LIFETIME BRANDS, INC Management’s Discussion and Analysis of Financial Condition and Results of Operations (Form 10-Q)

This Quarterly Report on Form 10-Q of Lifetime Brands, Inc. (the "Company" and,
unless the context otherwise requires, references to the "Company" shall include
its consolidated subsidiaries), contains "forward-looking statements" as defined
by the Private Securities Litigation Reform Act of 1995. All statements other
than statements of historical facts contained in this Quarterly Report on Form
10-Q are forward-looking statements. These forward-looking statements include
information concerning the Company's plans, objectives, goals, strategies,
future events, future revenues, performance, capital expenditures, financing
needs and other information that is not historical information. Many of these
statements appear, in particular, in Management's Discussion and Analysis of
Financial Condition and Results of Operations. When used in this Quarterly
Report on Form 10-Q, the words "estimates," "expects," "intends," "predicts,"
"plans," "believes," "may," "should," "would," and variations of such words or
similar expressions are intended to identify forward-looking statements. All
forward-looking statements, including, without limitation, those based on the
Company's examination of historical operating trends, are based upon the
Company's current expectations and various assumptions. The Company believes
there is a reasonable basis for its expectations and assumptions, but there can
be no assurance that the Company will realize its expectations or that the
Company's assumptions will prove correct.

There are a number of risks and uncertainties that could cause the Company's
actual results to differ materially from the forward-looking statements
contained in this Quarterly Report on Form 10-Q. Important factors that could
cause the Company's actual results to differ materially from those expressed as
forward-looking statements include, without limitation, those set forth in the
Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2021
(the "2021 Annual Report on Form 10-K") in Part I, Item 1A under the heading
Risk Factors, and in the Company's subsequent filings with the U.S. Securities
and Exchange Commission (the "SEC"). Such risks, uncertainties and other
important factors include, among others, risks related to:

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

•The continued impact of the COVID-19 pandemic;

•Rising supply chain costs, including raw materials, procurement, transportation and energy;

•The impact of from the United Kingdom exit from the the European Union on the Company UK operations;

• The impact of tariffs and commercial policies, in particular with regard to China;

•Legislative or regulatory risks related to climate change;

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

•Access to capital and credit markets;

•The seasonality of the Company’s cash flows;

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

• Intense market competition and changes in customer practices or preferences;

•Dependence on third-party manufacturers;

•Risks related to technology, cybersecurity and data confidentiality;

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

•Product liability claims; and

•Reputational risks.

There may be other factors that may cause the Company's actual results to differ
materially from the forward-looking statements. Except as may be required by
law, the Company undertakes no obligation to publicly update or revise
forward-looking statements which may be made to reflect events or circumstances
after the date made or to reflect the occurrence of unanticipated events.

The Company is required to file its Annual Reports on Forms 10-K, Quarterly
Reports on Forms 10-Q, Current Reports on Form 8-K, and other reports and
documents as required from time to time with the SEC. The Company also maintains
a website at http://www.lifetimebrands.com. 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
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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. The SEC also
maintains a website that contains reports, proxy and information statements, and
other information regarding the Company's electronic filings with the SEC at
http://www.sec.gov.

The Company intends to use its website as a means of disclosing material
non-public information and for complying with its disclosure obligations under
Regulation FD. Such disclosures will be included on the Company's website in the
'Investor Relations' section. Accordingly, investors should monitor such portion
of the Company's website, in addition to following the Company's press releases,
SEC filings and public conference calls and webcasts.

ABOUT THE COMPANY

The Company designs, sources and sells branded kitchenware, tableware and other
products used in the home. The Company's product categories include two
categories of products used to prepare, serve, and consume foods: Kitchenware
(kitchen tools and gadgets, cutlery, kitchen scales, thermometers, cutting
boards, shears, cookware, pantryware, spice racks, and bakeware) and Tableware
(dinnerware, stemware, flatware, and giftware); and one category, Home
Solutions, which comprises other products used in the home (thermal
beverageware, bath scales, weather and outdoor household products, food storage,
neoprene travel products and home décor). In 2021, Kitchenware products and
Tableware products accounted for approximately 85% of the Company's U.S.
segment's net sales and 87% of the Company's consolidated net sales.

The Company markets several product lines within each of its product categories
and under most of the Company's brands, primarily targeting moderate price
points through virtually every major level of trade. 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®, KitchenAid®, Taylor®, Mikasa®, KitchenCraft®, Built NY®,
Kamenstein®, Pfaltzgraff®, Rabbit®, and Sabatier®. 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 United States), and establishing new
product categories. 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

Disruptions in the global supply chain have been caused by various factors,
including increased demand for containers, limited container capacity and
backlog at shipping ports. The global economy is experiencing accelerated
inflation, which has in part been caused by the supply chain disruptions, higher
consumer spending and low interest rates. Further, the United Kingdom economy
has been facing unfavorable economic and market conditions, with high inflation
and low consumer confidence due to uncertain geopolitical and economic outlooks.
The rise in inflation is contributing to higher prices, which may result in
higher input cost for products, increased transportation and labor cost and
impact consumer spending and buying patterns. The Company has been adversely
impacted by these trends in 2022.

The Company has experienced an increase in delivery times and cost for products
shipped from its U.K. warehouse to continental Europe. To remain competitive in
the distribution of products within continental Europe, the Company expanded its
distribution and warehouse capacity through a third-party operated distribution
provider located in the Netherlands in the first quarter of 2022. The Company
began 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.

