LIFETIME BRANDS, INC 10-Q

Item 1. Financial Statements LIFETIME BRANDS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share data) June 30, 2025 December 31, 2024 (unaudited) ASSETS CURRENT ASSETS Cash and cash equivalents $ 12,045 $ 2,929 Accounts receivable, less allowances of $ 15,005 at June 30, 2025 and $ 14,093 at December 31, 2024 89,554 156,743 Inventory 218,208 202,408 Prepaid expenses and other current assets 12,138 11,488 Income taxes receivable 5,036 — TOTAL CURRENT ASSETS 336,981 373,568 PROPERTY AND EQUIPMENT, net 15,952 15,049 OPERATING LEASE RIGHT-OF-USE ASSETS 55,363 59,571 INTANGIBLE ASSETS, net 141,657 183,527 OTHER ASSETS 1,924 2,595 TOTAL ASSETS $ 551,877 $ 634,310 LIABILITIES AND STOCKHOLDERS’ EQUITY CURRENT LIABILITIES Current maturity of term loan $ 4,952 $ 4,891 Accounts payable 52,528 60,029 Accrued expenses 53,419 70,848 Income taxes payable — 830 Current portion of operating lease liabilities 16,027 15,145 TOTAL CURRENT LIABILITIES 126,926 151,743 OTHER LONG-TERM LIABILITIES 15,947 15,955 INCOME TAXES PAYABLE, LONG-TERM 706 706 OPERATING LEASE LIABILITIES 50,604 56,740 DEFERRED INCOME TAXES 5,787 5,601 REVOLVING CREDIT FACILITY 37,683 42,693 TERM LOAN 128,456 130,949 STOCKHOLDERS’ EQUITY Preferred stock, $ 1.00 par value, shares authorized: 100 shares of Series A and 2,000,000 shares of Series B; none issued and outstanding — — Common stock, $ 0.01 par value, shares authorized: 50,000,000 at June 30, 2025 and December 31, 2024; shares issued and outstanding: 22,657,435 at June 30, 2025 and 22,155,735 at December 31, 2024 227 222 Paid-in capital 282,252 280,566 Accumulated deficit ( 78,426 ) ( 32,550 ) Accumulated other comprehensive loss ( 18,285 ) ( 18,315 ) TOTAL STOCKHOLDERS’ EQUITY 185,768 229,923 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 551,877 $ 634,310 See accompanying notes to unaudited condensed consolidated financial statements. - 2 - Table of Contents LIFETIME BRANDS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) (unaudited) Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Net sales $ 131,862 $ 141,666 $ 271,947 $ 283,908 Cost of sales 81,023 87,116 170,471 171,811 Gross margin 50,839 54,550 101,476 112,097 Distribution expenses 17,314 15,052 35,384 31,233 Selling, general and administrative expenses 37,495 38,331 68,963 77,867 Goodwill impairment 33,237 — 33,237 — (Loss) income from operations ( 37,207 ) 1,167 ( 36,108 ) 2,997 Interest expense ( 5,054 ) ( 5,157 ) ( 9,969 ) ( 10,771 ) Mark to market loss on interest rate derivatives ( 220 ) ( 82 ) ( 747 ) ( 256 ) Loss on equity securities — ( 14,152 ) — ( 14,152 ) Loss before income taxes and equity in losses ( 42,481 ) ( 18,224 ) ( 46,824 ) ( 22,182 ) Income tax benefit (provision) 2,782 57 2,924 ( 153 ) Equity in losses, net of taxes — — — ( 2,092 ) NET LOSS $ ( 39,699 ) $ ( 18,167 ) $ ( 43,900 ) $ ( 24,427 ) BASIC LOSS PER COMMON SHARE $ ( 1.83 ) $ ( 0.85 ) $ ( 2.03 ) $ ( 1.14 ) DILUTED LOSS PER COMMON SHARE $ ( 1.83 ) $ ( 0.85 ) $ ( 2.03 ) $ ( 1.14 ) See accompanying notes to unaudited condensed consolidated financial statements. - 3 - Table of Contents LIFETIME BRANDS, INC. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (in thousands) (unaudited) Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Net loss $ ( 39,699 ) $ ( 18,167 ) $ ( 43,900 ) $ ( 24,427 ) Other comprehensive (loss) income, net of taxes: Net change in translation adjustment 195 14,205 612 14,245 Net change in cash flow hedges ( 461 ) 22 ( 590 ) 223 Effect of retirement benefit obligations 4 12 8 25 Other comprehensive (loss) income, net of taxes ( 262 ) 14,239 30 14,493 Comprehensive loss $ ( 39,961 ) $ ( 3,928 ) $ ( 43,870 ) $ ( 9,934 ) See accompanying notes to unaudited condensed consolidated financial statements. - 4 - Table of Contents LIFETIME BRANDS, INC. CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (in thousands) (unaudited) Common stock Paid-in capital Accumulated deficit Accumulated other comprehensive loss Total Shares Amount BALANCE AT DECEMBER 31, 2024 22,156 $ 222 $ 280,566 $ ( 32,550 ) $ ( 18,315 ) $ 229,923 Net loss — — — ( 4,201 ) — ( 4,201 ) Other comprehensive income, net of taxes — — — — 292 292 Net issuance of restricted shares granted to employees 338 3 ( 3 ) — — — Stock compensation expense — — 1,063 — — 1,063 Shares effectively repurchased for required employee withholding taxes ( 80 ) ( 1 ) ( 415 ) — — ( 416 ) Dividends (1) — — — ( 985 ) — ( 985 ) BALANCE AT MARCH 31, 2025 22,414 $ 224 $ 281,211 $ ( 37,736 ) $ ( 18,023 ) $ 225,676 Net loss — — — ( 39,699 ) — ( 39,699 ) Other comprehensive loss, net of taxes — — — — ( 262 ) ( 262 ) Net issuance of restricted shares granted to employees and directors 243 3 ( 3 ) — — — Stock compensation expense — — 1,044 — — 1,044 Dividends (1) — — — ( 991 ) — ( 991 ) BALANCE AT JUNE 30, 2025 22,657 $ 227 $ 282,252 $ ( 78,426 ) $ ( 18,285 ) $ 185,768 Common stock Paid-in capital Accumulated deficit Accumulated other comprehensive loss Total Shares Amount BALANCE AT DECEMBER 31, 2023 21,813 $ 218 $ 277,728 $ ( 13,568 ) $ ( 33,499 ) $ 230,879 Net loss — — — ( 6,260 ) — ( 6,260 ) Other comprehensive income, net of taxes — — — — 254 254 Performance shares issued to employees 152 2 ( 2 ) — — — Net issuance of restricted shares granted to employees 213 2 ( 2 ) — — — Stock compensation expense — — 799 — — 799 Shares effectively repurchased for required employee withholding taxes ( 105 ) ( 1 ) ( 1,027 ) — — ( 1,028 ) Dividends (1) — — — ( 943 ) — ( 943 ) BALANCE AT MARCH 31, 2024 22,073 $ 221 $ 277,496 $ ( 20,771 ) $ ( 33,245 ) $ 223,701 Net loss — — — ( 18,167 ) — ( 18,167 ) Other comprehensive income, net of taxes — — — — 14,239 14,239 Net issuance of restricted shares granted to employees and directors 92 1 ( 1 ) — — — Stock compensation expense — — 1,044 — — 1,044 Shares effectively repurchased for required employee withholding taxes ( 7 ) — ( 55 ) — — ( 55 ) Dividends (1) — — — ( 957 ) — ( 957 ) BALANCE AT JUNE 30, 2024 22,158 $ 222 $ 278,484 $ ( 39,895 ) $ ( 19,006 ) $ 219,805 (1) Cash dividends declared per share of common stock were $ 0.085 and $ 0.085 in the six months ended June 30, 2025 and 2024, respectively. See accompanying notes to unaudited condensed consolidated financial statements. - 5 - Table of Contents LIFETIME BRANDS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited) Six Months Ended June 30, 2025 2024 OPERATING ACTIVITIES Net loss $ ( 43,900 ) $ ( 24,427 ) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 11,135 9,833 Goodwill impairment 33,237 — Amortization of financing costs 1,390 1,471 Mark to market loss on interest rate derivatives 747 256 Operating leases, net ( 1,134 ) ( 965 ) Provision (recovery) for doubtful accounts 1,408 ( 287 ) Deferred income taxes — 144 Stock compensation expense 2,106 1,844 Equity in losses, net of taxes — 2,092 Loss on equity securities — 14,152 Changes in operating assets and liabilities Accounts receivable 67,239 42,712 Inventory ( 12,318 ) ( 20,184 ) Prepaid expenses, other current assets and other assets ( 629 ) 1,687 Accounts payable, accrued expenses and other liabilities ( 27,319 ) ( 3,213 ) Income taxes receivable ( 5,036 ) ( 3,546 ) Income taxes payable ( 869 ) ( 639 ) NET CASH PROVIDED BY OPERATING ACTIVITIES 26,057 20,930 INVESTING ACTIVITIES Purchases of property and equipment ( 2,746 ) ( 1,098 ) NET CASH USED IN INVESTING ACTIVITIES ( 2,746 ) ( 1,098 ) FINANCING ACTIVITIES Proceeds from revolving credit facility 145,891 74,207 Repayments of revolving credit facility ( 154,134 ) ( 101,804 ) Repayments of term loan ( 3,750 ) ( 1,875 ) Payments for finance lease obligations ( 21 ) ( 14 ) Payments of tax withholding for stock based compensation ( 416 ) ( 1,083 ) Cash dividends paid ( 1,933 ) ( 1,977 ) NET CASH USED IN FINANCING ACTIVITIES ( 14,363 ) ( 32,546 ) Effect of foreign exchange on cash 168 ( 79 ) INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 9,116 ( 12,793 ) Cash and cash equivalents at beginning of period 2,929 16,189 CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 12,045 $ 3,396 See accompanying notes to unaudited condensed consolidated financial statements. - 6 - LIFETIME BRANDS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS June 30, 2025 (unaudited) NOTE 1 — BASIS OF PRESENTATION AND SUMMARY OF ACCOUNTING POLICIES Organization and business Lifetime Brands, Inc. (“the Company”) designs, sources and sells branded kitchenware, tableware and other products used in the home and markets its products under a number of widely-recognized brand names and trademarks, which are either owned or licensed by the Company or through retailers’ private labels and their licensed brands. The Company’s products, which are targeted primarily towards consumers purchasing moderately priced kitchenware, tableware and housewares, are sold through nearly every major level of trade. The Company generally markets several lines within each of its product categories under more than one brand. The Company sells its products directly to retailers (who may resell the Company’s products through their websites) and, to a lesser extent, to distributors. The Company also sells a limited selection of its products directly to consumers through its own websites. Basis of presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and with the instructions to Quarterly Reports on Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments, which consist of normal recurring accruals and non-recurring adjustments, considered necessary for a fair presentation have been included. Certain immaterial amounts from the prior year have been reclassified to conform to the current year presentation. