Lifetime Brands, Inc. (LCUT)
Q1 2010 Earnings Call
May 06, 2010 11:00 am ET
Jeff Siegel - Chairman, President & CEO
Larry Winoker - SVP & CFO
Alvin Concepcion - Citigroup
Peir Uslin - Jefferies & Company
Mike Ruggirello - Barrington Research
Gary Giblin with Quint Miller
Neil Goldman - Goldman Capital
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Good morning everyone and thank you for joining Lifetime Brands’ first quarter 2010 conference call. With us today from management are Jeff Siegel, Chairman, President and Chief Executive Officer and Larry Winoker, Senior Vice President and Chief Financial Officer.
Before we begin I’ll read the Safe Harbor statement under the Private Securities Litigation Reform Act of 1995. The statements that are about to be made in this conference that are not historical factors are forward-looking statements and involve risks and uncertainties including but the company's ability to comply with requirement of its credit agreement. The availability of funding under that credit agreement. The Company's ability to maintain adequate liquidity and financing sources and an appropriate level of debt. Changes in general economic conditions which could affect customer payment practices or consumer spending, changes in demand for company's product, shortages and price volatility for certain commodities, effective competition on the company's market and other risk details Lifetime Brands' filing with the SEC.
The Company undertakes no obligation to update these forward-looking statements. The company's earning release contained non-GAAP financial measure within the meaning of Regulation G promulgated by the Securities and Exchange Commission. Included in this morning's release is reconciliation of these non-GAAP financial measures to the comparable financial measures calculated in accordance with GAAP.
With that introduction, I would like to turn the call over to Mr. Siegel. Go ahead, please Jeff.
Thank you, Harriet. Good morning and thank you for joining us, we’ll review our first quarter 2010 results. On today’s call, I’ll be joined by Laurence Winoker, our Chief Financial Officer. What a difference that you can make? As compared to 2009’s first quarter in which the company loss approximately $6 million, today, we report a net income of $729,000 equal to $0.06 per diluted share.
Gross margin increased sharply from last year and we continue to see leverage from reductions and distribution expense and in SG&A. Most important, we returned to growing our top line excluding $3.4 million of non-recurring net sales to one of our customers going out of business of sales. Also net revenue for the quarter were up by 2.4%. We also strengthened our balance sheet while further reducing inventory and (inaudible) asset. Lower inventories means that we will have few goods to close out and therefore margins like will be greater than the prior years. While the borrowings will result in volume interest expense.
We intend to maintain a prudent attitude towards inventory. We feel that there is quite a room for improvement in inventory terms though the reduction in inventory will not be as dramatic as it has been in the past year. Overall, our performance reflects improvements we’ve made to types of our business. In our wholesale business, our food product and Tabletop businesses (erupted) as compared to last year.
Our internal plan, which is updated monthly anticipates increases in these businesses every quarter this year with a most significant increases occurring in the third and fourth quarters. We attribute our improved performance to the results of our focus on innovation, brands and value. For many years Lifetime Brand has led the housewares industry in new product developments. In 2009, the year in which many companies cut product development budgets and reduced the staff across the board. We increased overall spending in this area. With almost 100 designers, engineers and audits in the US and Asia.
We have been introducing more new and innovative products annually than any company in our industry. In 2010, we expect to introduce over 5500 new redesigned items. Many of these were shown for the first item at the International Home and Housewares Show in March and at the Tabletop Show in April. These were two of the best shows I have ever attended and I have been attending trade shows for over 40 years. reflecting our goal of innovative solutions to improve everyday tests, new product introductions included enhanced designs and functionality water bottle and coffee mugs, multiple purposes peelers, slicers barbeque tools and accessories, fashion-forward cutting-edge cutlery, shearer and board designs, unique spice and storage solutions and a significant number of new patterns in dinnerware, flatware and glassware.
In addition to own full time enhanced designed steps, we (inaudible) have an open innovation network of thousands of investors and new products and entrepreneurs. In 2009, we screened more than 1000 inventions submitted by this group and some of our most successful new product introductions originated from this network. We expect this network to be very important source of innovative new products for many years to come. 18 months ago when we saw the weakening US economy with (inaudible) overall growth and the house ware sector. We began an intense focus on gaining market share. We hold a weekly meeting without key sales people and division helps focused only on market share gains and the top 25 retailers we do business with.