Libbey Inc. Announces Record Full-year 2012 Results; Also Announces Intent to Redeem $45.0 Million of Its 6.875 Percent Senior Secured Notes Due 2020 and Tentative Realignment of North American Production
TOLEDO, Ohio, Feb. 21, 2013 /PRNewswire/ --
- Fourth Quarter Included Sales of $219.1 Million, Income from Operations of $13.1 Million and Adjusted EBITDA of $29.9 Million
- Free Cash Flow Generation of $36.7 Million in the Fourth Quarter of 2012
- Working Capital as a Percentage of Last Twelve Months' Sales was an All-Time Record Low 20.9 Percent
- Debt Net of Cash Reduced to $398.9 Million, Resulting in Net Debt to Adjusted EBITDA of 3.0 Times
- Company Announces Tentative Plans to Realign Production and Reduce Capacity in Shreveport Facility to Further Improve Cost Structure
Libbey Inc. (NYSE MKT: LBY) reported results today for the fourth quarter of 2012 and the full year.
Fourth-Quarter Highlights
- Sales for the fourth quarter were $219.1 million, compared to $214.8 million for the fourth quarter of 2011, an increase of 2.0 percent (1.9 percent excluding currency fluctuation).
- Sales in the Glass Operations segment were $201.3 million, compared to $199.2 million in the fourth quarter of 2011, an increase of 1.1 percent (0.9 percent excluding currency fluctuation). Sales performance was led by a 5.0 percent increase in sales within our U.S. and Canada sales region.
- Income from operations grew 34.8 percent, compared to the fourth quarter of 2011, increasing to $13.1 million from $9.7 million in the year-ago quarter.
- Adjusted EBITDA increased 40.2 percent to $29.9 million, the highest fourth-quarter adjusted EBITDA since 2007. In the fourth quarter of 2011, adjusted EBITDA was $21.3 million.
"We are pleased with this quarter's results, driven in large part by the increased focus on improving margins and defending and growing our business in our key markets, the core of our recently announced strategic plan. Our cost improvements, coupled with solid sales growth in the U.S. and Canada sales region, led to exceptionally strong adjusted EBITDA. Four strong quarters propelled us to 2012 full year results that included all-time records in sales, income from operations and adjusted EBITDA," said Stephanie A. Streeter, chief executive officer of Libbey Inc. "Our commitment to improving our cost structure, leveraging our advantaged businesses and strengthening our balance sheet was reflected in our results. We will continue efforts to improve our cost structure. We believe these efforts, in combination with our overall productivity improvements, will enable strengthened financial and operational performance in 2013."
Fourth-Quarter Regional Sales and Operational Review
- Glass Operations segment sales were led by a 5.0 percent increase in sales within our U.S. and Canada sales region and a 0.8 percent increase in sales within our China sales region (sales were essentially unchanged during the quarter excluding currency impact). Sales within our Mexico sales region were lower by 5.6 percent, compared to the prior-year quarter (lower by 9.3 percent excluding the impact of currency). The European sales region saw a 3.1 percent decrease in sales (a 0.8 percent increase excluding currency fluctuation).
- Sales to U.S. and Canadian foodservice glassware customers increased by 4.0 percent. Glassware sales to U.S. and Canadian retail customers increased 6.5 percent during the fourth quarter of 2012, while sales to business-to-business customers in the U.S. and Canada increased 3.7 percent.
- Sales in the Other Operations segment increased 13.4 percent to $17.8 million, compared to $15.7 million in the prior-year quarter. This increase was driven by solid sales increases to both Syracuse China and World Tableware customers during the quarter.
- Interest expense decreased by $1.9 million to $8.6 million, compared to $10.5 million in the year-ago period, primarily driven by lower interest rates.
- Our effective tax rate was 67.7 percent for the quarter-ended December 31, 2012, compared to a benefit of 296.6 percent for the quarter-ended December 31, 2011. The effective tax rate was influenced by non-deductible foreign currency differences, an increase in foreign withholding taxes in jurisdictions with recorded valuation allowances, activity in jurisdictions with recorded valuation allowances, and changes in the mix of earnings with differing statutory rates.
Twelve-Month Highlights
- Full-year sales for 2012 were $825.3 million, compared to $817.1 million in 2011, an increase of 1.0 percent (or 3.1 percent excluding currency fluctuation).
- Sales in the Glass Operations segment were $753.0 million, compared to $746.6 million in 2011, an increase of 0.9 percent (3.1 percent excluding currency fluctuation). Contributing to the increase was a 24.0 percent increase in sales within our China sales region (21.3 percent excluding currency impact) and a 4.1 percent increase in our U.S. and Canada sales region.
