TOLEDO, Ohio, Feb. 28,
2017 /PRNewswire/ -- Libbey Inc. (NYSE MKT: LBY), one of the
largest glass tableware manufacturers in the world, today
reported results for the fourth quarter ended December 31, 2016.
Full-Year 2016 Highlights
- Net sales $793.4 million, down
3.5 percent versus prior year, or down 1.1 percent in constant
currency
- Net income $10.1 million, down
$56.3 million versus prior year; 2015
included a non-repeating $43.8
million tax benefit; 2016 net income margin of 1.3
percent
- Adjusted EBITDA $109.8 million,
down $6.4 million versus prior
year; 2016 Adjusted EBITDA margin of 13.8 percent
- Company estimates Toledo work
stoppage negatively impacted net sales by $7
million to $9 million and pre-tax income by $7 million to $8 million
- During the year, the Company returned $12.1 million to shareholders through a
combination of share repurchases and dividends
"Fourth quarter results continued to be impacted by the recent
trends we've observed in our foodservice and retail channels,
consistent with the activity that we saw in the preceding quarter,"
said William A. Foley, chairman and
chief executive officer of Libbey Inc. "Foodservice unit volumes
increased slightly, despite the impact of a Toledo work stoppage and an ongoing decline in
restaurant traffic trends. By executing against our business
strategy, we have continued to outperform our industry, and we are
encouraged by indications that Libbey is continuing to win market
share amidst a challenging, competitive environment."
Foley added, "2016 was an important year from an operational
standpoint, as we began to make proactive changes to ensure the
business is adapting to shifts in consumer behaviors and addressing
legacy issues of our business. Our new product development
capabilities are improving, we've rationalized and streamlined our
product portfolio and we're taking new approaches to the ways in
which we evaluate our manufacturing footprint to maximize
profitability. We are seeing positive impacts from many of these
initiatives that we prioritized during the year, and we remain
confident that we are taking the appropriate steps to improve the
long-term performance of the Company."
Fourth Quarter Financial & Operating Highlights
- Net sales in fourth quarter 2016 were $205.8 million, compared to $219.1 million in the prior-year fourth quarter,
a 6.1 percent decrease (or a 3.6 percent decrease excluding
$5.4 million currency impact).
- Net loss in fourth quarter 2016 was $2.2
million, compared to net income of $32.1 million in fourth quarter 2015. The fourth
quarter 2015 included the reversal of substantially all of the U.S.
deferred tax asset valuation allowance of $43.8 million.
- Adjusted EBITDA (see Table 1) in fourth quarter 2016 was
$22.8 million, compared to
$31.0 million in fourth quarter
2015.
- Net sales in the U.S. and Canada segment were $129.5 million, a decrease of 7.3 percent versus
net sales of $139.8 million in fourth
quarter 2015. The decrease was primarily driven by lower retail and
business-to-business net sales, which were down 17.2 percent and
6.9 percent, respectively, compared to fourth quarter 2015.
Foodservice net sales decreased 1.4 percent compared to the
prior-year fourth quarter.
- Toledo work stoppage
negatively impacted net sales by an estimated $7 million to $9 million and income before income
taxes by approximately $7 million to $8
million. Adjusted EBITDA was negatively impacted by the
estimated lost sales by approximately $3
million to $4 million.
- Net sales in the Latin America
segment were $36.4 million, compared
to $40.2 million in fourth quarter
2015, a 9.5 percent decrease (or a 1.3 percent increase excluding
$4.3 million currency impact). Retail
net sales growth of 5.0 percent (or an 18.8 percent increase
excluding $2.4 million currency
impact) was primarily offset by weakness in business-to-business
net sales.
- Net sales in the EMEA segment were $31.7
million, compared to $31.5
million in fourth quarter 2015, an increase of 0.8 percent
(or an increase of 2.3 percent adjusted for currency). Growth in
the retail and business-to-business channels was partially offset
by slower foodservice net sales.
- Net sales in Other were $8.2
million in fourth quarter 2016, compared to $7.7 million in the comparable prior-year
quarter, reflecting an increase of 6.3 percent (or an increase of
13.1 percent adjusted for currency).
- The Company recorded tax expense of $5.7 million for
fourth quarter 2016, compared to a tax benefit of $39.7
million in same period in 2015. The benefit recorded for
fourth quarter 2015 included a tax benefit of $43.8
million related to the reversal of the valuation allowance
recorded against U.S. deferred tax assets. In addition, 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, non-taxable foreign
translation gains and other activity in jurisdictions with recorded
valuation allowances.
