Lifetime Brands Inc (LCUT) 2011 Q4 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the fourth quarter 2011 Lifetime Brands earnings conference call. My name is Keith and I'll be your operator for today. At this time, all participants are in a listen-only mode. Later on, we will conduct a question-and-answer session. (Operator Instructions). As a reminder, today's conference is being recorded for replay purposes. And I would now like to turn the conference over to your host for today, Ms. Harriet Fried of LHA. Please go ahead, ma'am.

Good morning, everyone, and thank you for joining Lifetime Brands fourth quarter conference call. With us today from management are Jeff Siegel, Chairman, President and Chief Executive Officer, and Larry Winoker, Senior Vice President and Chief Financial Officer. Before we begin, I'll read the Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995.

The statements that are about to be made in this conference call that are not historical facts are forward-looking statements and involve risks and uncertainties, including the Company's ability to comply with the requirements of its credit agreements, the availability of funding under those credit agreements, the Company's ability to maintain adequate liquidity and financing sources and an appropriate level of debt, changes in general economic conditions which could affect customer payment practices or consumer spending, changes in demand for the Company's products, shortages of and price volatility for certain commodities, the affect of competition on the Company's markets, and other risks detailed in Lifetime's filings with the Securities and Exchange Commission.

The Company undertakes no obligation to update these forward-looking statements. The Company's earnings release contains non-GAAP financial measures within the meaning of Regulation G promulgated by the SEC. Included in this morning's release is a reconciliation of these non-GAAP financial measures to the comparable financial measures calculated in accordance with GAAP.

With that introduction, I would like to turn the call over to Mr. Siegel. Please go ahead, Jeff.

Thanks, Harriet, and good morning, everyone. With me on the call today is Larry Winoker, our CFO. Hopefully, you've all had a chance to review the earnings release we issued earlier today.

In 2011, Lifetime's core US wholesale business, kitchenware and tabletop, performed well, achieving solid profitable growth. Our kitchenware businesses, which include kitchen tools and gadgets, kitchen cutlery, cutting boards, and bakeware and cookware achieved organic sales growth of 3.5%, and our Tabletop businesses, which are dinnerware, flatware, and glassware, achieved organic sales growth of 9.1%, with actual sales growth of 14.5%. These gains were achieved in spite of a weak consumer demand and reflect the critical importance of our commitment to innovation and our successful effort to gain market share.

In the tabletop area, the overall gain also reflects sales of Creative Tops, which we acquired in November. It is worth noting that our tabletop businesses have had a remarkable turnaround from the time, only a few years ago, when they were struggling. Including Creative Tops, total wholesale sales for the year increased 1.8%.

For the fourth quarter, total wholesale sales were down by 1.7%, as some of our retailer partners shifted planned new product launches into 2012, as those retailers chose to manage their year-end inventories. Our business, other than kitchenware and tabletop, which we now call home solutions, were impacted by the weak consumer demand for nonessential, especially home decor. The home decor market has been soft all year, with many of our retailer partners indicating that this business has been struggling.

The problems were especially acute in the fourth quarter with concerns about the direction of the economy was going to take still very much on everyone's mind. Our plan to restore our home decor business, which began in 2011, includes installing new management, reducing overhead, and refocusing our product assortment on more upscale offerings, utilizing the Mikasa, Pfaltzgraff, and Studio Nova brands.

The good news here is that sales from Mikasa and Studio Nova brand in home decor have been excellent, and the Pfaltzgraff line was first shown to buyers in January, last month, to excellent reviews and will begin shipping in the second quarter. Unfortunately, even though this process is one of our priorities, it's going to take some time to before it is complete.

As Larry will discuss later in the call, our bottom line financial results were also impacted by expenses relating to two important acquisitions. These expenses totalled more than $2 million and, obviously, affected our year-over-year comparisons. That said, Lifetime achieved many things in 2011 that we believe will help strengthen our business in 2012 and beyond.

A key goal for 2011 was to broaden our product offerings and to diversify our geographic base. We have succeeded in both of those goals. We can now take advantage of growth opportunities outside of the US, where consumer classes are expanding and they're enthusiastic about acquiring household goods with leading brands that were previously out of their reach.

We are doing this both by investing in successful companies outside the US and by starting new ventures and partnership with strong local management teams. The success we've had since 2007 with Grupo Vasconia, our 30% owned Mexicana affiliate, shows the compelling opportunities this strategy provides.

