Lifetime Brands, Inc. Stock

Thank you. Welcome to the Lifetime Brands Second Quarter 2026 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 today, there will be a question and answer portion of the call. If you would like to ask a question during this time, please press the star key followed by 1 on your telephone keypad. Please note that this conference is being recorded. I would now like to turn the conference over to Jamie Kirchhen. Mr. Kirchhen, you may now go ahead.

Good morning and thank you for joining Lifetime Brands' second quarter 2026 earnings call. With us today from management are Rob Kang, 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 of the company. safe harbor protection from liability established by the Private Security Litigation Reform Act. Any such statements are not guarantees of future performance and factors that could influence our results are highlighted in our earnings release. Any 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 and are subject to change for future development. Except as required by law, the company does not undertake any obligation to update such statements.

Our remarks this morning and in our earnings 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 and good morning. We are pleased with our performance during the second quarter, which showed year-over-year growth as expected. The increase in gross margin and our bottom line was meaningfully driven by a benefit recognized from IEPA tariff refunds. Topline growth was notable with net sales up 7.4% to $141.6 million, despite some timing delays on a few programs, which shifted revenues from these programs into the third and fourth quarter. The earnings growth we generated includes a benefit for the expected recovery of $40.1 million of tariffs we paid in 2025. Larry is going to walk through the numbers in detail, but I wanted to spend a few minutes up front on that refund, what it is, how it's accounted for, and what we're doing with it, and then get into how the underlying business performed. Some of you will remember that on our last call, we were asked about the potential IEPA tariff refund, and we said at the time that we weren't recognizing anything in our numbers or in our guidance that we had paid $41.7 million and believed we were legally entitled to a refund, but there was still a still a path to travel, including the possibility of an appeal. That path has now largely played out, We have recorded a benefit of $40.1 million of tariff refunds and to date have received approximately $36 million in cash.

The accounting is straightforward. We paid the tariffs in 2025, and they ran through cost of goods sold. So accordingly, the refund runs through cost of goods sold as well. which is reflected in our results for the second quarter. That's why gross margin was 65.9% this quarter and why you're seeing such strong growth in operating income and EBITDA. I want to be straightforward about what we're doing with that money. First, we'll be paying taxes on it. Second, this income will be used to mitigate inflationary pressures that are being experienced in the economy and we are seeing flow through the lifetime. We are also using this cash inflow to restore reductions in the business that we pulled back in 2025 to protect our bottom line against the tariff impact.

We've already begun restored spending levels for growth and product investment back since the beginning of 2000 of 26. And finally, we're using it to strengthen our balance sheet, particularly through deleveraging. The tariffs meant we were carrying meaningfully more inventory value. We paid duties before we ever sold the goods. And we had to shift production across our supply base to other geographies to manage the exposure. The tariff refund, combined with the cash flow the business is generating organically, lets us pay that borrowing back down. Since the end of the first quarter, we've repaid $40 million of term debt. $20 million in the second quarter, and another $20 million in early July. by a combination of operating cash flow and the tariff refund.

Separately, we're in the process of refinancing our outstanding debt, which includes the company's existing line of credit and its term loan B facility. As part of that, we expect to improve the mix and tenor of our debt and expect a reduction in our ongoing annualized interest expense. On the underlying business, we beat last year's second quarter by nearly $10 million in net sales, so it was a relatively easy comparison. a year ago right after the initial tariff actions, including the 145% rate on China. and elevated rates across many other countries resulted in us largely stopping shipping during that quarter. Against that backdrop, the 2026 second quarter was in line with our expectations. End markets remain soft across the majority of consumer durable categories, and some shipments shifted out of the second quarter into the third and fourth. Driven both by market conditions and internal challenges related to our new Hagerstown, Maryland distribution center, which I will elaborate more shortly. Growth was led by our warehouse club programs and e-commerce.

Setting the refund aside, gross margin in the underlying business also reflects mix. We added meaningful club channel volume this year that carries a lower margin than our average. And additionally, as we have previously discussed in the impact of tariffs and our pricing mitigation strategy, this has led to lower gross margin percentages as we focus on maintaining gross margin dollars. Today we are maintaining our full year net sales guidance as issued at $650 to $700 million. We're raising our earnings and adjusted EBITDA guidance to reflect the tariff refund offset by the cost of the additional investments I referenced above, which is also factored in inflationary and other impacts related to increased investment. That's not a change to our organic outlook for the underlying business. We continue to watch the ongoing impact of geopolitical conditions and inflation, including higher ocean freight costs on our end markets for the rest of the year, and we built a degree of caution into our guidance as a result.

On new product, our newly redesigned Farbaware kitchen tool line relaunched in the second quarter and early sell-through has been very encouraging. We started this program about a year ago as a refresh to our very popular and successful product line with a redesigned look while holding competitive price points on shelf. We also extended our Dolly Parton license for another three years, reflection of how that partnership continues to perform for us. International continues to narrow its losses, sales were up, and year-to-date losses were meaningfully lower than the same period last year, with most of that improvement coming in the second quarter. Project Concord remains on plan. We're implementing the final cross-actions now. and we're actively evaluating options around the UK facility that could further improve this segment's performance. We remain on track for international to reach break-even on a pro forma basis in 2026. The Hagerstown DC is online. As we've discussed before, bringing up a facility of this scale comes with startup costs and operational disruption.

That had a negative effect on the second quarter as efficiencies started out low and shipments were adversely impacted. We expect to continue the smaller impact in the third quarter as we finish the ramp, and we expect to be fully operational by the fourth quarter. At this point, we believe that our full-year guidance, as presented, captured these incremental one-time costs. If operational disruptions continue, one-time startup costs could exceed our previously disclosed estimates. As we have previously announced, we look forward to presenting our longer-term strategy at our Investor Day this December, which we will be providing more details on shortly. So, to sum up a good quarter for the underlying business against a still soft and market backdrop. And an exceptional 1 on a reported basis, given the 40.1Million dollar tariff refund.

We're using that money to pay the associated taxes, restore reductions we pulled back in 2025, and strengthen our balance sheet, including $40 million of term debt paid down since the end of the first quarter. We're reaffirming our net sales guidance, raising our earnings guidance to reflect the refund and staying focused on the fundamentals, getting Hagerstown to full operation, of Concord and internationals past the break-even and continued momentum from our core lines, including Farberware, and from our licensed portfolio. With that, let me turn it over to Larry to go through the financials in more detail. Thanks.

As we reported this morning net income for the second quarter of 2026 was 19.6 million or 87 cents for the shares compared to an at loss of 39.7 million or $83 for diluted share in 25 just in that income was 26. 6.6 million for the second quarter of 26 or $1.18. Regulated shares compared to adjusted net loss of 2.6 million or 12 cents per share in 25. Income from operations with 31.6 in the second quarter 26 is compared to a loss from operations of 37.2 in the 25 period. Income from operations for the current period included a tariff refund of 40.1 million. Custom operations for the prior period included a non-cash goodwill impairment charge of $33.2 million related to the U.S. segment. Adjusted income from operations for the second quarter of 26 was 41.1M as compared to 900,000 in the 25 period. The 2026 period include adjustments for acquisition related intangible amortization expense of 4.3 million, acquisition related diligence expenses of 1 million, restructuring expenses of 2 million, and warehouse relocation and redesign expenses of 2.2 million.

The 2025 period also included adjustments for acquisition related intangible amortization of 4.4 million, the goodwill impairment charge of 33.2 million, and certain other adjustments that were approximately 500,000 in the aggregate. Justice Adib adopted a trillion 12 month period and the June 30th, 26 was 92 million. The adjustment information noted are non-GAAP financial measures, which are reconciled to our GAAP financial measures in the Army's release. Following comments offered the second quarter of 26 and 25, unless stated otherwise. Solidated sales increased 7.4% to 141.6 million. In the US, segments increased by 7.5% to 128.2 million. Sales increased in all product categories driven by warehouse clubs, and to a lesser extent e-commerce.

International segment sales increased 6.8% or 5.3% in local currency to 13.4 million. This increase was driven by higher sales in the Asia Pacific region and continental Europe, partially offset by lower sales in the UK. Consolidated gross margin increased to 65.9% from 38.6. The U.S. segment gross margin increased to 68.3 from 39.1%. The improvement in the gross margin percentage was attributable to a benefit from the tariff refunds 40.1 million in the current period, partially offset by unfavorable product mix. And international gross margins increased to 42.5% and 32.5 driven by favorable customer mix. US segment distribution expense as a percentage of goods shipped from its warehouses, excluding non-recurring expenses was 11.9% versus 11%.

The increase was attributable to labor inefficiencies, primarily due to the move of our East Coast distribution operation from New Jersey. to Maryland. And now recurring expenses for the current period were $2.2 million, which related to one-time expenses to start up Maryland distribution facility, including relocation of inventory, recruiting and training expenses, set of costs and lease expenses for the non-operational portion of the New Jersey and Maryland distribution facility. facilities. International segment, the distribution expenses as a percentage of its goods shipped from its warehouses improved to 24.2% from 26.8%. Improvement was due to operational efficiencies in the export regions. Selling general and administrative expenses increased by 5.3% to $39.5 million. In the U.S., increased by $1.7 million to $31.2 million. This increase in expenses was employee related.

As a percentage of net sales, expenses improved to $24.3 from The decrease as a percentage was attributable to the impact of fixed costs on highest sales International SG&A decreased to 3.3 million from 3.7. The decrease was due to lower employee and commission expenses. And as the percentage of net sales decreased to 24.6 and 29.4. This decreased percentage was due to the impact of fixed costs on higher sales volume. and unallocated corporate expenses were 5.1 million compared to 4.3 million. The increase was attributable to due diligence expenses. Restructuring expenses were 2 million in 2026, of which 1.2 million was for employee severance related to exiting the New Jersey distribution facility and 800,000 to close a manufacturing operation in Mexico. Interest expense, excluding mark-to-market adjustments for swaps, decreased by $900,000 due to lower average outstanding borrowings and lower interest rates on outstanding debt.

The effective tax rate for 2026 and 2025 were 29.2% and 6.5% respectively. These rates differ from the federal statutory income tax rate of 21%, primarily due to the impact of non deductible expenses in 26 and a partial valuation allowance recorded on deferred taxes related to the goodwill impairment in 25. Turning to our balance sheet, it continues to strengthen. Our net debt declined by approximately $10 million for the current quarter and approximately $39 million since year end 25. At quarter end, our liquidity was approximately $151 million, which includes cash, plus availability under our credit facility and receivable purchase agreement. As discussed, the company recorded a benefit of $40.1 million for the IEFA tariff refunds, of which $36.4 million has been received to date. Our current net debt is approximately 121 million.

We are now in the final stage of extending our revolving credit facility and refinancing our term loan, which if consummated, will extend all our debt maturities to 2031. As provided in the release this morning, we updated our financial guidance for the full year 26 as follows. Net sales of 650 to 700 million, adjusted income from operations from 81.5 to 84. adjusted net income of $46 million to $47.5 million, and adjusted EBITDA of $90.5 to $93 million. This concludes our prepared comments. Operator, please open the line for questions.