Full-Year 2016 Financial & Operating Highlights
- Net sales for full-year 2016 were $793.4
million, compared to $822.3
million for full-year 2015, a decrease of 3.5 percent (or a
decrease of 1.1 percent excluding $19.6
million currency impact).
- Net income for full-year 2016 was $10.1
million, compared to $66.3
million during full-year 2015; 2015 included the reversal of
substantially all of the U.S. deferred tax asset valuation
allowance of $43.8 million.
- Adjusted EBITDA (see Table 1) was $109.8
million for full-year 2016, compared to $116.1 million for full-year 2015.
- Net sales in the U.S. and Canada segment were $488.2 million for full-year 2016, compared to
$497.7 million for full-year 2015, a
decrease of 1.9 percent. Retail net sales declined 10.2 percent,
more than offsetting a 2.3 percent increase in foodservice net
sales. Business-to-business net sales were down 0.7 percent.
- Toledo work stoppage
negatively impacted net sales by an estimated $7 million to $9 million and income before income
taxes by approximately $7 million to $8
million. Adjusted EBITDA was negatively impacted by the
estimated lost sales by approximately $3
million to $4 million.
- Net sales in the Latin America
segment were $151.4 million, compared
to $167.1 million for full-year 2015;
the 9.4 percent decrease (or 0.8 percent increase excluding
$17.0 million currency impact) was
primarily due to weakness in the business-to-business channel.
Retail net sales for full-year 2016 increased 1.5 percent compared
to the prior year (or increased 14.4 percent excluding $9.0 million currency impact).
- Net sales in the EMEA segment decreased 2.4 percent (or
decreased 2.0 percent adjusted for currency) to $119.8 million, compared to $122.7 million for full-year 2015. The decrease
was primarily the result of weakness in the business-to-business
channel.
- Net sales in Other were $34.1
million for full-year 2016, compared to $34.9 million for full year 2015, reflecting a
decrease of 2.2 percent (or an increase of 3.7 percent adjusted for
currency).
- The Company recorded tax expense of $17.7 million for
2016, compared to a tax benefit of $38.2 million for
2015. The benefit recorded for full-year 2015 includes a tax
benefit of $43.8 million related to the reversal of the
valuation allowance against its U.S. deferred tax assets. In
addition, the effective tax rates for both years were generally
influenced by 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 $88.4 million under its ABL credit facility at
December 31, 2016, with no loans
outstanding, and cash on hand of $61.0
million.
- At December 31, 2016, Trade
Working Capital, defined as inventories and accounts receivable
less accounts payable, was $183.5
million, a decrease of $17.3
million from $200.8 million at
December 31, 2015 (see Table 3). The
decrease was a result of lower accounts receivable and inventories
with almost no change in accounts payable.
Outlook
The Company expects macroeconomic, industry and competitive
trends to remain consistent year-over-year and thus projects the
following outlook for full-year 2017:
- Net sales flat to slightly down on an as reported basis,
compared to full-year 2016, as negative currency impacts offset
projected growth.
- Adjusted EBITDA margin of 13 percent to 14 percent.
- Capital expenditures in the range of $50
million to $55 million.
Foley concluded, "As we look toward 2017, we plan to take the
next steps to strengthen the functions we emphasized last year by
maintaining an active new product development pipeline and
continually evaluating opportunities to optimize the performance of
our global manufacturing network. Longer term, we believe
significant opportunities exist to grow sales through new product
and category introductions, as well as continued market share
expansion in underpenetrated categories."
"While we're focused on taking advantage of opportunities we see
in our markets to drive the long-term growth of our business, we
need also to continue to improve our operational and organizational
excellence to support growth. Therefore, we will pursue ecommerce
and begin an ERP implementation during 2017. For full-year 2017, we
expect to be able to offset much of the cost of these initiatives,
and we project our full year Adjusted EBITDA margin to be similar
to, or slightly down from, last year. We see these investments as
both defensive and offensive. They provide critical platforms for
our growth and help position us for enhanced alignment with
consumer purchasing preferences and improved operating
efficiencies."
