Libbey Inc. Announces Fourth Quarter And Full-Year 2015 Financial Results

Feb 24, 2016, 07:45 ET from Libbey Inc.

TOLEDO, Ohio, Feb. 24, 2016 /PRNewswire/ --

  • Strong quarterly net sales growth of 7.2 percent (constant currency) in the foodservice channel helped limit an overall net sales decline of 0.9 percent (constant currency)
  • Strong Adjusted Earnings Before Interest, Tax, Depreciation and Amortization (Adjusted EBITDA) margin in the quarter of 14.1 percent
  • Full-year net sales increased 1.7 percent (constant currency) versus prior year

Libbey Inc. (NYSE MKT: LBY), one of the largest glass tableware manufacturers in the world, today reported results for the fourth quarter and full-year 2015. The Company also announced that it has revised its reportable operating segments as: U.S. and Canada (reflects combination of U.S. and Canada Glass business and previous U.S. Sourcing segment); Latin America; Europe, Middle East and Africa (EMEA); and Other.  The Company will disclose 2015 quarterly results and three years of full-year financial results (2013 - 2015) for these new segments within its Form 10-K for the year ended December 31, 2015.

Fourth Quarter Financial Highlights

  • Net sales for fourth quarter 2015 were $219.1 million, compared to $231.4 million in fourth quarter 2014, a decrease of 5.3 percent (or a decrease of 0.9 percent excluding currency fluctuation).
  • Net income for fourth quarter 2015 was $32.1 million, compared to net income of $19.8 million in the prior-year fourth quarter. Adjusted net income (see Table 1) for fourth quarter 2015 was $9.1 million, compared to $11.9 million recorded in the same period of 2014.
  • Adjusted EBITDA (see Table 3) for fourth quarter 2015 was $31.0 million, compared to $30.7 million in the prior-year fourth quarter.

"Libbey made progress during 2015 on the Own the Moment strategy, despite the challenging market conditions," said William A. Foley, chairman and chief executive officer of Libbey Inc. "We have the right long-term vision, and the core foundation of our Own the Moment strategy is absolutely correct.  We must continue our evolution to become a faster-paced, customer and consumer-focused business. We have an excellent leadership team in place that is focused on a number of operational improvements that will simplify our business, allow us to respond faster to customer needs, become a true innovator of new products and become more competitive in the markets in which we compete."

Fourth Quarter Segment Sales and Operational Review

  • Net sales in the U.S. and Canada segment were $139.8 million, compared to $138.2 million in the fourth quarter 2014, an increase of 1.1 percent (or an increase of 1.3 percent excluding currency impact). Foodservice sales remained strong during the quarter, growing 9.0 percent versus last year, partially offset with a reduction in net sales primarily as a result of softness in the retail and business-to-business channels.
  • Net sales in the Latin America segment were $40.2 million, compared to $48.5 million in fourth quarter 2014, a decrease of 17.1 percent (or a decrease of 5.8 percent excluding currency impact), due to a heightened competitive environment and weakness in the retail channel.
  • Net sales in the EMEA segment were $31.5 million, compared to $36.2 million in fourth quarter 2014, a decrease of 13.0 percent (or a decrease of 1.3 percent excluding currency impact), due to softness in the retail channel.
  • Net sales in Other were $7.7 million in fourth quarter 2015, compared to $8.5 million in the comparable prior-year quarter, reflecting a decrease of 9.8 percent (or a decrease of 5.7 percent excluding currency impact) in the Asia Pacific region.
  • The Company recorded a tax benefit of $39.7 million for fourth quarter 2015, compared to a provision of $3.9 million in same period in 2014. The benefit recorded for fourth quarter 2015 includes a tax benefit of $43.8 million related to the reversal of substantially all of the remaining valuation allowance recorded against U.S. deferred tax assets. In addition, the effective rate in both years was generally influenced by foreign earnings with differing statutory rates, foreign withholding tax, accruals related to uncertain tax positions, non-taxable foreign translation gains and other activity in jurisdictions with recorded valuation allowances.

