Attached files
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| 8-K - FORM 8-K - LIBBEY INC | form8-k.htm |
Libbey Inc.
Page 1
Exhibit 99.1
 | Libbey Inc. 300 Madison Ave P.O. Box 10060 Toledo, OH 43699 |
NEWS RELEASE
INVESTOR CONTACT: | MEDIA CONTACT: | |
Kenneth Boerger | Lisa Fell | |
Vice President and Treasurer | Director of Corporate Communications | |
(419) 325-2279 | (419) 325-2001 | |
ken.boerger@libbey.com | lfell@libbey.com | |
FOR IMMEDIATE RELEASE
TUESDAY, NOVEMBER 4, 2014
LIBBEY INC. ANNOUNCES RECORD THIRD QUARTER NET SALES AND CONTINUED STRONG REVENUE AND PROFITABILITY GROWTH
Third quarter sales increased 5.7 percent, compared to the third quarter of 2013, and were the highest third quarter sales in Company history; Company expects similar top-line growth for the fourth quarter
TOLEDO, OHIO, NOVEMBER 4, 2014--Libbey Inc. (NYSE MKT: LBY) today reported results for the third quarter-ended September 30, 2014.
Third Quarter Financial Highlights
• | Sales for the third quarter were $216.0 million, compared to $204.4 million for the third quarter of 2013, an increase of 5.7 percent (5.8 percent excluding currency fluctuation). |
• | Net income for the third quarter was $13.8 million, compared to $4.7 million in the prior-year third quarter. Adjusted net income (see Table 1) for the third quarter of $13.8 million was nearly double the $7.4 million adjusted net income recorded in the third quarter of 2013. |
• | Income from operations for the third quarter was $20.7 million, compared to $14.0 million for the third quarter of 2013. Adjusted income from operations (see Table 1) for the third quarter of $20.7 million was an improvement of 18.0 percent, compared to $17.6 million in the third quarter of 2013. |
• | Adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA) (see Table 3) for the quarter was $31.7 million, compared to $28.7 million in the prior-year quarter. |
• | Interest expense of $4.8 million was $2.9 million lower, compared to $7.7 million in the prior-year quarter. |
"Sales growth was strong throughout the Company, as revenue increased in every segment and every channel of distribution. Revenues continued to be strong in the Americas where we achieved 5.6 percent revenue growth. For
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Libbey Inc.
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the second consecutive quarter, we were able to defend and grow our market share in an extremely competitive market. While our adjusted EBITDA margins were significantly impacted by reduced production activity related to an earlier-than-planned rebuild of a furnace, higher input costs and competitive market actions, we are pleased with our overall Company sales growth of 5.7 percent during the quarter. We look forward to continuing our strong sales performance in the remainder of the year, as we leverage the investments we have made in new products, sales and marketing capabilities. For the fourth quarter, we expect to deliver sales growth and adjusted EBITDA margins similar to the third quarter of 2014," said Stephanie A. Streeter, chief executive officer of Libbey Inc.
