Good morning, ladies and gentlemen, and welcome to the Lifetime Brands, Inc. fourth quarter 2025 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 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 star and 1 on your touch-tone telephone. Please also note today's event is being recorded. At this time, I would 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, Inc. fourth quarter 2025 earnings call. With us today from management are Rob Kay, Chief Executive Officer, and Laurence 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 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. 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 will now 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, and the operational demands were all significant. And yet, when I look at where we stand today, I am 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 Brands, Inc.'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 goods sourced from China following the Liberation 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 Brands, Inc., as the immediacy of the implementation would have resulted in selling products at a loss. As the year progressed, and some stability was introduced on tariff rates, Lifetime Brands, Inc. 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 Brands, Inc. 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…

Thanks, Rob. As we reported this morning, net income for 2025 was $18.2 million, or $0.83 per diluted share, compared to $8.9 million, or $0.41 per diluted share, in 2024. Adjusted net income was $23 million for the fourth quarter, or $1.05 per diluted share, as compared to $12 million, or $0.55 per diluted share, in 2024. Income from operations was $20 million for 2025 as compared to $15.5 million in 2024. And adjusted income from operations for the fourth quarter 2025 was $26.4 million compared to $20.2 million in 2024. Adjusted EBITDA for the full year 2025 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 2025 and 2024, 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-sourced products. However, retailers' buying disruption and consumers' dampened spending reaction to the high tariff environment dampened demand in our industry. Within this segment, product line decreases were in kitchenware and home solutions, partially offset by an 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% 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 cost 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…

Thank you. We will now begin to conduct our question-and-answer session. If you would like to ask a question, please press star and 1. A confirmation tone will indicate that your line is in the question queue. You may press star and 2 if you would like to remove your question from the queue. It may be necessary to pick up your handset before pressing the star keys to ensure the best sound quality. One moment while we poll for questions. Our first question today comes from Matt Caranda from Roth Capital. Please go ahead with your question.

Hey, guys. Good morning. I know you do not typically give full-year official guidance until the first quarter, but I would like to hear a little bit more about building blocks for growth in 2026. 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 2025 that sort of wraps into 2026, 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 qualitatively as we kind of think about the forecast for 2026? And any commentary on seasonality this year would be appreciated as well.

I mean, from a seasonality perspective, we are expecting more of a normal seasonality. There were disruptions in 2025 that were tariff-oriented, which put a total curve on normal seasonality. So I think we do not expect it to not normalize in 2026. Some of the things you mentioned—pricing increases, which is kind of a one-time event—happened throughout 2025. So the impact of those will be fully felt because they were fully implemented in 2025. So you get the full impact of that in 2026, which, of course, the caveat is who knows what is going to happen. From a new product introduction, I know that we have been introducing a much greater amount of new product than a lot of competition just because times are tough and a lot of people are paring back. But a couple of areas we are seeing good traction. One, we talked about the Dolly brand. That is actually expanding beyond the dollar channel where we have firm commitments. And while we had tremendous growth in 2025, we expect that trajectory to continue in 2026. So we see some good growth there. Our food service initiative—that is 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 2026. The end market in 2025 for food service establishments was very challenged. You saw new store openings decline. You saw franchises and the like, store closings throughout a lot of multiunit. Unknown where that heads in 2026. The industry thinks it will go up, but nonetheless, we have gained market share and, not end-market driven, we will see some nice growth in that area in 2026. So those are some of the key drivers. Hopefully that gives you some perspective there.

Yeah, that is helpful. Thanks, Rob. We wanted to also hear a little bit about what you are 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 are seeing in kind of your key SKUs versus sell-in? And how are you thinking about that for 2026?

We have 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 have seen over the last couple of years, that there has 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-commerce in the fourth quarter, therefore drove full-year performance. So that trend should continue. But there is high bifurcation. From the perspective of what you see from time to time, particularly with larger retailers, and we saw some of this in 2025, they pull back on safety stock issues. So there is a divergence between sell-in and sell-through. We saw some of that in 2025. We do not expect that to be a major impact in 2026. And part of that is some of the people that have done that have pared back a lot, and if they pared back more, they would harm their sell-through, their velocity, which is obviously not in their interest to do so. So we do not expect that to be a factor in 2026.