"We also will continue to take a balanced approach to our
capital allocation policies and remain committed to our dividend
policy, which we recently increased by two percent to 11.75 cents per quarter. However, given the
continued softness that we're seeing in some of our end markets, we
believe it is prudent to continue prioritizing debt reduction with
our excess capital over the near term. We believe we are well
positioned to return the Company to growth and look forward to
driving value for shareholders in the future.
Webcast Information
Libbey will hold a conference call for investors on Tuesday, February 28, 2017, at 11 a.m. Eastern Standard 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®, Libbey
Signature®, Masters Reserve®,
World® Tableware, Syracuse® China, and Crisal Glass®. In 2016,
Libbey Inc.'s net sales totaled $793.4
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 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
additional transparency of financial results and business outlook.
In addition, we use non-GAAP data internally to assess performance,
liquidity 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:
- We define Adjusted EBITDA and Adjusted EBITDA Margin as U.S.
GAAP net income plus interest expense, provision for income taxes,
depreciation and amortization, and special items that Libbey
believes are not reflective of our core operating performance.
- We define Free Cash Flow as net cash provided by (used in)
operating activities less capital expenditures plus proceeds from
asset sales and other.
- We define Trade Working Capital as net accounts receivable plus
net inventories less accounts payable.
- We define our Debt Net of Cash to Adjusted EBITDA Ratio as
gross debt before unamortized discount and finance fees, less cash
and cash equivalents, divided by Adjusted EBITDA (defined
above).
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 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 U.S. 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
December 31,
|
|
2016
|
|
2015
|
|
|
|
|
Net sales
|
$
|
205,838
|
|
|
$
|
219,145
|
|
Freight billed to
customers
|
807
|
|
|
810
|
|
Total
revenues
|
206,645
|
|
|
219,955
|
|
Cost of
sales
|
172,618
|
|
|
190,703
|
|
Gross
profit
|
34,027
|
|
|
29,252
|
|
Selling, general and
administrative expenses
|
27,636
|
|
|
33,717
|
|
Income (loss) from
operations
|
6,391
|
|
|
(4,465)
|
|
Other
income
|
2,327
|
|
|
1,603
|
|
Earnings (loss)
before interest and income taxes
|
8,718
|
|
|
(2,862)
|
|
Interest
expense
|
5,259
|
|
|
4,722
|
|
Income (loss) before
income taxes
|
3,459
|
|
|
(7,584)
|
|
Provision (benefit)
for income taxes
|
5,708
|
|
|
(39,692)
|
|
Net income
(loss)
|
$
|
(2,249)
|
|
|
$
|
32,108
|
|
|
|
|
|
Net income (loss) per
share:
|
|
|
|
Basic
|
$
|
(0.10)
|
|
|
$
|
1.47
|
|
Diluted
|
$
|
(0.10)
|
|
|
$
|
1.45
|
|
Dividends declared
per share
|
$
|
0.115
|
|
|
$
|
0.110
|
|
|
|
|
|
Weighted average
shares:
|
|
|
|
Basic
|
21,908
|
|
|
21,819
|
|
Diluted
|
21,908
|
|
|
22,111
|
|
Libbey
Inc.
Condensed
Consolidated Statements of Operations
(dollars in
thousands, except per share amounts)
(unaudited)
|
|
|
Year ended
December 31,
|
|
2016
|
|
2015
|
|
|
|
|
Net sales
|
$
|
793,420
|
|
|
$
|
822,345
|
|
Freight billed to
customers
|
2,790
|
|
|
2,885
|
|
Total
revenues
|
796,210
|
|
|
825,230
|
|
Cost of
sales
|
629,916
|
|
|
648,902
|
|
Gross
profit
|
166,294
|
|
|
176,328
|
|
Selling, general and
administrative expenses
|
120,984
|
|
|
132,607
|
|
Income from
operations
|
45,310
|
|
|
43,721
|
|
Other
income
|
3,362
|
|
|
2,880
|
|
Earnings before
interest and income taxes
|
48,672
|
|
|
46,601
|
|
Interest
expense
|
20,888
|
|
|
18,484
|
|
Income before income
taxes
|
27,784
|
|
|
28,117
|
|
Provision (benefit)
for income taxes
|
17,711
|
|
|
(38,216)
|
|
Net income
|
$
|
10,073
|
|
|
$
|
66,333
|
|
|
|
|
|
Net income per
share:
|
|
|
|
Basic
|
$
|
0.46
|
|
|
$
|
3.04
|
|
Diluted
|
$
|
0.46
|
|
|
$
|
2.99
|
|
Dividends declared
per share
|
$
|
0.46
|
|
|
$
|
0.44
|
|
|
|
|
|
Weighted average
shares:
|
|
|
|
Basic
|
21,880
|
|
|
21,817
|
|
Diluted
|
22,049
|
|
|
22,159
|
|
|
|
|
|
Libbey
Inc.
