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By clicking “I AGREE” [at the end of this document], you indicate that you understand and intend these terms and conditions to be the legal equivalent of a signed, written contract and equally binding, and that you accept such terms and conditions as a condition of viewing any and all Moody’s inform​ation that becomes accessible to you [after clicking “I AGREE”] (the “Information”).   References herein to “Moody’s” include Moody’s Corporation, Inc. and each of its subsidiaries and affiliates.

 

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Related Issuers
Rating Action:

Moody's downgrades Lifetime Brand's CFR to B1; outlook negative

19 Feb 2020

New York, February 19, 2020 -- Moody's Investors Service ("Moody's") downgraded Lifetime Brands, Inc.'s (Lifetime) Corporate Family Rating (CFR) to B1 from Ba3, Probability of Default Rating (PDR) to B1-PD from Ba3-PD, and senior secured term loan rating to B2 from B1. The outlook is negative, and the Speculative Grade Liquidity is unchanged at SGL-2.

"Today's ratings downgrade and outlook change to negative reflect the company's subdued pace of deleveraging versus our expectations because of ongoing operating and execution challenges. The challenges include margin pressure due to tariffs and operational issues Lifetime experienced with consolidating its UK operations, resulting in still elevated financial leverage" said Moody's lead analyst Oliver Alcantara. "Considering our expectation for only modest earnings growth over the next 12 months, credit metrics will remain weak with debt-to-EBITDA leverage at around 5.0x" added Alcantara.

Downgrades:

..Issuer: Lifetime Brands, Inc.

....Corporate Family Rating, Downgraded to B1 from Ba3

....Probability of Default Rating, Downgraded to B1-PD from Ba3-PD

....Gtd Senior Secured Term Loan B, Downgraded to B2(LGD4) from B1(LGD4)

Outlook Actions:

..Issuer: Lifetime Brands, Inc.

....Outlook, Changed To Negative From Stable

RATINGS RATIONALE

Lifetime's B1 CFR broadly reflects its relatively small scale with annual revenue under $1.0 billion, and its weak credit metrics profile with elevated debt/EBITDA leverage that Moody's estimates at around 5.4x at fiscal year-end December 31, 2019. Moody's projects leverage will fall over the next year due to modest earnings growth and debt repayment, but debt/EBITDA will remain high at around 5.0x at the end of fiscal 2020. The credit profile also reflects Lifetime's relatively low mid-single digits operating profit margins, and its geographic and customer concentration. The company's concentration in the homeware product category and susceptibility to discretionary consumer spending also constrain the rating. In addition, Lifetime competes with significantly larger, global, and well-known manufacturers in mature product categories with limited growth prospects.

However, the credit profile is broadly supported by the company's strong market position in the homewares industry with many leading brands in narrowly defined product categories, and its good brand and product diversification. Lifetime's well-diversified retail distribution channel, which includes e-commerce, positions the company well to benefit from the continued shift of consumer spending to online. Lifetime's good liquidity is supported by access to a $150 million ABL revolving facility due March 2023, Moody's expectation for positive free cash flow of around $30 million in fiscal 2020, and lack of near term debt maturities until its revolver is due. The extended maturity of the approximately $270 million first lien term loan due February 2025 provides flexibility to execute on the growth initiatives the company outlined at its January 2020 investor day. The company also has a reasonably conservative 3.0x net debt-to-EBITDA target (based on the company's calculation).

The negative outlook reflects the company's elevated financial leverage and the uncertainty regarding the company's ability to materially grow revenue and earnings such that debt/EBITDA leverage is below 5.0x over the next 12 months.

Ratings could be downgraded if the company's operating results do not improve or if the company does not reduce debt/EBITDA leverage below 5.0x by fiscal 2020. Additional factors that could lead to a downgrade include a deterioration of liquidity, or if the company's financial policies become more aggressive, in particular regarding a material debt-funded acquisition or shareholder returns.

Ratings could be upgraded if Lifetime materially increases its revenue scale and generates consistent organic revenue growth with a stable to higher EBITDA margin. Debt/EBITDA sustained below 4.0x and free cash flow/debt above 10% would also be necessary for an upgrade.

Lifetime Brands, Inc. designs, sources and sells branded kitchenware, tableware and other products used in the home. Lifetime Brands is publicly traded, with annual revenue of approximately $736 million for the twelve months period ended September 30, 2019.

The principal methodology used in these ratings was Consumer Durables Industry published in April 2017. Please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.

REGULATORY DISCLOSURES

For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Oliver Alcantara
Analyst
Corporate Finance Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

John E. Puchalla, CFA
Associate Managing Director
Corporate Finance Group
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

No Related Data.
© 2021 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.

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MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.

​
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