Q3 2025 Lifetime Brands Inc Earnings Call
Good morning, ladies and gentlemen, and welcome to the Lifetime Brands Q3 2025 earnings conference call.
At this time, I would like to inform all participants that their lines will be in a listen-only mode.
After the speaker's remarks, there will be a question-and-answer portion of the call.
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I would now like to introduce our host for today's conference. Jamie kirchin.
Mr. Kirchin, you may go ahead now.
Good morning and thank you for joining lifetime Brands. Third quarter 2025 earnings call with us today from management are Rob K, chief executive officer and Larry, Welker 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 of the company. And these statements are intended to qualify for the Safe Harbor protection from liability established by the private security litigation Reform Act.
Any such statements are not guarantees of future performance and factors that could influence. Our results are 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 here of 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 promulgated 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.
As we discussed last quarter, the second quarter were saved by a unique set of external pressures. Most notably the sudden Tower swings that disrupted shipping patterns across our industry.
Coming into the third quarter, we expected a move towards normalization, and that is what we've seen. Although in a still choppy environment, tariff rates have continued to fluctuate in both directions.
We saw the new 233 232 tariffs implemented on steel content, imported across all geographies.
Most recently, there has been announced 10% reduction of tariffs assessed against imports from China.
Even before this tariff reduction lifetime had seen a more favorable all-in cost basis from China for many of our product categories in the current tariff environment.
We anticipate that this will further improve with the latest 10% tariff reduction.
The current macroeconomic backdrop and End Market environment, have have created an environment that we expect will persist until greater stability returns to the global trade environment.
As has occurred, historically stability, at whatever tariff levels, has resulted in a return to normaly with our customer base. And in our end markets,
We fully expect to see the same trend return.
Most consumer categories.
According to the US Bureau of Labor Statistics, the general ma merchandise category saw a decline in shipments of approximately 6.1% for the quarter.
Lifetime shipments were basically in line with this metric.
And we believe compares favorably to many of our peers.
We remain confident that our proactive actions and deep expertise in navigating periods of uncertainty will favorably position Lifetime for above-average growth in a return to a normal operating environment.
of note, the overall end market demand continues to evolve driven partly by the current macro environment,
You will increase me here about the k-shaped economy, where there is a trending diversion of outcomes between different age and demographic groups.
We are closely monitoring these Trends to optimize our footprint among positive Trends in consumer spending.
Along these lines, we remain wary of a slightly downtrend for this holiday season. However, we expect that shipments to 2 of our 3 largest customers will rebound in the fourth quarter, due to a shift of orders from the third quarter to the fourth quarter.
The near-term volatility created by the current tariff landscape remains challenging.
But lifetime has navigated environments like this before.
The steps we took early in the year including expanding sourcing in Mexico and Southeast Asia.
Implementing targeted pricing actions.
And tightening cost controls.
Have all proven effective.
Our tariff mitigation strategies, now fully in place and Performing as intended.
While some manufacturing has shifted back to China, due to the current trade realities. I just mentioned
The flexibility of our supply chain allows us to Pivot quickly as conditions evolve.
Importantly, the diverse Geographic footprint that we set out to establish for our product country of origin is firmly in place and we are positioned to adjust our sourcing across regions in response to evolving political and economic conditions.
The results for the Ford third quarter, reflect disciplined cost management.
Ongoing progress under project Concord and continued enhancements in operational efficiency across our platform.
Companywide. We have further, streamlined, processes eliminated, redundancies and captured tangible savings. That are reflected in our results.
Sgna expenses in the US are down over 5% year-over-year.
On Concord, we're approaching the finish line on the major initiatives, we established and will evaluate. After year end whether the progress achieved, warrants a next phase of optimization.
Operationally, the business is performing well in the areas within our control.
In a down Market, our International segment, again shot progress on top and bottom line.
Benefiting from our strategic shift towards major retailers and markets, like Australia and New Zealand and the European continent.
the strength of those relationships coupled with our globally, recognized brand portfolio, continues to differentiate Lifetime and further strengthen our competitive position
Specifically, Harris remained disruptive across all categories, with certain segments, like dinnerware and the club channel experience, deferring shipments.
That we expect will move into 2026.
However, our multi-pronged.
Pricing strategy will offset much of the cost impact moving forward. As it has been fully implemented. For all tariffs announced through the third quarter, with the exception of the 232, tariff price increases.
Which have been passed through to our customer base in this quarter and will be fully implemented before the end of the fourth quarter.
These pricing actions are attended to preserve and sustain our gross margin dollar.
Lifetime is benefiting from higher deal flow, as we believe that financially pressured competitors are looking for partnership or sale opportunities.
That Dynamic supports our ongoing m&a strategy, where we continue to make progress.
Innovation, also remains Central to our growth strategy?
We're continuing to launch new products that align with consumer Trends and retailer demand the Daly line and the expanded Builder board collection have performed. Well we are informing our ability to identify Trends early and bring to Market at scale.
In hydration, our new glass bottle, line under the swell brand, has launched successfully, and will be expanded shortly to capture additional Market opportunities in the hydration category.
