What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-05-05 compared with 2021-11-04 · 162 added, 261 removed, 200 unchanged (68% of the section changed)

12 unchanged sentences

Such risks, uncertainties and other important factors include, among others, risks related to:

• General economic factors and political conditions;

• Exit of the United Kingdom from the European Union;

• Port disruptions and higher transportation costs;

• Indebtedness and compliance with credit agreements;

• Macroeconomic conditions, including inflationary impacts and disruptions to the global supply chain;

• The ongoing impact of the COVID-19 pandemic;

• Increase in supply chain costs, including raw materials, sourcing, transportation and energy;

• The impact of the United Kingdom's exit from the European Union on the Company's U.K.

• The impact of tariffs and trade policies, particularly with respect to china;

• legislative or regulatory risks relating to climate change;

• Indebtedness, compliance with credit agreements, and access to credit markets;

• Access to the capital markets and credit markets;

• The credit-worthiness of the Company’s customers and the counterparties to its derivatives;

• Seasonality;

• Interest rates;

• Competition;

• Customer practices;

• Intellectual property, brands and licenses;

• International operations;

• Supply chain;

• Foreign exchange rates;

• International trade, including trade negotiations;

• Transportation;

• Product liability;

• Regulatory matters;

• Product development;

• Reputation;

• Technology;

• Cyber security;

• Price fluctuations;

• Business interruptions;

• Projections;

• Fixed costs;

• Governance;

• Acquisition integration;

• Acquisitions and investments;

• Public health pandemics and related effects, such as the COVID-19 pandemic;

• Social unrest, including related protests or disturbances.

• The seasonality of the Company's cash flows;

• The Company's ability to complete acquisitions or successfully integrate acquisitions, such as the recent acquisition of S'well;

• Intense market competition and changing customer practices or preferences;

• Dependence on third-party manufacturers;

• Technology, cybersecurity and data privacy risks;

• Geopolitical conditions, including war, conflict, unrest and sanctions, including those related to the conflict in Ukraine;

• Product liability claims;

• Reputational risks.

There may be other factors that may cause the Company’s actual results to differ materially from the forward-looking statements.

3 unchanged sentences

Information contained on this website is not a part of or incorporated by reference into this Quarterly Report on Form 10-Q.

The Company makes available on its website the Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and any amendments to these reports as soon as reasonably practicable after these reports are filed with or furnished to the SEC.

practicable after these reports are filed with or furnished to the SEC.

Users can access these reports free of charge on the Company’s website.

12 unchanged sentences

The Company believes it possesses certain competitive advantages based on its brands, its emphasis on innovation and new product development, and its sourcing capabilities.

The Company owns or licenses a number of leading brands in its industry, including Farberware ® , Mikasa ® , Taylor ® , KitchenAid ® , KitchenCraft ® , Pfaltzgraff ® , Built NY ® , Rabbit ® , Kamenstein ® , and MasterClass®.

Historically, the Company’s sales growth has come from expanding product offerings within its product categories, developing existing brands, acquiring new brands (including complementary brands in markets outside the U.S.), and establishing new product categories.

The Company owns or licenses a number of leading brands in its industry, including Farberware ® , KitchenAid ® , Taylor ® , Mikasa ® , KitchenCraft ® , Built NY ® , Kamenstein ® , Pfaltzgraff ® , Rabbit ® , and Sabatier ® .

Key factors in the Company’s growth strategy have been the selective use and management of the Company’s brands and the Company’s ability to provide a stream of new products and designs.

A significant element of this strategy is the Company’s in-house design and development teams that create new products, packaging and merchandising concepts.

RECENT DEVELOPMENTS

The COVID-19 pandemic, as well as other factors including, increased demand and shifts in consumer shopping patterns, have caused disruption in the global supply chain.

The increased demand for containers, limited container capacity, backlog at U.S.

ports and recent shutdowns impacting ports in China, have resulted in increased market costs of inbound freight, container shortages, and longer lead times.

The disruption in the global supply chain has also caused increased input costs used to manufacture the Company’s product.

The Company has been impacted by these disruptions and has experienced higher inbound freight cost, delays in importing inventory due to limited availability of containers, and an increase in product costs.

There have also been instances of limited trucking availability.

The Company has experienced instances of trucking shortages, which has resulted in delays of shipments to certain of its customers.

The Company expects that these trends may continue in 2022.

The Company has experienced an increase in delivery times and cost for products shipped from the U.K.

warehouse to continental Europe.

To remain competitive in the distribution of products within continental Europe, the Company expands its distribution and warehouse capacity through a third-party operated distribution provider located in the Netherlands in the first quarter of 2022.

The Company expects to begin shipments from this location in the second quarter of 2022.

On March 23 2022, the United States Trade Representative ("USTR") announced it had reinstated exclusions on certain product categories or harmonized tariff codes retroactive to October 12, 2021.

The exclusion is effective through December 31, 2023.

BUSINESS SEGMENTS

7 unchanged sentences

Such measures give recognition to specifically identifiable operating costs such as cost of sales, distribution expenses and selling, general and administrative expenses.

Certain general and administrative expenses, such as senior executive salaries and benefits, stock compensation, director fees, and accounting, legal and consulting fees, are not allocated to the specific segments and are reflected as unallocated corporate expenses.

Certain general and administrative expenses, such as senior executive salaries and

benefits, stock compensation, director fees, and accounting, legal fees and consulting fees, are not allocated to the specific segments and are reflected as unallocated corporate expenses.

EQUITY INVESTMENTS

As of September 30, 2021, the Company owned approximately 25% of the outstanding capital stock of Grupo Vasconia S.A.B.

As of March 31, 2022, the Company owned 24.7% of the outstanding capital stock of Grupo Vasconia S.A.B.

(“Vasconia”), an integrated manufacturer of aluminum products and one of Mexico’s largest housewares companies.

1 unchanged sentence

The Quotation Key is VASCONI.

For the period ended March 31, 2021, the Company's investment ownership was 30%.

The Company's investment ownership decreased to approximately 27% on June 30, 2021 and was further reduced to 24.7% on July 29, 2021 as a result of transactions that occurred in those periods.

The Company accounts for its investment in Vasconia using the equity method of accounting and records its proportionate share of Vasconia’s net income in the Company’s condensed consolidated statements of operations.

Accordingly, the Company has recorded its proportionate share of Vasconia’s net income (reduced for amortization expense related to the customer relationships acquired) for the three and nine months ended September 30, 2021 and 2020 in the accompanying unaudited condensed consolidated statements of operations.

