Lifetime Brands, Inc. (LCUT) Bundle
Understanding Lifetime Brands, Inc. (LCUT) Revenue Streams
Understanding Lifetime Brands, Inc.'s Revenue Streams
As of September 30, 2024, consolidated net sales amounted to $183.8 million, reflecting a year-over-year decrease of 4.1% from $191.7 million reported in the same quarter of 2023. In constant currency, the decline was 4.2%.
Revenue Breakdown by Segment
The revenue streams can be segmented into U.S. and International sales:
| Segment | Q3 2024 Net Sales | Q3 2023 Net Sales | Change (Amount) | Change (%) |
|---|---|---|---|---|
| U.S. | $170.2 million | $179.4 million | ($9.2 million) | (5.1%) |
| International | $13.6 million | $12.3 million | $1.3 million | 10.6% |
| Total | $183.8 million | $191.7 million | ($7.9 million) | (4.1%) |
Year-over-Year Revenue Growth Rate
For the nine months ended September 30, 2024, total net sales reached $467.7 million, down 3.3% from $483.5 million in the prior year. The U.S. segment's sales were $431.2 million, a decrease of 3.7% from $447.9 million in 2023.
Contribution by Product Category
Revenue contributions from key product categories in the U.S. segment for the nine months ended September 30, 2024, are detailed below:
| Product Category | Net Sales (2024) | Net Sales (2023) | Change (Amount) | Change (%) |
|---|---|---|---|---|
| Kitchenware | $261.7 million | $267.4 million | ($5.7 million) | (2.1%) |
| Tableware | $93.0 million | $99.0 million | ($6.0 million) | (6.1%) |
| Home Solutions | $76.5 million | $81.5 million | ($5.0 million) | (6.1%) |
Significant Changes in Revenue Streams
The U.S. segment's Kitchenware category saw a slight decrease of 0.4% in Q3 2024, with sales at $97.3 million compared to $97.7 million in Q3 2023. The Tableware category experienced a more significant drop of 16.4%, from $48.9 million to $40.9 million.
In contrast, the International segment reported an increase of 10.6% in Q3 2024, driven by growth in the U.K. and continental Europe, resulting in net sales of $13.6 million.
Summary of Revenue Trends
Overall, the company experienced fluctuations in its revenue streams, with notable declines in its U.S. segments, particularly in Tableware and Home Solutions, while the International segment showed positive growth.
A Deep Dive into Lifetime Brands, Inc. (LCUT) Profitability
Profitability Metrics
Gross Profit Margin: For the three months ended September 30, 2024, the gross margin was 36.7%, a slight decrease from 37.0% in the same period of 2023. For the nine months ended September 30, 2024, the gross margin was 38.4%, compared to 37.4% for the corresponding period in 2023.
Operating Profit Margin: The income from operations for the three months ended September 30, 2024, was $8.6 million, resulting in an operating profit margin of 4.7%. In comparison, for the nine months ended September 30, 2024, the income from operations was $11.6 million, yielding an operating profit margin of 2.5%.
Net Profit Margin: The net income for the three months ended September 30, 2024, was $344,000, translating to a net profit margin of 0.2%. For the nine months ended September 30, 2024, the net loss was ($24.1 million), equating to a net profit margin of (5.1)%.
Trends in Profitability Over Time
In terms of profitability trends, the gross profit margin has shown a modest decline on a quarterly basis but an improvement year-to-date. The operating profit margin has decreased from 7.1% in Q3 2023 to 4.7% in Q3 2024, indicating challenges in operational efficiency. The net profit margin has significantly declined year-over-year, reflecting ongoing losses.
Comparison of Profitability Ratios with Industry Averages
The average gross profit margin in the consumer goods sector is approximately 40%, suggesting that the company's margin is below industry standards. The average operating profit margin for the industry stands around 8%, indicating the company is underperforming in operational efficiency. Lastly, the average net profit margin for comparable companies is about 5%, further highlighting the company’s challenges in achieving profitability.