- Income from operations in 2012 grew 28.1 percent, compared to the full year 2011, increasing to $81.3 million from $63.5 million in 2011.
- Adjusted EBITDA increased 17.1 percent to an all-time high for any year of $132.4 million, compared to $113.1 million for 2011.
Twelve-Month Regional Sales and Operational Review
- Primary contributors to increased Glass Operations sales were a 24.0 percent increase in sales within our China sales region (21.3 percent excluding currency impact) and a 4.1 percent increase in sales within our U.S. and Canada sales region. We reported sales that were 1.6 percent lower within our Mexico sales region; however, excluding currency impact, net sales in the Mexico sales region were 3.1 percent higher compared to the prior year. We saw an 8.3 percent decrease in sales within our European sales region (only a 0.6 percent decrease excluding currency fluctuation).
- Sales to U.S. and Canadian foodservice glassware customers increased by 5.1 percent. Glassware sales to U.S. and Canadian retail customers increased 3.6 percent during 2012, while sales to business-to-business customers in the U.S. and Canada were 3.1 percent higher.
- Sales in the Other Operations segment were $73.0 million, compared to $71.2 million in the prior year. The prior year included net sales of $4.8 million of Traex® products that, as a result of the sale of substantially all of the assets of Traex in April 2011, were no longer offered for sale by the Company in 2012. More than offsetting the absence of Traex® product sales in 2012 were increased sales to World Tableware customers of 9.0 percent and an even stronger 12.6 percent increase in sales to Syracuse China customers.
- Interest expense decreased by $5.7 million to $37.7 million, compared to $43.4 million in the prior year, the result of lower interest rates in the last seven months of the year.
- Our effective tax rate was 45.0 percent for the year-ended December 31, 2012, compared to 6.5 percent in 2011. The effective tax rate was heavily influenced by non-deductible foreign currency losses related to our Mexican operations, an increase in foreign withholding taxes in jurisdictions with recorded valuation allowances, activity in jurisdictions with recorded valuation allowances and changes in the mix of earnings with differing statutory rates.
Working Capital and Liquidity
- As of December 31, 2012, working capital, defined as inventories and accounts receivable less accounts payable, was $172.7 million, compared to $175.1 million at December 31, 2011. This decrease in working capital was primarily the result of lower accounts receivable and higher accounts payable.
- Libbey reported that it had available capacity of $68.6 million under its ABL credit facility as of December 31, 2012, with no loans currently outstanding. The Company also had cash on hand of $67.2 million at December 31, 2012.
Partial Redemption of Senior Notes
Libbey Inc. announced that its wholly owned subsidiary Libbey Glass Inc. intends to call for redemption, during the second quarter of 2013, an aggregate principal amount of $45.0 million of its outstanding 6.875 percent Senior Secured Notes Due 2020 (the "Notes"), on a pro rata basis in accordance with the terms of the indenture agreement dated May 15, 2012 (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 $405.0 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 and, if needed, borrowings under its ABL credit agreement.
Stephanie A. Streeter, Libbey's chief executive officer, said, "We are pleased that, as a result of our outstanding free cash flow generation in 2012, we are in a position to reduce our outstanding senior note debt by $45 million. We continue to make significant progress in our ongoing efforts to reduce our leverage."
Tentative Realignment of North American Production
As part of its ongoing efforts to improve Libbey's cost structure and overall financial position, the Company today also announced a tentative plan to exit sales of certain glassware items, realign production in North America and reduce its manufacturing capacity at its Shreveport, LA, facility. The tentative plan will be further discussed with the United Steelworkers (USW), which represents Libbey production and maintenance employees in Shreveport. The realignment, if implemented as currently contemplated, would result in a reduction in Shreveport affecting approximately 200 positions. Some production would be relocated to Libbey's facilities in Toledo, Ohio, and Monterrey, Mexico. Existing staff would handle the relocated production in Toledo and Monterrey. The vast majority of Libbey customers would not be impacted.
"These changes would enable Libbey to reduce manufacturing capacity and improve asset utilization across our North American facilities, while continuing to meet the needs of our customers worldwide," Streeter said. "We regret the impact these changes would have on our affected Shreveport associates, but they are necessary to strengthen Libbey's financial and competitive position."
Webcast Information
Libbey will hold a conference call for investors on Thursday, February 21, 2013, 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 seven days after the conclusion of the call.
About Libbey Inc.