Condensed
Consolidated Balance Sheets
(dollars in
thousands)
|
|
|
December 31,
2016
|
|
December 31,
2015
|
|
(unaudited)
|
|
|
ASSETS:
|
|
|
|
Cash and cash
equivalents
|
$
|
61,011
|
|
|
$
|
49,044
|
|
Accounts receivable —
net
|
85,113
|
|
|
94,379
|
|
Inventories —
net
|
170,009
|
|
|
178,027
|
|
Other current
assets
|
16,777
|
|
|
19,326
|
|
Total current
assets
|
332,910
|
|
|
340,776
|
|
Pension
asset
|
—
|
|
|
977
|
|
Purchased intangibles
— net
|
15,225
|
|
|
16,364
|
|
Goodwill
|
164,112
|
|
|
164,112
|
|
Deferred income
taxes
|
40,016
|
|
|
48,662
|
|
Other
assets
|
9,514
|
|
|
9,019
|
|
Total other
assets
|
228,867
|
|
|
239,134
|
|
Property, plant and
equipment — net
|
256,392
|
|
|
272,534
|
|
Total
assets
|
$
|
818,169
|
|
|
$
|
852,444
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY:
|
|
|
|
Accounts
payable
|
$
|
71,582
|
|
|
$
|
71,560
|
|
Salaries and
wages
|
27,018
|
|
|
27,266
|
|
Accrued
liabilities
|
41,807
|
|
|
45,179
|
|
Accrued income
taxes
|
1,384
|
|
|
4,009
|
|
Pension liability
(current portion)
|
2,461
|
|
|
2,297
|
|
Non-pension
postretirement benefits (current portion)
|
4,892
|
|
|
4,903
|
|
Derivative
liability
|
1,928
|
|
|
4,265
|
|
Long-term debt due
within one year
|
5,009
|
|
|
4,747
|
|
Total current
liabilities
|
156,081
|
|
|
164,226
|
|
Long-term
debt
|
402,831
|
|
|
426,272
|
|
Pension
liability
|
43,934
|
|
|
44,274
|
|
Non-pension
postretirement benefits
|
55,373
|
|
|
55,282
|
|
Deferred income
taxes
|
1,859
|
|
|
2,822
|
|
Other long-term
liabilities
|
12,972
|
|
|
11,186
|
|
Total
liabilities
|
673,050
|
|
|
704,062
|
|
|
|
|
|
Common stock and
capital in excess of par value
|
329,941
|
|
|
330,974
|
|
Treasury
stock
|
—
|
|
|
(4,448)
|
|
Retained
deficit
|
(59,625)
|
|
|
(57,912)
|
|
Accumulated other
comprehensive loss
|
(125,197)
|
|
|
(120,232)
|
|
Total shareholders'
equity
|
145,119
|
|
|
148,382
|
|
Total liabilities and
shareholders' equity
|
$
|
818,169
|
|
|
$
|
852,444
|
|
Libbey
Inc.
