Libbey Inc. Announces Record Second Quarter 2013 Financial Results

TOLEDO, Ohio, July 30, 2013 /PRNewswire/ -- Libbey Inc. (NYSE MKT: LBY) today reported results for the second quarter-ended June 30, 2013.

Second Quarter Financial Highlights

• Sales for the second quarter were $209.9 million, compared to $209.2 million for the second quarter of 2012, an increase of 0.3 percent (a decrease of 1.1 percent excluding currency fluctuation).

• Net income grew to $12.4 million from a loss of $10.1 million in the second quarter of 2012.

• Adjusted income from operations grew 8.6 percent, to $31.5 million from $29.0 million in the year-ago quarter, increasing to an all-time record for any quarter in Company history.

• Adjusted EBITDA increased 5.8 percent to an all-time record for the Company of $42.0 million (see Tables 1 and 3), compared to $39.7 million for the second quarter of 2012.

"While lower sales in the high volume retail and business-to-business channels of distribution in the U.S. and Canada contributed to overall flat sales for the quarter, we are very encouraged by sales increases in our other end markets, including EMEA, Asia Pacific and Mexico and Latin America.  The key component of our story, however,  is our continued success in cost reductions, which resulted in record adjusted income from operations and adjusted EBITDA.  This performance is even more notable, given that we had a significant amount of underutilized capacity throughout the Americas during the quarter related to the planned realignment of our production," said Stephanie A. Streeter, chief executive officer of Libbey Inc.

"With six consecutive quarters of year-over-year improvement, we have demonstrated success in improving our cost structure, making productivity improvements, leveraging our advantaged businesses and strengthening our balance sheet.  While capacity utilization will have an even greater impact during the third quarter as we continue to make progress in realigning our production in the Americas, we expect to see continued improvement in adjusted EBITDA and margins for the full-year 2013 as capacity utilization improves in the fourth quarter."  

Second Quarter Segment Sales and Operational Review

• Sales in the Americas segment were $141.8 million, compared to $148.6 million in the second quarter of 2012, a decrease of 4.6 percent (6.1 percent excluding currency fluctuation). Sales performance was led by a 3.5 percent increase in sales within our Mexican and Latin American end market (a decrease of 1.7 percent excluding currency impact) and a 1.8 percent increase in our U.S. and Canada foodservice glassware channel. However, even with the improvement in foodservice sales, overall sales within our US and Canada end market were lower by 7.8 percent.

• Sales in the EMEA segment increased 12.6 percent (10.9 percent excluding currency impact) to $38.0 million, compared to $33.7 million in the second quarter of 2012.

• Sales in Other were $30.1 million, compared to $26.9 million in the prior-year quarter. This increase was largely the result of a 13.4 percent increase in sales to Syracuse China and World Tableware customers, as well as an 8.1 percent increase in sales (6.3 percent excluding currency impact) in the Asia Pacific end market.

• Interest expense decreased by $1.8 million to $8.1 million, compared to $9.9 million in the year-ago period, primarily driven by lower interest rates.

• Our effective tax rate was an expense of 28.2 percent for the quarter-ended June 30, 2013, compared to a benefit of 12.8 percent for the quarter-ended June 30, 2012. The effective tax rate was influenced by jurisdictions with recorded valuation allowances and changes in the mix of earnings with differing statutory rates.

Six-Month Financial Highlights

• Sales for the first six months of 2013 were $393.4 million, compared to $397.1 million for the first half of 2012, a decrease of 0.9 percent (or 1.9 percent excluding currency fluctuation).

• Net income for the first six months of 2013 grew to $14.4 million, compared to a net loss of $9.5 million during the first half of 2012.

• Adjusted EBITDA increased 5.6 percent to $68.2 million, compared to $64.6 million for the first half of 2012.

Sixth-Month Segment Sales and Operational Review

• Sales in the Americas segment were $265.4 million, compared to $278.3 million in the first six months of 2012, a decrease of 4.6 percent (5.7 percent excluding currency fluctuation). Sales performance was led by a 4.0 percent increase in sales within our Mexican and Latin American end market (0.5 percent excluding currency impact), offset by an 8.1 percent decrease within our US and Canada end market.

• Sales in the EMEA segment increased 11.9 percent (10.7 percent excluding currency impact) to $72.2 million, compared to $64.5 million in the first half of 2012.

• Sales in Other were $55.8 million, compared to $54.3 million in the prior-year period. This increase was largely the result of a 9.8 percent increase in sales to Syracuse China and World Tableware customers, offset by a 10.2 percent decrease in sales (11.1 percent excluding currency impact) in the Asia Pacific end market.

• Interest expense decreased by $3.8 million to $16.6 million, compared to $20.4 million in the year-ago period, primarily driven by lower interest rates.

• Our effective tax rate was 27.8 percent for the six months ended June 30, 2013, compared to 23.3 percent for the six months ended June 30, 2012. The effective tax rate was influenced by jurisdictions with recorded valuation allowances and changes in the mix of earnings with differing statutory rates.

Balance Sheet and Liquidity

• Libbey repaid $45.0 million of its senior notes in May 2013 and realized a net reduction in debt outstanding of over $35.0 million during the quarter.

• Libbey reported that it had available capacity of $68.8 million under its ABL credit facility as of June 30, 2013, with $9.8 million in loans currently outstanding. The Company also had cash on hand of $10.5 million at June 30, 2013.

• As of June 30, 2013, working capital, defined as inventories and accounts receivable less accounts payable, was $208.1 million, compared to $200.6 million at June 30, 2012. This increase in working capital resulted from higher inventories and receivables, partially offset by higher accounts payable.

Sherry Buck, chief financial officer, added, "This quarter, the sixth consecutive quarter of margin and adjusted EBITDA improvement, represents continued progress on the journey to execute our Libbey 2015 strategy.  The first six-month results, including our May 2013 repayment of $45 million of our senior notes, keep us solidly on track to further reduce costs, strengthen our balance sheet, meet the objectives laid out in our plan and position Libbey's global business for long-term success."

Supplier Awards from Sysco Corporation and the Edward Don Company

Libbey also announced that Sysco Corporation, the global leader in selling, marketing and distributing food products to restaurants, healthcare and educational facilities, lodging establishments and other customers who prepare meals away from home, has named Libbey as a "Supplier of Excellence."   In addition, on June 28, 2013, the Edward Don Company, a leading distributor of foodservice equipment and supplies, recognized Libbey Inc. as one of only three recipients of their Outstanding Supplier Award.  These two customer awards are the latest of many that Libbey has received in the last several years.

Commenting on these achievements, Ms. Streeter said, "We are proud to once again be recognized as best in class by our customers. With ever-increasing competitive pressures in this challenging economic environment, this recognition confirms the strength of our brands and the quality of the service we provide our customers."

Webcast Information

Libbey will hold a conference call for investors on Tuesday, July 30, 2013, at 11 a.m. Eastern Daylight 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.

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 10-K filed with the Commission on March 18, 2013.  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.   

In accordance with the SEC's Regulation G, tables 1, 2, 3, 4 and 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.