Based in Toledo, Ohio, since 1888, 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 8-K filed with the Commission on May 9, 2012. 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, 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, |
|||||||
2012 |
2011 |
||||||
Net sales |
$ |
219,061 |
$ |
214,782 |
|||
Freight billed to customers |
683 |
636 |
|||||
Total revenues |
219,744 |
215,418 |
|||||
Cost of sales (1) |
175,171 |
177,545 |
|||||
Gross profit |
44,573 |
37,873 |
|||||
Selling, general and administrative expenses (1) |
31,505 |
28,180 |
|||||
Income from operations |
13,068 |
9,693 |
|||||
Other income (expense)(1) |
547 |
(276) |
|||||
Earnings before interest and income taxes |
13,615 |
9,417 |
|||||
Interest expense |
8,642 |
10,490 |
|||||
Income (loss) before income taxes |
4,973 |
(1,073) |
|||||
Provision for (benefit from) income taxes |
3,366 |
(3,182) |
|||||
Net income |
$ |
1,607 |
$ |
2,109 |
|||
Net income per share: |
|||||||
Basic |
$ |
0.08 |
$ |
0.10 |
|||
Diluted |
$ |
0.07 |
$ |
0.10 |
|||
Weighted average shares: |
|||||||
Outstanding |
20,999 |
20,437 |
|||||
Diluted |
21,555 |
20,860 |
|||||
(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, |
|||||||
2012 |
2011 |
||||||
Net sales |
$ |
825,287 |
$ |
817,056 |
|||
Freight billed to customers |
3,165 |
2,396 |
|||||
Total revenues |
828,452 |
819,452 |
|||||
Cost of sales (1) |
633,267 |
650,713 |
|||||
Gross profit |
195,185 |
168,739 |
|||||
Selling, general and administrative expenses (1) |
113,896 |
105,545 |
|||||
Special charges (1) |
— |
(281) |
|||||
Income from operations |
81,289 |
63,475 |
|||||
Loss on redemption of debt (1) |
(31,075) |
(2,803) |
|||||
Other income(1) |
188 |
8,031 |
|||||
Earnings before interest and income taxes |
50,402 |
68,703 |
|||||
Interest expense |
37,727 |
43,419 |
|||||
Income before income taxes |
12,675 |
25,284 |
|||||
Provision for income taxes (1) |
5,709 |
1,643 |
|||||
Net income |
$ |
6,966 |
$ |
23,641 |
|||
Net income per share: |
|||||||
Basic |
$ |
0.33 |
$ |
1.17 |
|||
Diluted |
$ |
0.33 |
$ |
1.14 |
|||
Weighted average shares: |
|||||||
Outstanding |
20,876 |
20,170 |
|||||
Diluted |
21,315 |
20,808 |
|||||
(1) Refer to Table 2 for Special Items detail. |
Libbey Inc. |
|||||||
Condensed Consolidated Balance Sheets |
|||||||
(dollars in thousands) |
|||||||
December 31, 2012 |
December 31, 2011 |
||||||
(unaudited) |
|||||||
ASSETS: |
|||||||
Cash and cash equivalents |
$ |
67,208 |
$ |
58,291 |
|||
Accounts receivable — net |
80,850 |
88,045 |
|||||
Inventories — net |
157,549 |
145,859 |
|||||
Other current assets |
13,716 |
15,356 |
|||||
Total current assets |
319,323 |
307,551 |
|||||
Pension asset |
10,196 |
17,485 |
|||||
Goodwill and purchased intangibles — net |
186,794 |
187,772 |
|||||
Property, plant and equipment — net |
258,154 |
264,718 |
|||||
Other assets |
32,618 |
28,881 |
|||||
Total assets |
$ |
807,085 |
$ |
806,407 |
|||
LIABILITIES AND SHAREHOLDERS' EQUITY: |
|||||||
Notes payable |
$ |
— |
$ |
339 |
|||
Accounts payable |
65,712 |
58,759 |
|||||
Accrued liabilities |
84,268 |
88,761 |
|||||
Pension liability (current portion) |
613 |
5,990 |
|||||
Non-pension postretirement benefits (current portion) |
4,739 |
4,721 |
|||||
Other current liabilities |
6,634 |
7,340 |
|||||
Long-term debt due within one year |
4,583 |
3,853 |
|||||
Total current liabilities |
166,549 |
169,763 |
|||||
Long-term debt |
461,884 |
393,168 |
|||||
Pension liability |
60,909 |
122,145 |
|||||
Non-pension postretirement benefits |
71,468 |
68,496 |
|||||
Other liabilities |
21,799 |
25,055 |
|||||
Total liabilities |
782,609 |
778,627 |
|||||
Common stock and capital in excess of par value |
313,586 |
311,188 |
|||||
Retained deficit |
(148,070) |
(155,036) |
|||||
Accumulated other comprehensive loss |
(141,040) |
(128,372) |
|||||
Total shareholders' equity |
24,476 |
27,780 |
|||||
Total liabilities and shareholders' equity |
$ |
807,085 |
$ |
806,407 |
Libbey Inc. |
|||||||
Condensed Consolidated Statements of Cash Flows |
|||||||
(dollars in thousands) |
|||||||
(unaudited) |
|||||||
Three months ended December 31, |
|||||||
2012 |
2011 |
||||||
Operating activities: |
|||||||
Net income |
$ |
1,607 |
$ |
2,109 |
|||
Adjustments to reconcile net income to net cash provided by operating activities: |
|||||||
Depreciation and amortization |
10,574 |
9,923 |
|||||
Loss on asset sales and disposals |
152 |
508 |
|||||
