Good morning, ladies and gentlemen. And welcome to Lifetime Brands First Quarter 2025 Earnings Conference Call. At this time, I would like to inform all after the speakers' remarks, there will be a question and answer portion of the call. If you would like to ask a question during this time, please press 1. I would now like to introduce your host for today's conference, Jamie Kirchen. Mr. Kirchen, you may begin. With us today from management are Rob Kay, Chief Executive Officer, and Larry Winoker, Chief Financial Officer.

Before we begin the call, I would like to remind you that our remarks this morning may contain forward-looking statements that relate to the future performance 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 further developments. 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 would like to turn the call over to Rob Kay. Please go ahead, Rob.

Thank you. As we navigate a volatile macro and political environment, we are continuously evaluating options and consequences that impact most aspects of our business. With that in mind, I will start today's call by discussing our first quarter performance, before getting into the current operating environment and Lifetime's strategic positioning. Sales for the quarter were down slightly year over year, with a more pronounced impact on gross margin due to shifts in customer and product mix. Top line performance was primarily affected by challenges in the mass channel where we experienced declines in certain product categories. These trends mirror broader industry patterns and were driven by slower retail sales and elevated inventory levels at key mass retailers towards the end of the fourth quarter. Additionally, ordering patterns softened due to ongoing trade concerns, particularly around tariffs. Many retailers pulled back on incentives in response to rising input costs and general uncertainty as a means to prolong inventory levels in the face of potential supply disruptions later in the year. Despite headwinds in the mass channel, we achieved strong gains in e-commerce, the dollar channel, and club driven by new product introductions, and good point of sale sell-through. These areas helped offset some of the declines and underscore the resilience of our multichannel strategy. Uncertainty continues to define the current operating environment. Across the board and within the consumer products industry, companies are bracing for further economic headwinds and a volatile tariff policy. For retailers, this creates unpredictability around pricing, promotions, and product planning resulting in slower purchasing, cautious reordering, and extended decision cycles. All of these factors are being addressed by Lifetime as we execute and adopt our business model to maximize performance and flexibility in this environment. The first area I would like to comment on related to…

Thanks, Rob. As we reported this morning, net loss for the first quarter of 2025 was $4.2 million or $0.19 per diluted share, as compared to a loss of $6.3 million or $0.29 per diluted share in the first quarter of 2024. Adjusted net loss was $5.3 million for the first quarter of 2025 or $0.25 per diluted share as compared to $3.2 million or $0.15 per diluted share in 2024. Income from operations was $1.1 million in the first quarter of 2025 as compared to $1.8 million in the 2024 period. And adjusted loss from operations for the first quarter of 2025 was $900,000 compared to adjusted income from operations of $5.7 million in the 2024 period. Adjusted EBITDA for the trailing twelve-month period ended March 31, 2025, was $51 million. Adjusted net loss, adjusted loss from operations, and adjusted EBITDA are non-GAAP financial measures, which are reconciled to our GAAP financial measures in the earnings release. Following comments for the first quarter of 2025 and 2024 unless stated otherwise. Consolidated sales declined by 1.5% to $140.1 million. U.S. Segment sales decreased by 1.5% to $128.5 million. As Rob commented, net sales were primarily affected by the challenges in the mass channel. Within this segment, the major product line decrease was in kitchenware and largely offset by increases in tableware and home solution products, on strength at warehouse clubs, e-commerce, and the dollar channel. International segment sales were approximately even with the prior year period. An increase in the Asia Pacific region was offset by a small decrease from UK national accounts. Gross margin decreased to 36.1% from 40.5%. U.S. Gross margin decreased to 36.2% from 40.8%. The decline was driven by customer and product mix. International gross margin was solid at 35.3% despite a 0.6% decrease versus the…

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press 1 on your telephone keypad. You may press 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, while we poll for questions. First question comes from Anthony Lebiedzinski with Sidoti and Company. Please go ahead.

Good morning, everyone, and thank you for taking the questions. So first, looking at the top line, is there a way that you guys can provide some additional numbers as far as I just wanted to get a sense of the magnitude of the sales decline at mass retail and conversely the sales increase that you saw in e-commerce, club, and the dollar store channel?

Yeah. It's the Sling was, like, in the range of about $15 million.

Okay. Yeah. Thanks, Larry. Okay. And then can you give us an update on Dolly Parton? You know, did you guys see those shipments shifting from Q4 to Q1 as you previously expected? And any additional thoughts on that?

Yes. It occurred and shipped just as expected. And the program remains very strong. If you actually look at Dollar General's releases, it usually includes a comment on Dolly Parton. So it's very important to them. So they say, and they continue we continue to work with them on new programs. So we remain very bullish and there will be year-over-year growth in Dolly Parton at Dollar General as well as other retailers.

Thanks, Rob. And then, you know, in terms of the price increases that you are planning to do, I believe what you said May 15, which is next week. Can you give us any sense of the magnitude of those price increases? And any idea as to, like, what the volume impact will be, you know, once you raise the prices? I know there's a lot of uncertainty out there, but any thoughts on that would be appreciated.

So the bulk of the increases are between 6-16%, and that excludes the 145%, which is much higher.

Unknown. In terms of the impact. You know, as I mentioned in my remarks, the average ticket of what we sell is rather small. So if it's a $6 item, it may go up to, you know, $6.80, $7. Right? So it's not, you know, within the realm of, you know, the consumer's affordability. But, you know, there's no visibility.

