Attached files
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| 8-K - FORM 8-K - LIBBEY INC | form8-k.htm |
Libbey Inc.
Page 1
Exhibit 99.1
 | Libbey Inc. 300 Madison Ave P.O. Box 10060 Toledo, OH 43699 |
NEWS RELEASE
INVESTOR CONTACT: | MEDIA CONTACT: | |
Kenneth Boerger | Lisa Fell | |
Vice President and Treasurer | Director of Corporate Communications | |
(419) 325-2279 | (419) 325-2001 | |
ken.boerger@libbey.com | lfell@libbey.com | |
FOR IMMEDIATE RELEASE
FRIDAY, FEBRUARY 27, 2015
LIBBEY INC. ANNOUNCES RECORD FOURTH QUARTER AND FULL-YEAR 2014
NET SALES ON CONTINUED STRONG REVENUE GROWTH
Fourth quarter sales increased 4.7 percent, compared to the fourth quarter of 2013,
and were the highest fourth quarter sales in Company history
TOLEDO, OHIO, FEBRUARY 27, 2015--Libbey Inc. (NYSE MKT: LBY) today reported results for the fourth quarter and year-ended December 31, 2014.
Fourth Quarter Financial Highlights
• | Sales for the fourth quarter were $231.4 million, compared to $221.0 million for the fourth quarter of 2013, an increase of 4.7 percent (7.1 percent excluding currency fluctuation). |
• | Net income for the fourth quarter was $19.8 million, compared to $9.3 million in the prior-year fourth quarter. Adjusted net income (see Table 1) for the fourth quarter was $11.9 million, compared to the $12.8 million adjusted net income recorded in the fourth quarter of 2013. |
• | Adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA) (see Table 3) for the quarter was $30.7 million, compared to $37.6 million in the prior-year quarter. Adjusted EBITDA of $30.7 million was at the high end of the Company's previous guidance of $29.0 million to $31.0 million. |
• | Own the Moment strategic foundation announced at 2015 Investor Day is driven by a balanced capital allocation strategy, including an $0.11 per share quarterly dividend, repurchases of up to 1.5 million shares and reinvestment in the business. |
"For the third consecutive quarter, we were able to defend and grow our market share in an extremely competitive market, as sales grew in each of our segments, excluding currency impacts. Adjusted EBITDA results were
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Libbey Inc.
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positively impacted by our North American capacity realignment and productivity improvements, but these gains were offset by the items we outlined at our Investor Day in January: costs associated with an earlier-than-planned furnace repair, strategic growth initiatives, negative sales mix, higher than expected currency impact from the weaker peso and euro and unplanned non-income tax assessments. We are pleased with our overall Company sales growth of 4.7 percent, 7.1 percent excluding currency fluctuation, during the quarter. We look forward to continuing our strong sales performance during 2015, as we leverage the investments we have made in new products, sales and marketing capabilities," said Stephanie A. Streeter, chief executive officer of Libbey Inc.
Fourth Quarter Segment Sales and Operational Review
• | Sales in the Americas segment were $165.7 million, compared to $154.1 million in the fourth quarter of 2013, an increase of 7.5 percent (8.9 percent excluding currency impact). Contributing to the increase were a 3.2 percent increase in sales in our foodservice channel, an increase of 8.9 percent in retail and a 10.5 percent increase in the business-to-business channel. |
• | Sales in the EMEA segment decreased 6.6 percent (an increase of 1.2 percent excluding currency impact) to $36.2 million, compared to $38.7 million in the fourth quarter of 2013. |
• | Sales in U.S. Sourcing were $21.1 million in the fourth quarter of 2014, compared to $19.8 million in the prior-year quarter, as sales of World Tableware and Syracuse China flatware and dinnerware increased 6.7 percent. |
• | Sales in Other were $8.5 million, similar to the prior-year quarter, resulting from a 0.8 percent increase in sales (1.9 percent excluding currency impact) in the Asia Pacific region. |
• | Adjusted EBITDA was $30.7 million (see Table 3) compared to $37.6 million reported in the prior-year quarter. The increased sales and the realization of savings of approximately $3.6 million from the recently completed North American capacity realignment positively impacted adjusted EBITDA. However, these favorable factors were more than offset by an unfavorable sales mix, the $3.9 million impact of costs related to an earlier-than-planned furnace repair, higher input costs for natural gas and electricity of $0.9 million, $1.6 million in unplanned non-income tax assessments as well as increased selling and marketing expenses and expenses incurred in connection with other strategic growth initiatives. |
• | Interest expense was $4.9 million, a decrease of $2.8 million, compared to $7.7 million in the year-ago period, primarily driven by lower interest rates as a result of the refinancing completed during the second quarter of 2014. |
• | Our effective tax rate was 16.4 percent for the quarter-ended December 31, 2014, compared to 42.5 percent for the quarter-ended December 31, 2013. 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 and other activity in jurisdictions with recorded valuation allowances. |
Full-Year 2014 Financial Highlights
