Attached files
| file | filename |
|---|---|
| 8-K - 8-K - LIBBEY INC | form8kq42011.htm |
Exhibit 99.1
 | Libbey Inc. 300 Madison Ave P.O. Box 10060 Toledo, OH 43699 |
NEWS RELEASE
AT THE COMPANY:
Kenneth Boerger
Vice President and Treasurer
(419) 325-2279
FOR IMMEDIATE RELEASE
THURSDAY, FEBRUARY 16, 2012
LIBBEY INC. ANNOUNCES FOURTH QUARTER
AND FULL YEAR 2011 RESULTS
Reductions in Working Capital, Debt and Leverage Ratio
• | Fourth Quarter Net Sales of $214.8 Million, a Decrease of 3.6 Percent, Compared to $222.8 Million in the Prior-Year Quarter |
• | Sales to U.S. and Canadian Foodservice Glassware Customers Increase 1.3 Percent, Compared to the Prior-Year Quarter |
• | Full-Year 2011 Sales of $817.1 Million, an Increase of 2.2 Percent Compared to the Prior Year |
• | Free Cash Flow Generation of $37.7 Million in the Fourth Quarter of 2011 |
• | Working Capital as a Percentage of Last Twelve Months' Sales was an All-Time Record Low 21.4 Percent |
• | Debt Net of Cash Reduced to $339.1 Million, Resulting in Net Debt to Adjusted EBITDA of 3.0 Times |
TOLEDO, OHIO, FEBRUARY 16, 2012--Libbey Inc. (NYSE Amex: LBY) announced results today for the fourth quarter and full year of 2011.
Fourth Quarter Results
For the quarter-ended December 31, 2011, sales were $214.8 million, compared to $222.8 million in the year-ago quarter. Sales in the Glass Operations segment were $199.2 million, a decrease of 1.1 percent, compared to $201.4 million in the fourth quarter of 2010 (see Table 5). While sales within our China sales region increased 47.9 percent (41.5 percent excluding currency impact), sales within our U.S. and Canadian sales region were 4.1 percent lower than the prior-year quarter. We saw growth of 0.9 percent in sales within our European sales region (a 1.6 percent increase excluding the impact of currency). Sales within our Mexico sales region were flat; however, excluding the currency impact, net sales were 8.0 percent higher than the prior year quarter. Sales to U.S. and Canadian foodservice glassware customers increased 1.3 percent. Glassware sales to U.S. and Canadian retail customers were flat during the fourth quarter of 2011, while glassware sales to U.S. and Canadian business-to-business customers were down
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21.0 percent during the quarter. A large premium program to one customer that did not repeat in 2011 accounted for more than the total decline in business-to-business sales. Sales in the Other Operations segment were $15.7 million, compared to $21.6 million in the prior-year quarter. As a result of the sale of substantially all of the assets of our Traex subsidiary in late April 2011, sales of Traex products were lower by $3.8 million versus the prior year, accounting for a substantial portion of the $5.9 million decrease in sales for Other Operations. In addition to the lack of sales of Traex products, sales to World Tableware customers and Syracuse China customers were both lower than the prior-year quarter.
The Company reported income from operations of $9.7 million during the quarter, compared to income from operations of $19.2 million in the year-ago quarter. Income from operations, excluding special items (see Table 1), was $11.8 million in the fourth quarter of 2011, compared to $19.9 million during the fourth quarter of 2010. The special items during the fourth quarter of 2011 included a $1.1 million charge for severance and $0.8 million related to a write-down of unutilized fixed assets in our Glass Operations segment. The special items in the fourth quarter of 2010 included a $1.5 million gain on redemption of debt, partially offset by a write-down of decorating assets at the Company's Shreveport, Louisiana, facility as well as additional restructuring charges in connection with the 2009 closure of our Syracuse, New York, manufacturing facility. The change in income from operations excluding special items was largely driven by lower sales, lower production activity related to planned furnace rebuilds, increased selling general and administrative expenses and a $2.0 million unfavorable currency impact, primarily resulting from the devaluation of the peso, partially offset by lower labor and benefit costs and lower natural gas costs. The $2.3 million increase in selling, general and administrative expenses was related to a comprehensive strategic review that was started late in the year and includes a review of the Company's markets, competitive position, computer systems and cost structure as well as higher research and development expenses.
Libbey reported earnings before interest and taxes (EBIT) of $9.4 million, compared to EBIT of $19.5 million in the year-ago quarter. Items that drove the change in EBIT included the lower sales, lower production activity and an unfavorable currency impact, partially offset by the lower labor and benefit costs and lower natural gas costs as discussed above, as well as $0.9 million lower other expense in 2011. EBIT, excluding special items (see Table 1), was $11.4 million in the fourth quarter of 2011, compared to $18.7 million during the fourth quarter of 2010. Segment EBIT (see Table 5) was $19.6 million for Glass Operations, compared to segment EBIT of $23.2 million in the year-ago quarter. Other Operations reported segment EBIT for the fourth quarter of 2011 of $2.4 million, compared to $3.9 million in the year-ago quarter.
Libbey reported Adjusted EBITDA (see Table 3) was $21.3 million in the fourth quarter of 2011, compared to $28.8 million in the fourth quarter of 2010. The fourth quarter of 2010 included EBITDA related to Traex of $0.5 million.