Third Quarter Segment Sales and Operational Review
• | Sales in the Americas segment were $149.4 million, compared to $141.4 million in the third quarter of 2013, an increase of 5.6 percent (5.9 percent excluding currency impact). This was comprised of 7.3 percent higher sales in our foodservice channel, an increase of 4.5 percent in retail and a 5.7 percent increase in the business-to-business channel. |
• | Sales in the EMEA segment increased 6.2 percent (6.0 percent excluding currency impact) to $37.7 million, compared to $35.5 million in the third quarter of 2013. |
• | Sales in U.S. Sourcing were $20.6 million in the third quarter of 2014, compared to $19.9 million in the prior-year quarter, as sales of World Tableware and Syracuse China flatware and dinnerware increased 3.6 percent. |
• | Sales in Other were $8.3 million, compared to $7.6 million in the prior-year quarter, resulting from a 9.1 percent increase in sales (also 9.1 percent excluding currency impact) in the Asia Pacific region. |
• | Adjusted EBITDA of $31.7 million (see Table 3) was $3.0 million higher than the $28.7 million reported in the prior-year quarter. The primary factors contributing to the improvement in adjusted EBITDA from the prior-year quarter include higher sales and the realization of savings of approximately $4.6 million from the recently completed North American capacity realignment, partially offset by the nearly $3.0 million impact of lower production activity related to an earlier-than-planned furnace repair, higher input costs for natural gas, packaging and electricity of $1.2 million, nearly $2.0 million in increased freight costs, as well as increased selling and marketing expenses. |
• | Interest expense was $4.8 million, a decrease of $2.9 million, compared to $7.7 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 20.4 percent for the quarter-ended September 30, 2014, compared to 15.0 percent for the quarter-ended September 30, 2013. 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, intra-period tax allocation and other activity in jurisdictions with recorded valuation allowances. |
Nine-Month Financial Highlights
• | Sales for the first nine months of 2014 were $621.1 million, compared to $597.8 million for the first nine months of 2013, an increase of 3.9 percent (or 3.8 percent excluding currency fluctuation). |
• | Income from operations for the first nine months of 2014 was $53.7 million, compared to $53.4 million during the first nine months of 2013. |
• | Adjusted EBITDA (see Table 3) was $92.8 million for the first nine months of 2014, compared to $96.8 million for the first nine months of 2013. |
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Nine-Month Segment Sales and Operational Review
• | Sales in the Americas segment were $425.7 million, compared to $406.7 million in the first nine months of 2013, an increase of 4.7 percent (5.4 percent excluding currency fluctuation) driven by increases in all channels of distribution. |
• | Sales in the EMEA segment increased 3.4 percent (0.6 percent excluding currency impact) to $111.4 million, compared to $107.7 million in the first nine months of 2013. |
• | Sales in the U.S. Sourcing segment increased 2.0 percent to $59.7 million, compared to $58.5 million in the first nine months of 2013. |
• | Sales in Other were $24.2 million, compared to $24.8 million in the prior-year period. This decrease was the result of a 2.2 percent decrease in sales (3.1 percent excluding currency impact) in the Asia Pacific region. |
• | Interest expense was $18.0 million, a decrease of $6.3 million, compared to $24.3 million in the year-ago period, primarily driven by lower interest rates. |
• | Our effective tax rate was (46.6) percent for the nine months ended September 30, 2014, compared to 25.0 percent for the nine months ended September 30, 2013. 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. |
Balance Sheet and Liquidity
• | Libbey reported that it had available capacity of $83.1 million under its ABL credit facility as of September 30, 2014, with $8.9 million in loans currently outstanding. The Company also had cash on hand of $24.1 million at September 30, 2014. |
• | As of September 30, 2014, working capital, defined as inventories and accounts receivable less accounts payable, was $216.8 million, compared to $204.2 million at September 30, 2013. Working capital increased $12.6 million, compared to the prior year, as the result of higher inventories and increased accounts receivable which were only partially offset by higher accounts payable. |
Sherry Buck, chief financial officer, added: "We would expect to generate a significant amount of free cash flow during the fourth quarter as a result of working capital reductions of at least $25 million and receipt of approximately $10 million in insurance proceeds related to a claim for a furnace malfunction in 2013. Additionally, we will continue to realize lower interest expense during the fourth quarter, similar to the $2.9 million reduction we saw in the third quarter."
Webcast Information
Libbey will hold a conference call for investors on Tuesday, November 4, 2014, 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 14 days after the conclusion of the call.
About Libbey Inc.
Based in Toledo, Ohio, since 1888, we believe 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.
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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 2013, Libbey Inc.'s net sales totaled $818.8 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 10-K filed with the Commission on March 12, 2014. 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 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.
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Libbey Inc.