• | Sales for the full-year 2014 were $852.5 million, compared to $818.8 million for 2013, an increase of 4.1 percent (or 4.7 percent excluding currency fluctuation). |
• | Income from operations for 2014 was $81.2 million, compared to $74.6 million in 2013. |
• | Adjusted EBITDA (see Table 3) was $123.4 million for the full-year 2014, compared to $135.3 million for 2013. |
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Full-Year 2014 Segment Sales and Operational Review
• | Sales in the Americas segment were $591.4 million, compared to $560.8 million in 2013, an increase of 5.4 percent (6.3 percent excluding currency fluctuation), including increases in all channels of distribution. |
• | Sales in the EMEA segment increased 0.8 percent to $147.6 million, compared to $146.5 million in 2013. |
• | Sales in the U.S. Sourcing segment increased 3.2 percent to $80.8 million, compared to $78.3 million in 2013. |
• | Sales in Other were $32.7 million, compared to $33.2 million in the prior-year period. This decrease was the result of a 1.5 percent decrease in sales in the Asia Pacific region. |
• | Interest expense for 2014 was $22.9 million, a decrease of $9.1 million, compared to $32.0 million in 2013, primarily driven by lower interest rates as a result of the refinancing completed during the second quarter of 2014. |
• | Our effective tax rate was 63.3 percent for the full-year 2014, compared to 31.8 percent for 2013. The effective tax rate was generally influenced by foreign earnings with differing statutory rates, foreign withholding tax, accruals related to uncertain tax positions and other activity in jurisdictions with recorded valuation allowances. |
Balance Sheet and Liquidity
• | Libbey reported that it had available capacity of $82.3 million under its ABL credit facility as of December 31, 2014, with no loans currently outstanding. The Company also had cash on hand of $60.0 million at December 31, 2014, including in excess of $26.0 million in the U.S. |
• | As of December 31, 2014, working capital, defined as inventories and accounts receivable less accounts payable, was $178.4 million, compared to $216.8 million at September 30, 2014, and $173.1 million at December 31, 2013 (see Table 5). Working capital increased $5.3 million, compared to the prior year, but was reduced during the quarter by $38.4 million, as the result of the Company's focus on working capital reduction. |
Sherry Buck, chief financial officer, added: "We generated a significant amount of free cash flow during the fourth quarter, as a result of working capital reductions of over $38 million and receipt of approximately $10 million in insurance proceeds related to a claim for the furnace malfunction in 2013. We also continued to realize lower interest expense during the fourth quarter, compared to the prior year, which resulted in a reduction of over $9 million of interest expense for the full year. As we look to 2015, we expect to continue our strong free cash flow performance."
Buck added, "Since the implementation of our 10b5-1 share repurchase plan on December 15, 2014, we have repurchased over 180,000 shares of stock at an average purchase price of approximately $32.92 per share. At a minimum, we would expect to repurchase all 1.5 million shares under our current authorization by year-end 2017."
Outlook for 2015
For the full-year 2015, the Company provided a performance outlook consistent with the long-term goals it disclosed at its January 23, 2015, Investor Day. For the year 2015 the company expects:
• | Sales growth of approximately 3 percent, 5 to 6 percent on a constant currency basis |
• | Adjusted EBITDA margins of approximately 15 percent |
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• | Capital expenditures in the range of $55 million to $60 million |
Webcast Information
Libbey will hold a conference call for investors on Friday, February 27, 2015, 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 7 days after the conclusion of the call.
About Libbey Inc.
Based in Toledo, Ohio, since 1888, we believe Libbey Inc. is the largest manufacturer of glass tableware in the western hemisphere and one of the largest glass tableware manufacturers in the world. Libbey supplies products to foodservice, retail, industrial and business-to-business customers in over 100 countries and is the leading manufacturer of tabletop products for the U.S. foodservice industry.
Libbey operates glass tableware manufacturing plants in the United States in Louisiana and Ohio as well as in Mexico, China, Portugal and the Netherlands. Its Crisa subsidiary, located in Monterrey, Mexico, is a leading producer of glass tableware in Mexico and Latin America. Its subsidiary located in Leerdam, Netherlands, is among the world leaders in producing and selling glass stemware to retail, foodservice and industrial clients. Its Crisal subsidiary, located in Portugal, provides an expanded presence in Europe. Its Syracuse China subsidiary designs and distributes an extensive line of high-quality ceramic dinnerware, principally for foodservice establishments in the United States. Its World Tableware subsidiary imports and sells a full line of metal flatware and hollowware and an assortment of ceramic dinnerware and other tabletop items, principally for foodservice establishments in the United States. In 2014, Libbey Inc.'s net sales totaled $852.5 million.