Interest expense decreased by $1.4 million to $10.5 million, compared to $11.9 million in the year-ago period, primarily as a result of the impact of the $40.0 million debt repayment completed in March 2011.
The effective tax rate was a benefit of 296.6 percent for the quarter-ended December 31, 2011, compared to 63.5 percent for the quarter-ended December 31, 2010. The effective tax rate was heavily impacted by exchange rate losses in the current year on the revaluation of non-peso denominated liabilities due to the peso devaluation in the fourth quarter. Further, the effective tax rate was influenced by jurisdictions with recorded valuation allowances and changes in the mix of earnings with differing statutory rates.
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Libbey reported net income of $2.1 million, or $0.10 per diluted share, for the fourth quarter of 2011, compared to net income of $2.8 million, or $0.13 per diluted share, in the prior-year quarter. Excluding special items of $2.0 million of expense in the fourth quarter of 2011 and $0.8 million of income in the fourth quarter of 2010, Libbey had net income of $4.1 million (see Table 1) and diluted earnings per share of $0.19 during the fourth quarter of 2011, compared to net income of $1.9 million and diluted earnings per share of $0.09 for the fourth quarter of 2010. The special items during the fourth quarter of 2011 included a $1.1 million charge for severance and $0.8 million related to a write-down of unutilized fixed assets in our Glass Operations segment. The special items in the fourth quarter of 2010 included a $1.5 million gain on redemption of debt, partially offset by a write-down of decorating assets at the Company's Shreveport, Louisiana, facility as well as a restructuring charge in connection with the 2009 closure of our Syracuse, New York, manufacturing facility.
Twelve-Month Results
For the year ended December 31, 2011, sales increased 2.2 percent to $817.1 million, compared to $799.8 million in the year ended December 31, 2010. Sales in the Glass Operations segment were $746.6 million, an increase of 4.0 percent (2.6 percent excluding the impact of currency), compared to $717.6 million in 2010 (see Table 5). Primary contributors to the increased sales were a 56.3 percent increase in sales within our China sales region (49.3 percent increase excluding currency impact), an 8.3 percent increase in sales within our European sales region (3.0 percent excluding the impact of currency), and an 6.8 percent increase in sales within our International sales region, compared to full-year 2010 sales. Sales within our Mexico region were essentially flat (excluding the currency impact, sales decreased 1.9 percent). Sales to U.S. and Canadian foodservice glassware customers increased 2.0 percent. Sales to U.S. and Canadian retail customers increased 2.7 percent in 2011, compared to 2010, while sales to U.S. and Canadian business-to-business customers were essentially flat in 2011, compared to 2010. Sales in the Other Operations segment were $71.2 million, compared to $82.8 million in the prior year, reflecting the late April 2011 disposition of substantially all of the assets of Traex. Sales of Syracuse China products and sales to World Tableware customers were essentially unchanged for the full year. Sales of Traex products were lower by $11.3 million versus the prior year, as the result of the sale of substantially all of the assets of Traex in late April, accounting for substantially all of the total $11.6 million decrease in sales for Other Operations.
The Company reported income from operations of $63.5 million during 2011, compared to income from operations of $68.8 million for 2010. Adjusted income from operations was $69.9 million for the full year 2011, compared to $74.0 million in 2010 (see Table 2). Factors contributing to the change in adjusted income from operations were higher sales and lower natural gas costs, which were more than offset by the impact of lower capacity utilization, increased selling, general and administrative expenses, higher freight expense, unfavorable currency impact of $1.1 million, primarily resulting from the devaluation of the peso and increases in packaging and raw material costs.
Earnings before interest and taxes (EBIT) were $68.7 million for 2011, compared to EBIT of $126.8 million in 2010. Adjusted EBIT for 2011, as detailed in Table 2, was $70.9 million, compared to Adjusted EBIT of $73.8 million for the full year 2010. Segment EBIT for the Glass Operations segment was $96.7 million in 2011, compared to segment EBIT of $94.7 million in 2010. The increase is primarily the result of increased sales. The Other Operations segment reported EBIT for 2011 of $12.0 million, compared to $14.9 million in 2010, with the decrease being the result of slightly higher costs and the sale of substantially all of the assets of Traex in April 2011.
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Libbey reported that Adjusted EBITDA, as detailed in Table 3, was $113.1 million in 2011, compared to Adjusted EBITDA of $115.0 million in 2010. Included in the Adjusted EBITDA numbers is EBITDA related to Traex of $0.8 million in 2011 and $2.9 million in 2010.
Interest expense decreased by $1.8 million in 2011 to $43.4 million, compared to $45.2 million during 2010. The decrease in interest expense was primarily attributable to the lower debt levels in 2011 and was partially offset by the fact that prior to the debt refinancing completed in February 2010, a portion of the Company's debt carried a lower effective interest rate as a result of the debt exchange completed in October 2009.
The effective tax rate was 6.5 percent for 2011, compared to 14.2 percent for 2010. The effective tax rate was heavily impacted by exchange rate losses in the current year on the revaluation of non-peso denominated liabilities due to the peso devaluation in the fourth quarter. Further, the effective tax rate was influenced by valuation allowances and changes in the mix of earnings with differing statutory rates.