Condensed Consolidated Statements of Operations
(dollars in thousands, except per-share amounts)
(unaudited)
Three months ended September 30, | |||||||
2014 | 2013 | ||||||
Net sales | $ | 215,957 | $ | 204,386 | |||
Freight billed to customers | 931 | 924 | |||||
Total revenues | 216,888 | 205,310 | |||||
Cost of sales (1) | 166,573 | 165,405 | |||||
Gross profit | 50,315 | 39,905 | |||||
Selling, general and administrative expenses (1) | 29,573 | 25,519 | |||||
Special charges (1) | — | 390 | |||||
Income from operations | 20,742 | 13,996 | |||||
Other income (expense) | 1,340 | (706 | ) | ||||
Earnings before interest and income taxes | 22,082 | 13,290 | |||||
Interest expense | 4,797 | 7,706 | |||||
Income before income taxes | 17,285 | 5,584 | |||||
Provision for income taxes (1) | 3,527 | 835 | |||||
Net income | $ | 13,758 | $ | 4,749 | |||
Net income per share: | |||||||
Basic | $ | 0.63 | $ | 0.22 | |||
Diluted | $ | 0.62 | $ | 0.21 | |||
Weighted average shares: | |||||||
Outstanding | 21,800 | 21,493 | |||||
Diluted | 22,240 | 22,223 | |||||
(1) Refer to Table 1 for Special Items detail.
Libbey Inc.
Condensed Consolidated Statements of Operations
(dollars in thousands, except per-share amounts)
(unaudited)
Nine months ended September 30, | |||||||
2014 | 2013 | ||||||
Net sales | $ | 621,074 | $ | 597,766 | |||
Freight billed to customers | 2,638 | 2,447 | |||||
Total revenues | 623,712 | 600,213 | |||||
Cost of sales (1) | 480,791 | 460,614 | |||||
Gross profit | 142,921 | 139,599 | |||||
Selling, general and administrative expenses (1) | 89,177 | 81,551 | |||||
Special charges (1) | — | 4,619 | |||||
Income from operations | 53,744 | 53,429 | |||||
Loss on redemption of debt (1) | (47,191 | ) | (2,518 | ) | |||
Other income (expense) | 1,340 | (1,090 | ) | ||||
Earnings before interest and income taxes | 7,893 | 49,821 | |||||
Interest expense | 17,984 | 24,267 | |||||
(Loss) income before income taxes | (10,091 | ) | 25,554 | ||||
Provision for income taxes (1) | 4,703 | 6,380 | |||||
Net (loss) income | $ | (14,794 | ) | $ | 19,174 | ||
Net (loss) income per share: | |||||||
Basic | $ | (0.68 | ) | $ | 0.90 | ||
Diluted | $ | (0.68 | ) | $ | 0.87 | ||
Weighted average shares: | |||||||
Outstanding | 21,667 | 21,300 | |||||
Diluted | 21,667 | 21,929 | |||||
(1) Refer to Table 2 for Special Items detail.
Libbey Inc.
Condensed Consolidated Balance Sheets
(dollars in thousands)
September 30, 2014 | December 31, 2013 | ||||||
(unaudited) | |||||||
ASSETS: | |||||||
Cash and cash equivalents | $ | 24,089 | $ | 42,208 | |||
Accounts receivable — net | 106,459 | 94,549 | |||||
Inventories — net | 189,221 | 163,121 | |||||
Other current assets | 33,168 | 24,838 | |||||
Total current assets | 352,937 | 324,716 | |||||
Pension asset | 34,364 | 33,615 | |||||
Goodwill and purchased intangibles — net | 185,573 | 186,704 | |||||
Property, plant and equipment — net | 268,830 | 265,662 | |||||
Other assets | 16,234 | 19,293 | |||||
Total assets | $ | 857,938 | $ | 829,990 | |||
LIABILITIES AND SHAREHOLDERS' EQUITY: | |||||||
Accounts payable | $ | 78,895 | $ | 79,620 | |||
Accrued liabilities | 79,719 | 73,821 | |||||
Pension liability (current portion) | 3,100 | 3,161 | |||||
Non-pension postretirement benefits (current portion) | 4,758 | 4,758 | |||||
Other current liabilities | — | 1,374 | |||||
Long-term debt due within one year | 7,896 | 5,391 | |||||
Total current liabilities | 174,368 | 168,125 | |||||
Long-term debt | 446,653 | 406,512 | |||||
Pension liability | 37,861 | 40,033 | |||||
Non-pension postretirement benefits | 58,137 | 59,065 | |||||
Other liabilities | 23,526 | 25,446 | |||||
Total liabilities | 740,545 | 699,181 | |||||
Common stock and capital in excess of par value | 329,418 | 323,580 | |||||
Retained deficit | (134,405 | ) | (119,611 | ) | |||
Accumulated other comprehensive loss | (77,620 | ) | (73,160 | ) | |||
Total shareholders’ equity | 117,393 | 130,809 | |||||
Total liabilities and shareholders’ equity | $ | 857,938 | $ | 829,990 | |||
Libbey Inc.