This press release includes forward-looking statements as defined in Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements reflect only the Company's best assessment at this time and are indicated by words or phrases such as "goal," "expects," " believes," "will," "estimates," "anticipates," or similar phrases. Investors are cautioned that forward-looking statements involve risks and uncertainty and that actual results may differ materially from these statements, and that investors should not place undue reliance on such statements. These forward-looking statements may be affected by the risks and uncertainties in the Company's business. This information is qualified in its entirety by cautionary statements and risk factor disclosures contained in the Company's Securities and Exchange Commission filings, including the Company's report on Form 10-K filed with the Commission on March 12, 2014. Important factors potentially affecting performance include but are not limited to risks related to our ability to borrow under our ABL credit agreement; increased competition from foreign suppliers endeavoring to sell glass tableware in the United States and Mexico; the impact of lower duties for imported products; global economic conditions and the related impact on consumer spending levels; major slowdowns in the retail, travel or entertainment industries in the United States, Canada, Mexico, Western Europe and Asia, caused by terrorist attacks or otherwise; significant increases in per-unit costs for natural gas, electricity, freight, corrugated packaging, and other purchased materials; high levels of indebtedness; high interest rates that increase the Company's borrowing costs or volatility in the financial markets that could constrain liquidity and credit availability; protracted work stoppages related to collective bargaining agreements; increases in expense associated with higher medical costs, increased pension expense associated with lower returns on pension investments and increased pension obligations; devaluations and other major currency fluctuations relative to the U.S. dollar and the Euro that could reduce the cost competitiveness of the Company's products compared to foreign competition; the effect of high inflation in Mexico and exchange rate changes to the value of the Mexican peso and the earnings and cash flow of Libbey Mexico, expressed under U.S. GAAP; the inability to achieve savings and profit improvements at targeted levels in the Company's operations or within the intended time periods; and whether the Company completes any significant acquisition and whether such acquisitions can operate profitably. Any forward-looking statements speak only as of the date of this press release, and the Company assumes no obligation to update or revise any forward-looking statement to reflect events or circumstances arising after the date of this press release.
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Libbey Inc.
Condensed Consolidated Statements of Operations
(dollars in thousands, except per-share amounts)
(unaudited)
Three months ended December 31, | |||||||
2014 | 2013 | ||||||
Net sales | $ | 231,418 | $ | 221,045 | |||
Freight billed to customers | 762 | 897 | |||||
Total revenues | 232,180 | 221,942 | |||||
Cost of sales (1) | 171,956 | 172,124 | |||||
Gross profit | 60,224 | 49,818 | |||||
Selling, general and administrative expenses (1) | 32,732 | 28,430 | |||||
Special charges (1) | — | 240 | |||||
Income from operations | 27,492 | 21,148 | |||||
Other income (1) | 1,011 | 2,737 | |||||
Earnings before interest and income taxes | 28,503 | 23,885 | |||||
Interest expense | 4,882 | 7,739 | |||||
Income before income taxes | 23,621 | 16,146 | |||||
Provision for income taxes (1) | 3,864 | 6,861 | |||||
Net income | $ | 19,757 | $ | 9,285 | |||
Net income per share: | |||||||
Basic | $ | 0.90 | $ | 0.43 | |||
Diluted | $ | 0.88 | $ | 0.42 | |||
Weighted average shares: | |||||||
Outstanding | 21,861 | 21,429 | |||||
Diluted | 22,332 | 21,975 | |||||
(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, | |||||||
2014 | 2013 | ||||||
Net sales | $ | 852,492 | $ | 818,811 | |||
Freight billed to customers | 3,400 | 3,344 | |||||
Total revenues | 855,892 | 822,155 | |||||
Cost of sales (1) | 652,747 | 632,738 | |||||
Gross profit | 203,145 | 189,417 | |||||
Selling, general and administrative expenses (1) | 121,909 | 109,981 | |||||
Special charges (1) | — | 4,859 | |||||
Income from operations | 81,236 | 74,577 | |||||
Loss on redemption of debt (1) | (47,191 | ) | (2,518 | ) | |||
Other income (1) | 2,351 | 1,647 | |||||
Earnings before interest and income taxes | 36,396 | 73,706 | |||||
Interest expense | 22,866 | 32,006 | |||||
Income before income taxes | 13,530 | 41,700 | |||||
Provision for income taxes (1) | 8,567 | 13,241 | |||||
Net income | $ | 4,963 | $ | 28,459 | |||
Net income per share: | |||||||
Basic | $ | 0.23 | $ | 1.34 | |||
Diluted | $ | 0.22 | $ | 1.31 | |||
Weighted average shares: | |||||||
Outstanding | 21,716 | 21,217 | |||||
Diluted | 22,184 | 21,742 | |||||
(1) Refer to Table 2 for Special Items detail.
Libbey Inc.