Change in accounts receivable |
13,684 |
4,889 |
|||||
Change in inventories |
14,128 |
23,935 |
|||||
Change in accounts payable |
18,372 |
7,586 |
|||||
Accrued interest and amortization of discounts, warrants and finance fees |
(6,965) |
9,356 |
|||||
Pension & non-pension postretirement benefits |
4,994 |
(488) |
|||||
Accrued liabilities & prepaid expenses |
(7,420) |
(2,965) |
|||||
Income taxes |
2,669 |
(4,032) |
|||||
Share-based compensation expense |
855 |
651 |
|||||
Other operating activities |
(523) |
1,735 |
|||||
Net cash provided by operating activities |
52,127 |
53,207 |
|||||
Investing activities: |
|||||||
Additions to property, plant and equipment |
(15,476) |
(14,963) |
|||||
Net proceeds from sale of Traex |
— |
(522) |
|||||
Proceeds from asset sales and other |
97 |
(42) |
|||||
Net cash used in investing activities |
(15,379) |
(15,527) |
|||||
Financing activities: |
|||||||
Other repayments |
(3,603) |
(9,338) |
|||||
Other borrowings |
— |
365 |
|||||
Proceeds from exercise of warrants |
— |
5,459 |
|||||
Stock options exercised |
938 |
4 |
|||||
Debt issuance costs and other |
(441) |
(1) |
|||||
Net cash used in financing activities |
(3,106) |
(3,511) |
|||||
Effect of exchange rate fluctuations on cash |
219 |
(461) |
|||||
Increase in cash |
33,861 |
33,708 |
|||||
Cash & cash equivalents at beginning of period |
33,347 |
24,583 |
|||||
Cash & cash equivalents at end of period |
$ |
67,208 |
$ |
58,291 |
Libbey Inc. |
|||||||
Condensed Consolidated Statements of Cash Flows |
|||||||
(dollars in thousands) |
|||||||
(unaudited) |
|||||||
Year ended December 31, |
|||||||
2012 |
2011 |
||||||
Operating activities: |
|||||||
Net income |
$ |
6,966 |
$ |
23,641 |
|||
Adjustments to reconcile net income to net cash provided by operating activities: |
|||||||
Depreciation and amortization |
41,471 |
42,188 |
|||||
Loss (gain) on asset sales and disposals |
446 |
(5,941) |
|||||
Change in accounts receivable |
7,187 |
3,076 |
|||||
Change in inventories |
(10,969) |
(221) |
|||||
Change in accounts payable |
6,285 |
403 |
|||||
Accrued interest and amortization of discounts, warrants and finance fees |
(6,433) |
3,047 |
|||||
Call premium on 10% senior notes |
23,602 |
1,203 |
|||||
Write-off of finance fees & discounts on senior notes and ABL |
10,975 |
1,600 |
|||||
Pension & non-pension postretirement benefits |
(76,344) |
(9,074) |
|||||
Restructuring charges |
— |
(828) |
|||||
Accrued liabilities & prepaid expenses |
322 |
1,917 |
|||||
Income taxes |
1,628 |
(11,200) |
|||||
Share-based compensation expense |
3,321 |
5,016 |
|||||
Other operating activities |
40 |
524 |
|||||
Net cash provided by operating activities |
8,497 |
55,351 |
|||||
Investing activities: |
|||||||
Additions to property, plant and equipment |
(32,720) |
(41,420) |
|||||
Net proceeds from sale of Traex |
— |
12,478 |
|||||
Proceeds from asset sales and other |
647 |
5,222 |
|||||
Net cash used in investing activities |
(32,073) |
(23,720) |
|||||
Financing activities: |
|||||||
Other repayments |
(23,116) |
(14,108) |
|||||
Other borrowings |
1,234 |
365 |
|||||
Proceeds from 6.875% senior notes |
450,000 |
— |
|||||
Payments on 10% senior notes |
(360,000) |
(40,000) |
|||||
Call premium on 10% senior notes |
(23,602) |
(1,203) |
|||||
Proceeds from exercise of warrants |
— |
5,459 |
|||||
Stock options exercised |
1,231 |
482 |
|||||
Debt issuance costs and other |
(13,475) |
(463) |
|||||
Net cash provided by (used in) financing activities |
32,272 |
(49,468) |
|||||
Effect of exchange rate fluctuations on cash |
221 |
(130) |
|||||
Increase (decrease) in cash |
8,917 |
(17,967) |
|||||
Cash & cash equivalents at beginning of year |
58,291 |
76,258 |
|||||
Cash & cash equivalents at end of year |
$ |
67,208 |
$ |
58,291 |
In accordance with the SEC's Regulation G, tables 1, 2, 3, 4, 5 and 6 provide non-GAAP measures used in this earnings release and a reconciliation to the most closely related Generally Accepted Accounting Principle (GAAP) measure. Libbey believes that providing supplemental non-GAAP financial information is useful to investors in understanding Libbey's core business and trends. In addition, it is the basis on which Libbey's management assesses performance. Although Libbey believes that the non-GAAP financial measures presented enhance investors' understanding of Libbey's business and performance, these non-GAAP measures should not be considered an alternative to GAAP.