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024. Operating results for the three and six months ended June 30, 2025 are not necessarily indicative of the results that may be expected for the year ending December 31, 2025. The Company’s business and working capital needs are seasonal, with a majority of sales occurring in the third and fourth quarters. In 2024 and 2023, net sales for the third and fourth quarters accounted for 58 % and 57 % of total annual net sales, respectively. In anticipation of the pre-holiday shipping season, inventory levels increase primarily in the June through October time period. The Company’s current estimates contemplate current and expected future conditions, as applicable; however it is reasonably possible that actual conditions could differ from expectations, which could materially affect the Company’s results of operations and financial position. Revenue recognition The Company sells products wholesale, to retailers and distributors, and retail, directly to the consumer. Wholesale sales and retail sales are primarily recognized at the point in time the customer obtains control of the products, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those products. The Company offers various sales incentives and promotional programs to its customers in the normal course of business. These incentives and promotions typically include arrangements such as cooperative advertising, buydowns, volume rebates and discounts. These arrangements and an estimate for products expected to be returned are reflected as reductions of revenue at the time of sale. See NOTE 2 —REVENUE to the unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for additional information. Cost of sales Cost of sales consist primarily of costs associated with the production and procurement of product, inbound freight costs, purchasing costs, handling costs, duties and tariffs, royalties, and other product procurement related charges. - 7 - Table of Contents LIFETIME BRANDS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS June 30, 2025 (unaudited) Distribution expenses Distribution expenses consist primarily of warehousing expenses and freight-out expenses. Accounts receivable The Company periodically reviews the collectability of its accounts receivable and establishes allowances for estimated credit losses that could result from the inability of its customers to make required payments, taking into consideration customer credit history and financial condition, industry and market segment information, credit reports, and expectations of current and future economic conditions. A considerable amount of judgment is required to assess the ultimate realization of these receivables including assessing the initial and on-going creditworthiness of the Company’s customers. The Company also maintains an allowance for anticipated customer deductions. Contractual deductions for incentives and promotions granted to customers such as cooperative advertising, are recorded as a reduction to accounts receivable at the time of sale. These deductions are primarily fixed amounts; however, in certain cases, these deductions are not fixed and, therefore, the allowance is estimated based on currently available information and historical trends of deductions. Receivable purchase agreement The Company has an uncommitted Receivables Purchase Agreement with HSBC Bank USA, National Association (“HSBC”) as Purchaser (the “Receivables Purchase Agreement”). The sale of accounts receivable, under the Receivables Purchase Agreement with HSBC, is excluded from the Company’s unaudited condensed consolidated balance sheets at the time of sale and the related sale expense is included in selling, general and administrative expenses in the Company’s unaudited condensed consolidated statements of operations. The Company did not sell receivables to HSBC during the three and six months ended June 30, 2025 and June 30, 2024. At June 30, 2025, $ 19.2 million of accounts receivables were available for sale to HSBC, net of applicable charges. Inventory Inventory consists principally of finished goods sourced from third-party suppliers. Inventory also includes finished goods, work in process and raw materials related to the Company’s manufacture of sterling silver products. Inventory is priced using the lower of cost (first-in, first-out basis) or net realizable value. The Company estimates the selling price of its inventory on a product-by-product basis based on the current selling environment. If the estimated selling price is lower than the inventory’s cost, the Company reduces the value of the inventory to its net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable cost of completion, disposal and transportation. The components of inventory were as follows (in thousands): June 30, 2025 December 31, 2024 Finished goods $ 208,434 $ 192,480 Work in process 114 62 Raw materials 9,660 9,866 Total $ 218,208 $ 202,408 - 8 - Table of Contents LIFETIME BRANDS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS June 30, 2025 (unaudited) Fair value of financial instruments The Company determined that the carrying amounts of cash and cash equivalents, accounts receivable and accounts payable are reasonable estimates of their fair values because of their short-term nature. The Company determined that the carrying amounts of borrowings outstanding under its ABL Agreement and Term Loan (each as defined in NOTE 6 — DEBT to the unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q) approximate fair value since such borrowings bear interest at variable market rates. Derivatives The Company accounts for derivative instruments in accordance with Accounting Standard Codification (“ASC”) Topic 815, Derivatives and Hedging ( “ASC 815” ) . ASC 815 requires that all derivative instruments be recognized on the balance sheet at fair value as either an asset or liability. Changes in the fair value of derivatives that qualify as hedges and have been designated as part of a hedging relationship for accounting purposes are included in accumulated other comprehensive loss and are subsequently recognized in the Company’s unaudited condensed consolidated statements of operations in the same period that the hedged items are recognized in earnings. Changes in fair value of derivatives that do not qualify as hedging instruments for accounting purposes are recorded in the Company’s unaudited condensed consolidated statements of operations. Goodwill, intangible assets and long-lived assets Goodwill is not amortized but, instead, subject to an annual impairment assessment on October 1 or more frequently if events or conditions were to indicate the carrying value of a reporting unit may not be recoverable. As it relates to the goodwill assessment, the Company first assesses qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the quantitative goodwill impairment testing described in the Financial Accounting Standards Board's (“FASB”) ASC Topic 350, Intangibles – Goodwill and Other. If, after assessing qualitative factors, the Company determines that it is more likely than not that the fair value of a reporting unit exceeds its carrying amount, then no further testing is performed for that reporting unit. However, if based on the Company’s qualitative assessment it concludes that it is more likely than not that the fair value of the reporting unit is less than its carrying amount, or if the Company elects to bypass the qualitative assessment, the Company will proceed with performing the quantitative impairment test. Impairment testing is based upon the best information available, including estimates of fair value which incorporate assumptions marketplace participants would use in making their estimates of fair value. The Company performed its annual impairment assessment of its U.S. reporting unit as of October 1, 2024 by comparing the fair value of the reporting unit with its carrying value. The Company performed the analysis using a discounted cash flow and market multiple method. As of October 1, 2024, the fair value of the U.S. reporting unit exceeded the carrying value of goodwill by 5 %. In the second quarter of 2025, the Company observed a sustained decline in the market valuation of the Company's common stock. Additionally, the Company's near term forecasts for the U.S. reporting unit were revised downward due to changes in retailer and consumer buying patterns, which were impacted by the recent changes in the U.S tariff policies. Based on these factors the Company concluded that impairment indicators for the U.S. reporting unit were present in the second quarter. The Company performed an interim impairment test of the goodwill in the U.S. reporting unit by comparing its fair value with its carrying value. The analysis was performed by using a discounted cash flow and market multiple method. Accordingly, this fair value measurement is classified as Level 3 since it is based primarily on unobservable inputs. Based upon the analysis per formed, the Company's U.S. reporting unit goodwill was fully impaired and a $ 33.2 million non-cash goodwill impairment charge was recognized in the second quarter of 2025. The goodwill impairment charge was the result of the decline in the Company's near term forecasts that were revised downward due to the changes in retailer and consumer buying patterns and an increase to the company-specific risk premium, which is an input to the cost of capital assumption, to address the potential risks in the long-term forecast which remain uncertain at this time. As of June 30, 2025, the carrying value of the Company's total goodwill has been reduced to zero . The significant assumptions used under the income approach, or discounted cash flow method, are projected net sales, projected