Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - LIBBEY INC | form8-k.htm |
Exhibit 99.1
 | Libbey Inc. 300 Madison Ave P.O. Box 10060 Toledo, OH 43699 |
NEWS RELEASE
INVESTOR CONTACT: | MEDIA CONTACT: | |
Chris Hodges or Sam Gibbons | Lisa Fell | |
Alpha IR Group | Director of Corporate Communications | |
(312) 445-2870 | (419) 325-2001 | |
LBY@alpha-ir.com | lfell@libbey.com | |
FOR IMMEDIATE RELEASE
THURSDAY, NOVEMBER 5, 2015
LIBBEY INC. ANNOUNCES THIRD QUARTER 2015 FINANCIAL RESULTS
• | Outstanding quarterly net sales growth of 8.4 percent (constant currency) in foodservice, despite continued weakness in restaurant traffic |
• | Total Company net sales in the quarter decreased 0.7 percent (constant currency) versus prior year, but demonstrated strong Adjusted Earnings Before Interest, Tax, Depreciation and Amortization (Adjusted EBITDA) margins of 15.3 percent |
• | Owing to weakness in markets outside the United States, Company now expects full-year revenue growth of approximately one percent on a constant currency basis and Adjusted EBITDA margins of approximately 14 percent |
TOLEDO, OHIO, NOVEMBER 5, 2015--Libbey Inc. (NYSE MKT: LBY), one of the largest glass tableware manufacturers in the world, today reported results for the third quarter-ended September 30, 2015.
Third Quarter Financial Highlights
• | Net sales for the third quarter were $201.8 million, compared to $216.0 million for the third quarter of 2014, a decrease of 6.6 percent (or a decrease of 0.7 percent excluding currency fluctuation). |
• | Net income for the third quarter of 2015 was $16.7 million, compared to net income of $13.8 million in the prior-year third quarter. Adjusted net income (see Table 1) for the third quarter of 2015 was $18.0 million, compared to $13.8 million recorded in the third quarter of 2014. |
• | Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (Adjusted EBITDA) (see Table 3) for the third quarter of 2015 were $30.9 million, compared to $31.7 million in the prior-year quarter. |
“Our core foodservice channel continues to be very strong around the globe in the face of declining restaurant traffic trends. This is the sixth consecutive quarter of growth in foodservice for the Company. Unfortunately, that was offset in the third quarter by weakness in our retail and business-to-business channels,” said Stephanie A.
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Streeter, chief executive officer of Libbey Inc. “Given the macro environment and the significant impact of currency, we delivered a solid performance and the fundamentals of our business remain strong. Even though our top-line growth was weaker than expected, we achieved 15.3 percent Adjusted EBITDA margins, in-line with our expectations and ahead of prior year, largely driven by favorable price-mix, as we continue to gain share in our most profitable and important foodservice channel. However, the global economic environment continues to be inconsistent, and as a result, we believe it’s prudent to adjust our outlook for the remainder of 2015. We are now forecasting sales growth of approximately one percent, on a constant currency basis, and forecast Adjusted EBITDA margins of approximately 14 percent.”
Third Quarter Segment Sales and Operational Review
• | Net sales in the Americas segment were $139.5 million, compared to $149.4 million in the third quarter of 2014, a decrease of 6.6 percent (or a decrease of 2.0 percent excluding currency impact). While foodservice sales remained strong, the reduction in net sales in the Americas was primarily the result of softness in the retail channel. |
• | Net sales in the EMEA segment decreased 18.9 percent (or a decrease of 4.1 percent excluding currency impact) to $30.6 million, compared to $37.7 million in the third quarter of 2014, due to softness in the retail and business-to-business channels. |
• | Net sales in the U.S. Sourcing segment were $23.5 million in the third quarter of 2015, compared to $20.6 million in the prior-year quarter, an increase of 14.2 percent. |
• | Net sales in Other were $8.2 million in the third quarter of 2015, compared to $8.3 million in the comparable period last year, reflecting a decrease of 1.1 percent (or an increase of 1.4 percent excluding currency impact) in the Asia Pacific region. |
• | The Company’s effective tax rate was (15.4) percent for the quarter-ended September 30, 2015, compared to 20.4 percent for the quarter-ended September 30, 2014. The effective rate in both years was generally influenced by foreign earnings with differing statutory rates, foreign withholding tax, accruals related to uncertain tax positions, non-taxable foreign translation gains and other activity in jurisdictions with recorded valuation allowances. |
Nine-Month Financial Highlights
• | Net sales for the first nine months of 2015 were $603.2 million, compared to $621.1 million for the first nine months of 2014, a decrease of 2.9 percent (or an increase of 2.7 percent excluding currency fluctuation). During the first nine months, foodservice net sales for the Company were up 6.0 percent versus prior year (or 8.2 percent in constant currency). |