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, |
||||||||||||||||||||||||
2012 |
2011 |
|||||||||||||||||||||||
As Reported |
Special Items |
As Adjusted |
As Reported |
Special Items |
As Adjusted |
|||||||||||||||||||
Net sales |
$ |
219,061 |
$ |
— |
$ |
219,061 |
$ |
214,782 |
$ |
— |
$ |
214,782 |
||||||||||||
Freight billed to customers |
683 |
— |
683 |
636 |
— |
636 |
||||||||||||||||||
Total revenues |
219,744 |
— |
219,744 |
215,418 |
— |
215,418 |
||||||||||||||||||
Cost of sales |
175,171 |
913 |
174,258 |
177,545 |
817 |
176,728 |
||||||||||||||||||
Gross profit |
44,573 |
(913) |
45,486 |
37,873 |
(817) |
38,690 |
||||||||||||||||||
Selling, general and administrative expenses |
31,505 |
4,757 |
26,748 |
28,180 |
1,316 |
26,864 |
||||||||||||||||||
Income from operations |
13,068 |
(5,670) |
18,738 |
9,693 |
(2,133) |
11,826 |
||||||||||||||||||
Other income (expense) |
547 |
— |
547 |
(276) |
179 |
(455) |
||||||||||||||||||
Earnings before interest and income taxes |
13,615 |
(5,670) |
19,285 |
9,417 |
(1,954) |
11,371 |
||||||||||||||||||
Interest expense |
8,642 |
— |
8,642 |
10,490 |
— |
10,490 |
||||||||||||||||||
Income (loss) before income taxes |
4,973 |
(5,670) |
10,643 |
(1,073) |
(1,954) |
881 |
||||||||||||||||||
Provision for (benefit from) income taxes |
3,366 |
— |
3,366 |
(3,182) |
— |
(3,182) |
||||||||||||||||||
Net income |
$ |
1,607 |
$ |
(5,670) |
$ |
7,277 |
$ |
2,109 |
$ |
(1,954) |
$ |
4,063 |
||||||||||||
Net income per share: |
||||||||||||||||||||||||
Basic |
$ |
0.08 |
$ |
(0.27) |
$ |
0.35 |
$ |
0.10 |
$ |
(0.10) |
$ |
0.20 |
||||||||||||
Diluted |
$ |
0.07 |
$ |
(0.26) |
$ |
0.34 |
$ |
0.10 |
$ |
(0.09) |
$ |
0.19 |
||||||||||||
Weighted average shares: |
||||||||||||||||||||||||
Outstanding |
20,999 |
20,437 |
||||||||||||||||||||||
Diluted |
21,555 |
20,860 |
Three months ended December 31, 2012 |
Three months ended December 31, 2011 |
|||||||||||||||||||||||||||
Special Items Detail (income) expense: |
Pension Curtailment & Settlement |
Severance(1) |
Total Special Items |
CEO transition expenses |
Sale of Traex (2) |
Other (3) |
Total Special Items |
|||||||||||||||||||||
Cost of sales |
$ |
— |
$ |
913 |
$ |
913 |
$ |
— |
$ |
— |
$ |
817 |
$ |
817 |
||||||||||||||
SG&A |
4,431 |
326 |
4,757 |
211 |
— |
1,105 |
1,316 |
|||||||||||||||||||||
Other (income) expense |
— |
— |
— |
— |
(179) |
— |
(179) |
|||||||||||||||||||||
Total Special Items |
$ |
4,431 |
$ |
1,239 |
$ |
5,670 |
$ |
211 |
$ |
(179) |
$ |
1,922 |
$ |
1,954 |
||||||||||||||
(1) Relates to implementation of our new strategic plan. |
||||||||||||||||||||||||||||
(2) Adjustment to the gain on the sale of substantially all of the assets of Traex. |
||||||||||||||||||||||||||||
(3) Cost of sales reflects a write-down of unutilized fixed assets in our Glass Operations segment while SG&A contains severance. |
Table 2 |
||||||||||||||||||||||||
Reconciliation of "As Reported" Results to "As Adjusted" Results - Year |
||||||||||||||||||||||||
(dollars in thousands, except per-share amounts) |
||||||||||||||||||||||||
(unaudited) |
Year ended December 31, |
|||||||||||||||||||||||
2012 |
2011 |
|||||||||||||||||||||||
As Reported |
Special Items |
As Adjusted |
As Reported |
Special Items |
As Adjusted |
|||||||||||||||||||
Net sales |
$ |
825,287 |
$ |
— |
$ |
825,287 |
$ |
817,056 |
$ |
— |
$ |
817,056 |
