Libbey Inc. Announces Second Quarter 2015 Financial Results

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.

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

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

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.

⁽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.

⁽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.

⁽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.

Related Links

http://www.libbey.com