earnings before interest, tax, depreciation and amortization (“EBITDA”), and the cost of capital. Projected net sales and projected EBITDA were determined to be significant assumptions because they are the primary drivers of the projected cash flows in the discounted cash flow fair value model. Cost of capital was also determined to be a significant assumption as it is - 9 - Table of Contents LIFETIME BRANDS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS June 30, 2025 (unaudited) the discount rate used to calculate the current fair value of those projected cash flows. The calculation of cost of capital includes a number of subjective inputs, including a company-specific risk premium to capture the perceived risks associated with the reporting unit’s projected cash flows used in the discounted cash flow method. Determining fair value using a market approach considers multiples of financial metrics based on both acquisitions and trading multiples of a selected peer group of companies. From the comparable companies, a representative market multiple is determined which is applied to financial metrics to estimate the fair value of a reporting unit. Long-lived assets, including intangible assets deemed to have finite lives, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Impairment indicators include, among other conditions, cash flow deficits, historic or anticipated declines in revenue or operating profit or material adverse changes in the business climate that indicate that the carrying amount of an asset may be impaired. When impairment indicators are present, the recoverability of the asset is measured by comparing the carrying value of the asset to the estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of the asset is not recoverable, the impairment to be recognized is measured by the amount by which the carrying amount of each long-lived asset exceeds the fair value of the asset. The Company performed a recoverability test for long-lived assets, including intangible assets with finite lives, within the U.S. asset group as of June 30, 2025, and concluded that no impairment existed as total estimated future undiscounted cash flows expected to be generated by the asset group exceeded the asset group's carrying amount. See NOTE 5 — INTANGIBLE ASSETS to the unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for additional information. Leases The Company determines if an arrangement is a lease at the inception of a contract. Operating lease right-of-use (“ROU”) assets are included in operating lease right-of-use assets on the condensed consolidated balance sheets. The current and long-term components of operating lease liabilities are included in the current portion of operating lease liability and operating lease liabilities, respectively, on the condensed consolidated balance sheets. Finance leases are included in property and equipment, net, accrued expenses and other long-term liabilities. The Company’s finance leases are not material to the Company’s condensed consolidated balance sheets. Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term. As most of the Company’s leases do not provide an implicit rate, the Company uses an incremental borrowing rate based on the information available at the commencement date in determining the present value of future payments. The operating lease ROU asset may also include any lease payments made, adjusted for any prepaid or accrued rent payments, lease incentives, and initial direct costs incurred. Certain leases may include options to extend or terminate the lease. Periods to extend the lease are included in the lease term when the Company is reasonably certain that the extension option would be exercised, and the associated lease payments for such periods are reflected in the ROU asset and lease liability. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. For certain equipment leases, the Company applies a portfolio approach to effectively account for any ROU assets and lease liabilities. Leases with an initial term of twelve months or less are not recorded on the balance sheet. The Company has elected the practical expedient to account for each separate lease component of a contract and its associated non-lease components as a single lease component, thus causing all fixed payments to be capitalized. New accounting pronouncements Updates not listed below were assessed and either determined to not be applicable or are expected to have a minimal effect on the Company’s financial position, results of operations, and disclosures. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures: This guidance is intended to enhance the transparency and decision usefulness of income tax disclosures. The amendments in ASU 2023-09 address investor requests for enhanced income tax information primarily through changes to the rate reconciliation and income taxes paid information. Early adoption is permitted. The new guidance is effective for public business entities for - 10 - Table of Contents LIFETIME BRANDS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS June 30, 2025 (unaudited) annual periods beginning after December 15, 2024 on a prospective basis. Retrospective application is permitted. Management is currently evaluating the impact of this standard on its consolidated financial statements and related disclosures. In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. The guidance requires additional disclosure in the notes to the financial statements for specified information about certain costs and expenses. The new guidance is effective for public business entities for annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027. Early adoption is permitted. The amendments in this ASU may be applied either (1) prospectively to financial statements issued for reporting periods after the effective date of this ASU or (2) retrospectively to all prior periods presented in the financial statements. Management is currently evaluating the impact of this standard on its consolidated financial statements and related disclosures. NOTE 2 — REVENUE The Company sells products wholesale, to retailers and distributors, and retail, directly to consumers. Wholesale sales and retail sales are recognized at the point in time the customer obtains control of the products in an amount that reflects the consideration the Company expects to be entitled to in exchange for those products. To indicate the transfer of control, the Company must have a present right to payment, legal title must have passed to the customer, the customer must have the significant risks and rewards of ownership, and where acceptance is not a formality, the customer must have accepted the product or service. The Company’s principal terms of sale are Free On Board (“FOB”) Shipping Point, or equivalent, and, as such, the Company primarily transfers control and records revenue for product sales upon shipment. Sales arrangements with delivery terms that are not FOB Shipping Point are not recognized upon shipment and the transfer of control for revenue recognition is evaluated based on the associated shipping terms and customer obligations. Shipping and handling fees that are billed to customers in sales transactions are included in net sales and amounted to $ 0.8 million and $ 1.4 million, respectively, for the three and six months ended June 30, 2025 and $ 0.6 million and $ 1.2 million, respectively, for the three and six months ended June 30, 2024. Net sales exclude taxes that are collected from customers and remitted to the taxing authorities. The Company offers various sales incentives and promotional programs to its wholesale customers from time to time in the normal course of business. These incentives and promotions typically include arrangements such as cooperative advertising, buydowns, volume rebates and discounts. These sales incentives and promotions represent variable consideration and are reflected as reductions in net sales in the Company’s unaudited condensed consolidated statements of operations. While many of the sales incentives and promotions are contractually agreed upon with the Company’s customers, certain of the sales incentives and promotions are non-contractual and require the Company to estimate the amount of variable consideration based on historical experience and other known factors or as the most likely amount in a range of possible outcomes. On a quarterly basis, variable consideration is assessed on a portfolio approach in estimating the extent to which the components of variable consideration are constrained. Payment terms vary by customer, but generally range from 30 to 90 days or at the point of sale for the Company’s retail direct sale s. The Company incurs certain direct incremental costs to obtain contracts with customers, such as sales-related co mmissions, where the recognition period for the related revenue is less than one year. These costs are expensed as incurred and recorded within selling, general and administrative expenses in the unaudited condensed consolidated statements of operations. Incidental items that are immaterial in the context of the contract are expensed as incurred. - 11 - Table of Contents LIFETIME BRANDS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS June 30, 2025 (unaudited) The following tables present the Company’s net sales disaggregated by segment, product category and geographic region for the three and six months ended June 30, 2025 and 2024 (in thousands): Three Months Ended Six Months Ended June 30, June 30, 2025 2024 2025 2024 U.S. segment Kitchenware $ 82,549 $ 80,787 $ 162,070 $ 164,317 Tableware 21,323 26,341 48,900 52,100 Home Solutions 15,443 23,375 36,855 44,566 Total