Two pieces of news provide a flicker of hope amid the doom and gloom.
TOLEDO, Ohio, July 31, 2014 /PRNewswire/ -- Libbey Inc. (NYSE MKT: LBY) today reported results for the second quarter-ended June 30, 2014.
Second Quarter Financial Highlights
"Sales growth was strong throughout the Company, as revenue increased in every region except Asia Pacific. Revenues were particularly strong in the Americas where we achieved 8.9 percent revenue growth, as we were able to defend and grow our market share in a hyper-competitive market. While our adjusted EBITDA margins were impacted by higher input costs, currency and market actions, we are pleased with our overall Company growth of 6.5 percent during the quarter. We look forward to continuing our strong sales performance in the remainder of the year, as we leverage the investments we have made in new products, sales and marketing capabilities. We continue to make progress in realizing the benefits of our North American capacity realignment, but have determined that over the balance of the year we will not be able to recover from the impact of weather, currency and higher input costs that we experienced in the first quarter of 2014. For each of the remaining two quarters, we expect to deliver sales growth similar to the second quarter and adjusted EBITDA margins similar to the full-year margins we delivered in 2013," said Stephanie A. Streeter, chief executive officer of Libbey Inc.
Second Quarter Segment Sales and Operational Review
Six-Month Financial Highlights
Sixth-Month Segment Sales and Operational Review
Balance Sheet and Liquidity
Sherry Buck, chief financial officer, added: "In addition to the strong sales performance that we achieved during the second quarter, we believe the actions we have taken to strengthen our balance sheet positions us well to compete in this dynamic market environment. We will continue to realize lower interest expense going forward as a result of the $440 million senior secured credit facility, which, based on current interest rates, is expected to generate over $10 million in annual interest expense savings."
Libbey Expands Premium Dinnerware Offering
The Company also confirmed its announcement that Libbey will become the exclusive foodservice distributor of Schönwald dinnerware products to the U.S. and Canada, effective January 1, 2015.
Through this exclusive agreement, Libbey will be offering new premium dinnerware choices for U.S. and Canadian foodservice customers. "Schönwald is one of the world's leading providers of high-end porcelain for foodservice. This agreement directly supports our strategic goal to further grow our business in the foodservice industry. We are extremely pleased that Schönwald will be joining the Libbey family," said Streeter. "These new choices for dinnerware, in combination with our Spiegelau and Nachtmann partnership, dramatically extend our high quality premium offerings. When added to the hundreds of new products we have introduced this year, it provides our foodservice customers with the broadest tabletop choices available in the U.S. and Canada."
Libbey will hold a conference call for investors on Thursday, July 31, 2014, at 11 a.m. Eastern Daylight Time. The conference call will be simulcast live on the Internet and is accessible from the Investor Relations' section of www.libbey.com. To listen to the call, please go to the website at least 10 minutes early to register, download and install any necessary software. A replay will be available for 14 days after the conclusion of the call.
About Libbey Inc.
Based in Toledo, Ohio, since 1888, we believe Libbey Inc. is the largest manufacturer of glass tableware in the western hemisphere and one of the largest glass tableware manufacturers in the world. It supplies products to foodservice, retail, industrial and business-to-business customers in over 100 countries, and it is the leading manufacturer of tabletop products for the U.S. foodservice industry.
Libbey operates glass tableware manufacturing plants in the United States in Louisiana and Ohio as well as in Mexico, China, Portugal and the Netherlands. Its Crisa subsidiary, located in Monterrey, Mexico, is a leading producer of glass tableware in Mexico and Latin America. Its subsidiary located in Leerdam, Netherlands, is among the world leaders in producing and selling glass stemware to retail, foodservice and industrial clients. Its Crisal subsidiary, located in Portugal, provides an expanded presence in Europe. Its Syracuse China subsidiary designs and distributes an extensive line of high-quality ceramic dinnerware, principally for foodservice establishments in the United States. Its World Tableware subsidiary imports and sells a full line of metal flatware and hollowware and an assortment of ceramic dinnerware and other tabletop items principally for foodservice establishments in the United States. In 2013, Libbey Inc.'s net sales totaled $818.8 million.
