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Edited Transcript of LCUT earnings conference call or presentation 14-Mar-19 3:00pm GMT

Q4 2018 Lifetime Brands Inc Earnings Call

GARDEN CITY Mar 26, 2019 (Thomson StreetEvents) -- Edited Transcript of Lifetime Brands Inc earnings conference call or presentation Thursday, March 14, 2019 at 3:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Andrew Squire

Lifetime Brands, Inc. - Head of IR

* Laurence Winoker

Lifetime Brands, Inc. - Senior VP of Finance, Treasurer & CFO

* Robert Bruce Kay

Lifetime Brands, Inc. - CEO & Director

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Conference Call Participants

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* Frank Anthony Camma

Sidoti & Company, LLC - Senior Research Analyst

* Justyn R. Putnam

Talanta Investment Group, LLC - Managing Member and MD

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Presentation

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Operator [1]

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Good morning, ladies and gentlemen, and welcome to Lifetime Brands Fourth Quarter and Full Year Earnings Conference Call. (Operator Instructions) I would now like to introduce your host for today's conference, Andrew Squire. Mr. Squire, you may begin.

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Andrew Squire, Lifetime Brands, Inc. - Head of IR [2]

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Thank you. Good morning, everyone, and thank you for joining Lifetime Brands Fourth Quarter and Full Year 2018 Earnings Call. With us today from management are Rob Kay, Chief Executive Officer; and Larry Winoker, Chief Financial Officer.

Before we begin the call, I'll read the safe harbor statement under the Private Securities Litigation Reform Act of 1995. The statements regarding the company and its consolidated subsidiaries that are about to be made in this call that are not historical facts are forward-looking statements. Such statements include all statements regarding our current and projected financial and operating performance, results and profitability and all guidance related thereto as well as our future plans and intentions regarding the company and its consolidated subsidiaries. Such statements involve risks and uncertainties including the company's ability to comply with the requirements of its credit agreements, the availability of funding under those credit agreements, company's ability to maintain adequate liquidity and financing sources and an appropriate level of debt; the possibly of impairments to the company's goodwill; changes in U.S. or foreign trade or tax law and policy; the impact of tariffs on imported goods and materials and whether the actions we're taking will mitigate the impact of tariffs; changes in general economic conditions, which could affect customer payment practices or consumer spending; the impact of changes in general economic conditions on the company's customers, customer ordering behavior; and our expectations relating thereto; the performance of our newer products, expenses and other challenges relating to the integration of the Filament Brands business and future acquisitions, whether the benefits we expect to realize from the acquisition of Filament will materialize; our expectations regarding our cost-savings initiatives; whether the reorganization of our European operations will create profitability; whether the actions we are taking will create shareholder value; changes in demand for the company's products; changes in the company's management team, the significant influence of the company's largest stockholder; fluctuations in foreign exchange rates; changes in U.S. trade policy or the trade policies of nations in which Lifetime or its suppliers do business; uncertainty regarding the U.K.'s exit from the European Union; shortages of and price volatility for certain commodities; significant changes in the competitive environment and the effect of competition on the company's market, including its pricing policies, financing sources and ability to maintain an appropriate level of debt; and other risks detailed in Lifetime's filings with the SEC. The company undertakes no obligation to update these forward-looking statements.

The company's earnings release contains non-GAAP financial measures within the meaning of Regulation G promulgated by the SEC. Included in this morning's release is a consideration of these non-GAAP financial measures to 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.

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Robert Bruce Kay, Lifetime Brands, Inc. - CEO & Director [3]

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Thanks, Andrew. Good morning and thank you for joining us today to discuss Lifetime Brands fourth quarter and full year financial results -- full year 2018 financial results.

Our fourth quarter and consequently our full year performance were below our expectations than previously provided guidance. On a pro forma basis, including the Filament results for both 2017 and 2018, the fourth quarter was basically flat with prior year. However, we had anticipated growth in top and bottom line.