U.S. segment 119,315 130,503 247,825 260,983 International segment 12,547 11,163 24,122 22,925 Total net sales $ 131,862 $ 141,666 $ 271,947 $ 283,908 United States $ 115,046 $ 123,695 $ 239,251 $ 249,829 United Kingdom 7,233 7,150 14,187 14,616 Rest of World 9,583 10,821 18,509 19,463 Total net sales $ 131,862 $ 141,666 $ 271,947 $ 283,908 NOTE 3 — LEASES The Company has operating leases for corporate offices, distribution facilities, a manufacturing plant, and certain vehicles. The components of lease expense for the three and six months ended June 30, 2025 and 2024 were as follows (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Operating lease expenses (1) : Fixed lease expense $ 4,318 $ 4,265 $ 8,576 $ 8,528 Variable lease expense 1,812 1,650 3,565 3,018 Total $ 6,130 $ 5,915 $ 12,141 $ 11,546 (1) Expenses are recorded within distribution expenses and selling, general and administrative expenses on the unaudited condensed consolidated statement of operations. Supplemental cash flow information for lease related liabilities and assets for the six months ended June 30, 2025 and 2024 were as follows (in thousands): Six Months Ended June 30, 2025 2024 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows for operating leases $ 9,710 $ 9,493 Six Months Ended June 30, 2025 2024 Right-of-use assets obtained in exchange for lease obligations: Operating leases $ 754 $ 423 - 12 - Table of Contents LIFETIME BRANDS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS June 30, 2025 (unaudited) The aggregate future lease payments for operating leases as of June 30, 2025 were as follows (in thousands): Operating 2025 (excluding the six months ended June 30, 2025) $ 9,847 2026 19,361 2027 15,125 2028 13,115 2029 6,879 2030 5,058 Thereafter 9,385 Total lease payments 78,770 Less: Interest ( 12,139 ) Present value of lease payments $ 66,631 Average lease terms and discount rates were as follows: June 30, 2025 Operating leases: Weighted-average remaining lease term (years) 5.0 Weighted-average discount rate 6.6 % On January 23, 2025, the Company entered into a lease agreement for a new distribution center in Hagerstown, Maryland (“Hagerstown Facility”). The term of the lease is 180 months following the rent commencement date, which will occur in the first quarter of 2026. Base rent for the first year of the lease is $ 7.3 million, escalating by 3 % annually. A portion of the base rent will be abated for the first 36 months at the annual prevailing rate for a total rent abatement of $ 7.2 million. The lease agreement also includes a total tenant improvement allowance of $ 5.1 million. NOTE 4 — INVESTMENT As of June 30, 2025, the Company has a 24.7 % interest in Grupo Vasconia S.A.B. (“Vasconia”), an integrated manufacturer of aluminum products and a housewares company in Mexico. Shares of Vasconia’s capital stock are traded on the Bolsa Mexicana de Valores, the Mexican Stock Exchange. The Quotation Key is VASCONI. During the second quarter of 2024, Vasconia’s shareholders approved a resolution to a reorganization process in terms of the Law of Commercial Bankruptcy in Mexico and subsequently a bankruptcy suit was filed against Vasconia by one of its largest suppliers. The Company concluded that the recent events constituted a loss of significant influence and resulted in the discontinuation of the equity method of accounting. The Company accounts for its Vasconia investment at fair value in accordance with Accounting Standards Codification (“ASC”) Topic 321: Investments — Equity Securities , with any changes in fair value recorded within income (loss) on equity securities on the consolidated statements of operations. The fair value of the Vasconia investment was not material as of June 30, 2025. Given Vasconia's limited trading activity, recent operating results of Vasconia and impact of the bankruptcy related activity, the fair value of the Vasconia investment was measured using the income approach based on Level 3 unobservable inputs. Prior to accounting for the investment in Vasconia at fair value, equity in losses, net of taxes recognized for the six months ended June 30, 2024 was $ 2.1 million. On March 13, 2025, the Company and Vasconia entered into Amendment No. 6 of the Shares Subscription Agreement, which among other items, terminated the Company’s rights to designate individuals to be nominated as members of the Vasconia board of directors. The Company did not have any designated members nominated to the Vasconia board of directors as of the date of the amendment. - 13 - Table of Contents LIFETIME BRANDS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS June 30, 2025 (unaudited) NOTE 5 — INTANGIBLE ASSETS Intangible assets consisted of the following as of June 30, 2025 and December 31, 2024 (in thousands): June 30, 2025 December 31, 2024 Gross Impairment Accumulated Amortization Net Gross Accumulated Amortization Net Goodwill (1) $ 33,237 $ ( 33,237 ) $ — $ — $ 33,237 $ — $ 33,237 Finite-lived intangible assets: Licenses 15,847 — ( 12,794 ) 3,053 15,847 ( 12,566 ) 3,281 Trade names 104,661 — ( 32,070 ) 72,591 104,459 ( 28,619 ) 75,840 Customer relationships 143,159 — ( 78,426 ) 64,733 143,157 ( 73,505 ) 69,652 Other 5,902 — ( 4,622 ) 1,280 5,868 ( 4,351 ) 1,517 Total $ 302,806 $ ( 33,237 ) $ ( 127,912 ) $ 141,657 $ 302,568 $ ( 119,041 ) $ 183,527 (1) The net value at June 30, 2025 reflects a reduction of $ 113.0 million impairment charges within U.S. segment and $ 11.9 million impairment charges within International segment. The gross and net value at December 31, 2024 reflect a reduction of $ 79.8 million impairment charges within U.S. segment and $ 11.9 million impairment charges within International segment. Goodwill impairment test In the second quarter of 2025, the Company observed a sustained decline in the market valuation of the Company's common stock. Additionally, the Company's near term forecasts for the U.S. reporting unit were revised downward due to changes in retailer and consumer buying patterns, which were impacted by the recent changes in the U.S tariff policies. Based on these factors the Company concluded that impairment indicators for the U.S. reporting unit were present in the second quarter. The Company performed an interim impairment test of the goodwill in the U.S. reporting unit by comparing its fair value with its carrying value. The analysis was performed by using a discounted cash flow and market multiple method. Accordingly, this fair value measurement is classified as Level 3 since it is based primarily on unobservable inputs. Based upon the analysis per formed, the Company's U.S. reporting unit goodwill was fully impaired and a $ 33.2 million non-cash goodwill impairment charge was recognized in the second quarter of 2025. The goodwill impairment charge was the result of the decline in the Company's near term forecasts that were revised downward due to the changes in retailer and consumer buying patterns and an increase to the company-specific risk premium, which is an input to the cost of capital assumption, to address the potential risks in the long-term forecast which remain uncertain at this time. As of June 30, 2025, the carrying value of the Company's total goodwill has been reduced to zero . NOTE 6 — DEBT On August 26, 2022, the Company entered into Amendment No. 2 (the “Amendment”) to the Company’s credit agreement, dated as of March 2, 2018 (as amended, the “ABL Agreement”) among the Company, as a Borrower, certain subsidiaries of the Company, as Borrowers and/or Loan Parties, JPMorgan Chase Bank, N.A., as Administrative Agent and a Lender. The ABL Agreement provides for a senior secured asset-based revolving credit facility in the maximum aggregate principal amount of $ 200.0 million, which facility will mature on August 26, 2027. On November 14, 2023, the Company entered into Amendment No. 2 to amend the Loan Agreement, dated as of March 2, 2018, among the Company, as borrower, the other loan parties from time to time party thereto, the lenders from time to time party thereto, and JPMorgan Chase Bank, N.A., as Administrative Agent (as amended, the “Term Loan” and together with the ABL Agreement, the “Debt Agreements”). The Term Loan has a principal amount of $ 150.0 million, and matures on August 26, 2027. The Term Loan requires the Company to make quarterly payments of principal each equal to 1.25 % of the aggregate principal amount of the Term Loan, which commenced on March 31, 2024, with the remaining balance payable on the maturity date. The Term Loan requires the Company to make an annual prepayment of principal, beginning with those for the fiscal year ending December 31, 2024, based upon a percentage of the Company’s excess cash flow, (“Excess Cash Flow”), if any. The percentage applied to the Company’s Excess Cash Flow is based on the Company’s Total Net Leverage Ratio (as defined in the Debt Agreements). When an Excess Cash Flow payment is required, each lender has the option to decline a portion or all of the - 14 - Table of Contents LIFETIME BRANDS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS June 30, 2025 (unaudited) prepayment amount payable to it. Per the Term Loan, when the Company makes an Excess Cash Flow prepayment, the payment is first applied to satisfy the next eight (8) scheduled future quarterly required payments of the Term Loan in order of maturity and then to the remaining scheduled installments on a pro rata basis. The maximum borrowing amount under the ABL Agreement may be increased to up to $ 250.0 million if certain conditions are met. One or more tranches of additional term loans (the “Incremental Term Facilities”) may be added under the Term Loan if certain conditions are met. The