Condensed Consolidated Statements of Cash Flows
(dollars in thousands)
(unaudited)
Three months ended September 30, | |||||||
2014 | 2013 | ||||||
Operating activities: | |||||||
Net income | $ | 13,758 | $ | 4,749 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 9,569 | 11,773 | |||||
Loss on asset sales and disposals | 234 | 481 | |||||
Change in accounts receivable | (1,926 | ) | 732 | ||||
Change in inventories | (9,460 | ) | 3,722 | ||||
Change in accounts payable | 767 | 318 | |||||
Accrued interest and amortization of discounts and finance fees | 384 | 7,266 | |||||
Pension & non-pension postretirement benefits | (349 | ) | 3,118 | ||||
Restructuring | — | (797 | ) | ||||
Accrued liabilities & prepaid expenses | 4,105 | 3,533 | |||||
Income taxes | 1,498 | (2,106 | ) | ||||
Share-based compensation expense | 1,109 | 990 | |||||
Other operating activities | (616 | ) | 988 | ||||
Net cash provided by operating activities | 19,073 | 34,767 | |||||
Investing activities: | |||||||
Additions to property, plant and equipment | (16,693 | ) | (10,381 | ) | |||
Proceeds from asset sales and other | 3 | 73 | |||||
Net cash used in investing activities | (16,690 | ) | (10,308 | ) | |||
Financing activities: | |||||||
Borrowings on ABL credit facility | 33,400 | 12,400 | |||||
Repayments on ABL credit facility | (31,500 | ) | (22,200 | ) | |||
Other repayments | (5,201 | ) | (4,397 | ) | |||
Other borrowings | 3,250 | 6,094 | |||||
Repayments on Term Loan B | (1,100 | ) | — | ||||
Stock options exercised | 759 | 2,059 | |||||
Debt issuance costs and other | (91 | ) | — | ||||
Net cash used in financing activities | (483 | ) | (6,044 | ) | |||
Effect of exchange rate fluctuations on cash | (1,020 | ) | 507 | ||||
Increase in cash | 880 | 18,922 | |||||
Cash & cash equivalents at beginning of period | 23,209 | 10,544 | |||||
Cash & cash equivalents at end of period | $ | 24,089 | $ | 29,466 | |||
Libbey Inc.
Condensed Consolidated Statements of Cash Flows
(dollars in thousands)
(unaudited)
Nine months ended September 30, | |||||||
2014 | 2013 | ||||||
Operating activities: | |||||||
Net (loss) income | $ | (14,794 | ) | $ | 19,174 | ||
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 30,837 | 34,170 | |||||
Loss on asset sales and disposals | 247 | 514 | |||||
Change in accounts receivable | (18,325 | ) | (10,147 | ) | |||
Change in inventories | (28,823 | ) | (14,770 | ) | |||
Change in accounts payable | 2,119 | (5,999 | ) | ||||
Accrued interest and amortization of discounts and finance fees | 1,729 | 7,876 | |||||
Call premium on senior notes | 37,348 | 1,350 | |||||
Write-off of finance fees on senior notes | 9,086 | 1,168 | |||||
Pension & non-pension postretirement benefits | 2,420 | 8,322 | |||||
Restructuring | (289 | ) | 2,858 | ||||
Accrued liabilities & prepaid expenses | (3,617 | ) | (13,052 | ) | |||
Income taxes | (2,425 | ) | (6,285 | ) | |||
Share-based compensation expense | 3,746 | 3,299 | |||||
Other operating activities | (2,202 | ) | 2,994 | ||||
Net cash provided by operating activities | 17,057 | 31,472 | |||||
Investing activities: | |||||||
Additions to property, plant and equipment | (38,528 | ) | (30,152 | ) | |||
Proceeds from furnace malfunction insurance recovery | 4,346 | — | |||||
Proceeds from asset sales and other | 7 | 81 | |||||
Net cash used in investing activities | (34,175 | ) | (30,071 | ) | |||
Financing activities: | |||||||
Borrowings on ABL credit facility | 54,700 | 42,800 | |||||