ACTIVITY AREA

The Company has two reportable segments, U.S. and International. The Company has
segmented its operations to reflect the manner in which management reviews and
evaluates the results of its operations. The U.S. segment includes the Company's
primary domestic business that designs, markets and distributes its products to
retailers, distributors and directly to consumers through its own websites. The
International segment consists of certain business operations conducted outside
the U.S. Management evaluates the performance of the U.S. and International
segments based on net sales and income from operations. 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
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employee benefits, stock-based compensation, attendance fees, and accounting, legal, and consulting fees are not allocated to specific segments and are reflected as unallocated corporate expenses.

PARTICIPATIONS

As of September 30, 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. Shares of
Vasconia's capital stock are traded on the Bolsa Mexicana de Valores, the
Mexican Stock Exchange. The Quotation Key is VASCONI. 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, 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, 2022, Vasconia's Board of
Directors is comprised of eleven members, of whom the Company has designated two
members.

On June 30, 2021, Vasconia issued additional shares of its stock, 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, 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.

SEASONALITY

The Company's business and working capital needs are seasonal, with a majority
of sales occurring in the third and fourth quarters. 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 to shifts in consumer purchasing patterns.
In anticipation of the pre-holiday shipping season, inventory levels increase
primarily in the June through October time period. In 2022, the Company's
inventory trends may deviate from historical trends due to a change in inventory
strategy to react to the current market conditions impacting the Company and
retailers.

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, changes in some of the Company’s sales and purchase cycles as customers deviate from their historical ordering patterns.

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.
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RESULTS OF OPERATIONS

The following table sets forth the Company’s operating data statements as a percentage of net sales for the periods indicated:

                                                                Three Months Ended                             Nine Months Ended
                                                                  September 30,                                  September 30,
                                                           2022                    2021                   2022                    2021
Net sales                                                     100.0  %               100.0  %                100.0  %               100.0  %
Cost of sales                                                  63.6                   63.0                    64.3                   64.5
Gross margin                                                   36.4                   37.0                    35.7                   35.5
Distribution expenses                                          10.0                    8.4                    10.6                    9.3
Selling, general and administrative expenses                   19.5                   18.8                    21.9                   19.2

Wallace facility remediation expense                            2.8                    0.2                     1.0                    0.1
Income from operations                                          4.1                    9.6                     2.2                    6.9
Interest expense                                               (2.5)                  (1.7)                   (2.3)                  (1.9)
Mark to market gain on interest rate derivatives                0.4                    0.1                     0.4                    0.1

Income before income taxes and equity in (losses)
earnings                                                        2.0                    8.0                     0.3                    5.1
Income tax provision                                           (1.0)                  (2.5)                   (0.7)                  (1.7)
Equity in (losses) earnings, net of taxes                      (4.4)                   0.1                    (1.4)                   0.1
Net (loss) income                                              (3.4) %                 5.6  %                 (1.8) %                 3.5  %



                      MANAGEMENT'S DISCUSSION AND ANALYSIS

THREE MONTHS ENDED SEPTEMBER 30, 2022 COMPARED TO THE THREE MONTHS ENDED

                               SEPTEMBER 30, 2021

Net Sales

Consolidated net sales for the three months ended September 30, 2022 were $186.6
million, representing a decrease of $38.2 million, or 17.0%, as compared to net
sales of $224.8 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 $34.7 million, or
15.7%, 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, 2022
were $172.8 million, a decrease of $24.9 million, or 12.6%, as compared to net
sales of $197.7 million for the corresponding period in 2021.

Net sales for the U.S. segment's Kitchenware product category were $92.6 million
for the three months ended September 30, 2022, a decrease of $20.8 million, or
18.3%, as compared to $113.4 million for the corresponding period in 2021. The
decrease was driven by lower sales for kitchen tools and gadgets, cutlery and
boards, and bakeware primarily due to inventory buildup at brick-and-mortar and
e-commerce retailers.

Net sales for the U.S. segment's Tableware product category were $44.5 million
for the three months ended September 30, 2022, a decrease of $7.2 million, or
13.9%, as compared to $51.7 million for the corresponding period in 2021. The
decrease was driven by lower flatware sales to brick-and-mortar retailers.

Net sales for the WE segment’s Home Solutions product category were $35.7 million for the three months ended September 30, 2022an augmentation of $3.1 millioni.e. 9.5%, compared to $32.6 million for the corresponding period in 2021. The increase is due to higher sales of hydration products attributable to S’well, partially offset by lower sales of measurement products.

Net sales for the International segment were $13.8 million for the three months
ended September 30, 2022, a decrease of $13.3 million, or 49.1%, as compared to
net sales of $27.1 million for the corresponding period in 2021. In constant
currency, which excludes the impact of foreign exchange fluctuations, net sales
decreased $9.9 million, or 41.9%, as compared to consolidated net sales in the
corresponding period in 2021. The decrease was driven by lower sales to
brick-and-mortar retailers and e-commerce sales due to low consumer confidence
in the region.
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Gross margin

Gross margin for the three months ended September 30, 2022 was $67.8 million, or
36.4%, as compared to $83.1 million, or 37.0%, for the corresponding period in
2021.

Gross margin for the U.S. segment was $63.3 million, or 36.6%, for the three
months ended September 30, 2022, as compared to $74.5 million, or 37.7%, for the
corresponding period in 2021. The decrease in gross margin was driven by lower
sales. The decrease in gross margin percentage for the U.S. was driven by
product mix.

