TOLEDO, Ohio, Oct. 31, 2017 /PRNewswire/ -- Libbey Inc. (NYSE
American: LBY), one of the largest glass tableware manufacturers in
the world, today reported results for the third quarter ended
September 30, 2017.
Business Highlights
- Net sales $187.3 million, down
4.8 percent versus prior year, or down 6.2 percent in constant
currency
- Net loss of $(78.8) million, down
$81.7 million versus prior year,
driven by a $79.7 million non-cash
goodwill impairment charge associated with the Latin America segment
- Adjusted EBITDA (Table 1) $20.0
million, compared to $24.7
million in the third quarter of the prior year
"Competitive pressures and challenging market conditions, as
well as a handful of unusual weather-related events and natural
disasters, hindered our performance during the quarter. However,
the improvements we expected to drive performance in the second
half, such as improved profitability in EMEA and the launch of our
e-commerce capabilities, began to materialize in the third quarter,
and we look for them to contribute to a stronger fourth quarter.
Teams across our business are actively working to leverage our
e-commerce capabilities and new product offerings to return the
Company to profitable growth," said Chief Executive Officer
William Foley.
Foley continued, "The execution of our EMEA strategy helped
drive sales and profitability improvement in the segment during the
third quarter. Looking to the fourth quarter, we are anticipating
year-over-year revenue growth, with growing sales contributions
coming from the combined impact of new products as well as our new
e-commerce platform. We expect these positive trends to continue
into 2018, along with sustained improvement in the performance of
our manufacturing operations."
Chief Financial Officer James
Burmeister added, "Due to the continued decline in the
performance of our Mexico
reporting unit, relative to our expectations, together with the
continued competitive pressures and long-term weakness of the peso
relative to the U.S. dollar, we recognized a non-cash goodwill
impairment charge in our Latin
America reporting segment. While we are disappointed in the
need to write off this goodwill, we continue to view our
Latin America operations as a
strategic asset that can contribute to improved business
performance going forward."
Third Quarter Financial & Operating Highlights
Three months ended
September 30, (dollars
in thousands)
|
|
Net
Sales
|
|
|
Increase/(Decrease)
|
|
|
Currency
Effects
|
|
|
Constant Currency
Sales Growth (Decline)
|
|
|
2017
|
|
|
2016
|
|
|
$
Change
|
|
|
%
Change
|
U.S. &
Canada
|
|
$
|
112,252
|
|
|
$
|
117,268
|
|
|
$
|
(5,016)
|
|
|
(4.3)%
|
|
|
$
|
1,190
|
|
|
(5.3)%
|
|
Latin
America
|
|
35,339
|
|
|
40,149
|
|
|
(4,810)
|
|
|
(12.0)%
|
|
|
1,087
|
|
|
(14.7)%
|
|
EMEA
|
|
33,743
|
|
|
32,489
|
|
|
1,254
|
|
|
3.9%
|
|
|
221
|
|
|
3.2%
|
|
Other
|
|
6,005
|
|
|
6,967
|
|
|
(962)
|
|
|
(13.8)%
|
|
|
260
|
|
|
(17.5)%
|
|
Consolidated
|
|
$
|
187,339
|
|
|
$
|
196,873
|
|
|
$
|
(9,534)
|
|
|
(4.8)%
|
|
|
$
|
2,758
|
|
|
(6.2)%
|
|
- Hurricane and earthquake events during the third quarter
resulted in a combined negative revenue impact of approximately
$4 million in the U.S. and
Canada and Latin America segments.
- Net sales in the U.S. and Canada segment declined 4.3 percent, driven by
softer sales in the foodservice and retail channels, which were
down 6.3 percent and 3.5 percent, respectively. U.S. and
Canada business-to-business net
sales were flat versus prior year.
- In Latin America, net sales
declined as a result of lower net sales in the business-to-business
and retail channels, primarily due to lower volume that was
partially offset by favorable price and mix, as well as growth in
our foodservice channel.
