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LB

LIFETIME BRANDS, INC (LCUT)·Q4 2024 Earnings Summary

Executive Summary

  • LCUT delivered a strong Q4: revenue rose 6% to $215.2M, gross margin expanded 130 bps to 37.7%, and GAAP diluted EPS was $0.41; adjusted EPS was $0.55, reflecting non-GAAP add-backs to amortization and other items .
  • Results beat Wall Street consensus on both revenue and EPS; Q4 revenue of $215.2M vs. ~$204.7M consensus*, EPS $0.55 vs. ~$0.43 consensus*; adjusted EBITDA of ~$23.0M vs. ~$22.9M consensus*; strength was led by e-commerce and international margin improvement .
  • Management launched Project Concord to accelerate International turnaround (targeting breakeven by 2026, ~$5M improvement to operating profit in 2025) and announced relocation of the East Coast DC to Hagerstown, MD (capex ~$10M; ~$13M incentives), supporting cost containment and capacity .
  • Near-term catalysts: tariff mitigation actions (price increases, sourcing shift out of China), Dolly Parton program expansion (Dollar General and additional retailers), and fourfold growth forecast in hospitality glassware; the Board declared a $0.0425 quarterly dividend payable May 15, 2025 .

What Went Well and What Went Wrong

What Went Well

  • E-commerce strength: online sales reached 24% of Q4 total; consolidated e-commerce sales grew 9% to $51.5M in Q4; U.S. e-commerce up 10% YoY, driving share gains in cutlery, tableware, and home décor .
  • International margin turnaround: international gross margin rose to 38.5% from 27.2% YoY; Amazon channel margin up 1,140 bps to 38.6% supporting the turnaround thesis and breakeven path .
  • Dolly Parton program execution: $7M shipped in 2024 with ~$4M deferred to Q1’25; management: “sell-through at Dollar General has been very strong… and we expect the 2024 program at Dollar General to double from the $7 million” .

What Went Wrong

  • Mass channel softness: management cited share loss on KitchenAid in mass, offsetting core U.S. progress despite overall share gains in Q4 .
  • Higher SG&A and warehouse costs: SG&A rose $4.5M to $43.2M; U.S. warehouse expenses increased due to depreciation on the exiting NJ facility, WMS start-up inefficiencies, and higher labor rates .
  • Tariff uncertainty: majority of production still in China; the company aims to move >50% out of China in 2025 and pass through price increases, acknowledging consumer headwind risks .

Financial Results

MetricQ4 2023Q3 2024Q4 2024
Revenue ($USD Millions)$203.1 $183.8 $215.2
Gross Margin (%)36.4% 36.7% 37.7%
Operating Income ($USD Millions)$15.7 $8.6 $15.5
Adjusted Operating Income ($USD Millions)$19.4 $13.2 $20.2
Net Income ($USD Millions)$2.7 $0.3 $8.9
Diluted EPS (GAAP) ($)$0.13 $0.02 $0.41
Adjusted EPS ($)$0.29 $0.21 $0.55
Adjusted EBITDA ($USD Millions)$21.5 $16.9 $23.0

Segment net sales and margins:

SegmentQ4 2023 Net Sales ($M)Q4 2024 Net Sales ($M)YoY ChangeQ4 2023 GM (%)Q4 2024 GM (%)
U.S.$185.2 $196.0 +5.8% 37.2% 37.7%
International$17.9 $19.2 +7.2% (cc +4.4%) 27.2% 38.5%

KPIs and balance sheet:

KPIQ4 2023Q4 2024
E-commerce % of Sales—24%
E-commerce Sales ($M)—$51.5
Liquidity ($M)—$111.7
Free Cash Flow ($M, FY)—$16.3
Adjusted EBITDA/Net Debt (x)—3.5x

Actual vs Consensus (Q4 2024):

MetricConsensusActualResult
Revenue ($USD Millions)204.7*215.2 Beat
Adjusted EPS ($)0.43*0.55 Beat
Adjusted EBITDA ($USD Millions)22.9*23.0 Inline/Small Beat

Values retrieved from S&P Global.*

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
FY2024 Net SalesFY2024$680–$700M (updated Nov 2024) Reported $683.0M Final actual
FY2025 OutlookFY2025—Guidance to be provided with Q1’25 results in mid‑May N/A (cadence affirmed)
International Operating ProfitFY2025—~$5M improvement vs FY2024; breakeven by 2026 New framework
DividendQ2 2025—$0.0425 per share payable May 15, 2025 Declared
DC Relocation (Hagerstown, MD)2025–2026—Capex ~$10M; one‑time relocation costs up to ~$7M; operational by Q2 2026; ~$13M incentives New program
Tariff Mitigation2025—Price increases on affected products; sourcing shift out of China underway New actions

