Lifetime Brands, Inc.

Good morning, ladies and gentlemen, and welcome to the Lifetime Brands' first quarter 2024 earnings conference call. At this time, I would like to inform all participants that all their lines will be in listen mode only. After the speaker's remarks, there will be a question and answer portion of the call. If you'd like to ask a question during this time, please press start and number one on your telephone keypad. I would like to introduce your host for today's conference, Carly King. Ms. King, please go ahead.

Thank you. Good morning, and thank you for joining Lifetime Brands' first quarter 2024 earnings call. With us today from 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. Good morning, everyone, and thank you for joining us today. I am pleased to report a solid start to fiscal year 2024, delivering first quarter results that were in line with our expectations and came in above the broader market. Our performance this quarter is a direct testament to the work we have done in the last few years to ensure we are well positioned to compete and gain share notwithstanding market conditions. As we look ahead to the rest of the fiscal year, we are confident in our ability to continue driving operational excellence, advancing our strategic growth initiatives, and investing in our business to drive value for our shareholders. We delivered $142.2 million in net sales this quarter, a decrease of 2.2% year-over-year. This slight decrease reflects both economic headwinds and the impact of inventory rationalization efforts among select retailers, which I will elaborate on later in my remarks. It is worth noting that third-party market data, which we tracked, reported a decline of approximately 3.5% in point-of-sale revenues, indicating that Lifetime's top line performance exceeded the broader market across our categories. Despite these macro pressures, we delivered strong bottom line growth driven by gross margin of 40.5% for the quarter, exceeding expectations and surpassing that of our first quarter last year. This was a result of benefits from favorable product mix, new product introduction, and stability in our supply chain. Further, our margin expansion and increased profitability, despite challenges in the underlying markets, underscores our continued focus on disciplined expense management as we balance investment and growth with delivering financial results. Beginning with our core U.S. business, We delivered solid results in the first quarter and performed well in comparison to the market and our peers. As widely reported for the quarter, end markets across our industry experienced a dip in demand, leading to decreased shipment volume among retailers. One factor which contributed to our decline in shipments was a lowering of in-stock levels at certain retailers, particularly in e-commerce. Lifetime tracked a noticeable divergence between shipments and sell-through rates with these retailers, which speaks to the continued customer and consumer receptivity to our products. We are confident that as demand returns, we will see a corresponding rebound in shipment activities to normal levels. I'll now discuss our international business, where we continue to focus on investing in growth and improving our performance across each of our end markets. While our investments broadly are bearing fruit and supporting share gains, the ongoing recessionary environment in the UK continues to put significant pressure on demand for the market. In the first quarter, we saw a substantial decline in UK order volume during the period resulting from a temporary decrease in shipment volume from a major customer and sluggishness in the independent and specialty retail channels. However, we expect volume to return to normal levels in the coming months, particularly driven by recent incremental placement at national retailers and a rebound in the e-commerce channel, which we have begun to experience. Turning to our other international markets, in Asia Pacific, we continue to realize the significant benefits of the change in our go-to-market strategy in Australia and New Zealand, where we are consistently gaining new customers and seeing higher margins. Additionally, our markets throughout Southeastern Asia are benefiting from the infrastructure investments we've made over the last several quarters, and we are confident that the solid volume growth and pickup and sales rates we are seeing in those regions will continue throughout 2024. In the European markets and predominantly in our core UK market, after a strong start to the year, we saw a meaningful drop-off in shipments in March, driven by poor retail sales across all channels and a shutdown in shipments to our largest customer, which is in the e-commerce channel, for nearly a six week period. This had an adverse impact for our international segment results for the quarter, which were basically flat to prior year, but below our expectations. Although our international segment was not favorable in terms of contribution margin for the quarter, we remain confident this segment will produce a meaningful improvement in contribution margin for the full year. based upon the actions we have previously taken and some momentum we are starting to see in market share gains, which I will talk about in a moment. Turning to our growth initiatives. First, let me address our progress in our food service business. We are continuing to gain shares through our Mercasa Hospitality product line and remain on a path to deliver $30 million in revenue from