Accordingly, the Company has recorded its proportionate share of Vasconia’s net income (reduced for amortization expense related to the customer relationships acquired) for the three months ended March 31, 2022 and 2021 in the accompanying unaudited condensed consolidated statements of operations.

Pursuant to a Shares Subscription Agreement, the Company may designate four persons to be nominated as members of Vasconia’s Board of Directors.

As of September 30, 2021, Vasconia’s Board of Directors is comprised of eleven members, of whom the Company has designated two members.

On June 30, 2021, Vasconia sold shares, which diluted the Company’s investment ownership from approximately 30% to approximately 27%.

The Company recorded a non-cash gain of $1.7 million, increasing the Company’s investment balance.

Additionally, a loss of $2.0 million was recognized for the proportionate share of the diluted ownership for amounts previously recognized in accumulated other comprehensive loss.

The net loss of $0.3 million was included in equity in earnings (losses), net of taxes, in the accompanying unaudited condensed consolidated statements of operations for the nine months ended September 30, 2021.

On July 29, 2021, the Company sold 2.2 million shares further reducing its ownership from approximately 27% to approximately 25% in Vasconia for net cash proceeds of approximately $3.1 million, as a result the Company recorded a gain of $1.0 million, after decreasing the Company’s investment balance.

The gain on the sale resulted in a tax expense of $0.1 million.

Additionally, a loss of $1.4 million was recognized for the proportionate share of the reduced ownership for amounts previously recognized in accumulated other comprehensive loss.

The net loss, including taxes, of $0.5 million was included in equity in earnings (losses), net of taxes, in the accompanying unaudited condensed consolidated statements of operations for the three and nine months ended September 30, 2021.

The Company continues to apply the equity method of accounting.

As of March 31, 2022, Vasconia’s Board of Directors is comprised of eleven members, of whom the Company has designated two members.

The Company continues to explore opportunities to sell additional shares of its investment in Vasconia.

1 unchanged sentence

In 2021 and 2020, net sales for the third and fourth quarters accounted for 56% and 62% of total annual net sales, respectively.

The increase in the Company's net sales in the first half of the year in 2021 compared to historical trend was a result of increased demand for the Company's products due shifts in consumer purchasing patterns.

In anticipation of the pre-holiday shipping season, inventory levels increase primarily in the June through October time period.

The Company's inventory levels at March 31, 2022, did not decrease from the previous two quarters, as a result of increased inventory purchases, to maintain inventory availability and meet expected demand, and higher inventory cost.

In 2021, the Company's inventory levels increased during the fourth quarter compared to the third quarter.

The higher inventory balance at December 31, 2021 was a result of increased inventory purchases, to maintain inventory availability and meet expected demand, and higher inventory cost.

Consistent with the seasonality of the Company’s net sales and inventory levels, the Company also experiences seasonality in its inventory turnover and turnover days from one quarter to the next.

The COVID-19 pandemic has caused, and may continue to cause, shifts in some of the Company's selling and purchasing cycles as customers deviate from their historical ordering patterns.

RESTRUCTURING

During the three and nine months ended September 30, 2021, the Company did not incur any restructuring expenses.

During the nine months ended September 30, 2020, the Company’s international segment incurred $0.3 million of restructuring expenses related to severance associated with the strategic reorganization of the international segment’s product development

and sales workforce.

The strategic reorganization is the result of the Company’s efforts to achieve product development efficiencies and a country tailored international sales approach.

RECENT DEVELOPMENTS

The COVID-19 pandemic, as well as other factors including, increased demand and shifts in consumer shopping patterns, have caused disruption in the global supply chain.

The increased demand for containers, limited container capacity, and backlog at U.S.

ports have resulted in increased market costs of inbound freight, container shortages, and longer lead times.

The disruption in the global supply chain has also caused increased input costs used to manufacture the Company’s product.

The increasing costs trend is expected to impact the Company into the fourth quarter of fiscal year 2021.

There have also been instances of limited trucking availability.

The Company has experienced instances of trucking shortages, which has resulted in delays of shipments to certain of its customers.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

There have been no material changes to the Company’s critical accounting policies and estimates discussed in the 2020 Annual Report on Form 10-K in Item 7 under the heading Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies and Estimates .

CRITICAL ACCOUNTING ESTIMATES

There have been no material changes to the Company’s critical accounting estimates discussed in the 2021 Annual Report on Form 10-K in Item 7 under the heading Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies and Estimates .

RESULTS OF OPERATIONS

1 unchanged sentence

Three Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

Net sales 100.0 % 100.0 %

3 unchanged sentences

Selling, general and administrative expenses 21.6 19.5

Restructuring expenses — — — 0.0

Goodwill and other impairments

Income from operations

9.6 9.6 6.9 0.1

Interest expense (2.1) (2.1)

Mark to market gain (loss) on interest rate derivatives

0.1 0.0 0.1 (0.4)

Income (loss) before income taxes and equity in earnings (losses)

8.0 7.8 5.1 (2.9)

Mark to market gain on interest rate derivatives

Income before income taxes and equity in earnings (losses)

Income tax provision

(2.5) (1.7) (1.7) (0.6)

Equity in earnings (losses), net of taxes

0.1 0.1 0.1 (0.1)

Net income (loss)

5.6 % 6.2 % 3.5 % (3.5) %

MANAGEMENT’S DISCUSSION AND ANALYSIS

THREE MONTHS ENDED SEPTEMBER 30, 2021 COMPARED TO THE THREE MONTHS ENDED

SEPTEMBER 30, 2020

Consolidated net sales were $224.8 million for both the three months ended September 30, 2021 and 2020.

THREE MONTHS ENDED MARCH 31, 2022 COMPARED TO THE THREE MONTHS ENDED

MARCH 31, 2021

Consolidated net sales for the three months ended March 31, 2022 were $182.7 million, representing a decrease of $13.0 million or 6.6%, as compared to net sales of $195.7 million for the corresponding period in 2021.

In constant currency, a non-GAAP financial measure, which excludes the impact of foreign exchange fluctuations and was determined by applying 2022 average rates to 2021 local currency amounts, consolidated net sales decreased by $12.5 million, or 6.4%, as compared to consolidated net sales in the corresponding period in 2021.

Net sales for the U.S.

segment for the three months ended September 30, 2021 were $197.7 million, a decrease of $3.8 million, or 1.9%, as compared to net sales of $201.5 million for the corresponding period in 2020.

segment for the three months ended March 31, 2022 were $166.2 million, a decrease of $10.0 million, or 5.7%, as compared to net sales of $176.2 million for the corresponding period in 2021.