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue. For participants using a speakerphone, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. And today's first question comes from Matt Coranda with Roth Capital.

Please go ahead.

Hey guys, thanks. I guess you're raising the EBITDA guide by $37 million at the midpoint. I GUESS THE IEPA REFUND WAS ROUGHLY 40 MILLION. IS THE DELTA THERE, I GUESS THE REINVESTMENT THAT YOU WERE TALKING ABOUT IN THE PREPARED REMARKS OR MAYBE JUST UNPACK THAT FOR US IF YOU COULD. AND THEN IT SOUNDS LIKE MAYBE THERE'S A LITTLE BIT MORE LEFT TO RECEIVE FOR THE REST OF THE YEAR. I THINK THAT'S A GOOD THING. will that be recognized through the P&L or maybe just a little bit of help on sort of how it flows through? Sure.

Yes, so you got it exactly right. So as we discussed, You know, we've raised our earnings a lot, but we're also using that money to aid the lever, which flows through, and obviously pay taxes. And then restore investments. For instance, we cut a bunch of expenses because a lot of heads were not restoring that, but we also cut compensation levels and salary levels through most of the company. I restored those and we're making investment in new products that we had curtailed. So that is that Delta three main that you point out. And Larry, you wanna answer? Yes, so the 40 reflects an accrual for the.

what we received in July as well as what we expect to receive. However, we don't know I don't think anybody knows when that, if and when that will be received. But based on our analysis, we believe it was appropriate to accrue it. And as Larry pointed out, we received in cash $36 million as of this year. THAT'S HELPFUL. JUST A COUPLE MILLION LEFT TO.

received, but it's all been accrued for in the second quarter. Makes sense. I'm going to go to the Hagerstown ramp up, I guess. Is there any way to quantify the impact to the second quarter? that you saw, I guess, in terms of the drag on efficiencies and what's factored into the full year guide. It sounds like you haven't really, I mean, core guidance hasn't really changed for the full year, so I'm assuming you think you can offset whatever inefficiencies you saw in the second quarter, but just any quantification around the, the drag it created, and then any fixes that are in place, I guess, that you feel confident about that it'll be done by the third quarter.

Yes, so, so, um, we anticipated. You're going to have, it's a lot of new people, you know, like, actually a lot of the senior management is shifting, but there's a lot of new people. So there's, there's training. issues, you're building up staff, our availability of staff and their ability to get people in Hagerstown has been fine, no issues at all. But so we had anticipated we had included that in our guidance. So what we've experienced to date, that's why it had no impact in our guidance. And what we are currently anticipating to continue in the third quarter has also been factored in our guidance in our initial guidance. Right. So, so no impact there at all.

The second quarter impact in terms of expense, So we had to run like a shift and a half. This is just more people to try to get things through the system. as it ramps up that that'll continue. Those are the end of the second quarter into the third quarter. We are potentially going to see some delay in shipments. We're monitoring that. The ramp up in efficiencies have to date mostly been solved. So at this point we're shipping at a very healthy rate. But we need to catch up in a couple of weeks.

Once that's done over the next two to three weeks, providing there's nothing else that becomes an issue, we'll be at a good point. fully flow through. So not full capability, because we're still shifting some of the inventory out of Robbinsville, New Jersey into Hagerstown. And we'll have that mostly done by the beginning of the fourth quarter, when the Maryland facility will be fully fully operational and by the end of the year, the New Jersey facility will be not operating anymore. Okay. All right. Thank you. Yes, I think so.

Maybe just last one. It sounds like you're kind of circling in on the debt refi. given the mention, the prepared remarks. And I know you probably can't give a ton of detail, but just broad brushstrokes, curious how we should be thinking about... you know, what a new package might look like in terms of increasing capacity for acquisitions, in terms of... rates, just broad brushstrokes would be helpful to kind of get your thoughts on how to think about it.

Yes, we'll have more information very shortly and share that, but our concept is to more fully utilize our asset base capability, which is also much lower cost debt. Our total term loan will be much smaller because we don't need it. but we are looking to do it in the private market with someone that should we need availability for an external initiative, such as an acquisition, we can add that on, but it wouldn't be something we would add on and deal negative arb looking to use that money.

And we're actually past negotiation. We're in the final stage. We may file. consummate this as early possibly as tomorrow or next week. So, I mean, we know all the terms. We just don't want to cite them until they're.

It's not signed, but it could be signed imminently, and you'll see an 8K very shortly, and we're happy to discuss it once it is. And we'll have capacity to do what we call acquisitions. Again, right, we're sitting today at $150 million of liquidity, right?.

Yes. Okay. Got you. Clear. Thanks, guys. And the next question is from Anthony Libidzinski with Sidoti and Company. Please go ahead.

Thank you. Good morning, everyone. Thanks for taking the questions. Certainly a nice performance here in the quarter. Just wondering, as far as the sales increase, that 7%, the number came in better than what we had expected. And this is despite some timing shifts that you said. So is there Is there any way, Rob, that maybe you can quantify what you think those timing shifts were? And also, if you could speak to pricing versus unit volumes, just broadly speaking, as far as the impact on the revenue number.

Yes, Anthony, hi. So the two factors that shifted, and by the way, the quarter kind of came in. for our expectations. You know, we knew there would be growth, as you did as well in your estimates. PROGRAM, SO NOW WE DON'T HAVE PARTIAL ORDERS. PARTIAL ORDERS. PARTIAL ORDERS. I WAS JUST ASKING IF THERE ARE that shifted from our customers' preference into the third quarter. A LITTLE BIT MAYBE THE FOURTH, BUT MOSTLY THE THIRD. BUT MOSTLY THE THIRD. AND IT WAS TIMING PART OF THAT merchandising strategy on certain accounts. Part of that is, If you look at retailers, there's some slowness and they wanted to push some new sets out.

The other delay that shifted in the second third quarter was what we were just talking about in the ramp up of New Hagerstown. So we had, when we first started operational on a large scale basis, really started with receiving goods, which then ended up in terms of shipping goods. And this was really impacting us, started to impact us in the last month of the quarter. So it shifted out of the second quarter. You know, we expect again, you know, we believe our issues there have been addressed. So things will ship if they were not addressed and they lasted for a period of time, we would lose business. not permanently, but obviously it wouldn't shift this year and you'd lose a turn. But the shifting is a result of those factors that I mentioned.

I think price volume, What I can say consistent with us as well, we've done I think a little better than what we've seen in the marketplace. But if you just look at the main Sercana data, and you look at all the categories that we're in and consumer durables, in general the market's relatively flat on a dollar basis. And actually, if you look at particularly our categories and you add them up, they're down in the neighborhood of two to 3% on a dollar basis. I'm referring to third party data now, the whole market. But then if you then drill into those details and look at it on a unit basis, they're down, much more now, anywhere from 7.5% to 10%. And we did better than that, but, but, you know,.

along those lines. Okay, that's very helpful, Color. Got you. And then as far as the Dolly Parton product line, you know, that you were able to extend that relationship. Certainly, anything to call out in terms of revenue related to Dolly Parton products in the second quarter?.

Um, no, pretty much as expected. There was some Dolly stuff that shifted. particularly some stuff to Dollar General. We are now shipping multiple accounts. more the second half of the year there was some dollar general dolly part and stuff that shifted out of the second quarter but the program continues to go well, continues to do really well on shelf. which is also helping why a bunch of the other retailers are picking it up, some of our other customers.

Got you. Okay. And then just going back to the earlier question about the delta between the Tariff refund amount of 40 million and the 37 million increase in adjusted operating income. So, thinking about that 3M, is that going to be mostly SG&A or perhaps maybe some other line items to think about? I know you mentioned ocean freight costs being higher as well, but if you could just kind of speak to that as well, that would be very helpful.

Yes, so most of it is just investment. It's restoring some cuts we had done and just investing in product. So, I mean, looking at it another way is, you know, our earnings and our cash flow greatly increased and And we're redeploying that money into the business for future growth capability. As opposed to just pocketing, we're not trying to just pocket it. Obviously, from the balance sheet perspective, in the tariff environment, two major things required capital. One is shifting to a geographically dispersed territory. a geographic footprint for sourcing a lot of money to do that. But also just the tariffs themselves, paying those tariffs, you pay them, they're sitting in your inventory, so you're carrying much higher values The unit didn't change, right? But the value of your inventory, you have to fund that, right? So, you know, we... helped uh uh we were able to do that because we have a strong balance sheet you know our public peers as well but a lot of people that we compete against were not right able to do that um But now with this refund, we've replenished that.

So that's a big source of use of this cash.

Understood. All right. Well, thank you very much and best of luck. Thank you.

And the next question is from Brian McNamara with Canaccord Genuity.

Please go ahead. Hey, good morning, guys. Thanks for taking the questions. So sales are pretty much where they were in 2024, both in Q2 and H1. When do you think this business starts to sustainably grow again, and what are the levers for that growth?.

Yes, so I mean, any different quarter, right, there's going to be, as you know, different and mixes. So if you look at the full year guidance, right, we think we'll hit those Obviously, growth in the end market is going to help. We're not factoring that into our guidance. So when there's growth in the end market, when that starts growing, we will benefit from that accordingly. And that will be over and above what we have in the guidance that we've issued.

What's the annual run rate for sales for Dolly Parton, and how much is that expected to grow this year? And then similar to my previous question, what brands are up today versus 2024?.

So KitchenAid has grown. Farberware, a big chunk of Farberware. Since we relaunched and the POS is really good, but we've also had to take out the existing business and discount that. There's a lot of noise in those numbers that will be growing though in the second half of the year. Dolly Parton, which has grown in the last couple of years, it's not going to grow at the same rate this year. maintain. We'll grow a little bit. It's about a $20 million business for us. So it's grown from nothing to about our fifth largest brand. And we've seen meaningful growth this year in Makassa, which both on the dinnerware and the flatware side, which dropped in 25 and we've seen nice growth in that in 2026 and will continue.

Great. That's helpful. And then just one last one from me. Sales guidance remains pretty wide despite having shipments moved out of Q2 into Q3. Is that subtly acknowledging that those shipments might not happen? You mentioned the market environment. And why would that be? Presumably visibility is maybe better this year than you've seen in some time, but correct me if I'm wrong. Thanks.

Yes, no, visibility is well, no one knows what's happening with the end market. And obviously the war and inflation will impact may have an impact in our business. But yes, visibility is pretty good. And basically we looked at the year, no, There's no subtle underlying message that we're going to lose that business. We think it shifts. So we don't think there's an impact. As we mentioned, the guidance, our approach to it was conservative and there's upside to it, but we'd rather be in a position to raise guidance as the year unfolds, then to lower it.

And this does conclude our question and answer session for today. I would like to turn the conference back over to Rob Kay for any closing remarks.

Again, thanks everyone for their interest and their time. As we mentioned before, we will have a Lent the Investor Day, which we will host in New York City in the beginning of December, and we will be sending out to the public more information shortly on that. Thank you and have a good day.

The conference has now concluded. Thank you for attending today's presentation and you may now disconnect your lines.