Repayments on ABL credit facility | (45,800 | ) | (42,800 | ) | |||
Other repayments | (5,316 | ) | (4,511 | ) | |||
Other borrowings | 5,214 | 6,094 | |||||
Payments on 6.875% senior notes | (405,000 | ) | (45,000 | ) | |||
Proceeds from Term Loan B | 438,900 | — | |||||
Repayments on Term Loan B | (1,100 | ) | — | ||||
Call premium on senior notes | (37,348 | ) | (1,350 | ) | |||
Stock options exercised | 2,881 | 5,107 | |||||
Debt issuance costs and other | (6,959 | ) | — | ||||
Net cash provided by (used in) financing activities | 172 | (39,660 | ) | ||||
Effect of exchange rate fluctuations on cash | (1,173 | ) | 517 | ||||
Decrease in cash | (18,119 | ) | (37,742 | ) | |||
Cash & cash equivalents at beginning of period | 42,208 | 67,208 | |||||
Cash & cash equivalents at end of period | $ | 24,089 | $ | 29,466 | |||
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 September 30, | ||||||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||||||
As Reported | Special Items | As Adjusted | As Reported | Special Items | As Adjusted | |||||||||||||||||||
Net sales | $ | 215,957 | $ | — | $ | 215,957 | $ | 204,386 | $ | — | $ | 204,386 | ||||||||||||
Freight billed to customers | 931 | — | 931 | 924 | — | 924 | ||||||||||||||||||
Total revenues | 216,888 | — | 216,888 | 205,310 | — | 205,310 | ||||||||||||||||||
Cost of sales | 166,573 | — | 166,573 | 165,405 | 2,749 | 162,656 | ||||||||||||||||||
Gross profit | 50,315 | — | 50,315 | 39,905 | (2,749 | ) | 42,654 | |||||||||||||||||
Selling, general and administrative expenses | 29,573 | — | 29,573 | 25,519 | 448 | 25,071 | ||||||||||||||||||
Special charges | — | — | — | 390 | 390 | — | ||||||||||||||||||
Income from operations | 20,742 | — | 20,742 | 13,996 | (3,587 | ) | 17,583 | |||||||||||||||||
Other income (expense) | 1,340 | — | 1,340 | (706 | ) | — | (706 | ) | ||||||||||||||||
Earnings before interest and income taxes | 22,082 | — | 22,082 | 13,290 | (3,587 | ) | 16,877 | |||||||||||||||||
Interest expense | 4,797 | — | 4,797 | 7,706 | — | 7,706 | ||||||||||||||||||
Income before income taxes | 17,285 | — | 17,285 | 5,584 | (3,587 | ) | 9,171 | |||||||||||||||||
Provision for income taxes | 3,527 | — | 3,527 | 835 | (976 | ) | 1,811 | |||||||||||||||||
Net income | $ | 13,758 | $ | — | $ | 13,758 | $ | 4,749 | $ | (2,611 | ) | $ | 7,360 | |||||||||||
Net income per share: | ||||||||||||||||||||||||
Basic | $ | 0.63 | $ | — | $ | 0.63 | $ | 0.22 | $ | (0.12 | ) | $ | 0.34 | |||||||||||
Diluted | $ | 0.62 | $ | — | $ | 0.62 | $ | 0.21 | $ | (0.12 | ) | $ | 0.33 | |||||||||||
Weighted average shares: | ||||||||||||||||||||||||
Outstanding | 21,800 | 21,493 | ||||||||||||||||||||||
Diluted | 22,240 | 22,223 | ||||||||||||||||||||||
Three months ended September 30, 2013 | ||||||||||||||||||||
Special Items Detail - (Income) Expense: | Restructuring Charges (1) | Furnace Malfunction (2) | Pension Settlement | Other | Total Special Items | |||||||||||||||
Cost of sales | $ | — | $ | 2,437 | $ | 312 | $ | — | $ | 2,749 | ||||||||||
SG&A | — | — | 448 | — | 448 | |||||||||||||||
Special charges | 390 | — | — | — | 390 | |||||||||||||||
Income taxes | (292 | ) | (300 | ) | (208 | ) | (176 | ) | (976 | ) | ||||||||||
Total Special Items | $ | 98 | $ | 2,137 | $ | 552 | $ | (176 | ) | $ | 2,611 | |||||||||
(1) Restructuring charges relate to discontinuing production of certain glassware in North America and reducing manufacturing capacity at our Shreveport, Louisiana, manufacturing facility.