• | Net income for the first nine months of 2015 was $34.2 million, compared to a net loss of $14.8 million for the first nine months of 2014. The net loss for the first nine months of 2014 included a $47.2 million charge for the retirement of debt during the period. Adjusted net income (see Table 2) for the first nine months of 2015 was $38.7 million, compared to $38.9 million recorded in the first nine months of 2014. |
• | Adjusted EBITDA (see Table 3) was $85.2 million for the first nine months of 2015, compared to $92.7 million for the similar period in 2014. |
• | Year to date in 2015, Libbey has repurchased 412,473 shares at an average price of $37.03. |
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Nine-Month Segment Sales and Operational Review
• | Net sales in the Americas segment for the first nine months of 2015 were $417.3 million, compared to $425.7 in the first nine months in 2014, a decrease of 2.0 percent (or an increase of 1.7 percent excluding currency fluctuation). Sales performance was led by a 4.5 percent increase in sales within our foodservice channel (or 5.8 percent increase excluding currency impact). Partially offsetting this increase is a decrease in our retail channel of 6.5 percent (or 1.9 percent decrease excluding currency impact). |
• | Net sales in the EMEA segment for the first nine months of 2015 decreased 18.1 percent (or down 1.4 percent excluding currency impact) to $91.2 million, compared to $111.4 million in the first nine months of 2014. |
• | Net sales in the U.S. Sourcing segment for the first nine months of 2015 increased 13.0 percent to $67.5 million, compared to $59.7 million in the first nine months of 2014. |
• | Sales in Other were $27.2 million in the first nine months of 2015, compared to $24.2 million in the prior-year period. This increase was the result of a 12.3 percent increase in sales (13.9 percent excluding currency impact) in the Asia Pacific region. |
• | Interest expense in the first nine months of 2015 was $13.8 million, a decrease of $4.2 million compared to $18.0 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 4.1 percent for the nine months ended September 30, 2015, compared to (46.6) percent for the nine months ended September 30, 2014. The effective tax rate was generally influenced by foreign earnings with differing statutory rates, foreign withholding tax, accruals related to uncertain tax positions, non-taxable foreign translation gains and other activity in jurisdictions with recorded valuation allowances. |
Balance Sheet and Liquidity
• | Libbey reported that it had available capacity of $83.7 million under its ABL credit facility as of September 30, 2015, with $7.0 million of loans currently outstanding. The Company also had cash on hand of $30.1 million as of September 30, 2015. |
• | As of September 30, 2015, working capital, defined as inventories and accounts receivable less accounts payable, was $231.9 million, an increase of $15.1 million compared to $216.8 million at September 30, 2014 (see Table 5). The increase was primarily a result of higher inventories and lower accounts payable, partially offset by lower accounts receivable. |
Sherry Buck, chief financial officer, concluded: “Despite the somewhat tepid economic environment that we saw developing throughout the quarter, we continued to generate strong free cash flow in the quarter of $9.3 million. We are on track to return more than 50 percent of our free cash flow to shareholders through dividends and share repurchases, and we have strong liquidity with $30 million in cash on hand and approximately $84 million available on our ABL. We remain committed to our balanced capital allocation program that we announced earlier this year.”
Webcast Information
Libbey will hold a conference call for investors on Thursday, November 5, 2015, at 11 a.m. Eastern Standard Time. The conference call will be webcast live on the Internet and is accessible from the Investor Relations' section of www.libbey.com. To listen to the call, please go to the website at least 10 minutes early to register, download and install any necessary software. A replay will be available for 7 days after the conclusion of the call.
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About Libbey Inc.
Based in Toledo, Ohio, Libbey Inc. is one of the largest glass tableware manufacturers in the world. Libbey Inc. operates manufacturing plants in the U.S., Mexico, China, Portugal and the Netherlands. In existence since 1818, the Company supplies tabletop products to retail, foodservice and business-to-business customers in over 100 countries. Libbey's global brand portfolio, in addition to its namesake brand, includes Crisa®, Royal Leerdam®, World® Tableware, Syracuse® China, and Crisal Glass®. In 2014, Libbey Inc.'s net sales totaled $852.5 million. Additional information is available at www.libbey.com.
