Libbey Inc. Announces Second Quarter 2015 Financial Results

Jul 30, 2015, 07:45 ET from Libbey Inc.

TOLEDO, Ohio, July 30, 2015 /PRNewswire/ --

  • Company sees solid growth of 6.5 percent (constant currency) in foodservice despite continued weakness in restaurant traffic
  • Total Company sales increased 4.5 percent (constant currency) over prior year through the first half
  • Company reaffirms prior guidance at the low end of the range

Libbey Inc. (NYSE MKT: LBY), one of the largest glass tableware manufacturers in the world, today reported results for the second quarter-ended June 30, 2015.

Second Quarter Financial Highlights

  • Net sales for the second quarter were $214.1 million, compared to $223.5 million for the second quarter of 2014, a decrease of 4.2 percent (or an increase of 1.4 percent excluding currency fluctuation).
  • Net income for the second quarter of 2015 was $14.4 million, compared to a net loss of $25.2 million in the prior-year second quarter. Net income during the second quarter of 2014 included a $47.2 million charge for the retirement of debt during the period. Adjusted net income (see Table 1) for the second quarter of 2015 was $17.1 million, compared to $22.6 million recorded in the second quarter of 2014.
  • Adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA) (see Table 3) for the second quarter of 2015 were $34.5 million, compared to $41.0 million in the prior-year quarter.
  • In the second quarter of 2015, Libbey repurchased 153,068 shares at an average price of $40.05 and paid a quarterly dividend of $0.11 per share.

"While net sales growth of 1.4 percent on a constant currency basis was below our expectations for the quarter, we continued to see strong growth of 6.5 percent in our core foodservice business. This is the fourth consecutive quarter in which foodservice traffic was down, yet Libbey has been able to outperform the industry in each quarter by leveraging our financial strength and successful execution of proactive growth strategies. In the second quarter, however, a handful of unanticipated costs and a more inconsistent global backdrop than expected affected our overall results," said Stephanie A. Streeter, chief executive officer of Libbey Inc. "While these results are disappointing, they have not caused us to revise our outlook for the remainder of 2015. As we look forward, we believe that our strategic growth investments across the business are starting to gain traction and should support our performance in the second half of the year. As a result, we reaffirm our expectations, albeit at the low end of the range, of top-line growth of 5 to 6 percent on a constant currency basis for the full-year 2015 and Adjusted EBITDA margins of approximately 15 percent."

Second Quarter Segment Sales and Operational Review

  • Net sales in the Americas segment were $149.5 million, compared to $154.5 million in the second quarter of 2014, a decrease of 3.2 percent (or an increase of 0.3 percent excluding currency impact). The reduction in net sales was primarily in the retail and business-to-business channels in Latin America, partially offset by increases in the foodservice channel.
  • Net sales in the EMEA segment decreased 18.3 percent (or an increase of 0.2 percent excluding currency impact) to $32.1 million, compared to $39.3 million in the second quarter of 2014.
  • Net sales in the U.S. Sourcing segment were $22.6 million in the second quarter of 2015, compared to $21.4 million in the prior-year quarter, an increase of 5.4 percent.
  • Net sales in Other were $9.9 million in the second quarter of 2015, compared to $8.4 million in the comparable period last year, reflecting an 18.2 percent increase in sales (18.4 percent excluding currency impact) in the Asia Pacific region.
  • Interest expense was $4.5 million in the second quarter of 2015, a decrease of $1.0 million, compared to $5.5 million in the year-ago period.
  • The Company's effective tax rate was 14.4 percent for the quarter-ended June 30, 2015, compared to (10.3) percent for the quarter-ended June 30, 2014. 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 and other activity in jurisdictions with recorded valuation allowances.