Our second international venture, Lifetime Brands Canada, is also doing very well due to its access to Lifetime's product lines, brands, and sourcing. Both Vasconia and Lifetime Brands Canada had record years in 2011. To give you a few highlights of our expanded focus on international markets, in January 2011, we formed Housewares Corporation of Asia, our Hong Kong based joint venture that supplied direct import kitchenware programs to retailers in North, Central, and South America.

Our partners in the joint venture are Accent-Fairchild Group, Grupo Vasconia, and Fackelmann, a German company with ownership interests in a number of Chinese factories. Our goal is to use HCA in order to offer those retailers in the US that want to develop proprietary kitchenware programs sourced directly from Asia, access to well-established product design resources, factories, and sourcing networks.

Business that we write through HCA will not cannibalize our existing kitchenware businesses, but rather enable us to share in business that we previously would have foregone and ceded to other manufacturers. Based on programs currently being negotiated, we believe this joint venture will begin to show positive results in 2012.

In November, we acquired Creative Tops, a leading UK supplier of private label and branded tableware and kitchenware products. Our goal is to use the acquisition as a base for building a powerful housewares company in the UK and as a platform for expanding our tabletop businesses throughout Europe. Creative Tops Far East Limited also offers us more resources to expand our existing Asia sourcing infrastructure.

It's been just a few months since the acquisition, but Creative Tops is already having success in placing items developed by Lifetime into key UK retailers. As noted in this morning's press release, Creative Tops contributed $6.7 million in net sales to our fourth quarter results.

Since our last earnings call, we also acquired a 40% interest in GS International, a leading wholesale distributor of branded housewares products in Brazil. GSI has an outstanding management team, and we're looking forward to working with them to build a company into a preeminent player in housewares Brazil, Uruguay, and Argentina. The economies in these countries exemplify the emerging middle-class we want to target, propelling housewares to much faster growth than is possible in the US.

Finally, just last month, we announced a joint venture to market Mikasa branded dinnerware, glassware, and giftware products in China. As you know, over the past couple of years, Mikasa has proven be to an extremely successful acquisition. It's known for contemporary patterns and designs, a style that also matches the shopping preference for young, urban, middle income Chinese families.

Our joint venture is with King's Flair, a company with which we have done business with for over 25 years. King's Flair has a solid infrastructure that is experienced with distributing better brands to the Chinese market. We will continue to look for investment opportunities with a potential of increasing our presence in new and under-penetrated international markets with high growth potential.

All of this is not to say we're not pursuing some very good growth opportunities in the US, as well. We recently signed a licensing agreement with celebrity chief and author, Guy Fieri, a star in the top rated food network shows, who also has a hit show on prime time TV, someone with very broad appeal, will unveil his collection, Guy's Collection, which includes cookware, kitchen tools and gadgets, cutting boards and pantryware, at next week's International Home & Houseware Show in Chicago.

In addition, we'll be showcasing vast assortments of innovative products through preparing, cooking, and serving food as a Lifetime's established brands. We're featuring space saving designs, bold colors, unique shapes, and new technologies, everything needed to be in the forefront of the kitchenware industry. Even more significant, we have some very promising new distribution opportunities in our US Tabletop business that we think will be a real plus for our results in 2012.

Now, I will turn the call over to Larry for more details on our fourth quarter and full-year financial results. Larry.

Thanks, Jeff. As we reported earlier this morning, net income for the fourth quarter of 2011 was $5.4 million, or $0.43 per diluted share, versus $13.9 million, or $1.07 for diluted share in the 2010 period.

Adjusted net income for the 2011 quarter was $6.5 million, or $0.52 per share, versus $7.9 million, or $0.62 per share in the 2010 quarter. Adjusted net income, which was reconciled to net income in our earnings release excludes acquisition-related expenses in 2011 and extraordinary gain in 2010 and changes to the deferred income tax valuation allowance in both periods.

Income from operations was $10 million, $11.5 million excluding acquisition expenses in the fourth quarter of 2011, versus $14.5 million in 2010. Consolidated EBITDA, a non-GAAP measure that is defined and reconciled net income in our earnings release, was $14.3 million for the 2011 quarter and $17.5 million for 2010 quarter. Consolidated EBITDA was $38.1 million for the full year 2011 versus $42.9 million last year.

Looking at our wholesale segment, net sales for the fourth quarter of 2011 decreased $2.3 million, or 1.7%, to $129.1 million. This is primarily due to a $9.1 million decrease for home solutions products, which includes home decor, pantryware, spices, travel mugs, and storage containers. This category has been weak throughout 2011, especially home decor, as consumer spending for these non-essentials has been down.