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 have a lot of organic growth initiatives in place. But then you have the European restructuring that is 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? Just wanted to hear a little bit about sort of capital allocation decision-making for 2026.

So there is actually a lot of internal growth initiatives that we are pursuing, but they are not capital intensive, except for the DC, which we have already—there is not too much on the come for that. And we also will get the benefit of the $13 million of the government funding, mostly from Maryland. That will offset. So not really any issue and any constraints there, and plenty of availability. We have no intention to change anything on our dividend, our dividend policy. We will look to ultimately restructure our debt arrangements because at this point, in terms of life of that, we are not in the ability to buy back stock, so we are not using cash at this point to do that because we have agreements with our lenders in place. But we will ultimately restructure that and allow us to do so when we do that. And the M&A environment is the strongest I have seen in decades for strategic because, first of all, financials are investing. So our competition for a 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 is something that needs a larger company or infrastructure help. To move product from a China-based system to a distributed geography, you need a lot of infrastructure to do that, both from a supply chain and quality. It takes a lot of effort and work. And with the fluctuations of moving it all over the place, a lot of smaller, less capitalized people are having troubles, let alone the systems and everything to deal with the constant pricing fluctuations as tariffs change and evolve. So that combination has made it very attractive. So we are seeing real deal flow at real valuations that we have not seen literally in decades. So we have some large opportunities we are looking at. You do not know if they will come through, but it is one of the things that we wrote off on a couple of things that we are working—not wrote off, but expensed in the fourth quarter—related to that. And we will see some highly accretive opportunities if we can execute.

Okay. Sounds great. Appreciate all the detail, and I will turn it over.

Next question comes from Brian McNamara from Canaccord Genuity. Please go ahead with your question.

Hey. Good morning, guys. Thanks for taking the questions. 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 pricing. But I am curious what drove SG&A lower and how sustainable that is?

Yes, it is a great question, Brian. So it is sustainable. It is all a function of how fast we want to grow. And if we have opportunities and there is a good return on that, we can increase investment, which would increase your 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 is not a need for investing in SG&A. We will also see the further benefits one way or the other with our international operations, which will continue to benefit those line items.

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

Right. Just wanted to—sorry to belabor—but as you know, Brian, you have seen us for a little bit. In any given, particularly quarter reporting period, you are going to get margin fluctuations based upon mix—channel mix particularly, but also product.

Understood. So next I am curious, which of your brands saw sales increases in 2025? Outside of Dolly, as overall sales decline for a fourth straight year, what gives you guys confidence that the top line inflects this year?

The main confidence that we see there is the disruptions that we saw in 2025. And again, in the fourth quarter, we got some rebound of things that did not ship from Q2 and Q3, but we will have a much more normalization in a lot of the core business in 2026 because some of that did not come back in 2025 and will in 2026. So that is going to be a natural driver for our business. We talked about Dolly will continue to grow. We are seeing good traction there. In cutlery, we have had a tremendous run for a few years, and a lot of that is new product implementation. Our Build to Board line went from nothing; it created a whole marketplace. The growth trajectory of that piece of cutlery will not continue from the trajectory of growth, but we established a new business, and we will maintain. And there are some other things in that line that we are introducing that, hopefully, will produce some good growth. There are some things we have not disclosed that are new that get us into a new space totally, or internal investment that hopefully will hit 2026. If not, it will hit 2027. But, unfortunately, I cannot 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 just on the brand growth for the year, any brands perform better than the company average?

Yeah. So, I mean, Taylor had a phenomenal year. Taylor is a great business. From the retailer to our customers' perspective, it is very attractive to them because what they track generally as a key metric, which is the velocity and the margins that they make, it is very profitable for them. It is very good, and it had a very good year across the board in 2025. Again, that trajectory will not continue in 2026, but we had a banner year, and that continues to do well. Farberware, across different things, very strong, and Farberware is our growth engine. KitchenAid, we lost some share a couple of years ago at Walmart. That has run through our numbers. We sold some of that that hit us in 2025, so that is actually the opportunities, and we relaunched the kitchen tool piece of that with a new line that is getting tremendous traction. And we also introduced just recently for 2026 a KitchenAid storage product, which we think is beautiful, but is getting, more importantly, acceptance in the marketplace. So that, not in 2025, but 2026 is looking pretty good—KitchenAid.