Libbey reported net income of $23.6 million for 2011, or $1.14 per diluted share, compared to net income of $70.1 million, or $3.51 per diluted share, in 2010. Excluding special items of $2.2 million, Libbey had net income of $25.8 million (see Table 2) and diluted earnings per share of $1.24 for 2011, compared to net income of $17.1 million (excluding special items of $53.0 million), or diluted earnings per share of $0.86 in 2010. The significant special items in 2011 included the $3.4 million gain on the sale of substantially all of the assets of Traex and a $3.4 million gain on the sale of land at Libbey Holland, which were more than offset by $2.7 million in mostly non-cash CEO transition expenses, $2.8 million in expenses related to the redemption in March 2011 of $40.0 million of senior notes, $2.7 million accrued for an on-going unclaimed property audit and $0.8 million for other charges. The special items in 2010 included a gain of $71.7 million, which represented the difference between the carrying value and the face value of the New PIK notes that were redeemed in February 2010. This gain was partially offset by the write-off of $13.4 million of unamortized fees and discounts on the refinanced floating rate senior notes and ABL credit facility and call premium payments. Also included was a write-down of certain after-processing equipment within the Company's Glass Operations segment.
Working Capital and Liquidity
As of December 31, 2011, working capital, defined as inventories and accounts receivable less accounts payable, was $175.1 million, compared to $181.2 million at December 31, 2010. Working capital as a percentage of the last twelve months' net sales was an all-time record low 21.4 percent at December 31, 2011, compared to 22.6 percent at December 31, 2010.
Free cash flow, as detailed in the attached Table 4, was a source of $37.7 million for the fourth quarter of 2011, compared to a source of $49.4 million in the fourth quarter of 2010. In addition, $5.5 million in proceeds from the exercise of warrants were received during the fourth quarter of 2011. This $5.5 million is included in the Financing activities section of the statement of cash flow and is in addition to the $37.7 million of free cash flow for the quarter. Free cash flow was a source of $31.6 million for the year-ended December 31, 2011, compared to a source of $48.9 million for the year-ended December 31, 2010, after adjusting for the payment of interest on the New PIK notes.
Libbey reported that it had available capacity of $63.8 million under its ABL credit facility as of December 31, 2011, with no loans currently outstanding. The Company also had cash on hand of $58.3 million at December 31, 2011, after reducing total gross borrowings by $9.2 million during the fourth quarter.
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Continued Progress in Working Capital and Debt Reduction
Stephanie A. Streeter, chief executive officer, said, “The fourth quarter results were negatively impacted by much lower than expected shipments in the month of October, followed by a significantly stronger November and December. The impact of the fourth quarter on full year results was magnified by the seasonality of our business. Overall, we remain upbeat about our results. In spite of the challenges that face the European economy and the modest but spotty improvements in the U.S. economy, we were able to grow sales two percent for the full year 2011. We were encouraged by the substantial growth in our China sales region and the slightly improved performance of the U.S. and Canadian retail and foodservice channels of distribution. We continue to be pleased with our working capital reductions over the past twelve months and finished 2011 with working capital as a percentage of last twelve months sales at an all-time low for any quarter of any year at 21.4 percent. We reduced gross debt by $52.5 million in 2011 and continue to move ourselves toward a position that will allow us to better align our capital structure."
Webcast Information
Libbey will hold a conference call for investors on Thursday, February 16, 2012, at 11 a.m. Eastern Standard 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 seven days after the conclusion of the call.
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 only reflect 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 14, 2011. Important factors potentially affecting performance include but are not limited to 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
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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.:
• | is the largest manufacturer of glass tableware in the western hemisphere and one of the largest glass tableware manufacturers in the world; |
• | is the leading manufacturer of tabletop products for the U.S. foodservice industry; and |
• | supplies products to foodservice, retail, industrial and business-to-business customers in over 100 countries. |
Based in Toledo, Ohio, since 1888, 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 the leading producer of glass tableware in Mexico and Latin America. Its Royal Leerdam 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 newest subsidiary, Libbey China, is located in Langfang, China. 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 holloware and an assortment of ceramic dinnerware and other tabletop items principally for foodservice establishments in the United States. In 2011, Libbey Inc.'s net sales totaled $817.1 million.
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Condensed Consolidated Statements of Operations
(dollars in thousands, except per-share amounts)
(unaudited)
Three months ended December 31, | |||||||
2011 | 2010 | ||||||
Net sales | $ | 214,782 | $ | 222,847 | |||
Freight billed to customers | 636 | 479 | |||||
Total revenues | 215,418 | 223,326 | |||||
Cost of sales (1) | 177,545 | 178,906 | |||||
Gross profit | 37,873 | 44,420 | |||||
Selling, general and administrative expenses (1) | 28,180 | 24,512 | |||||
Special charges (1) | — | 714 | |||||
Income from operations | 9,693 | 19,194 | |||||
Gain on redemption of debt (1) | — | 1,500 | |||||
Other expense(1) | (276 | ) | (1,190 | ) | |||
Earnings before interest and income taxes | 9,417 | 19,504 | |||||
Interest expense | 10,490 | 11,928 | |||||
(Loss) income before income taxes | (1,073 | ) | 7,576 | ||||
(Benefit from) provision for income taxes | (3,182 | ) | 4,813 | ||||
Net income | $ | 2,109 | $ | 2,763 | |||
Net income per share: | |||||||
Basic: | $ | 0.10 | $ | 0.14 | |||
Diluted: | $ | 0.10 | $ | 0.13 | |||
Weighted average shares: | |||||||
Outstanding | 20,437 | 19,865 | |||||
Diluted | 20,860 | 20,604 | |||||
(1) Refer to Table 1 for Special Items detail.