- Net sales in the EMEA segment were favorably impacted by
increased volumes in the business-to-business channel and favorable
price and mix in the segment.
- Net sales in Other were down as a result of softer sales in
China.
- The Company's effective tax rate was (3.6) percent for the
third quarter of 2017, compared to 65.2 percent in the prior-year
quarter. The change in the effective tax rate was driven by several
items, including the non-deductible goodwill impairment charge,
lower pretax income, the timing and mix of pretax income earned in
tax jurisdictions with varying tax rates, and the impact of
foreign exchange losses.
First Nine Months of 2017 Financial & Operating
Highlights
Nine months ended
September 30,
|
|
|
|
Increase/(Decrease)
|
|
|
Currency
Effects
|
|
|
Constant Currency
Sales Growth (Decline)
|
|
(dollars in
thousands)
|
|
2017
|
|
2016
|
|
$
Change
|
|
|
%
Change
|
U.S. &
Canada
|
|
$
|
343,452
|
|
|
$
|
354,381
|
|
|
$
|
(10,929)
|
|
|
(3.1)%
|
|
|
$
|
2,495
|
|
|
(3.8)%
|
|
Latin
America
|
|
102,564
|
|
|
114,971
|
|
|
(12,407)
|
|
|
(10.8)%
|
|
|
(2,318)
|
|
|
(8.8)%
|
|
EMEA
|
|
90,128
|
|
|
93,058
|
|
|
(2,930)
|
|
|
(3.1)%
|
|
|
(3,262)
|
|
|
0.4%
|
|
Other
|
|
21,703
|
|
|
25,172
|
|
|
(3,469)
|
|
|
(13.8)%
|
|
|
1
|
|
|
(13.8)%
|
|
Consolidated
|
|
$
|
557,847
|
|
|
$
|
587,582
|
|
|
$
|
(29,735)
|
|
|
(5.1)%
|
|
|
$
|
(3,084)
|
|
|
(4.5)%
|
|
- Net sales in the U.S. and Canada segment were lower due to softer retail
and foodservice channel sales, which were down approximately 7
percent and 3 percent, respectively. U.S. and Canada business-to-business net sales
increased compared to prior year approximately 2 percent, mainly as
a result of increased volume, partially offset by unfavorable price
and mix.
- In Latin America, net sales
declined as a result of lower net sales across the retail and
business-to-business channels, specifically due to lower volume and
unfavorable currency. The decline was partially offset by favorable
price and mix.
- Net sales in the EMEA segment decreased primarily as a result
of unfavorable currency across all three channels. Improved price
and mix offset decreases in volume in the segment.
- Net sales in Other were down as a result of softer sales in
China.
- The Company's effective tax rate was (2.0) percent for the
first nine months of 2017, compared to 49.3 percent in the year-ago
period. The change in the effective tax rate was driven by several
items, including the non-deductible goodwill impairment charge,
lower pretax income, the timing and mix of pretax income earned in
tax jurisdictions with varying tax rates, and the impact of foreign
exchange losses compared to gains in the prior period.
Balance Sheet and Liquidity
- The Company had available capacity of $83.5 million under its ABL credit facility at
September 30, 2017, with $8.7 million in loans outstanding and cash on
hand of $21.6 million.
- At September 30, 2017, Trade
Working Capital (see Table 3), defined as inventories and accounts
receivable less accounts payable, was $215.6
million, a decrease of $11.2
million from $226.8 million at
September 30, 2016. The decrease was
a result of lower accounts receivable and higher accounts payable,
partially offset by higher inventories.
Commenting on the Company's balance sheet and liquidity
position, Chief Financial Officer James
Burmeister said, "The Company successfully managed to lower
trade working capital compared to the prior year and repaid
$6.1 million dollars on our Term Loan
B debt during the quarter, as we continued to prioritize debt
reduction."
