Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - LIBBEY INC | form8-k.htm |
Exhibit 99.1
 | Libbey Inc. 300 Madison Ave P.O. Box 10060 Toledo, OH 43699 |
NEWS RELEASE
CORPORATE CONTACTS: | INVESTOR INQUIRIES: | |
Kim Hunter, Investor Relations | Chris Hodges or Sam Gibbons | |
(419)-325-2612 | Alpha IR Group | |
khunte@libbey.com | (312) 445-2870 | |
LBY@alpha-ir.com | ||
Lisa Fell, Media | ||
(419)-325-2001 | ||
lfell@libbey.com | ||
FOR IMMEDIATE RELEASE
THURSDAY, APRIL 28, 2016
LIBBEY INC. ANNOUNCES FIRST QUARTER 2016 FINANCIAL RESULTS
• | Q1 net sales up slightly (constant currency) with continued strength in foodservice, up 6.3 percent (constant currency); retail up 1.1 percent (constant currency) |
• | Adjusted Earnings Before Interest, Tax, Depreciation and Amortization (Adjusted EBITDA) of $22.5 million, up 13.9 percent |
• | Company reaffirms full-year 2016 financial outlook |
TOLEDO, OHIO, APRIL 28, 2016--Libbey Inc. (NYSE MKT: LBY), one of the largest glass tableware manufacturers in the world, today reported results for the first quarter ended March 31, 2016.
First Quarter Financial Highlights
• | Net sales for first quarter 2016 were $182.8 million, compared to $187.4 million in first quarter 2015, a decrease of 2.4 percent (or an increase of 0.5 percent excluding currency fluctuation). |
• | Net income for first quarter 2016 was $0.7 million, compared to net income of $3.1 million in the prior-year first quarter. Adjusted net income (see Table 1) for first quarter 2016 was $3.6 million, flat compared to the same period of 2015. |
• | Adjusted EBITDA (see Table 2) for first quarter 2016 was $22.5 million, compared to $19.7 million in the prior-year first quarter. |
• | The Company reiterates full-year expectations to generate sales growth of approximately 1 percent, as reported, and Adjusted EBITDA margins of approximately 14 percent. |
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Libbey Inc.
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“During the first quarter of 2016, our core foodservice channel delivered its 12th consecutive quarter of volume growth, despite continued softness in restaurant traffic,” said William A. Foley, chairman and chief executive officer of Libbey Inc. “This further demonstrates our market strength and continued commitment to this important part of our business. Improving performance in our other channels continues to be a priority and is critical to the long-term success and potential growth profile of our business. Over the past several months, we have made initial strides across all of our key strategic priority areas, including improving our capability to develop innovative new products, strengthening relationships with our customers across the globe and simplifying our business to enable it to operate more efficiently and effectively. We are actively pursuing strategic improvements to address these needs and anticipate that this work will progress for the balance of the year.”
First Quarter Segment Sales and Operational Review
• | Net sales in the U.S. and Canada segment were $113.1 million, compared to $109.9 million in first quarter 2015, an increase of 2.9 percent. Foodservice sales remained strong during the quarter, growing 8.9 percent versus last year, partially offset by a reduction in net sales in the business-to-business channel. Retail sales were in-line with the prior-year quarter. |
• | Net sales in the Latin America segment were $34.2 million, compared to $39.9 million in first quarter 2015, a decrease of 14.1 percent (or a decrease of 2.9 percent excluding currency impact), due to weakness in the business-to-business and foodservice channels, more than offsetting a 1.0 percent (constant currency) increase in net sales in the retail channel. |
• | Net sales in the EMEA segment were $26.6 million, compared to $28.5 million in first quarter 2015, a decrease of 6.6 percent (or a decrease of 4.7 percent excluding currency impact), due to softness in the business-to-business channel that more than offset a 5.1 percent (constant currency) growth in net sales in the retail channel. |