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 13, 2015. Important factors potentially affecting performance include but are not limited to risks related to our ability to borrow under our ABL credit agreement; increased competition from foreign suppliers endeavoring to sell glass tableware, ceramic dinnerware and metalware in the United States and Mexico; the impact of lower duties for imported products; global economic conditions and the related impact on consumer spending levels; major slowdowns in the retail, travel or entertainment industries in the United States, Canada, Mexico, Western Europe and Asia, caused by terrorist attacks or otherwise; significant increases in per-unit costs for natural gas, electricity, freight, corrugated packaging, and other purchased materials; high levels of indebtedness; high interest rates that increase the Company's borrowing costs or volatility in the financial markets that could constrain liquidity and credit availability; protracted work stoppages related to collective bargaining agreements; increases in expense associated with higher medical costs, increased pension expense associated with lower returns on pension investments and increased pension obligations; devaluations and other major currency fluctuations relative to the U.S. dollar and the Euro that could reduce the cost competitiveness of the Company's products compared to foreign competition; the effect of high inflation in Mexico and exchange rate changes to the value of the Mexican peso and the earnings and cash flow of Libbey Mexico, expressed under U.S. GAAP; the inability to achieve savings and profit improvements at targeted levels in the Company's operations or within the intended time periods; and whether the Company completes any significant acquisition and whether such acquisitions can operate profitably. Any forward-looking statements speak only as of the date of this press release, and the Company assumes no obligation to update or revise any forward-looking statement to reflect events or circumstances arising after the date of this press release.
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Libbey Inc.
Condensed Consolidated Statements of Operations
(dollars in thousands, except per-share amounts)
(unaudited)
Three months ended September 30, | |||||||
2015 | 2014 | ||||||
Net sales | $ | 201,784 | $ | 215,957 | |||
Freight billed to customers | 734 | 931 | |||||
Total revenues | 202,518 | 216,888 | |||||
Cost of sales (1) | 154,827 | 166,573 | |||||
Gross profit | 47,691 | 50,315 | |||||
Selling, general and administrative expenses (1) | 28,101 | 29,573 | |||||
Income from operations | 19,590 | 20,742 | |||||
Other income (expense) (1) | (396 | ) | 1,340 | ||||
Earnings before interest and income taxes | 19,194 | 22,082 | |||||
Interest expense | 4,701 | 4,797 | |||||
Income before income taxes | 14,493 | 17,285 | |||||
Provision (benefit) for income taxes (1) | (2,226 | ) | 3,527 | ||||
Net income | $ | 16,719 | $ | 13,758 | |||
Net income per share: | |||||||
Basic | $ | 0.77 | $ | 0.63 | |||
Diluted | $ | 0.75 | $ | 0.62 | |||
Dividends declared per share | $ | 0.11 | $ | — | |||
Weighted average shares: | |||||||
Outstanding | 21,796 | 21,800 | |||||
Diluted | 22,199 | 22,240 | |||||
(1) Refer to Table 1 for Special Items detail.
Libbey Inc.
Condensed Consolidated Statements of Operations
(dollars in thousands, except per-share amounts)
(unaudited)
Nine months ended September 30, | |||||||
2015 | 2014 | ||||||
Net sales | $ | 603,200 | $ | 621,074 | |||
Freight billed to customers | 2,075 | 2,638 | |||||
Total revenues | 605,275 | 623,712 | |||||
Cost of sales (1) | 458,199 | 480,791 | |||||
Gross profit | 147,076 | 142,921 | |||||
Selling, general and administrative expenses (1) | 98,890 | 89,177 | |||||
Income from operations | 48,186 | 53,744 | |||||
Loss on redemption of debt (1) | — | (47,191 | ) | ||||
Other income (1) | 1,277 | 1,340 | |||||
Earnings before interest and income taxes | 49,463 | 7,893 | |||||
Interest expense | 13,762 | 17,984 | |||||
Income (loss) before income taxes | 35,701 | (10,091 | ) | ||||
Provision for income taxes (1) | 1,476 | 4,703 | |||||
Net income (loss) | $ | 34,225 | $ | (14,794 | ) | ||
Net income (loss) per share: | |||||||
Basic | $ | 1.57 | $ | (0.68 | ) | ||
Diluted | $ | 1.54 | $ | (0.68 | ) | ||
Dividends declared per share | $ | 0.33 | $ | — | |||
Weighted average shares: | |||||||
Outstanding | 21,816 | 21,667 | |||||
Diluted | 22,268 | 21,667 | |||||
(1) Refer to Table 2 for Special Items detail.
Libbey Inc.
