Globalization Strategy Fuels Solid Sales Growth for Libbey Inc. in Third Quarter and First Nine Months of 2008

10/30/2008

     -- Sales Increase 4.5 Percent for Third Quarter and 5.9 Percent for First
        Nine Months

     -- Third-Quarter Income From Operations Remains Essentially Flat
        Year-Over-Year at $14.6 Million

     -- EBITDA of $24.5 Million Versus $28.0 Million for Prior-Year Quarter

     -- Cash Flow From Operations for the Third Quarter Climbs to
        $13.3 Million

     -- Free Cash Flow Initiatives Expected to Yield an Additional $20 Million
        to $23 Million in 2009

TOLEDO, Ohio, Oct. 30 /PRNewswire-FirstCall/ -- Libbey Inc. (NYSE: LBY) today announced solid sales growth for the third quarter and first nine months of 2008, fueled by strong gains in international sales.

John F. Meier, chairman and chief executive officer, said, "While we are certainly not satisfied with our performance in the third quarter, we are proud of what we accomplished despite the state of the global economic markets. We remain convinced that these results are a strong indication of the health of our business and the strength of our brands."

Third Quarter Results

For the quarter-ended September 30, 2008, sales increased 4.5 percent to $211.5 million from $202.4 million in the year-ago quarter. The increase in sales included a 17.4 percent increase in International sales, as sales to Crisal and Royal Leerdam glassware customers increased 15.5 percent and 4.1 percent, respectively, and Libbey China had sales growth of over 150.0 percent. Excluding the currency impact, International sales increased approximately 10.4 percent. In addition, North American Glass sales increased 1.9 percent, benefiting from more than a 6.0 percent increase in shipments to U.S. and Canadian retail glassware customers. Shipments of Crisa glassware were up 2.7 percent, and sales to foodservice glassware customers were down 1.7 percent. North American Other sales decreased 3.6 percent, as a 10.9 percent decrease in shipments of World Tableware products more than offset the single-digit sales growth of Syracuse China and Traex products.

The Company reported income from operations of $14.6 million during the quarter, compared with income from operations of $14.7 million in the year-ago quarter. Higher sales and lower selling, general and administrative costs were offset by increased natural gas and distribution costs.

Earnings before interest and taxes (EBIT), as described on Table 2, were $13.6 million, compared with $16.2 million in the year-ago quarter. EBIT was $9.7 million for North American Glass, compared with $11.3 million in the third quarter of 2007, as a result of an unfavorable swing in non-cash foreign currency translation losses versus the prior-year quarter of approximately $2.7 million, the lower production activity in Mexico due to a scheduled furnace rebuild, lower production activity in the U. S. operations to control inventories and higher natural gas expenses. North American Other reported EBIT of $2.1 million for the third quarter of 2008, compared with $3.2 million in the third quarter of 2007. The decrease was primarily a result of the lower sales of World Tableware products. The International segment reported EBIT of $1.7 million, which was consistent with the year-ago quarter. This can primarily be attributed to higher International sales offset by higher natural gas and other costs in Europe.

Libbey reported that EBITDA, as detailed on Table 1, was $24.5 million in the third quarter of 2008, compared with EBITDA of $28.0 million in the year- ago quarter. EBITDA declined primarily as the result of an unfavorable swing in non-cash foreign currency translation losses versus the prior-year quarter of approximately $2.7 million as well as increased natural gas and distribution costs. These increased costs were partially offset by higher sales and lower selling, general and administrative costs.

Interest expense increased $0.6 million, compared with the year-ago quarter, as a result of higher debt partially offset by slightly lower average interest rates.

The effective tax rate was negative 50.8 percent for the quarter, compared with 162.2 percent in the year-ago quarter. The Company's effective tax rate changed from the year-ago quarter primarily due to the Company's provision for income taxes being significantly impacted by the recognition of valuation allowances in certain countries, particularly the United States. Further, changes in the mix of earnings in countries with differing statutory tax rates, changes in accruals related to uncertain tax positions, tax planning structures and changes in tax laws have also impacted the effective tax rate. Libbey reported a third-quarter net loss of $6.0 million, or $0.40 per diluted share, compared with net income of $0.4 million, or $0.03 per diluted share, in the third quarter of 2007.