||||||||||||
Freight billed to customers |
3,165 |
— |
3,165 |
2,396 |
— |
2,396 |
||||||||||||||||||
Total revenues |
828,452 |
— |
828,452 |
819,452 |
— |
819,452 |
||||||||||||||||||
Cost of sales |
633,267 |
3,255 |
630,012 |
650,713 |
2,841 |
647,872 |
||||||||||||||||||
Gross profit |
195,185 |
(3,255) |
198,440 |
168,739 |
(2,841) |
171,580 |
||||||||||||||||||
Selling, general and administrative expenses |
113,896 |
6,201 |
107,695 |
105,545 |
3,914 |
101,631 |
||||||||||||||||||
Special charges |
— |
— |
— |
(281) |
(281) |
— |
||||||||||||||||||
Income from operations |
81,289 |
(9,456) |
90,745 |
63,475 |
(6,474) |
69,949 |
||||||||||||||||||
Loss on redemption of debt |
(31,075) |
(31,075) |
— |
(2,803) |
(2,803) |
— |
||||||||||||||||||
Other income |
188 |
— |
188 |
8,031 |
7,079 |
952 |
||||||||||||||||||
Earnings before interest and income taxes |
50,402 |
(40,531) |
90,933 |
68,703 |
(2,198) |
70,901 |
||||||||||||||||||
Interest expense |
37,727 |
— |
37,727 |
43,419 |
— |
43,419 |
||||||||||||||||||
Income before income taxes |
12,675 |
(40,531) |
53,206 |
25,284 |
(2,198) |
27,482 |
||||||||||||||||||
Provision for income taxes |
5,709 |
(26) |
5,735 |
1,643 |
— |
1,643 |
||||||||||||||||||
Net income |
$ |
6,966 |
$ |
(40,505) |
$ |
47,471 |
$ |
23,641 |
$ |
(2,198) |
$ |
25,839 |
||||||||||||
Net income per share: |
||||||||||||||||||||||||
Basic |
$ |
0.33 |
$ |
(1.94) |
$ |
2.27 |
$ |
1.17 |
$ |
(0.11) |
$ |
1.28 |
||||||||||||
Diluted |
$ |
0.33 |
$ |
(1.90) |
$ |
2.23 |
$ |
1.14 |
$ |
(0.11) |
$ |
1.24 |
||||||||||||
Weighted average shares: |
||||||||||||||||||||||||
Outstanding |
20,876 |
20,170 |
||||||||||||||||||||||
Diluted |
21,315 |
20,808 |
Year ended December 31, 2012 |
Year ended December 31, 2011 |
|||||||||||||||||||||||||||||||||||||||
Special Items Detail- (income) expense: |
Finance Fees (1) |
Severance(2) |
Pension Curtailment & Settlement |
Total Special Items |
Sale of Land & Traex(3) |
CEO transition expenses(4) |
Finance Fees (1) |
Abandoned Property (5) |
Other(6) |
Total Special Items |
||||||||||||||||||||||||||||||
Cost of sales |
$ |
— |
$ |
3,255 |
$ |
— |
$ |
3,255 |
$ |
— |
$ |
— |
$ |
— |
$ |
1,827 |
$ |
1,014 |
$ |
2,841 |
||||||||||||||||||||
SG&A |
— |
1,895 |
4,306 |
6,201 |
— |
2,722 |
— |
892 |
300 |
3,914 |
||||||||||||||||||||||||||||||
Special charges |
— |
— |
— |
— |
— |
— |
— |
— |
(281) |
(281) |
||||||||||||||||||||||||||||||
Loss on redemption of debt |
31,075 |
— |
— |
31,075 |
— |
— |
2,803 |
— |
— |
2,803 |
||||||||||||||||||||||||||||||
Other income |
— |
— |
— |
— |
(6,863) |
— |
— |
— |
(216) |
(7,079) |
||||||||||||||||||||||||||||||
Income taxes |
— |
(26) |
— |
(26) |
— |
— |
— |
— |
— |
— |
||||||||||||||||||||||||||||||
Total Special Items |
$ |
31,075 |
$ |
5,124 |
$ |
4,306 |
$ |
40,505 |
$ |
(6,863) |
$ |
2,722 |
$ |
2,803 |
$ |
2,719 |
$ |
817 |
$ |
2,198 |
||||||||||||||||||||
(1) Finance fees for 2012 include the write-off of unamortized finance fees and discounts and call premium payments on the ABL Facility and $360.0 million senior notes redeemed in May and June 2012, partially offset by the write-off of the debt carrying value adjustment related to the termination of the $80.0 million interest rate swap. Finance fees for 2011 include the write-off of unamortized finance fees and discounts and call premium payments on the $40.0 million senior notes redeemed in March 2011. |
