or loss in that segment, if you could tell us and also give us an update on Project Concord
Yeah. Yeah. In general. Um, and we had to write out some inventory, which had a negative impact on International bottom line, uh, just as we've gotten through Concord, there was some excess copy wrote down. I should say no.
Um, uh, but you know, we're still tracking, you know, a lot of what we've done in terms of cost takeout, uh, not as easy to implement legally. So, uh, in the UK as it is in the US. So a lot of the actual Financial impact starts flowing through in the third quarter. Um so you know we're we're still um on track for what we've been doing. You know the big impact is going to be in the second half of the Year financially.
Um, and you know, we continue to monitor closely to make sure, as we said in the past, that, you know,
We hit those milestones.
Gotcha. Okay, and my last question before I pass it on to others. So, um, your distribution expenses were up 7% from last year. Um, I think Larry, you mentioned that new warehouse management system and a new warehouse in, um, APAC. So is that...
Is that really the the only reason or is there anything else for a unusual uh, driving those uh dollar increases in terms of distribution costs? And how how do we think about this uh cost item uh, for the back half of the year?
Yeah, so so um, the other factor is that, you know, we talked about the, um, shipments that we delayed or cancel, the second quarter due to the Tariff. Um, that had a big impact on the warehouse, uh, Warehouse Club, and a Warehouse Club, business does not go through the warehouse it goes Direct.
Um from overseas suppliers. So you know, when you look at sales relative to um Warehouse expenses that will be worse,
Um, but an absolute terms. Um, you know, that's a percentage but an absolute terms is the fact that we we mentioned and there's some, you know, there's some a little disruption because we all go through um, moving into a new war warehouse and shutting down an existing 1. Yeah. And as we've talked about, we expect, you know to be in if some inefficiencies until we go live in our new Warehouse, which will be in 2026, which we are completely unscheduled.
Terrific. Okay, all right. Well thank you very much, guys. And the best of luck.
Thanks man.
The next question comes from Brian mcnamera of canaccord genuity, please. Go ahead.
Good morning guys, thanks for taking the questions.
Uh, first off, can you reasonably quantify how much sales you might have left on the table by stopping shipments and other internal uh actions to kind of mitigate tariffs and Q2 and what impact if any lingers into Q3 in the back half?
Um,
yes. So
The.
Uh, some of the big things.
Um,
That shifted would be um, some of it shifted.
Some of it um was delayed. Uh, there's about 30 million plus
Uh, related to that. Um
There is in terms of carryover, um, the only carryover that will continue for the second half of the year is that there were delays in certain programs that um, will cause changes of ship dates. So we are still trying to
um,
Solidify ship dates of some things. Does it slip.
My obviously that would impact this year.
In favor of next year.
but the bulk of the
as we talked about the bulk of the disruption that we saw on the second quarter,
Uh, is passed.
Fair enough. Um, secondly, why is, I guess, guidance so difficult to provide with the improved clarity on tariffs here? We've heard from many other companies, even those that may perhaps be more exposed, that have either reinstated guidance or at least updated prior outlooks.
Yeah, we, we've thought about it. We don't see clear visibility. I mean, things change frequently. Um, both, and, you know, a lot of the impact of the pricing increases haven't really been followed by the consumer. We thought that, you know, visibility, uh, at least right now was rather poor and, you know, we didn't want to resume with this much uncertainty. You know, we were re-evaluate that for next quarter. However,
On your point on pricing, when do you think pricing actually hits the shelves? Because I would actually agree with your standpoint across the consumer for the most part.
there was
an article today, I was reading in 1 in a major national publication, that, that was talking about how you start trusting it soon. So that's their opinion. Uh, I agree with that. Um, I also think that it, it wasn't uniform. So some stuff that you started to see,
Immediately move was you know some of the bigger retailers direct import private label stuff because right? They're paying that they're passing that through quicker. Um though I think many companies have absorbed a lot and delayed pricing pieces but that we've seen catching up
Um, and uh, we expect that to be hitting.
shelves in Q3
And then, what kind of elasticity are you guys expecting? Um, and what products are kind of most price sensitive
Well, traditionally there, uh, hasn't been much impact, um, of price increases on, on a lot of what we could, uh, of what we sell. Um, partly driven by, you know, the average selling prices of what we sell is pretty low.
So, you know, if you take the can opener and it's a 7 dollars and now it's at 8 dollars, we've never in the I should say.
In the past, we have in seen an impact on volume related to that, um, you know, some bigger items like large, generare sets or tabletop, you know, would be most vulnerable. Um, on the consumer side, uh, in the food service side, uh, those same items, uh, are not very price sensitive. Um, the issue you could potentially see is, you know, in a down economic time, uh, when hotels restaurants and the like, uh, stop. Uh, a pace of capital investment, particularly new store openings, or in a really bad economic environment. New store closings, that impacts their, uh, purchases of cable, top Goods, but the pricing does not
Thanks very much. I'll pass it on.
All right. Thanks Brian.
this concludes our question and answer session, I would like to turn it back over to Robert Kay for
Closing remarks.
Thank you. And thank you, everyone, for tuning in for our call this quarter. We hope to keep people updated on a timely basis and look forward to speaking to people in the next call. In the interim, as always, Larry and I are unavailable for anyone who wants to reach out. Thank you and have a good day.
Thank you. This concludes today's conference. We thank you for your participation. You may now disconnect your lines at this time.
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