Outlook
Today the Company updated its full-year 2017
Adjusted EBITDA margin outlook (see Table 6) to reflect
lower-than-expected third-quarter results, as well as its
expectation for year-over-year sales growth in the fourth quarter.
The Adjusted EBITDA margin for the full year is now expected to be
in the 9 percent to 10 percent range. As previously guided, the
Company still expects:
- Net sales decline in the low-to-mid single digits, compared to
the full-year 2016, on a reported basis
- Capital expenditures of approximately $50 million
The Company expects to provide its preliminary full-year 2018
outlook in conjunction with the release of its fourth-quarter and
full-year 2017 results early next year.
Webcast Information
Libbey will hold a conference
call for investors on Tuesday, October 31,
2017, 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.
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 Libbey
Signature®, Masters Reserve®,
Crisa®, Royal
Leerdam®, 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, Adjusted Selling,
General & Administrative Expense (Adjusted SG&A), Adjusted
SG&A Margin 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
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 (loss) 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 Trade Working Capital as net accounts receivable plus
net inventories less accounts payable.
- We define Adjusted SG&A and Adjusted SG&A Margin as
U.S. GAAP selling, general and administrative expenses less special
items that Libbey believes are not reflective of our core operating
performance.
- 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 be 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 March 3,
2017. Important factors potentially affecting performance
include but are not limited to risks related to increased
competition from foreign suppliers endeavoring to sell glass
tableware, ceramic dinnerware and metalware in our core markets;
global economic conditions and the related impact on consumer
spending levels; changes in trends in the restaurant and bar
industry and the retail channel of distribution that impact demand
for our products; 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; our ability to borrow under our ABL credit agreement;
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
exchange rate changes to the value of the euro, the Mexican peso,
the RMB and the Canadian dollar and the earnings and cash flows of
our international operations, expressed under U.S. GAAP; the effect
of high levels of inflation in countries in which we operate or
sell our products; and the inability to achieve savings and profit
improvements at targeted levels in the Company's operations or
within the intended time periods. 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
September 30,
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
Net sales
|
$
|
187,339
|
|
|
$
|
196,873
|
|
Freight billed to
customers
|
1,058
|
|
|
703
|
|
Total
revenues
|
188,397
|
|
|
197,576
|
|
Cost of
sales
|
151,202
|
|
|
155,694
|
|
Gross
profit
|
37,195
|
|
|
41,882
|
|
Selling, general and
administrative expenses
|
29,082
|
|
|
28,540
|
|
Goodwill
impairment
|
79,700
|
|
|
—
|
|
Income (loss) from
operations
|
(71,587)
|
|
|
13,342
|
|
Other
income
|
621
|
|
|
248
|
|
Earnings (loss)
before interest and income taxes
|
(70,966)
|
|
|
13,590
|
|
Interest
expense
|
5,118
|
|
|
5,231
|
|
Income (loss) before
income taxes
|
(76,084)
|
|
|
8,359
|
|
Provision for income
taxes
|
2,731
|
|
|
5,450
|
|
Net income
(loss)
|
$
|
(78,815)
|
|
|
$
|
2,909
|
|
|
|
|
|
Net income (loss) per
share:
|
|
|
|
Basic
|
$
|
(3.57)
|
|
|
$
|
0.13
|
|
Diluted
|
$
|
(3.57)
|
|
|
$
|
0.13
|
|
Dividends declared
per share
|
$
|
0.1175
|
|
|
$
|
0.1150
|
|
|
|
|
|
Weighted average
shares:
|
|
|
|
Basic
|
22,075
|
|
|
21,894
|
|
Diluted
|
22,075
|
|
|
22,071
|
|
Libbey
Inc.