Incremental Facilities may not exceed the sum of (i) $ 50.0 million plus (ii) an unlimited amount so long as, in the case of (ii) only, the Company’s secured net leverage ratio, as defined in and computed on a pro forma basis pursuant to the Term Loan, after giving effect to such increase, is no greater than 3.25 to 1.00, subject to certain limitations and for the period defined pursuant to the Term Loan but not to mature earlier than the maturity date of the then existing term loans. As of June 30, 2025 and December 31, 2024, the total availability under the ABL Agreement were as follows (in thousands): June 30, 2025 December 31, 2024 Maximum aggregate principal allowed $ 160,114 $ 176,329 Outstanding borrowings under the ABL Agreement ( 37,683 ) ( 42,693 ) Standby letters of credit ( 11,564 ) ( 8,828 ) Total availability under the ABL Agreement $ 110,867 $ 124,808 Availability under the ABL Agreement is limited to the lesser of the $ 200.0 million commitment thereunder and the borrowing base and therefore depends on the valuation of certain current assets comprising the borrowing base. The borrowing capacity under the ABL Agreement will depend, in part, on eligible levels of accounts receivable and inventory that fluctuate regularly. Due to the seasonality of the Company’s business, the Company may have greater borrowing availability during the third and fourth quarters of each year. Consequently, the $ 200.0 million commitment thereunder may not represent actual borrowing capacity. The Company’s borrowing capacity may be further limited by the Term Loan financial covenant of 5.00 to 1.00 maximum Total Net Leverage Ratio. As of June 30, 2025, the availability under the ABL Agreement, limited by the Term Loan financial covenant, was $ 65.7 million. The current and non-current portions of the Company’s Term Loan included in the condensed consolidated balance sheets were as follows (in thousands): June 30, 2025 December 31, 2024 Current portion of Term Loan: Term Loan payment $ 7,500 $ 7,500 Estimated unamortized debt issuance costs ( 2,548 ) ( 2,609 ) Total Current portion of Term Loan $ 4,952 $ 4,891 Non-current portion of Term Loan: Term Loan, net of current portion $ 131,250 $ 135,000 Estimated unamortized debt issuance costs ( 2,794 ) ( 4,051 ) Total Non-current portion of Term Loan $ 128,456 $ 130,949 The 2024 excess cash flow payment of $ 1.2 million was paid on April 4, 2025 and reduced the scheduled quarterly payment due on June 30, 2025. As of June 30, 2025, the Company estimates no excess cash flow payment will be due for 2025. The Company’s payment obligations under its Debt Agreements are unconditionally guaranteed by its existing and future U.S. subsidiaries with certain minor exceptions. Certain payment obligations under the ABL Agreement are also direct obligations of its foreign subsidiary borrowers designated as such under the ABL Agreement and, subject to limitations on such guaranty, are guaranteed by the foreign subsidiary borrowers, as well as by the Company. The obligations of the foreign subsidiary borrowers under the ABL Agreement are secured by security interests in substantially all of the assets of, and stock in, such foreign subsidiary borrowers, subject to certain limitations. The obligations of the Company under the Debt Agreements and any - 15 - Table of Contents LIFETIME BRANDS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS June 30, 2025 (unaudited) hedging arrangements and cash management services and the guarantees by its domestic subsidiaries in respect of those obligations are secured by security interests in substantially all of the assets and stock (but in the case of foreign subsidiaries, limited to 65 % of the capital stock in first-tier foreign subsidiaries and not including the stock of subsidiaries of such first-tier foreign subsidiaries) owned by the Company and the U.S. subsidiary guarantors, subject to certain exceptions. Such security interests consist of (1) a first-priority lien, subject to certain permitted liens, with respect to certain assets of the Company and certain of its subsidiaries (the “ABL Collateral”) pledged as collateral in favor of lenders under the ABL Agreement and a second-priority lien in the ABL Collateral in favor of the lenders under the Term Loan and (2) a first-priority lien, subject to certain permitted liens, with respect to certain assets of the Company and certain of its subsidiaries (the “Term Loan Collateral”) pledged as collateral in favor of lenders under the Term Loan and a second-priority lien in the Term Loan Collateral in favor of the lenders under the ABL Agreement. Borrowings under the revolving credit facility bear interest, at the Company’s option, at one of the following rates: (i) an alternate base rate, defined, for any day, as the greater of the prime rate, a federal funds and overnight bank funding based rate plus 0.5 % or one-month Adjusted Term Secured Overnight Financing Rate (“SOFR”) plus 1.0 % as of a specified date in advance of the determination, but in each case not less than 1.0 %, plus a margin of 0.25 % to 0.50 %, or (ii) Adjusted Term SOFR, which is the Term SOFR Rate for the selected 1, 3 or 6 month interest period plus 0.10 % (or Euro Interbank Offered Rate “EURIBOR” for borrowings denominated in Euro; or Sterling Overnight Index Average “SONIA” for borrowings denominated in Pounds Sterling), but in each case not less than zero, plus a margin of 1.25 % to 1.50 %. The respective margins are based upon average quarterly availability, as defined in and computed pursuant to the ABL Agreement. In addition, the Company pays a commitment fee of 0.20 % to 0.25 % per annum based on the average daily unused portion of the aggregate commitment under the ABL Agreement. The interest rate on outstanding borrowings under the ABL Agreement at June 30, 2025 was between 3.30 % and 5.79 %. The Company paid a commitment fee of 0.25 % on the unused portion of the ABL Agreement during the six months ended June 30, 2025. The Term Loan bears interest, at the Company’s option, at one of the following rates: (i) alternate base rate, defined, for any day, as the greater of (x) the prime rate, (y) a federal funds and overnight bank funding based rate plus 0.5 % or (z) one-month Adjusted Term SOFR, but not less than 1.0 %, plus 1.0 %, plus a margin of 4.5 % or (ii) Adjusted Term SOFR (Term SOFR plus the Term SOFR Adjustment) for the applicable interest period, but not less than 1.0 %, plus a margin of 5.5 %. The interest rate on outstanding borrowings under the Term Loan at June 30, 2025 was 9.93 %. The Debt Agreements provide for customary restrictions and events of default. Restrictions include limitations on additional indebtedness, liens, acquisitions, investments and payment of dividends, among other things. Under the Term Loan, the Total Net Leverage Ratio is not permitted to be greater than 5.00 to 1.00 determined as of the end of each fiscal quarters. Further, the ABL Agreement provides that during any period (a) commencing on the last day of the most recently ended four consecutive fiscal quarters on or prior to the date availability under the ABL Agreement is less than the greater of $ 20.0 million and 10 % of the aggregate commitment under the ABL Agreement at any time and (b) ending on the day after such availability has exceeded the greater of $ 20.0 million and 10 % of the aggregate commitment under the ABL Agreement for 45 consecutive days, the Company is required to maintain a minimum fixed charge coverage ratio of 1.10 to 1.00 as of the last day of any period of four consecutive fiscal quarters. The Company was in compliance with the covenants of the Debt Agreements at June 30, 2025. The Company expects that it will continue to borrow, subject to availability, and repay funds under the ABL Agreement based on working capital and other corporate needs . NOTE 7 — DERIVATIVES The Company’s risk management strategy includes the use derivative financial instruments to manage its exposure to interest rate movements and to reduce the volatility of earnings and cash flows associated with changes in foreign currency exchange rates primarily to offset the earnings impact related to inventory purchases. The Company does not enter into derivative transactions for trading purposes. The Company classifies cash flows from its derivative transactions as cash flows from operating activities in the consolidated statements of cash flows. - 16 - Table of Contents LIFETIME BRANDS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS June 30, 2025 (unaudited) The Company’s derivatives expose it to credit risks from possible non-performance by counterparties. The Company has limited its credit risk by entering into derivative transactions exclusively with investment-grade rated financial institutions and monitors the creditworthiness of these financial institutions on an ongoing basis. The Company utilizes standard counterparty master netting agreements that net certain foreign currency and interest rate swap transactions in the event of the insolvency of one of the parties to the transaction. These master netting arrangements permit the Company to net amounts due from the Company to counterparty with amounts due to the Company from the same counterparty. Although all of the Company’s recognized derivative assets and liabilities are subject to enforceable master netting arrangements, the Company has elected to present these assets and liabilities on a gross basis. The Company does not anticipate non-performance by any of its counterparties. Interest Rate Swap Agreements To manage its exposures to interest rate movements, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. These interest rate