This live transcript is auto-generated without human intervention or review.

[Call has ended.]

Good morning, and welcome to the Annual Meeting of Stockholders of Lifetime Brands, Inc. Please note that today's meeting is being recorded. [Operator Instructions] Stockholders who participate in the meeting by entering a 15-digit control number may submit a question regarding the proposals at any time by clicking the Q&A icon.

It is now my pleasure to turn today's meeting over to Jeffrey Siegel, Chairman of the Board of Lifetime Brands, Inc. Mr. Siegel, the floor is yours.

It's time to convene the Annual Meeting of Stockholders of Lifetime Brands, Inc. I am Jeff Siegel, Chairman of the Board of the company. I hereby call the 2026 Annual Meeting of Stockholders to order. I would like to start by extending a warm welcome to you, our stockholders and guests, and thank you for your attendance today. Today's meeting is being held via a live audio webcast.

We hope that this virtual meeting will maximize the participation of stockholders regardless of their location. I call your attention to the rules of conduct set forth for this meeting. They are being made available to each stockholder in the Document section in the upper-right corner of the meeting center screen. I would like to introduce the other directors of the Company. They are Robert B. Kay. Robert B. Kay is the Chief Executive Officer of the company; Jeffrey H. Evans. Jeffrey H. Evans is the Chief Commercial Officer for the Reebok brand at Galaxy Employee Corporation.

Rachael A. Jarosh. Rachael A. Jarosh is past President and CEO of Enactus, a nonprofit organization. Cherrie Nanninga. Cherrie Nanninga is a consultant for RES Group and was the Chief Operating Officer of the New York Tri-State region of C.B. Richard Ellis, Inc., a commercial real estate firm. Craig Phillips. Craig Phillips was Senior Vice President, Distribution of the company; Veronique Gabai-Pinsky. Veronique Gabai-Pinsky leads our own brand of luxury perfumes and was Global President of the Vera Wang Group; Bruce G. Pollack. Bruce G. Pollack is a Managing Partner of Centre Partners Management LLC. Michael J. Regan. Michael J. Regan was a partner of KPMG LLP. Michael Schnabel. Michael Schnabel is a senior partner of Centre Partners Management LLC.

I would like now to introduce you to our officers, starting with Daniel Siegel, President of the company; Larry Winoker. Larry is Executive Vice President and Treasurer of the company and our Chief Financial Officer; Sara Shindel, Sara is Executive Vice President and the Company's General Counsel and Secretary. Finally, I would like to introduce Mike Moran, a partner with Ernst & Young LLP, the Company's independent registered public accounting firm.

I have before me an affidavit of Computershare, our transfer agent, stating that a copy of the Notice of Internet Availability of Proxy Materials was mailed on or about May 6, 2026, to each stockholder of record as of the close of business on April 21, 2026, the record date for this meeting. The affidavit, to which are attached copies of the Notice and Proxy Statement, will be appended to the Minutes of the Meeting.

Christopher Perkins, a Relationship Manager with Computershare, has been appointed to act as Inspector of Election for this meeting. He is neither an Officer nor a Director of the company. His subscribed oath to faithfully execute his duties as Inspector of Election has been submitted and will be appended to the Minutes. The Inspector of Election has polled the stockholders present and has examined the proxies. His report has been submitted and indicates that holders of shares of common stock in excess of the number necessary to constitute a quorum are present or represented by proxy.

His report will be appended to the Minutes. We will now vote on the 4 items set forth in this Notice of Annual Meeting of Stockholders and Proxy Statement. One, to elect 9 directors to the Board of Directors of the Company, each to serve until the 2027 Annual Meeting of Stockholders and until their respective successors are duly elected and qualified. Two, to ratify the appointment of Ernst & Young LLP as the independent registered public accounting firm of the company for the fiscal year ending December 31, 2026. Three, to approve, on a non-binding advisory basis, the 2025 compensation of the Company's named executive officers; and four, to approve an amendment and restatement of the Company's Amended and Restated 2000 Long-Term Incentive Plan.

If you have not voted or wish to change your vote, you may do so now by clicking on the vote icon in the upper right corner of the Meeting Center screen. Any stockholder who has already voted and does not wish to change their vote need not take any further action. Please reserve any questions until the appropriate question period. There will be a General Q&A portion of the meeting, which will take place after the formal matters are addressed.

The First Item of Business to properly come before the meeting is the election as directors of the 9 nominees named in the Company's Proxy Statement, to hold office until the next Annual Meeting of Stockholders and until their successors are duly elected and qualified, or until their earlier resignation or removal.

The Board of Directors unanimously recommends the following 9 nominees for election as directors: Jeffrey Siegel, Robert B. Kay, Jeffrey H. Evans, Rachael A. Jarosh, Cherrie Nanninga, Bruce G. Pollock, Michael J. Regan, Michael Schnabel and Daniel Siegel. The names of each of the aforementioned nominees shall be deemed duly placed into nomination. These 9 individuals are the only nominees for election as directors.

The Second Item of Business to properly come before the meeting is the ratification of the appointment of Ernst & Young LLP as independent registered public accounting firm of the Company for the fiscal year ending December 31, 2026. The Board of Directors unanimously recommends a vote for this proposal. The Third Item of Business to properly come before the meeting is the approval, on a non-binding advisory basis, of the 2025 compensation of the Named Executive Officers.

The Board of Directors unanimously recommends a vote for this proposal. The Fourth Item of Business to properly come before the meeting is the approval of an amendment and restatement of the Company's Amended and Restated 2000 Long-Term Incentive Plan. The Board of Directors unanimously recommends a vote for this proposal. All agenda items are deemed duly placed before the meeting. We will now give the Inspector of Election a moment to record the votes.

[Voting]

Now that all of the ballots have been collected, I declare that the polls are now closed. While we are waiting for the report of the Inspector of Elections, we will move to the informal Question-and-Answer portion of the meeting. Stockholders who participate in the meeting by entering a control number may submit questions regarding the proposals by clicking on the Q&A icon in the upper right corner of the meeting screen. Questions should relate to the official business of the meeting. Please refer to the Rules of Conduct for additional information regarding questions posed during the meeting.

I have before me a report of the Inspector of Elections. The report shows that votes representing a majority of the shares of Common Stock present or represented by proxy at the meeting were cast for the election of each Jeffrey Siegel, Robert B. Kay, Jeffrey H. Evans, Rachael A. Jarosh, Cherrie Nanninga, Bruce G. Pollock, Michael J. Regan, Michael Schnabel and Daniel Siegel as directors. Two, a majority of the shares of Common Stock present or represented by proxy at the meeting were cast in favor of the ratification of the appointment of Ernst & Young LLP as the independent registered public accounting firm of the Company for the fiscal year ending December 31, 2026.

Three, a majority of the shares of Common Stock present or represented by proxy at the meeting were cast in favor of approving the 2025 compensation of the Named Executive Officers; four, a majority of the shares of Common Stock present or represented by proxy at the meeting were cast in favor of approving the amendment and restatement of the Company's Amended and Restated 2000 Long-Term Incentive Plan.

Accordingly, I hereby declare that: one, the nominees of the Board of Directors have been duly elected as directors of the Company to hold office until the 2027 Annual Meeting of Stockholders and until their successors are duly elected and qualified, or until their earlier resignation or removal; two, the appointment of Ernst & Young LLP as the independent auditors of the Company for the fiscal year ended December 31, 2026, has been ratified; three, the 2025 compensation of the Company's named executive officers has been approved on a nonbinding advisory basis; four, the amendment and restatement of the Company's Amended and Restated 2000 Long-Term Incentive Plan has been approved. Pursuant to SEC rules, the official results from our meeting will be published by the Company within 4 business days of this meeting. There being no further business to come before the meeting, I declare the meeting adjourned.

This concludes the meeting. You may now disconnect.

Good morning, ladies and gentlemen, and welcome to the Lifetime Brands First Quarter of 2026 Earnings Conference Call. [Operator Instructions]. Please also note that this conference is being recorded. I would now like to introduce our host for today's conference, [ Jamie Kirchen ]. Mr. Kirchen, you may go ahead now.