Tabletop sales increased by $2.6 million, which offset decline in kitchenware. However, for the full year, each of kitchenware and tabletop increased in the aggregate 5.5%. The 2011 quarter decline was substantially offset by the inclusion of Creative Tops, since its acquisition in November.

Wholesale gross margin was 34.8% in 2011 quarter versus 36% last year. This decline primarily reflects the poor performance of our home solutions products, which contributed 100 of the 120 basis point decline in the quarter.

On a full year basis, home solutions reduced our income from operations by approximately $7.5 million in 2011. Our current business plan is to bring this category of business to breakeven for 2012.

Wholesale distribution expenses as a percentage of shipped sales shipped from the Company's US warehouses were approximately 8% in the 2011 quarter, as compared to 8.8% in 2010. This improvement reflects improved labor efficiencies and the benefit of higher warehouse shipments supported by a largely fixed cost base.

Wholesale SG&A expenses, excluding Creative Tops, were $19 million in the fourth quarter of 2011 versus $19.1 million last year. As a percentage, SG&A increased to 15.5% from 14.5% last year. This percentage was due to the sales decline in the home solutions category.

Looking at our retail direct segment, net sales were $8.5 million in the fourth quarter of 2011, versus $11.2 million last year. The decrease was principally due to the Company's decision in April to terminate its print consumer catalog. We feel direct gross margin increased do 67.6% from 64.5% last year, as we reduced promotional activity.

As a percentage of net sales, retail distribution expenses were 30.7% for 2011 versus 30% for 2010. This increase reflects the effect of lower shipments over a fixed cost base.

Retail direct SG&A expenses were $2.7 million in the 2011 quarter, versus $3.9 million last year. The reduction reflects savings associated with the decision to terminate the print catalog.

Looking at non-segment items, unallocated expenses, excluding acquisition expenses, was $3.2 million in the 2011 quarter versus $3.4 million in 2010. This decline is not meaningful as it reflects timing differences of certain expenses incurred.

Interest expense declined to $2 million from $2.2 million last year. The decrease was due to lower average borrowing rates as we retired our convertible senior notes in July, but was partially offset by higher average outstanding.

The effective income tax rate for the fourth quarter 2011 was 43.9% versus 13% in 2010. The low effective rate for 2010 was due to a significant reduction in the valuation allowance of certain deferred tax assets. In 2011, the rate was unfavorably affected by the non-deductibility of certain acquisition expenses.

Grupo Vasconia, our 30% owned investee, reported income from operations in the quarter of $5.5 million versus $4.1 million last year, and net income in the quarter of $3.4 million, as compared to $2.8 million last year. These solid improvements were a direct result of the 17% increase in sales, mostly from -- which is derived from kitchenware products.

And looking at our financial position, at the end of calendar 2011, the outstanding balance on our revolving credit facility was $57.6 million and liquidity under the facility was $67.8 million.

That concludes our prepared comments. Operator, we're ready for questions.

(Operator Instructions). And your first question is from the line of Lee Giordano with Imperial Capital. Please go ahead.

Thanks. Good morning, everybody.

Morning, Lee.

Morning.

Can you talk a little bit more what you're doing to improve (inaudible) in the home decor business? And I guess what you have seen so far this year that gives you hope that these discretionary categories will revive in 2012?

You know, we, obviously, as that business was deteriorating in 2011, we took a very, very hard look at it and made plans for grate changes. The most important things that we've done, I guess, go in two directions. One in how to improve the top line and the margins of the business, and secondly, how to reduce the SG&A. Talking about the SG&A, we have significantly reduced the SG&A by combining two of the businesses into one and done other things that would reduce the SG&A of the business.

In addition to that, we've refocused the business to move it up to a little bit higher level, primarily under the Mikasa brand and then also under the Pfaltzgraff and Studio Nova brands. We have had great success with Mikasa home decor. Wherever it's been placed, it's sold.

We haven't had anything that didn't do well, so we're, obviously, going to expand on that. It's the first time we've had a really consumer branded home decor assortment, and that started in 2011, and really we're going to accelerate it in 2012. And last month at the Atlanta Gift Show, which is a big show for home decor, we showed a line of Pfaltzgraff branded home decor, which has wider distribution than Mikasa, and it was very, very well received, and that will be rolling out in the beginning of the second quarter. So those are the main initiatives to improve that business.