Condensed Consolidated Balance Sheets
(dollars in thousands)
December 31, 2014 | December 31, 2013 | ||||||
(unaudited) | |||||||
ASSETS: | |||||||
Cash and cash equivalents | $ | 60,044 | $ | 42,208 | |||
Accounts receivable — net | 91,106 | 94,549 | |||||
Inventories — net | 169,828 | 163,121 | |||||
Other current assets | 27,701 | 24,838 | |||||
Total current assets | 348,679 | 324,716 | |||||
Pension asset | 848 | 33,615 | |||||
Goodwill and purchased intangibles — net | 181,883 | 186,704 | |||||
Property, plant and equipment — net | 277,978 | 265,662 | |||||
Other assets | 19,542 | 19,293 | |||||
Total assets | $ | 828,930 | $ | 829,990 | |||
LIABILITIES AND SHAREHOLDERS' EQUITY: | |||||||
Accounts payable | $ | 82,485 | $ | 79,620 | |||
Accrued liabilities | 71,673 | 73,821 | |||||
Pension liability (current portion) | 1,488 | 3,161 | |||||
Non-pension postretirement benefits (current portion) | 4,800 | 4,758 | |||||
Other current liabilities | 8,296 | 1,374 | |||||
Long-term debt due within one year | 7,658 | 5,391 | |||||
Total current liabilities | 176,400 | 168,125 | |||||
Long-term debt | 436,264 | 406,512 | |||||
Pension liability | 56,462 | 40,033 | |||||
Non-pension postretirement benefits | 63,301 | 59,065 | |||||
Other liabilities | 19,049 | 25,446 | |||||
Total liabilities | 751,476 | 699,181 | |||||
Common stock and capital in excess of par value | 331,609 | 323,580 | |||||
Treasury stock | (1,060 | ) | — | ||||
Retained deficit | (114,648 | ) | (119,611 | ) | |||
Accumulated other comprehensive loss | (138,447 | ) | (73,160 | ) | |||
Total shareholders’ equity | 77,454 | 130,809 | |||||
Total liabilities and shareholders’ equity | $ | 828,930 | $ | 829,990 | |||
Libbey Inc.
Condensed Consolidated Statements of Cash Flows
(dollars in thousands)
(unaudited)
Three months ended December 31, | |||||||
2014 | 2013 | ||||||
Operating activities: | |||||||
Net income | $ | 19,757 | $ | 9,285 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 9,551 | 9,799 | |||||
Loss on asset sales and disposals | 427 | — | |||||
Change in accounts receivable | 16,517 | (2,527 | ) | ||||
Change in inventories | 17,995 | 10,838 | |||||
Change in accounts payable | 5,282 | 18,189 | |||||
Accrued interest and amortization of discounts and finance fees | 310 | (6,380 | ) | ||||
Pension & non-pension postretirement benefits | (3,299 | ) | (576 | ) | |||
Restructuring | — | (646 | ) | ||||
Accrued liabilities & prepaid expenses | (3,605 | ) | (4,455 | ) | |||
Income taxes | 3,310 | 4,481 | |||||
Share-based compensation expense | 1,537 | 1,764 | |||||
Other operating activities | (655 | ) | 1,485 | ||||
Net cash provided by operating activities | 67,127 | 41,257 | |||||
Investing activities: | |||||||
Additions to property, plant and equipment | (18,178 | ) | (19,255 | ) | |||
Proceeds from furnace malfunction insurance recovery | (1,996 | ) | — | ||||
Proceeds from asset sales and other | 17 | — | |||||
Net cash used in investing activities | (20,157 | ) | (19,255 | ) | |||
Financing activities: | |||||||
Borrowings on ABL credit facility | 28,300 | 8,200 | |||||
Repayments on ABL credit facility | (37,200 | ) | (8,200 | ) | |||
Other repayments | (547 | ) | (9,759 | ) | |||
Repayments on Term Loan B | (1,100 | ) | — | ||||
Stock options exercised | 1,690 | 277 | |||||
Treasury shares purchased | (1,060 | ) | — | ||||
Net cash used in financing activities | (9,917 | ) | (9,482 | ) | |||
Effect of exchange rate fluctuations on cash | (1,098 | ) | 222 | ||||
Increase in cash | 35,955 | 12,742 | |||||
Cash & cash equivalents at beginning of period | 24,089 | 29,466 | |||||
Cash & cash equivalents at end of period | $ | 60,044 | $ | 42,208 | |||
Libbey Inc.