Good morning, and thank you for joining Lifetime Brands First Quarter 2026 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'd like to remind you that our remarks this morning may contain forward-looking statements that relate to the future 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 our earnings 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 development. Except as required by law, the company does not undertake any obligation to update such statements. Our remarks this morning and in our earnings 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, and good morning. Continuing trends from the prior quarter, Life Time reported year-over-year growth in both top and bottom line. While 2025 was a difficult year for our industry, the actions Lifetime implemented on pricing, on cost, on supply chain and new product development have contributed to these results and continue to produce strong results, which have exceeded consensus expectations and most of our peer companies. Our first quarter results have continued this performance. Let me walk you through what drove the quarter, where we see the business heading and the framework for our full year guidance, which we are providing today. Q1 results reflected year-over-year growth. Net sales and EBITDA grew year-over-year. We outperformed most of our public peers and exceeded analyst consensus, and Larry will speak through this in more detail shortly. These results reflect, in part, the actions and strategies that we have implemented. Over the past 2 years, we have been consistently focused on the things we can control, cost discipline, pricing execution, new product investment and operational efficiency. In a quarter where many in our space continued to struggle, these efforts contributed to our performance. I would like to provide additional context. The pricing increases we implemented throughout 2025, which had a near-term impact on volumes are now reflected in our pricing structure and our customer relationships. Due to the staggered nature of the tariff policy implementation, we are now seeing a more complete impact of those actions in 2026 compared to 2025 when they were being phased in. We expect these factors to continue to support our performance. There are a few main factors that have been driving growth. Kitchen tools remains our largest category. It had a strong quarter. Farberware continues to perform well across all channels. KitchenAid, where we absorbed a meaningful market share reset at Walmart over the past 2 years is recovering. We have relaunched the Farberware kitchen tool line with new product and have recently introduced KitchenAid storage and early acceptance has been strong. Trajectory is improving, and we expect continued progress through the balance of 2026. Home decor also had a very strong quarter and continues to grow. This is a business that was essentially de minimis for us a few years ago. We have been deliberate about product development with brands, including Macassa and Elements, and that investment is generating real results. The club and dollar channels have become a meaningful driver here as well. Their sell-through on our home decor programs has been strong. And when Circana data reflects that performance, other retailers take notice, which creates pull-through demand that builds on itself. Our Home Solutions segment, which includes home decor, grew 22.9% in the quarter, driven by higher sales in the dollar channel and warehouse club programs. The Dolly Parton brand, which we have discussed on prior calls, continues to be a meaningful contributor to growth across home decor, cutlery, dinnerware and kitchen tools. We shipped approximately $18 million under Dolly in 2025 and expect substantial growth in the Dolly brand in 2026. Finally, as we have discussed previously, we continue to see a rebound in our sales of flatware from the disruption in 2025 related to the tariff implementation, which resulted in lost shipments for 2025. We saw shipments normalizing beginning in the fourth quarter of last year and into 2026. E-commerce declined at the start of the quarter, driven by annual negotiations with Amazon as well as a reduction in advertising spend during the quarter as we evaluated our 2026 plans. Trends improved in March, and these actions were completed, and we are seeing continued improvement into the beginning of the second quarter. We expect e-commerce to be a contributor to growth for the full year. In cutlery, which has been a growth category for us for a couple of years, we had a year-over-year decline in the quarter. Builder Board, a product line we launched 2 years ago, continues to contribute to profitability and remains a strong profitable business. However, we saw some normalization in the quarter. The underlying business remains stable. We are introducing new products in the cutlery line, and we expect that category to remain attractive and support overall growth. Our international business grew year-over-year in the quarter and continued its trajectory of improving profitability. This growth occurred despite challenging end market conditions in Europe, particularly in the U.K. and reflects in part our efforts to expand our sales footprint to national accounts from the legacy sales focus on independent retailers. We are not yet at breakeven on the bottom line internationally, but we have made progress toward breakeven. The final phase of Project Concord, our international restructuring initiative, encountered some legal and structural delays in 2025. We expect those to be fully resolved in the first half of this year, and we expect the completion of this work to contribute to improved financial performance. I want to address the macro environment directly because I know it is top of mind. We have been managing tariff exposure proactively and systematically for over 2 years. During this period, we have expanded our sourcing footprint away from China to other geographies. We were among the first in our space to implement price increases during this period, which had a near-term impact on volumes in 2025, however, supported our margin structure. Our supply chain is designed to provide flexibility to shift production across geographies as trade economics evolve. While we have established meaningful manufacturing capacity outside of China, in 2025, we sourced the majority of our product supply from China as the tariff adjusted cost of goods sold was more favorable. We expect this will evolve and over time, we expect sourcing from other established geographies to increase. On cost of goods sold, more broadly, we have not experienced a material impact from resin or freight costs related to recent geopolitical developments. We maintain long-term freight contracts and while these provide some protection in periods of acute rate escalation, we believe we are positioned to mitigate and respond to changes in freight costs, including those related to developments in the Middle East. We may experience a reduction in sales to the Middle East as a result of disruptions related to the war in this region, but our sales to this region is insignificant, being below $1 million a year. The relocation of our East Coast distribution center to Hagerstown, Maryland is on schedule. The facility, approximately 1 million square feet adds approximately 327,000 square feet of incremental capacity compared to our current New Jersey facility, and the facility is now operational. Capital and operational costs for this project are tracking below our estimates. We will implement our warehouse management system in the new facility, which we had previously implemented in our West Coast distribution center, where it contributed to improved labor efficiency. The establishment of the Hagerstown distribution facility is expected to `position Lifetime for future growth and cost efficiency. Let me spend some time discussing our view of the full year. Detailed in our earnings release this morning, we expect net sales of between $650 million to $700 million, adjusted EBITDA of $53.5 million to $56 million and adjusted net income of $16 million to $17.5 million. This guidance reflects continued top line growth, the full year benefit of 2025 pricing actions and a cost structure that has been reset to a lower base. It also reflects the costs associated with the Hagerstown transition, which are running through our P&L this year. We are continuing to invest in new product. Dolly Parton sales grew by approximately 150% in fiscal year 2025, and we expect substantial growth again in 2026. As discussed, this growth is across 4 of our product categories. This year, we will see an expansion of the Dolly line beyond the dollar channel to several additional retailers across a couple of channels. On M&A, we continue to monitor the M&A environment. We have observed reduced activity from financial buyers and lower valuation levels in certain segments. We are seeing real deal flow from businesses that need a larger platform for supply chain, for systems for the infrastructure required to navigate the current trade environment. We are actively evaluating opportunities. As has been our practice, we will remain disciplined in our approach and only move forward with opportunities that provide returns that meet our investment criteria. We will provide additional information when we have something definitive to report. We plan to host an Investor Day later this year, targeting the fourth quarter of this year. We look forward to providing a more comprehensive view of our multiyear strategy and the growth drivers we see ahead. Finally, and I will close with this, we entered 2026 with momentum, a cleaner cost structure and better visibility than we have had in some time. The actions we took over the past 2 years, decisions that were not easy and that carried real short-term costs are the reason we are standing here with a business that is growing on both the top and bottom line. We are focused on sustaining that. With that, I'll turn the call over to Larry to review the financials in more detail.

Thanks, Rob. As we reported this morning, net loss for the first quarter of 2026 was $4.8 million or $0.22 per diluted share compared to the net loss of $4.2 million or $0.19 per diluted share in the first quarter of 2025. Adjusted net income was $800,000 for the first quarter of 2026 or $0.04 per diluted share compared to adjusted net loss $5.3 million or $0.25 per diluted share in '25. Loss from operations was $2.2 million in the first quarter of '26 compared to income from operations of $1.1 million in the 2025 period. Adjusted income from operations for the first quarter of 2026 was $5.4 million compared to a loss from operations of $900,000 in the 2025 period. The '26 and '25 periods exclude acquisition intangible amortization of $4.4 million. Also, the 2026 period excluded expenses of $2 million for restructuring, $1.1 million for due diligence and $100,000 for East Coast warehouse relocation. The 2025 period excluded a $6.4 million nonrecurring gain related to a litigation settlement. Adjusted EBITDA for the trailing 12-month period ended March 31, 2026, was $52.7 million. Adjusted net income, adjusted income from operations and adjusted EBITDA are non-GAAP measures, which are reconciled to our GAAP measures in the earnings release. The following comments are for the first quarter of 2026 and 2025, unless stated otherwise. Consolidated net sales increased by 2.4% to $143.5 million. U.S. segment sales increased by 1.7% to $130.7 million. The increase includes the higher selling prices that went into effect during the third quarter of 2025 to mitigate the impact of tariffs imposed on foreign-sourced products. Within the segment product line increase primarily came from Home Solutions attributable to home decor products in the dollar channel and warehouse club programs. This is partially offset by a decrease in tableware products. International segment sales increased by 10.6% to $12.8 million. Excluding the impact of foreign exchange translation, the increase was 2.5%, driven by higher sales in the Asia Pacific region and to the U.K. nationals. Overall, gross margin increased to 37.7% from 36.1%. U.S. segment gross margin increased to 37.9% from 36.2%. The improvement in the gross margin percentage was attributable to favorable product mix and higher selling prices, partially offset by higher tariffs. International gross margin increased to 36.7% from 35.3%, driven by favorable customer and product mix. U.S. segment distribution expenses as a percentage of goods shipped from its warehouses was 10.9% versus 11.9%. The improvement was attributable to higher sales resulting in a favorable impact on fixed expenses, lower variable labor as unit sales declined but were more than offset by higher dollar volume from higher selling prices and lower facility supply expenses. This improvement was partially offset by higher freight rates. International segment distribution expenses as a percentage of goods shipped from its warehouses improved to 23.2% from 25% last year. The improvement was due to higher sales resulting in a favorable impact on fixed expenses and a decrease in inventory levels at third-party operated distribution facilities. This decrease was also partially offset by higher freight rates. Selling, general and administrative expenses increased by 16.8% to $36.8 million. U.S. segment expenses decreased by $1.8 million to $28.2 million. The decrease in expenses was attributable to lower employee expenses and the provision for doubtful accounts and advertising expenses. As a percentage of net sales, expenses decreased to 21.6% from 23.3%. The decrease was due to the impact of fixed costs on higher sales volume. International SG&A remained the same at $3.7 million. Decreases in employee expenses and commissions were offset by foreign currency loss on non-sterling denominated net liabilities. And as a percentage of net sales, expenses decreased to 28.9% from 31.9%. The decreased percentage was attributable to the impact of fixed costs on higher sales volume. Unallocated corporate expenses were $4.9 million compared to income of $2.2 million in 2025. Excluding $1.1 million of due diligence expenses in the current period and a nonrecurring legal settlement gain of $6.4 million last year, corporate expenses would have been $3.8 million in the current period versus $4.2 million. That's a decrease of $400,000. Restructuring expenses were $2 million in 2026, of which $1.2 million was for employee severance related to exiting the New Jersey distribution facility, $100,000 for the U.K. project Concord and $700,000 to downsize our Sterling Silver manufacturing operations in Puerto Rico. The high price of silver has made the Sterling Silver Flatware business no longer viable. The facility will focus on ornaments and other profitable Sterling Silver products. Interest expense, excluding mark-to-market adjustment for swaps, decreased by $400,000 due to lower average outstanding borrowings, partially offset by higher interest rates. Income tax rate for the current and prior periods were 26% and 3.3%, respectively. The difference in the 2026 rate compared to 2025 is primarily driven by nondeductible expenses and foreign losses for which no tax benefit is recognized, partially offset by federal tax credits. Our balance sheet strengthened during the 2026 quarter. During the period, we generated free cash flow of $30 million. This enabled us to reduce our net debt to $170 million. And at quarter end, the adjusted EBITDA to net debt ratio improved to 3.2x. At quarter end, our liquidity was approximately $110 million, which included cash plus availability under our credit facility and receivable purchase agreement. Lastly, we are pleased to report that our new East Coast distribution facility in Hagerstown, Maryland is in operation and beginning the process of receiving and shipping goods. We previously reported that the cost of the move to the new facility was on plan. We now feel confident that the spending will be favorable to that plan. This concludes our prepared comments. Operator, please open the line for comments for questions.[Operator Instructions]

And our first question here will come from Matt Koranda with ROTH Capital.

Congrats on a nice quarter. Maybe just starting with the guidance for '26. Just wanted to hear a little bit more about the pricing assumption that you embedded in the growth for sales. And then just any additional color on sort of the way to think about demand between the U.S. versus international?

So for pricing, we didn't bake in, in our 2026 view any incremental pricing related to further fluctuations and the pricing that we did do in 2025 were all related to tariffs. That's an evolving situation, but it has stabilized. And there were phases of it. And throughout 2025, we reacted that. Again, we aim to be margin dollar neutral in passing through prices, not necessarily margin percent neutral. And we did that effectively. So in 2026, you get the impact because you're getting the full year impact of those pricings were in 2025, they were phased in. So there's far less than that. In terms of international, Matt, it's a small part of our business. The bulk of our financial results are based off of North America and the U.S. There's -- I'm not sure exactly the question. There's a tremendous overlap in products. There's historically more of a divergence. But as we've restructured the business, we've done it to -- one of the things we've done is aligned the product offerings and aligned the product development. So there's a big overlap. For instance, the fastest-growing brand that we have internationally is Kitchen, where those products are all designed in the U.S., the same products that we're selling over throughout the world, and that's the fastest-growing area. So there is now much more alignment than we've ever had in the past where there was more separation between the business lines -- business units, sorry. Does that answer that question, Matt? I don't know I forgot.

Yes. No, that helps, Rob. And then I guess the margin expansion that is contemplated in the full year guide, at least on the adjusted EBITDA line, I wanted to hear a little bit about the way you guys built the expectations for margin expansion contribution from the cost cutting you've done in international versus just flow-through in the U.S. from good growth. wanted to hear how that kind of feeds into the expansion assumption for the full year? And then also, if there's any headwind that you're baking in from higher oil prices, component costs or shipping or anything like that in the '26 guide, that would be helpful.