• | Net sales in Other were $8.9 million in first quarter 2016, compared to $9.1 million in the comparable prior-year quarter, reflecting a decrease of 2.5 percent (or an increase of 3.2 percent excluding currency impact) in net sales in the Asia Pacific region. |
• | The Company's effective tax rate was (23.8) percent for the quarter ended March 31, 2016, compared to 29.3 percent for the quarter ended March 31, 2015. The change in the effective tax rate was primarily driven by lower pre-tax income in 2016 as compared with the first quarter of 2015. Other less material factors were foreign earnings with differing statutory rates, foreign withholding tax, accruals related to uncertain tax positions, non-taxable foreign translation gains and other activity in jurisdictions with recorded valuation allowances. |
Balance Sheet and Liquidity
• | The Company had available capacity of $91.4 million under its ABL credit facility at March 31, 2016, with no loans currently outstanding. The Company also had cash on hand of $25.6 million at March 31, 2016. |
• | At March 31, 2016, working capital, defined as inventories and accounts receivable less accounts payable, was $216.7 million, an increase of $17.8 million, compared to $198.9 million at March 31, 2015 (see Table 4). The increase was a result of higher inventories and lower accounts payable, partially offset by lower accounts receivable. |
Sherry Buck, chief financial officer, commented: “The first quarter saw a continuation of many trends we have witnessed over the last few quarters. Our U.S. and Canada segment saw fairly stable conditions, while our international businesses continued to be impacted by an extremely competitive environment. We are on track to return fifty percent of free cash flow to shareholders, from 2015 through 2017, through a combination of our increased dividend and share repurchases. We will continue to take a balanced approach to capital allocation
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throughout 2016. This includes the maintenance of our strong and flexible financial profile, which includes the goal of maintaining a leverage ratio in the range of 2.5x to 3.0x net debt to Adjusted EBITDA over the long-term.”
Webcast Information
Libbey will hold a conference call for investors on Thursday, April 28, 2016, 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 2015, Libbey Inc.'s net sales totaled $822.3 million. Additional information is available at www.libbey.com.
Caution on Forward-Looking Statements
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. 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 February 29, 2016. 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
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Libbey Inc.
Condensed Consolidated Statements of Operations
(dollars in thousands, except per-share amounts)
(unaudited)
Three months ended March 31, | |||||||
2016 | 2015 | ||||||
Net sales | $ | 182,807 | $ | 187,365 | |||
Freight billed to customers | 618 | 606 | |||||
Total revenues | 183,425 | 187,971 | |||||
Cost of sales | 143,451 | 145,476 | |||||
Gross profit | 39,974 | 42,495 | |||||
Selling, general and administrative expenses (1) | 34,135 | 34,399 | |||||
Income from operations | 5,839 | 8,096 | |||||
Other income (expense) (1) | (15 | ) | 827 | ||||
Earnings before interest and income taxes | 5,824 | 8,923 | |||||
Interest expense | 5,244 | 4,523 | |||||
Income before income taxes | 580 | 4,400 | |||||
Provision (benefit) for income taxes (1) | (138 | ) | 1,288 | ||||
Net income | $ | 718 | $ | 3,112 | |||
Net income per share: | |||||||
Basic | $ | 0.03 | $ | 0.14 | |||
Diluted | $ | 0.03 | $ | 0.14 | |||
Dividends declared per share | $ | 0.115 | $ | 0.110 | |||
Weighted average shares: | |||||||
Outstanding | 21,850 | 21,853 | |||||
Diluted | 22,001 | 22,349 | |||||
(1) Refer to Table 1 for Special Items detail.
Libbey Inc.