This press release includes forward-looking statements as defined in Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements reflect only the Company's best assessment at this time and are indicated by words or phrases such as "goal," "expects," " believes," "will," "estimates," "anticipates," or similar phrases. Investors are cautioned that forward-looking statements involve risks and uncertainty and that actual results may differ materially from these statements, and that investors should not place undue reliance on such statements. These forward-looking statements may be affected by the risks and uncertainties in the Company's business. This information is qualified in its entirety by cautionary statements and risk factor disclosures contained in the Company's Securities and Exchange Commission filings, including the Company's report on Form 10-K filed with the Commission on March 12, 2014. Important factors potentially affecting performance include but are not limited to risks related to our ability to borrow under our ABL credit agreement; increased competition from foreign suppliers endeavoring to sell glass tableware in the United States and Mexico; the impact of lower duties for imported products; global economic conditions and the related impact on consumer spending levels; major slowdowns in the retail, travel or entertainment industries in the United States, Canada, Mexico, Western Europe and Asia, caused by terrorist attacks or otherwise; significant increases in per-unit costs for natural gas, electricity, freight, corrugated packaging, and other purchased materials; high levels of indebtedness; high interest rates that increase the Company's borrowing costs or volatility in the financial markets that could constrain liquidity and credit availability; protracted work stoppages related to collective bargaining agreements; increases in expense associated with higher medical costs, increased pension expense associated with lower returns on pension investments and increased pension obligations; devaluations and other major currency fluctuations relative to the U.S. dollar and the Euro that could reduce the cost competitiveness of the Company's products compared to foreign competition; the effect of high inflation in Mexico and exchange rate changes to the value of the Mexican peso and the earnings and cash flow of Libbey Mexico, expressed under U.S. GAAP; the inability to achieve savings and profit improvements at targeted levels in the Company's operations or within the intended time periods; and whether the Company completes any significant acquisition and whether such acquisitions can operate profitably. Any forward-looking statements speak only as of the date of this press release, and the Company assumes no obligation to update or revise any forward-looking statement to reflect events or circumstances arising after the date of this press release.
Condensed Consolidated Statements of Operations
(dollars in thousands, except per-share amounts)
Three months ended June 30,
Freight billed to customers
Cost of sales (1)
Selling, general and administrative expenses (1)
Special charges (1)
Income from operations
Loss on redemption of debt (1)
(Loss) earnings before interest and income taxes
(Loss) income before income taxes
Provision for income taxes (1)
Net (loss) income
Net (loss) income per share:
Weighted average shares:
(1) Refer to Table 1 for Special Items detail.
Six months ended June 30,
Loss on redemption of debt (1)
(1) Refer to Table 2 for Special Items detail.
Condensed Consolidated Balance Sheets
(dollars in thousands)
June 30, 2014
December 31, 2013
Cash and cash equivalents
Accounts receivable — net
Inventories — net
Other current assets
Total current assets
Goodwill and purchased intangibles — net
Property, plant and equipment — net
LIABILITIES AND SHAREHOLDERS' EQUITY:
Pension liability (current portion)
Non-pension postretirement benefits (current portion)
Other current liabilities
Long-term debt due within one year
Total current liabilities
Non-pension postretirement benefits
Common stock and capital in excess of par value
Accumulated other comprehensive loss
Total shareholders' equity
Total liabilities and shareholders' equity
Condensed Consolidated Statements of Cash Flows
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization
Loss on asset sales and disposals
Change in accounts receivable
Change in inventories
Change in accounts payable
Accrued interest and amortization of discounts and finance fees
Call premium on senior notes
Write-off of finance fees on senior notes
Pension & non-pension postretirement benefits
Accrued liabilities & prepaid expenses
Share-based compensation expense
Other operating activities
Net cash provided by operating activities
Additions to property, plant and equipment
Proceeds from asset sales and other
Net cash used in investing activities
Borrowings on ABL credit facility
Repayments on ABL credit facility
Payments on 6.875% senior notes
Proceeds from Term Loan B
Stock options exercised
Debt issuance costs and other
Net cash provided by (used in) financing activities
Effect of exchange rate fluctuations on cash
Decrease in cash
Cash & cash equivalents at beginning of period
Cash & cash equivalents at end of period
Adjustments to reconcile net (loss) income to net cash used in operating activities:
Net cash used in operating activities
Proceeds from furnace malfunction insurance recovery
In accordance with the SEC's Regulation G, tables 1, 2, 3, 4, 5 and 6 provide non-GAAP measures used in this earnings release and a reconciliation to the most closely related Generally Accepted Accounting Principle (GAAP) measure. Libbey believes that providing supplemental non-GAAP financial information is useful to investors in understanding Libbey's core business and trends. In addition, it is the basis on which Libbey's management assesses performance. Although Libbey believes that the non-GAAP financial measures presented enhance investors' understanding of Libbey's business and performance, these non-GAAP measures should not be considered an alternative to GAAP.