Yes. So in terms of margin expansion, I believe you're talking about really EBITDA and bottom line as opposed to gross margin, but I'll just comment briefly on gross margin. Gross margin is -- we look at things on a bottoms-up basis. So any fluctuation, particularly in any given quarter with actual results and also as we look at the full year and what's baked into our guidance is a function of channel mix and product mix, right? So as we introduce new product, it may -- even if it's replacing existing products. So it could be a cut reset that's introducing another cut reset, but the new SKU is a little different. It will be of a different margin. So that gets factored in. And channel is different, right? When you club, off-price, mass, independent. So there's all those -- there's differentiation. So we add it up and then it is what it is. There is -- if you look at the bottom line, while again, it's not terribly material to the whole, but there's bigger improvement percentage-wise to the international business because that business wasn't making money, and we're driving that to the opposite direction to make money. So whereas the U.S. business has always been highly profitable and the majority of the increase in our bottom line, our EBITDA growth is coming from the U.S. business, where in both businesses, as we continue to grow the top line with a very streamlined infrastructure, as we had talked about, a disproportion of that amount is going to fall to EBITDA, fall to cash flow. So we get the benefit of that using our overhead more efficiently. As a matter of fact, the challenges we've had in the U.K. is there was too much overhead to feed the business. So the restructuring is addressing that overhead. So the infrastructure has changed to make it more profitable or to make it profitable. And that's been really the anchor, so to speak, in that business, and that's what we're addressing, and that's what Project Concord is attacking. I think those are the questions.

Yes. I appreciate the detail there, Rob. Maybe just one more for me. Curious if you've seen or if you could kind of note out any changes in behavior from your retail customers, if there is anything notable at all since the Iran conflict broke out in early March? Just curious if there's any more reticence to take inventory or if it's relatively business as normal. Just wanted to hear a little bit about sort of the demand trends that you're seeing from retail customers over the last couple of months.

Sure. Before I answer that, I realize there was a piece of your last question I did not answer in terms of headwinds. So we are seeing a COGS impact, and I think you're seeing a bigger driver in the global supply-demand imbalance. So it's still -- if you are sourcing product, you still have a lot of leverage, particularly when you can provide growth and more volume to factories that are just looking for volume. So you're seeing that. But we are seeing -- and Larry mentioned in his comments, we are seeing increased freight, both domestically and ocean freight. So container rates are starting to go up. We are unless -- which we're not predicting, there is some settlement in terms of the Middle East, it seems to us that container rates will continue to increase driven by freight cost -- excuse me, oil cost. So we have baked that into our analysis in terms of best we can see. In terms of retailer behavior, we haven't really seen anything. There was a tremendous amount. Look, most retailers are very sophisticated with very sophisticated finance areas that tracks the general trends of the economy. And we had seen a lot and saw a lot in 2025 and starting in 2024, a lot of retailers changed safety stock levels and that hurts you -- they're buying less. And there was a period of time that hurt our shipments because they're buying less because of managing their inventories more tightly. We are not seeing that. That kind of seem to have passed through, right? We can only do that so long. And there has been -- there's a lot of channel differentiations. Some retail channels are doing very well, some are not. But we have not seen anything. We've also seen more impacts on the supply side where -- look, there's a lot of competition out there, but people are hurting. And we believe that our continued investment in new product development where there's a lot less new product there has helped us gain placement and position at our customer base, which we're seeing in our results.

And our next question will come from Anthony Lebiedzinski with Sidoti & Company.

Nice to see the better-than-expected start to 2026. So first, I just wanted to follow up on one of the last comments you mentioned, Rob, as far as new products. So would you say that now that new products as a percentage of overall sales, are they meaningfully up versus where they had been historically? Just maybe help us better understand as far as the relevance of new products and how that impacted not just the quarter, but your guidance for this year?

So I think more of the issue is we didn't slow down our new product development through all the gyrations that have happened over the last 2 to 4 years, right? Product development is a continuous cycle. And I think we've positioned ourselves favorably, we believe, as a result of that. If you look at Builder Board, right, which we talked about, right, I mean, that was really introduced its first big year with 2024, and it tremendously grew our cutlery business, right? And so we're constantly looking at what's next with Builder Board, but there's not as much new product there in 2026. There is, but it went from 0, right? If you look at 2023 and grew to 8 figures -- so you're not seeing as much new growth there in 2026. Whereas in home decor, there's been a lot of new products that we've introduced that have been driving substantial growth. We look throughout our portfolio, and we're constantly looking at where we can bring in new product, everything from highly disruptive to just lipstick on a pig. And what I mean by that is just looking at trends, right? We have a trend group. And if white handled knife became very popular, we started to introduce white handled knife. Now it's white handled with some trim, a little metal. And that's -- but we're putting that on a knife that we've always made, right? It's just looking a little different. So there's various levels, and we're constantly doing that. So there's -- the buckets may have changed, but overall, the mix in terms of new product has not necessarily changed. Again, except taking out newness, Dolly Parton was nothing in 2023, right? We had a little bit in '24, $18 million in '25 continues to grow, and that's all plus one opportunity for us.

Got you. That's very helpful color. And then did you give the sales number for Dolly Parton for the first quarter?

We did not. I can't tell you that I was saying 8. We were also -- we were down in Dolly and the dollar channel in the first quarter. It's just timing.

Okay. Got you. Okay. And then I just wanted to follow up about pricing. So I know your guidance for the full year is not including any additional price increases. But when we look at the first quarter of this year versus the first quarter of last year, which the year ago period was before Liberation Day. So just on a comparable period level, was there any -- can you just speak to pricing versus volumes just for the first quarter alone?

Yes. That's always a tough one. Certainly, units were down. We was made up with the dollar in dollar sales. It's in the single-digit percentages, the unit decline.

And the second quarter was a disaster in '25, that's past us.

Right.

On a volume basis.

Right, right. And lastly, as far as potential AEPA tariff refunds, how are you guys thinking about that? I assume it's not included in your guidance, but maybe if you could just speak to that.

No, it is not included in our guidance, and we think appropriate GAAP is not to recognize any impact to the financial statements. We are -- we did pay $41.7 million, and we're legally according to the Supreme Court of the United States, entitled and the Court of International Trade, a refund to that. But while that may be done by June, the administration could appeal. There's a lot. Garden for can pass, let alone, you have to pay taxes on that. But we have a refund of the tariffs that we paid subject to a refund is $41.7 million, not that we know it all.

Right. That's definitely a very meaningful number. So all right. So we'll stay tuned on that.

And this concludes our question-and-answer session. I'd now like to turn the call back over to Rob Kay for any closing remarks.

Thanks, Joe. As always, thanks, everyone, for listening in, for your interest and for your support of Lifetime Brands, and we look forward to future communication.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.

Good morning, ladies and gentlemen, and welcome to the Lifetime Brands Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions]. Please also note, today's event is being recorded.

At this time, I'd like to introduce our host for today's conference, Jamie Kirchen. Mr. Kirchen, you may go ahead.

Good morning, and thank you for joining Lifetime Brands Fourth Quarter 2025 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'd like to remind you that our remarks this morning may contain forward-looking statements that relate to the future 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 our earnings 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 development. Except as required by law, the company does not undertake any obligation to update such statements.

Our remarks this morning and in our earnings 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, and good morning. A year ago, we entered 2025, knowing it would be a challenging year. What we did not fully anticipate was just how dynamic the external environment would become. The tariff escalations, retail customer disruption consumers' reactions, the operational demands were all significant. And yet, when I look at where we stand today, I'm proud of how our team performed and where we finished the year. .

Let me walk you through the key dynamics that shaped both the fourth quarter and the full year and the decisions we made, including those that carried short-term costs and why they were right for our business. Overall, what drove Lifetime's 2025 performance was the macro environment largely shaped by U.S. tariff actions and the market's reaction to them. The biggest impact of this was the second quarter implementation of 145% tariffs on good source from China following deliberation day tariffs implemented on many countries throughout the globe. This resulted in wide-scale disruption and, in some cases, cancellation of orders for our products, both by our customers and internally by lifetime as the immediacy of the implementation would have resulted in selling products at a loss.

As the year progressed and sub stability was introduced on tariff rates, Lifetime was a first mover in implementing price increases across all our channels to offset the tariff cost. While this initially hurt our volumes as we were selling our products at a higher price than most of our competition, the market eventually caught up and pricing parity was restored. However, Lifetime benefited from enhanced profitability due to the price increases, which led to improved performance relative to the overall market and many of our peers.

In particular, we note that bottom line results showed a positive year-over-year growth by the fourth quarter of 2025. Contributing to this performance was our pricing strategy, a comprehensive cost efficiency and reduction program and improved results in our international business. First, as we told you earlier in the year, the impact of the 145% tariffs on China-sourced product was significant. It negatively impacted shipments in the second quarter and flowed into disruption in the third. We specifically called out that some of that deferred volume would come back in 2025 with a fuller normalization expected in 2026.

As you can see, we benefit by the current quarter with some resumption in shipment levels from missed second quarter shipments, particularly in Tabletop and Kitchenware. The most visible example is Costco, our largest year-over-year decline in any single customer through September. They pulled back sharply on tabletop programs as tariffs uncertainty peaked. But as conditions stabilized, a portion of those programs shipped in the fourth quarter, and we performed very well with Costco in Q4. That recovery was a meaningful contributor to our strong finish.

The second major factor driving performance was Lifetime's decision to move first on pricing to offset tariff costs. We did not wait to see what the market would do. We built a detailed plan with each of our customers, communicating the rationale clearly and implementing the increases.

As I mentioned above, there were short-term consequences. In the third quarter, we were priced higher than the market, and that created some volume headwinds. A portion of our shelf performance suffered while competitors had not yet moved. But by the fourth quarter, the market had largely card out, pricing parity had returned across all our categories. And because we had been selling at higher prices earlier than most, we captured better margins during that window. If you look at our results, particularly the bottom line, you can see that clearly. We had a modest outperformance on the top line, but we significantly exceeded expectations on the bottom line. Our first mover pricing decision was a key contributor to that outcome.

The third element of our Q4 performance was cost discipline. Variable costs naturally flex with volume but we also took deliberate action on our cost structure throughout the year. We streamlined infrastructure and SG&A came in at $38 million in Q4, down 12% versus the prior year quarter. That's a meaningful reduction and it reflects real work done on the cost base. Combined, these 3 factors drove a strong quarter and finish to the year. The fourth quarter came in ahead of expectations, and I think the results speak to the strategy working. Revenue was modestly below prior year, which we anticipated, but margins expanded and the bottom line was strong. Larry will take you through the detail in a moment.

While the year was challenging due to tariffs, we took the decisive actions I've discussed to mitigate their effects. Given the circumstances, we performed well as evidenced by our results. In the fourth quarter, adjusted income from operations was up over 30% from the prior year quarter and full year adjusted EBITDA was over $50 million despite a 5% decline in net sales.

