2011_01_31 - Lifetime Presentation

7/31/2019 2011_01_31 - Lifetime Presentation

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NASDAQ: LCUTwww.lifetimebrands.com


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Forward-Looking Statements

This presentation contains forward-looking statements, including statements concerning Lifetimesfuture prospects that represent the Companys current judgment about possible future events.

The Company believes these judgments are reasonable, but these statements are not guaranteesof any events or financial results, and actual results may differ materially due to a variety ofimportant factors. Such factors might include, among others, the Companys ability to comply withthe requirements of its credit agreement; the availability of funding under that credit agreement;the Companys ability to maintain adequate liquidity and financing sources and an appropriate

level of debt; changes in general economic conditions which could affect customer paymentpractices or consumer spending; the impact of changes in general economic conditions on theCompanys customers; changes in demand for the Companys products; shortages of and pricevolatility for certain commodities; significant changes in the competitive environment and theeffect of competition on the Companys markets, including on the Companys pricing

Non-GAAP Financial MeasuresThis presentation contains non-GAAP financial measures within the meaning of Regulation Gpromulgated by the Securities and Exchange Commission. Included in this presentation are

reconciliations of these non-GAAP financial measures to the comparable financial measurescalculated in accordance with GAAP.

policies, financing sources and an appropriate level of debt.


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Market Estimated RetailMarket Size* Our Categories

Food Preparation $5.0B Kitchen Tools & Gadgets Cutlery & Cutting Boards

Pantryware & Spices

Bakeware & Cookware

Tabletop $3.0B Dinnerware Glassware

Flatware

Home Dcor $6.5B Decorative Accessories Non-Electric Lighting

Wall Dcor

Picture Frames

*Note: Lifetime Brands and industry estimates

Target Markets


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KitchenAidCrock and Tools

MikasaMidnight Bloom

MelanncoHanging Collage

TABLETOP

28%FOODPREPARATION

53%

Business Overview Sales Breakdown

TABLETOP

26%FOOD

PREPARATION

54%

YTD September 2010

Wholesale94%

TABLETOP30%

FOOD

PREPARATION

52%HOME DCOR

12%

Internet & Catalog6%

TABLETOP

25%FOOD

PREPARATION57%


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Stable Brand Platform Focusing on nationally recognized brands as well as private label programs

Multiple brands in each category allow for effective consumer targeting at every level of retail


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Focus is on identifying major consumer trends, new technologies, materials and designs.

Investment in advanced design technologies

Managed network of thousands of independent inventors

Four Company-operated design centers with 100+ professionals in U.S. and China

Developed over 5,500 products in 2010

Culture of Innovation

Ideas of a LifetimeTM - Requires all employees to recommend product ideas, process improvements

and actions to increase net revenue or to save cost throughout the company, every month.


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Broad DistributionLifetime Brands sells to every major U.S. retailer that carries housewares

(this is a small selection of our customers)

Mass MarketRetailers Supermarkets

Home Centers Internet &

Catalog

Electronic

Retailers

WarehouseClubsOff-PriceRetailersNationalChains

Specialty

Stores

Department

Stores
http://www.pier1.com/Home/tabid/36/Default.aspxhttp://www.meijer.com/home.jsphttp://www.burlingtoncoatfactory.com/http://www.kirklands.com/default.aspxhttp://www.biglots.com/http://www4.jcpenney.com/jcp/default.aspxhttp://www1.bloomingdales.com/index.ognchttp://www.sears.com/sr/javasr/home.do?adCell=P1&BV_UseBVCookie=Yeshttp://www.tuesdaymorning.com/index.asphttp://www.samsclub.com/eclub/main_home.jsp?mt=a&n=0&BV_SessionID=_SC_1611021812.1131122665_CS_&BV_EngineID=ccciaddgedmlkidcfkfcfkjdgoodflf.0http://www.lowes.com/lowes/lkn?action=homehttp://fs02.hoan.com/Marketing/D/http://www.breakfastforlearning.ca/english/prog_events/d_event_ap.htmlhttp://www.kroger.com/index.htm