Six-Month Financial Highlights

  • Net sales for the first six months of 2015 were $401.4 million, compared to $405.1 million for the first half of 2014, a decrease of 0.9 percent (or an increase of 4.5 percent excluding currency fluctuation).
  • Net income for the first six months of 2015 was $17.5 million, compared to a net loss of $28.6 million during the first half of 2014. Net income for the first six months of 2014 included a $47.2 million charge for the retirement of debt during the period. Adjusted net income (see Table 2) for the first six months of 2015 was $20.7 million, compared to $25.1 million recorded in the first six months of 2014.
  • Adjusted EBITDA (see Table 3) was $54.2 million for the first six months of 2015, compared to $61.1 million for the first half of 2014.
  • Year to date in 2015, Libbey has repurchased 412,473 shares at an average price of $37.03.

Six-Month Segment Sales and Operational Review

  • Sales in the Americas segment were $277.9 million, compared to $276.4 million in the first six months of 2014, an increase of 0.5 percent (or 3.7 percent excluding currency fluctuation). Sales performance was led by a 5.3 percent increase in sales within our United States and Canada region, partially offset by an 8.9 percent decrease in our Latin America region (or 0.2 percent increase excluding currency impact).
  • Sales in the EMEA segment decreased 17.8 percent (or flat excluding currency impact) to $60.6 million, compared to $73.7 million in the first half of 2014.
  • Sales in the U.S. Sourcing segment increased 12.3 percent to $44.0 million, compared to $39.1 million in the first half of 2014.
  • Sales in Other were $19.0 million in the first six months of 2015, compared to $15.9 million in the prior-year period. This increase was the result of a 19.4 percent increase in sales (20.5 percent excluding currency impact) in the Asia Pacific region.
  • Interest expense in the first six months of 2015 was $9.1 million, a decrease of $4.1 million compared to $13.2 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.
  • Our effective tax rate was 17.5 percent for the six months ended June 30, 2015, compared to (4.3) percent for the six months ended June 30, 2014. The effective tax rate was generally influenced by foreign earnings with differing statutory rates, foreign withholding tax, accruals related to uncertain tax positions, intra-period tax allocation and other activity in jurisdictions with recorded valuation allowances.

New High-End Glassware Launch

On July 6, 2015, Libbey disclosed details surrounding the Company's previously announced $30 million investment at its Shreveport, Louisiana, manufacturing facility with the launch of its premium Perfect Signature™ collection. Manufacturing of the new glassware is anticipated to reach full production during the fourth quarter of this year and is expected to launch in select retail and foodservice markets during the fourth quarter, with a broader rollout planned for 2016. The new high brilliance, elegant glass collection contains the Company's unique ClearFire™ glass formula and represents the culmination of over two years of research and development, planning, installation and testing of new production equipment. Perfect Signature™ features thin rims, tall stems, a flat foot and unique shapes and will be backed by Libbey's 25-year consumer warranty, which guarantees against chipping.

Balance Sheet and Liquidity

  • Libbey reported that it had available capacity of $76.9 million under its ABL credit facility as of June 30, 2015, with $14.0 million of loans currently outstanding. The Company also had cash on hand of $31.4 million as of June 30, 2015.
  • As of June 30, 2015, working capital, defined as inventories and accounts receivable less accounts payable, was $221.6 million, an increase of $13.7 million compared to $207.9 million at June 30, 2014 (see Table 5). The increase was primarily a result of higher inventories and lower accounts payable, partially offset by lower accounts receivable.

Sherry Buck, chief financial officer, concluded: "We were able to generate free cash flow of $11.2 million during the quarter while still prioritizing several planned capital investments across the business designed to drive future growth. During the second half of this year, we expect to see continued strength in our gross margins and will continue to emphasize returns to shareholders through our balanced capital allocation plan."

Webcast Information

Libbey will hold a conference call for investors on Thursday, July 30, 2015, at 11 a.m. Eastern Daylight 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 2014, Libbey Inc.'s net sales totaled $852.5 million. Additional information is available at www.libbey.com.