Net sales for the U.S.

segment’s Kitchenware product category were $113.4 million for the three months ended September 30, 2021, a decrease of $6.2 million, or 5.2%, as compared to $119.6 million for the corresponding period in 2020.

The decrease was mainly driven by lower sales due to supply chain constraints for kitchen tools and gadgets and cutlery and board products, partially offset by higher selling prices.

segment’s Kitchenware product category were $114.1 million for the three months ended March 31, 2022, a decrease of $5.9 million, or 4.9%, as compared to $120.0 million for the corresponding period in 2021.

The decrease was mainly driven by timing of customer inventory replenishment and lower sales for kitchen tools and gadgets as prior period sales were benefited by increased demand in the first quarter due to shifts in consumer purchasing patterns.

The decrease was partially offset by higher selling prices and an increase in sales for barware and wine products attributable to a new warehouse club program.

Net sales for the U.S.

segment’s Tableware product category were $51.7 million for the three months ended September 30, 2021, an increase of $0.4 million, or 0.8%, as compared to $51.3 million for the corresponding period in 2020.

The increase came from higher dinnerware e-commerce sales, partially offset by lower sales of flatware which was impacted by supply chain constraints.

segment’s Tableware product category were $26.6 million for the three months ended March 31, 2022, a decrease of $3.6 million, or 11.9%, as compared to $30.2 million for the corresponding period in 2021.

The decrease was attributable to lower dinnerware sales to brick-and-mortar retailers and e-commerce sales.

Net sales for the U.S.

segment’s Home Solutions product category were $32.6 million for the three months ended September 30, 2021, an increase of $1.9 million, or 6.2%, as compared to $30.7 million for the corresponding period in 2020.

The increase was primarily driven by a new private label hydration program and sales in the back-to-school lunch box category, offset by lower sales in the hydration product category due to a warehouse club program not repeating in 2021.

Net sales for the International segment were $27.1 million for the three months ended September 30, 2021, an increase of $3.9 million, or 16.8%, as compared to net sales of $23.2 million for the corresponding period in 2020.

In constant currency, which excludes the impact of foreign exchange fluctuations, net sales increased $2.5 million, or 10.0%, as compared to consolidated net sales in the corresponding period in 2020.

The increase was primarily attributable to increased sales in the Company’s global trading business in Asia, higher e-commerce sales, continued recovery of sales to brick-and-mortar retailers, and higher selling prices.

Gross margin for the three months ended September 30, 2021 was $83.1 million, or 37.0%, as compared to $78.8 million, or 35.1%, for the corresponding period in 2020.

segment’s Home Solutions product category were $25.5 million for the three months ended March 31, 2022, a decrease of $0.5 million, or 1.9%, as compared to $26.0 million for the corresponding period in 2021.

The decrease was primarily driven by lower sales for home décor attributable to supply chain delays and measurement products, partially offset by S'well sales.

Net sales for the International segment were $16.5 million for the three months ended March 31, 2022, a decrease of $3.0 million, or 15.4%, as compared to net sales of $19.5 million for the corresponding period in 2021.

In constant currency, which excludes the impact of foreign exchange fluctuations, net sales decreased $2.5 million, or 13.3%, as compared to consolidated

net sales in the corresponding period in 2021.

The decrease was attributable to the Company's global trading business in Asia driven by lower sales with an Australian distributor.

Gross margin for the three months ended March 31, 2022 was $63.1 million, or 34.5%, as compared to $66.0 million, or 33.7%, for the corresponding period in 2021.

Gross margin for the U.S.

segment was $74.5 million, or 37.7%, for the three months ended September 30, 2021, as compared to $71.7 million, or 35.6%, for the corresponding period in 2020.

Gross margin for the International segment was $8.6 million, or 31.7%, for the three months ended September 30, 2021, as compared to $7.0 million, or 30.2%, for the corresponding period in 2020.

segment was $57.7 million, or 34.7%, for the three months ended March 31, 2022, as compared to $59.8 million, or 33.9%, for the corresponding period in 2021.

The improvement in gross margin for the U.S.

and International segments was primarily driven by price increases, channel and product mix, partially offset by higher inventory cost.

was primarily driven by a tariff reduction on certain product categories.

Gross margin for the International segment was $5.4 million, or 32.7%, for the three months ended March 31, 2022, as compared to $6.2 million, or 31.8%, for the corresponding period in 2021.The improvement in gross margin was attributable to customer mix.

Distribution expenses

Distribution expenses for the three months ended September 30, 2021 were $18.9 million, as compared to $19.0 million for the corresponding period in 2020.

Distribution expenses as a percentage of net sales were 8.4% for the three months ended September 30, 2021, as compared to 8.4% for the three months ended September 30, 2020.

Distribution expenses for the three months ended March 31, 2022 were $19.2 million, as compared to $18.6 million for the corresponding period in 2021.

Distribution expenses as a percentage of net sales were 10.5% for the three months ended March 31, 2022, as compared to 9.5% for the three months ended March 31, 2021.

Distribution expenses as a percentage of net sales for the U.S.

segment were approximately 7.2% and 7.6% for the three months ended September 30, 2021 and 2020, respectively.

segment were approximately 9.0% and 8.7% for the three months ended March 31, 2022 and 2021, respectively.

As a percentage of sales shipped from the Company’s U.S.

warehouses, distribution expenses were 8.4% and 8.4% for the three months ended September 30, 2021 and 2020, respectively.

The improvement in expenses as a percentage of net sales was attributable to improved labor management, lower warehouse supply expenses in the current period, partially offset by higher hourly labor rates.

Distribution expenses as a percentage of net sales for the International segment were 17.5% for the three months ended September 30, 2021, compared to 15.5% for the corresponding period in 2020.

As a percentage of sales shipped from the Company’s U.K.

warehouse distribution expenses were 14.5% and 13.6% for the three months ended September 30, 2021 and 2020, respectively.

warehouses, distribution expenses were 9.9% and 8.9% for the three months ended March 31, 2022 and 2021, respectively.

The increase in expenses as a percentage of sales was attributable to lower shipment volume, higher labor rates and an increase in warehouse supply expenses.

Distribution expenses as a percentage of net sales for the International segment were 26.2% for the three months ended March 31, 2022, compared to 17.2% for the corresponding period in 2021.

Distribution expenses during the three months ended March 31, 2022 include $0.4 million for the Company's relocation costs for its new warehouse distribution facility in the Netherlands.