Right. Okay. And then last one for me before I pass it on to others. Yeah. So, Rob, you also mentioned that the CapEx for the new DC will be lower. Any sort of way to put a number on that as to how to think about CapEx for this year?

So I cannot put the bucket this year versus next year because as you know, we are spending between the two years on the capital. You know, I think that a lot of why the number's coming down is more driven from overpromise, right, or underpromise, overdeliver, I should say. So, you know, we were conservative in our approach to this. But now as we solidify the actual contractual arrangements, and, you know, racking and other machinery, those numbers were sourcing or ordering at a much lower rate than we had talked about and put in our plan. And that's because it's now reality, and we had, I think, were conservative in our approach. It's 7 figures. Low 7 figures impact, but we're still working.

Got it. I appreciate the color. But gotcha. Okay. Got it. Alright. Well, thanks a lot, and good luck navigating through this current environment.

Thanks, Anthony. Thank you.

Our next question comes from Brian McNamara with Canaccord Genuity. Please go ahead.

Hey, good morning, guys. Thanks for taking the questions.

Hey, Brian.

I guess to start off by look. I do not think this is an easy thing to do, but I'm curious what went into the decision to not provide guidance. We've seen other arguably more exposed companies to China kind of give a kind of a best guess? And just given the fact that you guys typically provide guidance in Q1, investors kind of have to wait an extra quarter. So you walk through kind of the puts and takes there on that giving some kind of directional indicators?

Yeah. Sure, Brian. And we understand the benefit, you know, typically from your seat. Why we've always given guidance. But, you know, and two things. Look. We did look at the rest of the world, and, yeah, people have provided. People have not. I think the main reason is there's lack of visibility. So, you know, if one was to guide in this environment, you know, it's a bit of a slack. And maybe we're a bit more conservative but, you know, we felt that with a tremendous lack of visibility, here's what's gonna happen tomorrow and change and the like. So it was driven from that perspective. We thought it best to withhold at this point. Guidance. And then secondly, it's great to see your aggressive push to kind of move out of China, but I guess the counterpoint to that would be why hasn't it been done already? And I've obviously, I'm not making it sound like this is easy to do, but that's a question we expect to get from folks.

Yeah. No. No. Absolutely. Understand. So, yeah, a lot of it has. You know, I mentioned a bunch of geographies. We're already shipping from them. So a lot of it has, you know, I mentioned the Mexico facility, which, you know, we ramped that up, or we acquired that, you know, and we've been ramping it up. And, fortunately, you know, we hit full production, which we are now expanding to this point. It hit full production just before the tariffs started getting implemented. So we've been ramping this up. You know, we could have ramped it up quicker if we were going to spend a lot of capital in actually investing in these facilities, but we're not using our capital and using third-party partners to do this. So that slowed you down a little bit because, obviously, they're reluctant to until they wait to see that situation where they had to do it. So I can say that the feedback that we've gotten from our retail customer base is because we've shared the detail and the transition plans. Because if you think we're, you know, we're passing price increases, but we're also showing look. This is, you know, where, you know, you're covered by inventory and covered by new stuff on a lower geography coming in. So feedback we've gotten universally is that we're substantially ahead of the industry in terms of moving product out of China. So we may have phrased it in a way that gave you the wrong impression, but we are actively moving and have already shipping from many of these geographies.

Given your kind of relatively low price point, what do you think the elasticity of a, you know, a significant price increase would be on demand relative to your history? And this is obviously understanding this is a unique time, but there's a school of thought that suggests that maybe this pushes more demand into, you know, private label and things like that. How would you expect your products to react to or your markets to react to significant price increases?

Yeah. Historically, you know, there's been, you know, relatively healthy ability for our products to sell similarly in high rising cost environments. I always use the example people have heard me, you know, on can offers, I'm sure, single a biggest skew. And people don't exactly if they need a can opener and it's $6 and now that can opener is to be extreme, so it's $9. They're not gonna go and use a, you know, hammer and screwdriver to open up the can. So we've seen historically and, again, we're not a start-up. We've got a lot of data. That there's been, you know, relatively little impact in many of our product categories. You know, food service falls relatively inelastic for any price increases. In other words, you know, they don't really react at all for price increases, but in rising cost environments, people tend to eat more at home that will help us. But at food service, right, tends to do worse, people spend less money in restaurants. And traveling. But again, historically, if you look at poor economic environments and rising cost environments, people tend to eat home. That means they need our products.

Great. And then finally, I'm just curious. Look. The stock hasn't performed well. A lot of this stuff's out of your control. What I'm just curious what your message would be to shareholders or potential shareholders at these levels here? Thank you.

Yes. Look, we strongly believe that a big intrinsic value gap. You know, as you know, we insiders including the board control, you know, about 40% of the company. You know? So we think there is a big intrinsic value gap. And, you know, in the right conditions, we will work hard to make sure that gap is realized in the stock price. We think there's a lot of upside. But short term and it appears that the segment is not in favor. But the fundamentals are very strong. It's a big value play. Tremendous cash flow generation. So we think it's a very strong story over the long term.

Thanks very much. Appreciate the color, and best of luck.

Thank you, Brian.

Thank you. As there are no further questions, I would now like to hand the conference over to Robert Kay for closing comments.

Thank you very much. Thank you, everyone, for listening in on our call, and we hope to be in touch shortly with continued updates. Have a good day. Thank you.

That concludes today's call. Thank you all for joining us. You may disconnect your lines now. Thank you.