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 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 June 30,


2015


2014





Net sales

$

214,051



$

223,536


Freight billed to customers

735



893


Total revenues

214,786



224,429


Cost of sales (1)

157,896



164,162


Gross profit

56,890



60,267


Selling, general and administrative expenses (1)

36,390



30,726


Income from operations

20,500



29,541


Loss on redemption of debt  (1)



(47,191)


Other income (1)

846



322


Earnings (loss) before interest and income taxes

21,346



(17,328)


Interest expense

4,538



5,486


Income (loss) before income taxes

16,808



(22,814)


Provision for income taxes (1)

2,414



2,354


Net income (loss)

$

14,394



$

(25,168)






Net income (loss) per share:




Basic

$

0.66



$

(1.16)


Diluted

$

0.65



$

(1.16)


Dividends per share

$

0.11



$






Weighted average shares:




Outstanding

21,775



21,673


Diluted

22,234



21,673


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

 

 

Libbey Inc.

Condensed Consolidated Statements of Operations

(dollars in thousands, except per-share amounts)

(unaudited)



Six months ended June 30,


2015


2014





Net sales

$

401,416



$

405,117


Freight billed to customers

1,341



1,707


Total revenues

402,757



406,824


Cost of sales (1)

303,372



314,218


Gross profit

99,385



92,606


Selling, general and administrative expenses (1)

70,789



59,604


Income from operations

28,596



33,002


Loss on redemption of debt (1)



(47,191)


Other income (1)

1,673




Earnings (loss) before interest and income taxes

30,269



(14,189)


Interest expense

9,061



13,187


Income (loss) before income taxes

21,208



(27,376)


Provision for income taxes (1)

3,702



1,176


Net income (loss)

$

17,506



$

(28,552)






Net income (loss) per share:




Basic

$

0.80



$

(1.32)


Diluted

$

0.78



$

(1.32)


Dividends per share

$

0.22



$






Weighted average shares:




Outstanding

21,827



21,600


Diluted

22,305



21,600


(1) Refer to Table 2 for Special Items detail.

 

 

Libbey Inc.

Condensed Consolidated Balance Sheets

(dollars in thousands)



June 30, 2015


December 31, 2014


(unaudited)



ASSETS:




Cash and cash equivalents

$

31,352



$

60,044


Accounts receivable — net

96,694



91,106


Inventories — net

193,728



169,828


Other current assets

27,169



27,701


Total current assets

348,943



348,679






Pension asset

848



848


Purchased intangibles — net

 

16,937



17,771


Goodwill

164,112



164,112


Deferred income taxes

5,521



5,566


Other assets

14,168



13,976


Total other assets

201,586



202,273


Property, plant and equipment — net

282,902



277,978


Total assets

$

833,431



$

828,930






LIABILITIES AND SHAREHOLDERS' EQUITY:




Accounts payable

$

68,865



82,485


Salaries and wages

29,630



29,035


Accrued liabilities

53,528



42,638


Accrued income taxes

1,103



2,010


Pension liability (current portion)

1,435



1,488


Non-pension postretirement benefits (current portion)

4,800



4,800


Derivative liability

2,296



2,653


Deferred income taxes

3,633



3,633


Long-term debt due within one year

4,577



7,658


Total current liabilities

169,867



176,400






Long-term debt

447,633



436,264


Pension liability

50,050



56,462


Non-pension postretirement benefits

60,442



63,301


Deferred income taxes

5,760



5,893


Other long-term liabilities

14,810



13,156


Total liabilities

748,562



751,476






Common stock and capital in excess of par value

326,700



331,609


Treasury stock

(5,884)



(1,060)


Retained deficit

(101,942)



(114,648)


Accumulated other comprehensive loss

(134,005)



(138,447)


Total shareholders' equity

84,869



77,454


Total liabilities and shareholders' equity

$

833,431



$

828,930


 

 

Libbey Inc.

Condensed Consolidated Statements of Cash Flows

(dollars in thousands)

(unaudited)



Three months ended June 30,


2015


2014

Operating activities:




Net income (loss)

$

14,394



$

(25,168)


Adjustments to reconcile net income (loss) to net cash provided by operating activities:




Depreciation and amortization

10,469



10,592


Loss on asset sales and disposals

92



17


Change in accounts receivable

(1,802)



(19,481)


Change in inventories

(9,699)



(8,168)


Change in accounts payable

(5,002)



6,667


Accrued interest and amortization of discounts and finance fees

390



(5,911)


Call premium on senior notes



37,348


Write-off of finance fees on senior notes



9,086


Pension & non-pension postretirement benefits

895



1,397


Restructuring



(46)