Libbey Inc.
Condensed Consolidated Statements of Operations
(dollars in thousands, except per-share amounts)
(unaudited)
Year ended December 31, | |||||||
2011 | 2010 | ||||||
Net sales | $ | 817,056 | $ | 799,794 | |||
Freight billed to customers | 2,396 | 1,790 | |||||
Total revenues | 819,452 | 801,584 | |||||
Cost of sales (1) | 650,713 | 633,571 | |||||
Gross profit | 168,739 | 168,013 | |||||
Selling, general and administrative expenses (1) | 105,545 | 97,390 | |||||
Special charges (1) | (281 | ) | 1,802 | ||||
Income from operations | 63,475 | 68,821 | |||||
(Loss) gain on redemption of debt (1) | (2,803 | ) | 58,292 | ||||
Other income (expense)(1) | 8,031 | (274 | ) | ||||
Earnings before interest and income taxes | 68,703 | 126,839 | |||||
Interest expense | 43,419 | 45,171 | |||||
Income before income taxes | 25,284 | 81,668 | |||||
Provision for income taxes | 1,643 | 11,582 | |||||
Net income | $ | 23,641 | $ | 70,086 | |||
Net income per share: | |||||||
Basic: | $ | 1.17 | $ | 3.97 | |||
Diluted: | $ | 1.14 | $ | 3.51 | |||
Weighted average shares: | |||||||
Outstanding | 20,170 | 17,668 | |||||
Diluted | 20,808 | 19,957 | |||||
(1) Refer to Table 2 for Special Items detail.
Libbey Inc.
Condensed Consolidated Balance Sheets
(dollars in thousands)
December 31, 2011 | December 31, 2010 | ||||||
(unaudited) | |||||||
ASSETS: | |||||||
Cash and cash equivalents | $ | 58,291 | $ | 76,258 | |||
Accounts receivable — net | 88,045 | 92,101 | |||||
Inventories — net | 145,859 | 148,146 | |||||
Other current assets | 9,701 | 6,437 | |||||
Total current assets | 301,896 | 322,942 | |||||
Pension asset | 17,485 | 12,767 | |||||
Goodwill and purchased intangibles — net | 187,772 | 192,474 | |||||
Property, plant and equipment — net | 264,718 | 270,397 | |||||
Other assets | 18,280 | 20,391 | |||||
Total assets | $ | 790,151 | $ | 818,971 | |||
LIABILITIES AND SHAREHOLDERS' EQUITY: | |||||||
Notes payable | $ | 339 | $ | — | |||
Accounts payable | 58,759 | 59,095 | |||||
Accrued liabilities | 88,761 | 84,066 | |||||
Pension liability (current portion) | 5,990 | 2,330 | |||||
Non-pension postretirement benefits (current portion) | 4,721 | 5,017 | |||||
Other current liabilities | 6,730 | 6,513 | |||||
Long-term debt due within one year | 3,853 | 3,142 | |||||
Total current liabilities | 169,153 | 160,163 | |||||
Long-term debt | 393,168 | 443,983 | |||||
Pension liability | 122,145 | 115,521 | |||||
Non-pension postretirement benefits | 68,496 | 67,737 | |||||
Other liabilities | 9,409 | 20,301 | |||||
Total liabilities | 762,371 | 807,705 | |||||
Common stock, capital in excess of par value and warrants | 311,188 | 300,889 | |||||
Retained deficit | (155,036 | ) | (178,677 | ) | |||
Accumulated other comprehensive loss | (128,372 | ) | (110,946 | ) | |||
Total shareholders’ equity | 27,780 | 11,266 | |||||
Total liabilities and shareholders’ equity | $ | 790,151 | $ | 818,971 | |||
Libbey Inc.