Condensed Consolidated Balance Sheets
(dollars in thousands)
September 30, 2015 | December 31, 2014 | ||||||
(unaudited) | |||||||
ASSETS: | |||||||
Cash and cash equivalents | $ | 30,101 | $ | 60,044 | |||
Accounts receivable — net | 96,738 | 91,106 | |||||
Inventories — net | 199,115 | 169,828 | |||||
Other current assets | 29,277 | 27,701 | |||||
Total current assets | 355,231 | 348,679 | |||||
Pension asset | 848 | 848 | |||||
Purchased intangibles — net | 16,720 | 17,771 | |||||
Goodwill | 164,112 | 164,112 | |||||
Deferred income taxes | 5,463 | 5,566 | |||||
Other assets | 13,572 | 13,976 | |||||
Total other assets | 200,715 | 202,273 | |||||
Property, plant and equipment — net | 276,351 | 277,978 | |||||
Total assets | $ | 832,297 | $ | 828,930 | |||
LIABILITIES AND SHAREHOLDERS' EQUITY: | |||||||
Accounts payable | $ | 63,921 | 82,485 | ||||
Salaries and wages | 29,518 | 29,035 | |||||
Accrued liabilities | 54,847 | 42,638 | |||||
Accrued income taxes | — | 2,010 | |||||
Pension liability (current portion) | 1,356 | 1,488 | |||||
Non-pension postretirement benefits (current portion) | 4,800 | 4,800 | |||||
Derivative liability | 3,817 | 2,653 | |||||
Deferred income taxes | 3,633 | 3,633 | |||||
Long-term debt due within one year | 4,758 | 7,658 | |||||
Total current liabilities | 166,650 | 176,400 | |||||
Long-term debt | 439,439 | 436,264 | |||||
Pension liability | 46,322 | 56,462 | |||||
Non-pension postretirement benefits | 60,456 | 63,301 | |||||
Deferred income taxes | 4,774 | 5,893 | |||||
Other long-term liabilities | 15,579 | 13,156 | |||||
Total liabilities | 733,220 | 751,476 | |||||
Common stock and capital in excess of par value | 327,034 | 331,609 | |||||
Treasury stock | (4,594 | ) | (1,060 | ) | |||
Retained deficit | (87,620 | ) | (114,648 | ) | |||
Accumulated other comprehensive loss | (135,743 | ) | (138,447 | ) | |||
Total shareholders’ equity | 99,077 | 77,454 | |||||
Total liabilities and shareholders’ equity | $ | 832,297 | $ | 828,930 | |||
Libbey Inc.
Condensed Consolidated Statements of Cash Flows
(dollars in thousands)
(unaudited)
Three months ended September 30, | |||||||
2015 | 2014 | ||||||
Operating activities: | |||||||
Net income | $ | 16,719 | $ | 13,758 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 10,633 | 9,569 | |||||
Loss on asset sales and disposals | 87 | 234 | |||||
Change in accounts receivable | (253 | ) | (1,926 | ) | |||
Change in inventories | (5,485 | ) | (9,460 | ) | |||
Change in accounts payable | (1,315 | ) | 767 | ||||
Accrued interest and amortization of discounts and finance fees | 344 | 384 | |||||
Pension & non-pension postretirement benefits | (445 | ) | (349 | ) | |||
Accrued liabilities & prepaid expenses | 698 | 4,105 | |||||
Income taxes | (3,987 | ) | 1,498 | ||||
Share-based compensation expense | 905 | 1,109 | |||||
Other operating activities | (359 | ) | (616 | ) | |||
Net cash provided by operating activities | 17,542 | 19,073 | |||||
Investing activities: | |||||||
Additions to property, plant and equipment | (8,244 | ) | (16,693 | ) | |||
Proceeds from asset sales and other | — | 3 | |||||
Net cash used in investing activities | (8,244 | ) | (16,690 | ) | |||
Financing activities: | |||||||
Borrowings on ABL credit facility | — | 33,400 | |||||
Repayments on ABL credit facility | (7,000 | ) | (31,500 | ) | |||
Other repayments | — | (5,201 | ) | ||||
Other borrowings | — | 3,250 | |||||
Repayments on Term Loan B | (1,100 | ) | (1,100 | ) | |||
Stock options exercised | 345 | 759 | |||||
Debt issuance costs and other | — | (91 | ) | ||||
Dividends | (2,397 | ) | — | ||||
Net cash used in financing activities | (10,152 | ) | (483 | ) | |||
Effect of exchange rate fluctuations on cash | (397 | ) | (1,020 | ) | |||
Increase (decrease) in cash | (1,251 | ) | 880 | ||||
Cash & cash equivalents at beginning of period | 31,352 | 23,209 | |||||
Cash & cash equivalents at end of period | $ | 30,101 | $ | 24,089 | |||
Libbey Inc.