As a percentage of sales shipped from the Company’s international warehouses, excluding non-recurring expenses, distribution expenses were 21.7% and 14.4% for the three months ended March 31, 2022 and 2021, respectively.

The increase was primarily attributed to increased shipping cost for products shipped from the U.K.

warehouse to continental Europe and higher cost due to transportation shortages.

warehouse to continental Europe and an increase in business occupancy tax expense for the U.K.

Selling, general and administrative expenses

Selling, general and administrative expenses for the three months ended September 30, 2021 were $42.5 million, an increase of $4.2 million, or 11.0%, as compared to $38.3 million for the corresponding period in 2020.

Selling, general and administrative expenses for the three months ended March 31, 2022 were $39.5 million, an increase of $1.4 million, or 3.7%, as compared to $38.1 million for the corresponding period in 2021.

Selling, general and administrative expenses for the U.S.

segment were $29.3 million for the three months ended September 30, 2021, as compared to $27.3 million for the corresponding period in 2020.

As a percentage of net sales, selling, general and administrative expenses were 14.8% and 13.5% for the three months ended September 30, 2021 and 2020, respectively.

The increase was primarily attributable to lower expenses in the prior period due to the Company's savings initiative in response to the COVID-19 pandemic.

Selling, general and administrative expenses for the International segment were $6.3 million for the three months ended September 30, 2021, as compared to $4.8 million for the corresponding period in 2020.

The increase was primarily attributable to foreign currency exchange losses and increased professional fees.

Unallocated corporate expenses for the three months ended September 30, 2021 were $6.9 million, as compared to $6.3 million for the corresponding period in 2020.

The increase was driven by higher incentive compensation expense, partially offset by lower professional fees.

segment were $28.5 million for the three months ended March 31, 2022, as compared to $27.4 million for the corresponding period in 2021.

As a percentage of net sales, selling, general and administrative expenses were 17.1% and 15.6% for the three months ended March 31, 2022 and 2021, respectively.

The increase was driven by integration cost related to the S'well acquisition.

Selling, general and administrative expenses for the International segment were $5.1 million for the three months ended March 31, 2022, as compared to $5.0 million for the corresponding period in 2021.

As a percentage of net sales, selling, general and administrative expenses were 30.9% and 25.6% for the three months ended March 31, 2022 and 2021, respectively.

The expense increase was attributable to unfavorable foreign currency exchange losses, partially offset by lower amortization expense on intangible assets as a result of the prior year impairment, which reduced the carrying value of the assets to its fair value.

Unallocated corporate expenses for the three months ended March 31, 2022 were $5.9 million, as compared to $5.7 million for the corresponding period in 2021.

The current period increases in legal and professional fees related to the S'well acquisition were offset by lower incentive compensation expense.

Interest expense

Interest expense was $3.8 million for the three months ended September 30, 2021 and $4.1 million for the three months ended September 30, 2020.

Interest expense was $3.8 million for the three months ended March 31, 2022 and $4.0 million for the three months ended March 31, 2021.

The decrease in expense was a result of less debt outstanding.

Mark to market gain (loss) on interest rate derivatives

Mark to market gain on interest rate derivatives was $0.1 million for both the three months ended September 30, 2021 and 2020.

Mark to market gain on interest rate derivatives

Mark to market gain on interest rate derivatives was $1.0 million for the three months ended March 31, 2022, as compared to a mark to market gain on interest rate derivatives of $0.5 million for the three months ended March 31, 2021.

The increase was attributable to the change in fair value due to the change in the projected interest rate environment.

The mark to market amount represents the change in fair value on the Company’s interest rate derivatives that have not been designated as hedging instruments.

These derivatives were entered into for purposes of locking-in a fixed interest rate on a portion of the Company’s variable interest rate debt.

As of September 30, 2021, the intent of the Company is to hold these derivative contracts until their maturity.

Income tax provision of $5.6 million and $3.7 million for the three months ended September 30, 2021 and 2020, respectively, represent taxes on both U.S.

As of March 31, 2022, the intent of the Company is to hold these derivative contracts until their maturity.

Income tax provision of $1.7 million and $2.4 million for the three months ended March 31, 2022 and 2021, respectively, represent taxes on both U.S.

and foreign earnings at combined effective income tax provision rates of 102.2% and 42.2%, respectively.

The effective tax rate for the three months ended September 30, 2021 differs from the federal statutory income tax rate of 21% primarily due to state and local tax expense, and foreign losses for which no tax benefit is recognized as such amounts are fully offset with a valuation allowance.

The effective tax rate for the three months ended September 30, 2020 is consistent with the federal statutory income tax rate of 21.0% and includes an increase for state and local tax expense offset by other items that are not material.

Equity in earnings (losses)

Equity in earnings of Vasconia, net of taxes, was $0.7 million for the three months ended September 30, 2021, as compared to equity in earnings of Vasconia, net of taxes, of $0.1 million for the three months ended September 30, 2020.

Vasconia reported income from operations of $3.9 million for the three months ended September 30, 2021, as compared to income from operations of $3.0 million for the three months ended September 30, 2020.

The increase in income from operations was primarily attributable to improved operating results in the current period in both Vasconia's kitchenware and aluminum divisions.

For the three months ended September 30, 2021, the Company recognized a net loss, including taxes, of $0.5 million related to a partial sale of the Company’s ownership in its Vasconia investment.

The net loss was comprised of a gain of $1.0 million, for the difference between the selling price and the Company’s basis in the sale of shares, offset by tax expense of $0.1 million and a loss of $1.4 million, related to amounts previously recognized in accumulated other comprehensive loss.

MANAGEMENT’S DISCUSSION AND ANALYSIS

NINE MONTHS ENDED SEPTEMBER 30, 2021 COMPARED TO THE NINE MONTHS ENDED

SEPTEMBER 30, 2020

Consolidated net sales for the nine months ended September 30, 2021 were $607.1 million, an increase of $87.1 million, or 16.8%, as compared to net sales of $520.0 million for the corresponding period in 2020.

In constant currency, a non-GAAP financial measure, which excludes the impact of foreign exchange fluctuations and was determined by applying 2021 average rates to 2020 local currency amounts, consolidated net sales increased by $82.5 million, or 15.7%, as compared to consolidated net sales in the corresponding period in 2020.

Net sales for the U.S.

segment for the nine months ended September 30, 2021 were $540.5 million, an increase of $77.2 million, or 16.7%, as compared to net sales of $463.3 million for the corresponding period in 2020.