Condensed Consolidated Statements of Cash Flows
(dollars in thousands)
(unaudited)
Year ended December 31, | |||||||
2014 | 2013 | ||||||
Operating activities: | |||||||
Net income | $ | 4,963 | $ | 28,459 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 40,388 | 43,969 | |||||
Loss on asset sales and disposals | 674 | 514 | |||||
Change in accounts receivable | (1,808 | ) | (12,674 | ) | |||
Change in inventories | (10,828 | ) | (3,932 | ) | |||
Change in accounts payable | 7,401 | 12,190 | |||||
Accrued interest and amortization of discounts and finance fees | 2,039 | 1,496 | |||||
Call premium on senior notes | 37,348 | 1,350 | |||||
Write-off of finance fees on senior notes | 9,086 | 1,168 | |||||
Pension & non-pension postretirement benefits | (879 | ) | 7,746 | ||||
Restructuring | (289 | ) | 2,212 | ||||
Accrued liabilities & prepaid expenses | (7,222 | ) | (17,507 | ) | |||
Income taxes | 885 | (1,804 | ) | ||||
Share-based compensation expense | 5,283 | 5,063 | |||||
Other operating activities | (2,857 | ) | 4,479 | ||||
Net cash provided by operating activities | 84,184 | 72,729 | |||||
Investing activities: | |||||||
Additions to property, plant and equipment | (56,706 | ) | (49,407 | ) | |||
Proceeds from furnace malfunction insurance recovery | 2,350 | — | |||||
Proceeds from asset sales and other | 24 | 81 | |||||
Net cash used in investing activities | (54,332 | ) | (49,326 | ) | |||
Financing activities: | |||||||
Borrowings on ABL credit facility | 83,000 | 51,000 | |||||
Repayments on ABL credit facility | (83,000 | ) | (51,000 | ) | |||
Other repayments | (5,863 | ) | (14,270 | ) | |||
Other borrowings | 5,214 | 6,094 | |||||
Payments on 6.875% senior notes | (405,000 | ) | (45,000 | ) | |||
Proceeds from Term Loan B | 438,900 | — | |||||
Repayments on Term Loan B | (2,200 | ) | — | ||||
Call premium on senior notes | (37,348 | ) | (1,350 | ) | |||
Stock options exercised | 4,571 | 5,384 | |||||
Debt issuance costs and other | (6,959 | ) | — | ||||
Treasury shares purchased | (1,060 | ) | — | ||||
Net cash used in financing activities | (9,745 | ) | (49,142 | ) | |||
Effect of exchange rate fluctuations on cash | (2,271 | ) | 739 | ||||
Increase (decrease) in cash | 17,836 | (25,000 | ) | ||||
Cash & cash equivalents at beginning of year | 42,208 | 67,208 | |||||
Cash & cash equivalents at end of year | $ | 60,044 | $ | 42,208 | |||
In accordance with the SEC’s Regulation G, tables 1 through 6 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, | ||||||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||||||
As Reported | Special Items | As Adjusted | As Reported | Special Items | As Adjusted | |||||||||||||||||||
Net sales | $ | 231,418 | $ | — | $ | 231,418 | $ | 221,045 | $ | — | $ | 221,045 | ||||||||||||
Freight billed to customers | 762 | — | 762 | 897 | — | 897 | ||||||||||||||||||
Total revenues | 232,180 | — | 232,180 | 221,942 | — | 221,942 | ||||||||||||||||||
Cost of sales | 171,956 | (10,349 | ) | 182,305 | 172,124 | 3,933 | 168,191 | |||||||||||||||||
Gross profit | 60,224 | 10,349 | 49,875 | 49,818 | (3,933 | ) | 53,751 | |||||||||||||||||
Selling, general and administrative expenses | 32,732 | 1,649 | 31,083 | 28,430 | 1,401 | 27,029 | ||||||||||||||||||
Special charges | — | — | — | 240 | 240 | — | ||||||||||||||||||
Income from operations | 27,492 | 8,700 | 18,792 | 21,148 | (5,574 | ) | 26,722 | |||||||||||||||||
Other income (expense) | 1,011 | (1,317 | ) | 2,328 | 2,737 | 1,844 | 893 | |||||||||||||||||
Earnings before interest and income taxes | 28,503 | 7,383 | 21,120 | 23,885 | (3,730 | ) | 27,615 | |||||||||||||||||
Interest expense | 4,882 | — | 4,882 | 7,739 | — | 7,739 | ||||||||||||||||||
Income before income taxes | 23,621 | 7,383 | 16,238 | 16,146 | (3,730 | ) | 19,876 | |||||||||||||||||
Provision for income taxes | 3,864 | (482 | ) | 4,346 | 6,861 | (196 | ) | 7,057 | ||||||||||||||||
Net income | $ | 19,757 | $ | 7,865 | $ | 11,892 | $ | 9,285 | $ | (3,534 | ) | $ | 12,819 | |||||||||||
Net income per share: | ||||||||||||||||||||||||
Basic | $ | 0.90 | $ | 0.36 | $ | 0.54 | $ | 0.43 | $ | (0.17 | ) | $ | 0.60 | |||||||||||
Diluted | $ | 0.88 | $ | 0.35 | $ | 0.53 | $ | 0.42 | $ | (0.16 | ) | $ | 0.58 | |||||||||||
Weighted average shares: | ||||||||||||||||||||||||
Outstanding | 21,861 | 21,429 | ||||||||||||||||||||||
Diluted | 22,332 | 21,975 | ||||||||||||||||||||||
Three months ended December 31, 2014 | ||||||||||||||||||||||||
Special Items Detail - (Income) Expense: | Furnace Malfunction (1) | Executive Retirement | Pension Settlement | Derivatives (2) | Environmental Obligation(3) | Total Special Items | ||||||||||||||||||
Cost of sales | $ | (10,664 | ) | $ | — | $ | — | $ | — | $ | 315 | $ | (10,349 | ) | ||||||||||
SG&A | — | 875 | 774 | — | — | 1,649 | ||||||||||||||||||
Other (income) expense | — | — | — | 1,317 | — | 1,317 | ||||||||||||||||||
Income taxes | — | — | (87 | ) | (395 | ) | — | (482 | ) | |||||||||||||||
Total Special Items | $ | (10,664 | ) | $ | 875 | $ | 687 | $ | 922 | $ | 315 | $ | (7,865 | ) | ||||||||||
Three months ended December 31, 2013 | ||||||||||||||||||||
Special Items Detail - (Income) Expense: | Restructuring Charges (4) | Furnace Malfunction (1) | Pension Settlement | Executive Retirement | Total Special Items | |||||||||||||||
Cost of sales | $ | (14 | ) | $ | 3,835 | $ | 112 | $ | — | $ | 3,933 | |||||||||
SG&A | — | — | 665 | 736 | 1,401 | |||||||||||||||
Special charges | 240 | — | — | — | 240 | |||||||||||||||
Other (income) expense | — | (1,844 | ) | — | — | (1,844 | ) | |||||||||||||
Income taxes | 163 | (115 | ) | (300 | ) | 56 | (196 | ) | ||||||||||||
Total Special Items | $ | 389 | $ | 1,876 | $ | 477 | $ | 792 | $ | 3,534 | ||||||||||
(1) Furnace malfunction relates to loss of production and disposal of fixed assets, net of insurance recoveries, at our Toledo, Ohio, manufacturing facility.