Condensed
Consolidated Statements of Operations
|
|
(dollars in
thousands, except per share amounts)
(unaudited)
|
|
|
|
|
|
|
Nine months ended
September 30,
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
Net sales
|
$
|
557,847
|
|
|
$
|
587,582
|
|
Freight billed to
customers
|
2,481
|
|
|
1,983
|
|
Total
revenues
|
560,328
|
|
|
589,565
|
|
Cost of
sales
|
452,041
|
|
|
457,298
|
|
Gross
profit
|
108,287
|
|
|
132,267
|
|
Selling, general and
administrative expenses
|
95,733
|
|
|
93,348
|
|
Goodwill
impairment
|
79,700
|
|
|
—
|
|
Income (loss) from
operations
|
(67,146)
|
|
|
38,919
|
|
Other income
(expense)
|
(2,283)
|
|
|
1,035
|
|
Earnings (loss)
before interest and income taxes
|
(69,429)
|
|
|
39,954
|
|
Interest
expense
|
15,123
|
|
|
15,629
|
|
Income (loss) before
income taxes
|
(84,552)
|
|
|
24,325
|
|
Provision for income
taxes
|
1,665
|
|
|
12,003
|
|
Net income
(loss)
|
$
|
(86,217)
|
|
|
$
|
12,322
|
|
|
|
|
|
Net income (loss) per
share:
|
|
|
|
Basic
|
$
|
(3.92)
|
|
|
$
|
0.56
|
|
Diluted
|
$
|
(3.92)
|
|
|
$
|
0.56
|
|
Dividends declared
per share
|
$
|
0.3525
|
|
|
$
|
0.3450
|
|
|
|
|
|
Weighted average
shares:
|
|
|
|
Basic
|
22,015
|
|
|
21,870
|
|
Diluted
|
22,015
|
|
|
22,026
|
|
|
|
|
|
Libbey
Inc.
Condensed
Consolidated Balance Sheets
|
|
(dollars in
thousands)
|
|
|
September 30,
2017
|
|
|
December 31,
2016
|
|
|
(unaudited)
|
|
|
|
ASSETS:
|
|
|
|
Cash and cash
equivalents
|
$
|
21,574
|
|
|
$
|
61,011
|
|
Accounts receivable —
net
|
89,084
|
|
|
85,113
|
|
Inventories —
net
|
200,181
|
|
|
170,009
|
|
Prepaid and other
current assets
|
15,941
|
|
|
16,777
|
|
Total current
assets
|
326,780
|
|
|
332,910
|
|
Purchased intangibles
— net
|
14,786
|
|
|
15,225
|
|
Goodwill
|
84,412
|
|
|
164,112
|
|
Deferred income
taxes
|
38,119
|
|
|
40,016
|
|
Other
assets
|
10,852
|
|
|
9,514
|
|
Property, plant and
equipment — net
|
263,349
|
|
|
256,392
|
|
Total
assets
|
$
|
738,298
|
|
|
$
|
818,169
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY:
|
|
|
|
Accounts
payable
|
$
|
73,645
|
|
|
$
|
71,582
|
|
Salaries and
wages
|
26,667
|
|
|
27,018
|
|
Accrued
liabilities
|
49,511
|
|
|
41,807
|
|
Accrued income
taxes
|
1,399
|
|
|
1,384
|
|
Pension liability
(current portion)
|
2,263
|
|
|
2,461
|
|
Non-pension
post-retirement benefits (current portion)
|
4,903
|
|
|
4,892
|
|
Derivative
liability
|
954
|
|
|
1,928
|
|
Long-term debt due
within one year
|
7,443
|
|
|
5,009
|
|
Total current
liabilities
|
166,785
|
|
|
156,081
|
|
Long-term
debt
|
391,439
|
|
|
402,831
|
|
Pension
liability
|
44,553
|
|
|
43,934
|
|
Non-pension
post-retirement benefits
|
50,208
|
|
|
55,373
|
|
Deferred income
taxes
|
2,079
|
|
|
1,859
|
|
Other long-term
liabilities
|
12,420
|
|
|
12,972
|
|
Total
liabilities
|
667,484
|
|
|
673,050
|
|
|
|
|
|
Common stock and
capital in excess of par value
|
332,714
|
|
|
329,941
|
|
Retained
deficit
|
(151,421)
|
|
|
(59,625)
|
|
Accumulated other
comprehensive loss
|
(110,479)
|
|
|
(125,197)
|
|
Total shareholders'
equity
|
70,814
|
|
|
145,119
|
|
Total liabilities and
shareholders' equity
|
$
|
738,298
|
|
|
$
|
818,169
|
|
Libbey
Inc.