Net sales for the U.S.

segment’s Kitchenware product category were $337.1 million for the nine months ended September 30, 2021, an increase of $53.8 million, or 19.0%, as compared to $283.3 million for the corresponding period in 2020.

The increase was mainly driven by higher consumer demand, in both e-commerce and wholesale channels, for essential kitchen tools and

gadgets, cutlery and board and bakeware products, and higher selling prices.

The increase was partially offset by lower sales due to supply chain constraints for kitchen tools and gadgets and cutlery and board products.

The strong demand for these products has been a result of shifts in consumer purchasing patterns as consumers continue to spend more time at home.

Net sales for the U.S.

segment’s Tableware product category were $119.2 million for the nine months ended September 30, 2021, an increase of $20.7 million, or 21.0%, as compared to $98.5 million for the corresponding period in 2020.

The increase came from all product lines, most notably on sales from a new flatware warehouse club program, continued recovery of sales to brick-and-mortar customers and higher dinnerware e-commerce sales.

Net sales for the U.S.

segment’s Home Solutions product category were $84.2 million for the nine months ended September 30, 2021, an increase of $2.7 million, or 3.3%, as compared to $81.5 million for the corresponding period in 2020.

The increase was primarily driven by home décor, a new private label hydration program and sales in the back-to-school lunch box category.

The increase was partially offset by lower sales in the hydration product category due to a warehouse club program not repeating in 2021.

Net sales for the International segment were $66.6 million for the nine months ended September 30, 2021, an increase of $10.0 million, or 17.7%, as compared to net sales of $56.6 million for the corresponding period in 2020.

In constant currency, which excludes the impact of foreign exchange fluctuations, net sales increased $5.5 million, or 9.1%, as compared to consolidated net sales in the corresponding period in 2020.

The increase in sales was primarily attributable to sales in the Company’s global trading business in Asia, continued recovery of sales to brick-and-mortar retailers, and higher selling prices, partially offset by lower e-commerce sales.

Gross margin for the nine months ended September 30, 2021 was $215.3 million, or 35.5%, as compared to $185.9 million, or 35.8%, for the corresponding period in 2020.

Gross margin for the U.S.

segment was $193.9 million, or 35.9%, for the nine months ended September 30, 2021, as compared to $170.9 million, or 36.9%, for the corresponding period in 2020.

The decrease in gross margin was primarily due to higher inbound freight costs, product mix and the inclusion in the 2020 period of a benefit from a duty exclusion on certain products.

The decrease was partially offset by higher prices.

Gross margin for the International segment was $21.4 million, or 32.1%, for the nine months ended September 30, 2021, as compared to $15.0 million, or 26.5%, for the corresponding period in 2020.

The increase was driven by the comparable prior period being negatively impacted by higher sales allowances and inventory reserves, and customer mix.

In addition, higher prices, partially offset by increased inbound freight costs contributed to the improvement.

Distribution expenses

Distribution expenses for the nine months ended September 30, 2021 were $56.5 million, as compared to $50.7 million for the corresponding period in 2020.

Distribution expenses as a percentage of net sales were 9.3% for the nine months ended September 30, 2021, as compared to 9.8% for the nine months ended September 30, 2020.

Distribution expenses as a percentage of net sales for the U.S.

segment were approximately 8.2% and 8.6% for the nine months ended September 30, 2021 and 2020, respectively.

As a percentage of sales shipped from the Company’s U.S.

warehouses, distribution expenses were 8.9% and 9.0% for the nine months ended September 30, 2021 and 2020, respectively.

The improvement was a result of the leverage benefit of fixed costs on higher sales volume, improved labor management, partially offset by higher hourly labor rates and warehouse supply expenses.

Distribution expenses as a percentage of net sales for the International segment were 18.1% for the nine months ended September 30, 2021, compared to 19.5% for the corresponding period in 2020.

Distribution expenses during the nine months ended September 30, 2020 include $1.1 million for the Company’s facility relocation costs.

As a percentage of sales shipped from the Company’s U.K.

warehouse, excluding the moving and relocation costs for U.K.

operations, distribution expenses were 15.4% and 14.7% for the nine months ended September 30, 2021 and 2020, respectively.

The increase was primarily attributed to increased shipping cost for products shipped from the U.K.

warehouse to continental Europe and higher cost due to transportation shortages.

Selling, general and administrative expenses

Selling, general and administrative expenses for the nine months ended September 30, 2021 were $116.9 million, an increase of $2.6 million, or 2.3%, as compared to $114.3 million for the corresponding period in 2020.

Selling, general and administrative expenses for the U.S.

segment were $83.2 million for the nine months ended September 30, 2021, as compared to $82.7 million for the corresponding period in 2020.

As a percentage of net sales, selling, general and

administrative expenses were 15.4% and 17.8% for the nine months ended September 30, 2021 and 2020, respectively.

The increase was primarily attributable to higher incentive compensation, and lower expenses in the prior period due to the Company’s savings initiative in response to the COVID-19 pandemic.

The increase was partially offset by lower estimates for bad debt expense and facility expenses recorded in the current period.

The improvement in selling, general and administrative expense as a percentage of net sales is due to the leverage benefit of fixed costs on higher sales volume.

Selling, general and administrative expenses for the International segment were $15.5 million for the nine months ended September 30, 2021, as compared to $15.7 million for the corresponding period in 2020.

The decrease was primarily attributable to lower selling expenses related to advertising and lower estimates for bad debt expense.

The decrease was partially offset by unfavorable foreign currency exchange losses.

Unallocated corporate expenses for the nine months ended September 30, 2021 were $18.2 million, as compared to $15.9 million for the corresponding period in 2020.

The increase was driven by higher incentive compensation expense, partially offset by lower professional fees.

Restructuring expenses

The strategic reorganization is the result of the Company’s efforts for product development efficiencies and a country tailored international sales approach.

Goodwill and infinite-lived intangible asset impairment

During the nine months ended September 30, 2020, the Company recorded a $20.1 million non-cash goodwill and intangible asset impairment charge related to the U.S.

reporting unit.

The impairment charge resulted from, among other factors, more conservative estimated future cash flows in light of the uncertain market conditions arising from the COVID-19 pandemic.

Interest expense

Interest expense was $11.7 million for the nine months ended September 30, 2021 and $13.1 million for the nine months ended September 30, 2020.

The decrease in expense was a result of less debt outstanding.