our food service business for the fiscal year. We remain excited about the opportunity in this business, which continues to gain traction with customers and build a book of business that will serve as a solid base for this foreseeable future. In e-commerce, our sales for the quarter were impacted by inventory rationalization efforts, as safety stock levels at our largest e-commerce customer were significantly reduced, leading to meaningful decreases in order volume. We believe this will be a temporary pause as sell-through data across all of our categories was strong, and we picked up share in nearly all of our categories. Accordingly, we expect to see robust performance in this channel throughout 2024. New product development is one of Lifetime's core capabilities that provides us with a competitive advantage. We remain excited about our robust product pipeline, where we have continued to invest in a challenging end market environment, which has further differentiated lifetime for many of our competitors. The Dolly Parton line of products we announced last year has now been introduced to our customers and is garnering significant interest. While we originally expected some shipments in the second quarter, Due to a change in shipment mechanics, shipments will begin in the third quarter and at this point will exceed our initial estimates. Further, while this line is being launched in the dollar channel, we are having meaningful conversations with other retailers about expansion across several categories. Our KitchenAid line is gaining strong traction in our international end markets. notably in continental Europe and Australia and New Zealand. As a result, there are numerous customers where we have either gained listings or expanded listings now that we have established a beachhead on-shelf at these customers. We will see the benefit of this strategy this year. Looking ahead, we are preparing to announce a new partnership that we are particularly excited about for our international geographies. We expect to launch it likely this year, but no later than next year. More to come on that front, but we believe these new product introductions and brand will translate to top line growth in our international segment in 2025. For our Swell product line, we received good reception following our brand relaunch as we sold through and out of many products, delivering sales above expectations. Notably, these shipments were exclusively online as we pursued this relaunch solely on Swell.com and e-commerce platforms. We will continue to roll out this re-energized Swell product line across multiple channels and are pleased with the direction of this line. Let me briefly touch on our supply chain. As I noted, stability in our supply chain was a contributor to the solid margin expansion we were able to deliver this quarter. To that end, we were pleased to lock in rates for our ocean freight contract at levels comparable to last year, offering us stability in this key cost factor. In Mexico, We are pleased with our continued progress bringing our plastics manufacturing facility online. The facility remains on track to reach full production capacity this year. We continue to be active in many geographies, including Mexico and across Asia. Product supply diversification will remain a priority for us moving forward as part of our continued efforts to strengthen and de-risk our supply chain by moving towards sourcing 25% of our goods outside of China. Turning now to our balance sheet. Our strong earnings and cash flows have provided us the flexibility to reduce our term loan balance by almost $100 million over the past 12 months. While maintaining historical high levels of liquidity, we are pleased to be approaching our target leverage ratio of three times or below. Our continued focus on disciplined expense management has helped us maintain strong levels of liquidity above historical norms, which affords us ample flexibility with respect to capital allocation. We continue to view the market as favorable for strategic acquisitions and remain open to opportunities for value-enhancing acquisitions that align with our priorities. We will continue to evaluate these opportunities as they arise. On that note, let me now turn to our financial guidance for 2024, which we issued in our release this morning. While we are closely monitoring the initial signs of pressure on retailer and market demand, that we observed this quarter, our outlook reflects our confidence that we are positioned to continue executing and creating value regardless of market conditions. We have growth opportunities already in our pipeline for the year and are eager to continue bringing new products to market and gaining share across categories. Our guidance is based on our belief that we can grow our top and bottom lines through net market share expansion and diligent operational and expense management. A rebound in our end markets will be accretive to our guidance. We note that due to timing factors, the expectation built into our full year guidance is for a slight decline in the second quarter with growth in quarters three and four and for the full year. In summary, we are operating from a position of strength as we head into the remainder of fiscal 2024. With strong momentum across our business and the flexibility to invest in our continued growth, we are well positioned to capture opportunities as demand improves and create meaningful value for our shareholders. With that, I'll now turn the call over to Larry to discuss financials in more detail.