While our GAAP results for the full year showed growth related to the acquisition of Filament Brands, as a result of the fourth quarter performance we saw a noticeable decline for the full year in both pro forma and net sales and EBITDA. Simply put, we are disappointed in these results, and they are not what we expected to deliver to shareholders. We believe this underperformance was due to a combination of factors but primarily the adverse impact of certain unforeseen macroeconomic events, which I will discuss before turning over the call to Larry who will go over the numbers.

I'll also discuss with you important achievements from throughout 2018 as well as highlight some positive indicators we are seeing in the first couple of months of 2019. It's important for me to emphasize that we are optimistic these macro events, while meaningful in impact, are predominantly singular in nature. They include European softness, primarily due to Brexit, and the inconsistent implementation of a new U.S. tariff program that hindered our ability to pass along timely price increases.

Additionally, our sales were adversely affected by stocking levels and inventory management decisions by retail customers, including our largest e-commerce customer.

In Europe, as you know, in the second half of 2018, we announced a plan to reorganize our European-based operations including the consolidation of our European operation into a single, more profitable business. We expect this reorganization to create profitability starting in 2019. However, in 2018, our European business was adversely impacted in the fourth quarter by meaningful softness in the retail markets in Europe, primarily due to the uncertainty and instability of Brexit as well as the yellow vest protests in France.

With regard to tariffs, on our earnings call last quarter, I addressed the newly announced U.S. tariff program that was expected to affect 20% of our company's revenue. Despite taking proactive steps to mitigate the potential impact, such as reducing the cost of goods sold and resourcing our products to countries whose exports were not subject to the tariffs, the inconsistent implementation of the U.S. tariff program hindered our ability to pass along our planned, timely price increases, in turn creating a more impactful outcome on our revenue and margins than initially expected and resulting in meaningful losses in the affected lines of business.

An additional unforeseen consequence of the tariff program was an inability to book adequate containers to ship our products from Asia and the inability to move goods delivered to U.S. ports to our customers in a timely manner. These situations resulted in missed shipping windows and consequently reduced revenues for Lifetime.

Finally, certain of our North American distribution channels delivered disappointing sales due to a combination of poor holiday sales from certain channels and a change in policy regarding stocking level and inventory management by several large customers, including our largest e-commerce customer. Both in the U.S. and Europe, this customer noticeably reduced inventory and in-stock levels even though sell-through of most products to the consumer remained high. At this retailer, our average in-stock levels reduced from over 20 weeks at the end of 2017 to under 6 weeks at the end of 2018. Significantly, as just mentioned, across all of our markets, our sell-through to consumers at this customer has remained strong with substantial year-over-year growth.

We also saw a combination of canceled and postponed orders from our largest food service customer as a result of a reorganization of their merchandise program, which has led to a downsizing of their offerings. Combined, these issues resulted in a meaningful miss compared to our expectations that were based on product sell-through to consumers.

The unique headwinds experienced in the fourth quarter have not continued into 2019, and we are encouraged by the early results of 2019 as our shipping and supply chain has normalized and as we now have successfully implemented the planned price increases designed to mitigate tariff impacts. We feel confident that these initial results indicate a normalization of customer ordering and promising performance of our newer products. With these events in the rearview mirror, we are eager to refocus on serving the needs of our customers and providing high-quality houseware products while driving growth for shareholders.

Notably, we accomplished our primary 2018 goals of seamlessly integrating the Filament business into Lifetime, reorganizing our European operations and executing our opportunity to reduce the cost infrastructure through achieving synergy cost eliminations in excess of $11 million. Now that we have successfully integrated the Filament business, we expect to realize the many benefits of the merger including leveraging our expanded portfolio of brands, products and distribution platforms and forging partnerships in new channels.

Furthermore, we laid a strong foundation for repositioning our product portfolio, which as you may remember we accelerated during the third quarter of 2018 in an effort to achieve greater cost-saving benefits and provide for a revised platform to pursue organic growth opportunities. The associated ERP systems integration that went live in January is already off to a great start, and we expect to see a substantial impact from our implemented $11 million in annual savings beginning in 2019, which represents an increase of more than 1/3 from our original projection.