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Sourcing Expertise Sourcing products in Far East for 50 years in addition to our own manufacturing facilities

Network of 475 suppliers

Long-term relationships with primary vendors

Three offshore sourcing offices

Provide engineering, logistics, material safety, QC and QA

150+ professionals


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Distribution Two 700,000+ square foot distribution centers strategically located in California and New Jersey

Advanced electronic interfaces

Sortation systems allow receipt and shipment of nearly half a million cases of merchandise

per week The latest technology for increased efficiency and the ability to pick and pack by store

and cross dock pre-ticketed goods

Extensive consumer drop-ship capability

Lifetime received the highest rating in C-TPAT*, a certification process given to manufacturersthat ensure the integrity of their security practices


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Food Prep U.S. market: $5.0B

Kitchen Tools & Gadgets Lifetimes largest, most profitable and fastest growing category

#1 market share position

Cutlery, Cutting Boards & Shears Our original business since 1945


Bakeware & Cookware Strong focus on achieving significant market penetration in

supermarket channel

Pursuing Hispanic market with Vasconia(leading housewares brand

in Mexico) Leader in innovative specialty pieces; e.g., pressure cookers and

odor-absorbing splatter screens

Pantryware & Spice Racks


Ability to use our own automated U.S. based spice packing facilitygives us an advantage over competition

FarberwareBagel Slicer

Cuisinart

Premium Cutlery

VasconiaPressure Cooker
http://www.egstudios.us/samples/ltbrands/1.htmlhttp://www.egstudios.us/samples/ltbrands/1.htmlhttp://www.egstudios.us/samples/ltbrands/1.html


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Tabletop Market leader in $3.0 billion category

Acquisition strategy (2004 2008) paralleled consolidation trend

among retailers and provided entry to tabletop category

New management revitalized business beginning in 2008

Key dinnerware brands: Pfaltzgraff(housewares) and

Mikasa(luxury)

Leading position in flatware segment with strong brands:Wallace, Gorham, Towle, InternationalSilver, Pfaltzgraff

and Mikasa

Mikasaprovides strong presence in crystal category

Growing presence in private label and controlled brands throughcore competencies in design and sourcing

MikasaModern Butterfly

PfaltzgraffEveryday Mosaic

MikasaCheers
http://www.egstudios.us/samples/ltbrands/1.htmlhttp://www.egstudios.us/samples/ltbrands/1.htmlhttp://www.egstudios.us/samples/ltbrands/1.html


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Home Dcor U.S. market: $6.5B

Elementsand MikasaHome Accents offer trend-right, inexpensive decorative accessories

for the home

Melannco is a leading supplier of fashionable collage frames and decorative shelving

Value priced but high perceived value

ElementsMetal Patchwork Wall Plaque MikasaSolaris Candle Holder
http://www.egstudios.us/samples/ltbrands/1.htmlhttp://www.egstudios.us/samples/ltbrands/1.html


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Internet and Catalog Business Order processing and fulfillment for Pfaltzgraff and Mikasa websites and for consumers

purchasing on key wholesale customers websites

Leveraging infrastructure to service small independent accounts opens additional channels ofdistribution

Sell products directly to the consumer through:

Internet (Mikasa.com, Pfaltzgraff.com,

LifetimeSterling.com and HousewaresDeals.com) Mail-order catalogs

Growth potential from maximizing existing framework across all major brands

Developing new e-commerce selling sites for additional brands

Coming soon - our new business-to-business site aimed at the thousands of independent retailers

we are not currently doing business with
http://www.mikasa.com/http://www.pfaltzgraff.com/http://www.lifetimesterling.com/http://www.housewaresdeals.com/http://www.housewaresdeals.com/http://www.lifetimesterling.com/http://www.pfaltzgraff.com/http://www.mikasa.com/


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International Alliances Strategic alliance with Grupo Vasconia, S.A.B.