Condensed
Consolidated Statements of Cash Flows
|
|
(dollars in
thousands)
(unaudited)
|
|
|
Nine months ended
September 30,
|
|
|
2017
|
|
|
2016
|
|
Operating
activities:
|
|
|
|
Net income
(loss)
|
$
|
(86,217)
|
|
|
$
|
12,322
|
|
Adjustments to
reconcile net income (loss) to net cash provided by operating
activities:
|
|
|
|
Depreciation and
amortization
|
33,616
|
|
|
36,669
|
|
Loss on asset sales
and disposals
|
224
|
|
|
165
|
|
Change in accounts
receivable
|
(2,000)
|
|
|
(3,714)
|
|
Change in
inventories
|
(25,944)
|
|
|
(12,949)
|
|
Change in accounts
payable
|
3,283
|
|
|
(6,669)
|
|
Accrued interest and
amortization of discounts and finance fees
|
929
|
|
|
(1,510)
|
|
Goodwill
impairment
|
79,700
|
|
|
—
|
|
Pension &
non-pension post-retirement benefits, net
|
3,007
|
|
|
(1,653)
|
|
Accrued liabilities
& prepaid expenses
|
8,716
|
|
|
15,174
|
|
Income
taxes
|
(1,942)
|
|
|
2,344
|
|
Share-based
compensation expense
|
2,930
|
|
|
4,334
|
|
Other operating
activities
|
(94)
|
|
|
308
|
|
Net cash provided by
operating activities
|
16,208
|
|
|
44,821
|
|
|
|
|
|
Investing
activities:
|
|
|
|
Additions to
property, plant and equipment
|
(39,140)
|
|
|
(23,523)
|
|
Net cash used in
investing activities
|
(39,140)
|
|
|
(23,523)
|
|
|
|
|
|
Financing
activities:
|
|
|
|
Borrowings on
ABL credit facility
|
21,004
|
|
|
6,000
|
|
Repayments on ABL
credit facility
|
(12,277)
|
|
|
(6,000)
|
|
Other
repayments
|
(632)
|
|
|
(350)
|
|
Other
borrowings
|
—
|
|
|
339
|
|
Repayments on Term
Loan B
|
(18,300)
|
|
|
(18,300)
|
|
Stock options
exercised
|
466
|
|
|
1,153
|
|
Taxes paid on
distribution of equity awards
|
(623)
|
|
|
(862)
|
|
Dividends
|
(7,762)
|
|
|
(7,551)
|
|
Treasury shares
purchased
|
—
|
|
|
(2,000)
|
|
Other financing
activities
|
888
|
|
|
—
|
|
Net cash used in
financing activities
|
(17,236)
|
|
|
(27,571)
|
|
|
|
|
|
Effect of exchange
rate fluctuations on cash
|
731
|
|
|
(101)
|
|
Decrease in
cash
|
(39,437)
|
|
|
(6,374)
|
|
|
|
|
|
Cash & cash
equivalents at beginning of period
|
61,011
|
|
|
49,044
|
|
Cash & cash
equivalents at end of period
|
$
|
21,574
|
|
|
$
|
42,670
|
|
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
September 30,
|
|
|
Nine months ended
September 30,
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
2016
|
|
Reported net income
(loss) (U.S. GAAP)
|
|
$
|
(78,815)
|
|
|
$
|
2,909
|
|
|
$
|
(86,217)
|
|
|
$
|
12,322
|
|
Add:
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
5,118
|
|
|
5,231
|
|
|
15,123
|
|
|
15,629
|
|
Provision for income taxes
|
|
2,731
|
|
|
5,450
|
|
|
1,665
|
|
|
12,003
|
|
Depreciation and amortization
|
|
11,233
|
|
|
11,234
|
|
|
33,616
|
|
|
36,669
|
|
Add special items
before interest and taxes:
|
|
|
|
|
|
|
|
|
Goodwill