In addition, we are currently executing a wholesale restructure of our e-commerce operations focused on more efficiently promoting our products and brands and designed to grow our e-commerce revenues and product recognition and ratings. We are also continuing with investment in our brand equity development process as a way to increase our visibility and recognition of brands among consumers. These efforts have begun to show results in the first quarter of 2019.

So as I've mentioned, we expect our 2019 results to show meaningful top and bottom line growth. This expectation is supported by our results for the first 2 months of the year. We plan to release 2019 full year guidance on our Q1 2019's earnings call this May, at which point we'll be able to provide benchmarks of targets and opportunities created by our strategic review of the newly integrated Filament business.

We are confident that the path we are on to create a leaner and more growth-oriented Lifetime Brands will be strong drivers of enhanced results, profitability and value creation for Lifetime as we move forward.

Larry?

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Laurence Winoker, Lifetime Brands, Inc. - Senior VP of Finance, Treasurer & CFO [4]

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Thanks, Rob. As we reported this morning, net income for the fourth quarter of 2018 was $10 million or $0.49 per diluted share as compared to net income of $1.3 million or $0.08 per diluted share in the 2017 period. Adjusted net income for the quarter was $11.2 million or $0.55 per diluted share as compared to adjusted net income of $7.1 million, $0.40 per diluted share in 2017. A table which reconciles this non-GAAP measure to reported results was included in this morning's release.

Income from operations was $22.9 million for the 2018 quarter compared to $10.9 million for 2017.

Adjusted EBITDA, a non-GAAP measure that is reconciled to our GAAP results in the release, was $65.5 million, $64.9 million reflecting the credit agreement limitation, that's for the year ended December 31, 2018. This included permitted pro forma adjustments for Filament and projected unrealized synergies of $8.5 million.

As a result of reorganizing certain management responsibilities, the U.S. Wholesale segment now includes the U.S. Retail Direct channel. Therefore, our comments today and in the future will reflect this reorganization, including on a comparable basis with prior periods.

Net sales for the quarter increased $45.5 million to $228.3 million. This reflects the acquisition of Filament, which added $51.6 million. Organically, net sales decreased $6 million. The U.S. Wholesale organic sales decreased $3.4 million. This decrease reflects, as Rob noted, retailer inventory reductions and transportation difficulties due to tariff concerns.

A decline in kitchenware and tableware products was offset partially by an increase for home solution products.

In international, sales declined by approximately $2.6 million, but that's a $1.8 million decline in constant U.S. dollars. This reflected retail inventory reductions and consumer concerns about the potential impact of Brexit.

Gross margin was 37.2% in '18 compared to 39% in the comparable 2017 period. U.S. gross margin was 37.3% in 2018 versus 40.2% in '17. This reflects both product and customer mix as well as approximately 40 basis point decline associated with the effect of the tariffs.

For international, gross margin improved from 33.2% to 36% from tableware products on fewer off-price sales and portfolio repositioning. Distribution expenses as a percent of sales shipped from our warehouses, including Filament as it has largely been integrated with the rest of our U.S. operations during the quarter, were 9.3% in 2018 versus 10.4% last year. This excludes warehouse relocation expenses.

For the U.S. Wholesale distribution expense as a percent of shipments also excluding relocation, improved to 8.8% from 9.8% last year due to increase in products shipped. For International, expenses in distribution improved approximately 1 point to 12.4%. The 2017 period reflected an additional lease termination expense recorded in connection with the planned warehouse move.

SG&A expenses were 40.6% (sic) [$40.6 million] in the fourth quarter of '18 versus $41.3 million in the 2017 period. U.S. expenses including corporate unallocated were $34.4 million versus $34.6 million last year. The 2018 period includes Filament but was offset by lower employee compensation and acquisition expenses as well as an estimate reduction in contingent consideration related to an acquisition. As so much of Filament's operations have been integrated with Lifetime, there's no stand-alone Filament expense to identify except for purchase accounting amortization, which added $2.4 million.