From a macro perspective, we continue to believe the consumer will remain cautious through the holiday period, their early indications of seasonal, sell through our encouraging.
With an average product. Price point below $10. Lifetime's portfolio continues to resonate with households seeking quality and value a key strength in uncertain times.
Liquidity remains solid at 51 million and adjusted ibida for the trailing 12 months. Ended September 30th was 47.2 Million.
This solid financial position allows us to continue investing selectively in areas that will drive long-term profitability and shareholder value.
stepping back 2025 thus far has been a transitional year but an important 1
the second quarter appears to have represented the trough of tariff related disruption on the third quarter marks tangible progress towards the beginning of normalization,
the actions we've taken under project Concord combined with discipline, cost management and proactive sourcing diversification of meaningful, improved, the quality of our earnings and the resilience of our business
as I said, last quarter, our goal is to control what we can control, and we are doing just that
As the broader Market stabilizes, we expect the groundwork, we've laid this year to translate into stronger performance greater efficiency and removed, renewed growth momentum in 2026 and Beyond.
Particularly, we expect the current headwinds across consumer products industry to drive further disruption. As many under capitalized participants face increasing challenges, meaning the operational Financial demands who prior to remain competitive and rapidly changing environments.
These needs require a tremendous effort and Supply Chain management.
System requirements and balance sheet depth to effectively mitigate the trade War impact and remain relevant and present to the retail community and consumers.
Frankly, many smaller and some of our larger competitors are not adequately addressing these needs and are not providing.
For a consistent quality supply of products while adhering to the frequently changing legal requirements, created over the past year.
Ultimately, those companies will not be able to sustain this current operating modus operandi.
This will result in a streamlining of the participants in the consumer products industry and create opportunities. For for those that have the resources and have managed efficiently and appropriately through this environment
In the end, we are confident that Lifetime is well positioned to thrive as normalization returns to the global and domestic markets for our categories.
Thank you. And with that, I'll turn the call over to Larry to review the financials in more detail.
Thanks Rob as we report this morning, the net loss for the third quarter of 2025 was 1.2 million or 5 cents per diluted shares compared to net income of 0.3 million or 2 cents per diluted share in third quarter of 2024 adjusted. Net income was 2.5 million for the third quarter.
Of 2025 or 11 cents per share is compared to 4.5 million or 21 cents per diluted share in 24 income. From operations was 6.7 million in the third quarter.
25 as compared to 8.6 million in the 2024, period.
Off of the trailing 12-month period ended September 30th 25 was 47.2 Million.
Adjusted net income, adjusted income from operations and adjusted IBA. A non-gaap financial measures which are reconciled to our gaap financial measures in the earnings release.
Following comments are for the third quarter of 2025 and 2024. Unless stated otherwise.
consolidate sales declined by 6.5% to 171.9 million us segment sales decreased by 7.1% to 158.1 million
Sales of favorably impacted by the initiation of our planned increase in selling prices to offset higher tariffs on products sourced from outside the US.
However, we experienced a decline in unit sales due to dampened consumer demand and, for some retailers, a shift in the timing of their orders.
Within the segment, product line decreases for primarily in table wear, which was most affected by the retail order shifts.
International segment sales increased by 1.5% to 13.8 million and excluding the impact of Fur. Exchange translation. The decrease was 2.7% for dominantly in Europe, but partially offset by higher sales in the Asia and Pacific region.
Consolidated gross margin decreased to 35.1.
From 36.7% us segment, gross margin decreased to 35.1 from 36.8% to decrease in the gross margin. Percentage was primarily due to higher selling prices to offset higher tariffs. As Rob commented, our pricing actions were designed to maintain gross margin dollars, which arithmetically results in a lower gross margin percentage.
International growth margin increased to 35.5 to 34.6% driven by favorable customer and product mix.
Us segment distribution expenses as a percentage of goods shipped from its warehouses. Excluding non-recurring expenses was 8.5% versus 10.1%.
The decrease was attributable to improved, Labor Management. Efficiencies resulting in decreased employee expenses.
Lowered, depreciation expenses, due to change in asset retirement estimates and the prior year.
The decrease is partially offset by higher software expenses for the warehouse management system implemented in September of 2024.
International segment, distribution expense, as a percentage of ship good shift from its warehouses. Improved to 22.6% from 24.2
The Improvement was due to lower Freight out expenses and higher shipment volume resulting in better absorption of fixed expenses.
Selling, general, and administrative expenses decreased by 8.5% to $35.5 million. In the U.S., the expense decreased by $1.5 million to $28.4 million.
And as a percentage of net sales, the expense increased to 18% from 17.6.
The decrease in expenses due to lower employee expenses including incentive compensation partially offset by an increase in amortization expense related to a trade name, previously considered indefinite life.
The increase in percentage of net sales was attributable to the impact of fixed costs on lower sales lines.
International sgna expenses decreased by 1.1 million to 3.4 million dollars.
As a percentage of net sales, the expense ratio improved to 24.6% from 33.1%.