impairment (1)
|
|
79,700
|
|
|
—
|
|
|
79,700
|
|
|
—
|
|
Product
portfolio optimization (2)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,784
|
|
Reorganization charges (3)
|
|
—
|
|
|
—
|
|
|
2,488
|
|
|
—
|
|
Executive terminations
|
|
—
|
|
|
(98)
|
|
|
—
|
|
|
4,521
|
|
Pension
settlement
|
|
—
|
|
|
—
|
|
|
—
|
|
|
212
|
|
Adjusted EBITDA
(non-GAAP)
|
|
$
|
19,967
|
|
|
$
|
24,726
|
|
|
$
|
46,375
|
|
|
$
|
88,140
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
187,339
|
|
|
$
|
196,873
|
|
|
$
|
557,847
|
|
|
$
|
587,582
|
|
Net income (loss)
margin (U.S. GAAP)
|
|
(42.1)%
|
|
|
1.5%
|
|
|
(15.5)%
|
|
|
2.1%
|
|
Adjusted EBITDA
margin (non-GAAP)
|
|
10.7%
|
|
|
12.6%
|
|
|
8.3%
|
|
|
15.0%
|
|
__________________
(1)
|
Non-cash goodwill
impairment charge recorded in our Latin America
segment.
|
(2)
|
Product portfolio
optimization relates to inventory reductions to simplify and
improve our operations.
|
(3)
|
Workforce
reorganization as a part of our cost savings
initiatives.
|
Table
2
|
|
|
|
|
|
Reconciliation
of Net Cash Provided by Operating Activities to Free Cash
Flow
|
|
(dollars in
thousands)
|
|
|
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
Nine months ended
September 30,
|
|
|
|
2017
|
|
|
2016
|
|
Net cash provided by
operating activities (U.S. GAAP)
|
|
$
|
16,208
|
|
|
$
|
44,821
|
|
Net cash used in
investing activities (U.S. GAAP)
|
|
(39,140)
|
|
|
(23,523)
|
|
Free Cash Flow
(non-GAAP)
|
|
$
|
(22,932)
|
|
|
$
|
21,298
|
|
|
|
|
|
|
Table
3
|
|
|
|
|
|
|
|
Reconciliation
to Trade Working Capital
|
|
(dollars in
thousands)
|
|
|
|
|
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
September 30,
2017
|
|
|
December 31,
2016
|
|
|
September 30,
2016
|
|
|
|
|
|
|
|
|
Accounts receivable —
net
|
|
$
|
89,084
|
|
|
85,113
|
|
|
$
|
98,547
|
|
Inventories —
net
|
|
200,181
|
|
|
170,009
|
|
|
191,479
|
|
Less: Accounts
payable
|
|
73,645
|
|
|
71,582
|
|
|
63,191
|
|
Trade Working Capital
(non-GAAP)
|
|
$
|
215,620
|
|
|
$
|
183,540
|
|
|
$
|
226,835
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table
4
|
|
|
|
|
|
|
|
|
|
Summary
Business Segment Information
|
|
(dollars in
thousands)
(unaudited)
|
|
Three months ended
September 30,
|
|
|
Nine months ended
September 30,
|
|
Net
Sales:
|
|
2017
|
|
|
2016
(7)
|
|
|
2017
|
|
|
2016
(7)
|
|
|
|
|
|
|
|
|
|
|
U.S. & Canada
(1)
|
|
$
|
112,252
|
|
|
$
|
117,268
|
|
|
$
|
343,452
|
|
|
$
|
354,381
|
|
Latin America
(2)
|
|
35,339
|
|
|
40,149
|
|
|
102,564
|
|
|
114,971
|
|
EMEA
(3)
|
|
33,743
|
|
|
32,489
|
|
|
90,128
|
|
|
93,058
|
|
Other
(4)
|
|
6,005
|
|
|
6,967
|
|
|
21,703
|
|
|
25,172
|
|
Consolidated
|
|
$
|
187,339
|
|
|
$
|
196,873
|
|
|
$
|
557,847
|
|
|
$
|
587,582
|
|
|
|
|
|
|
|
|
|
|
Segment Earnings
