PR Newswire
TOLEDO, Ohio, Aug. 4, 2016
TOLEDO, Ohio, Aug. 4, 2016 /PRNewswire/ --
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, 2016.
Second Quarter Financial Highlights
"Our global foodservice business continued to demonstrate strength with our 13th consecutive quarter of volume growth during the second quarter," said William A. Foley, chairman and chief executive officer of Libbey Inc. "Sales were down in our retail and business-to-business channels, consistent with trends we've been witnessing in recent quarters. We believe the strategies we are implementing will drive performance improvements in both of these channels. Additionally, we are taking decisive actions to accelerate business improvements including the portfolio optimization project we executed in the quarter which will reduce the complexity in our product offering."
Foley continued, "In the near-term, we remain focused on our goals of strengthening relationships with customers, improving capabilities in product innovation and simplifying our business to operate more efficiently. Strong performance in these areas is critical to the long-term success of our Company, and we expect to be able to provide more specific details surrounding our progress on these important initiatives as the year continues. We reconfirm our expected Adjusted EBITDA margin of approximately 14 percent on lower expected net sales. Due to the challenging competitive and macroeconomic environment, we now expect net sales to be down 1 to 2 percent year over year on a reported basis." (See Table 6)
Second Quarter Segment Sales and Operational Review
Six-Month Financial Highlights
Six-Month Segment Sales and Operational Review
Balance Sheet and Liquidity
Sherry Buck, chief financial officer, commented: "While our portfolio optimization initiative led to a non-cash net income reduction of $6.8 million pre-tax for the second quarter, we're pleased to have delivered a 15.4 percent year-over-year increase in Adjusted EBITDA, driven by higher gross profit margins excluding the product portfolio optimization charge and lower SG&A."
Buck concluded, "We continue to take a balanced approach to capital allocation and remain committed to our plan to return fifty percent of free cash flow to shareholders during the period 2015 to 2017. While we were active in the market repurchasing shares during the second quarter, we chose to prioritize debt reduction during the period in support of our target leverage ratio of 2.5x to 3.0x Debt Net of Cash to Adjusted EBITDA (See Table 5). As a result, we made an optional, early repayment on our term loan of $5 million during the quarter."
Webcast Information
Libbey will hold a conference call for investors on Thursday, August 4, 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.
Use of Non-GAAP Financial Measures
To supplement the condensed financial statements presented in accordance with U.S. Generally Accepted Accounting Principles (" U.S. GAAP"), we use non-GAAP measures of certain components of financial performance. These non-GAAP measures include EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, Free Cash Flow, Trade Working Capital and our Debt Net of Cash to Adjusted EBITDA Ratio. Reconciliations to the nearest U.S. GAAP measures of all non-GAAP measures included in this press release can be found in the tables below.
Our non-GAAP measures, as defined below, are used by analysts, investors and other interested parties to compare our performance with the performance of other companies that report similar non-GAAP measures. Libbey believes these non-GAAP measures provide meaningful supplemental information regarding financial performance by excluding certain expenses and benefits that may not be indicative of core business operating results. We believe the non-GAAP measures, when viewed in conjunction with U.S. GAAP results and the accompanying reconciliations, enhance the comparability of results against prior periods and allow for greater transparency of financial results and business outlook. In addition, we use non-GAAP data internally to assess performance and facilitate management's internal comparison of our financial performance to that of prior periods, as well as trend analysis for budgeting and planning purposes. The presentation of our non-GAAP measures is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with U.S. GAAP. Furthermore, our non-GAAP measures may not be comparable to similarly titled measures reported by other companies and may have limitations as an analytical tool. We define our non-GAAP measures as follows:
Constant Currency
We translate revenue and expense accounts in our non-U.S. operations at current average exchange rates during the year. References to "constant currency," "excluding currency impact" and "adjusted for currency" are considered non-GAAP measures. Constant currency references regarding net sales reflect a simple mathematical translation of local currency results using the comparable prior period's currency conversion rate. Constant currency references regarding EBIT, EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin comprise a simple mathematical translation of local currency results using the comparable prior period's currency conversion rate plus the transactional impact of changes in exchange rates from revenues, expenses and assets and liabilities that are denominated in a currency other than the functional currency. We believe this non-GAAP constant currency information provides valuable supplemental information regarding our core operating results, better identifies operating trends that may otherwise by masked or distorted by exchange rate changes and provides a higher degree of transparency of information used by management in its evaluation of our ongoing operations. These non-GAAP measures should be viewed in addition to, and not as an alternative to, the reported results prepared in accordance with GAAP. Our currency market risks include currency fluctuations relative to the U.S. dollar, Canadian dollar, Mexican peso, Euro and RMB.
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.
Libbey Inc. | |||||||
Condensed Consolidated Statements of Operations | |||||||
(dollars in thousands, except per-share amounts) | |||||||
(unaudited) | |||||||
| | ||||||
| Three months ended June 30, | ||||||
| 2016 | | 2015 | ||||
| | | | ||||
Net sales | $ | 207,902 | | | $ | 214,051 | |
Freight billed to customers | 662 | | | 735 | | ||
Total revenues | 208,564 | | | 214,786 | | ||
Cost of sales | 158,153 | | | 157,896 | | ||
Gross profit | 50,411 | | | 56,890 | | ||
Selling, general and administrative expenses | 30,673 | | | 36,390 | | ||
Income from operations | 19,738 | | | 20,500 | | ||
Other income | 802 | | | 846 | | ||
Earnings before interest and income taxes | 20,540 | | | 21,346 | | ||
Interest expense | 5,154 | | | 4,538 | | ||
Income before income taxes | 15,386 | | | 16,808 | | ||
Provision for income taxes | 6,691 | | | 2,414 | | ||
Net income | $ | 8,695 | | | $ | 14,394 | |
| | | | ||||
Net income per share: | | | | ||||
Basic | $ | 0.40 | | | $ | 0.66 | |
Diluted | $ | 0.40 | | | $ | 0.65 | |
Dividends declared per share | $ | 0.115 | | | $ | 0.110 | |
| | | | ||||
Weighted average shares: | | | | ||||
Basic | 21,865 | | | 21,775 | | ||
Diluted | 22,003 | | | 22,234 | |
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