Libbey Inc. Announces First Quarter 2013 Financial Results Continued progress on Libbey 2015 strategic plan results in first quarter financial performance records

TOLEDO, Ohio, April 25, 2013 /PRNewswire/ -- Libbey Inc. (NYSE MKT: LBY) today reported results for the first quarter-ended March 31, 2013.

New Segment Reporting

Libbey presents today's financial results in revised reporting segments to align with the Company's previously announced regionally focused organizational structure which will enable Libbey to better serve customers across the globe.  Under this structure, Libbey will now report financial results for the Americas; Europe, the Middle East and Africa (EMEA); and Other.  In addition, sales and segment EBIT reflect a change to end market reporting that has sales and related costs in segment EBIT based on the geographical destination of the sale. The revised segment results do not affect the Company's previously reported consolidated financial results.

First Quarter Financial Highlights

  • Sales for the first quarter were $183.5 million, compared to $187.8 million for the first quarter of 2012, a decrease of 2.3 percent (2.8 percent excluding currency fluctuation).
  • Net income grew to $2.0 million from $0.6 million in the first quarter of 2012.
  • Adjusted income from operations grew 9.9 percent, compared to the first quarter of 2012, increasing to an all-time first quarter record of $16.4 million from $14.9 million in the year-ago quarter.
  • Adjusted EBITDA increased 5.2 percent to a record for any first quarter of $26.2 million (after adjusting for $4.3 million of restructuring charges relating to our previously announced plans to discontinue production of certain glassware in North America and reduce manufacturing capacity at our Shreveport, Louisiana, manufacturing facility), compared to $24.9 million for the first quarter of 2012.

"Overall, we are pleased with this quarter's results.  While disappointed with a sales decline in the U.S. and Canada, we are very encouraged by our significant sales increase in Mexico and Latin America.  The critical story, however,  is our success in cost reductions, which resulted in record adjusted income from operations and adjusted EBITDA for any first quarter ever.  This performance is even more notable, given that we had an extensive amount of maintenance activity which led to underutilized capacity during the quarter," said Stephanie A. Streeter, chief executive officer of Libbey Inc.

"We are building a track record of success improving our cost structure, focusing on productivity improvements, leveraging our advantaged businesses and strengthening our balance sheet.  We believe this solid start to the year should enable continued improved financial and operational performance for the remainder of 2013."  

First Quarter Segment Sales and Operational Review

  • Sales in the Americas segment were $123.5 million, compared to $129.7 million in the first quarter of 2012, a decrease of 4.7 percent (5.2 percent excluding currency fluctuation).  Sales performance was led by a 4.5 percent increase in sales within our Mexican and Latin American end market (2.8 percent excluding currency impact), offset by an 8.6 percent decrease within our US and Canada end market.
  • Sales in the EMEA segment increased 11.2 percent (10.4 percent excluding currency impact) to $34.2 million, compared to $30.8 million in the first quarter of 2012.
  • Sales in Other were $25.7 million, compared to $27.4 million in the prior-year quarter.  This decrease was largely the result of lower sales in the Asia Pacific end market.
  • Interest expense decreased by $2.0 million to $8.4 million, compared to $10.4 million in the year-ago period, primarily driven by lower interest rates.
  • Our effective tax rate was 25.0 percent for the quarter-ended March 31, 2013, compared to 83.7 percent for the quarter-ended March 31, 2012.  The effective tax rate was influenced by jurisdictions with recorded valuation allowances and changes in the mix of earnings with differing statutory rates.

Working Capital and Liquidity

  • As of March 31, 2013, working capital, defined as inventories and accounts receivable less accounts payable, was $196.4 million, compared to $191.7 million at March 31, 2012. This increase in working capital resulted primarily from higher inventories.
  • Libbey reported that it had available capacity of $73.3 million under its ABL credit facility as of March 31, 2013, with no loans currently outstanding.  The Company also had cash on hand of $45.9 million at March 31, 2013.

Sherry Buck, chief financial officer added, "This quarter, the fifth consecutive quarter of margin and earnings improvement, represents a solid start to the year.  The first quarter results, along with our previously announced plan to repay $45 million of our senior notes in May 2013, puts us solidly on track to further reduce costs, improve cash flow and strengthen our balance sheet in 2013 while investing to grow our business."