Condensed Consolidated Statements of Cash Flows
(dollars in thousands)
(unaudited)
Three months ended December 31, | |||||||
2011 | 2010 | ||||||
Operating activities: | |||||||
Net income | $ | 2,109 | $ | 2,763 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 9,923 | 10,121 | |||||
Loss on asset sales and disposals | 508 | — | |||||
Change in accounts receivable | 4,889 | 17,757 | |||||
Change in inventories | 23,935 | 10,564 | |||||
Change in accounts payable | 7,586 | 4,183 | |||||
Income taxes | (4,032 | ) | 911 | ||||
Restructuring charges | — | 484 | |||||
Gain on redemption of new PIK notes | — | (1,500 | ) | ||||
Pension & non-pension postretirement benefits | (488 | ) | 1,412 | ||||
Accrued interest and amortization of discounts, warrants and finance fees | 9,356 | 10,596 | |||||
Accrued liabilities & prepaid expenses | (2,965 | ) | (1,292 | ) | |||
Share-based compensation expense | 651 | 924 | |||||
Other operating activities | 1,735 | 1,609 | |||||
Net cash provided by operating activities | 53,207 | 58,532 | |||||
Investing activities: | |||||||
Additions to property, plant and equipment | (14,963 | ) | (9,125 | ) | |||
Net proceeds from sale of Traex | (522 | ) | — | ||||
Proceeds from asset sales and other | (42 | ) | — | ||||
Net cash used in investing activities | (15,527 | ) | (9,125 | ) | |||
Financing activities: | |||||||
Other repayments | (9,338 | ) | (9,641 | ) | |||
Other borrowings | 365 | — | |||||
Proceeds from exercise of warrants | 5,459 | — | |||||
Stock options exercised | 4 | 49 | |||||
Debt issuance costs and other | (1 | ) | 1,240 | ||||
Net cash used in financing activities | (3,511 | ) | (8,352 | ) | |||
Effect of exchange rate fluctuations on cash | (461 | ) | (365 | ) | |||
Increase in cash | 33,708 | 40,690 | |||||
Cash & cash equivalents at beginning of period | 24,583 | 35,568 | |||||
Cash & cash equivalents at end of period | $ | 58,291 | $ | 76,258 | |||
Libbey Inc.
Condensed Consolidated Statements of Cash Flows
(dollars in thousands)
(unaudited)
Year ended December 31, | |||||||
2011 | 2010 | ||||||
Operating activities: | |||||||
Net income | $ | 23,641 | $ | 70,086 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 42,188 | 41,115 | |||||
(Gain) loss on asset sales and disposals | (5,941 | ) | 3,039 | ||||
Change in accounts receivable | 3,076 | (11,210 | ) | ||||
Change in inventories | (221 | ) | (6,654 | ) | |||
Change in accounts payable | 403 | 4,955 | |||||
Accrued interest and amortization of discounts, warrants and finance fees | 3,047 | 17,391 | |||||
Gain on redemption of new PIK notes | — | (71,693 | ) | ||||
Payment of interest on new PIK notes | — | (29,400 | ) | ||||
Call premium on senior notes and floating rate notes | 1,203 | 8,415 | |||||
Write-off of finance fees & discounts on senior notes, old ABL and floating rate notes | 1,600 | 4,986 | |||||
Pension & non-pension postretirement benefits | (9,074 | ) | 5,200 | ||||
Restructuring charges | (828 | ) | 811 | ||||
Accrued liabilities & prepaid expenses | 1,917 | 3,344 | |||||
Income taxes | (11,200 | ) | 1,801 | ||||
Share-based compensation expense | 5,016 | 3,496 | |||||
Other operating activities | 524 | 2,017 | |||||
Net cash provided by operating activities | 55,351 | 47,699 | |||||
Investing activities: | |||||||
Additions to property, plant and equipment | (41,420 | ) | (28,247 | ) | |||
Net proceeds from sale of Traex | 12,478 | — | |||||
Proceeds from asset sales and other | 5,222 | — | |||||
Net cash used in investing activities | (23,720 | ) | (28,247 | ) | |||
Financing activities: | |||||||
Other repayments | (14,108 | ) | (10,610 | ) | |||
Other borrowings | 365 | 215 | |||||
Floating rate note payments | — | (306,000 | ) | ||||
Senior note payments | (40,000 | ) | — | ||||
Call premium on senior notes and floating rate notes | (1,203 | ) | (8,415 | ) | |||
PIK note payment | — | (51,031 | ) | ||||
Proceeds from senior secured notes | — | 392,328 | |||||
Proceeds from exercise of warrants | 5,459 | — | |||||
Stock options exercised | 482 | 57 | |||||
Debt issuance costs and other | (463 | ) | (14,256 | ) | |||
Net cash (used in) provided by financing activities | (49,468 | ) | 2,288 | ||||
Effect of exchange rate fluctuations on cash | (130 | ) | (571 | ) | |||
(Decrease) increase in cash | (17,967 | ) | 21,169 | ||||
Cash & cash equivalents at beginning of year | 76,258 | 55,089 | |||||
Cash & cash equivalents at end of year | $ | 58,291 | $ | 76,258 | |||
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.