International SG&A expenses decreased by approximately $600,000, which largely represents a benefit for the change in a mark to market of foreign currency contracts and foreign currency statement translation. Interest expense was $5.6 million in the 2018 quarter as compared to $1.2 million last year. The increase in interest is attributable to the financing obtained to acquire Filament.

The effective tax rate for 2018 primarily reflects nondeductible expenses and reserves for uncertain tax positions, while on the 2017 period the rate reflects the charge for the remeasurement of deferred taxes related to the tax reform act.

At December 31, '18, liquidity under the revolving credit agreement net of cash -- liquidity net of cash of $7.6 million, the liquidity was approximately $112 million.

This concludes our prepared comments. Operator, please open the line for questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question comes from the line of Frank Camma of Sidoti.

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Frank Anthony Camma, Sidoti & Company, LLC - Senior Research Analyst [2]

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I know, Larry, you called out the organic, but could you just give us, if you have it handy, the numbers for Filament for the quarter and for the year, the revenues?

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Laurence Winoker, Lifetime Brands, Inc. - Senior VP of Finance, Treasurer & CFO [3]

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Yes. So yes, it was $51.7 million. Last year, it was about $49 million, and so that's -- obviously, (inaudible)...

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Frank Anthony Camma, Sidoti & Company, LLC - Senior Research Analyst [4]

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That was the revenue in the quarter?

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Laurence Winoker, Lifetime Brands, Inc. - Senior VP of Finance, Treasurer & CFO [5]

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Yes. As I said, $51.6 million. Last year, approximately $49 million. So it was up about $2.5 million. For the year, it was -- for the year, on a full year basis -- we only had 10 months, but it was $154.5 million.

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Frank Anthony Camma, Sidoti & Company, LLC - Senior Research Analyst [6]

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$154.5 million, okay. And how much of that $154.5 million did you actually book though?

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Laurence Winoker, Lifetime Brands, Inc. - Senior VP of Finance, Treasurer & CFO [7]

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Yes -- yes, so our -- that's 12 months. So it's -- we -- obviously, only the 10 months, it was about $129 million.

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Frank Anthony Camma, Sidoti & Company, LLC - Senior Research Analyst [8]

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$129 million, okay, good. All right. So Filament, I mean, year-over-year in the quarter actually did okay, correct? I mean, like because last quarter that was actually down year-over-year, I believe.

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Robert Bruce Kay, Lifetime Brands, Inc. - CEO & Director [9]

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Yes. The same trends we saw across the business were related to all of our lines of business equally. But yes, Filament had a good fourth quarter.

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Frank Anthony Camma, Sidoti & Company, LLC - Senior Research Analyst [10]

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Yes, I guess where I'm going with that is, I mean -- and I know you're not naming the customer...

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Robert Bruce Kay, Lifetime Brands, Inc. - CEO & Director [11]

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But it was lower than our expectations, Frank. It was good year-over-year, but it was lower. So as we said, the fourth quarter year-over-year, we're flat on a pro forma basis. But our expectations were for more growth, and that's what we were addressing. But we were -- Filament was a bit off as I described.

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Frank Anthony Camma, Sidoti & Company, LLC - Senior Research Analyst [12]

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Okay. Now my concern though is -- with Filament was the fact -- and I know you didn't name customers, but you did say the largest food service, so we know who that is. Now so what can we expect? I know you're not giving guidance here, but what can we expect from that customer going forward? Does that mean you lose that customer? Does that mean they greatly scale it back? Can you give us like some color on that?

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Robert Bruce Kay, Lifetime Brands, Inc. - CEO & Director [13]

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So we did not lose that customer. But year-over-year there was a noticeable decline as they dramatically changed what they -- their merchandise strategy and, therefore, their purchases. So no, it's just a decline, not -- it's still a big customer.