Gross margin for the International segment was $4.5 million, or 32.6%, for the
three months ended September 30, 2022, as compared to $8.6 million, or 31.7%,
for the corresponding period in 2021. The decrease in gross margin was driven by
lower sales. The improvement in the gross margin percentage was attributable to
product and customer mix.

Distribution expenses

Distribution expenses for the three months ended September 30, 2022 were $18.6
million, as compared to $18.9 million for the corresponding period in 2021.
Distribution expenses as a percentage of net sales were 10.0% for the three
months ended September 30, 2022, as compared to 8.4% for the three months ended
September 30, 2021.

Distribution expenses as a percentage of net sales for the U.S. segment were
approximately 9.0% and 7.2% for the three months ended September 30, 2022 and
2021, respectively. As a percentage of sales shipped from the Company's U.S.
warehouses, distribution expenses were 10.4% and 8.4% for the three months ended
September 30, 2022 and 2021, respectively. The increase in expenses as a
percentage of sales was attributable to lower shipment volume resulting in an
unfavorable impact of fixed expenses, increased storage fees due to high
inventory levels and higher labor rates.

Distribution expenses as a percentage of net sales for the International segment
were 22.5% for the three months ended September 30, 2022, compared to 17.5% for
the corresponding period in 2021. As a percentage of sales shipped from the
Company's international warehouses, excluding non-recurring expenses,
distribution expenses were 22.9% and 14.5% for the three months ended
September 30, 2022 and 2021, respectively. The increase was attributable to
lower shipment volume, higher warehouse supply expenses and an increase in
business occupancy tax expense for the U.K. warehouse, partially offset by lower
labor costs.

Selling, general and administrative expenses

Selling, general and administrative expenses for the three months ended
September 30, 2022 were $36.5 milliona decrease of $5.5 millioni.e. 13.1%, compared to $42.0 million for the corresponding period in 2021.

Selling, general and administrative expenses for the U.S. segment were $28.3
million for the three months ended September 30, 2022, as compared to $29.3
million for the corresponding period in 2021. As a percentage of net sales,
selling, general and administrative expenses were 16.4% and 14.8% for the three
months ended September 30, 2022 and 2021, respectively. The decrease was
attributable to lower incentive compensation, partially offset by an increase in
selling expenses related to advertising and trade shows.

Selling, general and administrative expenses for the International segment were
$3.9 million for the three months ended September 30, 2022, as compared to $6.3
million for the corresponding period in 2021. As a percentage of net sales,
selling, general and administrative expenses were 28.3% and 23.3% for the three
months ended September 30, 2022 and 2021, respectively. The expense decrease was
attributable to lower amortization expense on intangible assets as a result of
the prior year impairment and lower unfavorable foreign currency exchange
losses.

Unallocated corporate expenses for the three months ended September 30, 2022
were $4.3 million, as compared to $6.4 million for the corresponding period in
2021. The current period decrease was driven by lower incentive compensation
expense.

Wallace Facility Remediation Expenses

In connection with the Wallace EPA matter, the Company recorded an additional
expense of $5.1 million for the three months ended September 30, 2022, to
increase its estimated liability for remediation cost related to the Wallace
facility. For the three months ended September 30, 2021, the Company recorded an
initial estimate of $0.5 million, related to remedial design portion of the
liability. Refer to NOTE 13 - CONTINGENCIES for further discussion on this
matter.


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Interest expense

Interest expense was $4.6 million and $3.8 million for the three months ended
September 30, 2022 and 2021, respectively. The increase in expense was a result
of higher interest rates on outstanding borrowings in the current period.

Mark-to-market gain on interest rate derivatives

Mark to market gain on interest rate derivatives was $0.6 million for the three
months ended September 30, 2022, as compared to a mark to market gain on
interest rate derivatives of $0.1 million for the three months ended
September 30, 2021. The increase was attributable to the change in the fair
value based on the increase in interest rates. 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, 2022, the intent
of the Company is to hold these derivative contracts until their maturity.

Income taxes

Income tax provision of $1.8 million and income tax provision of $5.6 million
for the three months ended September 30, 2022 and 2021, respectively, represent
taxes on both U.S. and foreign earnings at a combined effective income tax
provision rate of 50.6% and 31.1%, respectively. The effective tax rate for the
three months ended September 30, 2022 differs from the federal statutory income
tax rate of 21.0% primarily due to foreign losses for which no tax benefit is
recognized as such amounts are fully offset with a valuation allowance. The
effective tax rate for the three months ended September 30, 2021 differs from
the federal statutory income tax rate of 21.0% 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.

Equity in (loss) benefits

Equity in losses of Vasconia, net of taxes, was $8.2 million for the three
months ended September 30, 2022, as compared to equity in earnings of Vasconia,
net of taxes, of $0.7 million for the three months ended September 30, 2021.
Vasconia reported loss from operations of $5.5 million for the three months
ended September 30, 2022, as compared to income from operations of $3.9 million
for the three months ended September 30, 2021. The decrease in income from
operations was primarily attributable to decreased operating results in the
current period in Vasconia's kitchenware and aluminum division.

The Company recorded an impairment charge of $6.2 million to reduce the carrying
value of the Company's investment in Vasconia to its fair value. The decline in
the fair value was determined to be other than temporary due to the decline in
the quoted stock price and the quarterly decline in the operating results of
Vasconia.

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, 2022 COMPARED TO THE NINE MONTHS ENDED
                               SEPTEMBER 30, 2021

Net sales

Consolidated net sales for the nine months ended September 30, 2022 were $520.6
million, a decrease of $86.5 million, or 14.2%, as compared to net sales of
$607.1 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 $81.8 million, or 13.6%,
as compared to consolidated net sales in the corresponding period in 2021.