swaps involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. In March 2024 and October 2024, the Company entered into interest rate swap agreements, each with an aggregate notional value of $ 25.0 million and expire in August 2027. These non-designated interest rate swaps serve as cash flow hedges of the Company’s exposure to the variability of the payment of interest on a portion of its Term Loan borrowings. The Company’s total outstanding notional value of interest rate swaps was $ 50.0 million at June 30, 2025. Foreign Exchange Contracts To reduce the impact of changes in foreign currency exchange rates on its results, from time to time the Company is a party to certain foreign exchange contracts, primarily to offset the earnings impact related to fluctuations in foreign currency exchange rates associated with inventory purchases. The Company designates these contracts for accounting purposes as cash flow hedges. The Company purchases foreign currency forward contracts with terms less than 18 months. The aggregate gross notional value of foreign exchange contracts at June 30, 2025 was $ 6.1 million. The fair values of the Company’s derivative financial instruments included in the condensed consolidated balance sheets are presented as follows (in thousands): Derivatives designated as hedging instruments Balance Sheet Location June 30, 2025 December 31, 2024 Foreign exchange contracts Prepaid expenses and other current assets $ — $ 256 Accrued expenses 385 — Derivatives not designated as hedging instruments Balance Sheet Location June 30, 2025 December 31, 2024 Interest rate swaps Prepaid expenses and other current assets $ — $ 102 Other assets 10 379 Other long-term liabilities 430 154 The fair values of the interest rate swaps have been obtained from the counterparties to the agreements and were based on Level 2 observable inputs using proprietary models and estimates about relevant future market conditions. The fair values of the foreign exchange contracts were based on Level 2 observable inputs using quoted market prices for similar assets in an active market. - 17 - Table of Contents LIFETIME BRANDS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS June 30, 2025 (unaudited) The amounts of gains and losses, realized and unrealized, related to the Company’s derivative financial instruments designated as hedging instruments are recognized in other comprehensive (loss) income, net of taxes, as follows (in thousands): Three Months Ended June 30, Six Months Ended June 30, Derivatives designated as hedging instruments 2025 2024 2025 2024 Foreign exchange contracts $ ( 461 ) $ 22 $ ( 590 ) $ 223 Realized gains and losses on foreign exchange contracts that are reported in other comprehensive (loss) income are reclassified into cost of sales as the underlying inventory purchased is sold. During the three and six months ended June 30, 2025, the Company reclassified $ 0.02 million and $ 0.1 million, respectively, of cash flow hedges in accumulated other comprehensive losses to earnings, related to foreign exchange contracts recognized in cost of sales. At June 30, 2025, the estimated amount of existing net losses expected to be reclassified into earnings within the next 12 months was $ 0.4 million. During the three and six months ended June 30, 2024, the Company reclassified $ 0.02 million and $ 0.2 million, respectively, of cash flow hedges in accumulated other comprehensive losses to earnings, related to foreign exchange contracts recognized in cost of sales. Interest and mark to market losses related to the Company’s derivative financial instruments not designated as hedging instruments that were recognized in earnings are as follows (in thousands): Three Months Ended June 30, Six Months Ended June 30, Derivatives not designated as hedging instruments Location of gain (loss) 2025 2024 2025 2024 Interest rate swaps Mark to market loss on interest rate derivatives $ ( 220 ) $ ( 82 ) $ ( 747 ) $ ( 256 ) Interest expense 65 309 233 530 $ ( 155 ) $ 227 $ ( 514 ) $ 274 NOTE 8 — STOCK COMPENSATION As of June 30, 2025, there were 908,049 shares available for the grant of awards under the Company’s Amended and Restated 2000 Long Term Incentive Plan (“Plan”), assuming maximum performance of performance-based awards. Option Awards A summary of the Company’s stock option activity and related information for the six months ended June 30, 2025 is as follows: Options Weighted- average exercise price Weighted- average remaining contractual life (years) Aggregate intrinsic value (in thousands) Options outstanding, January 1, 2025 782,500 $ 11.41 Grants 44,500 5.13 Options outstanding, June 30, 2025 (1) 827,000 11.07 4.5 $ — Options exercisable, June 30, 2025 700,000 $ 11.73 3.7 $ — Total unrecognized stock option expense remaining (in thousands) $ 362 Weighted-average years expected to be recognized over 1.7 (1) Includes a non-plan stock option award of 15,000 stock options granted in 2024. - 18 - Table of Contents LIFETIME BRANDS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS June 30, 2025 (unaudited) The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value that would have been received by the option holders had all option holders exercised their exercisable in-the-money stock options on June 30, 2025. The intrinsic value is calculated for each in-the-money stock option as the difference between the closing price of the Company’s common stock on June 30, 2025 and the exercise price. Restricted Stock A summary of the Company’s restricted stock activity and related information for the six months ended June 30, 2025 is as follows: Restricted Shares Weighted- average grant date fair value Non-vested restricted shares, January 1, 2025 593,526 $ 9.46 Grants 588,698 4.57 Vested ( 286,320 ) 9.96 Forfeitures ( 6,751 ) 7.91 Non-vested restricted shares, June 30, 2025 889,153 $ 6.07 Total unrecognized compensation expense remaining (in thousands) $ 4,776 Weighted-average years expected to be recognized over 1.7 The total fair value of restricted stock that vested during the six months ended June 30, 2025 was $ 1.3 million. Performance shares Each performance award represents the right to receive up to 150 % of the target number of shares of common stock. The number of shares of common stock earned will be determined based on the attainment of specified performance goals at the end of the performance period, as determined by the Compensation Committee of the Company’s board of directors (the “Board of Directors”). The shares are subject to the terms and conditions of the Company’s Plan. A summary of the Company’s performance-based award activity and related information for the six months ended June 30, 2025 is as follows: Performance- based stock awards (1) Weighted- average grant date fair value Non-vested performance-based awards, January 1, 2025 529,407 $ 8.96 Grants 331,561 5.13 Forfeitures (2) ( 128,796 ) 11.96 Non-vested performance-based awards, June 30, 2025 732,172 $ 6.70 Total unrecognized compensation expense remaining (in thousands) $ 2,606 Weighted-average years expected to be recognized over 2.0 (1) Represents the target number of shares to be issued for each performance-based award. (2) Includes the forfeiture of performance-based awards granted in 2022 as the performance metric was not attained. Cash-settled performance-based awards Each cash-settled performance-based award represents the right to receive up to 150 % of the target number of deferred stock units with payment in cash equivalent to the value of one share of the Company's common stock. The number of deferred stock units earned will be determined based on the attainment of specified performance goals at the end of the performance period, as determined by the Compensation Committee of the Board of Directors. The cash-settled performance-based awards are subject to the terms and conditions of the Company’s Plan. - 19 - Table of Contents LIFETIME BRANDS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS June 30, 2025 (unaudited) A summary of the Company’s cash-settled performance-based awards activity and related information for the six months ended June 30, 2025 is as follows: Cash-settled performance-based awards (1) Weighted- average fair value Non-vested cash-settled performance-based awards, January 1, 2025 82,176 $ 5.91 Forfeitures (2) ( 82,176 ) 5.91 Non-vested cash-settled performance-based awards, June 30, 2025 — $ — Total unrecognized compensation expense remaining (in thousands) $ — Weighted-average years expected to be recognized over 0.0 (1) Represents the target number of units to be settled in cash. (2) Includes the forfeiture of performance-based awards granted in 2022 as the performance metric was not attained. The Company recorded stock compensation expense as follows (in thousands): Three Months Ended June 30, Six Months Ended June 30, Stock Compensation Expense Components 2025 2024 2025 2024 Equity based stock option expense $ 64 $ 60 $ 134 $ 110 Restricted and performance-based stock awards expense 980 984 1,973 1,733 Stock compensation expense for equity based awards 1,044 1,044 2,107 1,843 Liability based stock option expense — ( 7 ) ( 1 ) 1 Total Stock Compensation Expense $ 1,044 $ 1,037 $ 2,106 $ 1,844 NOTE 9 — LOSS PER COMMON SHARE Basic loss per common share has been computed by dividing net loss by the weighted-average number of shares of the Company’s common stock outstanding during the relevant period. Diluted loss per common share adjusts net loss and basic loss per common share for the effect of all potentially dilutive shares of the Company’s common stock. Anti-dilutive securities are not included in the computation of diluted earnings per share under the treasury stock