We continue to experience positives from our investment in new product development. The Daly brand grew to approximately $18 million for the year, an increase of over 150% and a great reflection on where the strategy is gaining traction. We are encouraged by the trajectory heading into 2026. Our International segment continued to demonstrate resilience. For the full year, international sales came in at $56.7 million, up 1.7% as reported. On a constant currency basis, International was down modestly at 1.7%, a solid result given the backdrop, particularly as we gained share in national accounts in light of a continued decline in independent shops, which historically have been the core of the European customer base.

On Project Concord, our international restructuring initiative, we made continued progress throughout the year, and the financial benefits are flowing through. That said, I want to be transparent. The final phase of Concord implementation was delayed modestly due to legal and structural constraints that took longer than anticipated to work through. We expect those to be fully resolved and implemented in the first half of 2026. The direction here remains clear. And we remain committed to completing Concord and realizing the full benefits of the program.

As announced early last year, we also took deliberate action on our distribution infrastructure. announcing the relocation of our East Coast distribution center to Hagerstown, Maryland. The facility will span approximately 1 million square feet adding 327,000 square feet of incremental capacity over our current New Jersey facility, which it will replace and is expected to commence operations in the second quarter of 2026. This move is consistent with how we approach the business, identifying where we can drive long-term efficiency on positioning Lifetime's operations to support our multiyear growth initiatives, while significantly containing Lifetime's future distribution expenses. As we enter 2026, we do so with momentum, a leaner cost structure and a clearer sense of where the opportunities are.

On guidance, Consistent with our historical cadence, we intend to provide detailed full year 2026 guidance in conjunction with our first quarter results in mid-May. At that point, we will have a clearer line of sight into the year and can speak to it with specificity you deserve. What I can tell you now is that recovering sustainable top line growth is the priority. We have done the work on the cost base and proven we can protect margins. Now the focus shifts to driving volume through our existing customer relationships, through the brands and product lines that are gaining traction, and through the pipeline of strategic activity that we continue to develop.

Finally, I want to acknowledge that this type of year navigating real disruption while delivering results that exceeded where we started does not happen without an exceptional team. I'm grateful for everyone at Lifetime who stayed focused executed under pressure and kept our commitments to customers and shareholders alike.

With that, I'll turn the call over to Larry to review the financials in more detail.

Thanks, Rob. As we reported this morning, net income for the fourth quarter of 2025 was $18.2 million or $0.83 per diluted share compared to $8.9 million or $0.41 per diluted share in the fourth quarter of '24. Adjusted net income was $23 million for the fourth quarter or $1.05 per diluted share compared to $12 million or $0.55 per diluted share in 24 Income from operations were $20 million for the fourth quarter of $25 million as compared to $15.5 million in '24. And adjusted income from operations for the fourth quarter '25 was $26.4 million compared to $20.2 million in 2024. Adjusted EBITDA for the full year '25 was $50.8 million. adjusted net income, adjusted income from operations and adjusted EBITDA are non-GAAP measures, which are reconciled to our GAAP financial measures in the earnings release.

The following comments are for the fourth quarter of 2025 and '24 unless stated otherwise. Consolidated sales decreased 5.2% to $204.1 million. U.S. segment sales decreased 5.5% to $185.3 million. Sales were favorably impacted by the increase in selling prices to mitigate the impact of higher tariffs on foreign sorts of products. However, retailers buying disruption and consumers dampen spending reactions to the high tariff environment, dampened demand in our industry. Within this segment, product lines decreases were in Kitchenware and Home Solutions, partially offset by increase in tableware.

International segment sales decreased 2.3% to $18.8 million and excluding the impact of foreign exchange translation, the decrease was $1.4 million or 6.8%. The decrease came from the U.K. e-commerce. Gross margin increased to 38.6% in from 37.7%. U.S. segment gross margin increased to 38.8% from 37.6%. The improvement was driven by lower ocean freight rates, some favorable product mix and the timing of inventory costs recognized under FIFO inventory accounting. These factors more than offset the adverse effects of tariffs in the current quarter. For International, gross margin decreased to 36.8% from 38.6%, driven by higher customer support spending in the current period.

U.S. segment distribution expenses as a percent of goods shipped from its warehouses was 8.3% versus 9.1%. The decrease was attributable to improved labor management efficiencies, largely resulting from the fully implemented new warehouse management system in our West Coast facility and the effect of higher tariff induced selling prices without a commensurate increase in expenses. International segment, distribution expenses as a percentage of good ship from its warehouses was 19.8% versus 18.1%. The increase is due to higher sales to prepay freight customers and the expansion of sales into the Asia Pacific region.

Selling, general and administrative expenses decreased by 12% to $38 million. U.S. segment expenses decreased by $3.2 million to $29.6 million. As a percentage of net sales, the expense decreased to 16% from 16.7%. The decrease was driven by lower employee expenses, including incentive compensation. International SG&A decreased $1.5 million to $3.1 million. As a percentage of net sales, the expense decreased to 16.7% versus 24.2% due to lower employee and advertising expenses as well as a foreign currency transaction gains. Unallocated corporate expense decreased $500,000 to $5.2 million due to lower employee expenses, also including incentive compensation, partially offset by higher professional fees.

Interest expense decreased by $600,000 due to lower average borrowings and lower interest rates on our variable rate debt. For income taxes, the benefit is primarily driven by the release -- the benefit rate is primarily driven by the release of a valuation allowance against deferred tax assets recorded in the second quarter.

And looking at our debt and liquidity. Our balance sheet continues to be strong, notwithstanding the higher working capital needs that resulted from tariffs. At year-end, our liquidity was $76.6 million, which includes cash plus availability under our credit facility and receivable purchase agreement and our adjusted EBITDA to net debt ratio at year-end was 3.9 -- 2.9x.

Lastly, as Rob discussed, the relocation of our East Coast distribution center is expected to begin operating in the second quarter. And I'll add that the cost that is exiting the New Jersey facility and starting up the Maryland facility, including capital expenditures, are expected to be at or below our forecast. This concludes our prepared comments. Operator, please open the line for questions.

[Operator Instructions]. Matt Koranda from Roth Capital.

I know you don't typically give full year official guidance until the first quarter, but just wanted to hear a little bit more about building blocks for growth in '26. I know you said you intend to grow in the year. Maybe you could just talk about some of the puts and takes around the price that you took in '25 that sort of wraps into '26, new product launches, existing growth with some of the successful lines like Dolly. I guess some of those are maybe a little bit offset by volume declines more recently. But just how do you think about those factors as we kind of think about the forecast for '26. And any commentary on seasonality this year would be appreciated as well.

Well, from a seasonality, we're expecting more of a normal seasonality, there were disruptions in '25 that were tariff oriented, which put total curve on normal seasonality. So I think we don't expect it to not normalize in '26. Some of the things you mentioned, pricing increases, which is kind of a onetime event happened throughout 2025. So the impact of those will be fully felt because they were fully implemented in '25. So you get the full impact of that in 2026, which, of course, the caveat [Audio Gap] much greater amount of new product than a lot of competition just because the times of taken a lot of people are paring back.

But a couple of areas we're seeing good traction. One, we talked about the Dolly brand that's actually expanding beyond the Dollar General, where we have firm commitments. And while we had tremendous growth in '25, we expect that trajectory to continue in '26. So we see some good growth there. Our food service initiative, that's a business where you have to build a book of business, and then it becomes a bit of an annuity for a period of time and particularly Mikasa Hospitality has gained a lot of traction. So while a small base, we expect substantial increase in those revenues in '26.

The end market in '25 for food service establishments was very challenged. So you saw new store openings decline, you saw store closings throughout a lot of multiunit franchises and the like. unknown where that heads in the industry thinks that will go up. But nonetheless, we gained market share and not end market-driven, we'll see some nice growth in that area in 2026. So those are some of the key drivers, hopefully answers -- gives you some perspective there.

That's helpful. I wanted to also hear a little bit about what you're hearing from your large retail customers in terms of willingness to take on inventory what does sell-through look like or POS data that you're seeing in kind of your key SKUs versus sell-in? And how are you thinking about that for '26?

So we've seen a pretty large divergence from channel to channel with certain channels performing very strong from a POS perspective and certain ones being weaker. We saw a continuing trend in the fourth quarter that we've seen over the last couple of years that there's been an uptick in e-commerce. So the holiday season continued the trend that we saw in 2024, where a lot of consumers waited to make their purchases from historical purchase cycles because they knew they could get delivery rather quickly and that helped e-com in the fourth quarter and, therefore, drove full year performance. So that trend should continue. But there is a high bifurcation.

From a perspective of you see from time to time, particularly with larger retailers, where there's -- and we saw some of this in '25, they pulled back on safety stock issues. So there is a divergence between sell-in and sell-through. And we saw some of that in '25. We don't expect that to be a major impact in '26. And part of that is in some of the more sophisticated people that have done that, have pared back a lot. And if they pare back more, they would harm their sell-through -- their velocity, which is in -- obviously, not in their interest to do so. So we don't expect that to be a factor in '26.

Okay. Very helpful. And then maybe just one more, if I could. The net leverage at the end of the year looks good under 4x. I wanted to just hear how you guys are thinking about cash priorities this year. Obviously, you've got a lot of organic growth initiatives in place, but then you had the European restructuring that's still maybe ongoing or maybe just recently implemented. How do you balance the organic investments that you need to make versus the M&A funnel versus buying back your stock? I just wanted to hear a little bit about sort of capital allocation decision-making for '26.

Yes. So there's actually a lot of internal growth initiatives that we're pursuing, but they're not capital intensive, except for the DC, which we've already -- there's not too much on the come for that. And we also will get the benefit of the $13 million of the funding -- government funding mostly from Maryland, that will offset. So not really any issue, any constraints there and plenty of availability. From -- we'll continue. We have no intention to change anything on our dividend, dividend policy.

We will look to ultimately restructure our debt arrangements because at this point and where we are in terms of the life of that. We're not in ability to buy back stock. So we're not using cash at this point to do that because we have agreements with our lenders in place. but we'll ultimately restructure that and allow us to do so when we do that. And the M&A environment is the strongest I've seen in decades for strategic because, first of all, financials are investing. So our competition for the longest time has been financials at very, very high valuations. So valuations have been down.

But a lot of businesses that are institutionally owned, there's something that needs a larger company or infrastructure health, like to move product from a China-based system to distribute geography, you need a lot of infrastructure to do that. both from a supply chain quality, it takes a lot of effort and work. And with the fluctuations of moving it all over the place, it's a lot of smaller, less capitalized people are having troubles let alone, the systems now everything to deal with the constant pricing fluctuations as tariffs change and evolve. So that combination has made it very attractive. So we're seeing real deal flow at real valuations that we haven't seen literally in decades.

So we have some large opportunities we're looking at. if they'll come through, but it's 1 of that we wrote off on a couple of things that were working that wrote off expensed in the fourth quarter related to that. And hopefully, we'll see some highly accretive opportunities if we can execute.

Our next question comes from Brian McNamara from Canaccord Genuity.

So this is your best Q4 EBITDA margin that we can recall with sales down even better than 2020 and 2021 when sales were up. So gross margins were nicely up presumably from the benefit of tariff price. But I'm curious what drove SG&A lower and how sustainable that is?