Net sales for the U.S. segment for the nine months ended September 30, 2022 were
$476.2 million, a decrease of $64.3 million, or 11.9%, as compared to net sales
of $540.5 million for the corresponding period in 2021.

Net sales for the WE the segment’s Kitchenware product category were $291.1 million for the nine months ended September 30, 2022a decrease of $46.0 millioni.e. 13.6%, compared to $337.1 million for the corresponding period in 2021. The decline was mainly due to lower sales of kitchen utensils and gadgets, cutlery and boards and cooking products, mainly due to

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inventory accumulation at physical and e-commerce retailers. The decline was partially offset by increased sales of barware and wine products attributable to a new warehouse club program in 2022.

Net sales for the U.S. segment's Tableware product category were $101.0 million
for the nine months ended September 30, 2022, a decrease of $18.2 million, or
15.3%, as compared to $119.2 million for the corresponding period in 2021. The
decrease came from all product lines due to lower sales to brick-and-mortar
retailers and e-commerce sales.

Net sales for the U.S. segment's Home Solutions product category were $84.1
million for the nine months ended September 30, 2022, a decrease of $0.1
million, or 0.1%, as compared to $84.2 million for the corresponding period in
2021. The decrease was primarily driven by lower sales for measurement and home
décor products, partially offset by hydration product sales attributable to
S'well.

Net sales for the International segment were $44.4 million for the nine months
ended September 30, 2022, a decrease of $22.2 million, or 33.3%, as compared to
net sales of $66.6 million for the corresponding period in 2021. In constant
currency, which excludes the impact of foreign exchange fluctuations, net sales
decreased $17.7 million, or 28.5%, as compared to consolidated net sales in the
corresponding period in 2021. The decrease was attributable to lower sales to
brick-and-mortar retailers, e-commerce sales and a decrease in the Company's
global trading business in Asia driven by lower sales with an Australian
distributor.

Gross margin

Gross margin for the nine months ended September 30, 2022 was $186.1 million, or
35.7%, as compared to $215.3 million, or 35.5%, for the corresponding period in
2021.

Gross margin for the U.S. segment was $172.1 million, or 36.1%, for the nine
months ended September 30, 2022, as compared to $193.9 million, or 35.9%, for
the corresponding period in 2021. The decrease in gross margin for the U.S. was
driven by lower sales. The improvement in gross margin percentage was due to
product mix, a tariff reduction on certain product categories and less
dependency on non-vessel operating common carriers.

Gross margin for the International segment was $14.0 million, or 31.5%, for the
nine months ended September 30, 2022, as compared to $21.4 million, or 32.1%,
for the corresponding period in 2021. The decrease in gross margin was driven by
lower sales. The decrease in gross margin percentage was due to the impact of
fixed overhead costs on lower sales volume for the 2022 period, partially offset
by customer mix.

Distribution expenses

Distribution expenses for the nine months ended September 30, 2022 were $55.2
million, as compared to $56.5 million for the corresponding period in 2021.
Distribution expenses as a percentage of net sales were 10.6% for the nine
months ended September 30, 2022, as compared to 9.3% for the nine months ended
September 30, 2021.

Distribution expenses as a percentage of net sales for the U.S. segment were
approximately 9.4% and 8.2% for the nine months ended September 30, 2022 and
2021, respectively. Distribution expenses during the nine months ended
September 30, 2022 include $0.1 million for the Company's distribution operation
redesign costs. As a percentage of sales shipped from the Company's U.S.
warehouses, excluding non-recurring expenses, distribution expenses were 10.5%
and 8.9% for the nine months ended September 30, 2022 and 2021, respectively.
The increase in the expenses as a percentage of sales was a result of lower
shipment volume resulting in an unfavorable impact of fixed expenses, increased
storage fees due to high inventory levels and higher labor rates, partially
offset by lower warehouse equipment and supply expenses.

Distribution expenses as a percentage of net sales for the International segment
were 23.5% for the nine months ended September 30, 2022, compared to 18.1% for
the corresponding period in 2021. Distribution expenses during the nine months
ended September 30, 2022 include $0.5 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 warehouse, excluding
non-recurring expenses, distribution expenses were 22.2% and 15.4% for the nine
months ended September 30, 2022 and 2021, respectively. The increase was
primarily attributed to lower shipment volume, higher warehouse supply expenses
and an increase in business occupancy tax expense for the U.K. warehouse,
partially offset by lower labor costs.

Selling, general and administrative expenses

Selling, general and administrative expenses for the nine months ended
September 30, 2022 were $114.2 milliona decrease of $2.2 millioni.e. 1.9%, compared to $116.4 million for the corresponding period in 2021.

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Selling, general and administrative expenses for the U.S. segment were $85.9
million for the nine months ended September 30, 2022, as compared to $83.2
million for the corresponding period in 2021. As a percentage of net sales,
selling, general and administrative expenses were 18.0% and 15.4% for the nine
months ended September 30, 2022 and 2021, respectively. The increase was
attributable to integration costs related to the S'well acquisition, higher
advertising expenses and employee related expenses, partially offset by lower
incentive compensation.

Selling, general and administrative expenses for the International segment were
$13.2 million for the nine months ended September 30, 2022, as compared to $15.5
million for the corresponding period in 2021. The decrease was primarily
attributable to lower amortization expense on intangible assets as a result of
the prior year impairment.