Before Interest & Taxes (Segment EBIT) (5)
:
|
|
|
|
|
|
|
|
|
U.S. & Canada
(1)
|
|
$
|
10,761
|
|
|
$
|
18,635
|
|
|
$
|
33,307
|
|
|
$
|
55,932
|
|
Latin America
(2)
|
|
3,721
|
|
|
1,954
|
|
|
2,549
|
|
|
15,226
|
|
EMEA
(3)
|
|
1,482
|
|
|
175
|
|
|
(1,412)
|
|
|
33
|
|
Other
(4)
|
|
(1,529)
|
|
|
(347)
|
|
|
(3,598)
|
|
|
979
|
|
Segment
EBIT
|
|
$
|
14,435
|
|
|
$
|
20,417
|
|
|
$
|
30,846
|
|
|
$
|
72,170
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Segment EBIT to Net Income (Loss):
|
|
|
|
|
|
|
|
|
Segment
EBIT
|
|
$
|
14,435
|
|
|
$
|
20,417
|
|
|
$
|
30,846
|
|
|
$
|
72,170
|
|
Retained corporate
costs (6)
|
|
(5,701)
|
|
|
(6,925)
|
|
|
(18,087)
|
|
|
(20,699)
|
|
Goodwill
impairment
|
|
(79,700)
|
|
|
—
|
|
|
(79,700)
|
|
|
—
|
|
Pension
settlement
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(212)
|
|
Reorganization
charges
|
|
—
|
|
|
—
|
|
|
(2,488)
|
|
|
—
|
|
Product portfolio
optimization
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,784)
|
|
Executive
terminations
|
|
—
|
|
|
98
|
|
|
—
|
|
|
(4,521)
|
|
Interest
expense
|
|
(5,118)
|
|
|
(5,231)
|
|
|
(15,123)
|
|
|
(15,629)
|
|
Provision for income
taxes
|
|
(2,731)
|
|
|
(5,450)
|
|
|
(1,665)
|
|
|
(12,003)
|
|
Net income
(loss)
|
|
$
|
(78,815)
|
|
|
$
|
2,909
|
|
|
$
|
(86,217)
|
|
|
$
|
12,322
|
|
|
|
|
|
|
|
|
|
|
Depreciation &
Amortization:
|
|
|
|
|
|
|
|
|
U.S. & Canada
(1)
|
|
$
|
2,850
|
|
|
$
|
2,883
|
|
|
$
|
9,016
|
|
|
$
|
9,718
|
|
Latin America
(2)
|
|
4,850
|
|
|
4,667
|
|
|
13,757
|
|
|
13,725
|
|
EMEA
(3)
|
|
1,816
|
|
|
1,885
|
|
|
5,508
|
|
|
7,660
|
|
Other
(4)
|
|
1,138
|
|
|
1,325
|
|
|
3,821
|
|
|
4,162
|
|
Corporate
|
|
579
|
|
|
474
|
|
|
1,514
|
|
|
1,404
|
|
Consolidated
|
|
$
|
11,233
|
|
|
$
|
11,234
|
|
|
$
|
33,616
|
|
|
$
|
36,669
|
|
(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, as
well as glass products for OEMs regardless of end-market
destination.
|
(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. Segment EBIT also includes an allocation of
manufacturing costs for inventory produced at a Libbey facility
that is located in a region other than the end market in which the
inventory is sold. This allocation can fluctuate from year to
year based on the relative demands for products produced in regions
other than the end markets in which they are sold.
|
(6)
|
Retained corporate
costs include certain headquarter, administrative and facility
costs, and other costs that are not allocable to the reporting
segments.
|
(7)
|
In the first
quarter of 2017, net sales and related costs for certain countries
were reclassified between segments to align with changes in
business unit responsibilities. Accordingly, 2016 segment results
have been reclassified to conform to the current year structure.