Yes, it's a great question, Brian. So it's sustainable. The -- we -- it's all a function of how fast we want to grow. And if we have opportunities and is a good return on that, we can increase investment, which would increase infrastructure and SG&A, but with a return. So in the current state of the business with what we have on the plate, including the growth we intend for 2026, there's not a need for investing in SG&A. We'll also see the further benefits 1 way or the other with our international operations, which will continue to benefit those line items.

I'm curious, Brian, let me to give something on the U.S. gross margins, the comment I made about the FIFO inventory. So we had talked about how we were increasing our sales price to offset to offset the tariffs, which should have a negative effect on the gross margin percentage neutral to dollars. But because we are -- we still have some free tariff inventory, we're seeing some benefit there. But that's not going to continue, right? As that rolls off, it will come back a bit. So I just wanted to...

I'm sorry to belabor, but as you know, Brian, seen us for a little bit. is in any given particular quarter reporting period, you're going to get margin fluctuations based upon mix gentlemen, particularly but also product.

Understood. So next, I'm curious, which of your brands saw sales increases in 2025 outside of Dolly as overall sales decline for a fourth street year what gives you guys confidence that the top line inflect this year? .

The main confidence that we see there is the disruptions that we saw at '26. And again, in the fourth quarter, we got rebound of things that didn't shift from Q2 and Q3, but we'll have a much more normalization in a lot of the core business in 2026 because we didn't -- some of that did not come back in '25, will in '26. So that's going to be a natural driver for our business.

We talked about Dolly will continue to grow. We're seeing good traction there. In cutlery, we've had a tremendous run for a few years, and a lot of that is new product implementation. Our billboard line went from not being created a whole marketplace. The growth trajectory of that piece of cutlery will not continue from the trajectory of growth, but we establish a new business, we'll maintain and there were some other things in that line that we're introducing that hopefully will produce some good growth.

There are some things we haven't disclosed that are new that get us into new space totally or internal investment that hopefully, we'll hit '26. It will -- if not, we'll hit '27. But unfortunately, we can't disclose that at this moment, but there are some things that are total organic internal initiatives that are completely new that hopefully will drive some nice growth for us.

Great. And then on the brand growth for the year, any brands perform better than the company average?

Yes. So I mean, Tableware had a phenomenal year. Table is a great business. From the retailer to our customers' perspective, it's very attractive to them because what they track [indiscernible] as a key metric, which is the velocity and the margins that they make. It's very profitable for them. It's very good. And it had a very good year across the board in '25. Again, that trajectory will not continue in '26, but had a banner year, and that continues to allow Farberware across different things, very strong. and Farberware, our growth engine.

Kitchen Aid, we lost some share a couple of years ago at Walmart. That has run through our numbers. We still have some of that, that hit us in '25. So that's actually the opportunities. And we relaunched the kitchen tool piece of that with a new line that's getting tremendous traction. And we also introduced just recently for 26 a storage -- kitchen storage product which we think is beautiful, but it's getting more importantly, acceptance in the marketplace. So that, not in '25, but 26 is looking pretty good, kitchen.

Great. You mentioned the Dolly brand, obviously, sales up really nicely, up 150% for the year. How big is that now? And what is your expectation for sales growth contribution or shipments in 2026?

So '24, we started that program. It was a small base, right? So part of that 150% is off a small base. We shipped 18 million in '25, we will have substantial growth in '26 as well. .

Got it. Okay. And then finally, obviously, topical given the Warren I ran at the moment. Can you remind us how you're positioned on freight in terms of spot versus contract, your cost exposure to oil and anything else we should be mindful of there?

Yes. so many of my questions are to take an hour to answer. But -- so from a couple of things that I ran, one is what we're seeing is container rates are starting to go up, and we'll probably start to experience that. We have very attractive long-term contracts in for freight. What's the reality of what happens in very high escalating periods is the shippers start to ignore those to be -- so long-term contracts are a benefit, but sometimes there's only so much that you can benefit. And you'll get some of it, but not all of it in very high inflationary ocean freight environment. .

We do very little business in the Mideast. We won't get much disruption there. It will get no disruption. We actually have a lot of upside that may not come on some new business. But either way, it's not material. Our European business is in jeopardy of seeing some supply disruption because the shipments are coming in a different -- it's going to be longer if they have to go around for and the like. But we think our inventory levels aren't going to impact that. And from a cost of goods sold perspective, plastics have resins resi are impacted by petroleum costs. We have not seen anything. We'll see how that plays out. But if you look at it as a total percentage on a bill of material basis isn't going to have a huge impact on us.

And our next question comes from Anthony Libazinski from Sidoti & Company.

It's certainly nice to see the better-than-expected results here in the fourth quarter. So it sounds overall like you guys should be able to maintain SG&A costs. As far as your distribution costs. Those also came down in the fourth quarter. How should we be thinking about that line item? And then I have a couple of other questions as well.

Yes. On the distribution, as I noted, our West Coast facility is running very efficiently given the new warehouse management system that's working quite well. We'll -- as I noted, as an expense because as a percentage because we had selling price increases, but there wasn't any meaningful cost increase, we'll continue to see that expense benefit as a percentage. And we think there'll be some, let's say, mild disruption expenses perhaps when we move into the Maryland facility, but we anticipate those. And we've done it many times, these moves. We're going to put in that new warehouse management system in that facility. So we're anticipating it to run quite well.

And on SG&A is also goes to Brian's question a little bit is the moves we've taken are sustainable. The only thing where you'll see some bounce back in '26 versus '25 is, look, from a sort of target and incentive compensation perspective, we paid out [indiscernible] nothing to management. And with improved performance in '26, they will likely be corresponding payment of incentive compensation. But everything -- that's not the bulk of the SG&A cost that was achieved -- cost reduction achieved in '25.

Got it. Okay. And then in terms of the International segment, Larry, you may have said this, but perhaps I missed it. But in terms of the operating loss for the quarter for the year. Can you provide the comments on that?

Yes. I mean there was a loss. It was in as pronounced as we had in 2024. I mean, as Rob mentioned in his comments, we're not done. The Concord and Concord 2.0 continues. So -- and there's some other things that we had hoped to achieve, but there is legal and other road blocks have slowed us down. We're hoping to achieve during 2026.

Okay. Got it. And then just a couple of other things here. So as far as the fourth quarter, you had a tax benefit, which you addressed, Larry. How should we think about the tax rate for '26? Any sort of commentary there on that?

Sure. So yes, I know it's very hard with [indiscernible] numbers to figure out tax rate. But we should be in the high 20% range, and that's based on -- the thing that we -- I'd just say, we have some usual occurrence this quarter, more in diesel than others. But what distorts our provision historically has been the loss internationally, where because of a history of velocity, you can't record a tax benefit that will sort it. So the we get the international operations to break even or better our tax rate should be in 27%, 28%. And that's a combination of the U.S. federal rate and state.

Got you. Got it. Okay. And then lastly, as far as the Maryland distribution center, it sounds like it's very well on track. So in terms of thinking about the CapEx for this year, do you guys have a ballpark estimate of what that could be?

Yes. So we had -- as I said, we're anticipating to be below budget, but that's accounted. We're very confident we're going to achieve the budget. We think we should beat it. So for CapEx, I think we had originally forecasted $9 million. It may be perhaps less than not less. And we put off that, we spent a couple of million of it in '25. So let's call it around $7 million in -- for that -- just for that in '26. But also bear in mind, there'll be a little offset compared to historically because we won't have the maintenance that we typically have in our New Jersey facility because we are putting in new racking and other things and tariffs and other things in the Maryland facility. So there will be maybe another $1 million benefit against what we would otherwise spend for routine maintenance.

And ladies and gentlemen, I'm showing no additional questions at this time. I would like to turn the floor back over to management for any closing remarks. .

Thanks, Jamie. Thank you, everyone, for listening and your interest in Lifetime Brands, and we look forward to further dialogue in the future. Have a great day. .

And with that, everyone, we'll be concluding today's conference call and presentation. We thank you for joining. You may now disconnect your lines.

Good morning, ladies and gentlemen, and welcome to the Lifetime Brands Third Quarter 2025 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded.

I would now like to introduce our host for today's conference, Jamie Kirchen. Mr. Kirchen, you may go ahead now.

Good morning, and thank you for joining Lifetime Brands Third Quarter 2025 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'd like to remind you that our remarks this morning may contain forward-looking statements that relate to the future 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 our earnings 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 development. Except as required by law, the company does not undertake any obligation to update such statements.

Our remarks this morning and in our earnings 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, and good morning. As we discussed last quarter, the second quarter were shaped by a unique set of external pressures, most notably the sudden tariff swings that disrupted shipping patterns across our industry.

Coming into the third quarter, we expected a move towards normalization, and that is what we've seen, although in a still choppy environment as tariff rates have continued to fluctuate in both directions. We saw the new 232 tariffs implemented on steel content imported across all geographies. Most recently, there has been announced 10% reduction of tariffs assessed against imports from China.

Even before this tariff reduction, Lifetime had seen a more favorable all-in cost basis from China for many of our product categories in the current tariff environment. We anticipate that this will further improve with the latest 10% tariff reduction.

The current macroeconomic backdrop and end market environment have created an environment that we expect will persist until greater stability returns to the global trade environment. As has occurred historically, stability at whatever tariff levels has resulted in a return to normalcy with our customer base and in our end markets. We fully expect to see the same trend return.

Third quarter saw a decline in shipments across most consumer categories. According to the U.S. Bureau of Labor Statistics, the general merchandise category saw a decline in shipments of approximately 6.1% for the quarter. Lifetime shipments were basically in line with this metric, and we believe compares favorably to many of our peers.

We remain confident that our proactive actions and deep expertise in navigating periods of uncertainty will favorably position Lifetime for above-average growth in a return to a normal operating environment.

Of note, the overall end market demand continues to evolve, driven partly by the current macro environment. You will increasingly hear about the K-shaped economy where there is a trending diversion of outcomes between different age and demographic groups. We are closely monitoring these trends to optimize our footprint among positive trends in consumer spending.

Along these lines, we remain wary of a slightly down trend for this holiday season. However, expect that shipments to 2 of our 3 largest customers will rebound in the fourth quarter due to a shift of orders from the third quarter to the fourth quarter.

The near-term volatility created by the current tariff landscape remains challenging, but Lifetime has navigated environments like this before. The steps we took early in the year, including expanding sourcing in Mexico and Southeast Asia, implementing targeted pricing actions and tightening cost controls have all proven effective.

Our tariff mitigation strategy is now fully in place and performing as intended. While some manufacturing has shifted back to China due to the current trade realities I just mentioned, the flexibility of our supply chain allows us to pivot quickly as conditions evolve.

Importantly, the diverse geographic footprint that we set out to establish for our product country of origin is firmly in place, and we are positioned to adjust our sourcing across regions in response to evolving political and economic conditions.

The results for the third quarter reflect disciplined cost management, ongoing progress under Project Concord and continued enhancements in operational efficiency across our platform. Company-wide, we have further streamlined processes, eliminated redundancies and captured tangible savings that are reflected in our results.