Condensed Consolidated Balance Sheets
(dollars in thousands)
March 31, 2016 | December 31, 2015 | ||||||
(unaudited) | |||||||
ASSETS: | |||||||
Cash and cash equivalents | $ | 25,570 | $ | 49,044 | |||
Accounts receivable — net | 87,901 | 94,379 | |||||
Inventories — net | 191,950 | 178,027 | |||||
Other current assets | 19,845 | 19,326 | |||||
Total current assets | 325,266 | 340,776 | |||||
Pension asset | 977 | 977 | |||||
Purchased intangibles — net | 16,231 | 16,364 | |||||
Goodwill | 164,112 | 164,112 | |||||
Deferred income taxes | 49,736 | 48,662 | |||||
Other assets | 8,900 | 9,019 | |||||
Total other assets | 239,956 | 239,134 | |||||
Property, plant and equipment — net | 268,913 | 272,534 | |||||
Total assets | $ | 834,135 | $ | 852,444 | |||
LIABILITIES AND SHAREHOLDERS' EQUITY: | |||||||
Accounts payable | $ | 63,185 | 71,560 | ||||
Salaries and wages | 25,971 | 27,266 | |||||
Accrued liabilities | 42,545 | 45,179 | |||||
Accrued income taxes | 2,295 | 4,009 | |||||
Pension liability (current portion) | 2,032 | 2,297 | |||||
Non-pension postretirement benefits (current portion) | 4,903 | 4,903 | |||||
Derivative liability | 4,346 | 4,265 | |||||
Long-term debt due within one year | 4,761 | 4,747 | |||||
Total current liabilities | 150,038 | 164,226 | |||||
Long-term debt | 420,469 | 426,272 | |||||
Pension liability | 42,792 | 44,274 | |||||
Non-pension postretirement benefits | 55,446 | 55,282 | |||||
Deferred income taxes | 3,235 | 2,822 | |||||
Other long-term liabilities | 13,736 | 11,186 | |||||
Total liabilities | 685,716 | 704,062 | |||||
Common stock and capital in excess of par value | 328,691 | 330,974 | |||||
Treasury stock | (979 | ) | (4,448 | ) | |||
Retained deficit | (61,397 | ) | (57,912 | ) | |||
Accumulated other comprehensive loss | (117,896 | ) | (120,232 | ) | |||
Total shareholders’ equity | 148,419 | 148,382 | |||||
Total liabilities and shareholders’ equity | $ | 834,135 | $ | 852,444 | |||
Libbey Inc.
Condensed Consolidated Statements of Cash Flows
(dollars in thousands)
(unaudited)
Three months ended March 31, | |||||||
2016 | 2015 | ||||||
Operating activities: | |||||||
Net income | $ | 718 | $ | 3,112 | |||
Adjustments to reconcile net income to net cash used in operating activities: | |||||||
Depreciation and amortization | 12,081 | 10,184 | |||||
Loss on asset sales and disposals | 61 | 211 | |||||
Change in accounts receivable | 7,217 | (5,647 | ) | ||||
Change in inventories | (12,467 | ) | (16,720 | ) | |||
Change in accounts payable | (5,589 | ) | (2,339 | ) | |||
Accrued interest and amortization of discounts and finance fees | (2,220 | ) | 212 | ||||
Pension & non-pension postretirement benefits, net | (101 | ) | 1,003 | ||||
Accrued liabilities & prepaid expenses | (1,616 | ) | (2,876 | ) | |||
Income taxes | (2,965 | ) | (1,360 | ) | |||
Share-based compensation expense | 1,816 | 2,129 | |||||
Other operating activities | (1,909 | ) | (1,145 | ) | |||
Net cash used in operating activities | (4,974 | ) | (13,236 | ) | |||
Investing activities: | |||||||
Additions to property, plant and equipment | (9,855 | ) | (16,659 | ) | |||
Net cash used in investing activities | (9,855 | ) | (16,659 | ) | |||
Financing activities: | |||||||
Borrowings on ABL credit facility | 6,000 | 14,100 | |||||
Repayments on ABL credit facility | (6,000 | ) | (10,000 | ) | |||