Unallocated corporate expenses for the nine months ended September 30, 2022 were
$15.1 million, as compared to $17.7 million for the corresponding period in
2021. The decrease was driven by lower incentive compensation expense, partially
offset by an increase in legal and professional fees related to the S'well
acquisition.

Wallace Facility Remediation Expenses

In connection with the Wallace EPA matter, the Company recorded an additional
expense of $5.1 million for the nine months ended September 30, 2022, to
increase its estimated liability for remediation cost related to the Wallace
facility. For the nine months ended September 30, 2021, the Company recorded an
initial estimate of $0.5 million, related to remedial design portion of the
liability. Refer to NOTE 13 - CONTINGENCIES for further discussion on this
matter.

Interest expense

Interest expense was $12.1 million and $11.7 million for the nine months ended
September 30, 2022 and 2021, respectively. The increase in expense was a result
of higher interest rates on outstanding borrowings in the current period.

Mark-to-market gain on interest rate derivatives

Mark to market gain on interest rate derivatives was $2.0 million for the nine
months ended September 30, 2022, as compared to a mark to market gain on
interest rate derivatives of $0.7 million for the nine months ended
September 30, 2021. The increase was attributable to the change in the fair
value based on the increase in interest rates. 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, 2022, the intent
of the Company is to hold these derivative contracts until their maturity.

Income taxes

Income tax provision of $3.4 million and $9.8 million for the nine months ended
September 30, 2022 and 2021, respectively, represent taxes on both US and
foreign earnings at combined effective income tax provision rates of 245.9% and
31.8%, respectively. The effective tax rate for the nine months ended
September 30, 2022 differs from the federal statutory income tax rate of 21%
primarily due to 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, 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.

Equity in (losses) earnings

Equity in losses of Vasconia, net of taxes, was $7.4 million for the nine months
ended September 30, 2022, as compared to equity in earnings of Vasconia, net of
taxes, of $1.2 million for the nine months ended September 30, 2021. Vasconia
reported loss from operations of $0.3 million for the nine months ended
September 30, 2022, as compared to income from operations of $14.2 million for
the nine months ended September 30, 2021. The decrease in income from operations
was primarily attributable to decreased operating results in the current period
in both Vasconia's kitchenware and aluminum divisions.

The Company recorded an impairment charge of $6.2 million to reduce the carrying
value of the Company's investment in Vasconia to its fair value. The decline in
the fair value was determined to be other than temporary due to the decline in
the quoted stock price and the quarterly decline in the operating results of
Vasconia.

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
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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. The net loss
was comprised of a loss 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.

CASH AND CAPITAL RESOURCES

Historically, the Company's principal sources of cash to fund liquidity needs
were: (i) cash provided by operating activities and (ii) borrowings available
under its revolving credit facility under the ABL Agreement, as defined below.
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, 2022, the Company had cash and cash equivalents of $5.9
million, compared to $28.0 million at December 31, 2021. Working capital was
$287.7 million at September 30, 2022, compared to $271.3 million at December 31,
2021. Liquidity, which includes cash and cash equivalents and availability under
the ABL Agreement, was approximately $170.6 million at September 30, 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. The Company also expects inventory turnover to
fluctuate from period to period based on product and customer mix. Certain
product categories have lower inventory turnover rates as a result of minimum
order quantities from the Company's vendors or customer replenishment needs.
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, 2022, inventory turnover was 1.7 times, or 219 days, as compared
to 2.4 times, or 154 days, for the three months ended September 30, 2021. In the
first half of fiscal 2022, the Company increased its inventory levels to address
supply chain disruptions and to support anticipated customer demand. However,
inventory turns have slowed due to macroeconomic challenges that companies
across industries and retailers in particular faced. Inflation has led to weaker
end market demand and supply chain disruptions have led to inventory buildup.

As part of the Wallace EPA case, the company expects that within the next twelve months it will be required to provide a financial guarantee of $5.6 million, which he intends to provide in the form of a letter of credit. This would reduce availability under the revolving credit facility.

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. 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
available on terms favorable to the Company.

The Company closely monitors the creditworthiness of its customers. Based upon
its evaluation of changes in customers' creditworthiness, the Company may modify
credit limits and/or terms of sale. However, notwithstanding the Company's
efforts to monitor its customers' financial condition, the Company could be
materially adversely affected by changes in customers' creditworthiness in the
future.

Credit Facilities

On August 26, 2022, the Company entered into Amendment No. 2 (the "Amendment")
to the Company's credit agreement, dated as of March 2, 2018 (as amended, the
"ABL Agreement") among the Company, as a Borrower, certain subsidiaries of the
Company, as Borrowers and/or Loan Parties, JPMorgan Chase Bank, N.A., as
Administrative Agent and a Lender, HSBC Bank USA, National Association and Wells
Fargo Bank, National Association, as Co-Documentation Agents and Lenders, and
Manufacturers and Traders Trust Company, as a Lender, that provides for the
Company's ABL facility. The ABL Agreement provides for a senior secured
asset-based revolving credit facility in the maximum aggregate principal amount
of $200.0 million, which facility will mature on August 26, 2027 (subject to an
earlier springing maturity date that is 90 days prior to the Term Loan maturity
date of February 28, 2025 if the Company's Term Loan has not been repaid or
refinanced by such date).