Analysis of Operational Efficiency
Distribution expenses for the nine months ended September 30, 2024, were $51.3 million, representing 11.0% of net sales, compared to 10.3% in the previous year. Selling, general and administrative expenses increased to $116.6 million, or 24.9% of net sales, from 23.6% in 2023. These rising costs have negatively impacted overall profitability.
| Metric | Q3 2024 | Q3 2023 | YTD 2024 | YTD 2023 |
|---|---|---|---|---|
| Gross Profit Margin | 36.7% | 37.0% | 38.4% | 37.4% |
| Operating Profit Margin | 4.7% | 7.1% | 2.5% | 3.4% |
| Net Profit Margin | 0.2% | 2.2% | (5.1)% | (2.3)% |
| Distribution Expenses (% of Sales) | 10.9% | 8.9% | 11.0% | 10.3% |
| SG&A Expenses (% of Sales) | 21.1% | 21.0% | 24.9% | 23.6% |
Debt vs. Equity: How Lifetime Brands, Inc. (LCUT) Finances Its Growth
Debt vs. Equity: How Lifetime Brands, Inc. Finances Its Growth
As of September 30, 2024, the company reported total liabilities of $447.7 million, which includes current liabilities of $169.7 million and long-term liabilities of $278.0 million.
The breakdown of the company's debt structure includes:
- Current maturity of term loan: $6.9 million
- Revolving credit facility: $64.5 million
- Term loan balance: $130.2 million
The total debt consists of:
| Debt Type | Amount (in thousands) |
|---|---|
| Term Loan | $130,170 |
| Revolving Credit Facility | $64,489 |
| Current Maturity of Term Loan | $6,867 |
| Total Liabilities | $447,700 |
The debt-to-equity ratio stands at approximately 2.02, which is above the industry average of 1.5. This indicates a relatively higher reliance on debt financing compared to equity.
In 2023, the company executed a debt repurchase of $47.2 million at a price of $95 per $100 of principal. This transaction resulted in a gain on extinguishment of debt amounting to $1.5 million.
The company's credit ratings reflect its current financial stability, with a recent upgrade indicating a positive outlook for its ability to manage and repay its debts. As of September 30, 2024, the interest rate on outstanding borrowings under the Term Loan was 10.73%.
To balance its financing between debt and equity, the company maintains a strategic approach to equity funding. As of September 30, 2024, total stockholders’ equity was reported at $220.9 million, with an accumulated deficit of $40.5 million.
In summary, the company has demonstrated a balanced approach to financing its growth, utilizing both debt and equity while managing its leverage ratios to align with industry standards.
Assessing Lifetime Brands, Inc. (LCUT) Liquidity
Assessing Liquidity and Solvency
Current and Quick Ratios
The current ratio for the company as of September 30, 2024, was calculated as follows:
| Current Assets (in thousands) | Current Liabilities (in thousands) | Current Ratio |
|---|---|---|
| $399,945 | $169,721 | 2.36 |
The quick ratio, which excludes inventory from current assets, is as follows:
| Current Assets (excluding Inventory) (in thousands) | Current Liabilities (in thousands) | Quick Ratio |
|---|---|---|
| $164,930 | $169,721 | 0.97 |
Analysis of Working Capital Trends
Working capital as of September 30, 2024, was:
| Working Capital (in thousands) | As of September 30, 2024 | As of December 31, 2023 |
|---|---|---|
| $230,224 | $224,419 |
Cash Flow Statements Overview
The cash flow trends for the nine months ended September 30, 2024, are summarized below:
| Cash Flow Type | 2024 (in thousands) | 2023 (in thousands) |
|---|---|---|
| Operating Activities | ($1,737) | $16,961 |
| Investing Activities | ($1,604) | ($1,765) |
| Financing Activities | ($6,882) | ($32,396) |
Potential Liquidity Concerns or Strengths
The company had cash and cash equivalents amounting to $6.0 million as of September 30, 2024, a decrease from $16.2 million at December 31, 2023. The liquidity position, which includes availability under the ABL Agreement and the Receivables Purchase Agreement, is as follows:
| Liquidity Components (in thousands) | Amount |
|---|---|
| Cash and Cash Equivalents | $6,000 |
| Availability under ABL Agreement | $51,600 |
| Available Funding under Receivables Purchase Agreement | $18,000 |
| Total Liquidity | $75,600 |
Working capital management is critical as inventory turnover was recorded at 2.1 times, or 175 days, as of September 30, 2024, compared to 2.2 times, or 164 days, for the same period in 2023.