We have a goal to at least breakeven in home solutions this year, which is a dramatic turnaround. I think we're going to do better than that. I think we'll make a little bit of a profit, so we're heading the right way. The top line is not going to increase much in that business, but it should increase enough to make it work.

Great. And as far as the JV in China, can you provide any financial metrics or targets there, you know, how big can this be as a revenue generator and how might it impact margins, or will this be accounted for similar to Vasconia?Thanks.

Well, the account will be more like Vasconia because we only have 50% of the joint venture. It will not be producing anything significant this year or probably even next year. It's going to take two years for us to really get this off the ground in a way that's worthwhile. The first two years will be to establish the brand in China, which we have already done.

Their opening showcase shops that really are to enhance the value of the brand in key cities. Next step will be moving towards an internet platform in China, which is a very popular thing with young people; that's how they shop. And also with a direct selling within China. Our partner has a direct selling setup that is done very, very well with other businesses they have, and that will be expanded in late 2012 going into 2013.

But as far as how much it could be worth or what it can do, that's an unknown market. It's brand new. As everyone knows, the Chinese have a very, very rapidly growing middle class. The middle class could equal our total population within a few years, and it's the right place for us to establish our key brand.

Great. Thanks a lot.

Your next question is from the line of Gary Giblin with Aegis Capital. Please go ahead.

Morning, Jeff and Larry.

Good morning, Gary.

Morning.

Is there any material inventory risk in the sense that inventories are up 10% year-over-year and more than the flattish sales growth so any mark down risk or is it just a solid carryover inventory?

There's no issue. We have a lower percentage of what we would call discontinued inventory than we've ever had in the history of the Company. The reason for the higher inventory -- there are two reasons for it.

First of all, Chinese New Year came as early as it could possibly come in 2012, so it was in mid-January, which means we had to ship goods in December. So a little more was on the water than would have normally been on the water, quite a bit more, actually, for the first quarter. In addition, as we noted, some of the programs that retailers were supposed to rollout in December were pushed into the retailer's first quarter.

So the inventory was there, it has already shipped, just so you know, we have already shipped it, so the inventory will be coming down. So your answer is there is no inventory risk.

Gary, just to add, half of that 10% increase is as Jeff described, the other half is because we now own Creative Tops.

Okay. That addresses that, thanks. And then as you look on the year -- I mean, what are the big three factors that led it to come in a little softer than you thought earlier in the year? I mean is it -- I mean the economy's effect on discretionary or is it retailers own reactions, cautiousness and open to buy or is it just -- what really drove the softness?

It's certainly related to the economy, but consumers for home decor are not buying home decor. I mean, it's a very discretionary purchase. Our home decor up until 2011 was aimed more at the blue collar level. That level is spending on necessities.

It certainly hasn't hurt our kitchenware business or our tabletop business because those things are necessary to have in a home. But you don't have to have that extra thing to hang on the wall or to put on the table and that business has suffered. It started suffering really in the second quarter of last year as we have mentioned on a number of calls and it accelerated in the fourth quarter. It seems to be stabilizing, not all way, but it is certainly moving better than it was. It's not showing the ridiculous decreases that it was showing in the fourth quarter.

A little note on the fourth quarter, which is a little bit surprising. We only had one really bad month in the fourth quarter, that was the month of October, and that was horrible, to be honest with you. It got better after that, not wonderful, but it certainly got better after that. And we expected December to be much, much stronger with all these new programs that we're rolling out for 2012, but a couple key retailers wanted to come low in inventory and they didn't let us ship it until the first quarter. The good news is that we have shipped these new programs.

Okay. And I mean that's interesting you say October was the low point and then it picked up from there. I mean, any color on why that would be? In other words the holiday season got a little bit clearer for retailers and they order more closer to their holiday need or what do you think happened?

No, this was -- it was unanticipated, frankly. I think there was a lot of nervousness if you -- what was in the news September going into October evidently got a lot of retailers nervous. They slowed down, slowed down much below what we expected.

I mean, we had -- we get monthly updates, we have something called a flex plan, which we look at very carefully to understand the demand, and there was no indication of this happening, but it did happen. And the month of October turned out to be a very slow month for us. It was the worst we've had in years, frankly, as far as percentage decrease.

But like I said, it came back and slowly is continuing to come back in a big way in the first quarter. The first quarter looks very, very good.

Okay. Got it. And then final question is could you give an update on the fourth quarter and current trends in the online business, give some commentary?