Accrued liabilities & prepaid expenses

14,978



4,647


Income taxes

422



(770)


Share-based compensation expense

2,515



1,634


Other operating activities

90



(1,491)


Net cash provided by operating activities

27,742



10,353






Investing activities:




Additions to property, plant and equipment

(16,577)



(11,934)


Proceeds from asset sales and other

2




Net cash used in investing activities

(16,575)



(11,934)






Financing activities:




Borrowings on ABL credit facility

30,400



21,300


Repayments on ABL credit facility

(20,500)



(14,300)


Other repayments

(12)



(65)


Other borrowings



1,964


Payments on 6.875% senior notes



(405,000)


Proceeds from Term Loan B



438,900


Repayments on Term Loan B

(1,100)




Call premium on senior notes



(37,348)


Stock options exercised

1,141



1,786


Debt issuance costs and other



(6,868)


Dividends

(2,398)




Treasury shares purchased

(6,131)




Net cash provided by financing activities

1,400



369






Effect of exchange rate fluctuations on cash

169



(52)


Increase (decrease) in cash

12,736



(1,264)






Cash & cash equivalents at beginning of period

18,616



24,473


Cash & cash equivalents at end of period

$

31,352



$

23,209


 

 


Libbey Inc.

Condensed Consolidated Statements of Cash Flows

(dollars in thousands)

(unaudited)



Six months ended June 30,


2015


2014

Operating activities:




Net income (loss)

$

17,506



$

(28,552)


Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:




Depreciation and amortization

20,653



21,268


Loss on asset sales and disposals

303



13


Change in accounts receivable

(7,449)



(14,403)


Change in inventories

(26,419)



(19,363)


Change in accounts payable

(7,341)



1,352


Accrued interest and amortization of discounts and finance fees

602



1,345


Call premium on senior notes



37,348


Write-off of finance fees on senior notes



9,086


Pension & non-pension postretirement benefits

1,898



2,769


Restructuring



(289)


Accrued liabilities & prepaid expenses

12,102



(7,722)


Income taxes

(938)



(3,923)


Share-based compensation expense

4,644



2,637


Other operating activities

(1,055)



(1,586)


Net cash provided by (used in) operating activities

14,506



(20)






Investing activities:




Additions to property, plant and equipment

(33,236)



(21,835)


Proceeds from furnace malfunction insurance recovery



2,350


Proceeds from asset sales and other

2



4


Net cash used in investing activities

(33,234)



(19,481)






Financing activities:




Borrowings on ABL credit facility

44,500



21,300


Repayments on ABL credit facility

(30,500)



(14,300)


Other repayments

(3,267)



(115)


Other borrowings



1,964


Payments on 6.875% senior notes



(405,000)


Proceeds from Term Loan B



438,900


Repayments on Term Loan B

(2,200)




Call premium on senior notes



(37,348)


Stock options exercised

2,989



2,122


Debt issuance costs and other



(6,868)


Dividends

(4,800)




Treasury shares purchased

(15,275)




Net cash (used in) provided by financing activities

(8,553)



655






Effect of exchange rate fluctuations on cash

(1,411)



(153)


Decrease in cash

(28,692)



(18,999)






Cash & cash equivalents at beginning of period

60,044



42,208


Cash & cash equivalents at end of period

$

31,352



$

23,209


 

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 June 30,



2015


2014



As Reported


Special Items


As Adjusted


As Reported


Special Items


As Adjusted

Net sales


$

214,051



$



$

214,051



$

223,536



$



$

223,536


Freight billed to customers


735





735



893





893


Total revenues


214,786





214,786



224,429





224,429


Cost of sales


157,896



223



157,673



164,162



576



163,586


Gross profit


56,890



(223)



57,113



60,267



(576)



60,843


Selling, general and administrative expenses


36,390



3,015



33,375



30,726





30,726


Income from operations


20,500



(3,238)



23,738



29,541



(576)



30,117


Loss on redemption of debt








(47,191)



(47,191)




Other income


846



566



280



322





322


Earnings (loss) before interest and income taxes


21,346



(2,672)