Great. And 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?

In 2024, we started that program. It was a small base. So part of that 150% was off a small base. We shipped $18 million in 2025. We will have substantial growth in 2026 as well.

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

There are so many questions—it may take an hour to answer. But a couple of things on that front. What we are seeing is container rates are starting to go up, and we will probably start to experience that. We have very attractive long-term contracting for freight. But the reality of what happens in very high escalating periods is the shippers start to ignore those, to be honest. So long-term contracts are a benefit, but sometimes there is only so much that you can benefit, and you will get some of it, but not all of it, in very high inflationary ocean freight environments. We do very little business in the Mideast. We will not get much disruption there. We will get no disruption. We actually have a lot of upside that may not come on some new business, but either way, it is not material. Our European business is in jeopardy of seeing some supply disruption because the shipments are coming in a different— it is going to be longer if they have to go around Africa and the like. But we think our inventory levels are not going to impact that. And from a cost of goods sold perspective, your plastics have resins. Resins are impacted by petroleum cost. We have not seen anything. We will see how that plays out. But if you look at it as a total percentage on a bill of material basis, it is not going to have a huge impact on it.

Great. Very helpful. Thanks very much. I will pass it on.

Our next question comes from Anthony Lebiedzinski from Sidoti & Company. Please go ahead with your question.

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 your SG&A cost. As far as your distribution costs, those also came down in the fourth quarter. How should we be thinking about that line item? And I have a couple of other questions as well.

On the distribution, as I noted, our West Coast facility is running very efficiently given the new warehouse management system—that is working quite well. And as I noted, as an expense as a percentage, because we had selling price increases but there was not any meaningful cost increase, we will continue to see that expense benefit as a percentage. And we think there will be some, let us say, mild disruption expenses perhaps when we move into the Maryland facility. But we anticipate those, and we have done this—we have done it many times, these moves. We are putting that new warehouse management system in that facility, so we are anticipating it to run quite well.

And on SG&A—this also goes to Brian's question a little bit—the moves we have taken are sustainable. The only thing where you will see some bounce back in 2026 versus 2025 is, from a target and incentive compensation perspective, we paid out hardly any—typically nothing to management. And with improved performance in 2026, there will likely be corresponding payment of incentive compensation. But that is not the bulk of the SG&A cost reduction that was achieved. The cost reduction was achieved in 2025.

Got it. Okay. Thanks for that. And then, in terms of the International segment, Laurence, 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 comments on that?

Yes. There was a loss. It was not as pronounced as we had in 2024. As Rob mentioned in his comments, we are not done. The CONCORD—and we will call it CONCORD 2.0—continues. And there are some other things that we had hoped to achieve, but there are legal and other roadblocks that slowed us down. We are looking to achieve those during 2026.

Okay. Got it. And then just a couple of other things here. As far as the fourth quarter, you had a tax benefit, which you addressed, Laurence. How should we think about the tax rate for 2026? Any sort of commentary there on that?

Sure. I know it is very hard with our numbers to figure out tax rate, but we should be in the high 20% range, and that is based on the thing that—I will just say we have some unusual occurrences this quarter, more unusual than others. But what distorts our provision historically has been the loss internationally where, because of a history of losses, you cannot record a tax benefit, and that would distort it. So as we get the International operations to breakeven or better, our tax rate should be in the 27%–28%, and that is a combination of the U.S. federal rate and state.

Gotcha. Got it. Okay. And then lastly, as far as the Maryland distribution center, it sounds like it is 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?

We are anticipating it to be below budget, but we are very confident we can achieve the budget. I think we should beat it. For CapEx, we had originally forecasted $9 million. It may be perhaps less than that, a little less. And we spent a couple of million of it in 2025. So, let us call it around $7 million for that in 2026. But also bear in mind, there will be a little offset compared to historically, because we will not have the maintenance that we typically have in our New Jersey facility, because we are putting in new racking and other things, so in the Maryland facility there will be maybe another $1 million benefit against what we would otherwise spend for routine maintenance.

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

Thanks. Thanks, Anthony.

Ladies and gentlemen, I am 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, Inc., and we look forward to further dialogue in the future. Have a great day.

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

Everyone else has left the call.