As we have mentioned in previous calls, our online business is evolved to be more of a way of enhancing our retail business. It certainly moved in the right direction. We don't run the sales that we used to run because the retailers don't like that, frankly, so we run less dramatic discount sales and we run things more at the same price that our customers are running it for.

We don't discounts anything on our online sites, but we do have proprietary product that is not carried by other retailers where we can run sales. So the sites are evolving especially -- our most important site going forward is the Mikasa site. It's evolving more into a site that really enhances the brand. That is our fastest growing brand, so you know, and it's going to be our fastest growing brand for many years all around the world.

And the Mikasa site is being designed and redesigned and will relaunched very shortly in a way that will enhance the brand worldwide and it will become a worldwide site. We will be porting the Mikasa site to many other countries starting in 2012.

That's good news and the -- are margins better than, you know, now that you said you're running more full price billing online and then -- but you still have shipping --

Yes. The answer is yes. Our margins on our direct to consumer business have gone up. They started going up in the fourth quarter very nicely, and we expect them to be up very nicely in 2012. In general, our margins seem to be improving as a Company right now. Going into the first quarter, the increases in cost that we faced in early 2011 have stabilized, we are not getting the increases, you know, raw materials have pretty much stabilized, the Chinese currency, the RMB, has stabilized against the dollar to some degree. So we're not getting the pressures that we had and retailers have accepted the increases that we have passed on to them, though they fought until the last quarter, frankly, but they have accepted it and we would expect margins in 2012 overall throughout the Company to improve.

Super update. Okay. Good luck on the quarter and year.

Thank you.

Your next question comes from the line of Brian Freckmann with LS Capital. Please go ahead.

Hey, guys. How are you? Just a question sort of jumping on the last caller. Care to put into a dollar amount what you would consider sort of the push out from fourth quarter to first quarter?

We haven't done that. Do you have that, Larry?

No. Actually, I don't, no.

All I can tell you --

Ballpark maybe?

I can't -- we don't have a number, but I can tell you that our first quarter will be impacted by the extra business that would have been shipped in December, though even without that, I think we're having a good quarter.

In my comment, I did mention that the tabletop, which is up about $2.6 million offset the decline, so kitchenware was up last year versus $2.6 million, so it should be at least that much, not more.

All right. Okay. I can sort of back into that math but tabletops offset -- okay. The next question would be as you guys grow the GSI business, and eventually the Chinese business, more and more of your earnings will come from the JV line. So given that and then of course given the change in tax rate this year versus last year, care to help us out a little bit in understanding -- I mean it's going to be harder and harder for us to model out -- we can get operating margins but to get to a net income number, it's going to be a little more difficult. So I was hoping you could maybe help us think about GSI in 2012, you're clear that maybe China wouldn't happen until 2013 or so.

I don't know if that's a tax question.

It's not a tax question.

No, no, I mean it's more of, obviously, you know -- GSI is going to come up as a JV income line like Grupo Vasconia, and so maybe a little help on sort of how we can model that out. I can -- we can model your core business out. We understand the margins there, but on GSI, it's just going to come out as a JV income line and I'm trying to figure out how -- if you could give us a little help there in trying to figure out what we should be looking for that type of business.

I think it's probably maybe a little early and maybe because we're looking at more of the whole business rather than just a component. We know that in China, we're going to -- that income will be taxed at lower rates. And rates are lower in Brazil. And you didn't ask, but also will be lower in the UK with Creative Tops. But in terms of how do you model that out in terms of its contribution to our net income, it's a little early yet because we just closed the acquisition, it'll take some time to integrate some of the benefits we think can be derived by bringing what we do well to those markets.

I can tell you that we expect to have income from GSI. Just, you know, this is a profitable business. We made an investment in a business that is nicely profitable.

Okay. Well, that's -- obviously, you've been able to grow Grupo Vasconia or they've been able to grow it, so I think that grew about 23% year-over-year, so as I sort of look at modeling my full year 2012, I'm using sort of Grupo Vasconia my best guess on how fast they're going to grow and then some GSI. Is that fair? Is that probably a fair way to look at it?

GSI is a much, much smaller business, remember.

Right.

So it's not in the same world; keep that in mind.

Okay.

It's going it take some time to get to the size of Grupo Vasconia. They're a much, much smaller company.

Okay. And then just finally on Creative Tops, you know, that -- I know is sort of short -- that 6.7, you know, were you guys pleased with that? Is that in line with kind of your estimates? How do you -- as you look at your influence on Creative Tops, how do you see that affecting 2012?