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024)Previous Mentions (Q3 2024)Current Period (Q4 2024)Trend
E-commerce strategyPrime Day +23% YoY; e-commerce 18.9% of revs; share gains U.S. e-commerce 18.3% of U.S; share gains across Amazon categories 24% of Q4 sales; consolidated e-comm +9%; U.S. e-comm +10% YoY Accelerating
International turnaroundShift to larger national chains; APAC direct build-out Sales +10.9%; margin improved; turnaround thesis intact GM 38.5% vs 27.2%; Amazon margin +1,140 bps; Project Concord launched Improving margins; path to breakeven
Tariffs and sourcingTarget ~25% spend outside China; Mexico facility ramp Defensive inventory build; tariff hedge post-election Price pass-through; moving >50% production outside China by 2025 Active mitigation
Dolly Parton programExceed $10M 2024 shipments; initial shipments begun ~$4M deferred from Q4 to Q1’25; program momentum $7M shipped 2024; sell-through strong; 2024 program to double in 2025; broader retailer rollout Expanding
Foodservice/hospitalityMarket share gains despite end market slowdown Downturn delaying capital projects; new listings to ship from Q1’25 Forecasting fourfold hospitality growth; shipping premium glassware Rebound expected 2025
M&A pipelineActive, disciplined; non-cash Vasconia write-down Active, valuations attractive; disciplined Attractive discounts; accretive targets in adjacencies/outdoor; maintain discipline Opportunistic
U.S. infrastructure—WMS implementation inefficiencies (temporary) New Hagerstown DC (capacity +30% vs NJ); ~$13M incentives; capex ~$10M Scaling efficiency

Management Commentary

  • “Our fourth quarter net sales increased 6% to $215 million… online sales… 24% of total sales in the fourth quarter and north of 20% for the full year 2024.”
  • “International… margin improvement of 1,140 basis points to 38.6% in the fourth quarter… contributing to an improved margin of 300 basis points for the full year 2024.”
  • “Project Concord… comprehensive turnaround plan… expect a $5 million improvement to operating profit in 2025… breakeven… by 2026.”
  • “Relocate our East Coast distribution center… build‑to‑suit warehouse… over 1 million square feet… approximately $13 million in government subsidies… capex $10 million.”

Q&A Highlights

  • Channel mix: Mass channel softness tied to KitchenAid share; e-commerce momentum continued into early 2025 .
  • Tariff exposure: ~75% production in China currently; plan to reduce to “much lower dependence” with >50% out of China by YE 2025; price increases to offset tariffs .
  • International losses: 2024 international EBITDA loss just under $10M; EBIT ~$10.5M loss; breakeven run rate targeted by end of 2025, full breakeven in 2026 .
  • Dolly program: ~$4M shipments delayed from Q4’24 to Q1’25 due to Dollar General timing; sustained strong sell-through; 2025 expansion beyond Dollar General and to other retailers .
  • Brand performance: Growth in Farberware and Mikasa; declines in Taylor and Pfaltzgraff; plans for Taylor smart suite and line extension to reignite growth .

Estimates Context

  • Q4 2024 performance vs consensus: Revenue $215.2M vs ~$204.7M*, adjusted EPS $0.55 vs ~$0.43*, adjusted EBITDA ~$23.0M vs ~$22.9M*; broad-based beat driven by e-commerce share gains and international margin improvement .
  • Implications: Street likely to raise forward margin assumptions for International and e-commerce mix; monitor tariff pass-through cadence and mass channel share recapture.

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Mix and margin: E-commerce penetration (24% of Q4 sales) and international margin expansion (38.5%) are driving EPS leverage despite macro pressure—supports a margin-up thesis into 2025 .
  • Tariff strategy: Proactive price pass-through and sourcing diversification (>50% outside China in 2025) mitigate tariff risk, but watch consumer elasticity and timing of price actions .
  • Dolly flywheel: Strong sell-through and 2025 program expansion (Dollar General and additional retailers) offer incremental top-line visibility; Q1’25 captures deferred ~$4M shipments .
  • Hospitality ramp: Fourfold growth forecast in 2025 for hospitality glassware; shipping began in late January and should contribute meaningfully to Commercial Foodservice .
  • Cost/scale: New Hagerstown DC adds capacity and incentives to contain distribution costs; expect transitional expenses but long-term operating leverage and logistics advantages .
  • Cash/FCF: Liquidity of $111.7M and FY FCF $16.3M provide flexibility against tariff shocks and fund initiatives; dividend of $0.0425 supports shareholder returns .
  • Near-term setup: Without formal FY25 guidance until mid‑May, focus on Q1 execution (Dolly shipments, tariff pass-through progress, hospitality ramp) as key narrative drivers .