Lifetime Brands, Inc. Q4 FY2025 earnings call

• Impact of tariffs: Tariff escalations in 2025 were significant, affecting shipments in Q2 and Q3, but some deferred volume returned in Q4. - Pricing strategy: Moved first on pricing to offset tariff costs, initially causing volume headwinds but leading to better margins later. - Cost discipline: Streamlined infrastructure, resulting in SG&A down 12% in Q4. - New product development: Dolly brand grew to approximately $18 million for the year, an increase of over 150%. - International segment: Continued to demonstrate resilience with international sales up 1.7% for full year, but final phase of Project Concord implementation delayed. - Distribution infrastructure: Relocation of East Coast Distribution Center to Hagerstown, Maryland expected to commence in Q2 2026.

Consolidated sales decreased 5.2% to $204.1 million. U.S. segment sales decreased 5.5% to $185.3 million, with product lines decreases in kitchenware and home solutions partially offset by an increase in tableware. International segment sales decreased 2.3% to $18.8 million. Gross margin increased to 38.6%, with U.S. segment gross margin increasing to 38.8 and international decreasing to 36.8. U.S. segment distribution expenses as a percent of goods shipped decreased to 8.3% versus 9.1%, while international segment distribution expenses as a percentage increased to 19.8% versus 18.1%. SG&A came in at $38 million in Q4, down 12% versus prior year quarter. Adjusted income from operations for the fourth quarter 2025 was $26.4 million compared to $20.2 million in 2024. Adjusted EBITDA for the full year 2025 was $50.8 million.

• Intends to provide detailed full year 2026 guidance in conjunction with first quarter results in mid-May. - Priority is recovering sustainable top line growth, focusing on driving volume through existing customer relationships, growing brands like Dolly, and strategic activity pipeline. - Pricing increases from 2025 will fully impact 2026, with expectation of more normal seasonality in 2026.

• Tariff fluctuations could impact shipments and sales. - Legal and structural constraints delayed final phase of Project Concord implementation. - Container rate increases and potential supply disruptions in European business due to geopolitical events like the war in Iran could affect operations. - Fluctuations in oil and resin costs could impact cost of goods sold.

Q: Hey guys, good morning. I know you don't typically give full-year official guidance until the first quarter, but just wanted to hear a little bit more about building blocks for growth in 2026.

A: Some of the things mentioned include pricing increases fully impacting 2026, new product introductions like Dolly brand continuing to grow, food service initiative with Macasa Hospitality expected to have substantial increase in revenues in 2026, and expecting more normal seasonality in 2026.

Q: So we wanted to also hear a little bit about what you're hearing from your large retail customers in terms of willingness to take on inventory. What does sell-through look like or POS data that you're seeing in kind of your key SKUs versus sell-in, and how are you thinking about that for 2026?

A: Seen a large divergence from channel to channel, continuing trend of uptick in e-commerce in fourth quarter, expecting that trend to continue, but with high bifurcation, and not expecting major impact of divergent selling and sell through in 2026 as those who pared back more would harm their sell through velocity.

Q: The net leverage at the end of the year looks good, under four times. Wanted to just hear how you guys are thinking about cash priorities this year. Obviously, you've got a lot of organic growth initiatives in place. But then you have the European restructuring that's still maybe ongoing or maybe just recently implemented. How do you balance the organic investments that you need to make versus the M&A funnel versus buying back your stock?

A: There are internal growth initiatives not capital intensive except for D.C., will get benefit of $13 million government funding from Maryland. No intention to change dividend policy. Will ultimately restructure debt arrangements. M&A environment is strong with real deal flow at real valuations.

Q: This is your best Q4 EBITDA margin that we can recall with sales down even better than 2020 and 2021 when sales were up. Gross margins were nicely up, presumably from the benefit of tariff pricing. But I'm curious what drove SG&A lower and how sustainable that is.

A: It's sustainable, a function of how fast we want to grow. With current business state including growth intended for 2026, no need for investing in SG&A further benefits from international operations.

Q: Which of your brands saw sales increases in 2025 outside of Dolly as an overall sales decline for a fourth straight year? What gives you guys confidence at the top line in flex this year?

A: Main confidence is disruptions in 2025 will normalize in 2026, Dolly will continue to grow, cutlery line established new business to maintain, and there are other organic internal initiatives in new space expected to drive growth.

Q: And just on the brand growth for the year, any brands perform better than the company average?

A: Taylor had a phenomenal year, Farberware was very strong, KitchenAid relaunched line with new products getting traction and new storage product for 2026 looking good.

Q: You mentioned the Dolly brand, obviously sales up really nicely, up 150% for the year. How big is that now? And what is your expectation for sales growth contribution or shipments in 2026?

A: Shipped $18 million in 2025 and will have substantial growth in 2026 as well.

Q: Obviously topical, given the war in Iran at the moment, can you remind us how you're positioned on freight in terms of spot versus contract, your cost exposure to oil and resin, and anything else we should be mindful of there?

A: Container rates starting to go up, have attractive long-term contracts for freight but shippers may ignore them in high inflationary periods. Very little business in mid-east, European business may see supply disruption but inventory levels not impacted. Cost of goods sold impacted by plastics resins but not a huge impact on total percentage on bill of material basis.

Q: Good morning and thanks for taking the questions. And it's certainly nice to see the better than expected results here in the fourth quarter. So it sounds overall like you guys should be able to maintain your SG&A costs. As far as your distribution costs, those also came down in the fourth quarter. How should we be thinking about that line item? And then I have a couple of other questions as well.

A: On distribution, West Coast facility running efficiently with new warehouse management system, expense benefit as percentage will continue, mild disrupting expenses expected when moving to Maryland facility but anticipating it to run well. On STNA, moves taken are sustainable, only bounce back in 2026 versus 2025 is potential payment of incentive compensation due to improved performance.

Q: In terms of the international segment, Larry, you may have said this, but perhaps I missed it, but in terms of the operating a loss for the quarter, for the year. Can you provide the comments on that?

A: There was a loss, as pronounced as in 2024. Concord 2.0 continues with legal and other roadblocks slowing down, hoping to achieve during 2026.

Q: So as far as you know, the fourth quarter, you had a tax benefit, which you addressed, Larry, how should we think about the tax rate for 2026? Any sort of commentary there on that?

A: Should be in the high 20% range, based on usual occurrences and international operations breaking even or better to affect tax rate.

Q: As far as the Maryland Distribution Center sounds like it's very well on track. So in terms of thinking about the CapEx for this year, do you guys have a ballpark estimate of what that could be?

A: Anticipating CapEx to be below budget, originally forecasted $9 million, may be less, spent couple million in 2025, call it around $7 million for 2026, with offset from reduced routine maintenance in New Jersey facility