Full-Year Financial Highlights

  • Net sales for the full year were $822.3 million, compared to $852.5 million for the full year of 2014, a decrease of 3.5 percent (or an increase of 1.7 percent excluding currency fluctuation). During 2015, foodservice net sales for the Company were up 5.8 percent versus prior year (or 8.0 percent in constant currency).
  • Net income for 2015 was $66.3 million, compared to net income of $5.0 million in 2014. Net income was favorably impacted by the reversal of substantially all of the remaining valuation allowance recorded against U.S. deferred tax assets of $43.8 million. Last year's net income included a $47.2 million charge for the retirement of debt during the period. Adjusted net income (see Table 2) for 2015 was $47.8 million, compared to $50.7 million recorded in 2014.
  • Adjusted EBITDA (see Table 3) for 2015 was $116.1 million, compared to $123.4 million in 2014.
  • In 2015, Libbey repurchased 412,473 shares at an average price of $37.03. The Company has approximately 1.05 million shares available for repurchase at December 31, 2015, under the current board authorization.

Full-Year Segment Sales and Operational Review

  • Net sales in the U.S and Canada segment were $497.7 million in 2015, compared to $482.1 million in 2014, an increase of 3.2 percent (or an increase of 3.4 percent excluding currency fluctuation). Sales performance was led by a 7.5 percent increase in sales within the segment's foodservice channel. Partially offsetting this increased performance was a decrease in the segment's retail channel of 2.5 percent (or 2.2 percent decrease excluding currency impact).
  • Net sales in the Latin America segment decreased 12.1 percent (or down 1.3 percent excluding currency impact) to $167.1 million, compared to $190.1 million in 2014.
  • Net sales in the EMEA segment decreased 16.9 percent (or down 1.4 percent excluding currency impact) to $122.7 million, compared to $147.6 million in 2014.
  • Sales in Other were $34.9 million, compared to $32.7 million in the prior-year. This increase was the result of a 6.6 percent increase in sales (8.7 percent excluding currency impact) in the Asia Pacific region.
  • Interest expense for 2015 was $18.5 million, a decrease of $4.4 million compared to $22.9 million in the year-ago period, primarily driven by lower interest rates as a result of the refinancing completed during the second quarter of 2014.
  • The Company recorded a tax benefit of $38.2 million for 2015, compared to a provision of $8.6 million for 2014. The benefit recorded for full-year 2015 includes a tax benefit of $43.8 million related to the reversal of substantially all of the remaining valuation allowance against its U.S. deferred tax assets. In addition, the effective tax rate was generally influenced by foreign earnings with differing statutory rates, foreign withholding tax, accruals related to uncertain tax positions, non-taxable foreign translation gains and other activity in jurisdictions with recorded valuation allowances.

Balance Sheet and Liquidity

  • Libbey reported that it had available capacity of $91.0 million under its ABL credit facility at December 31, 2015, with no loans currently outstanding. The Company also had cash on hand of $49.0 million at December 31, 2015.
  • At December 31, 2015, working capital, defined as inventories and accounts receivable less accounts payable, was $200.8 million, an increase of $22.4 million compared to $178.4 million at December 31, 2014 (see Table 5). The increase was a result of higher inventories, higher accounts receivable and lower accounts payable.

Sherry Buck, chief financial officer, commented: "In 2016, we plan to maintain our balanced approach to capital allocation. In addition to improving free cash flow generation during 2016, we plan to further our progress on achieving our stated leverage ratio targets and to return capital to shareholders through our share repurchase program and our dividend policy, which was recently increased 5 percent to $0.46 per share annually."

2016 Outlook

Taking into consideration the slowing global economy and the challenging competitive environment, the Company expects for full-year 2016:

  • Sales growth of approximately 1 percent, as reported, from $822.3 million to approximately $830 million
  • Adjusted EBITDA margins of approximately 14 percent
  • Capital expenditures in the range of $50 million to $55 million

Webcast Information

Libbey will hold a conference call for investors on Wednesday, February 24, 2016, at 11 a.m. Eastern Standard Time. The conference call will be webcast 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, Libbey Inc. is one of the largest glass tableware manufacturers in the world. Libbey Inc. operates manufacturing plants in the U.S., Mexico, China, Portugal and the Netherlands. In existence since 1818, the Company supplies tabletop products to retail, foodservice and business-to-business customers in over 100 countries. Libbey's global brand portfolio, in addition to its namesake brand, includes Crisa®, Royal Leerdam®, World® Tableware, Syracuse® China, and Crisal Glass®. In 2015, Libbey Inc.'s net sales totaled $822.3 million. Additional information is available at www.libbey.com.