Other repayments | (171 | ) | (3,255 | ) | |||
Repayments on Term Loan B | (6,100 | ) | (1,100 | ) | |||
Stock options exercised | 1,029 | 1,848 | |||||
Dividends | (2,515 | ) | (2,402 | ) | |||
Treasury shares purchased | (1,197 | ) | (9,144 | ) | |||
Net cash used in financing activities | (8,954 | ) | (9,953 | ) | |||
Effect of exchange rate fluctuations on cash | 309 | (1,580 | ) | ||||
Decrease in cash | (23,474 | ) | (41,428 | ) | |||
Cash & cash equivalents at beginning of period | 49,044 | 60,044 | |||||
Cash & cash equivalents at end of period | $ | 25,570 | $ | 18,616 | |||
In accordance with the SEC’s Regulation G, tables 1 through 5 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 March 31, | ||||||||||||||||||||||||
2016 | 2015 | |||||||||||||||||||||||
As Reported | Special Items | As Adjusted | As Reported | Special Items | As Adjusted | |||||||||||||||||||
Net sales | $ | 182,807 | $ | — | $ | 182,807 | $ | 187,365 | $ | — | $ | 187,365 | ||||||||||||
Freight billed to customers | 618 | — | 618 | 606 | — | 606 | ||||||||||||||||||
Total revenues | 183,425 | — | 183,425 | 187,971 | — | 187,971 | ||||||||||||||||||
Cost of sales | 143,451 | — | 143,451 | 145,476 | — | 145,476 | ||||||||||||||||||
Gross profit | 39,974 | — | 39,974 | 42,495 | — | 42,495 | ||||||||||||||||||
Selling, general and administrative expenses | 34,135 | 4,947 | 29,188 | 34,399 | 235 | 34,164 | ||||||||||||||||||
Income from operations | 5,839 | (4,947 | ) | 10,786 | 8,096 | (235 | ) | 8,331 | ||||||||||||||||
Other income (expense) | (15 | ) | 370 | (385 | ) | 827 | (399 | ) | 1,226 | |||||||||||||||
Earnings before interest and income taxes | 5,824 | (4,577 | ) | 10,401 | 8,923 | (634 | ) | 9,557 | ||||||||||||||||
Interest expense | 5,244 | — | 5,244 | 4,523 | — | 4,523 | ||||||||||||||||||
Income before income taxes | 580 | (4,577 | ) | 5,157 | 4,400 | (634 | ) | 5,034 | ||||||||||||||||
Provision (benefit) for income taxes | (138 | ) | (1,695 | ) | 1,557 | 1,288 | (120 | ) | 1,408 | |||||||||||||||
Net income | $ | 718 | $ | (2,882 | ) | $ | 3,600 | $ | 3,112 | $ | (514 | ) | $ | 3,626 | ||||||||||
Net income per share: | ||||||||||||||||||||||||
Basic | $ | 0.03 | $ | (0.13 | ) | $ | 0.16 | $ | 0.14 | $ | (0.02 | ) | $ | 0.17 | ||||||||||
Diluted | $ | 0.03 | $ | (0.13 | ) | $ | 0.16 | $ | 0.14 | $ | (0.02 | ) | $ | 0.16 | ||||||||||
Weighted average shares: | ||||||||||||||||||||||||
Outstanding | 21,850 | 21,853 | ||||||||||||||||||||||
Diluted | 22,001 | 22,349 | ||||||||||||||||||||||
Three months ended March 31, 2016 | Three months ended March 31, 2015 | |||||||||||||||||||||||
Special Items Detail - (Income) Expense: | Executive Terminations | Derivatives (1) | Total Special Items | Executive Terminations | Derivatives (1) | Total Special Items | ||||||||||||||||||
SG&A | $ | 4,947 | $ | — | $ | 4,947 | $ | 235 | $ | — | $ | 235 | ||||||||||||
Other (income) expense | — | (370 | ) | (370 | ) | — | 399 | 399 | ||||||||||||||||
Income taxes | (1,806 | ) | 111 | (1,695 | ) | — | (120 | ) | (120 | ) | ||||||||||||||
Total Special Items | $ | 3,141 | $ | (259 | ) | $ | 2,882 | $ | 235 | $ | 279 | $ | 514 | |||||||||||
(1) Derivatives relate to hedge ineffectiveness on our natural gas contracts 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.
