Good day, ladies and gentlemen, and welcome to the Lifetime Brands Fourth Quarter 2016 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to introduce your host for today’s conference, Ms. Harriet Fried of LHA. Ma’am, you may begin.

Good morning, everyone, and thank you for joining Lifetime Brands’ fourth quarter 2016 conference call. With us today from management are Jeff Siegel, Chairman and Chief Executive Officer; and Larry Winoker, Senior Vice President and Chief Financial Officer. Before we begin, I’ll read the Safe Harbor statement under the Private Securities Litigation Reform Act of 1995. The statements that are about to be made in this conference call that are not historical facts are forward-looking statements and involve risks and uncertainties, including the Company’s ability to comply with the requirements of its credit agreements, the availability of funding under those credit agreements, the Company’s ability to maintain adequate liquidity and financing sources and an appropriate level of debt, changes in general economic conditions, which could affect customer payment practices or consumer spending, changes in demand for the Company’s products, shortages of and price volatility for certain commodities, the effect of competition on the Company’s markets, the impact of foreign exchange fluctuations and other risks detailed in Lifetime’s filings with the Securities and Exchange Commission. The Company undertakes no obligation to update these forward-looking statements. The Company’s press release contains non-GAAP financial measures within the meaning of Regulation G promulgated by the SEC. Included in this morning’s release is a reconciliation of these non-GAAP financial measures to the comparable financial measures calculated in accordance with GAAP. With that introduction, I’d like to turn the call over to Mr. Siegel. Please go ahead, Jeff.

Thank you, Harriet and good morning everyone and thank you for joining us today to review our fourth quarter 2016 results. We delivered an outstanding quarter with record revenue and income from operations. It was a great way to end the year and we set these records despite unfavorable exchange rate fluctuations, which impacted the results of both our overseas subsidiaries and our partner companies in Canada and Mexico, as well as a general softness in retail sales at brick-and-mortar retailers. In constant currency which excludes the impact of foreign exchange fluctuations, our consolidated net sales rose 7.2% compared to last year’s period, an earnings per share jump from $0.79 to $1.03. Excluding the impact of sales from the Focus and Copco acquisitions, in constant dollars, our fourth quarter sales increased by 3.4%. Our strong fourth quarter results reflect several major initiatives we have underway that have begun to favorably affect the fundamental way we do business. I mentioned several of these in our last quarterly call, but since I expect each of them to benefit us even more dramatically in the future, I’ll run through them quickly again today, before turning to the details of the quarter. Rest of the acquisitions we completed last year, which brought sales as well as of an array of strong brands that complement those we already have while adding only minimally to our SG&A. These are strong established brands, both in categories that we are already in and several adjacent categories. We have been rapidly integrating each of the acquisitions and all of them proved accretive in the fourth quarter. We expect them to contribute even more positively beginning in 2017 as we benefit from our ability to lower input costs and increased innovation. As a reminder, the brands we acquired were Wilton…

Thanks, Jeff. As we reported this morning, net income for fourth quarter of 2016 was $14.7 million or $1 per diluted share as compared to $11 million or $0.77 per diluted share last year. Adjusted net income for the quarter was $15.2 million or $1.03 per diluted share as compared to $10.8 million or $0.75 per diluted share last year. The table, which reconciles this non-GAAP measure to reported results, was included in the release. Income from operations increased by $4.2 million to $21.8 million for the quarter. Consolidated EBITDA, a non-GAAP measure reconciled to our GAAP results in the release, increased $1.2 million to $25.1 million and $2.3 million to $47.2 million for the full year. For our U.S. Wholesale segment, net sales increased $9.5 million to $156.4 million, as growth from our tableware and home solutions business categories more than offset a small decline in kitchenware category. Tableware’s increase primarily came from flatware and storage and organization product sales and growth in the houseware club channel, while home solutions reported a very strong quarter from portable beverageware products. In the kitchenware division, strength from tools and gadgets approximately offset lower volume from the other kitchenware product lines. 2006 acquisitions contributed approximately $6.8 million to the segment sales volume in the current quarter. U.S. Wholesale segment gross margin was 38.7 in the 2016 quarter compared to 36.2 in 2015. The increase reflects a decrease in sales allowances, although it was approximately the same on a full year basis, and another contributing factor was the change in product mix. Gross margin increased by 30 basis points for the full year to 36%. U.S. Wholesale distribution expenses as a percentage of sales shipped from our warehouses was 7.9% in the 2016 quarter versus 7.7% last year. The increase is due in…

[Operator Instructions] Our first question comes from the line of Frank Camma with Sidoti. Your line is open.