The Company's loan agreement, dated as of March 2, 2018, (the "Term Loan
Agreement" and together with the ABL Agreement, the "Debt Agreements") provides
for a senior secured term loan credit facility in the original principal amount
of
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$275.0 million, which matures on February 28, 2025. The Term Loan Agreement
requires the Company to make an annual prepayment of principal based upon a
percentage of the Company's excess cash flow, ("Excess Cash Flow"), if any. The
percentage applied to the Company's excess cash flow is based on the Company's
Total Net Leverage Ratio (as defined in the Debt Agreements). When an Excess
Cash Flow payment is required, each lender has the option to decline a portion
or all of the prepayment amount payable to it. An estimate of the amount of the
Excess Cash Flow payment is recorded in current maturity of term loan on the
unaudited condensed consolidated balance sheets. Additionally, the Term Loan
Agreement 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, which payments are to be adjusted from time to time to account
for prepayments made. Per the Term Loan Agreement, when the Company makes an
Excess Cash Flow payment, the payment is first applied to satisfy the next eight
(8) scheduled future quarterly required payments of the Term Loan in order of
maturity and then to the remaining scheduled installments on a pro rata basis.
The quarterly principal payments have been satisfied through maturity of the
Term Loan by the annual Excess Cash Flow payments made to date.

The maximum borrowing amount under the ABL Agreement may be increased to up to
$250.0 million if certain conditions are met and further limited to $220.0
million pursuant to the Term Loan Agreement. One or more tranches of additional
term loans (the "Incremental Term Facilities") may be added under the Term Loan
Agreement if certain conditions are met. The Incremental Facilities may not
exceed the sum of (i) $50.0 million plus (ii) an unlimited amount so long as, in
the case of (ii) only, the Company's secured net leverage ratio, as defined in
and computed on a pro forma basis pursuant to the Term Loan Agreement, after
giving effect to such increase, is no greater than 3.75 to 1.00, subject to
certain limitations and for the period defined pursuant to the Term Loan
Agreement but not to mature earlier than the maturity date of the then existing
term loans.

From September 30, 2022 and December 31, 2021the total availability under the ABL agreement was as follows (in thousands):

                                                                 September 30, 2022           December 31, 2021
Maximum aggregate principal allowed                             $          200,000          $          150,000
Outstanding borrowings under the ABL Agreement                             (32,545)                          -
Standby letters of credit                                                   (2,765)                     (3,659)
Total availability under the ABL Agreement                      $          

$164,690 $146,341


Availability under the ABL Agreement is limited to the lesser of the $200.0
million commitment thereunder and the borrowing base and therefore depends on
the valuation of certain current assets comprising the borrowing base. The
borrowing capacity under the ABL Agreement will depend, in part, on eligible
levels of accounts receivable and inventory that fluctuate regularly. Due to the
seasonality of the Company's business, this means that the Company may have
greater borrowing availability during the third and fourth quarters of each
year. Consequently, the $200.0 million commitment thereunder may not represent
actual borrowing capacity.

The 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, 2022           December 31, 2021

Current portion of the term loan facility:

Estimated Excess Cash Flow principal payment                   $                -          $            7,200
Estimated unamortized debt issuance costs                                       -                      (1,429)
Total Current portion of Term Loan facility                    $                -          $            5,771

Non-current portion of Term Loan facility:
Term Loan facility, net of current portion                     $          245,911          $          244,927
Estimated unamortized debt issuance costs                                  (3,406)                     (3,054)
Total Non-current portion of Term Loan facility                $          

$242,505,241,873


The estimated Excess Cash Flow principal payment recorded at September 30, 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. The
Excess Cash Flow payment differs from the estimated amount at December 31, 2021
of $7.2 million as certain lenders opted to decline their payments per the terms
of the Term Loan Agreement.
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The Company's payment obligations under its Debt Agreements are unconditionally
guaranteed by its existing and future U.S. subsidiaries with certain minor
exceptions. Certain payment obligations under the ABL Agreement are also direct
obligations of its foreign subsidiary borrowers designated as such under the ABL
Agreement and, subject to limitations on such guaranty, are guaranteed by the
foreign subsidiary borrowers, as well as by the Company. The obligations of the
foreign subsidiary borrowers under the ABL Agreement are secured by security
interests in substantially all of the assets of, and stock in, such foreign
subsidiary borrowers, subject to certain limitations. The obligations of the
Company under the Debt Agreements and any hedging arrangements and cash
management services and the guarantees by its domestic subsidiaries in respect
of those obligations are secured by security interests in substantially all of
the assets and stock (but in the case of foreign subsidiaries, limited to 65% of
the capital stock in first-tier foreign subsidiaries and not including the stock
of subsidiaries of such first-tier foreign subsidiaries) owned by the Company
and the U.S. subsidiary guarantors, subject to certain exceptions. Such security
interests consist of (1) a first-priority lien, subject to certain permitted
liens, with respect to certain assets of the Company and certain of its
subsidiaries (the "ABL Collateral") pledged as collateral in favor of lenders
under the ABL Agreement and a second-priority lien in the ABL Collateral in
favor of the lenders under the Term Loan Agreement and (2) a first-priority
lien, subject to certain permitted liens, with respect to certain assets of the
Company and certain of its subsidiaries (the "Term Loan Collateral") pledged as
collateral in favor of lenders under the Term Loan Agreement and a
second-priority lien in the Term Loan Collateral in favor of the lenders under
the ABL Agreement.