The decrease was due to lower employee expenses and low selling expenses and a prior year included a regulatory expense.
An allocated corporate expense decreased to 30 3.7 million, from 4.3 million, due to low incentive, compensation and legal expenses.
Interest expense, excluding walk to Market adjustment for swaps decreased by 0.8.
million due to lower average outstanding borrowing, and lower interest rates on those outstanding borrowings
And the income tax rate for the current period difference from the federal statutory rate of 21%, primarily due to the impact of non-deductible expenses which no tax benefits recognized at a partial evaluation allowance by us. Tax asset has a result of Goodwill impairment in the second quarter.
In 2024. The rate difference is primarily due to foreign losses for which no tax benefit was recognized,
Continues to be strong, despite the challenges, from high, tariff rates, our debt level increased from the second quarter, reflects seasonal working capital needs including an additional 13 million of inventory costs due to higher tariffs.
A quarter end, our liquidity was approximately 51 million, which includes Cash Plus availability under our credit facility and receivable purchase agreement.
now adjusted ibida to net, debt ratio, as of September 30th was 4.2 times
This concludes our prepared comments, operator, please open the line for questions.
Thank you.
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We have the first question from the line of Anthony.
Liberty from sidoti and Company. Please go ahead.
Uh, good morning everyone. And thanks for taking the questions. Uh, so first, uh, is there any way that you guys could quantify what the magnitude of the revenue shift was for a couple of your large customers, Rob, as you called out in your prepared remarks?
um,
not at this time, ma'am.
Okay. Um,
And then, you know, thinking about uh, you know, price, uh versus UNI volumes. I know you. You did some price increases, uh, in the quarter. Uh, can you can you give us uh, some more information about that and how should we think about the fourth quarter?
As it relates to pricing is and I don't know if you if you can answer anything about the unit volumes about it. The if you could talk about pricing uh that'd be great.
Yeah, well, start off by saying that um, you know our analysis.
um, it appears that our
Price increase, approximately is off offset, the Tariff um, additional tariffs. And that was our objective.
Um, so that's um that's you know, that's good. That's that's planned. Uh, in terms of the impact of these price increases on sales it's you know a couple of percentage points.
You know, it's it's it's, it's still being phased in, uh, it doesn't happen all at once and for all customers. So it will have additional impact, um, in the fourth, in the fourth quarter.
Yeah, thanks Larry. And, uh, and are you referring to these section? 232 tariffs, uh, here for for the fourth quarter or just, just just wanted, I know there. It's, it's still, it's hard to keep up with all the changing paraphrases but um, you know, as far as like this, the the section 232, whether that that's already included in your outlook.
Yeah. A little of both, I mean uh the by the end of the third quarter, except for the 232 tariffs everything had been implemented but it wasn't implemented day 1 and 23, right? So there's there's not a full quarter impact
Mhm. Okay, gotcha. All right. All right. And then um,
Can you give us a sense as to, uh, you know, what's your product sourcing is, uh, now, nowadays, um, especially as it relates to China. I know you said that some production have have shifted back to China, but to just help us better, understand, kind of where you are with that, um, at this point,
Yeah, it's it's fluctuated a lot. Um, so like we had moved, um, you know, production to, um, India. But when the 50% terrorists were put in India, we, we basically stopped doing business with India because it become became
Uneconomical to do so. Um, we've
finished our buildout, uh, substantially of a lot of the southeast Asians and geographies. So we're shipping meaningfully from Cambodia and um,
Shipping through. Um, so again, we shifted that back to China, so we'd have continuity of Supply. Uh, and in today's environment, as I mentioned, the economics are favorable all in including tariffs with China. Um, so, um, you know, while we are targeted and we could easily move even today, 80% of production, out of China, it won't be by year end. Because in today's economic environment, that would be excuse me, today's tariff environment that would be
Um, harm the economics, right? So we can Flex it and a lot of our factories in Southeast. Asia. Asia, are are, um, overlap ownership with the factories in China, so we can shift very easily back and forth.
Gotcha. Okay. And then uh, lastly for me. Um, you know, what types of m&a opportunities are you guys looking at and what are you seeing in terms of valuation multiples, nowadays?
so, um,
we are actively engaged. We're seeing a lot in our own space, which would be highly synergistic just from the cost eliminations, uh, and some that are, uh, more vertically oriented to our current footprint, um, uh, in this environment, uh, particularly since
The financial buyers are not participating. We're seeing a meaningful reduction in valuation.
Um, so it's a common, we're seeing good valuations from a combination of a generally, the market valuations are down and B, we're looking at opportunities, uh, that have meaningful, um, synergies and cost eliminations, which which leverages that multiple down further.
All right. Well, that's good to hear, and best of luck.
Thanks Anthony.
Thank you.
This concludes, the question answer session, I would now like to hand the conference over to Rob for closing comments.
Thank you. And as always, thanks everyone for listening to our call and your interest in lifetime Brands. And we look to communicating uh with people um in the near future. And as always Larry and I remain available for anyone who wants to reach out directly, thank you and have a great day.
Thank you.
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