Libbey Inc. Announces Fourth Quarter and Full Year 2010 Results; Also Announces Intent to Redeem $40.0 Million of Its 10.0 Percent Senior Secured Notes Due 2015

TOLEDO, Ohio, Feb. 9, 2011 /PRNewswire/ --

• Fourth Quarter Net Sales of $222.8 Million, an Increase of 7.1 Percent Compared to $208.1 Million in the Prior-Year Quarter.
• Sales to U.S. and Canadian Foodservice Customers Increase 8.6 Percent Compared to the Prior-Year Quarter.
• Full-Year 2010 Sales of $799.8 Million, an Increase of 6.8 Percent Compared to the Prior Year.
• Income from Operations of $19.2 Million in the Fourth Quarter of 2010 Compared to Income from Operations of $19.3 Million in the Prior-Year Quarter.
• Adjusted EBITDA of $28.8 Million in the Fourth Quarter of 2010 Compared to $29.1 Million in the Fourth Quarter of 2009.
• Record Free Cash Flow Generation of $49.4 Million in the Fourth Quarter of 2010.
• Full-Year 2010 Income from Operations of $68.8 Million Compared to Income From Operations of $36.6 Million in 2009.
• Full-Year 2010 Adjusted EBITDA of $115.0 Million Compared to $90.1 Million in 2009.
• Calling for Redemption, on March 25, 2011, an Aggregate Principal Amount of $40.0 Million of its Outstanding Senior Secured Notes Due 2015.

Libbey Inc. (NYSE Amex: LBY) announced today that sales for the fourth quarter of 2010 were $222.8 million, compared to $208.1 million in the fourth quarter of 2009.  Libbey reported net income of $2.8 million, or $0.13 per diluted share, for the fourth quarter ended December 31, 2010, compared to a net loss of $7.1 million, or $0.45 per diluted share, in the prior-year quarter.

Partial Redemption of Senior Notes

Libbey Inc. announced that its wholly owned subsidiary Libbey Glass Inc. is calling for redemption on March 25, 2011, an aggregate principal amount of $40.0 million of its outstanding 10.0 percent Senior Secured Notes Due 2015 (the "Notes"), on a pro rata basis in accordance with the terms of the indenture agreement dated February 8, 2010 (the "Indenture").  Pursuant to the terms of the Indenture, the redemption price for the Notes will be 103.0 percent of the principal amount of the redeemed Notes, plus accrued and unpaid interest.  Following completion of the redemption, the aggregate principal amount of the Notes that will remain outstanding will be $360.0 million.

A formal notice of redemption will be sent separately to the holders of the Notes, in accordance with the terms of the Indenture.  The Company plans to fund this redemption using cash on its balance sheet.  This redemption is expected to result in a one-time charge for early extinguishment of debt in the Company's 2011 first quarter of $2.8 million ($1.6 million of which is a non-cash charge), or approximately $0.14 cents per diluted share.

John Meier, chairman and chief executive officer, said, "We are pleased that as a result of our outstanding free cash flow generation of $49.4 million during the fourth quarter of 2010, we are in a position to reduce our outstanding debt by an additional $40 million.  This follows our repayment of nearly $10 million of debt in China and Portugal during the fourth quarter of 2010.  This $50 million of debt reduction represents significant progress in our ongoing efforts to reduce our leverage."

Fourth Quarter Results

For the quarter-ended December 31, 2010, sales were $222.8 million, compared to $208.1 million in the year-ago quarter.  Sales of the North American Glass segment were $158.6 million, an increase of 7.3 percent, compared to $147.8 million in the fourth quarter of 2009 (see Table 5).  Primary contributors to the increased sales included an increase of 17.6 percent in sales to Business-to-Business customers within the U.S. and Canada, an increase in Crisa sales of 16.2 percent and an 8.6 percent increase in sales to U.S. and Canadian foodservice customers, compared to the prior-year quarter.  Sales to U.S. and Canadian retail customers decreased 2.5 percent from the all-time record set in the fourth quarter of 2009.  North American Other sales were $22.5 million, compared to $20.9 million in the prior-year quarter, as shipments of Syracuse China products increased 16.3 percent, sales to World Tableware customers increased 8.8 percent and Traex sales increased 0.6 percent during the quarter.  International segment sales were $44.3 million, compared to $41.4 million in the year-ago quarter, as a result of 17.1 percent sales growth at Crisal in Portugal, 30.4 percent increase in sales at Libbey China and 0.8 percent increase in sales to Royal Leerdam customers.  