Condensed Consolidated Statements of Cash Flows
(dollars in thousands)
(unaudited)
Nine months ended September 30, | |||||||
2015 | 2014 | ||||||
Operating activities: | |||||||
Net income (loss) | $ | 34,225 | $ | (14,794 | ) | ||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||
Depreciation and amortization | 31,286 | 30,837 | |||||
Loss on asset sales and disposals | 390 | 247 | |||||
Change in accounts receivable | (7,702 | ) | (16,329 | ) | |||
Change in inventories | (31,904 | ) | (28,823 | ) | |||
Change in accounts payable | (8,656 | ) | 2,119 | ||||
Accrued interest and amortization of discounts and finance fees | 946 | 1,729 | |||||
Call premium on senior notes | — | 37,348 | |||||
Write-off of finance fees on senior notes | — | 9,086 | |||||
Pension & non-pension postretirement benefits | 1,453 | 2,420 | |||||
Restructuring | — | (289 | ) | ||||
Accrued liabilities & prepaid expenses | 12,800 | (3,617 | ) | ||||
Income taxes | (4,925 | ) | (2,425 | ) | |||
Share-based compensation expense | 5,549 | 3,746 | |||||
Other operating activities | (1,414 | ) | (2,202 | ) | |||
Net cash provided by operating activities | 32,048 | 19,053 | |||||
Investing activities: | |||||||
Additions to property, plant and equipment | (41,480 | ) | (38,528 | ) | |||
Proceeds from furnace malfunction insurance recovery | — | 2,350 | |||||
Proceeds from asset sales and other | 2 | 7 | |||||
Net cash used in investing activities | (41,478 | ) | (36,171 | ) | |||
Financing activities: | |||||||
Borrowings on ABL credit facility | 44,500 | 54,700 | |||||
Repayments on ABL credit facility | (37,500 | ) | (45,800 | ) | |||
Other repayments | (3,267 | ) | (5,316 | ) | |||
Other borrowings | — | 5,214 | |||||
Payments on 6.875% senior notes | — | (405,000 | ) | ||||
Proceeds from Term Loan B | — | 438,900 | |||||
Repayments on Term Loan B | (3,300 | ) | (1,100 | ) | |||
Call premium on senior notes | — | (37,348 | ) | ||||
Stock options exercised | 3,334 | 2,881 | |||||
Debt issuance costs and other | — | (6,959 | ) | ||||
Dividends | (7,197 | ) | — | ||||
Treasury shares purchased | (15,275 | ) | — | ||||
Net cash provided by (used in) financing activities | (18,705 | ) | 172 | ||||
Effect of exchange rate fluctuations on cash | (1,808 | ) | (1,173 | ) | |||
Decrease in cash | (29,943 | ) | (18,119 | ) | |||
Cash & cash equivalents at beginning of period | 60,044 | 42,208 | |||||
Cash & cash equivalents at end of period | $ | 30,101 | $ | 24,089 | |||
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 September 30, | ||||||||||||||||||||||||
2015 | 2014 | |||||||||||||||||||||||
As Reported | Special Items | As Adjusted | As Reported | Special Items | As Adjusted | |||||||||||||||||||
Net sales | $ | 201,784 | $ | — | $ | 201,784 | $ | 215,957 | $ | — | $ | 215,957 | ||||||||||||
Freight billed to customers | 734 | — | 734 | 931 | — | 931 | ||||||||||||||||||
Total revenues | 202,518 | — | 202,518 | 216,888 | — | 216,888 | ||||||||||||||||||
Cost of sales | 154,827 | (100 | ) | 154,927 | 166,573 | — | 166,573 | |||||||||||||||||
Gross profit | 47,691 | 100 | 47,591 | 50,315 | — | 50,315 | ||||||||||||||||||
Gross profit margin | 23.6% | 23.6% | 23.3% | 23.3% | ||||||||||||||||||||
Selling, general and administrative expenses | 28,101 | 1,176 | 26,925 | 29,573 | — | 29,573 | ||||||||||||||||||
Income from operations | 19,590 | (1,076 | ) | 20,666 | 20,742 | — | 20,742 | |||||||||||||||||
Other income (expense) | (396 | ) | (42 | ) | (354 | ) | 1,340 | — | 1,340 | |||||||||||||||