(2) Derivatives relate to hedge ineffectiveness and mark-to-market adjustments on our natural gas contracts that have been de-designated and those for which we did not elect hedge accounting.
(3) 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.
(4) Restructuring charges relate to discontinuing production of certain glassware in North America and reducing manufacturing capacity at our Shreveport, Louisiana, 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, | ||||||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||||||
As Reported | Special Items | As Adjusted | As Reported | Special Items | As Adjusted | |||||||||||||||||||
Net sales | $ | 852,492 | $ | — | $ | 852,492 | $ | 818,811 | $ | — | $ | 818,811 | ||||||||||||
Freight billed to customers | 3,400 | — | 3,400 | 3,344 | — | 3,344 | ||||||||||||||||||
Total revenues | 855,892 | — | 855,892 | 822,155 | — | 822,155 | ||||||||||||||||||
Cost of sales | 652,747 | (3,482 | ) | 656,229 | 632,738 | 8,381 | 624,357 | |||||||||||||||||
Gross profit | 203,145 | 3,482 | 199,663 | 189,417 | (8,381 | ) | 197,798 | |||||||||||||||||
Selling, general and administrative expenses | 121,909 | 1,649 | 120,260 | 109,981 | 4,345 | 105,636 | ||||||||||||||||||
Special charges | — | — | — | 4,859 | 4,859 | — | ||||||||||||||||||
Income from operations | 81,236 | 1,833 | 79,403 | 74,577 | (17,585 | ) | 92,162 | |||||||||||||||||
Loss on redemption of debt | (47,191 | ) | (47,191 | ) | — | (2,518 | ) | (2,518 | ) | — | ||||||||||||||
Other income (expense) | 2,351 | (1,247 | ) | 3,598 | 1,647 | 928 | 719 | |||||||||||||||||
Earnings before interest and income taxes | 36,396 | (46,605 | ) | 83,001 | 73,706 | (19,175 | ) | 92,881 | ||||||||||||||||
Interest expense | 22,866 | — | 22,866 | 32,006 | — | 32,006 | ||||||||||||||||||
Income before income taxes | 13,530 | (46,605 | ) | 60,135 | 41,700 | (19,175 | ) | 60,875 | ||||||||||||||||
Provision for income taxes | 8,567 | (823 | ) | 9,390 | 13,241 | (2,067 | ) | 15,308 | ||||||||||||||||
Net income | $ | 4,963 | $ | (45,782 | ) | $ | 50,745 | $ | 28,459 | $ | (17,108 | ) | $ | 45,567 | ||||||||||
Net income per share: | ||||||||||||||||||||||||
Basic | $ | 0.23 | $ | (2.11 | ) | $ | 2.34 | $ | 1.34 | $ | (0.81 | ) | $ | 2.15 | ||||||||||
Diluted | $ | 0.22 | $ | (2.06 | ) | $ | 2.29 | $ | 1.31 | $ | (0.79 | ) | $ | 2.10 | ||||||||||
Weighted average shares: | ||||||||||||||||||||||||
Outstanding | 21,716 | 21,217 | ||||||||||||||||||||||
Diluted | 22,184 | 21,742 | ||||||||||||||||||||||
Year ended December 31, 2014 | ||||||||||||||||||||||||||||||||
Special Items Detail - (Income) Expense: | Restructuring Charges(1) | Pension Settlement | Debt Cost(2) | Furnace Malfunction(3) | Executive Retirement | Derivatives(4) | Environmental Obligation(5) | Total Special Items | ||||||||||||||||||||||||
Cost of sales | $ | 985 | $ | — | $ | — | $ | (4,782 | ) | $ | — | $ | — | $ | 315 | $ | (3,482 | ) | ||||||||||||||
SG&A | — | 774 | — | — | 875 | — | — | 1,649 | ||||||||||||||||||||||||
Loss on redemption of debt | — | — | 47,191 | — | — | — | — | 47,191 | ||||||||||||||||||||||||
Other (income) expense | — | — | — | — | — | 1,247 | — | 1,247 | ||||||||||||||||||||||||
Income taxes | (296 | ) | (87 | ) | — | (45 | ) | — | (395 | ) | — | (823 | ) | |||||||||||||||||||
Total Special Items | $ | 689 | $ | 687 | $ | 47,191 | $ | (4,827 | ) | $ | 875 | $ | 852 | $ | 315 | $ | 45,782 | |||||||||||||||
Year ended December 31, 2013 | ||||||||||||||||||||||||||||||||
Special Items Detail - (Income) Expense: | Restructuring Charge(1) | Furnace Malfunction(3) | Abandoned Property | Pension Settlement | Debt Costs(2) | Executive Retirement | Derivatives(4) | Total Special Items | ||||||||||||||||||||||||