The Company reported income from operations of $19.2 million during the quarter, compared to income from operations of $19.3 million in the year-ago quarter.  Income from operations, excluding special items (see Table 1), was $19.9 million in the fourth quarter of 2010, compared to income from operations of $20.2 million during the fourth quarter of 2009.

Libbey reported earnings before interest and taxes (EBIT) of $19.5 million, compared to EBIT of $18.0 million in the year-ago quarter.  The improved EBIT was the result of a $1.5 million gain on the redemption of debt.  Adjusted EBIT (see Table 1) for the fourth quarter of 2010 was $18.7 million, compared to $18.8 million in the prior-year quarter.  Adjusted EBIT (see Table 5) was $11.8 million for North American Glass, compared to adjusted EBIT of $14.2 million in the year-ago quarter.  North American Other reported adjusted EBIT for the fourth quarter of 2010 of $4.0 million, compared to $5.3 million in the year-ago quarter.  The International segment reported adjusted EBIT of $2.9 million, compared to adjusted loss before interest and taxes of $0.6 million in the fourth quarter of 2009.  

Libbey reported that adjusted earnings before interest, taxes, depreciation and amortization (adjusted EBITDA) (see Table 3) was $28.8 million for the fourth quarter, compared to $29.1 million in the fourth quarter of 2009.  

Interest expense decreased by $2.6 million to $11.9 million, compared to $14.5 million in the year-ago period, as the fourth quarter of 2009 included $2.7 million in finance fees related to the PIK Note exchange transaction completed in 2009.

The effective tax rate was 63.5 percent for the quarter, compared to 307.7 percent in the year-ago quarter.  The Company's effective tax rate for the year-ago quarter was negatively impacted by a reversal of a $5.3 million benefit from required intra-period tax allocations between loss from continuing operations and other comprehensive income in the U.S.  The effective tax rate for the current quarter was influenced by changes in valuation allowances and changes in the mix of earnings with differing statutory rates.

Libbey reported net income of $2.8 million, or $0.13 per diluted share, for the fourth quarter ended December 31, 2010, compared to a net loss of $7.1 million, or $0.45 per diluted share, in the prior year quarter.  Excluding the special items of $0.9 million, the net income was $1.9 million (see Table 1) and diluted earnings per share were $0.09 for the fourth quarter ended December 31, 2010.  This compares to a net loss excluding special items of $3.5 million and diluted loss per share of $0.22 in the year-ago quarter.

Twelve-Month Results

For the twelve months ended December 31, 2010, sales increased 6.8 percent to $799.8 million from $748.6 million in 2009.  John F. Meier, chairman and chief executive officer, commenting on 2010 said, "Sales increases of 29.4 percent in China and 21.9 percent in Mexico led the way, while our U.S. and Canadian retail shipments had another solid year in 2010, as sales in this channel increased over six percent compared to 2009 and we grew our U.S. market share from 42.1 percent in 2009 to 46.6 percent in 2010.  These factors, along with the continued benefits of some permanent cost reductions, allowed us to generate $115.0 million in adjusted EBITDA for the full year, compared to $90.1 million in 2009."

North American Glass sales increased 7.7 percent to $562.7 million from $522.6 million in 2009 (see Table 5). The increase in sales was primarily attributable to a 21.9 percent increase in sales to Crisa customers and a 6.2 percent increase in sales to U.S. and Canadian retail glassware customers.  North American Other sales decreased 1.2 percent to $86.0 million from $87.0 million in 2009, as shipments of Syracuse China products declined 14.1 percent, sales of World Tableware products increased 6.4 percent and Traex sales were even with the prior year.  International sales increased 12.2 percent to $162.7 million from $145.0 million as the result of increased sales at Libbey China of 29.4 percent, 12.8 percent higher sales at Crisal and an increase in sales of 10.8 percent at Royal Leerdam.  

Libbey reported income from operations of $68.8 million during 2010, compared to income from operations of $36.6 million for 2009.  Adjusted income from operations, excluding special items (see Table 2), was $74.0 million for the full year 2010, compared to $43.4 million in 2009.  Primary contributors to the improvement in adjusted income from operations were higher sales and lower natural gas costs.