Acquired 30% interest in December 2007

Mexicos leading housewares company provides an outstanding platform for further

growth in Central and South America Integrated aluminum manufacturer of cookware and other fabricated products

Strong financial performance in 2009 and YTD 2010

Vasconiabrand represents opportunity to focus on Hispanic consumers in the U.S. andothers who enjoy preparing Mexican cuisine

Strategic alliance with Accent-Fairchild Group, Lifetimes longtime distributor in Canada

Formed Lifetime Brands Canada in 2008 Strong ties to retailers enabling increased market penetration

Ability to service multinational customers globally (Walmart, Costco and TJX Cos.)

CanadaMexico
http://www.liverpool.com.mx/shopping/store/index.jsphttp://www1.soriana.com/default.asp?p=1http://www.walmart.ca/wps-portal/storelocator/index.jsphttp://www.canadiantire.ca/home.jsp


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SustainabilityWe believe that intelligent business and environmental responsibility go hand in hand. Our goal isto implement sustainable practices in all facets of our operations and through the actions of ourassociates.

Our warehouses have saved 2,017,225 kilowatt hours of electricity since 2008.

By floor loading instead of using pallets, the Fontana warehouse saved 26,848pallets in 2008 and 35,327 in 2009; Robbinsville saved 26,000 in 2009.

Sales participates in as many internal meetings as possible through videoconferencing as opposed to air travel.

Computers, monitors and printers are either salvaged for parts or sent to acomputer recycling center.

All associates are educated on sustainable activities for work and at home.

Associates are encouraged to seek new sustainable/efficient processes.


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Positioning Lifetime Brandsfor Profitable Growth


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Growth and Margin DriversDriver Actions

1. Innovation Provide value-priced innovative products

2. Expand MarketShare

Develop new and unique products

Create individualized programs for retail partners tailored for todays

business climate while remaining trend-right

3. Introduce Brand

Extensions

Reach additional markets and consumers by introducing brand

extensions that offer trusted names and outstanding design atsignificant values

Gourmet Basics by MikasaTM & Pfaltzgraff Everyday

4. Expand Focus onPrivate Label Brands

Support retailers emphasis on private label brands by leveraging

product development and sourcing expertise

5. LeverageInfrastructure

Leverage economies of scale (e.g., sourcing, relationships with factories

and freight companies)

Distribution

SG&A

Sales organization Use infrastructure to offer new services to retail customers


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Summary of Operating Results

Results reflect benefits of 2009 restructuring activities and other expense reduction efforts

2010 2009 2010 2009

Net sales 124,918$ 111,422$ 300,543$ 286,970$

Income from operations before restructuring expenses 10,229 8,270 15,278 6,492

Restructuring expenses - (671) - (832)

Income from operations as reported 10,229 7,599 15,278 5,660

Interest expense (2,090) (3,294) (7,163) (9,061)

Loss on early retirement of debt - - (764) -

Income (loss) before income taxes and equity in earnings of Vasconia 8,139 4,305 7,351 (3,401)

Income tax expense (2,390) (153) (3,002) (569)

Equity in earnings of Vasconia 836 727 1,984 1,637

Net income (loss) 6,585$ 4,879$ 6,333$ (2,333)$

Diluted income (loss) per common share 0.52$ 0.40$ 0.51$ (0.19)$

EBITDA 13,529$ 11,611$ 25,374$ 16,456$

Nine Months Ended

September 30,

Quarter Ended

September 30,

(in thousands, except per share amounts)


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Operations Pro Forma Basis

Note: Adjustments reflect effective tax rate of 40%.

Adjusted for unusual items, YTD 2010 income has improved by approximately $6.8 million

2010 2009 2010 2009

Net income (loss) as reported 6,585$ 4,879$ 6,333$ (2,333)$

Adjustments:

Normalized tax (expense) benefit on reported income (loss) (866) (1,569) 62 1,929

Loss on early retirement of debt, net of tax - - 458 -

Restructuring expenses, net of tax - 403 - 499

Net income pro forma basis 5,719$ 3,713$ 6,853$ 95$

Diluted income (loss) per common share:

As reported 0.52$ 0.40$ 0.51$ (0.19)$

As adjusted 0.46$ 0.31$ 0.55$ 0.01$

Quarter Ended

September 30,

Nine Months Ended

September 30,

(in thousands, except per share amounts)


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Segment Summary

(1) Excludes restructuring expenses of $363,000.(2) Excludes restructuring expenses of $308,000 and $469,000, respectively .