Earnings before interest and income taxes | 19,194 | (1,118 | ) | 20,312 | 22,082 | — | 22,082 | |||||||||||||||||
Interest expense | 4,701 | — | 4,701 | 4,797 | — | 4,797 | ||||||||||||||||||
Income before income taxes | 14,493 | (1,118 | ) | 15,611 | 17,285 | — | 17,285 | |||||||||||||||||
Provision (benefit) for income taxes | (2,226 | ) | 119 | (2,345 | ) | 3,527 | — | 3,527 | ||||||||||||||||
Net income | $ | 16,719 | $ | (1,237 | ) | $ | 17,956 | $ | 13,758 | $ | — | $ | 13,758 | |||||||||||
Net income per share: | ||||||||||||||||||||||||
Basic | $ | 0.77 | $ | (0.06 | ) | $ | 0.82 | $ | 0.63 | $ | — | $ | 0.63 | |||||||||||
Diluted | $ | 0.75 | $ | (0.06 | ) | $ | 0.81 | $ | 0.62 | $ | — | $ | 0.62 | |||||||||||
Weighted average shares: | ||||||||||||||||||||||||
Outstanding | 21,796 | 21,800 | ||||||||||||||||||||||
Diluted | 22,199 | 22,240 | ||||||||||||||||||||||
Three months ended September 30, 2015 | ||||||||||||||||
Special Items Detail - (Income) Expense: | Reorganization (1) | Derivatives (2) | Environmental Obligation (3) | Total Special Items | ||||||||||||
Cost of sales | $ | — | $ | — | $ | (100 | ) | $ | (100 | ) | ||||||
SG&A | 1,176 | — | — | 1,176 | ||||||||||||
Other (income) expense | — | 42 | — | 42 | ||||||||||||
Income taxes | 131 | (12 | ) | — | 119 | |||||||||||
Total Special Items | $ | 1,307 | $ | 30 | $ | (100 | ) | $ | 1,237 | |||||||
(1) Management reorganization to support our growth strategy.
(2) Derivatives relate to hedge ineffectiveness on our natural gas contracts and interest rate swap as well as mark-to-market adjustments on our natural gas contracts that have been de-designated and those for which we did not elect hedge accounting.
(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.
Table 2 | ||||||||||||||||||||||||
Reconciliation of "As Reported" Results to "As Adjusted" Results - Nine Months | ||||||||||||||||||||||||
(dollars in thousands, except per-share amounts) | ||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||
Nine months ended September 30, | ||||||||||||||||||||||||
2015 | 2014 | |||||||||||||||||||||||
As Reported | Special Items | As Adjusted | As Reported | Special Items | As Adjusted | |||||||||||||||||||
Net sales | $ | 603,200 | $ | — | $ | 603,200 | $ | 621,074 | $ | — | $ | 621,074 | ||||||||||||
Freight billed to customers | 2,075 | — | 2,075 | 2,638 | — | 2,638 | ||||||||||||||||||
Total revenues | 605,275 | — | 605,275 | 623,712 | — | 623,712 | ||||||||||||||||||
Cost of sales | 458,199 | 123 | 458,076 | 480,791 | 6,867 | 473,924 | ||||||||||||||||||
Gross profit | 147,076 | (123 | ) | 147,199 | 142,921 | (6,867 | ) | 149,788 | ||||||||||||||||
Gross profit margin | 24.4% | 24.4% | 23.0% | 24.1% | ||||||||||||||||||||
Selling, general and administrative expenses | 98,890 | 4,426 | 94,464 | 89,177 | — | 89,177 | ||||||||||||||||||
Income from operations | 48,186 | (4,549 | ) | 52,735 | 53,744 | (6,867 | ) | 60,611 | ||||||||||||||||
Loss on redemption of debt | — | — | — | (47,191 | ) | (47,191 | ) | — | ||||||||||||||||
Other income | 1,277 | 125 | 1,152 | 1,340 | 70 | 1,270 | ||||||||||||||||||
Earnings before interest and income taxes | 49,463 | (4,424 | ) | 53,887 | 7,893 | (53,988 | ) | 61,881 | ||||||||||||||||
Interest expense | 13,762 | — | 13,762 | 17,984 | — | 17,984 | ||||||||||||||||||
Income (loss) before income taxes | 35,701 | (4,424 | ) | 40,125 | (10,091 | ) | (53,988 | ) | 43,897 | |||||||||||||||
Provision for income taxes | 1,476 | 29 | 1,447 | 4,703 | (341 | ) | 5,044 | |||||||||||||||||