Caution on Forward-Looking Statements

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. 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 13, 2015.  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, ceramic dinnerware and metalware 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 December 31,


2015


2014





Net sales

$

219,145



$

231,418


Freight billed to customers

810



762


Total revenues

219,955



232,180


Cost of sales (1)

190,703



171,956


Gross profit

29,252



60,224


Selling, general and administrative expenses (1)

33,717



32,732


Income (loss) from operations

(4,465)



27,492


Other income (1)

1,603



1,011


Earnings (loss) before interest and income taxes

(2,862)



28,503


Interest expense

4,722



4,882


Income (loss) before income taxes

(7,584)



23,621


Provision (benefit) for income taxes (1)

(39,692)



3,864


Net income

$

32,108



$

19,757






Net income per share:




Basic

$

1.47



$

0.90


Diluted

$

1.45



$

0.88


Dividends declared per share

$

0.11



$






Weighted average shares:




Outstanding

21,819



21,861


Diluted

22,111



22,332




(1)

Refer to Table 1 for Special Items detail.

 

 


Libbey Inc.

Condensed Consolidated Statements of Operations

(dollars in thousands, except per-share amounts)

(unaudited)



Year ended December 31,


2015


2014





Net sales

$

822,345



$

852,492


Freight billed to customers

2,885



3,400


Total revenues

825,230



855,892


Cost of sales (1)

648,902



652,747


Gross profit

176,328



203,145


Selling, general and administrative expenses (1)

132,607



121,909


Income from operations

43,721



81,236


Loss on redemption of debt (1)



(47,191)


Other income (1)

2,880



2,351


Earnings before interest and income taxes

46,601



36,396


Interest expense

18,484



22,866


Income before income taxes

28,117



13,530


Provision (benefit) for income taxes (1)

(38,216)



8,567


Net income

$

66,333



$

4,963






Net income per share:




Basic

$

3.04



$

0.23


Diluted

$

2.99



$

0.22


Dividends declared per share

$

0.44



$






Weighted average shares:




Outstanding

21,817



21,716


Diluted

22,159



22,184




(1)

Refer to Table 2 for Special Items detail.

 

 


Libbey Inc.

Condensed Consolidated Balance Sheets

(dollars in thousands)



December 31, 2015


December 31, 2014


(unaudited)



ASSETS:




Cash and cash equivalents

$

49,044



$

60,044


Accounts receivable — net

94,379



91,106


Inventories — net

178,027



169,828


Other current assets

19,326



27,701


Total current assets

340,776



348,679






Pension asset

977



848


Purchased intangibles — net

16,364



17,771


Goodwill

164,112



164,112


Deferred income taxes

48,662



5,566


Other assets

9,019



7,984


Total other assets

239,134



196,281


Property, plant and equipment — net

272,534



277,978


Total assets

$

852,444



$

822,938






LIABILITIES AND SHAREHOLDERS' EQUITY:




Accounts payable

$

71,560



82,485


Salaries and wages

27,266



29,035


Accrued liabilities

45,179



42,638


Accrued income taxes

4,009



2,010


Pension liability (current portion)

2,297



1,488


Non-pension postretirement benefits (current portion)

4,903



4,800


Derivative liability

4,265



2,653


Deferred income taxes



3,633


Long-term debt due within one year

4,747



7,658


Total current liabilities

164,226



176,400






Long-term debt

426,272



430,272


Pension liability

44,274



56,462


Non-pension postretirement benefits

55,282



63,301


Deferred income taxes

2,822



5,893


Other long-term liabilities

11,186



13,156


Total liabilities

704,062



745,484






Common stock and capital in excess of par value

330,974



331,609


Treasury stock

(4,448)



(1,060)


Retained deficit

(57,912)



(114,648)


Accumulated other comprehensive loss

(120,232)



(138,447)


Total shareholders' equity

148,382



77,454


Total liabilities and shareholders' equity

$

852,444



$

822,938


 

 

Libbey Inc.