(2) Furnace malfunction relates to loss of production and disposal of fixed assets at our Toledo, Ohio, manufacturing facility.
Table 2 | ||||||||||||||||||||||||
Reconciliation of "As Reported" Results to "As Adjusted" Results - Nine Months | ||||||||||||||||||||||||
(dollars in thousands, except per-share amounts) | ||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||
Nine months ended September 30, | ||||||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||||||
As Reported | Special Items | As Adjusted | As Reported | Special Items | As Adjusted | |||||||||||||||||||
Net sales | $ | 621,074 | $ | — | $ | 621,074 | $ | 597,766 | $ | — | $ | 597,766 | ||||||||||||
Freight billed to customers | 2,638 | — | 2,638 | 2,447 | — | 2,447 | ||||||||||||||||||
Total revenues | 623,712 | — | 623,712 | 600,213 | — | 600,213 | ||||||||||||||||||
Cost of sales | 480,791 | 6,867 | 473,924 | 460,614 | 4,448 | 456,166 | ||||||||||||||||||
Gross profit | 142,921 | (6,867 | ) | 149,788 | 139,599 | (4,448 | ) | 144,047 | ||||||||||||||||
Selling, general and administrative expenses | 89,177 | — | 89,177 | 81,551 | 2,944 | 78,607 | ||||||||||||||||||
Special charges | — | — | — | 4,619 | 4,619 | — | ||||||||||||||||||
Income from operations | 53,744 | (6,867 | ) | 60,611 | 53,429 | (12,011 | ) | 65,440 | ||||||||||||||||
Loss on redemption of debt | (47,191 | ) | (47,191 | ) | — | (2,518 | ) | (2,518 | ) | — | ||||||||||||||
Other income (expense) | 1,340 | — | 1,340 | (1,090 | ) | — | (1,090 | ) | ||||||||||||||||
Earnings before interest and income taxes | 7,893 | (54,058 | ) | 61,951 | 49,821 | (14,529 | ) | 64,350 | ||||||||||||||||
Interest expense | 17,984 | — | 17,984 | 24,267 | — | 24,267 | ||||||||||||||||||
(Loss) income before income taxes | (10,091 | ) | (54,058 | ) | 43,967 | 25,554 | (14,529 | ) | 40,083 | |||||||||||||||
Provision for income taxes | 4,703 | (341 | ) | 5,044 | 6,380 | (1,871 | ) | 8,251 | ||||||||||||||||
Net (loss) income | $ | (14,794 | ) | $ | (53,717 | ) | $ | 38,923 | $ | 19,174 | $ | (12,658 | ) | $ | 31,832 | |||||||||
Net (loss) income per share: | ||||||||||||||||||||||||
Basic | $ | (0.68 | ) | $ | (2.48 | ) | $ | 1.80 | $ | 0.90 | $ | (0.59 | ) | $ | 1.49 | |||||||||
Diluted | $ | (0.68 | ) | $ | (2.48 | ) | $ | 1.76 | $ | 0.87 | $ | (0.58 | ) | $ | 1.45 | |||||||||
Weighted average shares: | ||||||||||||||||||||||||
Outstanding | 21,667 | 21,667 | 21,300 | |||||||||||||||||||||
Diluted | 21,667 | 22,126 | 21,929 | |||||||||||||||||||||
Nine months ended September 30, 2014 | Nine months ended September 30, 2013 | |||||||||||||||||||||||||||||||||||||||
Special Items Detail - (Income) Expense: | Restructuring Charges(1) | Debt Cost(2) | Furnace Malfunction(3) | Total Special Items | Restructuring Charge(1) | Furnace Malfunction(3) | Abandoned Property | Pension Settlement | Debt Costs(2) | Total Special Items | ||||||||||||||||||||||||||||||