24,018



(17,328)



(47,767)



30,439


Interest expense


4,538





4,538



5,486





5,486


Income (loss) before income taxes


16,808



(2,672)



19,480



(22,814)



(47,767)



24,953


Provision for income taxes


2,414



30



2,384



2,354





2,354


Net income (loss)


$

14,394



$

(2,702)



$

17,096



$

(25,168)



$

(47,767)



$

22,599















Net income (loss) per share:













Basic


$

0.66



$

(0.12)



$

0.79



$

(1.16)



$

(2.20)



$

1.04


Diluted


$

0.65



$

(0.12)



$

0.77



$

(1.16)



$

(2.20)



$

1.02















Weighted average shares:













Outstanding


21,775







21,673





21,673


Diluted


22,234







21,673





22,164


 



Three months ended June 30, 2015


Three months ended June 30, 2014

Special Items Detail  - (Income) Expense:


Environmental Obligation (1)


Reorganization (2)


Derivatives (3)


Total
Special
Items


Debt Costs(4)


Furnace
Malfunction (5)


Total
Special
Items

Cost of sales


$

223



$



$



$

223



$



$

576



$

576


SG&A




3,015





3,015








Loss on redemption of debt










47,191





47,191


Other (income) expense






(566)



(566)








Income taxes




(140)



170



30








Total Special Items


$

223



$

2,875



$

(396)



$

2,702



$

47,191



$

576



$

47,767


(1) 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.

(2) Management reorganization to support our growth strategy.

(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) 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.

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

 

Table 2













Reconciliation of "As Reported" Results to "As Adjusted" Results - Six Months



(dollars in thousands, except per-share amounts)







(unaudited)





Six months ended June 30,



2015


2014



As Reported


Special Items


As Adjusted


As Reported


Special Items


As Adjusted

Net sales


$

401,416



$



$

401,416



$

405,117



$



$

405,117


Freight billed to customers


1,341





1,341



1,707





1,707


Total revenues


402,757





402,757



406,824





406,824


Cost of sales


303,372



223



303,149



314,218



6,867



307,351


Gross profit


99,385



(223)



99,608



92,606



(6,867)



99,473


Selling, general and administrative expenses


70,789



3,250



67,539



59,604





59,604


Income from operations


28,596



(3,473)



32,069



33,002



(6,867)



39,869


Loss on redemption of debt








(47,191)



(47,191)




Other income (expense)


1,673



167



1,506





70



(70)


Earnings (loss) before interest and income taxes


30,269



(3,306)



33,575



(14,189)



(53,988)



39,799


Interest expense


9,061





9,061



13,187





13,187


Income (loss) before income taxes


21,208



(3,306)



24,514



(27,376)



(53,988)



26,612


Provision for income taxes


3,702



(90)



3,792



1,176



(341)



1,517


Net income (loss)


$

17,506



$

(3,216)



$

20,722



$

(28,552)



$

(53,647)



$

25,095















Net income (loss) per share:













Basic


$

0.80



$

(0.15)



$

0.95



$

(1.32)



$

(2.48)



$

1.16


Diluted


$

0.78



$

(0.14)



$

0.93



$

(1.32)



$

(2.48)



$

1.14















Weighted average shares:













Outstanding


21,827







21,600





21,600


Diluted


22,305







21,600





22,066


 



Six months ended June 30, 2015


Six months ended June 30, 2014


Special Items Detail  - (Income) Expense:


Reorganization(1)


Executive Retirement


Derivatives(2)


Environmental Obligation(3)


Total
Special
Items


Restructuring
Charge(4)


Furnace

Malfunction(5)


Derivatives(2)


Debt
Costs(6)


Total
Special
Items

Cost of sales


$



$



$



$

223



$

223



$

985



$

5,882



$



$



$

6,867


SG&A


3,015



235







3,250












Loss on redemption of debt


















47,191



47,191


Other (income) expense






(167)





(167)







(70)





(70)


Income taxes


(140)





50





(90)



(296)



(45)







(341)


Total Special Items


$

2,875



$

235



$

(117)



$

223



$

3,216



$

689



$

5,837



$

(70)



$

47,191



$

53,647


(1) Management reorganization to support our growth strategy.