Condensed Consolidated Statements of Cash Flows

(dollars in thousands)

(unaudited)



Three months ended December 31,


2015


2014

Operating activities:




Net income

$

32,108



$

19,757


Adjustments to reconcile net income to net cash provided by operating activities:




Depreciation and amortization

11,426



9,551


Loss on asset sales and disposals

177



427


Change in accounts receivable

1,390



16,517


Change in inventories

19,898



17,995


Change in accounts payable

5,190



2,969


Accrued interest and amortization of discounts and finance fees

345



310


Pension & non-pension postretirement benefits, net

17,412



(3,299)


Accrued liabilities & prepaid expenses

(8,660)



(3,605)


Income taxes

(40,078)



3,310


Share-based compensation expense

368



1,537


Excess tax benefit from share-based compensation arrangements

(2,797)




Other operating activities

(2,728)



(655)


Net cash provided by operating activities

34,051



64,814






Investing activities:




Additions to property, plant and equipment

(6,656)



(15,865)


Proceeds from furnace malfunction insurance recovery



(1,996)


Proceeds from asset sales and other

5



17


Net cash used in investing activities

(6,651)



(17,844)






Financing activities:




Borrowings on ABL credit facility

18,400



28,300


Repayments on ABL credit facility

(25,400)



(37,200)


Other repayments



(547)


Repayments on Term Loan B

(1,100)



(1,100)


Stock options exercised

4



1,690


Excess tax benefit from share-based compensation arrangements

2,797




Dividends

(2,400)




Treasury shares purchased



(1,060)


Net cash used in financing activities

(7,699)



(9,917)






Effect of exchange rate fluctuations on cash

(758)



(1,098)


Increase in cash

18,943



35,955






Cash & cash equivalents at beginning of period

30,101



24,089


Cash & cash equivalents at end of period

$

49,044



$

60,044


 

 


Libbey Inc.

Condensed Consolidated Statements of Cash Flows

(dollars in thousands)

(unaudited)



Year ended December 31,


2015


2014

Operating activities:




Net income

$

66,333



$

4,963


Adjustments to reconcile net income to net cash provided by operating activities:




Depreciation and amortization

42,712



40,388


Loss on asset sales and disposals

567



674


Change in accounts receivable

(6,312)



(1,808)


Change in inventories

(12,006)



(10,828)


Change in accounts payable

(3,466)



5,088


Accrued interest and amortization of discounts and finance fees

1,291



2,039


Call premium on senior notes



37,348


Write-off of finance fees on senior notes



9,086


Pension & non-pension postretirement benefits, net

18,865



(879)


Restructuring



(289)


Accrued liabilities & prepaid expenses

4,140



(7,222)


Income taxes

(45,003)



885


Share-based compensation expense

5,917



5,283


Excess tax benefit from share-based compensation arrangements

(2,797)




Other operating activities

(4,142)



(2,857)


Net cash provided by operating activities

66,099



81,871






Investing activities:




Additions to property, plant and equipment

(48,136)



(54,393)


Proceeds from furnace malfunction insurance recovery



2,350


Proceeds from asset sales and other

7



24


Net cash used in investing activities

(48,129)



(52,019)






Financing activities:




Borrowings on ABL credit facility

62,900



83,000


Repayments on ABL credit facility

(62,900)



(83,000)


Other repayments

(3,267)



(5,863)


Other borrowings



5,214


Payments on 6.875% senior notes



(405,000)


Proceeds from Term Loan B



438,900


Repayments on Term Loan B

(4,400)



(2,200)


Call premium on senior notes



(37,348)


Stock options exercised

3,338



4,571


Excess tax benefit from share-based compensation arrangements

2,797




Debt issuance costs and other



(6,959)


Dividends

(9,597)




Treasury shares purchased

(15,275)



(1,060)


Net cash used in financing activities

(26,404)



(9,745)






Effect of exchange rate fluctuations on cash

(2,566)



(2,271)


Increase (decrease) in cash

(11,000)



17,836






Cash & cash equivalents at beginning of year

60,044



42,208


Cash & cash equivalents at end of year

$

49,044



$

60,044


 

In accordance with the SEC's Regulation G, tables 1 through 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.