Table 1 | ||||||||||||||||||||||||
Reconciliation of "As Reported" Results to "As Adjusted" Results - Quarter | ||||||||||||||||||||||||
(dollars in thousands, except per-share amounts) | ||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||
Three months ended December 31, | ||||||||||||||||||||||||
2011 | 2010 | |||||||||||||||||||||||
As Reported | Special Items | As Adjusted | As Reported | Special Items | As Adjusted | |||||||||||||||||||
Net sales | $ | 214,782 | $ | — | $ | 214,782 | $ | 222,847 | $ | — | $ | 222,847 | ||||||||||||
Freight billed to customers | 636 | — | 636 | 479 | — | 479 | ||||||||||||||||||
Total revenues | 215,418 | — | 215,418 | 223,326 | — | 223,326 | ||||||||||||||||||
Cost of sales | 177,545 | 817 | 176,728 | 178,906 | (3 | ) | 178,909 | |||||||||||||||||
Gross profit | 37,873 | (817 | ) | 38,690 | 44,420 | 3 | 44,417 | |||||||||||||||||
Selling, general and administrative expenses | 28,180 | 1,316 | 26,864 | 24,512 | (49 | ) | 24,561 | |||||||||||||||||
Special charges | — | — | — | 714 | 714 | — | ||||||||||||||||||
Income from operations | 9,693 | (2,133 | ) | 11,826 | 19,194 | (662 | ) | 19,856 | ||||||||||||||||
Gain on redemption of debt | — | — | — | 1,500 | 1,500 | — | ||||||||||||||||||
Other expense | (276 | ) | 179 | (455 | ) | (1,190 | ) | — | (1,190 | ) | ||||||||||||||
Earnings before interest and income taxes | 9,417 | (1,954 | ) | 11,371 | 19,504 | 838 | 18,666 | |||||||||||||||||
Interest expense | 10,490 | — | 10,490 | 11,928 | — | 11,928 | ||||||||||||||||||
(Loss) income before income taxes | (1,073 | ) | (1,954 | ) | 881 | 7,576 | 838 | 6,738 | ||||||||||||||||
(Benefit from) provision for income taxes | (3,182 | ) | — | (3,182 | ) | 4,813 | — | 4,813 | ||||||||||||||||
Net income | $ | 2,109 | $ | (1,954 | ) | $ | 4,063 | $ | 2,763 | $ | 838 | $ | 1,925 | |||||||||||
Net income per share: | ||||||||||||||||||||||||
Basic | $ | 0.10 | $ | (0.10 | ) | $ | 0.20 | $ | 0.14 | $ | 0.04 | $ | 0.10 | |||||||||||
Diluted | $ | 0.10 | $ | (0.09 | ) | $ | 0.19 | $ | 0.13 | $ | 0.04 | $ | 0.09 | |||||||||||
Weighted average shares: | ||||||||||||||||||||||||
Outstanding | 20,437 | 19,865 | ||||||||||||||||||||||
Diluted | 20,860 | 20,604 | ||||||||||||||||||||||
Three months ended December 31, 2011 | Three months ended December 31, 2010 | |||||||||||||||||||||||||||
Special Items Detail (income) expense: | CEO transition expenses | Sale of Traex (1) | Other (2) | Total Special Items | Gain on PIK Notes(3) | Other (4) | Total Special Items | |||||||||||||||||||||
Cost of sales | $ | — | $ | — | $ | 817 | $ | 817 | $ | — | $ | (3 | ) | $ | (3 | ) | ||||||||||||
SG&A | 211 | — | 1,105 | 1,316 | — | (49 | ) | (49 | ) | |||||||||||||||||||
Special charges | — | — | — | — | — | 714 | 714 | |||||||||||||||||||||
Gain on redemption of debt | — | — | — | — | (1,500 | ) | — | (1,500 | ) | |||||||||||||||||||
Other (income) expense | — | (179 | ) | — | (179 | ) | — | — | — | |||||||||||||||||||
Total Special Items | $ | 211 | $ | (179 | ) | $ | 1,922 | $ | 1,954 | $ | (1,500 | ) | $ | 662 | $ | (838 | ) | |||||||||||
(1) Adjustment to the gain on the sale of substantially all of the assets of our Traex subsidiary in April, 2011.
(2) Cost of sales reflects a write-down of unutilized fixed assets in our Glass Operations segment while SG&A contains severance.
(3) Additional gain on PIK Notes.
(4) Other primarily reflects restructuring charges related to the closure of our Syracuse, New York, manufacturing facility, our Mira Loma, California, distribution center and the decorating operations at our Shreveport manufacturing facility.