Cost of sales | $ | 1,685 | $ | 6,272 | $ | — | $ | 424 | $ | — | $ | — | $ | — | $ | 8,381 | ||||||||||||||||
SG&A | — | — | 1,781 | 1,828 | — | 736 | — | 4,345 | ||||||||||||||||||||||||
Special charges | 4,859 | — | — | — | — | — | — | 4,859 | ||||||||||||||||||||||||
Loss on redemption of debt | — | — | — | — | 2,518 | — | — | 2,518 | ||||||||||||||||||||||||
Other (income) expense | — | (1,844 | ) | — | — | 916 | (928 | ) | ||||||||||||||||||||||||
Income taxes | (614 | ) | (415 | ) | (167 | ) | (566 | ) | (236 | ) | (69 | ) | — | (2,067 | ) | |||||||||||||||||
Total Special Items | $ | 5,930 | $ | 4,013 | $ | 1,614 | $ | 1,686 | $ | 2,282 | $ | 667 | $ | 916 | $ | 17,108 | ||||||||||||||||
(1) Restructuring charges relate to discontinuing production of certain glassware in North America and reducing manufacturing capacity at our Shreveport, Louisiana, facility.
(2) Debt costs for 2014 include the write-off of unamortized finance fees and call premium payments on the $405.0 million senior notes redeemed in April and May 2014, and the write-off of the debt carrying value adjustment related to the termination of the $45.0 million interest rate swap. Debt costs for 2013 include the write-off of unamortized finance fees and call premium payments on the $45.0 million senior notes redeemed in May 2013.
(3) Furnace malfunction relates to loss of production and disposal of fixed assets, net of insurance recoveries, at our Toledo, Ohio, manufacturing facility.
(4) In 2014, derivatives primarily relate to hedge ineffectiveness and mark-to-market adjustments on our natural gas contracts that have been de-designated and those for which we did not elect hedge accounting. In 2013, $0.3 million related to hedge ineffectiveness on our natural gas hedges and $0.6 million related to the hedge ineffectiveness on our interest rate swap.
(5) 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 3 | ||||||||||||||||
Reconciliation of Net Income to Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) and Adjusted EBITDA | ||||||||||||||||
(dollars in thousands) | ||||||||||||||||
(unaudited) | ||||||||||||||||
Three months ended December 31, | Year ended December 31, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Reported net income | $ | 19,757 | $ | 9,285 | $ | 4,963 | $ | 28,459 | ||||||||
Add: | ||||||||||||||||
Interest expense | 4,882 | 7,739 | 22,866 | 32,006 | ||||||||||||
Provision for income taxes | 3,864 | 6,861 | 8,567 | 13,241 | ||||||||||||
Depreciation and amortization | 9,551 | 9,799 | 40,388 | 43,969 | ||||||||||||
EBITDA | 38,054 | 33,684 | 76,784 | 117,675 | ||||||||||||
Add: Special items before interest and taxes | (7,383 | ) | 3,730 | 46,605 | 19,175 | |||||||||||
Less: Depreciation expense included in special items and also in depreciation and amortization above | — | 166 | — | (1,533 | ) | |||||||||||
Adjusted EBITDA | $ | 30,671 | $ | 37,580 | $ | 123,389 | $ | 135,317 | ||||||||
Table 4 | ||||||||||||||||
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, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Net cash provided by operating activities | $ | 67,127 | $ | 41,257 | $ | 84,184 | $ | 72,729 | ||||||||
Capital expenditures | (18,178 | ) | (19,255 | ) | (56,706 | ) | (49,407 | ) | ||||||||
Proceeds from furnace malfunction insurance recovery | (1,996 | ) | — | 2,350 | — | |||||||||||
Proceeds from asset sales and other | 17 | — | 24 | 81 | ||||||||||||
Free Cash Flow | $ | 46,970 | $ | 22,002 | $ | 29,852 | $ | 23,403 | ||||||||
Table 5 | ||||||||||||
Reconciliation to Working Capital | ||||||||||||
(dollars in thousands) | ||||||||||||
(unaudited) | ||||||||||||
September 30, 2014 | December 31, 2014 | December 31, 2013 | ||||||||||
Add: | ||||||||||||
Accounts receivable | $ | 106,459 | $ | 91,106 | $ | 94,549 | ||||||