 

Table 1




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



(dollars in thousands, except per-share amounts)





(unaudited)







Three months ended December 31,



2015


2014



As Reported


Special
Items


As Adjusted


As Reported


Special
Items


As Adjusted

Net sales


$

219,145



$



$

219,145



$

231,418



$



$

231,418


Freight billed to customers


810





810



762





762


Total revenues


219,955





219,955



232,180





232,180


Cost of sales


190,703



17,071



173,632



171,956



(10,349)



182,305


Gross profit


29,252



(17,071)



46,323



60,224



10,349



49,875


Selling, general and administrative expenses


33,717



5,416



28,301



32,732



1,649



31,083


Income (loss) from operations


(4,465)



(22,487)



18,022



27,492



8,700



18,792


Other income


1,603



93



1,510



1,011



(1,317)



2,328


Earnings (loss) before interest and income taxes


(2,862)



(22,394)



19,532



28,503



7,383



21,120


Interest expense


4,722





4,722



4,882





4,882


Income (loss) before income taxes


(7,584)



(22,394)



14,810



23,621



7,383



16,238


Provision (benefit) for income taxes


(39,692)



(45,421)



5,729



3,864



(482)



4,346


Net income


$

32,108



$

23,027



$

9,081



$

19,757



$

7,865



$

11,892















Net income per share:













Basic


$

1.47



$

1.06



$

0.42



$

0.90



$

0.36



$

0.54


Diluted


$

1.45



$

1.04



$

0.41



$

0.88



$

0.35



$

0.53















Weighted average shares:













Outstanding


21,819







21,861






Diluted


22,111







22,332






 



Three months ended December 31, 2015

Special Items Detail  - (Income) Expense:


Reorganization

Charges(1)


Executive Terminations


Pension Settlement (2)


Derivatives (3)


Environmental Obligation (4)


U.S. Valuation Allowance
Release


Total

Special

Items

Cost of sales


$



$



$

17,037



$



$

34



$



$

17,071


SG&A


125



635



4,656









5,416


Other (income) expense








(93)







(93)


Income taxes


(1,268)



(318)





27



(57)



(43,805)



(45,421)


Total Special Items


$

(1,143)



$

317



$

21,693



$

(66)



$

(23)



$

(43,805)



$

(23,027)


 
















Three months ended December 31, 2014

Special Items Detail  - (Income) Expense:


Environmental Obligation (4)


Furnace
Malfunction (5)


Pension Settlement


Executive Termination


Derivatives (3)


Total Special
Items

Cost of sales


$

315



$

(10,664)



$



$



$



$

(10,349)


SG&A






774



875





1,649


Other (income) expense










1,317



1,317


Income taxes






(87)





(395)



(482)


Total Special Items


$

315



$

(10,664)



$

687



$

875



$

922



$

(7,865)




(1)

Management reorganization to support our growth strategy.

(2)

The pension settlement charge in the fourth quarter of 2015 relates to EMEA unwinding direct ownership of its Dutch defined benefit pension plan.

(3)

Derivatives relate to hedge ineffectiveness on our natural gas contracts and interest rate swap as well as mark-to-market adjustments on our natural gas contracts that have been de-designated and those for which we did not elect hedge accounting.

(4)

Environmental obligation relates to our assessment of Syracuse China Company as a potentially responsible party with respect to the Lower Ley Creek sub-site of the Onondaga Lake Superfund site.

(5)

Furnace malfunction relates to loss of production, net of insurance recoveries, at our Toledo, Ohio, manufacturing facility.