Condensed
Consolidated Statements of Cash Flows
(dollars in
thousands)
(unaudited)
|
|
|
Three months ended
December 31,
|
|
2016
|
|
2015
|
Operating
activities:
|
|
|
|
Net income
(loss)
|
$
|
(2,249)
|
|
|
$
|
32,108
|
|
Adjustments to
reconcile net income (loss) to net cash provided by operating
activities:
|
|
|
|
Depreciation and
amortization
|
11,817
|
|
|
11,426
|
|
Loss on asset sales
and disposals
|
122
|
|
|
177
|
|
Change in accounts
receivable
|
12,374
|
|
|
1,390
|
|
Change in
inventories
|
18,928
|
|
|
19,898
|
|
Change in accounts
payable
|
6,188
|
|
|
5,190
|
|
Accrued interest and
amortization of discounts and finance fees
|
424
|
|
|
345
|
|
Pension &
non-pension postretirement benefits, net
|
(860)
|
|
|
17,412
|
|
Accrued liabilities
& prepaid expenses
|
(11,142)
|
|
|
(8,660)
|
|
Income
taxes
|
3,952
|
|
|
(40,078)
|
|
Share-based
compensation expense
|
432
|
|
|
368
|
|
Excess tax benefit
from share-based compensation arrangements
|
—
|
|
|
(2,797)
|
|
Other operating
activities
|
(936)
|
|
|
(2,728)
|
|
Net cash provided by
operating activities
|
39,050
|
|
|
34,051
|
|
|
|
|
|
Investing
activities:
|
|
|
|
Additions to
property, plant and equipment
|
(11,081)
|
|
|
(6,656)
|
|
Proceeds from asset
sales and other
|
—
|
|
|
5
|
|
Net cash used in
investing activities
|
(11,081)
|
|
|
(6,651)
|
|
|
|
|
|
Financing
activities:
|
|
|
|
Borrowings on
ABL credit facility
|
—
|
|
|
18,400
|
|
Repayments on ABL
credit facility
|
—
|
|
|
(25,400)
|
|
Repayments on Term
Loan B
|
(6,100)
|
|
|
(1,100)
|
|
Stock options
exercised
|
247
|
|
|
4
|
|
Excess tax benefit
from share-based compensation arrangements
|
—
|
|
|
2,797
|
|
Dividends
|
(2,519)
|
|
|
(2,400)
|
|
Net cash used in
financing activities
|
(8,372)
|
|
|
(7,699)
|
|
|
|
|
|
Effect of exchange
rate fluctuations on cash
|
(1,256)
|
|
|
(758)
|
|
Increase in
cash
|
18,341
|
|
|
18,943
|
|
|
|
|
|
Cash & cash
equivalents at beginning of period
|
42,670
|
|
|
30,101
|
|
Cash & cash
equivalents at end of period
|
$
|
61,011
|
|
|
$
|
49,044
|
|
Libbey
Inc.
Condensed
Consolidated Statements of Cash Flows
(dollars in
thousands)
(unaudited)
|
|
|
Year ended
December 31,
|
|
2016
|
|
2015
|
Operating
activities:
|
|
|
|
Net income
|
$
|
10,073
|
|
|
$
|
66,333
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
Depreciation and
amortization
|
48,486
|
|
|
42,712
|
|
Loss on asset sales
and disposals
|
287
|
|
|
567
|
|
Change in accounts
receivable
|
8,660
|
|
|
(6,312)
|
|
Change in
inventories
|
5,979
|
|
|
(12,006)
|
|
Change in accounts
payable
|
(481)
|
|
|
(3,466)
|
|
Accrued interest and
amortization of discounts and finance fees
|
(1,086)
|
|
|
1,291
|
|
Pension &
non-pension postretirement benefits, net
|
(2,513)
|
|
|
18,865
|
|
Accrued liabilities
& prepaid expenses
|
4,032
|
|
|
4,140
|
|
Income
taxes
|
6,296
|
|
|
(45,003)
|
|
Share-based
compensation expense
|
4,766
|
|
|
5,917
|
|
Excess tax benefit
from share-based compensation arrangements
|
(366)
|
|
|
(2,797)
|
|
Other operating
activities
|
(1,490)
|
|
|
(4,142)
|
|
Net cash provided by
operating activities
|
82,643
|
|
|
66,099
|
|
|
|
|
|
Investing
activities:
|
|
|
|
Additions to
property, plant and equipment
|
(34,604)
|
|
|
(48,136)
|
|
Proceeds from asset
sales and other
|
—
|
|
|
7
|
|
Net cash used in
investing activities
|
(34,604)
|
|
|
(48,129)
|
|
|
|
|
|
Financing
activities:
|
|
|
|
Borrowings on
ABL credit facility