SG&A expenses in the U.S. are down over 5% year-over-year. On Concord, we're approaching the finish line on the major initiatives we established, and we'll evaluate after year-end whether the progress achieved warrants a next phase of optimization.

Operationally, the business is performing well in the areas within our control. In a down market, our International segment again showed progress on top and bottom line, benefiting from our strategic shift towards major retailers in markets like Australia and New Zealand and the European continent. The strength of those relationships, coupled with our globally recognized brand portfolio continues to differentiate Lifetime and further strengthen our competitive position.

Specifically, tariffs remain disruptive across all categories with certain segments like dinnerware and the club channel experienced deferred shipments that we expect will move into 2026. However, our multipronged pricing strategy will offset much of the cost impact moving forward as it has been fully implemented for all tariffs announced through the third quarter with the exception of the 232 tariff price increases, which have been passed through to our customer base in this quarter and will be fully implemented before the end of the fourth quarter.

These pricing actions are intended to preserve and sustain our gross margin dollar. It's worth noting that some peers are struggling to adapt with slow reaction on pricing actions and a lack of adequate infrastructure to implement a diversified manufacturing strategy as well as the system capabilities to manage the complex and changing customs, cost and pricing environment.

Lifetime is benefiting from higher deal flow as we believe that financially pressured competitors are looking for partnership or sale opportunities. That dynamic supports our ongoing M&A strategy where we continue to make progress.

Innovation also remains central to our growth strategy. We're continuing to launch new products that align with consumer trends and retailer demand. The Dolly line and the expanded Build-A-Board collection have performed well, reaffirming our ability to identify trends early and bring to market at scale.

In hydration, our new glass bottle line under the S'well brand has launched successfully and will be expanded shortly to capture additional market opportunities in the hydration category.

From a macro perspective, we continue to believe the consumer will remain cautious through the holiday period. The early indications of seasonal sell-through are encouraging. With an average product price point below $10, Lifetime's portfolio continues to resonate with households seeking quality and value, a key strength in uncertain times.

Liquidity remains solid at $51 million and adjusted EBITDA for the trailing 12 months ended September 30 was $47.2 million. This solid financial position allows us to continue investing selectively in areas that will drive long-term profitability and shareholder value.

Stepping back, 2025 thus far has been a transitional year, but an important one. The second quarter appears to have represented the trough of tariff-related disruption and the third quarter marks tangible progress towards the beginning of normalization.

The actions we've taken under Project Concord, combined with disciplined cost management and proactive sourcing diversification have meaningfully improved the quality of our earnings and the resilience of our business.

As I said last quarter, our goal is to control what we can control, and we are doing just that. As the broader market stabilizes, we expect the groundwork we've laid this year to translate into stronger performance, greater efficiency and renewed growth momentum in 2026 and beyond.

Particularly, we expect the current headwinds across the consumer products industry to drive further disruption as many undercapitalized participants face increasing challenges meeting the operational and financial demands required to remain competitive in rapidly changing environments. These needs require a tremendous effort in supply chain management, system requirements and balance sheet depth to effectively mitigate the trade war impacts and remain relevant and present to the retail community and consumers.

Frankly, many smaller and some of our larger competitors are not adequately addressing these needs and are not providing for a consistent quality supply of products, while adhering to the frequently changing legal requirements created over the past year. Ultimately, those companies will not be able to sustain this current operating modest operandi.

This will result in a streamlining of the participants in the consumer products industry and create opportunities for those that have the resources and have managed efficiently and appropriately through this environment. To this end, we are confident that Lifetime is well positioned to thrive as normalization returns to the global and domestic markets for our categories. Thank you.

And with that, I'll turn the call over to Larry to review the financials in more detail.

Thanks, Rob. As we reported this morning, the net loss for the third quarter of 2025 was $1.2 million or $0.05 per diluted share as compared to net income of $0.3 million or $0.02 per diluted share in the third quarter of 2024. Adjusted net income was $2.5 million for the third quarter of 2025 or $0.11 per share as compared to $4.5 million or $0.21 per diluted share in '24.

Income from operations was $6.7 million in the third quarter of '25 as compared to $8.6 million in the 2024 period. Adjusted income from operations for the third quarter of '25 was $11.5 million compared to $13.2 million in the '24 period. Adjusted EBITDA for the trailing 12-month period ended September 30, '25, was $47.2 million.

Adjusted net income, adjusted income from operations and adjusted EBITDA are non-GAAP financial measures, which are reconciled to our GAAP financial measures in the earnings release. Following comments are for the third quarter of 2025 and 2024, unless stated otherwise.

Consolidated sales declined by 6.5% to $171.9 million. U.S. segment sales decreased by 7.1% to $158.1 million. Sales were favorably impacted by the initiation of our planned increase in selling prices to offset higher tariffs on products sourced from outside the U.S. However, we experienced a decline in unit sales from dampened consumer demand and for some retailers, a shift in the timing of their orders.

Within the segment, product line decreases were primarily in tableware, which was most affected by the retail order shifts. International segment sales increased by 1.5% to $13.8 million. And excluding the impact of foreign exchange translation, the decrease was 2.7%, predominantly in Europe, but partially offset by higher sales in the Asia Pacific region.

Consolidated gross margin decreased to 35.1% from 36.7%. U.S. segment gross margin decreased to 35.1% from 36.8%. The decrease in the gross margin percentage was primarily due to higher selling prices to offset higher tariffs. As Rob commented, our pricing actions were designed to maintain gross margin dollars, which arithmetically results in a lower gross margin percentage.

International gross margin increased to 35.5% from 34.6%, driven by favorable customer and product mix. U.S. segment distribution expenses as a percentage of goods shipped from its warehouses, excluding nonrecurring expenses, was 8.5% versus 10.1%. The decrease was attributable to improved labor management efficiencies resulting in decreased employee expenses, lower depreciation expenses due to a change in asset retirement estimates in the prior year. The decrease was partially offset by higher software expenses for the warehouse management system implemented in September of 2024.

International segment distribution expense as a percentage of goods shipped from its warehouses improved to 22.6% from 24.2%. The improvement was due to lower freight out expenses and higher shipment volume resulting in better absorption of fixed expenses.

Selling, general and administrative expenses decreased by 8.5% to $35.5 million. In the U.S., the expense decreased by $1.5 million to $28.4 million. And as a percentage of net sales, the expense increased to 18% from 17.6%. The decrease in expense was due to lower employee expenses, including incentive compensation, partially offset by an increase in amortization expense related to a trade name previously considered indefinite-lived. The increase in percentage of net sales was attributable to the impact of fixed costs on lower sales volume.

International SG&A expenses decreased by $1.1 million to $3.4 million. As a percentage of net sales, the expense ratio improved to 24.6% from 33.1%. The decrease was due to lower employee expenses and lower selling expenses and the prior year included a regulatory expense. Unallocated corporate expense decreased to $3.7 million from $4.3 million due to lower incentive compensation and legal expenses.

Interest expense, excluding mark-to-market adjustment for swaps, decreased by $0.8 million due to lower average outstanding borrowings and lower interest rates on those outstanding borrowings. And the income tax rate for the current period differs from the federal statutory rate of 21%, primarily due to the impact of nondeductible expenses for which no tax benefit is recognized and a partial valuation allowance on U.S. tax asset as a result of the goodwill impairment in the second quarter. In 2024, the rate difference is primarily due to foreign losses for which no tax benefit was recognized.

Looking at our balance sheet, it continues to be strong despite the challenges from high tariff rates. Our debt level increased from the second quarter reflects seasonal working capital needs, including an additional [ $13 ] million of inventory costs due to higher tariffs. At quarter end, our liquidity was approximately $51 million, which includes cash plus availability under our credit facility and receivable purchase agreement. And our adjusted EBITDA to net debt ratio as of September 30 was 4.2x.

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

[Operator Instructions] We have the first question from the line of Anthony Lebiedzinski from Sidoti & Company.

So first, is there any way that you guys can quantify what the magnitude of the revenue shift was for a couple of your large customers, Rob, as you called out in your prepared remarks?

Not at this time, Anthony.

Okay. And then thinking about pricing versus unit volumes, I know you did some price increases in the quarter. Can you give us some more information about that? And how should we think about the fourth quarter as it relates to pricing? I don't know if you can answer anything about the unit volumes, but if you could talk about pricing, that would be great.

Yes. Well, I'll start off by saying that in our analysis, it appears that our price increase approximately offset the tariff -- additional tariffs, and that was our objective. So that's good as planned.

In terms of the impact of these price increases on sales, it's a couple of percentage points. It's still being phased in. It doesn't happen all at once and for all customers. So it will have additional impact in the fourth quarter.

And are you referring to the Section 232 tariffs here for the fourth quarter? Or just wanted -- I know it's still -- it's hard to keep up with all the changing tariff rates. But as far as the Section 232, whether that's already included in your outlook?

Yes, a little of both. I mean by the end of the third quarter, except for the 232 tariffs, everything has been implemented, but it wasn't implemented day 1 in Q3, right? So there's not a full quarter impact.

Okay. Got you. All right. And then can you give us a sense as to what your product sourcing is nowadays, especially as it relates to China? I know you said that some production have shifted back to China, but could you just help us better understand kind of where you are with that at this point?

Anthony, it's fluctuated a lot. So we moved production to India, but when the 50% tariffs put in India, you basically stop getting business with India as it become -- became uneconomical to do so. We finished our build-out substantially of a lot of the Southeast Asian geographies, so we're shipping meaningfully from Cambodia and Malaysia and other geographies.

But again, we started in the third quarter experiencing infrastructure problems. So you couldn't take containers out of Vietnam where we had Vietnam and Cambodia shipping through. So again, we shifted that back to China. So we'd have continuity of supply. And in today's environment, as I mentioned, the economics are favorable, all in, including tariffs with China.

So while we had targeted, and we could easily move even today, 80% of production out of China, it won't be by year-end because in today's economic environment, that would be -- excuse me, in today's tariff environment, that would be -- harm the economics, right? So we can flex it and a lot of our factories in Southeast Asia are overlap ownership with the factories in China, so we can shift very easily back and forth.

Got you. Okay. And then lastly for me, what types of M&A opportunities are you guys looking at? And what are you seeing in terms of valuation multiples nowadays?

So we are actively engaged. We're seeing a lot in our own space, which would be highly synergistic just from the cost eliminations and some that are more very oriented to our current footprint. In this environment, particularly since the financial buyers are not participating. We're seeing a meaningful reduction in valuation. So it's a combination -- we're seeing good valuations from a combination of: a, generally, the market valuations are down; and b, to looking at opportunities that have meaningful synergies and cost eliminations, which leverages that multiple down further.

All right. Well, that's good to hear and best of luck.

Thanks, Anthony.

This concludes our question-answer session. I would now like to hand the conference over to Rob for closing comments.

Thank you. And as always, thanks, everyone, for listening to our call and your interest in Lifetime Brands, and we look to communicating with people in the near future. And as always, Larry and I remain available for anyone who wants to reach out directly. Thank you, and have a great day.

Thank you. This concludes today's conference. We thank you for your participation. You may now disconnect your lines.