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Frank Anthony Camma, Sidoti & Company, LLC - Senior Research Analyst [14]

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But that will flow into -- I guess where I'm going is that'll flow into next year, right? I'm assuming. And is the food service -- is Q1 typically a decent quarter for food service? Is that not as seasonal? I guess is what I'm trying to say.

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Robert Bruce Kay, Lifetime Brands, Inc. - CEO & Director [15]

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That is not as seasonal as the Retail business, Frank. As we mentioned, some of the transportation issues, both on getting containers out of China and then actually getting goods out of port -- well, in this case, what you're referring to is only out of China. That was also an impact because it's all out of China. So some of that rolled over into the first quarter.

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Frank Anthony Camma, Sidoti & Company, LLC - Senior Research Analyst [16]

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So you would actually benefit from that in Q1 now because it's just sort of a timing issue?

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Robert Bruce Kay, Lifetime Brands, Inc. - CEO & Director [17]

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You would.

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Frank Anthony Camma, Sidoti & Company, LLC - Senior Research Analyst [18]

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Okay. All right. And then, I guess, the other item -- and I know you didn't call out the customer again, but like you said 20 weeks for a e-commerce customer down to 6 weeks. That sounds like they almost didn't order in the quarter at all, I mean, given that dramatic of a decline in destocking.

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Robert Bruce Kay, Lifetime Brands, Inc. - CEO & Director [19]

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So this is across the industry. Everyone has experienced this. As a matter of fact, this is a big customer of us in Europe as well, and they did the same thing. So they operated globally along these lines. As we pointed out, we're able to track sell-through to consumer, which is quite good, which is also contributing to why the in-stocks went down so much. It happened, and there's a lot of press on it, but not for the full quarter, but it started in November. A lot of analysis in press in it. Again, that is a customer which -- you can't really -- 6 weeks is a little too low. So we've seen some nice order flow year-over-year so far in 2019.

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Frank Anthony Camma, Sidoti & Company, LLC - Senior Research Analyst [20]

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But aren't they changing their business model somewhat so that they don't actually hold the inventory? Isn't that the whole point? Like, they want you to sort of be -- they just want to take a skim. I mean, of sort of their shop-in-a-shop model, if you will. I mean, can you address that? Like does that change your model?

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Robert Bruce Kay, Lifetime Brands, Inc. - CEO & Director [21]

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Well, I -- yes, I mean, 2 things. First of all, if there's -- if anyone, doesn't matter brick-and-mortar or e-commerce, changes their inventory strategies and it happens, can't last forever because in this case, you can't run out of stock, right? You need inventory. So the impacts are finite. That being said, you're talking about someone who changes strategies often. So it's really hard to comment on that. And I think what you're referring to would really impact people that are smaller than us.

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Frank Anthony Camma, Sidoti & Company, LLC - Senior Research Analyst [22]

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Right. Because you have the ability to hold the inventory and ship directly.

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Robert Bruce Kay, Lifetime Brands, Inc. - CEO & Director [23]

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Well, sure, we do. And we can drop-ship and we're certified appropriately. So there's all that, which creates a different relationship. But also if you look at the press, the sort of eliminations are focused on people doing smaller amounts. And we're not near where those cutoffs are.

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Frank Anthony Camma, Sidoti & Company, LLC - Senior Research Analyst [24]

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Okay, okay. So the biggest shock to me is sort of the gross margin. And Larry, excuse me if I missed this, but you mentioned $2.4 million purchase accounting. Now did that flow through to the gross margin, lowering your gross margin? Or was that through somewhere else?

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Laurence Winoker, Lifetime Brands, Inc. - Senior VP of Finance, Treasurer & CFO [25]

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No. The purchase accounting amortization goes through SG&A.

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Frank Anthony Camma, Sidoti & Company, LLC - Senior Research Analyst [26]

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So that's SG&A. So that would have had no impact there? Okay... Go ahead, I'm sorry.