|
6,000
|
|
|
62,900
|
|
Repayments on ABL
credit facility
|
(6,000)
|
|
|
(62,900)
|
|
Other
repayments
|
(350)
|
|
|
(3,267)
|
|
Other
borrowings
|
339
|
|
|
—
|
|
Repayments on Term
Loan B
|
(24,400)
|
|
|
(4,400)
|
|
Stock options
exercised
|
1,400
|
|
|
3,338
|
|
Excess tax benefit
from share-based compensation arrangements
|
366
|
|
|
2,797
|
|
Dividends
|
(10,070)
|
|
|
(9,597)
|
|
Treasury shares
purchased
|
(2,000)
|
|
|
(15,275)
|
|
Net cash used in
financing activities
|
(34,715)
|
|
|
(26,404)
|
|
|
|
|
|
Effect of exchange
rate fluctuations on cash
|
(1,357)
|
|
|
(2,566)
|
|
Increase (decrease)
in cash
|
11,967
|
|
|
(11,000)
|
|
|
|
|
|
Cash & cash
equivalents at beginning of year
|
49,044
|
|
|
60,044
|
|
Cash & cash
equivalents at end of year
|
$
|
61,011
|
|
|
$
|
49,044
|
|
In accordance with the SEC's Regulation G, the following tables
provide non-GAAP measures used in this earnings release and a
reconciliation to the most closely related U.S. Generally Accepted
Accounting Principle (U.S. GAAP) measure. See the above text
for additional information on our non-GAAP measures. 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 Net Income (Loss) to Adjusted Earnings Before Interest, Taxes,
Depreciation and Amortization (Adjusted EBITDA)
|
(dollars in
thousands)
|
|
|
|
|
|
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
December 31,
|
|
Year ended
December 31,
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Reported net income
(loss) (U.S. GAAP)
|
|
$
|
(2,249)
|
|
|
$
|
32,108
|
|
|
$
|
10,073
|
|
|
$
|
66,333
|
|
Add:
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
5,259
|
|
|
4,722
|
|
|
20,888
|
|
|
18,484
|
|
Provision (benefit) for income taxes
|
|
5,708
|
|
|
(39,692)
|
|
|
17,711
|
|
|
(38,216)
|
|
Depreciation and amortization
|
|
11,817
|
|
|
11,426
|
|
|
48,486
|
|
|
42,712
|
|
Add special items
before interest and taxes:
|
|
|
|
|
|
|
|
|
Pension
settlement (1)
|
|
(44)
|
|
|
21,693
|
|
|
168
|
|
|
21,693
|
|
Product
portfolio optimization (2)
|
|
(1,091)
|
|
|
—
|
|
|
5,693
|
|
|
—
|
|
Work
Stoppage (3)
|
|
4,162
|
|
|
—
|
|
|
4,162
|
|
|
—
|
|
Reorganization charges (4)
|
|
—
|
|
|
125
|
|
|
—
|
|
|
4,316
|
|
Executive terminations
|
|
(61)
|
|
|
635
|
|
|
4,460
|
|
|
870
|
|
Derivatives (5)
|
|
(710)
|
|
|
(93)
|
|
|
(1,860)
|
|
|
(218)
|
|
Environmental obligation (6)
|
|
—
|
|
|
34
|
|
|
—
|
|
|
157
|
|
Adjusted EBITDA
(non-GAAP)
|
|
$
|
22,791
|
|
|
$
|
30,958
|
|
|
$
|
109,781
|
|
|
$
|
116,131
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
205,838
|
|
|
$
|
219,145
|
|
|
$
|
793,420
|
|
|
$
|
822,345
|
|
Net income (loss)
margin (U.S. GAAP)
|
|
(1.1)
|
%
|
|
14.7
|
%
|
|
1.3
|
%
|
|
8.1
|
%
|
Adjusted EBITDA
margin (non-GAAP)
|
|
11.1
|
%
|
|
14.1
|
%
|
|
13.8
|
%
|
|
14.1
|
%
|
(1)
|
The 2015 pension
settlement charge relates to EMEA unwinding direct ownership of its
Dutch defined benefit pension plan.
|
(2)
|
Product portfolio
optimization relates to inventory reductions to simplify and
improve our operations.
|
(3)
|
Work stoppage
relates to the lower production volume impact, shipping costs and
other direct expenses associated with the two-week Toledo, Ohio
work stoppage in the fourth quarter of 2016.
|
(4)
|
Management
reorganization to support our growth strategy.
|
(5)
|
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.
|
(6)
|
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.