Mark to market gain (loss) on interest rate derivatives

Mark to market gain on interest rate derivatives was $0.7 million for the nine months ended September 30, 2021, as compared to a mark to market loss on interest rate derivatives of $2.3 million for the nine months ended September 30, 2020.

The mark to market amount represents the change in fair value on the Company’s interest rate derivatives that have not been designated as hedging instruments.

These derivatives were entered into for purposes of locking-in a fixed interest rate on a portion of the Company’s variable interest rate debt.

The prior period loss was a result of declines in interest rates during that period.

As of September 30, 2021, the intent of the Company is to hold these derivative contracts until their maturity.

Income tax provision of $9.8 million and $3.0 million for the nine months ended September 30, 2021 and 2020, respectively, represent taxes on both US and foreign earnings at combined effective income tax provision rates of 31.8% and (20.3)%, respectively.

The negative rate for the nine months ended September 30, 2020 reflects tax expense on a pretax financial reporting loss.

The effective tax rate for the nine months ended September 30, 2021 differs from the federal statutory income tax rate of 21% primarily due to state and local tax expense, and foreign losses for which no tax benefit is recognized as such amounts are fully offset with a valuation allowance.

The effective tax rate for the nine months ended September 30, 2020 differs from the federal statutory income tax rate of 21% primarily due to state and local tax expense, equity based awards, and the non-deductible portion of the goodwill impairment recorded in the three months ended March 31, 2020.

The effective tax rate for both the three months ended March 31, 2022 and 2021 differs from the federal statutory income tax rate of 21.0% primarily due to state and local tax expenses, and foreign losses for which no tax benefit is recognized as such amounts are fully offset with a valuation allowance.

Equity in earnings (losses)

Equity in earnings of Vasconia, net of taxes, was $1.2 million for the nine months ended September 30, 2021, as compared to equity in losses of Vasconia, net of taxes, of $0.2 million for the nine months ended September 30, 2020.

Vasconia reported income from operations of $14.2 million for the nine months ended September 30, 2021, as compared to income from operations of $3.8 million for the nine months ended September 30, 2020.

The increase in income from operations was primarily attributable to improved operating results in the current period in both Vasconia's kitchenware and aluminum divisions.

During the nine months ended September 30, 2021, the Company's ownership in its equity method investment decreased as a result of a dilution of its investment in Vasconia and a subsequent partial sale of its investment.

The Company recognized a net loss of $0.3 million related to the dilution of the Company's ownership in its Vasconia investment.

The net loss was comprised of a loss of $2.0 million, related to amounts that were previously recognized in accumulated other comprehensive loss, net of a non-cash gain of $1.7 million for the difference between the selling price and the Company's basis in the diluted shares.

Additionally, the Company recognized a net loss of $0.5 million related to a partial sale of the Company’s ownership in its Vasconia investment.

During the nine months ended September 30, 2020, the Company recognized a loss of $0.2 million, relating to cumulative translation foreign currency losses that were recognized to earnings upon the dissolution of Lifetime Brands Do Brasil Participacoes Ltda., a 100% owned foreign subsidiary.

The foreign currency translation losses related to the notes receivable due to the Company from the 2016 sale of its equity interest in GS International S/A.

Equity in earnings of Vasconia, net of taxes, was $0.4 million for the three months ended March 31, 2022, as compared to equity in losses of Vasconia, net of taxes, of $0.2 million for the three months ended March 31, 2021.

Vasconia reported income from operations of $4.7 million for the three months ended March 31, 2022, as compared to income from operations of $3.8 million for the three months ended March 31, 2021.

The increase in income from operations was primarily attributable to improved operating results in the current period in Vasconia's aluminum division.

The prior year equity in losses of Vasconia was attributable to losses from discontinued operations recognized for the three months ended March 31, 2021.

LIQUIDITY AND CAPITAL RESOURCES

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The Company’s primary uses of funds consist of working capital requirements, capital expenditures, acquisitions and investments, and payments of principal and interest on its debt.

At September 30, 2021, the Company had cash and cash equivalents of $8.7 million, compared to $36.0 million at December 31, 2020.

Working capital was $251.5 million at September 30, 2021, compared to $241.2 million at December 31, 2020.

Liquidity, which includes cash and cash equivalents and availability under the ABL Agreement, was approximately $153.8 million at September 30, 2021.

At March 31, 2022, the Company had cash and cash equivalents of $14.8 million, compared to $28.0 million at December 31, 2021.

Working capital was $255.8 million at March 31, 2022, compared to $270.8 million at December 31, 2021.

Liquidity, which includes cash and cash equivalents and availability under the ABL Agreement, was approximately $162.0 million at March 31, 2022.

Inventory, a large component of the Company’s working capital, is expected to fluctuate from period to period, with inventory levels higher primarily in the June through October time period.

In 2021, the Company's inventory levels increased during the fourth quarter compared to the third quarter.

The Company also expects inventory turnover to fluctuate from period to period based on product and customer mix.

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Certain other product categories experience higher inventory turns due to lower minimum order quantities or trending sale demands.

For the three months ended September 30, 2021, inventory turnover was 2.4 times, or 154 days, as compared to 3.1 times, or 119 days, for the three months ended September 30, 2020.

The decrease in inventory turnover was attributable to higher inventory costs and increased inventory investment in the current period.

The Company believes that availability under the revolving credit facility under its ABL Agreement, cash on hand and cash flows from operations are sufficient to fund the Company’s operations for the next twelve months.

For the three months ended March 31, 2022, inventory turnover was 1.8 times, or 205 days, as compared to 2.6 times, or 143 days, for the three months ended March 31, 2021.

The decrease in inventory turnover was attributable to higher inventory levels and higher inventory costs in the current period.

The Company intends to refinance the ABL Agreement on or before its maturity on March 2, 2023.

At March 31, 2022 there were no outstanding borrowings under the ABL Agreement.

The Company believes that availability under the revolving credit facility under its ABL Agreement, including anticipated refinancing on it prior to its maturity, cash on hand and cash flows from operations are sufficient to fund the Company’s operations for the next twelve months.

However, if circumstances were to adversely change, the Company may seek alternative sources of liquidity including debt and/or equity financing.

However, there can be no assurance that any such alternative sources would be available or sufficient or on terms favorable to the Company.

However, there can be no assurance that any such alternative sources would be available or sufficient or available on terms favorable to the Company.

The Company closely monitors the creditworthiness of its customers.

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Additionally, the Term Loan facility requires quarterly payments, which commenced on June 30, 2018, of principal equal to 0.25% of the original aggregate principal amount of the Term Loan facility.