Table 2 | ||||||||||||||||||||||||
Reconciliation of "As Reported" Results to "As Adjusted" Results - Year | ||||||||||||||||||||||||
(dollars in thousands, except per-share amounts) | ||||||||||||||||||||||||
(unaudited) | Year ended December 31, | |||||||||||||||||||||||
2011 | 2010 | |||||||||||||||||||||||
As Reported | Special Items | As Adjusted | As Reported | Special Items | As Adjusted | |||||||||||||||||||
Net sales | $ | 817,056 | $ | — | $ | 817,056 | $ | 799,794 | $ | — | $ | 799,794 | ||||||||||||
Freight billed to customers | 2,396 | — | 2,396 | 1,790 | — | 1,790 | ||||||||||||||||||
Total revenues | 819,452 | — | 819,452 | 801,584 | — | 801,584 | ||||||||||||||||||
Cost of sales | 650,713 | 2,841 | 647,872 | 633,571 | 2,317 | 631,254 | ||||||||||||||||||
Gross profit | 168,739 | (2,841 | ) | 171,580 | 168,013 | (2,317 | ) | 170,330 | ||||||||||||||||
Selling, general and administrative expenses | 105,545 | 3,914 | 101,631 | 97,390 | 1,047 | 96,343 | ||||||||||||||||||
Special charges | (281 | ) | (281 | ) | — | 1,802 | 1,802 | — | ||||||||||||||||
Income from operations | 63,475 | (6,474 | ) | 69,949 | 68,821 | (5,166 | ) | 73,987 | ||||||||||||||||
(Loss) gain on redemption of debt | (2,803 | ) | (2,803 | ) | — | 58,292 | 58,292 | — | ||||||||||||||||
Other income (expense) | 8,031 | 7,079 | 952 | (274 | ) | (130 | ) | (144 | ) | |||||||||||||||
Earnings before interest and income taxes | 68,703 | (2,198 | ) | 70,901 | 126,839 | 52,996 | 73,843 | |||||||||||||||||
Interest expense | 43,419 | — | 43,419 | 45,171 | — | 45,171 | ||||||||||||||||||
Income before income taxes | 25,284 | (2,198 | ) | 27,482 | 81,668 | 52,996 | 28,672 | |||||||||||||||||
Provision for income taxes | 1,643 | — | 1,643 | 11,582 | — | 11,582 | ||||||||||||||||||
Net income | $ | 23,641 | $ | (2,198 | ) | $ | 25,839 | $ | 70,086 | $ | 52,996 | $ | 17,090 | |||||||||||
Net income per share: | ||||||||||||||||||||||||
Basic | $ | 1.17 | $ | (0.11 | ) | $ | 1.28 | $ | 3.97 | $ | 3.00 | $ | 0.97 | |||||||||||
Diluted | $ | 1.14 | $ | (0.11 | ) | $ | 1.24 | $ | 3.51 | $ | 2.66 | $ | 0.86 | |||||||||||
Weighted average shares: | ||||||||||||||||||||||||
Outstanding | 20,170 | 17,668 | ||||||||||||||||||||||
Diluted | 20,808 | 19,957 | ||||||||||||||||||||||
Year ended December 31, 2011 | Year ended December 31, 2010 | |||||||||||||||||||||||||||||||||||||||
Special Items Detail-(income) expense: | Sale of Land & Traex(1) | CEO transition expenses(2) | Finance Fees (3) | Abandoned Property(4) | Other(5) | Total Special Items | Gain on PIK Notes(6) | Equity Offering & Finance Fees (3) | Other(7) | Total Special Items | ||||||||||||||||||||||||||||||
Cost of sales | $ | — | $ | — | $ | — | $ | 1,827 | $ | 1,014 | $ | 2,841 | $ | — | $ | — | $ | 2,317 | $ | 2,317 | ||||||||||||||||||||
SG&A | — | 2,722 | — | 892 | 300 | 3,914 | — | 1,047 | — | 1,047 | ||||||||||||||||||||||||||||||
Special charges | — | — | — | — | (281 | ) | (281 | ) | — | — | 1,802 | 1,802 | ||||||||||||||||||||||||||||
Loss (gain) on redemption of debt | — | — | 2,803 | — | — | 2,803 | (71,693 | ) | 13,401 | — | (58,292 | ) | ||||||||||||||||||||||||||||
Other (income) expense | (6,863 | ) | — | — | — | (216 | ) | (7,079 | ) | — | — | 130 | 130 | |||||||||||||||||||||||||||
Total Special Items | $ | (6,863 | ) | $ | 2,722 | $ | 2,803 | $ | 2,719 | $ | 817 | $ | 2,198 | $ | (71,693 | ) | $ | 14,448 | $ | 4,249 | $ | (52,996 | ) | |||||||||||||||||
(1) Net gain on the sale of land at our Libbey Holland facility of $3,445 and gain on sale of substantially all of the assets of our Traex subsidiary of $3,418.
(2) CEO transition expenses primarily represent non-cash charges related to accelerated vesting of previously issued equity compensation.
(3) Includes the write-off of unamortized finance fees and discounts and call premium payments on the $40.0 million senior notes redeemed in March 2011 and floating rate senior notes refinanced in February 2010, unamortized finance fees on the refinanced credit facility in February 2010, and equity offering fees related to the secondary stock offering completed in August 2010 for which the Company received no proceeds.
(4) Estimate accrued for an on-going unclaimed property audit.
(5) Cost of sales includes $197 of restructuring charges and a $817 write-down of unutilized fixed assets in our Glass Operations segment. SG&A includes severance of $1,105, net of an equipment credit of $805. Special charges relate to the closure of our Syracuse, New York, manufacturing facility, our Mira Loma, California, distribution center and the decorating operations at our Shreveport manufacturing facility.
(6) Gain on PIK Notes is the difference between the carrying value and the face value of the PIK Notes when we redeemed them in February 2010.
(7) Restructuring charges related to the closure of our Syracuse, New York, manufacturing facility, our Mira Loma, California, distribution center and the decorating operations at our Shreveport manufacturing facility are included in cost of sales for $566, special charges for $1,802, and other expense of $130. Cost of sales also includes a $2,696 write down of certain after-processing equipment within our Glass Operations segment, net of an insurance claim recovery of $945.