Borrowings under the revolving credit facility bear interest, at the Company's
option, at one of the following rates: (i) an alternate base rate, defined, for
any day, as the greater of the prime rate, a federal funds and overnight bank
funding based rate plus 0.5% or one-month Adjusted Term Secured Overnight
Financing Rate ("SOFR") plus 1.0% as of a specified date in advance of the
determination, but in each case not less than 1.0%, plus a margin of 0.25% to
0.50%, or (ii) Adjusted Term SOFR, which is the Term SOFR Rate for the selected
1, 3 or 6 month interest period plus 0.10% (or Euro Interbank Offered Rate
"EURIBOR" for borrowings denominated in Euro; or Sterling Overnight Index
Average "SONIA" for borrowings denominated in Pounds Sterling), but in each case
not less than zero, plus a margin of 1.25% to 1.50%. The respective margins are
based upon average quarterly availability, as defined in and computed pursuant
to the ABL Agreement. In addition, the Company pays a commitment fee of 0.20% to
0.25% per annum based on the average daily unused portion of the aggregate
commitment under the ABL Agreement. The interest rate on outstanding borrowings
under the ABL Agreement at September 30, 2022 was between 2.19% and 6.75%.

The Term Loan facility bears interest, at the Company's option, at one of the
following rates: (i) alternate base rate, defined, for any day, as the greater
of (x) the prime rate, (y) a federal funds and overnight bank funding based rate
plus 0.5% or (z) one-month LIBOR, but not less than 1.0%, plus 1.0%, which
alternate base rate shall not be less than 2.0%, plus a margin of 2.5% or
(ii) LIBOR for the applicable interest period, multiplied by any statutory
reserve rate, but not less than 1.0%, plus a margin of 3.5%. The interest rate
on outstanding borrowings under the Term Loan at September 30, 2022 was 6.02%.

The Debt Agreements provide for customary restrictions and events of default.
Restrictions include limitations on additional indebtedness, liens,
acquisitions, investments and payment of dividends, among other things. Further,
the ABL Agreement provides that during any period (a) commencing on the last day
of the most recently ended four consecutive fiscal quarters on or prior to the
date availability under the ABL Agreement is less than the greater of $20.0
million and 10% of the aggregate commitment under the ABL Agreement at any time
and (b) ending on the day after such availability has exceeded the greater of
$20.0 million and 10% of the aggregate commitment under the ABL Agreement for 45
consecutive days, the Company is required to maintain a minimum fixed charge
coverage ratio of 1.10 to 1.00 as of the last day of any period of four
consecutive fiscal quarters.

The Company was in compliance with the covenants of the loan agreements at
September 30, 2022.

Prior to the amendment of the credit agreement, the Company's ABL provided for
an aggregate principal amount of $150.0 million. Upon entering into the
Amendment to the ABL agreement the Company repaid its outstanding ABL borrowing
in the amount of $32.0 million and re-borrowed such amounts under the ABL
Agreement, as amended. Unamortized debt issuance costs that were written off
were immaterial.

The Company expects it to continue to borrow, subject to availability, and to repay funds under the ABL Agreement based on working capital and other business needs.

Covenant calculations

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, net secured leverage ratio, total leverage and total net leverage ratio, which are required to be provided to the Company’s lenders pursuant to its debt agreements.

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The Company’s adjusted EBITDA (including pro forma adjustments), for the last twelve months ended September 30, 2022 has been $69.3 million.

Capital expenditures for the nine months ended September 30, 2022 were $2.0 million.

Non-GAAP Financial Measure

Adjusted EBITDA is a non-GAAP financial measure within the meaning of Regulation
G and Item 10(e) of Regulation S-K, each promulgated by the SEC. This measure is
provided because management of the Company uses this financial measure in
evaluating the Company's on-going financial results and trends, and management
believes that exclusion of certain items allows for more accurate
period-to-period comparison of the Company's operating performance by investors
and analysts. Management also uses this non-GAAP information as an indicator of
business performance. Adjusted EBITDA, as discussed above, is also one of the
measures used to calculate financial covenants required to be provided to the
Company's lenders pursuant to its Debt Agreements.

Investors should consider this non-GAAP financial measure in addition to, and
not as a substitute for, the Company's financial performance measures prepared
in accordance with U.S. GAAP. 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 (loss) income, as reported, to
adjusted EBITDA, for each of the last four quarters and the 12 months ended
September 30, 2022:

                                                                         Quarter Ended                                       Twelve Months
                                           December 31,         March 31,          June 30,           September 30,         Ended September
                                               2021                2022              2022                 2022                  30, 2022
                                                                                    (in thousands)
Net (loss) income as reported             $      (626)         $     380    

($3,460) ($6,358) ($10,064)
Losses (gains) on retained equity, net

                                              (466)              (416)             (334)                  8,159                  6,943
Income tax provision (benefit)                  6,704              1,673               (98)                  1,845                 10,124
Interest expense                                3,856              3,767             3,732                   4,581                 15,936
Mark to market (gain) on interest rate
derivatives                                      (398)            (1,049)             (304)                   (637)                (2,388)

Depreciation and amortization                   4,960              4,899             5,038                   4,598                 19,495
Intangible asset impairments                   14,760                  -                 -                       -                 14,760
Stock compensation expense                      1,244              1,174             1,365                   1,026                  4,809

Acquisition related expenses                      378              1,119                75                     109                  1,681
Warehouse relocation and redesign
expenses(1)                                       450                497                73                      59                  1,079
S'well integration costs(2)                         -                781               864                     250                  1,895

Wallace facility remediation expense                -                  -                 -                   5,140                  5,140
Adjusted EBITDA, before limitation             30,862             12,825             6,951                  18,772                 69,410
Permitted non-recurring charge limitation
(3)                                                                                                                                (1,403)
Adjusted EBITDA(4)                                                                                                          $      68,007
Pro forma historical S'well and projected
synergies adjustment(5)                                                                                                             1,250

Pro forma Adjusted EBITDA(4)              $    30,862          $  12,825          $  6,951          $       18,772          $      69,257


(1) For the twelve months ended September 30, 2022, the warehouse relocation and
redesign expenses included $0.6 million of expenses related to the International
segment and $0.5 million of expenses related to the U.S. segment.