Agreements, when the Company makes an Excess Cash Flow payment, the payment is first applied to satisfy the future quarterly required payments in order of maturity.

Per the Debt Agreements, when the Company makes an Excess Cash Flow payment, the payment is first applied to satisfy the future quarterly required payments in order of maturity.

The quarterly principal payments have been satisfied through maturity of the Term Loan by the annual Excess Cash Flow payments.

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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 pursuant to the Term Loan, is no greater than 3.75 to 1.00, subject to certain limitations and for the period defined pursuant to the Term Loan.

As of September 30, 2021 and December 31, 2020, the total availability under the ABL Agreement was as follows (in thousands):

September 30, 2021

As of March 31, 2022 and December 31, 2021, the total availability under the ABL Agreement was as follows (in thousands):

March 31, 2022

December 31, 2021

Maximum aggregate principal allowed $ 150,000 $ 150,000

Outstanding borrowings under the ABL Agreement (1,600) (27,302)

Standby letters of credit (2,765) (3,659)

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The current and non-current portions of the Company’s Term Loan facility included in the condensed consolidated balance sheets were as follows (in thousands):

September 30, 2021 December 31, 2020

March 31, 2022 December 31, 2021

Current portion of Term Loan facility:

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Total Non-current portion of Term Loan facility $ 240,703 $ 241,873

The estimated Excess Cash Flow principal payment recorded at September 30, 2021 represents the Company’s estimate for the 2022 Excess Cash Flow payment.

The estimated Excess Cash Flow principal payment recorded at March 31, 2022 represents the Company’s estimate for the 2023 Excess Cash Flow payment.

The 2022 Excess Cash Flow payment, paid on March 30, 2022, totaled $6.2 million.

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subsidiary guarantors, subject to certain exceptions.

Such security interest consists of (1) a first-priority lien, subject to certain permitted liens, with respect to certain assets of the Company and its domestic 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 its domestic 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 ABL Agreement bear interest, at the Company’s option, at one of the following rates:

(i) 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 LIBOR plus 1.0%, plus a margin of 0.25% to 0.75%, or (ii) LIBOR plus a margin of 1.25% to 1.75%.

or Sterling Overnight Index Average “SONIA” for borrowings denominated in Pounds Sterling) plus a margin of 1.25% to 1.75%.

The respective margins are based upon the Company’s total leverage ratio, as defined in and computed pursuant to the ABL Agreement.

The interest rate on outstanding borrowings under the ABL Agreement at September 30, 2021 was 3.5%.

There were no outstanding borrowings under the ABL Agreement at March 31, 2022.

In addition, the Company pays a commitment fee of 0.375% on the unused portion of the ABL Agreement.

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(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 LIBOR, but not less than 1.0%, plus 1.0%, which alternate base rate shall not be less than 2%, plus a margin of 2.5% or (ii) LIBOR, but not less than 1%, plus a margin of 3.5%.

The interest rate on outstanding borrowings under the Term Loan at September 30, 2021 was 4.5%.

The interest rate on outstanding borrowings under the Term Loan at March 31, 2022 was 4.5%.

The Debt Agreements provide for customary restrictions and events of default.

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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 $15.0 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 $15.0 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 September 30, 2021.

The Company was in compliance with the covenants of the Debt Agreements at March 31, 2022.

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

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Adjusted EBITDA (a non-GAAP financial measure), which is defined in the Company’s Debt Agreements, is used in the calculation of the Fixed Charge Coverage Ratio, Secured Net Leverage Ratio, Total Leverage Ratio and Total Net Leverage Ratio, which are required to be provided to the Company’s lenders pursuant to its Debt Agreements.

The Company’s adjusted EBITDA, for the last twelve months ended September 30, 2021 was $96.7 million.

Capital expenditures for the nine months ended September 30, 2021 were $3.4 million.

The Company’s adjusted EBITDA (including pro forma adjustments), for the last twelve months ended March 31, 2022 was $95.1 million.

Capital expenditures for the three months ended March 31, 2022 were $0.4 million.

Non-GAAP financial measure

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Further, the Company’s non-GAAP information may be different from the non-GAAP information provided by other companies including other companies within the home retail industry.

The following is a reconciliation of the net income, as reported, to adjusted EBITDA, for each of the last four quarters and the 12 months ended September 30, 2021:

Quarter Ended Twelve Months Ended September 30, 2021

December 31, 2020 March 31,

2021 June 30,

2021 September 30,

The following is a reconciliation of the net income (loss), as reported, to adjusted EBITDA, for each of the last four quarters and the 12 months ended March 31, 2022:

Quarter Ended Twelve Months Ended March 31, 2022

June 30, 2021 September 30,

2021 December 31,

2021 March 31,

(in thousands)

Net income as reported

Net income (loss) as reported

$ 5,789 $ 12,571 $ (626) $ 380 $ 18,114

Undistributed equity (losses) earnings, net

Undistributed equity (earnings), net

(393) (195) (466) (416) (1,470)

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Depreciation and amortization 5,765 5,837 4,960 4,899 21,461

Intangible asset impairments — — 14,760 — 14,760

Stock compensation expense 1,328 1,201 1,244 1,174 4,947

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72 41 378 1,119 1,610

Restructuring benefit

Warehouse relocation and redesign expenses (1)

— — 450 497 947

S'well integration costs

— — — 781 781

Wallace facility remedial design expense — 500 — — 500

Adjusted EBITDA (2)

Adjusted EBITDA is a non-GAAP financial measure which is defined in the Company’s debt agreements.

Adjusted EBITDA is defined as net income, adjusted to exclude undistributed equity in (losses) earnings, income tax provision, interest expense, mark to market gain on interest rate derivatives, depreciation and amortization, stock compensation expense, and other items detailed in the table above that are consistent with exclusions permitted by our debt agreements.

18,166 29,259 30,862 12,825 91,112

Pro forma historical S'well and projected synergies adjustment (3)

Pro forma Adjusted EBITDA (2)

$ 18,166 $ 29,259 $ 30,862 $ 12,825 $ 95,112

(1) For the twelve months ended March 31, 2022, the warehouse relocation and redesign expenses included $0.5 million of expenses related to the International segment and $0.4 million of expenses related to the U.S.

For the three months ended March 31, 2022, warehouse relocation and redesign expenses included $0.4 million of expenses related to the International segment and $0.1 million of expenses related to the U.S.

(2) Adjusted EBITDA is a non-GAAP financial measure that is defined in the Company’s debt agreements.