|
Table
2
|
Reconciliation
of Net Cash Provided By Operating Activities to Free Cash
Flow
|
(dollars in
thousands)
|
|
|
|
|
|
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
Three months ended
December 31,
|
|
Year ended
December 31,
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Net cash provided by
operating activities (U.S. GAAP)
|
|
$
|
39,050
|
|
|
$
|
34,051
|
|
|
$
|
82,643
|
|
|
$
|
66,099
|
|
Capital
expenditures
|
|
(11,081)
|
|
|
(6,656)
|
|
|
(34,604)
|
|
|
(48,136)
|
|
Proceeds from asset
sales and other
|
|
—
|
|
|
5
|
|
|
—
|
|
|
7
|
|
Free Cash Flow
(non-GAAP)
|
|
$
|
27,969
|
|
|
$
|
27,400
|
|
|
$
|
48,039
|
|
|
$
|
17,970
|
|
Table
3
|
Reconciliation
to Trade Working Capital
|
|
|
|
(dollars in
thousands)
|
|
|
|
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
December 31,
2016
|
|
September 30,
2016
|
|
December 31,
2015
|
Add:
|
|
|
|
|
|
|
Accounts receivable —
net
|
|
$
|
85,113
|
|
|
98,547
|
|
|
$
|
94,379
|
|
Inventories —
net
|
|
170,009
|
|
|
191,479
|
|
|
178,027
|
|
Less: Accounts
payable
|
|
71,582
|
|
|
63,191
|
|
|
71,560
|
|
Trade Working Capital
(non-GAAP)
|
|
$
|
183,540
|
|
|
$
|
226,835
|
|
|
$
|
200,846
|
|
Table
4
|
Summary
Business Segment Information
|
|
|
|
|
|
|
|
|
(dollars in
thousands)
(unaudited)
|
|
Three months
ended
December 31,
|
|
Year ended
December 31,
|
Net
Sales:
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
U.S. & Canada
(1)
|
|
$
|
129,549
|
|
|
$
|
139,774
|
|
|
$
|
488,162
|
|
|
$
|
497,728
|
|
Latin America
(2)
|
|
36,418
|
|
|
40,231
|
|
|
151,406
|
|
|
167,069
|
|
EMEA
(3)
|
|
31,707
|
|
|
31,457
|
|
|
119,750
|
|
|
122,664
|
|
Other
(4)
|
|
8,164
|
|
|
7,683
|
|
|
34,102
|
|
|
34,884
|
|
Consolidated
|
|
$
|
205,838
|
|
|
$
|
219,145
|
|
|
$
|
793,420
|
|
|
$
|
822,345
|
|
|
|
|
|
|
|
|
|
|
Segment Earnings
Before Interest & Taxes (Segment EBIT) (5)
:
|
|
|
|
|
|
|
|
|
U.S. & Canada
(1)
|
|
$
|
20,176
|
|
|
$
|
23,389
|
|
|
$
|
77,916
|
|
|
$
|
80,406
|
|
Latin America
(2)
|
|
(3,353)
|
|
|
3,646
|
|
|
10,731
|
|
|
22,017
|
|
EMEA
(3)
|
|
700
|
|
|
(23)
|
|
|
(1,002)
|
|
|
1,251
|
|
Other
(4)
|
|
17
|
|
|
539
|
|
|
915
|
|
|
4,390
|
|
Segment
EBIT
|
|
$
|
17,540
|
|
|
$
|
27,551
|
|
|
$
|
88,560
|
|
|
$
|
108,064
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Segment EBIT to Net Income (Loss):
|
|
|
|
|
|
|
|
|
Segment
EBIT
|
|
$
|
17,540
|
|
|
$
|
27,551
|
|
|
$
|
88,560
|
|
|
$
|
108,064
|
|
Retained corporate
costs (6)
|
|
(6,566)
|
|
|
(8,019)
|
|
|
(27,265)
|
|
|
(34,645)
|
|
Pension
settlement
|
|
44
|
|
|
(21,693)
|
|
|
(168)
|
|
|
(21,693)
|
|
Environmental
obligation
|
|
—
|
|
|
(34)
|
|
|
—
|
|
|
(157)
|
|
Reorganization
charges
|
|
—
|
|
|
(125)
|
|
|
—
|
|
|
(4,316)
|
|
Derivatives
|
|
710
|
|
|
93
|
|
|
1,860
|
|
|
218
|
|
Executive
terminations
|
|
61
|
|
|
(635)
|
|
|
(4,460)
|
|
|
(870)
|
|
Product portfolio
optimization
|
|
1,091
|
|
|
—
|
|
|
(5,693)
|
|
|
—
|
|
Work
stoppage
|
|