method. The calculations of basic and diluted loss per common share for the three and six months ended June 30, 2025 and 2024 are as follows: Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 (in thousands, except per share amounts) Net loss – Basic and Diluted $ ( 39,699 ) $ ( 18,167 ) $ ( 43,900 ) $ ( 24,427 ) Weighted-average shares outstanding – Basic 21,686 21,421 21,639 21,399 Effect of dilutive securities: Stock options and other stock awards — — — — Weighted-average shares outstanding – Diluted 21,686 21,421 21,639 21,399 Basic loss per common share $ ( 1.83 ) $ ( 0.85 ) $ ( 2.03 ) $ ( 1.14 ) Diluted loss per common share $ ( 1.83 ) $ ( 0.85 ) $ ( 2.03 ) $ ( 1.14 ) Antidilutive Securities (1) 1,583 1,507 1,500 1,556 (1) Stock options and other stock awards that have been excluded from the denominator as their inclusion would have been anti-dilutive. - 20 - Table of Contents LIFETIME BRANDS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS June 30, 2025 (unaudited) NOTE 10— INCOME TAXES Income tax benefit of $ 2.8 million and $ 2.9 million for the three and six months ended June 30, 2025, respectively, represent taxes on both U.S. and foreign earnings at a combined effective income tax benefit rate of 6.5 % and 6.2 %, respectively. The effective tax rate for the three months and six months ended June 30, 2025 differs from the federal statutory income tax rate of 21.0% primarily due to a partial valuation allowance on U.S. deferred tax assets that are not more likely than not to be realized as a result of the goodwill impairment in the current quarter. Income tax benefit of $ 0.1 million and income tax provision of $ 0.2 million for the three and six months ended June 30, 2024, respectively, represent taxes on both U.S. and foreign earnings at a combined effective income tax benefit rate of 0.3 % and provision rate of ( 0.7 )%, respectively. The effective tax rate for the three months ended June 30, 2024 differs from the federal statutory income tax rate of 21.0% primarily due to the expiration of non-qualified stock options and the vesting of equity-based awards, where the book expense exceeded the tax deduction upon vesting, and foreign losses for which no tax benefit is recognized as such amounts are fully offset with a valuation allowance. The negative rate for the six months ended June 30, 2024 reflects tax expense on a pretax financial reporting loss. The effective tax rate for the six months ended June 30, 2024 differs from the federal statutory income tax rate of 21.0% primarily due to foreign losses for which no tax benefit is recognized as such amounts are fully offset with a valuation allowance. The Company has identified the following jurisdictions as “major” tax jurisdictions: U.S. Federal, California, Massachusetts, New Jersey, New York and the United Kingdom. The Company evaluates its tax positions on a quarterly basis and revises its estimates accordingly. There were no material changes to the Company’s uncertain tax positions, interest, or penalties during the three-month periods ended June 30, 2025 and June 30, 2024. On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA") was enacted in the U.S. The OBBBA includes a broad range of tax reform provisions affecting businesses, including extending and modifying certain expiring provisions under the Tax Cuts and Job Acts (both domestic and international). The Company is currently evaluating the impact of the OBBBA on its consolidated financial statements. - 21 - Table of Contents LIFETIME BRANDS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS June 30, 2025 (unaudited) NOTE 11 – BUSINESS SEGMENTS Segment information The Company operates in two reportable segments: U.S. and International. The U.S. segment is the Company’s domestic business that designs, markets and distributes its products to retailers and distributors, as well as directly to consumers through third parties and its own internet websites primarily in the U.S.. The International segment is the Company’s international business that sells and distributes products to consumers primarily in the U.K., the European Union and the Asia Pacific region. The Company’s chief operation decision maker (“CODM”) is the Company’s Chief Executive Officer. The Company has segmented its operations to reflect the manner in which the CODM reviews and evaluates the results of its operations. The CODM allocates operating and capital resources and evaluates the performance of the Company’s segments based on segment net sales, segment gross margin, and segment (loss) income from operations. Such measures give recognition to specifically identifiable operating costs. Significant segment expenses that are included in segment operating income consist of cost of sales, distribution expenses (which include freight-out expenses and warehouse expenses) and selling, general and administrative expenses. Certain general and administrative expenses are not allocated to the Company’s segments as these represent corporate level activities and are reflected below as unallocated corporate expenses. These costs primarily include senior executive salaries and benefits, stock compensation, director fees and accounting, legal fees and consulting fees. Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Segment Performance Measures: (in thousands) Net sales: U.S. $ 119,315 $ 130,503 $ 247,825 $ 260,983 International 12,547 11,163 24,122 22,925 Total net sales $ 131,862 $ 141,666 $ 271,947 $ 283,908 Gross Margin: U.S. $ 46,769 $ 50,478 $ 93,333 $ 103,761 International 4,070 4,072 8,143 8,336 Total gross margin $ 50,839 $ 54,550 $ 101,476 $ 112,097 (Loss) income from operations U.S. $ ( 29,620 ) $ 9,189 $ ( 27,722 ) $ 18,631 International ( 3,328 ) ( 2,932 ) ( 6,280 ) ( 6,021 ) Unallocated corporate expenses (1) ( 4,259 ) ( 5,090 ) ( 2,106 ) ( 9,613 ) (Loss) income from operations $ ( 37,207 ) $ 1,167 $ ( 36,108 ) $ 2,997 (1) Unallocated corporate expenses for the six months ended June 30, 2025 included a net legal settlement gain of $ 6.4 million. Details see NOTE 12 — CONTINGENCIES - 22 - Table of Contents LIFETIME BRANDS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS June 30, 2025 (unaudited) Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Supplemental information for significant segment expenses: (in thousands) Cost of sales: U.S. $ 72,546 $ 80,025 $ 154,492 $ 157,222 International 8,477 7,091 15,979 14,589 Total cost of sales $ 81,023 $ 87,116 $ 170,471 $ 171,811 Freight-out expenses: U.S. $ 3,122 $ 2,042 $ 6,401 $ 5,355 International 717 664 1,262 1,461 Total freight-out expenses $ 3,839 $ 2,706 $ 7,663 $ 6,816 Warehouse expenses: U.S. $ 10,448 $ 9,826 $ 21,960 $ 19,517 International 3,027 2,520 5,761 4,900 Total warehouse expenses $ 13,475 $ 12,346 $ 27,721 $ 24,417 Selling, general and administrative expenses: U.S. $ 29,582 $ 29,421 $ 59,457 $ 60,258 International 3,654 3,820 7,400 7,996 Unallocated corporate expenses (1) 4,259 5,090 2,106 9,613 Total selling, general and administrative expenses $ 37,495 $ 38,331 $ 68,963 $ 77,867 Goodwill impairment: U.S. $ 33,237 $ — $ 33,237 $ — (1) Unallocated corporate expenses for the six months ended June 30, 2025 included a net legal settlement gain of $ 6.4 million. Details see NOTE 12 — CONTINGENCIES Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 (in thousands) Depreciation and amortization: U.S. $ 5,103 $ 4,611 $ 10,482 $ 9,267 International 334 283 653 566 Total depreciation and amortization $ 5,437 $ 4,894 $ 11,135 $ 9,833 Capital expenditures: U.S. $ 1,121 $ 422 $ 2,688 $ 938 International 52 76 58 160 Total capital expenditures $ 1,173 $ 498 $ 2,746 $ 1,098 - 23 - Table of Contents LIFETIME BRANDS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS June 30, 2025 (unaudited) June 30, 2025 December 31, 2024 (in thousands) Assets U.S. $ 447,722 $ 542,420 International 87,074 88,961 Unallocated corporate 17,081 2,929 Total Assets $ 551,877 $ 634,310 - 24 - Table of Contents LIFETIME BRANDS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS June 30, 2025 (unaudited) NOTE 12 — CONTINGENCIES Wallace EPA Matter Wallace Silversmiths de Puerto Rico, Ltd. (“WSPR”), a wholly-owned subsidiary of the Company, operates a manufacturing facility in San Germán, Puerto Rico that is leased from the Puerto Rico Industrial Development Company (“PRIDCO”). In March 2008, the U.S. Environmental Protection Agency (the “EPA”) announced that the San Germán Ground Water Contamination site in Puerto Rico (the “Site”) had been added to the Superfund National Priorities List due to organic compounds present in the local drinking water supply. In May 2008, WSPR received from the EPA a Notice of Potential Liability and Request for Information pursuant to 42 U.S.C. Sections 9607(a) and 9604(e) of the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”). In July 2011, WSPR received a letter from the EPA requesting access to the property that it leases from PRIDCO to conduct an environmental investigation, and the Company granted such access. In February 2013, the EPA requested access to conduct a further environmental investigation at the property. PRIDCO agreed to such access and the Company consented. The EPA conducted a further investigation during 2013 and, in April 2015, notified the Company and PRIDCO that the results from vapor intrusion sampling may warrant the implementation of measures to mitigate potential exposure to sub-slab soil gas. The Company reviewed the information provided by the EPA and requested that PRIDCO, as the property owner, find and implement a solution acceptable to the EPA. In order to protect the health of its employees and continue its business operations, WSPR has implemented corrective action