Cost of sales | $ | 985 | $ | — | $ | 5,882 | $ | 6,867 | $ | 1,699 | $ | 2,437 | $ | — | $ | 312 | $ | — | $ | 4,448 | ||||||||||||||||||||
SG&A | — | — | — | — | — | 1,781 | 1,163 | — | 2,944 | |||||||||||||||||||||||||||||||
Special charges | — | — | — | — | 4,619 | — | — | — | — | 4,619 | ||||||||||||||||||||||||||||||
Loss on redemption of debt | — | 47,191 | — | 47,191 | — | — | — | — | 2,518 | 2,518 | ||||||||||||||||||||||||||||||
Income taxes | (296 | ) | — | (45 | ) | (341 | ) | (777 | ) | (300 | ) | (219 | ) | (266 | ) | (309 | ) | (1,871 | ) | |||||||||||||||||||||
Total Special Items | $ | 689 | $ | 47,191 | $ | 5,837 | $ | 53,717 | $ | 5,541 | $ | 2,137 | $ | 1,562 | $ | 1,209 | $ | 2,209 | $ | 12,658 | ||||||||||||||||||||
(1) Restructuring charges relate to discontinuing production of certain glassware in North America and reducing manufacturing capacity at our Shreveport, Louisiana, facility.
(2) Debt costs for the nine months ended September 2014 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. Debt costs for the nine months ended September 2013 include the write-off of unamortized finance fees and call premium payments on the $45.0 million senior notes redeemed in May 2013.
(3) Furnace malfunction relates to loss of production and disposal of fixed assets at our Toledo, Ohio, manufacturing facility.
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 September 30, | Nine months ended September 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Reported net income (loss) | $ | 13,758 | $ | 4,749 | $ | (14,794 | ) | $ | 19,174 | |||||||
Add: | ||||||||||||||||
Interest expense | 4,797 | 7,706 | 17,984 | 24,267 | ||||||||||||
Provision for income taxes | 3,527 | 835 | 4,703 | 6,380 | ||||||||||||
Depreciation and amortization | 9,569 | 11,773 | 30,837 | 34,170 | ||||||||||||
EBITDA | 31,651 | 25,063 | 38,730 | 83,991 | ||||||||||||
Add: Special items before interest and taxes | — | 3,587 | 54,058 | 14,529 | ||||||||||||
Less: Depreciation expense included in special items and also in depreciation and amortization above | — | — | — | (1,699 | ) | |||||||||||
Adjusted EBITDA | $ | 31,651 | $ | 28,650 | $ | 92,788 | $ | 96,821 | ||||||||
Table 4 | ||||||||||||||||
Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow | ||||||||||||||||
(dollars in thousands) | ||||||||||||||||
(unaudited) | ||||||||||||||||
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Net cash provided by operating activities | $ | 19,073 | $ | 34,767 | $ | 17,057 | $ | 31,472 | ||||||||
Capital expenditures | (16,693 | ) | (10,381 | ) | (38,528 | ) | (30,152 | ) | ||||||||
Proceeds from furnace malfunction insurance recovery | — | — | 4,346 | — | ||||||||||||
Proceeds from asset sales and other | 3 | 73 | 7 | 81 | ||||||||||||
Free Cash Flow | $ | 2,383 | $ | 24,459 | $ | (17,118 | ) | $ | 1,401 | |||||||
Table 5 | ||||||||||||
Reconciliation to Working Capital | ||||||||||||
(dollars in thousands) | ||||||||||||