(2) 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.

(3) 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.

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

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

(6) 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.

 


Table 3









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

(dollars in thousands)









(unaudited)











Three months ended June 30,


Six months ended June 30,



2015


2014


2015


2014

Reported net income (loss)


$

14,394



$

(25,168)



$

17,506



$

(28,552)


Add:









Interest expense


4,538



5,486



9,061



13,187


Provision for income taxes


2,414



2,354



3,702



1,176


Depreciation and amortization


10,469



10,592



20,653



21,268


EBITDA


31,815



(6,736)



50,922



7,079


Add: Special items before interest and taxes


2,672



47,767



3,306



53,988


Adjusted EBITDA


$

34,487



$

41,031



$

54,228



$

61,067


 

 

Table 4









Reconciliation of Net Cash Provided by (Used in) Operating Activities to Free Cash Flow

(dollars in thousands)









(unaudited)











Three months ended June 30,


Six months ended June 30,



2015


2014


2015


2014

Net cash provided by (used in) operating activities


$

27,742



$

10,353



$

14,506



$

(20)


Capital expenditures


(16,577)



(11,934)



(33,236)



(21,835)


Proceeds from furnace malfunction insurance recovery








2,350


Proceeds from asset sales and other


2





2



4


Free Cash Flow


$

11,167



$

(1,581)



$

(18,728)



$

(19,501)


 

 

Table 5







Reconciliation to Working Capital





(dollars in thousands)







(unaudited)









June 30, 2015


June 30, 2014


December 31, 2014

Add:







Accounts receivable


$

96,694



$

106,345



$

91,106


Inventories


193,728



182,100



169,828


Less: Accounts payable


68,865



80,546



82,485


Working Capital


$

221,557



$

207,899



$

178,449


 

 


Table 6









Summary Business Segment Information

(dollars in thousands)

(unaudited)


Three months ended June 30,


Six months ended June 30,

Net Sales:


2015


2014


2015


2014









Americas (1)


$

149,491



$

154,450



$

277,863



$

276,375


EMEA (2)


32,126



39,331



60,635



73,729


U.S. Sourcing (3)


22,558



21,396



43,957



39,130


Other (4)


9,876



8,359



18,961



15,883


Consolidated


$

214,051



$

223,536



$

401,416



$

405,117











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

















Americas (1)


$

28,557



$

32,986



$

44,880



$

47,975


EMEA (2)


1,786



1,910



1,020



2,163


U.S. Sourcing (3)


1,761



2,301



3,386



3,169


Other (4)


1,076



869



2,946



1,314


Segment EBIT


$

33,180



$

38,066



$

52,232



$

54,621











Reconciliation of Segment EBIT
to Net Income (Loss):









Segment EBIT


$

33,180



$

38,066



$

52,232



$

54,621


Retained corporate costs (6)


(9,162)



(7,627)



(18,657)



(14,822)


Consolidated Adjusted EBIT


24,018



30,439



33,575



39,799


Loss on redemption of debt




(47,191)





(47,191)


Furnace malfunction




(576)





(5,882)


Environmental obligation


(223)





(223)




Reorganization charges


(3,015)





(3,015)




Restructuring charges








(985)


Derivatives


566





167



70


Executive retirement






(235)




Special items before interest and taxes


(2,672)



(47,767)



(3,306)



(53,988)


Interest expense


(4,538)



(5,486)



(9,061)



(13,187)


Income taxes


(2,414)



(2,354)



(3,702)



(1,176)


Net income (loss)


$

14,394



$

(25,168)



$

17,506



$

(28,552)











Depreciation & Amortization:









Americas (1)


$

6,411



$

5,851



$

12,482



$

11,810


EMEA (2)


2,137



2,738



4,314



5,364


U.S. Sourcing (3)


6



7



12



14


Other (4)


1,481



1,628



2,972



3,272


Corporate


434



368



873



808


Consolidated


$

10,469



$

10,592



$

20,653



$

21,268


(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.



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