measures to respond to vapor intrusion, such as sealing the floors of the building and conducting periodic air monitoring to address potential exposure. On August 13, 2015, the EPA released its remedial investigation and feasibility study (“RI/FS”) for the Site. On December 11, 2015, the EPA issued the Record of Decision (“ROD”) for an initial operable unit (“OU-1”), electing to implement its preferred remedy which consists of soil vapor extraction and dual-phase extraction/in-situ treatment. This selected remedy includes soil vapor extraction (“SVE”) to address soil (vadose zone) source areas at the Site, impermeable cover as necessary for the implementation of SVE, dual phase extraction in the shallow saprolite zone, and in-situ treatment as needed to address residual sources. The EPA’s total net present worth estimated cost for its selected remedy is $ 7.3 million. In February 2017, the EPA indicated that it planned to expand its field investigation for the RI/FS to a second operable unit (“OU-2”) to determine the nature and extent of the groundwater damage at and from the Site and to determine the nature of the remedial action needed to address the damage. The EPA requested access to the property occupied by WSPR to install monitoring wells and to undertake groundwater sampling as part of this expanded investigation. WSPR consented to the EPA’s access request, provided that the EPA received PRIDCO’s consent as the property owner. The EPA has also issued notices of potential liability to a number of other entities affiliated with the Site, which used the organic compounds of concern. In December 2018, the Company, WSPR, and other identified potentially responsible parties affiliated with the Site entered into tolling agreements with the U.S. government to extend the statute of limitations for potential claims for the recovery of response costs for the initial operable unit under Section 107 of CERCLA. The tolling agreements have been extended multiple times and currently expire in November 2025. The tolling agreements do not constitute in any way an admission or acknowledgment of any fact, conclusion of law, or liability by the parties to the agreements. The EPA released its proposed plan for OU-2 in July 2019, and on September 30, 2019, the EPA issued the ROD for OU-2. The EPA elected to implement its preferred remedy consisting of in-situ treatment of groundwater and a monitored natural attenuation program including monitoring of the plume fringe at the Site. The EPA’s estimated total net present worth cost for its selected remedy for OU-2 is $ 17.3 million, and the EPA is currently leading remediation of OU-2. In August 2021, WSPR received a Notice of Liability for the Site from the Department of Justice on behalf of the EPA, and in September 2021, WSPR responded with a good faith offer to conduct additional testing and remedial design work for OU-1. WSPR has actively participated in negotiations among the U.S. Government (the Department of Justice and the EPA) and other potentially responsible parties with respect to the remedial work at OU-1, which negotiations culminated in the finalization of a Consent Decree for Remedial Design and Remedial Action at Operable Unit One of the San German Groundwater Contamination Site (“Decree”). On July 26, 2023, the U.S. Government filed a complaint in United States District Court for the District of Puerto Rico for the purpose of seeking judicial approval of the Decree. As required by applicable regulations, the U.S. Government simultaneously lodged the Decree for public comment. No comments were received during the public comment period. On September 6, 2023, at the conclusion of the public comment period, the U.S. Government filed a Motion - 25 - Table of Contents LIFETIME BRANDS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS June 30, 2025 (unaudited) to Enter the Decree, and the court entered the Decree into order on December 14, 2023, thereby effectuating the Decree. On January 10, 2024, EPA issued a notice to proceed with the OU-1 remedial work. The Company thereafter commenced remedial work on OU-1 in accordance with the Decree. The Company reserved $ 5.6 million to cover probable and estimable liabilities with respect to the above remedial design and remedial action for the initial operable unit. However, it is not possible at this time for the Company to estimate its share of its ultimate liability for the Site. In the event of one or more adverse determinations related to this matter, it is possible that the ultimate liability resulting from this matter and the impact on the Company’s results of operations could be material. As of June 30, 2025, the remaining liability is $ 5.4 million. Legal Settlement Gain In 2015, Taylor Precision Products, Inc. (“Taylor” and/or the “Plaintiff”), acquired by the Company on March 2, 2018, commenced a legal action related to a 2013 acquisition, alleging that the seller failed to sufficiently disclose certain adverse information as part of the acquisition. In February 2025, the Company received a net settlement of $ 6.4 million, which consisted of a $ 7.0 million settlement less $ 0.6 million in legal fees related to this case. The Company recognized the gain in selling, general and administrative expenses in the condensed consolidated statement of operations for the quarter ended March 31, 2025. Other The Company is, from time to time, involved in other legal proceedings. The Company believes that other current litigation is routine in nature and incidental to the conduct of the Company’s business and that none of this litigation, individually or collectively, would have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows. - 26 - Table of Contents LIFETIME BRANDS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS June 30, 2025 (unaudited) NOTE 13 — OTHER Cash dividends Dividends declared in the six months ended June 30, 2025 were as follows: Dividend per share Date declared Date of record Payment date $ 0.0425 3/11/2025 5/1/2025 5/15/2025 $ 0.0425 6/18/2025 8/1/2025 8/15/2025 During the six months ended June 30, 2025, the Company paid dividends of $ 1.9 million. This included payments made on February 14, 2025 and May 15, 2025 of $ 0.9 million and $ 0.9 million to stockholders of record on January 31, 2025 and May 1, 2025, and payments of $ 0.1 million for dividends payable upon the vesting of restricted shares. In the three months ended June 30, 2025, the Company reduced retained earnings for the accrual of $ 1.0 million relating to the dividend payable on August 15, 2025. On August 5, 2025, the Board declared a quarterly dividend of 0.0425 per share of common stock payable on November 14, 2025 to stockholders of record on October 31, 2025. Stock repurchase program On March 14, 2022, the Company announced that its Board of Directors of the Company authorized the repurchase of up to $ 20.0 million of the Company’s common stock, replacing the Company’s previously-authorized $ 10.0 million share repurchase program. The repurchase authorization permits the Company to effect repurchases from time to time through open market purchases and privately negotiated transactions. No shares were repurchased during the six months ended June 30, 2025. As of June 30, 2025, the remaining dollar amount available for repurchases under the Board of Directors’ authorized plan was $ 11.1 million. Supplemental cash flow information Six Months Ended June 30, 2025 2024 (in thousands) Supplemental disclosure of cash flow information: Cash paid for interest $ 8,922 $ 9,853 Cash paid for taxes, net of refunds 2,980 4,193 - 27 - Table of Contents LIFETIME BRANDS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS June 30, 2025 (unaudited) Components of accumulated other comprehensive loss, net Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 (in thousands) Accumulated translation adjustment: Balance at beginning of period $ ( 17,967 ) $ ( 32,574 ) $ ( 18,384 ) $ ( 32,614 ) Translation adjustment during period 195 53 612 93 Amounts reclassified from accumulated other comprehensive loss (1) — 14,152 — 14,152 Net change in translation adjustment 195 14,205 612 14,245 Balance at end of period $ ( 17,772 ) $ ( 18,369 ) $ ( 17,772 ) $ ( 18,369 ) Accumulated deferred (losses) gains on cash flow hedges: Balance at beginning of period $ 118 $ 67 $ 247 $ ( 134 ) Change in unrealized (losses) gains ( 483 ) 2 ( 675 ) 72 Amounts reclassified from accumulated other comprehensive loss: Settlement of cash flow hedge (2) 22 20 85 151 Net change in cash flow hedges, net of taxes of $ 0 , $ 0 , $ 0 , $ 0 ( 461 ) 22 ( 590 ) 223 Balance at end of period $ ( 343 ) $ 89 $ ( 343 ) $ 89 Accumulated effect of retirement benefit obligations: Balance at beginning of period $ ( 174 ) $ ( 738 ) $ ( 178 ) $ ( 751 ) Amounts reclassified from accumulated other comprehensive loss: (3) Amortization of actuarial loss, net of taxes of $( 2 ), $( 4 ), $( 3 ), $( 8 ) 4 12 8 25 Balance at end of period $ ( 170 ) $ ( 726 ) $ ( 170 ) $ ( 726 ) Total accumulated other comprehensive loss at end of period $ ( 18,285 ) $ ( 19,006 ) $ ( 18,285 ) $ ( 19,006 ) (1) Amounts reclassified to the Vasconia investment carrying value as a result of the discontinuation of the equity method investment of accounting and recognized as a loss on equity securities in the unaudited condensed consolidated statements of operations, to reduce the Vasconia investment to its fair value. (2) Amounts reclassified are recorded in cost of sales on the unaudited condensed consolidated statement of operations. (3) Amounts are recorded in selling, general and administrative expense on the unaudited condensed consolidated statements of operations. - 28 - Table of Contents