 

 


Table 2





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



(dollars in thousands, except per-share amounts)





(unaudited)



Year ended December 31,



2015


2014



As
Reported


Special
Items


As Adjusted


As
Reported


Special
Items


As Adjusted

Net sales


$

822,345



$



$

822,345



$

852,492



$



$

852,492


Freight billed to customers


2,885





2,885



3,400





3,400


Total revenues


825,230





825,230



855,892





855,892


Cost of sales


648,902



17,194



631,708



652,747



(3,482)



656,229


Gross profit


176,328



(17,194)



193,522



203,145



3,482



199,663


Selling, general and administrative expenses


132,607



9,842



122,765



121,909



1,649



120,260


Income from operations


43,721



(27,036)



70,757



81,236



1,833



79,403


Loss on redemption of debt








(47,191)



(47,191)




Other income


2,880



218



2,662



2,351



(1,247)



3,598


Earnings before interest and income taxes


46,601



(26,818)



73,419



36,396



(46,605)



83,001


Interest expense


18,484





18,484



22,866





22,866


Income before income taxes


28,117



(26,818)



54,935



13,530



(46,605)



60,135


Provision (benefit) for income taxes


(38,216)



(45,392)



7,176



8,567



(823)



9,390


Net income


$

66,333



$

18,574



$

47,759



$

4,963



$

(45,782)



$

50,745















Net income per share:













Basic


$

3.04



$

0.85



$

2.19



$

0.23



$

(2.11)



$

2.34


Diluted


$

2.99



$

0.84



$

2.16



$

0.22



$

(2.06)



$

2.29















Weighted average shares:













Outstanding


21,817







21,716






Diluted


22,159







22,184






 



Year ended December 31, 2015

Special Items Detail - (Income) Expense:


Reorganization

Charges(1)


Pension

Settlement (2)


Executive Terminations


Derivatives(3)


Environmental Obligation(4)


U.S. Valuation Allowance
Release


Total Special Items

Cost of sales


$



$

17,037



$



$



$

157



$



$

17,194


SG&A


4,316



4,656



870









9,842


Other (income) expense








(218)







(218)


Income taxes


(1,277)





(318)



65



(57)



(43,805)



(45,392)


Total Special Items


$

3,039



$

21,693



$

552



$

(153)



$

100



$

(43,805)



$

(18,574)


 




Year ended December 31, 2014

Special Items Detail - (Income) Expense:


Debt Costs (5)


Furnace

Malfunction(6)


Restructuring Charges (7)


Pension Settlement


Environmental Obligation(4)


Executive Termination


Derivatives(3)


Total Special Items

Cost of sales


$



$

(4,782)



$

985



$



$

315



$



$



$

(3,482)


SG&A








774





875





1,649


Loss on redemption of debt


47,191















47,191


Other (income) expense














1,247



1,247


Income taxes




(45)



(296)



(87)







(395)



(823)


Total Special Items


$

47,191



$

(4,827)



$

689



$

687



$

315



$

875



$

852



$

45,782




(1)

Management reorganization to support our growth strategy.

(2)

The 2015 pension settlement charge relates to EMEA unwinding direct ownership of its Dutch defined benefit pension plan.

(3)

Derivatives relate to hedge ineffectiveness on our natural gas contracts and interest rate swap as well as mark-to-market adjustments on our natural gas contracts that have been de-designated and those for which we did not elect hedge accounting.

(4)

Environmental obligation relates to our assessment of Syracuse China Company as a potentially responsible party with respect to the Lower Ley Creek sub-site of the Onondaga Lake Superfund site.

(5)

Debt costs 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.

(6)

Furnace malfunction relates to loss of production at our Toledo, Ohio, manufacturing facility.

(7)

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

 

 


Table 3



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

(dollars in thousands)


(unaudited)




Three months ended

December 31,


Year ended December 31,



2015


2014


2015


2014

Reported net income


$

32,108



$

19,757



$

66,333



$

4,963


Add:









Interest expense


4,722



4,882



18,484



22,866


Provision (benefit) for income taxes


(39,692)



3,864



(38,216)



8,567


Depreciation and amortization


11,426



9,551



42,712



40,388


EBITDA


8,564



38,054



89,313



76,784


Add: Special items before interest and taxes


22,394



(7,383)