(2) For the twelve months ended September 30, 2022, S'well integration costs
included $0.5 million of expenses related to inventory step up adjustment in
connection with S'well acquisition.

(3) Permitted non-recurring charges include integration charges, Wallace
facility remediation expense, and warehouse relocation and redesign expenses.
These are permitted exclusions from the Company's consolidated adjusted EBITDA,
subject to limitations, pursuant to the Company's Debt Agreements.

(4) Adjusted EBITDA is a non-GAAP financial measure that is defined in the
Company's debt agreements. Adjusted EBITDA is defined as net (loss) income,
adjusted to exclude undistributed equity in (earnings) losses, income tax
provision (benefit), interest expense, mark to market (gain) on interest rate
derivatives, depreciation and amortization, intangible asset impairments, stock
compensation expense, Wallace facility remediation expense, and other items
detailed in the table above that are consistent with exclusions permitted by our
debt agreements.
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(5) 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 September 30, 2022 or expected to be taken as of
September 30, 2022, net of the benefits realized during the twelve months ended
September 30, 2022.

Accounts Receivable Purchase Agreement

To improve its liquidity during seasonally high working capital periods, the
Company has an uncommitted Receivables Purchase Agreement with HSBC Bank USA,
National Association ("HSBC") as Purchaser (the "Receivables Purchase
Agreement"). Under the Receivables Purchase Agreement, the Company may offer to
sell certain eligible accounts receivable (the "Receivables") to HSBC, which may
accept such offer, and purchase the offered Receivables. Under the Receivables
Purchase Agreement, following each purchase of Receivables, the outstanding
aggregate purchased Receivables shall not exceed $30.0 million. HSBC will assume
the credit risk of the Receivables purchased, and the Company will continue to
be responsible for all non-credit risk matters. The Company will service the
Receivables, and as such servicer, collect and otherwise enforce the Receivables
on behalf of HSBC. The term of the agreement is for 364 days and shall
automatically be extended for annual successive terms unless terminated. 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
$30.0 million and $109.8 million of receivables during the three and nine months
ended September 30, 2022, respectively and $33.7 million and $113.2 million of
receivables during three and nine months ended September 30, 2021, respectively.
Charges of $0.2 million and $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 the three months ended
September 30, 2022 and 2021, respectively. Charges of $0.5 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 nine months ended September 30, 2022 and 2021,
respectively. At September 30, 2022 and 2021, $20.2 million and $15.8 million,
respectively, of receivables sold were outstanding and due to HSBC from
customers.

Derivatives

Interest Rate Swaps

The total outstanding notional value of the Company’s interest rate swaps was $50.0 million at September 30, 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. The hedge periods of these agreements
commenced in April 2018 and expire in March 2023. The original notional values
are reduced over these periods. The aggregate notional value of designated
interest rate swaps was $25.0 million at September 30, 2022.

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

Foreign exchange contracts

The Company is party from time to time to certain foreign exchange contracts,
primarily to offset the earnings impact related to fluctuations in foreign
currency exchange rates associated with inventory purchases denominated in
foreign currencies. Fluctuations in the value of certain foreign currencies as
compared to the USD may positively or negatively affect the Company's revenues,
gross margins, operating expenses, and retained earnings, all of which are
expressed in USD. Where the Company deems it prudent, the Company engages in
hedging programs using foreign currency forward contracts aimed at limiting the
impact of foreign currency exchange rate fluctuations on earnings. The Company
purchases foreign currency forward contracts with terms less than 18 months to
protect against currency exchange risks associated with the payment of
merchandise purchases to foreign suppliers. 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 overall gross notional value of foreign exchange contracts at
September 30, 2022 has been $3.5 million. These foreign exchange contracts have been designated as hedges in order to apply hedge accounting.

The Company is exposed to market risks as well as changes in foreign currency
exchange rates as measured against the USD and each other, and to changes to the
credit risk of derivative counterparties. The Company attempts to minimize these
risks primarily by using foreign currency forward contracts and by maintaining
counterparty credit limits. These hedging activities provide only limited
protection against currency exchange and credit risk. Factors that could
influence the effectiveness of the
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Company's hedging programs include those impacting currency markets and the
availability of hedging instruments and liquidity of the credit markets. 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, 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.

Operational activities

Net cash used in operating activities was $20.1 million for the nine months
ended September 30, 2022, as compared to net cash provided by operating
activities of $14.6 million for the nine months ended September 30, 2021. The
decrease from 2022 compared to 2021 was attributable to a net loss generated in
2022 compared to 2021, timing of payments 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 $19.9 million and $0.5 million for the
nine months ended September 30, 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.

Fundraising activities

Net cash provided by financing activities was $18.4 million and for the nine
months ended September 30, 2022, as compared to net cash used in financing
activities of $41.5 million for the nine months ended September 30, 2021. The
change was mainly attributable to proceeds from the Company's revolving credit
facility under its ABL Agreement in the 2022 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 nine months ended September 30, 2022, the
Company repurchased 389,743 shares for a total cost of $4.7 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.
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