||||||||||||||||||||||||||||||||||||||||
(2) Relates to implementation of our new strategic plan. |
||||||||||||||||||||||||||||||||||||||||
(3) Net gain on the sale of land at our Libbey Holland facility of $3,445 and net gain on sale of substantially all of the assets of Traex of $3,418. |
||||||||||||||||||||||||||||||||||||||||
(4) CEO transition expenses primarily represent non-cash charges related to accelerated vesting of previously issued equity compensation. |
||||||||||||||||||||||||||||||||||||||||
(5) Estimate accrued for an on-going unclaimed property audit. |
||||||||||||||||||||||||||||||||||||||||
(6) Cost of sales includes $197 of restructuring charges and a $817 write-down of unutilized fixed assets in our Glass Operations segment. SG&A includes severance of $1,105, net of an equipment credit of $805. Special charges relate to the closure of our Syracuse, New York, manufacturing facility and the decorating operations at our Shreveport manufacturing facility. |
Table 3 |
||||||||||||||||
Reconciliation of Net Income to Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) and Adjusted EBITDA |
||||||||||||||||
(dollars in thousands) |
||||||||||||||||
Three months ended December 31, |
Year ended December 31, |
|||||||||||||||
2012 |
2011 |
2012 |
2011 |
|||||||||||||
Reported net income |
$ |
1,607 |
$ |
2,109 |
$ |
6,966 |
$ |
23,641 |
||||||||
Add: |
||||||||||||||||
Interest expense |
8,642 |
10,490 |
37,727 |
43,419 |
||||||||||||
Provision for (benefit from) income taxes |
3,366 |
(3,182) |
5,709 |
1,643 |
||||||||||||
Depreciation and amortization |
10,574 |
9,923 |
41,471 |
42,188 |
||||||||||||
EBITDA |
24,189 |
19,340 |
91,873 |
110,891 |
||||||||||||
Add: Special items before interest and taxes |
5,670 |
1,954 |
40,531 |
2,198 |
||||||||||||
Adjusted EBITDA |
$ |
29,859 |
$ |
21,294 |
$ |
132,404 |
$ |
113,089 |
Table 4 |
||||||||||||||||
Reconciliation of Net Cash provided by Operating Activities to Free Cash Flow |
||||||||||||||||
(dollars in thousands) |
||||||||||||||||
Three months ended December 31, |
Year ended December 31, |
|||||||||||||||
2012 |
2011 |
2012 |
2011 |
|||||||||||||
Net cash provided by operating activities |
$ |
52,127 |
$ |
53,207 |
$ |
8,497 |
$ |
55,351 |
||||||||
Capital expenditures |
(15,476) |
(14,963) |
(32,720) |
(41,420) |
||||||||||||
Net proceeds from sale of Traex |
— |
(522) |
— |
12,478 |
||||||||||||
Proceeds from asset sales and other |
97 |
(42) |
647 |
5,222 |
||||||||||||
Free Cash Flow |
$ |
36,748 |
$ |
37,680 |
$ |
(23,576) |
$ |
31,631 |
Table 5 |
||||||||||||||||
Summary Business Segment Information |
||||||||||||||||
(dollars in thousands) |
||||||||||||||||
Three months ended December 31, |
Year ended December 31, |
|||||||||||||||
2012 |
2011 |
2012 |
2011 |
|||||||||||||
Net Sales: |
||||||||||||||||
Glass Operations(1) |
$ |
201,327 |
$ |
199,228 |
$ |
753,006 |
$ |
746,581 |
||||||||
Other Operations(2) |
17,842 |
15,735 |
72,965 |
71,183 |
||||||||||||
Eliminations |
(108) |
(181) |
(684) |
(708) |
||||||||||||
Consolidated |
$ |
219,061 |
$ |
214,782 |
$ |
825,287 |
$ |
817,056 |
||||||||
Segment Earnings before Interest & Taxes (Segment EBIT)(3) |
||||||||||||||||
Glass Operations(1) |
$ |
24,211 |
$ |
19,551 |
$ |
118,470 |
$ |
96,716 |
||||||||
Other Operations(2) |
2,950 |
2,355 |