Good morning, guys, and congratulations on the quarter.

Thanks, Frank.

Thank you, Frank.

Hey. A lot of good things here, but I wanted to first focus on the organic growth. Given what’s going on at the retailers, Jeff, I know you commented on this. But, do you think -- and I know it’s kind of hard to parse it out totally. But, do you think it’s more that you gained in e-commerce or is this more a signal that maybe you’re gaining share at traditional retailers? That’s what I can’t get a sense of, like, I mean, it’s pretty good organic growth, given the categories that you’re in. So, just kind of wondering about that.

It’s a little of both. We made a very sizable investment several years ago in building a team to really drive our e-commerce business through both pure plays and through the brick-and-mortar retailers. It was costly, and it’s finally paying off and it’s paying off very rapidly in a very big way. So that is making up for some of the shortfall at the brick-and-mortar. But in brick-and-mortar, we do believe we are gaining market share.

Okay. And I assume like the competitive landscape there in the brick-and-mortar is -- I mean, it’s still pretty fragmented, right? I mean, there’s nobody too aggressively going after categories than the same players you’ve been dealing with, right? Just kind of update us on that.

That’s right. This is a very fragmented industry. We’re certainly one of the leaders in the categories we’re in; in most cases, we are the leader, and we know how to capitalize on that, and we know how to take advantage of where we are.

Okay. Your gross margin, I think it’s the highest gross margin I’ve seen, at least in the last five years. I could be wrong about that. I could only find one point where you’re in that 38% range before. Does this reflect sort of the input costs that you’ve garnered over the last couple of years; we’re finally seeing the flow through? And I was wondering if you could talk about how sticky that margin is going forward.

As we said earlier, in earlier calls, we expect to improve margins, and we have. Certainly, the business in the UK has helped do that. They have a terrific year, and they’re really working together. It’s a pleasure to see how that has come together as a business for us. And we’ve always focused on improving our margins throughout the Company, and we will continue to do that.

Okay. Yes, I’m just trying to get a feeling for like -- because since that’s near -- I think it’s near your peak margins even on the fourth quarter. Is that a correct statement, I mean, at least for the last five years or so?

It was high. Some of it is expectation early in the -- through the nine months we were substantially behind where we had been, probably 80 basis points. I mean, overall, for the year, I would hope, like 10 basis points. So, it’s timing. It’s not easy to gauge where your allowances will fall to customers and try and obviously an area of great estimate. So we had a fairly large swing quarter-over-quarter, which is good. It’s favorable, but it’s -- that’s why I commented on how it looks versus the full year.

Sure. Yes, I got that. Last question for me is just on distribution expenses. Given, Jeff, what you’re talking about the ability to kind of ship direct. Does that change the way we should look at that going forward? I mean, I know you’re trying to restructure things around your expenses and everything, but does it make it more expensive or has the investments you’re putting kind of made it manageable when you look at long-term, so your distribution expenses, if you ship more direct to the consumer through your online channel?

Yes. The goal is to become extremely efficient in doing that. And that’s a use of systems and automation, and we have invested heavily in that, in systems and automations. The retailers pay us back on shipping expenses…

Okay.

When we go direct-to-consumer. But you want to make sure that you have the lowest cost structure, so that you can do it in a way that doesn’t become a burden. And we’ve focused on that. And we’re in the process of consolidating the warehouses in the UK and it’s -- we will build into that that plants are doing direct shipping as we’re doing that and we’re also relocating one of our warehouses in California, our California warehouse and at the same time, going to make sure that the systems that are in place there will make us extremely efficient to ship direct-to-consumer out of that warehouse as well.

Thank you. [Operator Instructions] And I am showing no further questions at this time. I’d like to turn the call back to Mr. Siegel for closing remarks.

Okay. Thank you. Thanks for joining us today. And as you heard, we have a multitude of efforts underway to grow Lifetime’s assortment of brands and products while at the same time, increasing our efficiency and profitability. Our whole organization is committed to these initiatives, and we think they provide a great platform for 2017 and beyond. We’d like to show you our products in person, so I hope to see you at our showroom tour later this month. Thank you all.

Ladies and gentlemen, thank you for participating in today’s conference. This does conclude the program. And you may all disconnect. Everyone, have a wonderful day.