Adjusted EBITDA is defined as net income (loss), adjusted to exclude undistributed equity in (earnings), income tax provision, interest expense, mark to market (gain) on interest rate derivatives, depreciation and amortization, intangible asset impairments, stock compensation expense, and other items detailed in the table above that are consistent with exclusions permitted by our debt agreements.

(3) Pro forma historical S'well and projected synergies adjustment represents a permitted adjustment to the Company’s adjusted EBITDA for the acquisition of S'well on March 2, 2022 pursuant to the Company’s Debt Agreements.

Pro forma projected synergies represents the amount of projected cost savings, operating expense reductions and cost saving synergies projected by the Company as a result of actions taken through March 31, 2022 or expected to be taken as of March 31, 2022, net of the benefits realized during the twelve months ended March 31, 2022.

Accounts Receivable Purchase Agreement

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Either party may terminate the agreement at any time upon sixty days’ prior written notice to the other party.

Pursuant to the Receivable Purchase Agreement, the Company sold to HSBC $33.7 million and $113.2 million of receivables during the three and nine months ended September 30, 2021, respectively, and $43.0 million and $116.9 million of receivables during the three and nine months ended September 30, 2020, respectively.

Charges of $0.1 million and $0.3 million related to the sale of the receivables are included in selling, general and administrative expenses in the unaudited condensed consolidated statements of operations for the three and nine months ended September 30, 2021, respectively.

Charges of $0.1 million and $0.4 million related to the sale of the receivables are included in selling, general and administrative expenses in the unaudited condensed consolidated statements of operations for the three and nine months ended September 30, 2020, respectively.

At September 30, 2021 and 2020, $15.8 million and $26.7 million, respectively, of receivables sold were outstanding and due to HSBC from customers.

Pursuant to the Receivable Purchase Agreement, the Company sold to HSBC $46.3 million and $40.6 million of receivables during the three months ended March 31, 2022 and 2021, respectively.

Charges of $0.1 million related to the sale of the receivables are included in selling, general and administrative expenses in the unaudited condensed consolidated statements of operations for both the three months ended March 31, 2022 and 2021.

At March 31, 2022 and 2021, $28.1 million and $25.6 million, respectively, of receivables sold were outstanding and due to HSBC from customers.

Interest Rate Swaps

The Company's total outstanding notional value of interest rate swaps was $75.0 million at September 30, 2021.

The Company's total outstanding notional value of interest rate swaps was $69.0 million at March 31, 2022.

The Company designated a portion of these interest rate swaps 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.

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The original notional values are reduced over these periods.

The aggregate notional value of designated interest rate swaps was $50.0 million at September 30, 2021.

In June 2019, the Company entered into additional interest rate swap agreements, with an aggregate notional value of $25.0 million at September 30, 2021.

The aggregate notional value of designated interest rate swaps was $44.0 million at March 31, 2022.

In June 2019, the Company entered into additional interest rate swap agreements, with an aggregate notional value of $25.0 million at March 31, 2022.

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 and expire in February 2025.

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The Company does not hedge the translation of foreign currency profits into USD, as the Company regards this as an accounting exposure rather than an economic exposure.

The aggregate gross notional values of foreign exchange contracts at September 30, 2021 was $31.3 million.

The aggregate gross notional values of foreign exchange contracts at March 31, 2022 was $18.0 million.

These foreign exchange contracts have been designated as hedges in order to apply hedge accounting.

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All foreign currency forward contracts that the Company enters into are components of hedging programs and are entered into for the sole purpose of hedging an existing or anticipated currency exposure.

The Company does not enter into such contracts for speculative purposes, and as of September 30, 2021, the Company did not have any foreign currency forward contract derivatives that are not designated as hedges.

The Company does not enter into such contracts for speculative purposes, and as of March 31, 2022, the Company did not have any foreign currency forward contract derivatives that are not designated as hedges.

These foreign exchange contracts have been designated as hedges in to order to apply hedge accounting.

Operating activities

Net cash provided by operating activities was $14.6 million for the nine months ended September 30, 2021, as compared to net cash provided by operating activities of $49.2 million for the nine months ended September 30, 2020.

The decrease from 2021 compared to 2020 was attributable to an increased investment in inventory and timing of payment for accounts payable and accrued expenses.

The timing of payment for accounts payable and accrued expenses in the comparable period reflected cost savings initiatives and payment deferral strategies utilized in response to the COVID-19 pandemic.

The decrease in net cash provided by operating actives was partially offset by timing of collections related to the Company’s accounts receivables.

Net cash provided by operating activities was $13.4 million for the three months ended March 31, 2022, as compared to net cash provided by operating activities of $36.3 million for the three months ended March 31, 2021.

The decrease from 2022 compared to 2021 was attributable to timing of payment for accounts payable and accrued expenses, partially offset by timing of collections related to the Company's accounts receivables.

Investing activities

Net cash used in investing activities was $0.5 million and $1.6 million for the nine months ended September 30, 2021 and 2020, respectively.

The nine months ended September 30, 2021 included $3.1 million of proceeds received from a partial sale of the Company’s investment in its equity method investment, offset by cash used for purchases of property and equity of $3.4 million.

Net cash used in investing activities was $18.4 million and $0.9 million for the three months ended March 31, 2022 and 2021, respectively.

The increase from 2022 compared to 2021 was attributable to the cash consideration of $18.0 million paid for the acquisition of S'well.

Financing activities

Net cash used in financing activities was $41.5 million for the nine months ended September 30, 2021, as compared to net cash used in financing activities of $16.2 million for the nine months ended September 30, 2020.

The change was mainly attributable to repayments on the Company’s revolving credit facility under its ABL Agreement in the 2021 period compared to proceeds received in the 2020 period.

Net cash used in financing activities was $8.2 million and for the three months ended March 31, 2022, as compared to net cash used in financing activities of $40.8 million for the three months ended March 31, 2021.

The change was mainly attributable to repayments on the Company's revolving credit facility under its ABL Agreement in the 2021 period and the lower Excess Cash Flow principal payment on the term loan for the 2022 period compared to the 2021 period.

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 million share repurchase program.

The repurchase authorization permits the Company to effect the repurchases from time to time through open market purchases and privately negotiated transactions.

During the three months ended March 31, 2022, the Company repurchased 51,145 shares for a total cost of $0.7 million and thereafter retired the shares.

Please see Part II, Item 2—Unregistered Sales of Equity Securities and Use of Proceeds included in this Quarterly Report on Form 10-Q.

Quantitative and Qualitative Disclosures About Market Risk

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis