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LB

LIFETIME BRANDS, INC (LCUT)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 revenue was $140.1M, down 1.5% YoY, and missed S&P Global consensus of $142.7M; adjusted EPS was -$0.25 vs consensus -$0.095, a miss; gross margin compressed 440 bps YoY to 36.1% due to customer and product mix .*
  • Management withdrew FY25 guidance and paused the previously planned Investor Day amid tariff uncertainty; price increases of 6–16% took effect May 15 to offset tariff costs and 80% of manufacturing is targeted to be outside China by year-end 2025 .
  • Liquidity remained strong at ~$89.6–90M; TTM Adjusted EBITDA was $51.0M; net debt/Adjusted EBITDA stood at 3.6x, providing cushion to navigate exogenous shocks .
  • Near-term stock catalysts: no guidance and margin pressure are likely negatives; watch pricing elasticity, tariff policy updates, and execution on supply-chain relocation and Project Concord to stabilize margins and drive international turnaround .

What Went Well and What Went Wrong

What Went Well

  • E-commerce, dollar channel and club posted “strong gains,” offsetting mass channel weakness: “These areas helped offset some of the declines and underscore the resilience of our multichannel strategy” .
  • International turnaround progressing: revenue flat YoY with improved operating results; Project Concord “on track to drive meaningful improvement to profitability this year” .
  • Defensive actions: identified and eliminating “over $10 million in annual costs,” tighter variable spending, and inventory turn improvements; strong liquidity (~$90M) and 3.6x net debt/Adjusted EBITDA .

What Went Wrong

  • Gross margin compressed to 36.1% (vs 40.5% in Q1’24) due to customer and product mix; U.S. GM fell to 36.2% from 40.8%; international GM 35.3% vs 35.9% .
  • Mass channel softness and cautious retailer ordering around tariffs pressured top line and mix; management withdrew FY25 guidance citing “lack of visibility” in a fluid tariff regime .
  • Distribution expenses rose (U.S. 11.9% vs 10.5%; International 25.0% vs 23.6%) amid labor inefficiencies and warehouse systems transition, partially offset by lower freight .

Financial Results

Quarterly Results vs Prior Periods

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Millions)$183.8 $215.2 $140.1
Gross Margin %36.7% 37.7% 36.1%
Income from Operations ($USD Millions)$8.6 $15.5 $1.1
Adjusted Income from Operations ($USD Millions)$13.2 $20.2 $(0.9)
Diluted EPS (GAAP) ($USD)$0.02 $0.41 $(0.19)
Adjusted Diluted EPS ($USD)$0.21 $0.55 $(0.25)

Q1 2025 vs Prior Year (Q1 2024)

MetricQ1 2024Q1 2025
Revenue ($USD Millions)$142.2 $140.1
Gross Margin %40.5% 36.1%
Income from Operations ($USD Millions)$1.8 $1.1
Adjusted Income from Operations ($USD Millions)$5.7 $(0.9)
Diluted EPS (GAAP) ($USD)$(0.29) $(0.19)
Adjusted Diluted EPS ($USD)$(0.15) $(0.25)

Q1 2025 vs S&P Global Consensus

MetricConsensusActual
Revenue ($USD Millions)$142.659*$140.085
Primary EPS ($USD)$(0.095)*$(0.25)
# of Estimates (EPS / Revenue)2 / 2*—

Values retrieved from S&P Global.*

Segment Breakdown (Q1 2025)

SegmentNet Sales ($USD Millions)YoY ($USD Millions)Gross Margin %YoY pp
U.S.$128.510 $(1.970) 36.2% -4.6
International$11.575 $(0.187) 35.3% -0.6
Total$140.085 $(2.157) 36.1% -4.4

KPIs and Balance Sheet Highlights (Q1 2025)

KPIValue
Liquidity (Cash + ABL availability + RPA)$89.6M ($10.4M cash; $63.2M ABL availability; $16.0M RPA)
TTM Adjusted EBITDA$51.0M
Adjusted EBITDA / Net Debt3.6x
Cash and Cash Equivalents$10.375M
Inventory$210.053M