(unaudited) | ||||||||||||
September 30, 2014 | September 30, 2013 | December 31, 2013 | ||||||||||
Add: | ||||||||||||
Accounts receivable | $ | 106,459 | $ | 91,611 | $ | 94,549 | ||||||
Inventories | 189,221 | 173,394 | 163,121 | |||||||||
Less: Accounts payable | 78,895 | 60,767 | 79,620 | |||||||||
Less: Receivable on furnace malfunction insurance claim | — | — | 5,000 | |||||||||
Working Capital | $ | 216,785 | $ | 204,238 | $ | 173,050 | ||||||
Table 6 | ||||||||||||||||
Summary Business Segment Information | ||||||||||||||||
(dollars in thousands) (unaudited) | Three months ended September 30, | Nine months ended September 30, | ||||||||||||||
Net Sales: | 2014 | 2013 | 2014 | 2013 | ||||||||||||
Americas (1) | $ | 149,366 | $ | 141,390 | $ | 425,741 | $ | 406,740 | ||||||||
EMEA (2) | 37,684 | 35,491 | 111,413 | 107,714 | ||||||||||||
U.S. Sourcing (3) | 20,574 | 19,868 | 59,704 | 58,548 | ||||||||||||
Other (4) | 8,333 | 7,637 | 24,216 | 24,764 | ||||||||||||
Consolidated | $ | 215,957 | $ | 204,386 | $ | 621,074 | $ | 597,766 | ||||||||
Segment Earnings Before Interest & Taxes (Segment EBIT) (5) : | ||||||||||||||||
Americas (1) | $ | 25,489 | $ | 21,224 | $ | 73,464 | $ | 73,149 | ||||||||
EMEA (2) | 909 | (135 | ) | 3,072 | (806 | ) | ||||||||||
U.S. Sourcing (3) | 2,206 | 2,067 | 5,375 | 7,186 | ||||||||||||
Other (4) | 721 | (1,831 | ) | 2,035 | 1,283 | |||||||||||
Segment EBIT | $ | 29,325 | $ | 21,325 | $ | 83,946 | $ | 80,812 | ||||||||
Reconciliation of Segment EBIT to Net Income (Loss): | ||||||||||||||||
Segment EBIT | $ | 29,325 | $ | 21,325 | $ | 83,946 | $ | 80,812 | ||||||||
Retained corporate costs (6) | (7,243 | ) | (4,448 | ) | (21,995 | ) | (16,462 | ) | ||||||||
Consolidated Adjusted EBIT | 22,082 | 16,877 | 61,951 | 64,350 | ||||||||||||
Loss on redemption of debt | — | — | (47,191 | ) | (2,518 | ) | ||||||||||
Pension settlement | — | (760 | ) | — | (1,475 | ) | ||||||||||
Furnace malfunction | — | (2,437 | ) | (5,882 | ) | (2,437 | ) | |||||||||
Restructuring charges | — | (390 | ) | (985 | ) | (6,318 | ) | |||||||||
Abandoned property | — | — | — | (1,781 | ) | |||||||||||
Special items before interest and taxes | — | (3,587 | ) | (54,058 | ) | (14,529 | ) | |||||||||
Interest expense | (4,797 | ) | (7,706 | ) | (17,984 | ) | (24,267 | ) | ||||||||
Income taxes | (3,527 | ) | (835 | ) | (4,703 | ) | (6,380 | ) | ||||||||
Net income (loss) | $ | 13,758 | $ | 4,749 | $ | (14,794 | ) | $ | 19,174 | |||||||
Depreciation & Amortization: | ||||||||||||||||
Americas (1) | $ | 5,153 | $ | 5,975 | $ | 16,963 | $ | 19,824 | ||||||||
EMEA (2) | 2,624 | 2,930 | 7,988 | 7,923 | ||||||||||||
U.S. Sourcing (3) | 6 | 9 | 20 | 27 | ||||||||||||
Other (4) | 1,444 | 2,578 | 4,716 | 5,350 | ||||||||||||
Corporate | 342 | 281 | 1,150 | 1,046 | ||||||||||||
Consolidated | $ | 9,569 | $ | 11,773 | $ | 30,837 | $ | 34,170 | ||||||||
(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.