Net income (loss) | $ | 34,225 | $ | (4,453 | ) | $ | 38,678 | $ | (14,794 | ) | $ | (53,647 | ) | $ | 38,853 | |||||||||
Net income (loss) per share: | ||||||||||||||||||||||||
Basic | $ | 1.57 | $ | (0.20 | ) | $ | 1.77 | $ | (0.68 | ) | $ | (2.48 | ) | $ | 1.79 | |||||||||
Diluted | $ | 1.54 | $ | (0.20 | ) | $ | 1.74 | $ | (0.68 | ) | $ | (2.48 | ) | $ | 1.76 | |||||||||
Weighted average shares: | ||||||||||||||||||||||||
Outstanding | 21,816 | 21,667 | 21,667 | |||||||||||||||||||||
Diluted | 22,268 | 21,667 | 22,126 | |||||||||||||||||||||
Nine months ended September 30, 2015 | Nine months ended September 30, 2014 | |||||||||||||||||||||||||||||||||||||||
Special Items Detail - (Income) Expense: | Reorganization(1) | Executive Retirement | Derivatives(2) | Environmental Obligation(3) | Total Special Items | Restructuring Charge(4) | Furnace Malfunction(5) | Derivatives(2) | Debt Costs(6) | Total Special Items | ||||||||||||||||||||||||||||||
Cost of sales | $ | — | $ | — | $ | — | $ | 123 | $ | 123 | $ | 985 | $ | 5,882 | $ | — | $ | — | $ | 6,867 | ||||||||||||||||||||
SG&A | 4,191 | 235 | — | — | 4,426 | — | — | — | — | — | ||||||||||||||||||||||||||||||
Loss on redemption of debt | — | — | — | — | — | — | — | — | 47,191 | 47,191 | ||||||||||||||||||||||||||||||
Other (income) expense | — | — | (125 | ) | — | (125 | ) | — | — | (70 | ) | (70 | ) | |||||||||||||||||||||||||||
Income taxes | (9 | ) | — | 38 | — | 29 | (296 | ) | (45 | ) | — | — | (341 | ) | ||||||||||||||||||||||||||
Total Special Items | $ | 4,182 | $ | 235 | $ | (87 | ) | $ | 123 | $ | 4,453 | $ | 689 | $ | 5,837 | $ | (70 | ) | $ | 47,191 | $ | 53,647 | ||||||||||||||||||
(1) Management reorganization to support our growth strategy.
(2) Derivatives relate to hedge ineffectiveness on our natural gas contracts and interest rate swap as well as mark-to-market adjustments on our natural gas contracts that have been de-designated and those for which we did not elect hedge accounting.
(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.
(5) Furnace malfunction relates to loss of production at our Toledo, Ohio, manufacturing facility.
(6) Debt costs 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.
Table 3 | ||||||||||||||||
Reconciliation of Net Income (Loss) to Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) and Adjusted EBITDA | ||||||||||||||||
(dollars in thousands) | ||||||||||||||||
(unaudited) | ||||||||||||||||
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Reported net income (loss) | $ | 16,719 | $ | 13,758 | $ | 34,225 | $ | (14,794 | ) | |||||||
Add: | ||||||||||||||||
Interest expense | 4,701 | 4,797 | 13,762 | 17,984 | ||||||||||||
Provision (benefit) for income taxes | (2,226 | ) | 3,527 | 1,476 | 4,703 | |||||||||||
Depreciation and amortization | 10,633 | 9,569 | 31,286 | 30,837 | ||||||||||||
EBITDA | 29,827 | 31,651 | 80,749 | 38,730 | ||||||||||||
Add: Special items before interest and taxes | 1,118 | — | 4,424 | 53,988 | ||||||||||||
Adjusted EBITDA | $ | 30,945 | $ | 31,651 | $ | 85,173 | $ | 92,718 | ||||||||
Table 4 | ||||||||||||||||
Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow | ||||||||||||||||
(dollars in thousands) | ||||||||||||||||
(unaudited) | ||||||||||||||||
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Net cash provided by operating activities | $ | 17,542 | $ | 19,073 | $ | 32,048 | $ | 19,053 | ||||||||
Capital expenditures | (8,244 | ) | (16,693 | ) | (41,480 | ) | (38,528 | ) | ||||||||