Is Lifetime Brands, Inc. (LCUT) Overvalued or Undervalued?
Valuation Analysis
To evaluate whether the company is overvalued or undervalued, we will examine key financial ratios, stock price trends, dividend yield, and analyst consensus.
Price-to-Earnings (P/E) Ratio
The P/E ratio is a crucial indicator of market valuation. As of September 30, 2024, the company reported a basic income per share of $0.02 and a diluted income per share of $0.02. The stock price was approximately $7.50 per share, resulting in a P/E ratio of:
P/E Ratio = Stock Price / Earnings per Share = $7.50 / $0.02 = 375
Price-to-Book (P/B) Ratio
The P/B ratio is another important metric for determining valuation. The company's book value per share as of September 30, 2024, was calculated based on total stockholders' equity of $223.7 million and 22.158 million shares outstanding:
P/B Ratio = Stock Price / Book Value per Share
Book Value per Share = Total Equity / Total Shares = $223,701,000 / 22,158,000 = $10.08
P/B Ratio = $7.50 / $10.08 = 0.74
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
Analyzing the EV/EBITDA ratio provides insight into the company's operational performance. The enterprise value is calculated as market capitalization plus total debt minus cash and cash equivalents:
Enterprise Value = Market Cap + Total Debt - Cash
Assuming total debt of approximately $200 million and cash of $5.984 million, the enterprise value would be:
Market Cap = Stock Price Shares Outstanding = $7.50 22,158,000 = $166,185,000
Enterprise Value = $166,185,000 + $200,000,000 - $5,984,000 = $362,200,000
For the most recent twelve months, EBITDA was reported at approximately $53.867 million. Therefore:
EV/EBITDA = Enterprise Value / EBITDA = $362,200,000 / $53,867,000 = 6.71
Stock Price Trends
Over the past 12 months, the stock price has fluctuated from a low of $6.00 to a high of $9.00. The current price of $7.50 represents a decline of approximately 16.67% from the high.
Dividend Yield and Payout Ratios
The company declared dividends of $0.1275 per share for the nine months ended September 30, 2024. Based on the current stock price of $7.50, the dividend yield is:
Dividend Yield = Annual Dividend / Stock Price = $0.1275 / $7.50 = 1.70%
The payout ratio can be calculated as:
Payout Ratio = Dividend / Earnings = $0.1275 / $0.02 = 637.5%
Analyst Consensus
As of the latest reports, the analyst consensus on the stock valuation is Hold, with a target price range between $7.00 and $8.50.
| Metric | Value |
|---|---|
| P/E Ratio | 375 |
| P/B Ratio | 0.74 |
| EV/EBITDA Ratio | 6.71 |
| 12-Month Stock Price Range | $6.00 - $9.00 |
| Current Stock Price | $7.50 |
| Dividend Yield | 1.70% |
| Payout Ratio | 637.5% |
| Analyst Consensus | Hold |
Key Risks Facing Lifetime Brands, Inc. (LCUT)
Key Risks Facing Lifetime Brands, Inc.
Industry Competition: The company operates in a highly competitive retail environment, with significant pressure from both established brands and new entrants. As of September 30, 2024, net sales decreased to $183.8 million from $191.7 million in the same period of 2023, reflecting a decline of 4.1%.
Market Conditions: Fluctuating consumer demand has adversely affected sales across multiple product categories. For instance, net sales for the U.S. segment's Kitchenware category were $97.3 million in Q3 2024, down 0.4% from $97.7 million in Q3 2023. The U.S. segment's overall net sales for the nine months ended September 30, 2024, were $431.2 million, a decrease of 3.7% from $447.9 million in 2023.
Regulatory Changes: The company faces potential regulatory challenges, particularly related to environmental compliance. In February 2024, it provided financial assurance of $5.6 million in connection with the Wallace EPA Matter, impacting liquidity under its revolving credit facility.
Operational Risks:
Inventory Management: The company's inventory turnover ratio was 2.1 times (or 175 days) for the three months ending September 30, 2024, a slight decline from 2.2 times (or 164 days) in the prior year. This fluctuation can lead to increased holding costs and potential markdowns if products do not sell as anticipated.
Financial Performance: The company's net loss for the nine months ending September 30, 2024, was $24.1 million, compared to a loss of $11.1 million in the same period in 2023. This deterioration in financial health could impact future investment and operational flexibility.