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Laurence Winoker, Lifetime Brands, Inc. - Senior VP of Finance, Treasurer & CFO [27]

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Yes. I mean, there was... I was going to comment. It's down for the quarter, but it was more pronounced in the quarter than it was for the year.

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Robert Bruce Kay, Lifetime Brands, Inc. - CEO & Director [28]

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Yes, it's a bit of a mix issue. And of course, in the quarter, as Larry pointed out, we had an impact on the tariffs. That would be a fourth quarter impact.

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Frank Anthony Camma, Sidoti & Company, LLC - Senior Research Analyst [29]

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So it was really more the tariffs. Now have you consequently in Q1 started to push through those price increases?

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Robert Bruce Kay, Lifetime Brands, Inc. - CEO & Director [30]

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So the tariff situation, as I tried to explain, Frank, we had reacted and as part of that, as we mentioned, you can't mitigate all of the tariff without a price increase, all right? So we implemented a portion, and then we had implemented price increases. But unfortunately, when the government started moving the target of the tariff from potentially 10% to 25% to 10% and the timing of the implementation of that, it was impossible for us to get a price increase through in the fourth quarter because there was flip-flopping and uncertainty. As of now, we have been able to do that, subject to change if the tariffs change percentage and implementation dates or if they go away.

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Frank Anthony Camma, Sidoti & Company, LLC - Senior Research Analyst [31]

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Okay. Okay, fair enough. And just as I'm looking at these adjustments that you put in the release, just as a housekeeping, like the contingent consideration fair value adjustment it -- that I assume is an SG&A issue, correct?

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Laurence Winoker, Lifetime Brands, Inc. - Senior VP of Finance, Treasurer & CFO [32]

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Correct.

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Frank Anthony Camma, Sidoti & Company, LLC - Senior Research Analyst [33]

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Okay. So the only one that doesn't -- it looks like to me that -- of the ones up top that don't flow through SG&A is probably the warehouse relocation? Is that distribution?

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Laurence Winoker, Lifetime Brands, Inc. - Senior VP of Finance, Treasurer & CFO [34]

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Yes.

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Frank Anthony Camma, Sidoti & Company, LLC - Senior Research Analyst [35]

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Okay. And the bottom 3, I assume are to effective tax, they flow directly to your tax rate?

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Laurence Winoker, Lifetime Brands, Inc. - Senior VP of Finance, Treasurer & CFO [36]

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Yes.

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Frank Anthony Camma, Sidoti & Company, LLC - Senior Research Analyst [37]

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Okay. So then looking at that -- and this would be my last one, and I'll hop off. But it looks like your effective tax rate is still pretty high. And is that just because of your jurisdictions? I mean, it comes about -- and this is after I adjusted it -- it's about like 42% for the year. Is that just because of where you book the income?

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Laurence Winoker, Lifetime Brands, Inc. - Senior VP of Finance, Treasurer & CFO [38]

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Yes -- it's an anomaly. You still have this little numerator that hurts. But there's nothing that is, let's say, is persistent that would cause it to be that high going forward.

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Frank Anthony Camma, Sidoti & Company, LLC - Senior Research Analyst [39]

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Okay, yes. Because I have modeled about -- much less, like 27.5% going forward. Does that sounds like a more realistic modeling number?

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Laurence Winoker, Lifetime Brands, Inc. - Senior VP of Finance, Treasurer & CFO [40]

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Yes.

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Operator [41]

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Your next question comes from the line of Justyn Putnam of Talanta Investment Group.

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Justyn R. Putnam, Talanta Investment Group, LLC - Managing Member and MD [42]

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My first question is a clarification question. The food service customer that you discussed on the call is that the same customer that you mentioned on the last call where you may have sales from that customer going into the new year?

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Robert Bruce Kay, Lifetime Brands, Inc. - CEO & Director [43]

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Correct, Justyn.