Proceeds from furnace malfunction insurance recovery | — | — | — | 2,350 | ||||||||||||
Proceeds from asset sales and other | — | 3 | 2 | 7 | ||||||||||||
Free Cash Flow | $ | 9,298 | $ | 2,383 | $ | (9,430 | ) | $ | (17,118 | ) | ||||||
Table 5 | ||||||||||||
Reconciliation to Working Capital | ||||||||||||
(dollars in thousands) | ||||||||||||
(unaudited) | ||||||||||||
September 30, 2015 | September 30, 2014 | December 31, 2014 | ||||||||||
Add: | ||||||||||||
Accounts receivable | $ | 96,738 | $ | 106,459 | $ | 91,106 | ||||||
Inventories | 199,115 | 189,221 | 169,828 | |||||||||
Less: Accounts payable | 63,921 | 78,895 | 82,485 | |||||||||
Working Capital | $ | 231,932 | $ | 216,785 | $ | 178,449 | ||||||
Table 6 | ||||||||||||||||
Summary Business Segment Information | ||||||||||||||||
(dollars in thousands) (unaudited) | Three months ended September 30, | Nine months ended September 30, | ||||||||||||||
Net Sales: | 2015 | 2014 | 2015 | 2014 | ||||||||||||
Americas (1) | $ | 139,477 | $ | 149,366 | $ | 417,340 | $ | 425,741 | ||||||||
EMEA (2) | 30,572 | 37,684 | 91,207 | 111,413 | ||||||||||||
U.S. Sourcing (3) | 23,495 | 20,574 | 67,452 | 59,704 | ||||||||||||
Other (4) | 8,240 | 8,333 | 27,201 | 24,216 | ||||||||||||
Consolidated | $ | 201,784 | $ | 215,957 | $ | 603,200 | $ | 621,074 | ||||||||
Segment Earnings Before Interest & Taxes (Segment EBIT) (5) : | ||||||||||||||||
Americas (1) | $ | 23,908 | $ | 25,489 | $ | 68,788 | $ | 73,464 | ||||||||
EMEA (2) | 254 | 909 | 1,274 | 3,072 | ||||||||||||
U.S. Sourcing (3) | 3,214 | 2,206 | 6,600 | 5,375 | ||||||||||||
Other (4) | 905 | 721 | 3,851 | 2,035 | ||||||||||||
Segment EBIT | $ | 28,281 | $ | 29,325 | $ | 80,513 | $ | 83,946 | ||||||||
Reconciliation of Segment EBIT to Net Income (Loss): | ||||||||||||||||
Segment EBIT | $ | 28,281 | $ | 29,325 | $ | 80,513 | $ | 83,946 | ||||||||
Retained corporate costs (6) | (7,969 | ) | (7,243 | ) | (26,626 | ) | (22,065 | ) | ||||||||
Consolidated Adjusted EBIT | 20,312 | 22,082 | 53,887 | 61,881 | ||||||||||||
Loss on redemption of debt | — | — | — | (47,191 | ) | |||||||||||
Furnace malfunction | — | — | — | (5,882 | ) | |||||||||||
Environmental obligation | 100 | — | (123 | ) | — | |||||||||||
Reorganization charges | (1,176 | ) | — | (4,191 | ) | — | ||||||||||
Restructuring charges | — | — | — | (985 | ) | |||||||||||
Derivatives | (42 | ) | — | 125 | 70 | |||||||||||
Executive retirement | — | — | (235 | ) | — | |||||||||||
Special items before interest and taxes | (1,118 | ) | — | (4,424 | ) | (53,988 | ) | |||||||||
Interest expense | (4,701 | ) | (4,797 | ) | (13,762 | ) | (17,984 | ) | ||||||||
Income taxes | 2,226 | (3,527 | ) | (1,476 | ) | (4,703 | ) | |||||||||
Net income (loss) | $ | 16,719 | $ | 13,758 | $ | 34,225 | $ | (14,794 | ) | |||||||
Depreciation & Amortization: | ||||||||||||||||
Americas (1) | $ | 6,666 | $ | 5,153 | $ | 19,148 | $ | 16,963 | ||||||||
EMEA (2) | 2,131 | 2,624 | 6,445 | 7,988 | ||||||||||||
U.S. Sourcing (3) | 6 | 6 | 18 | 20 | ||||||||||||
Other (4) | 1,462 | 1,444 | 4,434 | 4,716 | ||||||||||||
Corporate | 368 | 342 | 1,241 | 1,150 | ||||||||||||
Consolidated | $ | 10,633 | $ | 9,569 | $ | 31,286 | $ | 30,837 | ||||||||
(1) Americas—includes primarily worldwide sales of manufactured and sourced glass tableware having an end market destination in North and South America.
(2) EMEA—includes primarily 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 primarily 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.