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Full Year 2025 GuidanceFY 2025Company intended to provide detailed FY25 guidance with Q1 results Company withdrew FY25 guidance due to lack of visibility Lowered/Withdrawn
Investor Day2025Planned for Q4 2025 Paused (no formal Investor Day commitment) Postponed
DividendQ2 2025$0.0425 per share declared; payable May 15, 2025 No change noted in Q1 release Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024, Q4 2024)Current Period (Q1 2025)Trend
Tariffs / Trade PolicyDelayed shipments, mass channel softness; mitigation actions underway Price increases 6–16% (higher for 145% tariff items) starting May 15; early inventory build ahead of tariff hikes; de minimis loophole eliminated Intensifying policy impact; proactive pricing and sourcing
Supply Chain RelocationMovement to various geographies referenced On track to relocate ~80% of manufacturing out of China by end-2025 (Malaysia, Indonesia, Vietnam, Cambodia, India, Mexico); Mexico Maquiladora ramp-up Accelerating de-risking
Channel MixMass softness; e-commerce share gains Strength in e-commerce, dollar and club; mass remains weak Mix shifting toward value/online
International TurnaroundInternational growth starting to benefit from restructuring Project Concord “on track,” profitability improvement expected in 2025 Improving execution
Cost ActionsSG&A control, margin resilience >$10M annual cost reductions; working capital optimization Incremental defensive measures
Distribution InfrastructureNoted efficiency focus East Coast DC relocation to Hagerstown, MD; lower-than-expected capex; WMS transition Modernization underway
M&A PostureSelective opportunities Valuations attractive but lower predictability; conservative due diligence Cautious stance

Management Commentary

  • “We are on track to complete the relocation of the majority or 80% of our manufacturing out of China by the end of 2025,” targeting Southeast Asia and North America, including Mexico .
  • “The bulk of the [price] increases are between 6% and 16%… [and] begin to go in effect on May 15,” to offset tariff-related costs; higher pricing for 145% tariff items .
  • “Adjusted EBITDA for the trailing 12-month period ended… March 31, 2025, was $51 million… our liquidity was approximately $90 million… adjusted EBITDA to net debt ratio… 3.6x” .
  • “We’ve identified and eliminated over $10 million in annual costs… paused nonessential marketing… focused on optimizing working capital” .
  • “We made the decision to not issue formal guidance for the full year 2025… lack of visibility” .

Q&A Highlights

  • Magnitude of channel swing: “The swing was… about $15 million” between mass declines and e-commerce/club/dollar strength .
  • Dolly Parton program: shipment shift from Q4 to Q1 occurred “just as expected”; continued bullish outlook and year-over-year growth anticipated .
  • Pricing magnitude and elasticity: 6–16% increases (higher for 145% tariff items); average ticket low—limited demand elasticity historically for core SKUs (e.g., can openers) .
  • Distribution center capex: lower than previously anticipated; “low seven figures” impact reduction; timing spread across years .
  • Guidance decision: management withheld FY25 guidance due to “lack of visibility” in a fluid environment .

Estimates Context

  • Revenue missed S&P Global consensus ($140.1M actual vs $142.7M consensus); EPS missed (adjusted -$0.25 vs consensus -$0.095). Thin coverage: 2 estimates for both revenue and EPS .*
  • Drivers of the miss: mass channel softness, customer/product mix pressuring gross margin; retailer caution around tariffs; higher distribution costs during DC transition .

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Near-term headwinds: mass channel softness and tariff-driven pricing/mix pressure reduce visibility; management withdrew FY25 guidance—a negative for sentiment .
  • Pricing actions in place: broad-based 6–16% list price increases should offset tariff costs; monitor elasticity in value channels and sell-through performance .
  • Supply-chain de-risking is advanced: target of ~80% manufacturing outside China by YE25 reduces long-term tariff risk; Mexico capacity ramp and Southeast Asia sourcing diversify inputs .
  • International turnaround: Project Concord execution is on track; expect incremental profitability improvement in 2025—track margin progress and SG&A efficiencies .
  • Cost control and liquidity: >$10M annualized savings, strong liquidity (~$89.6–90M) and 3.6x net debt/Adjusted EBITDA provide resilience amid macro shocks .
  • Operating infrastructure upgrade: Hagerstown DC modernizes logistics, with lower-than-expected capex; expect transient distribution expense pressures to normalize post-transition .
  • Trading setup: absent guidance and margin compression, the stock may remain volatile; watch tariff policy developments, Q2/Q3 pricing realization, and channel mix as catalysts for margin stabilization .

Bold indicates significant beats/misses: Q1 revenue and EPS were both misses to consensus.*