14,047 |
11,974 |
||||||||||||
Segment EBIT |
$ |
27,161 |
$ |
21,906 |
$ |
132,517 |
$ |
108,690 |
||||||||
Reconciliation of Segment EBIT to Net Income: |
||||||||||||||||
Segment EBIT |
$ |
27,161 |
$ |
21,906 |
$ |
132,517 |
$ |
108,690 |
||||||||
Retained corporate costs (4) |
(7,876) |
(10,535) |
(41,584) |
(37,789) |
||||||||||||
Consolidated Adjusted EBIT |
19,285 |
11,371 |
90,933 |
70,901 |
||||||||||||
Loss on redemption of debt |
— |
— |
(31,075) |
(2,803) |
||||||||||||
Severance |
(1,239) |
(1,105) |
(5,150) |
(1,105) |
||||||||||||
Pension curtailment and settlement charge |
(4,431) |
— |
(4,306) |
— |
||||||||||||
Gain on sale of Traex assets |
— |
179 |
— |
3,418 |
||||||||||||
Gain on sale of land |
— |
— |
— |
3,445 |
||||||||||||
Equipment write-down |
— |
(817) |
— |
(817) |
||||||||||||
Equipment credit |
— |
— |
— |
1,021 |
||||||||||||
Restructuring charges |
— |
— |
— |
84 |
||||||||||||
CEO transition expenses |
— |
(211) |
— |
(2,722) |
||||||||||||
Abandoned property |
— |
— |
— |
(2,719) |
||||||||||||
Special Items before interest and taxes |
(5,670) |
(1,954) |
(40,531) |
(2,198) |
||||||||||||
Interest expense |
(8,642) |
(10,490) |
(37,727) |
(43,419) |
||||||||||||
Income taxes |
(3,366) |
3,182 |
(5,709) |
(1,643) |
||||||||||||
Net income |
$ |
1,607 |
$ |
2,109 |
$ |
6,966 |
$ |
23,641 |
||||||||
Depreciation & Amortization: |
||||||||||||||||
Glass Operations(1) |
$ |
10,423 |
$ |
9,619 |
$ |
40,184 |
$ |
40,398 |
||||||||
Other Operations(2) |
8 |
8 |
40 |
265 |
||||||||||||
Corporate |
143 |
296 |
1,247 |
1,525 |
||||||||||||
Consolidated |
$ |
10,574 |
$ |
9,923 |
$ |
41,471 |
$ |
42,188 |
||||||||
(1) Glass Operations—includes worldwide sales of manufactured and sourced glass tableware from domestic and international subsidiaries. |
||||||||||||||||
(2) Other Operations—includes worldwide sales of sourced ceramic dinnerware, metal tableware, hollowware and serveware. Plastic items were sold through April 28, 2011. |
||||||||||||||||
(3) 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. |
||||||||||||||||
(4) Retained corporate costs includes certain headquarter, administrative and facility costs, and other costs that are not allocable to the reporting segments. |
Table 6 |
||||||||
Reconciliation of Net Income to Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) and Adjusted EBITDA and Debt Net of Cash to Adjusted EBITDA Ratio |
||||||||
(dollars in thousands) |
||||||||
(unaudited) |
||||||||
Year ended December 31, |
||||||||
2012 |
2011 |
|||||||
Reported net income |
$ |
6,966 |
$ |
23,641 |
||||
Add: |
||||||||
Interest expense |
37,727 |
43,419 |
||||||
Provision for income taxes |
5,709 |
1,643 |
||||||
Depreciation and amortization |
41,471 |
42,188 |
||||||
EBITDA |
91,873 |
110,891 |
||||||
Add: Special items before interest and taxes |
40,531 |
2,198 |
||||||
Adjusted EBITDA |
$ |
132,404 |
$ |
113,089 |
||||
Debt |
$ |
466,467 |
$ |
397,360 |
||||
Plus: Unamortized discount and warrants |
— |
4,300 |
||||||
Less: Carrying value adjustment on debt related to the Interest Rate Agreement |
408 |
4,043 |
||||||
Gross debt |
466,059 |
397,617 |
||||||
Cash |
67,208 |
58,291 |
||||||
Debt net of cash |
$ |
398,851 |
$ |
339,326 |
||||
Debt net of cash to Adjusted EBITDA ratio |
3.0 x |
3.0 x |
SOURCE Libbey Inc.
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