The revised 2016 segment results do not affect any previously
reported consolidated financial results.
|
Table
5
|
|
|
|
|
Reconciliation
of Net Income (Loss) to Adjusted Earnings Before Interest, Taxes,
Depreciation and Amortization (Adjusted EBITDA) and Debt Net of
Cash to Adjusted EBITDA Ratio
|
|
(dollars in
thousands)
|
|
|
|
(unaudited)
|
|
|
|
|
Last
twelve
months
ended
September 30,
2017
|
|
|
Last twelve
months ended
September 30, 2016
|
|
Reported net income
(loss) (U.S. GAAP)
|
$
|
(88,466)
|
|
|
$
|
44,430
|
|
Add:
|
|
|
|
|
|
Interest
expense
|
20,382
|
|
|
20,351
|
|
Provision (benefit) for income taxes
|
7,373
|
|
|
(27,689)
|
|
Depreciation and amortization
|
45,433
|
|
|
48,095
|
|
Special
items before interest and taxes
|
85,154
|
|
|
34,004
|
|
Adjusted EBITDA
(non-GAAP)
|
$
|
69,876
|
|
|
$
|
119,191
|
|
|
|
|
|
|
|
Reported debt on
balance sheet (U.S. GAAP)
|
$
|
398,882
|
|
|
$
|
413,833
|
|
Plus:
Unamortized discount and finance fees
|
3,588
|
|
|
4,803
|
|
Gross debt
|
402,470
|
|
|
418,636
|
|
Less:
Cash and cash equivalents
|
21,574
|
|
|
42,670
|
|
Debt net of
cash
|
$
|
380,896
|
|
|
$
|
375,966
|
|
|
|
|
|
|
|
Debt Net of Cash to
Adjusted EBITDA Ratio (non-GAAP)
|
5.5 x
|
|
|
3.2 x
|
|
Table
6
|
|
|
Full year
Outlook
|
|
|
Reconciliation
of Net Income (Loss) margin to Adjusted EBITDA
Margin
|
|
(percent of
estimated 2017 net sales)
|
|
|
(unaudited)
|
|
|
|
|
Outlook for the
year ended
December 31,
2017
|
Net income (loss)
margin (U.S. GAAP)
|
|
(11.0%) -
(10.0%)
|
Add:
|
|
|
Interest
expense
|
|
2.5%
|
Provision for income taxes
|
|
1.0%
|
Depreciation and amortization
|
|
6.0%
|
Special
items before interest and taxes
|
|
10.5%
|
Adjusted EBITDA
Margin (non-GAAP)
|
|
9.0% -
10.0%
|
Table
7
|
|
|
Full year
Outlook on Adjusted SG&A Margin
|
(percent of net
sales)
|
|
|
|
|
(unaudited)
|
|
|
|
|
|
|
Outlook for
the
year ended
December 31, 2017
|
|
Year ended
December 31, 2016
|
SG&A margin (U.S.
GAAP)
|
|
17.3%
|
|
|
15.2%
|
|
Deduct special items
in SG&A expenses:
|
|
|
|
|
Executive terminations
|
|
—%
|
|
|
(0.5)%
|
|
Reorganization charges
|
|
(0.3)%
|
|
|
—%
|
|
Adjusted SG&A
Margin (non-GAAP)
|
|
17.0%
|
|
|
14.7%
|
|
View original
content:http://www.prnewswire.com/news-releases/libbey-inc-announces-third-quarter-results-300546287.html
SOURCE Libbey Inc.