Webcast Information

Libbey will hold a conference call for investors on Thursday, April 25, 2013, 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 7 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 2012, Libbey Inc.'s net sales totaled $825.3 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 18, 2013.  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.   

 


Libbey Inc.

Condensed Consolidated Statements of Operations

(dollars in thousands, except per-share amounts)

(unaudited)



Three months ended March 31,


2013


2012

Net sales

$

183,476



$

187,829


Freight billed to customers

752



708


Total revenues

184,228



188,537


Cost of sales (1)

141,996



145,481


Gross profit

42,232



43,056


Selling, general and administrative expenses

26,397



28,126


Special charges (1)

4,314




Income from operations

11,521



14,930


Other expense

(435)



(591)


Earnings before interest and income taxes

11,086



14,339


Interest expense

8,435



10,408


Income before income taxes

2,651



3,931


Provision for income taxes (1)

662



3,290


Net income

$

1,989



$

641






Net income per share:




Basic

$

0.09



$

0.03


Diluted

$

0.09



$

0.03






Weighted average shares:




Outstanding

21,115



20,769


Diluted

21,594



21,184



(1) Refer to Table 1 for Special Items detail.

 

Libbey Inc.

Condensed Consolidated Balance Sheets

(dollars in thousands)



March 31, 2013


December 31, 2012


(unaudited)



ASSETS:




Cash and cash equivalents

$

45,949



$

67,208


Accounts receivable — net

86,264



80,850


Inventories — net

167,374



157,549


Other current assets

16,834



12,997


Total current assets

316,421



318,604






Pension asset

10,176



10,196


Goodwill and purchased intangibles — net

187,324



186,794


Property, plant and equipment — net

253,009



258,154


Other assets

26,245



28,428


Total assets

$

793,175



$

802,176






LIABILITIES AND SHAREHOLDERS' EQUITY:




Accounts payable

$

57,259



$

65,712


Accrued liabilities

81,841



84,268


Pension liability (current portion)

660



613


Non-pension postretirement benefits (current portion)

4,739



4,739


Other current liabilities

3,436



5,915


Long-term debt due within one year

14,031



4,583


Total current liabilities

161,966



165,830






Long-term debt

452,122



461,884


Pension liability

62,389



60,909


Non-pension postretirement benefits

71,587



71,468


Other liabilities

16,900



17,609


Total liabilities

764,964



777,700






Common stock and capital in excess of par value

314,541



313,586


Retained deficit

(146,081)



(148,070)


Accumulated other comprehensive loss

(140,249)



(141,040)


Total shareholders' equity

28,211



24,476


Total liabilities and shareholders' equity

$

793,175



$

802,176


 

Libbey Inc.

Condensed Consolidated Statements of Cash Flows

(dollars in thousands)

(unaudited)



Three months ended March 31,


2013


2012

Operating activities:




Net income

$

1,989



$

641


Adjustments to reconcile net income to net cash used in operating activities:




Depreciation and amortization

10,774



10,536


Loss (gain) on asset sales and disposals

2



(1)


Change in accounts receivable

(6,043)



1,604


Change in inventories

(10,635)



(12,166)


Change in accounts payable

(7,745)



(5,218)


Accrued interest and amortization of discounts and finance fees

8,131



(7,375)


Pension & non-pension postretirement benefits

3,700



(560)


Restructuring charges

4,314




Accrued liabilities & prepaid expenses

(15,792)



(9,336)


Income taxes

(1,626)



1,977


Share-based compensation expense

824



727


Other operating activities

(573)



73


Net cash used in operating activities

(12,680)



(19,098)






Investing activities:




Additions to property, plant and equipment

(8,882)



(6,446)


Proceeds from asset sales and other

4



180


Net cash used in investing activities

(8,878)



(6,266)






Financing activities:




Other repayments

(59)



(394)


Stock options exercised

537



28


Net cash provided by (used in) financing activities

478



(366)






Effect of exchange rate fluctuations on cash

(179)



257


Decrease in cash

(21,259)



(25,473)






Cash at beginning of period

67,208



58,291


Cash at end of period

$

45,949



$

32,818


 

In accordance with the SEC's Regulation G, tables 1, 2, 3 and 4 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.    