(4,162)
|
|
|
—
|
|
|
(4,162)
|
|
|
—
|
|
Interest
expense
|
|
(5,259)
|
|
|
(4,722)
|
|
|
(20,888)
|
|
|
(18,484)
|
|
Income tax benefit
(expense)
|
|
(5,708)
|
|
|
39,692
|
|
|
(17,711)
|
|
|
38,216
|
|
Net income
(loss)
|
|
$
|
(2,249)
|
|
|
$
|
32,108
|
|
|
$
|
10,073
|
|
|
$
|
66,333
|
|
|
|
|
|
|
|
|
|
|
Depreciation &
Amortization:
|
|
|
|
|
|
|
|
|
U.S. & Canada
(1)
|
|
$
|
3,030
|
|
|
$
|
3,425
|
|
|
$
|
12,748
|
|
|
$
|
12,214
|
|
Latin America
(2)
|
|
5,343
|
|
|
4,361
|
|
|
19,068
|
|
|
14,738
|
|
EMEA
(3)
|
|
1,717
|
|
|
2,065
|
|
|
9,377
|
|
|
8,510
|
|
Other
(4)
|
|
1,426
|
|
|
1,421
|
|
|
5,588
|
|
|
5,855
|
|
Corporate
|
|
301
|
|
|
154
|
|
|
1,705
|
|
|
1,395
|
|
Consolidated
|
|
$
|
11,817
|
|
|
$
|
11,426
|
|
|
$
|
48,486
|
|
|
$
|
42,712
|
|
(1)
|
U.S. &
Canada—includes sales of manufactured and sourced tableware 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 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 sales of manufactured and sourced glass tableware having
an end market destination in Europe, the Middle East and
Africa.
|
(4)
|
Other—includes
primarily 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.
|
Table
5
|
Reconciliation
of Net Income to Adjusted Earnings Before Interest, Taxes,
Depreciation and Amortization (Adjusted EBITDA)
and Debt Net of Cash to Adjusted EBITDA
Ratio
|
(dollars in
thousands)
|
|
|
|
(unaudited)
|
|
|
|
|
Year Ended
December 31, 2016
|
|
Year Ended
December 31, 2015
|
|
|
Reported net
income (U.S. GAAP)
|
$
|
10,073
|
|
|
$
|
66,333
|
|
Add:
|
|
|
|
Interest
expense
|
20,888
|
|
|
18,484
|
|
Provision (benefit) for income taxes
|
17,711
|
|
|
(38,216)
|
|
Depreciation and amortization
|
48,486
|
|
|
42,712
|
|
Special
items before interest and taxes
|
12,623
|
|
|
26,818
|
|
Adjusted EBITDA
(non-GAAP)
|
$
|
109,781
|
|
|
$
|
116,131
|
|
|
|
|
|
Reported debt on
balance sheet (U.S. GAAP)
|
$
|
407,840
|
|
|
$
|
431,019
|
|
Plus:
Unamortized discount and finance fees
|
4,480
|
|
|
5,832
|
|
Gross debt
|
412,320
|
|
|
436,851
|
|
Less:
Cash and cash equivalents
|
61,011
|
|
|
49,044
|
|
Debt net of
cash
|
$
|
351,309
|
|
|
$
|
387,807
|
|
|
|
|
|
Debt Net of Cash to
Adjusted EBITDA Ratio (non-GAAP)
|
3.2 x
|
|
|
3.3 x
|
|
Table
6
|
|
|
Full year
Outlook
|
|
|
Reconciliation
of Net Income margin to Adjusted EBITDA Margin
|
|
(percent of
estimated 2017 net sales)
|
|
|
(unaudited)
|
|
|
|
|
Outlook for
the
year ended
December 31,
2017
|
|
|
|
Net income
margin (U.S. GAAP)
|
|
2.5% -
3.5%
|
Add:
|
|
|
Interest
expense
|
|
2.5%
|
Provision for income taxes
|
|
2.0%
|
Depreciation and amortization
|
|
6.0%
|
Special
items before interest and taxes (1)
|
|
—%
|
Adjusted EBITDA
Margin (non-GAAP)
|
|
13.0% -
14.0%
|
|
(1) We have not estimated any
impact for special items in 2017.
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/libbey-inc-announces-fourth-quarter-and-full-year-2016-financial-results-300414812.html
SOURCE Libbey Inc.