Table 3 | ||||||||||||||||
Reconciliation of Net Income to Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) and Adjusted EBITDA | ||||||||||||||||
(dollars in thousands) | ||||||||||||||||
Three months ended December 31, | Year ended December 31, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Reported net income | $ | 2,109 | $ | 2,763 | $ | 23,641 | $ | 70,086 | ||||||||
Add: | ||||||||||||||||
Interest expense | 10,490 | 11,928 | 43,419 | 45,171 | ||||||||||||
(Benefit from) provision for income taxes | (3,182 | ) | 4,813 | 1,643 | 11,582 | |||||||||||
Depreciation and amortization | 9,923 | 10,121 | 42,188 | 41,115 | ||||||||||||
EBITDA | 19,340 | 29,625 | 110,891 | 167,954 | ||||||||||||
Add: Special items before interest and taxes | 1,954 | (838 | ) | 2,198 | (52,996 | ) | ||||||||||
Adjusted EBITDA | $ | 21,294 | $ | 28,787 | $ | 113,089 | $ | 114,958 | ||||||||
Table 4 | ||||||||||||||||
Reconciliation of Net Cash provided by Operating Activities to Free Cash Flow | ||||||||||||||||
(dollars in thousands) | ||||||||||||||||
Three months ended December 31, | Year ended December 31, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Net cash provided by operating activities | $ | 53,207 | $ | 58,532 | $ | 55,351 | $ | 47,699 | ||||||||
Capital expenditures | (14,963 | ) | (9,125 | ) | (41,420 | ) | (28,247 | ) | ||||||||
Net proceeds from sale of Traex | (522 | ) | — | 12,478 | — | |||||||||||
Proceeds from asset sales and other | (42 | ) | — | 5,222 | — | |||||||||||
Payment of interest on New PIK Notes | — | — | — | 29,400 | ||||||||||||
Free Cash Flow | $ | 37,680 | $ | 49,407 | $ | 31,631 | $ | 48,852 | ||||||||
Table 5 | ||||||||||||||||
Summary Business Segment Information | ||||||||||||||||
(dollars in thousands) | ||||||||||||||||
Three months ended December 31, | Year ended December 31, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Net Sales: | ||||||||||||||||
Glass Operations(1) | $ | 199,228 | $ | 201,392 | $ | 746,581 | $ | 717,576 | ||||||||
Other Operations(2) | 15,735 | 21,580 | 71,183 | 82,783 | ||||||||||||
Eliminations | (181 | ) | (125 | ) | (708 | ) | (565 | ) | ||||||||
Consolidated | $ | 214,782 | $ | 222,847 | $ | 817,056 | $ | 799,794 | ||||||||
Segment Earnings before Interest & Taxes (Segment EBIT) (3) | ||||||||||||||||
Glass Operations(1) | $ | 19,551 | $ | 23,203 | $ | 96,716 | $ | 94,745 | ||||||||
Other Operations(2) | 2,355 | 3,891 | 11,974 | 14,902 | ||||||||||||
Segment EBIT | $ | 21,906 | $ | 27,094 | $ | 108,690 | $ | 109,647 | ||||||||
Reconciliation of Segment EBIT to Net Income: | ||||||||||||||||
Segment EBIT | $ | 21,906 | $ | 27,094 | $ | 108,690 | $ | 109,647 | ||||||||
Retained corporate costs (4) | (10,535 | ) | (8,428 | ) | (37,789 | ) | (35,804 | ) | ||||||||
Consolidated Adjusted EBIT | 11,371 | 18,666 | 70,901 | 73,843 | ||||||||||||
Gain (loss) on redemption of debt | — | 1,500 | (2,803 | ) | 58,292 | |||||||||||
Gain on sale of Traex assets | 179 | — | 3,418 | — | ||||||||||||
Gain on sale of land | — | — | 3,445 | — | ||||||||||||
Restructuring charges | — | (711 | ) | 84 | (2,498 | ) | ||||||||||
CEO transition expenses | (211 | ) | — | (2,722 | ) | — | ||||||||||
Abandoned property | — | — | (2,719 | ) | — | |||||||||||
Other special items | (1,922 | ) | 49 | (901 | ) | (2,798 | ) | |||||||||
Special Items before interest and taxes | (1,954 | ) | 838 | (2,198 | ) | 52,996 | ||||||||||
Interest expense | (10,490 | ) | (11,928 | ) | (43,419 | ) | (45,171 | ) | ||||||||
Income taxes | 3,182 | (4,813 | ) | (1,643 | ) | (11,582 | ) | |||||||||
Net income | $ | 2,109 | $ | 2,763 | $ | 23,641 | $ | 70,086 | ||||||||
Depreciation & Amortization: | ||||||||||||||||
Glass Operations(1) | $ | 9,619 | $ | 9,651 | $ | 40,398 | $ | 39,038 | ||||||||
Other Operations(2) | 8 | 167 | 265 | 715 | ||||||||||||
Corporate | 296 | 303 | 1,525 | 1,362 | ||||||||||||
Consolidated | $ | 9,923 | $ | 10,121 | $ | 42,188 | $ | 41,115 | ||||||||
(1) Glass Operations—includes worldwide sales of glass tableware from domestic and international subsidiaries.
(2) Other Operations—includes worldwide sales of ceramic dinnerware, metal tableware, hollowware and serveware. Plastic items were sold through April 28, 2011.
(3) 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.
(4) Retained corporate costs includes certain headquarter, administrative and facility costs, and other costs that are not allocable to the reporting segments.