Significant improvement in operating results for both segments

2010 2009 2010 2009

Net sales:Wholesale 118,765$ 106,316$ 282,405$ 270,820$

Internet & Catalog 6,153 5,106 18,138 16,150

124,918$ 111,422$ 300,543$ 286,970$

Income (loss) from operations before restructuring expenses:Wholesale 14,328$ 11,581$ (1) 24,986$ 15,988$ (1)

Internet & Catalog (537) (702) (2) (955) (1,932) (2)

Unallocated corporate expenses (3,562) (2,609) (8,753) (7,564)

10,229$ 8,270$ 15,278$ 6,492$

(in thousands)

Nine Months Ended

September 30,

Quarter Ended

September 30,


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Operations Segment Results

Wholesale segment margin differs significantly from Internet & Catalog segment margin

WholesaleInternet &

Catalog

Net sales 282,405$ 18,138$

Operating Expenses as a percentage of Net sales:

Gross Margin 36.5% 65.5%

Distribution expenses 9.2% 28.8%

SG&A expenses 18.5% 42.0%

($ in thousands)

Nine Months Ended

September 30,

2010


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Balance Sheet Summary

Stronger balance sheet from reduction of debt and increase in income

September 30, December 31, September 30,

2010 2009 2009

ASSETS

Cash and cash equivalents 2,164$ 682$ 899$

Accounts receivable 88,719 61,552 71,915

Inventory 126,301 103,931 126,455

Other current assets 8,790 7,685 8,429

Long term assets 102,039 102,873 105,685

TOTAL ASSETS 328,013$ 276,723$ 313,383$

LIABILITIES AND STOCKHOLDERS' EQUITY

Accounts payable and accrued expenses 72,953$ 51,722$ 56,390$

Other liabilities 27,121 25,861 27,663Debt:

Bank borrowings 52,677 24,601 62,863

Term Loan 40,000 - -

Convertible notes 23,332 70,527 69,840

Total debt 116,009 95,128 132,703

Stockholders' equity 111,930 104,012 96,627

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 328,013$ 276,723$ 313,383$

LTM EBITDA 40,932$ 32,015$ 20,636$

Leverage Ratio (Total debt to LTM EBITDA) 2.8 x 3.0 x 6.4 x

($ in thousands)


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Wholesale Segment Trends

Improvement in operating margin in 2010 through efficiency and expense control

(1) The calculation of operating margin excludes $29.4 million of asset impairment charges and $18.0 million of restructuring expenses.(2) The calculation of operating margin excludes $2.6 million of restructuring expenses.

(3) The calculation of operating margin excludes $363K of restructuring expenses.

2007 2008 2009 2009 2010 3-Year Goal

As a % of net sales

Gross Margin 37.9% 36.0% 35.7% 35.0% 36.5% 38.0%

Distribution expenses 9.5% 11.0% 8.7% 9.1% 9.2% 8.0%

SG&A expenses 18.0% 20.6% 18.9% 20.0% 18.5% 17.0%

Operating margin 10.4% 4.4% (1) 8.0% (2) 5.9% (3) 8.8% 13.0%

Year Ended

December 31,

Nine Months Ended

September 30,


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Investment Highlights Market leader with a powerful brand platform nationally recognized and private label

Focus on three substantial markets that provide ample room for growth

Proven track record of innovation and new product introductions

Multiple distribution channels and superior sourcing expertise

Highly leverageable infrastructure

Positioned for profitable growth in 2011 and beyond


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Corporate Headquarters1000 Stewart Avenue

Garden City, NY 11530(516) 683-6000

NASDAQ: LCUT

www.lifetimebrands.com

Documents

2011_01_31 - Lifetime Presentation