Reconciliation of "As Reported" Results to "As Adjusted" Results - Quarter
Cost of sales
Selling, general and administrative expenses
Loss on redemption of debt
Provision for income taxes
Three months ended June 30, 2014
Three months ended June 30, 2013
Special Items Detail - (Income) Expense:
Total Special Items
(1) Debt costs for the three months ended June 2014 include the write-off of unamortized finance fees and call premium payments on the $405.0 million senior notes redeemed in April and May 2014, and the write-off of the debt carrying value adjustment related to the termination of the $45.0 million interest rate swap. Debt costs for the three months ended June 2013 include the write-off of unamortized finance fees and call premium payments on the $45.0 million senior notes redeemed in May 2013.
(2)Furnace malfunction relates to loss of production at our Toledo, Ohio, manufacturing facility.
(3) Restructuring charges relate to discontinuing production of certain glassware in North America and reducing manufacturing capacity at our Shreveport, Louisiana, manufacturing facility.
Reconciliation of "As Reported" Results to "As Adjusted" Results - Year
Six months ended June 30, 2014
Six months ended June 30, 2013
(1) Restructuring charges relate to discontinuing production of certain glassware in North America and reducing manufacturing capacity at our Shreveport, Louisiana, facility.
(2) Debt costs for the six months ended June 2014 include the write-off of unamortized finance fees and call premium payments on the $405.0 million senior notes redeemed in April and May 2014, and the write-off of the debt carrying value adjustment related to the termination of the $45.0 million interest rate swap. Debt costs for the six months ended June 2013 include the write-off of unamortized finance fees and call premium payments on the $45.0 million senior notes redeemed in May 2013.
(3)Furnace malfunction relates to loss of production at our Toledo, Ohio, manufacturing facility.
Reconciliation of Net (Loss) Income to Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) and Adjusted EBITDA
Reported net (loss) income
Add: Special items before interest and taxes
Less: Depreciation expense included in special items and
also in depreciation and amortization above
Reconciliation of Net Cash Provided by (Used in) Operating Activities to Free Cash Flow
Net cash provided by (used in) operating activities
Free Cash Flow
Reconciliation to Working Capital
June 30, 2013
Less: Accounts payable
Less: Receivable on furnace malfunction insurance claim
Summary Business Segment Information
Segment Earnings Before Interest & Taxes (Segment EBIT) (5) :
Reconciliation of Segment EBIT to Net (Loss) Income:
Retained corporate costs (6)
Consolidated Adjusted EBIT
Pension settlement and curtailment
Special items before interest and taxes
Depreciation & Amortization:
(1) Americas—includes worldwide sales of manufactured and sourced glass tableware having an end market destination in North and South America.
(2) EMEA—includes worldwide sales of manufactured and sourced glass tableware having an end market destination in Europe, the Middle East and Africa.
(3) U.S. Sourcing—includes U.S. sales of sourced ceramic dinnerware, metal tableware, hollowware, and serveware.
(4) Other—includes worldwide sales of manufactured and sourced glass tableware having an end market destination in Asia Pacific.
(5) Segment EBIT represents earnings before interest and taxes and excludes amounts related to certain items we consider not representative of ongoing operations as well as certain retained corporate costs and other allocations that are not considered by management when evaluating performance.
(6) Retained corporate costs includes certain headquarter, administrative and facility costs, and other costs that are not allocable to the reporting segments.
SOURCE Libbey Inc.