Earnings before interest and taxes (EBIT) were $126.8 million for 2010, compared to EBIT of $40.7 million in 2009.  The improvement in EBIT was primarily a result of the $58.3 million gain on redemption of debt in 2010 and of the higher income from operations.  Adjusted EBIT (see Table 2) for 2010 was $73.8 million, compared to $47.7 million for the full year 2009.  Adjusted EBIT (see Table 5) was $54.9 million for North American Glass, compared to $36.9 million in 2009.  The North American Other segment had adjusted EBIT for 2010 of $15.1 million, compared to $13.6 million in 2009.  The International segment reported adjusted EBIT of $3.9 million, compared to adjusted loss before interest and taxes of $2.9 million in 2009.  

For the twelve months ended December 31, 2010, adjusted EBITDA (see Table 3) was $115.0 million, compared to $90.1 million during 2009.  This resulted in an adjusted EBITDA margin of 14.4 percent, which was the highest adjusted EBITDA margin since 2003.  

Interest expense decreased $21.5 million compared to the year-ago period.  Contributing to the decrease in interest expense were lower interest rates and lower debt.

The effective tax rate was 14.2 percent for 2010, compared to a negative 10.6 percent in 2009.  The rate was influenced principally by changes in valuation allowances and the mix of earnings with differing statutory rates.  

The Company recorded net income of $70.1 million, or $3.51 per diluted share for 2010, compared to a net loss of $28.8 million, or $1.90 per diluted share, in the year-ago period.  The Company reported that its adjusted net income was $17.1 million and its adjusted net income per diluted share for the full year 2010, as detailed in the attached Table 2, was $0.86 per diluted share.  This compares to the adjusted net loss of $19.1 million and adjusted diluted loss per share of $1.26 in 2009.

Working Capital and Liquidity

As of December 31, 2010, working capital, defined as inventories and accounts receivable less accounts payable, increased by $10.3 million to $181.2 million from $170.9 million at December 31, 2009, as higher sales resulted in increased receivables and inventories were also increased in order to service the higher demand.  Working capital as a percentage of net sales was 22.6 percent in 2010, which compares to working capital as a percentage of 2009 net sales of 22.8 percent.

Free cash flow, as detailed in the attached Table 4, was a source of $49.4 million in the fourth quarter of 2010, compared to a source of $31.7 million in the fourth quarter of 2009.  This represents the highest free cash flow during the fourth quarter in the Company's history.  The primary contributors were lower cash interest payments and larger reductions in receivables and inventories during the 2010 fourth quarter, compared to the prior-year quarter.  This was partially offset by higher capital expenditures in the fourth quarter of 2010.  

Libbey reported that it had available capacity of $65.2 million under its Asset Backed Loan (ABL) credit facility as of December 31, 2010, and cash on hand of $76.3 million.  This compares to availability of $79.2 million and cash on hand of $55.1 million at December 31, 2009.

Webcast Information

Libbey will hold a conference call for investors on Wednesday, February 9, 2011, at 11 a.m. Eastern Standard 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 30 days after the conclusion of the call.

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 only reflect 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 15, 2010.  Important factors potentially affecting performance include but are not limited to 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, corrugated packaging, and other purchased materials; higher indebtedness related to the Crisa acquisition; higher 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 Crisa, 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.:

• is the largest manufacturer of glass tableware in the western hemisphere and one of the largest glass tableware manufacturers in the world;
• is expanding its international presence with facilities in China, Mexico, the Netherlands and Portugal;
• is the leading manufacturer of tabletop products for the U.S. foodservice industry; and
• supplies products to foodservice, retail, industrial and business-to-business customers in over 100 countries.

Based in Toledo, Ohio, since 1888, 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 the leading producer of glass tableware in Mexico and Latin America.  Its Royal Leerdam 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 holloware and an assortment of ceramic dinnerware and other tabletop items principally for foodservice establishments in the United States.  Its Traex subsidiary, located in Wisconsin, designs, manufactures and distributes an extensive line of plastic items for the foodservice industry.  In 2010, Libbey Inc.'s net sales totaled $799.8 million.

SOURCE Libbey Inc.