Well, the 6.7 was in line with what we expected. Creative Tops probably we will see the benefits sooner than we will see in GSI because it's a big -- it's more developed, it has more infrastructure than GSI, but that will -- we'll see that more in the second half in 2012 as we bring -- as I said, the things that Lifetime does well in the different categories, we bring that to the UK market and get placement in the different retail channels.

Yes. I would agree with that. We should -- we'll get positive benefit from Creative Tops starting in the first quarter, but the benefit, the additional benefit that Lifetime brings to help Creative Tops in any way would not come until the second half of the year, starting the second half the year. They have a great management team, they're very aggressive, they like to run -- they started running before we even closed on the transaction. But it takes time. We have to -- if they're going to put a line into a particular retailer that was developed by Lifetime, they have to displace somebody else. They've already started having success doing that, so we expect that will continue. But even with that, we won't get the additional benefit from that until the second half.

Let's see here. And then, you know, as you have got a number of moving parts, I think after the second quarter call back in June or July or whenever it was, you guys made a comment that you thought operating income would be up year-over-year. Care to give us sort of any thoughts on something like that rather than -- I know you guys are sort of tight with your guidance, but you have on occasion given us a few things to look at. Care to think about 2012 from a revenue and operating income line or an op margin or something that we can kind of try to build our models off of?

We'll try to give you a little more at the next conference call. It's early in the year. Give us a little more time to try to open up a little bit more for you.

Okay. I will hold you to that next quarter, but I do appreciate that. Thanks so much, guys.

Okay.

And your next question is from the line of Dominic Marshall with Pacific Ridge. Please go ahead.

Thank you. I was going to push on the same question that the previous caller asked, but -- you did talk at the beginning of your prepared statements about 2011 being a year for broadening your lines and increasing the geographic spread in 2012, being more of a focus on growth. Can you quantify at all kind of your baseline expectation for what reasonable growth expectation would be for 2012?

Well, as we have said before, we want to grow it just in our -- in the US domestic business at double the rate of GDP. Hopefully, we will do better than that. But we also have this year (inaudible) Creative Tops, which we acquired in November, so we have a full year of that. So we should have significant growth both organic growth in our core businesses, as well as the additional growth layered on by Creative Tops and then additional income layered on by GSI and our other foreign partners.

Okay, thank you. And could you remind us -- I looked at your recent investor presentation on your website and didn't see anything listed there. I think I have in the past in terms of your kind of long-term operating model. Can you talk at all about just longer-term what your expectation is on the gross margin and operating margin line?

Yes. We continue to try to keep 13% on the wholesale margin line. We said that the gross margin -- that's operating margin. The gross margin line has been challenged for reasons we discussed of costs going up in China, currency, but we've made really fast, good progress on the other lines on the expense side, so we think 13% is something we should be able to achieve in wholesale.

And what sort of revenue level would it take to get there do you think?

Well, not much more, 3% to 5%. We're pretty close.

Okay.

That's why it comes to the 13 notwithstanding the gross margin challenges.

Then just last question. You talked about the goal for 2012 being to get home solutions to around breakeven. Maybe I missed this, but can you just quantify at all what the drag was in 2011 from that business?

Well, we said that the delta was about $7.5 million and it was a category that was very weak in the whole industry. We were not immune to that. So it hurt our top line and then in addition to moving product, it hurt our margins. We had more off-price selling.

So $7.5 million was the top line impact. Can you talk about what the --?

I'm sorry. $7.5 million was the profit, the delta profit. The top line was for the year was about $17.5 million.

Right. Thank you. Appreciate that. That's it for me.

And there are no other questions at this time. (Operator Instructions). And it looks like no other questions, so with that, this will end the question-and-answer portion of our call, and I would like to turn it back over to Mr. Jeff Siegel for closing remarks.

Thank you. I'm glad you were able to join us on the call today. We remain committed to creating shareholder value through growth in revenue, net income, and diluted earnings per share. As a leading marketer and distributor of branded consumer products used in the home, our strategy for achieving these objectives is to introduce new products, to increase our penetration of existing distribution channels, and to pursue strategic acquisitions in the United States and to expand internationally. I hope you will join us for the next update after the first quarter of 2012 results are in. Thank you.

Ladies and gentlemen, that concludes today's conference. Thank you for joining us. You may now disconnect. Everyone have a great rest of the day.