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Justyn R. Putnam, Talanta Investment Group, LLC - Managing Member and MD [44]

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Okay. So now the update is not only do they get pushed into the new year, they were also a lot less than we were expecting. Is that right?

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Robert Bruce Kay, Lifetime Brands, Inc. - CEO & Director [45]

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They ended up, for the first time in our relationship over 15 years, canceling some orders, but there was some orders that got pushed off.

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Justyn R. Putnam, Talanta Investment Group, LLC - Managing Member and MD [46]

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Okay. And my next question then is, I guess, Larry, this is for you, I was wondering if I could get maybe a more updated net debt balance. And the reason is because I think we've talked about on the last call a lot of cash flow comes in after the first of the year. I was wondering if we can get maybe an update on the net debt figure. Maybe January, February?

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Laurence Winoker, Lifetime Brands, Inc. - Senior VP of Finance, Treasurer & CFO [47]

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Yes. Justyn, I'll give them to you as of, obviously, end of the year. So net debt at the end of the year was approximately $307 million.

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Justyn R. Putnam, Talanta Investment Group, LLC - Managing Member and MD [48]

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What about, say, January 31?

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Laurence Winoker, Lifetime Brands, Inc. - Senior VP of Finance, Treasurer & CFO [49]

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Yes. Well, I don't -- we're not going to comment it on going forward. But we did say -- and this is typical for the company year-after-year is that because we sell so much in the fourth quarter our debt balance does significantly decline in the first quarter. But I can't -- I mean, I'm not prepared here, but we generally don't give out that information. We will get it in the report.

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Justyn R. Putnam, Talanta Investment Group, LLC - Managing Member and MD [50]

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Okay. Then my next question is, I mean, obviously, you have a lot of moving parts in the business right now with the transition and macro issue and so forth. But just taking a trip down memory lane here, looking back at December 22, 2017, when the stock price was about [50%] higher than it is now, I think you announced the acquisition was expecting the company to have around $770 million in net sales and EBITDA of 800 -- $85 million. Once the dust settles in this acquisition, is that still fundamentally your expectation for the business? Or going through this integration process, you realized perhaps it's not what you thought.

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Robert Bruce Kay, Lifetime Brands, Inc. - CEO & Director [51]

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Yes -- no, our expectations are that -- Justyn, it's a fair question. The expectations are -- to get there are the same. It's just we didn't get there as fast as we thought.

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Laurence Winoker, Lifetime Brands, Inc. - Senior VP of Finance, Treasurer & CFO [52]

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Justyn, just one thing, maybe you have this, but just a clarification. I think you're referring to with Filament on a 12-month basis. There's another $25 million that Filament had in sales in the first 2 months of '18 that are not in our numbers. So the $700 million and change of what we reported is $730 million on a 12-month basis. Still off what we projected, but I just wanted to point that out.

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Justyn R. Putnam, Talanta Investment Group, LLC - Managing Member and MD [53]

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Yes, the sales figure. But the EBITDA is still, even with your adjustment $25 million -- about $20 million below that, I guess, right? Below that expectation.

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Laurence Winoker, Lifetime Brands, Inc. - Senior VP of Finance, Treasurer & CFO [54]

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Yes.

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Justyn R. Putnam, Talanta Investment Group, LLC - Managing Member and MD [55]

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Yes. Right, okay.

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Operator [56]

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(Operator Instructions) At this time, there are no further questions. I will now return the call to Rob Kay for any additional or closing remarks.

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Robert Bruce Kay, Lifetime Brands, Inc. - CEO & Director [57]

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Thank you, operator. For everyone on the call, thank you again for joining us today. We are looking forward for our improving results and profitability throughout 2019 and are confident that the steps we are taking will help us achieve our goal of becoming a powerhouse in the housewares industry across all channels.

As always, we appreciate your continued support of Lifetime Brands. Have a good day.

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Operator [58]

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Thank you. The does conclude the Lifetime Brands fourth quarter and full year earnings conference call. You may now disconnect your lines, and have a wonderful day.