Lifetime Brands, Inc.

Good morning, ladies and gentlemen, and welcome to the Lifetime Brands fourth quarter and full year 2023 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. If you would like to ask a question during this time, please press star 1 on your telephone keypad. I would now like to introduce your host for today's conference, TJ O'Sullivan. Mr. O'Sullivan, you may begin.

Thank you. Good morning and thank you for joining Lifetime Brands' fourth quarter and full year 2023 earnings call. With us today for management are Rob Kay, Chief Executive Officer, and Larry Winokur, 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 performance of the company. and these statements are intended to qualify for the safe harbor protection from liability established by the Private Securities Litigation Reform Act. Any such statements are not guarantees of future performance, and factors that could influence our results are highlighted in today's press 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 hereof and are subject to change for future developments. Except as required by law, the company does not undertake any obligation to update such statements. Our remarks this morning and in today's press 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 Kay. Please go ahead, Rob.

Thank you, TJ. Good morning, everyone, and thank you for joining us today. We had a strong fourth quarter delivering results that helped us to meet or exceed net sales income from operation, and adjusted EBITDA targets from the revised full-year guidance metrics we provided last quarter, as well as analyst estimates. We are pleased with the strong net sales growth we are driving across categories, especially in our e-commerce channel, which continues to gain share. Uncoupled with our continued focus on driving efficiencies across the business, This outperformance translated to meaningful operating income growth that we expect will continue in 2024. To start, I'd like to walk you through our fourth quarter and full year results at a high level. In the fourth quarter, we delivered $203.1 million in net sales and $21.5 million in adjusted EBITDA, compared to $207 million in net sales and $19.7 million in adjusted EBITDA in the prior year period. For the full year, we generated $57.3 million in adjusted EBITDA, compared to $58.2 million in 2022, coming in ahead of our internal estimates, thanks to diligent expense management and a focus on incremental revenue opportunities throughout the year. Of note, our performance was notwithstanding $3.6 million of one-time charges in 2023. We have been encouraged by the improving supply chain environment in recent quarters and experienced no disruptions in the fourth quarter. Though we are monitoring potential issues stemming from ongoing geopolitical challenges in the Red Sea, which have had some initial impact on ocean freight's costs and shipping times. Further, with another quarter of normalized shipment and ordering activities now behind us, we believe that the oversupply issues our retailers experience coming out of the pandemic have dissipated. Turning now to our international business. Throughout 2023, we remain diligent in the execution of our international turnaround strategy, and we are pleased with the meaningful progress we have made, including market share gains in these end markets. In Australia and New Zealand, the direct go-to-market strategy we implemented earlier this year is translating to increased listings with additional accounts, products, and brand listings. Additionally, we continue to drive incremental revenue opportunities as we roll out new product lines into our international markets, driven by our highly successful KitchenAid offering. As a result of these factors, in the fourth quarter, we saw the first turnaround in year-over-year international revenues since 2021. As part of our international turnaround plan, we took a non-cash inventory write-off in the fourth quarter, which impacted our bottom line performance. But we expect that the aforementioned initiatives will have a meaningful impact on our international channel's bottom line in 2024. In our food service business, we remain on track to achieve significant growth in 2024 as MACASA hospitality continues to gain traction and capitalize on the market positioning achieved in 2023. While this business is still in its early stages, we are confident that Lifetime is now recognized as an important participant in the food service industry and will continue to expand its product placement across North America. We maintain our long-term view that we can grow our total food service business to $60 million in revenues by 2026. Refining and building out our e-commerce strategy remains a key strategic priority for Lifetime. This quarter, e-commerce net sales exceeded 23% of our total net sales for the quarter, contributing meaningfully to our overall outperformance. This represents an increase of nearly 3.5% from the comparable quarter a year ago when our e-commerce net sales were slightly below 20%. We are continuing to hone our online strategy to ensure we are best positioned to capitalize on the significant opportunities we see in the channel. We maintain a strong focus on new product development and channel expansion to bolster our market position. Looking ahead, we are excited about our robust new product pipeline, many of which are incremental revenue opportunities. Production of our previously announced Dolly Parton branded products is well underway, with shipments on track to begin in April and the majority of products slated for the second half of the year. This launch is across four different product categories, all in the dollar channel. which is a new channel for lifetime. We are also reinvigorating our robust pipeline of Swell products with new items being launched in the first quarter of 2024. These will initially be available online on Swell.com as well as across e-commerce channels. In line with our commitment to reduce our exposure to supply chain issues in China, we continue to ramp up production capacity in our Mexico facility. With the facility now operational and on track to reach full capacity in 2024, and combined with other sourcing initiatives, we are well on our way to meeting our previously stated target of approximately 25% of our spend on goods being outside of China by the end of the year. Active balance sheet management remains a priority for us, and we are pleased with our financial position as we enter 2024. Our disciplined cash management throughout 2023 led to a noticeable improvement in working capital year over year in both our U.S. and international businesses, which Larry will discuss in further detail shortly. We remain prudent in our approach to capital allocation and are open-minded to value-enhancing M&A opportunities that align with our strategic priorities. We will continue to evaluate opportunities as they arise, especially in the current market, which favors strategic buyers. In summary, we are pleased with the strong momentum across our business as we close out 2023. The significant work we have done over the past several years to transform and reposition our business is paying off and we are entering 2024 as a more focused, agile company. Looking ahead, we are excited by the meaningful work already underway across our organization to continue innovating new products, expanding into new channels, and growing market share. generating significant value for our shareholders. With that, I'll now turn the call over to Larry.