26,818



46,605


Adjusted EBITDA


$

30,958



$

30,671



$

116,131



$

123,389











Net sales


$

219,145



$

231,418



$

822,345



$

852,492


Adjusted EBITDA margin


14.1

%


13.3

%


14.1

%


14.5

%

 

 

Table 4

Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow

(dollars in thousands)

(unaudited)



Three months ended 
December 31,


Year ended December 31,



2015


2014


2015


2014

Net cash provided by operating activities


$

34,051



$

64,814



$

66,099



$

81,871


Capital expenditures


(6,656)



(15,865)



(48,136)



(54,393)


Proceeds from furnace malfunction insurance recovery




(1,996)





2,350


Proceeds from asset sales and other


5



17



7



24


Free Cash Flow


$

27,400



$

46,970



$

17,970



$

29,852


 

 

Table 5



Reconciliation to Working Capital



(dollars in thousands)



(unaudited)





December 31, 2015


September 30, 2015


December 31, 2014

Add:







Accounts receivable


$

94,379



$

96,738



$

91,106


Inventories


178,027



199,115



169,828


Less: Accounts payable


71,560



63,921



82,485


Working Capital


$

200,846



$

231,932



$

178,449


 

 


Table 6

Summary Business Segment Information

(dollars in thousands)

(unaudited)


Three months ended
December 31,


Year ended December 31,

Net Sales:


2015


2014


2015


2014









U.S. & Canada (1)


$

139,774



$

138,221



$

497,728



$

482,094


Latin America (2)


40,231



48,507



167,069



190,079


EMEA (3)


31,457



36,174



122,664



147,587


Other (4)


7,683



8,516



34,884



32,732


Consolidated


$

219,145



$

231,418



$

822,345



$

852,492











Segment Earnings Before Interest & Taxes (Segment EBIT) (5) :







U.S. & Canada (1)


$

23,389



$

16,681



$

80,406



$

72,546


Latin America (2)


3,646



9,935



22,017



32,909


EMEA (3)


(23)



2,654



1,251



5,726


Other (4)


539



343



4,390



2,378


Segment EBIT


$

27,551



$

29,613



$

108,064



$

113,559











Reconciliation of Segment EBIT to Net Income:









Segment EBIT


$

27,551



$

29,613



$

108,064



$

113,559


Retained corporate costs (6)


(8,019)



(8,493)



(34,645)



(30,558)


Consolidated Adjusted EBIT


19,532



21,120



73,419



83,001


Loss on redemption of debt








(47,191)


Pension settlement


(21,693)



(774)



(21,693)



(774)


Furnace malfunction




10,664





4,782


Environmental obligation


(34)



(315)



(157)



(315)


Reorganization charges


(125)





(4,316)




Restructuring charges








(985)


Derivatives


93



(1,317)



218



(1,247)


Executive terminations


(635)



(875)



(870)



(875)


Special items before interest and taxes


(22,394)



7,383



(26,818)



(46,605)


Interest expense


(4,722)



(4,882)



(18,484)



(22,866)


Income tax benefit (expense)


39,692



(3,864)



38,216



(8,567)


Net income


$

32,108



$

19,757



$

66,333



$

4,963











Depreciation & Amortization:









U.S. & Canada (1)


$

3,425



$

2,339



$

12,214



$

10,319


Latin America (2)


4,361



3,559



14,738



12,562


EMEA (3)


2,065



2,073



8,510



10,061


Other (4)


1,421



1,463



5,855



6,179


Corporate


154



117



1,395



1,267


Consolidated


$

11,426



$

9,551



$

42,712



$

40,388




(1)

U.S. & Canada—includes worldwide sales of manufactured and sourced glass tableware and sourced ceramic dinnerware, metal tableware, hollowware and serveware having an end market destination in the U.S and Canada excluding glass products for Original Equipment Manufacturers (OEM), which remain in the Latin America segment.

(2)

Latin America—includes primarily worldwide sales of manufactured and sourced glass tableware having an end market destination in Latin America including glass products for OEMs that have an end market destination outside of Latin America.

(3)

EMEA—includes primarily worldwide sales of manufactured and sourced glass tableware having an end market destination in Europe, the Middle East and Africa.

(4)

Other—includes primarily 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.



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