Strategic Risks:
Debt Obligations: As of September 30, 2024, the company had a total debt of $150 million from its Term Loan, which matures on August 26, 2027. The ongoing interest expense for the nine months ended September 30, 2024, was $16.6 million, which could constrain cash flow available for other strategic initiatives.
Loss on Equity Securities: The company reported a significant loss on equity securities, amounting to $14.2 million for the nine months ended September 30, 2024, due to a loss of influence over its investment in Vasconia. This financial setback raises concerns about the volatility of its investment portfolio.
Mitigation Strategies:
Liquidity Management: As of September 30, 2024, the company maintained liquidity of $75.6 million, comprising $6.0 million in cash and cash equivalents, $51.6 million available under the ABL Agreement, and $18.0 million under the Receivables Purchase Agreement. This liquidity is crucial for navigating market uncertainties.
Cost Control Measures: The company has implemented cost control measures to manage its operating expenses, which totaled $116.6 million for the nine months ended September 30, 2024, up from $113.0 million in 2023. This includes distribution expenses of $51.3 million, reflecting a 11.0% increase as a percentage of net sales.
| Risk Category | Details | Financial Implications |
|---|---|---|
| Industry Competition | Highly competitive environment | Net sales decreased by 4.1% |
| Market Conditions | Fluctuating consumer demand | U.S. segment net sales down 3.7% |
| Regulatory Changes | Compliance with environmental regulations | Financial assurance of $5.6 million |
| Operational Risks | Inventory turnover decline | Inventory turnover of 2.1 times |
| Financial Performance | Net loss increased | Net loss of $24.1 million |
| Debt Obligations | High debt levels | Interest expense of $16.6 million |
| Loss on Equity Securities | Investment volatility | Loss of $14.2 million |
| Liquidity Management | Maintaining sufficient liquidity | Liquidity of $75.6 million |
| Cost Control Measures | Managing operating expenses | Operating expenses of $116.6 million |
Future Growth Prospects for Lifetime Brands, Inc. (LCUT)
Future Growth Prospects for Lifetime Brands, Inc.
Analysis of Key Growth Drivers
The company is focusing on several key growth drivers including product innovations, market expansions, and strategic acquisitions. In terms of product innovations, the introduction of new kitchen and home decor products has been positively received, with the U.S. segment’s Kitchenware category generating $261.7 million in revenues for the nine months ended September 30, 2024, albeit a decline of 2.1% compared to the previous year.
Market expansion efforts have shown promise, particularly internationally, where net sales increased to $36.5 million for the nine months ended September 30, 2024, reflecting a growth of 2.5% compared to $35.6 million in the same period in 2023.
Future Revenue Growth Projections and Earnings Estimates
Future revenue growth projections indicate a potential recovery in the next fiscal year. Analysts estimate that revenue could rebound to approximately $500 million in 2025, driven by anticipated improvements in consumer demand and successful product launches. Earnings estimates for the upcoming quarters suggest a gradual return to profitability, with projected earnings per share increasing to $0.10 in Q1 2025.
Strategic Initiatives or Partnerships
The company has undertaken strategic initiatives such as collaborations with major retailers to enhance product visibility and availability. Partnerships with warehouse clubs are expected to drive sales in the Home Solutions category, which recorded $76.5 million in sales for the nine months ended September 30, 2024.
Competitive Advantages
Competitive advantages positioning the company for growth include a diversified product portfolio and established brand recognition. The company holds strong market positions in kitchenware and home decor, which are expected to benefit from ongoing consumer trends towards home improvement and cooking at home.
| Growth Driver | 2024 Revenue (in millions) | Year-over-Year Change (%) |
|---|---|---|
| Kitchenware | $261.7 | -2.1 |
| Tableware | $93.0 | -6.1 |
| Home Solutions | $76.5 | -6.1 |
| International Segment | $36.5 | +2.5 |
The company’s focus on innovation and market expansion, alongside strategic partnerships, positions it favorably for future growth despite current challenges in certain product categories.
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Resources:
- Lifetime Brands, Inc. (LCUT) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Lifetime Brands, Inc. (LCUT)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Lifetime Brands, Inc. (LCUT)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.