Table 1





Reconciliation of "As Reported" Results to "As Adjusted" Results - Quarter



(dollars in thousands, except per-share amounts)





(unaudited)







Three months ended March 31,



2013


2012



As Reported


Special Items


As Adjusted


As Reported


Special Items


As Adjusted

Net sales


$

183,476



$



$

183,476



$

187,829



$



$

187,829


Freight billed to customers


752





752



708





708


Total revenues


184,228





184,228



188,537





188,537


Cost of sales


141,996



566



141,430



145,481





145,481


Gross profit


42,232



(566)



42,798



43,056





43,056


Selling, general and administrative expenses


26,397





26,397



28,126





28,126


Special charges


4,314



4,314










Income from operations


11,521



(4,880)



16,401



14,930





14,930


Other expense


(435)





(435)



(591)





(591)


Earnings before interest and income taxes


11,086



(4,880)



15,966



14,339





14,339


Interest expense


8,435





8,435



10,408





10,408


Income before income taxes


2,651



(4,880)



7,531



3,931





3,931


Provision for income taxes


662



(837)



1,499



3,290





3,290


Net income


$

1,989



$

(4,043)



$

6,032



$

641



$



$

641















Net income per share:













Basic


$

0.09



$

(0.19)



$

0.29



$

0.03



$



$

0.03


Diluted


$

0.09



$

(0.19)



$

0.28



$

0.03



$



$

0.03















Weighted average shares:













Outstanding


21,115







20,769






Diluted


21,594







21,184






 



Three months ended March 31, 2013

Special Items Detail  - (Income) Expense:


Restructuring

Charges (1)


Total Special Items

Cost of sales


$

566



$

566


Special charges


4,314



4,314


Income taxes


(837)



(837)


Total Special Items


$

4,043



$

4,043



(1) Restructuring charges relate to discontinuing production of certain glassware in North America and reducing manufacturing capacity at our Shreveport, Louisiana, manufacturing facility.

 

Table 2





Reconciliation of Net Income to Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) and Adjusted EBITDA

(dollars in thousands)












Three months ended March 31,



2013


2012

Reported net income


$

1,989



$

641


Add:





Interest expense


8,435



10,408


Provision for income taxes


662



3,290


Depreciation and amortization


10,774



10,536


EBITDA


21,860



24,875


Add: Special items before interest and taxes


4,880




Less: Depreciation expense included in special charges and

     also in depreciation and amortization above


(566)




Adjusted EBITDA


$

26,174



$

24,875


 

Table 3





Reconciliation of Net Cash Used in Operating Activities to Free Cash Flow

(dollars in thousands)







Three months ended March 31,



2013


2012






Net cash used in operating activities


$

(12,680)



$

(19,098)


Capital expenditures


(8,882)



(6,446)


Proceeds from asset sales and other


4



180


Free Cash Flow


$

(21,558)



$

(25,364)


 

Table 4





Summary Business Segment Information





(dollars in thousands)







Three months ended March 31,



2013


2012

Net Sales:





Americas (1)


$

123,535



$

129,675


EMEA (2)


34,242



30,792


Other (3)


25,699



27,362


Consolidated


$

183,476



$

187,829







Segment Earnings Before Interest & Taxes (Segment EBIT) (4) :





Americas (1)


$

18,152



$

15,674


EMEA (2)


(1,483)



(580)


Other (3)


3,797



5,125


Segment EBIT


$

20,466



$

20,219







Reconciliation of Segment EBIT to Net Income:





Segment EBIT


$

20,466



$

20,219


Retained corporate costs (5)


(4,500)



(5,880)


Consolidated Adjusted EBIT


15,966



14,339


Restructuring charges


(4,880)




Special Items before interest and taxes


(4,880)




Interest expense


(8,435)



(10,408)


Income taxes


(662)



(3,290)


Net income


$

1,989



$

641







Depreciation & Amortization:





Americas (1)


$

6,528



$

6,182


EMEA (2)


2,486



2,548


Other (3)


1,383



1,417


Corporate


377



389


Consolidated


$

10,774



$

10,536



(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 and end market destination in Europe, the Middle East and Africa.

(3) Other—includes worldwide sales of manufactured and sourced glass tableware having an end market destination in Asia Pacific and worldwide sales of sourced ceramic dinnerware, metal tableware, hollowware, and serveware.

(4) 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.

(5) Retained corporate costs includes certain headquarter, administrative and facility costs, and other costs that are not allocable to the reporting segments.

 

SOURCE Libbey Inc.



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