Table 2 | ||||||||
Reconciliation of Net Income to Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) and Adjusted EBITDA | ||||||||
(dollars in thousands) | ||||||||
(unaudited) | ||||||||
Three months ended March 31, | ||||||||
2016 | 2015 | |||||||
Reported net income | $ | 718 | $ | 3,112 | ||||
Add: | ||||||||
Interest expense | 5,244 | 4,523 | ||||||
Provision (benefit) for income taxes | (138 | ) | 1,288 | |||||
Depreciation and amortization | 12,081 | 10,184 | ||||||
EBITDA | 17,905 | 19,107 | ||||||
Add: Special items before interest and taxes | 4,577 | 634 | ||||||
Adjusted EBITDA | $ | 22,482 | $ | 19,741 | ||||
Net sales | $ | 182,807 | $ | 187,365 | ||||
Adjusted EBITDA margin | 12.3 | % | 10.5 | % | ||||
Table 3 | ||||||||
Reconciliation of Net Cash Used In Operating Activities to Free Cash Flow | ||||||||
(dollars in thousands) | ||||||||
(unaudited) | ||||||||
Three months ended March 31, | ||||||||
2016 | 2015 | |||||||
Net cash used in operating activities | $ | (4,974 | ) | $ | (13,236 | ) | ||
Capital expenditures | (9,855 | ) | (16,659 | ) | ||||
Free Cash Flow | $ | (14,829 | ) | $ | (29,895 | ) | ||
Table 4 | ||||||||||||
Reconciliation to Working Capital | ||||||||||||
(dollars in thousands) | ||||||||||||
(unaudited) | ||||||||||||
March 31, 2016 | December 31, 2015 | March 31, 2015 | ||||||||||
Add: | ||||||||||||
Accounts receivable | $ | 87,901 | 94,379 | $ | 94,370 | |||||||
Inventories | 191,950 | 178,027 | 183,301 | |||||||||
Less: Accounts payable | 63,185 | 71,560 | 78,760 | |||||||||
Working Capital | $ | 216,666 | $ | 200,846 | $ | 198,911 | ||||||
Table 5 | ||||||||
Summary Business Segment Information | ||||||||
(dollars in thousands) (unaudited) | Three months ended March 31, | |||||||
Net Sales: | 2016 | 2015 | ||||||
U.S. & Canada (1) | $ | 113,101 | $ | 109,919 | ||||
Latin America (2) | 34,220 | 39,852 | ||||||
EMEA (3) | 26,628 | 28,509 | ||||||
Other (4) | 8,858 | 9,085 | ||||||
Consolidated | $ | 182,807 | $ | 187,365 | ||||
Segment Earnings Before Interest & Taxes (Segment EBIT) (5) : | ||||||||
U.S. & Canada (1) | $ | 13,312 | $ | 10,860 | ||||
Latin America (2) | 4,340 | 7,088 | ||||||
EMEA (3) | (945 | ) | (766 | ) | ||||
Other (4) | 418 | 1,870 | ||||||
Segment EBIT | $ | 17,125 | $ | 19,052 | ||||
Reconciliation of Segment EBIT to Net Income: | ||||||||
Segment EBIT | $ | 17,125 | $ | 19,052 | ||||
Retained corporate costs (6) | (6,724 | ) | (9,495 | ) | ||||
Consolidated Adjusted EBIT | 10,401 | 9,557 | ||||||
Derivatives | 370 | (399 | ) | |||||
Executive terminations | (4,947 | ) | (235 | ) | ||||
Special items before interest and taxes | (4,577 | ) | (634 | ) | ||||
Interest expense | (5,244 | ) | (4,523 | ) | ||||
Income tax benefit (expense) | 138 | (1,288 | ) | |||||
Net income | $ | 718 | $ | 3,112 | ||||
Depreciation & Amortization: | ||||||||
U.S. & Canada (1) | $ | 3,456 | $ | 2,792 | ||||
Latin America (2) | 4,542 | 3,285 | ||||||
EMEA (3) | 2,158 | 2,177 | ||||||
Other (4) | 1,428 | 1,491 | ||||||
Corporate | 497 | 439 | ||||||
Consolidated | $ | 12,081 | $ | 10,184 | ||||
(1) U.S. & Canada—includes worldwide sales of manufactured and sourced glass tableware and sourced ceramic dinnerware, metal tableware, hollowware and serveware having an end market destination in the U.S and Canada excluding glass products for Original Equipment Manufacturers (OEM), which remain in the Latin America segment.
(2) Latin America—includes primarily worldwide sales of manufactured and sourced glass tableware having an end market destination in Latin America including glass products for OEMs that have an end market destination outside of Latin America.
(3) EMEA—includes primarily worldwide sales of manufactured and sourced glass tableware having an end market destination in Europe, the Middle East and Africa.
(4) Other—includes primarily 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 include certain headquarter, administrative and facility costs, and other costs that are not allocable to the reporting segments.