Inventories | 189,221 | 169,828 | 163,121 | |||||||||
Less: Accounts payable | 78,895 | 82,485 | 79,620 | |||||||||
Less: Receivable on furnace malfunction insurance claim | — | — | 5,000 | |||||||||
Working Capital | $ | 216,785 | $ | 178,449 | $ | 173,050 | ||||||
Table 6 | ||||||||||||||||
Summary Business Segment Information | ||||||||||||||||
(dollars in thousands) (unaudited) | Three months ended December 31, | Year ended December 31, | ||||||||||||||
Net Sales: | 2014 | 2013 | 2014 | 2013 | ||||||||||||
Americas (1) | $ | 165,650 | $ | 154,100 | $ | 591,391 | $ | 560,840 | ||||||||
EMEA (2) | 36,174 | 38,741 | 147,587 | 146,455 | ||||||||||||
U.S. Sourcing (3) | 21,078 | 19,754 | 80,782 | 78,302 | ||||||||||||
Other (4) | 8,516 | 8,450 | 32,732 | 33,214 | ||||||||||||
Consolidated | $ | 231,418 | $ | 221,045 | $ | 852,492 | $ | 818,811 | ||||||||
Segment Earnings Before Interest & Taxes (Segment EBIT) (5) : | ||||||||||||||||
Americas (1) | $ | 24,996 | $ | 29,028 | $ | 98,460 | $ | 100,534 | ||||||||
EMEA (2) | 2,654 | 2,046 | 5,726 | 874 | ||||||||||||
U.S. Sourcing (3) | 1,620 | 2,566 | 6,995 | 9,752 | ||||||||||||
Other (4) | 343 | 2,194 | 2,378 | 3,374 | ||||||||||||
Segment EBIT | $ | 29,613 | $ | 35,834 | $ | 113,559 | $ | 114,534 | ||||||||
Reconciliation of Segment EBIT to Net Income: | ||||||||||||||||
Segment EBIT | $ | 29,613 | $ | 35,834 | $ | 113,559 | $ | 114,534 | ||||||||
Retained corporate costs (6) | (8,493 | ) | (8,219 | ) | (30,558 | ) | (21,653 | ) | ||||||||
Consolidated Adjusted EBIT | 21,120 | 27,615 | 83,001 | 92,881 | ||||||||||||
Loss on redemption of debt | — | — | (47,191 | ) | (2,518 | ) | ||||||||||
Pension settlement | (774 | ) | (777 | ) | (774 | ) | (2,252 | ) | ||||||||
Furnace malfunction | 10,664 | (1,991 | ) | 4,782 | (4,428 | ) | ||||||||||
Environmental obligation | (315 | ) | — | (315 | ) | — | ||||||||||
Restructuring charges | — | (226 | ) | (985 | ) | (6,544 | ) | |||||||||
Derivatives (7) | (1,317 | ) | — | (1,247 | ) | (916 | ) | |||||||||
Abandoned property | — | — | — | (1,781 | ) | |||||||||||
Executive retirement | (875 | ) | (736 | ) | (875 | ) | (736 | ) | ||||||||
Special items before interest and taxes | 7,383 | (3,730 | ) | (46,605 | ) | (19,175 | ) | |||||||||
Interest expense | (4,882 | ) | (7,739 | ) | (22,866 | ) | (32,006 | ) | ||||||||
Income taxes | (3,864 | ) | (6,861 | ) | (8,567 | ) | (13,241 | ) | ||||||||
Net income | $ | 19,757 | $ | 9,285 | $ | 4,963 | $ | 28,459 | ||||||||
Depreciation & Amortization: | ||||||||||||||||
Americas (1) | $ | 5,893 | $ | 5,129 | $ | 22,856 | $ | 24,953 | ||||||||
EMEA (2) | 2,073 | 2,526 | 10,061 | 10,449 | ||||||||||||
U.S. Sourcing (3) | 5 | 6 | 25 | 33 | ||||||||||||
Other (4) | 1,463 | 1,925 | 6,179 | 7,275 | ||||||||||||
Corporate | 117 | 213 | 1,267 | 1,259 | ||||||||||||
Consolidated | $ | 9,551 | $ | 9,799 | $ | 40,388 | $ | 43,969 | ||||||||
(1) Americas—includes worldwide sales of manufactured and sourced glass tableware having an end market destination in North and South America.
(2) EMEA—includes worldwide sales of manufactured and sourced glass tableware having an end market destination in Europe, the Middle East and Africa.
(3) U.S. Sourcing—includes U.S. sales of sourced ceramic dinnerware, metal tableware, hollowware, and serveware.
(4) Other—includes worldwide 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 includes certain headquarter, administrative and facility costs, and other costs that are not allocable to the reporting segments.
(7) Derivatives relate to hedge ineffectiveness and mark-to-market adjustments on our natural gas contracts that have been de-designated and those for which we did not elect hedge accounting. 2013 also includes hedge ineffectiveness on our interest rate swap.