Nine-Month Results

For the nine months ended September 30, 2008, sales increased 5.9 percent to $623.6 million from $589.0 million in the year-ago period. International sales increased 22.9 percent as a result of significantly increased shipments to customers of Libbey China and favorable currency impact on European sales. Excluding the currency impact, International sales increased approximately 9.4 percent. In addition, North American Glass sales increased 3.3 percent, benefiting from more than a 9.0 percent increase in shipments to U.S. and Canadian retail glassware customers. Shipments of Crisa glassware were up 8.1 percent and sales to foodservice glassware customers were down 4.9 percent. North American Other sales decreased 2.6 percent, primarily as the result of lower sales of Syracuse China products.

Libbey reported income from operations of $42.8 million during the first nine months of 2008, compared with income from operations of $45.6 million during the year-ago period. Factors contributing to the decline in income from operations were lower foodservice sales, lower production activity in Mexico, as a result of a scheduled furnace rebuild, and higher natural gas costs, partially offset by increased total sales.

EBIT was $43.1 million, compared with $49.6 million in the first nine months of 2007. For North American Glass, EBIT was $31.7 million, compared with $38.8 million in the first nine months of 2007, as higher sales were more than offset by an unfavorable swing in non-cash foreign currency translation losses versus the prior-year of approximately $1.8 million, an unfavorable mix of sales, decreased operating activity and higher natural gas costs. North American Other reported EBIT of $9.6 million for the first nine months of 2008, compared with $11.3 million in the year-ago period, primarily as a result of the lower sales at Syracuse China and a $1.1 million gain on the sale of land at Syracuse included in 2007. The International segment reported EBIT of $1.8 million, compared with an EBIT loss of $0.5 million in the first nine months of 2007. The improvement was primarily related to Libbey China's increased sales and improved operating performance and higher European sales, partially offset by higher natural gas costs in Europe.

For the first nine months of 2008, EBITDA, as detailed on Table 1, was $76.5 million, compared with EBITDA of $81.3 million for the first nine months of 2007.

As a result of higher debt, interest expense for the first nine months increased $3.3 million compared with the year-ago period.

The effective tax rate was a negative 25.7 percent for the first nine months of 2008, compared with a negative 290.4 percent in the first nine months of 2007. Similar to the third quarter impact, the Company's effective tax rate changed from the year-ago period primarily due to the Company's provision for income taxes being significantly impacted by the recognition of valuation allowances in certain countries, particularly the United States. Further, changes in the mix of earnings in countries with differing statutory tax rates, changes in accruals related to uncertain tax positions, tax planning structures and changes in tax laws have also impacted the effective tax rate. Libbey reported a net loss of $11.6 million for the first nine months of 2008, or a loss of $0.79 per diluted share, compared with net income of $2.6 million, or $0.18 per diluted share, in the first nine months of 2007.

Cash Flow

Cash flow from operations during the third quarter of 2008 increased to $13.3 million, compared with $11.4 million in the year-ago period. A major contributor to this performance was improved working capital management during the quarter.

Working capital, defined as inventories and accounts receivable less accounts payable, decreased by $3.4 million to $248.8 million at September 30, 2008, from $252.2 million at September 30, 2007. Key drivers of the lower working capital were lower accounts receivable and higher accounts payable, which more than offset higher inventories as the result of seasonal working capital needs.

Libbey reported that it had available capacity of $79.7 million under its Asset Based Loan (ABL) credit facility as of September 30, 2008, compared with availability of $71.1 million at June 30, 2008.

Outlook

"As we announced on October 16, 2008, based on the expected continuing weaknesses in the Mexican peso, consumer confidence and the foodservice channel, we expect fourth-quarter 2008 sales in the range of $210.0 million to $220.0 million and EBITDA between $20.5 million to $23.5 million," Meier said. "Based on this fourth-quarter outlook, we expect full-year 2008 sales in the range of $833.0 million to $843.0 million and EBITDA in the range of $97.0 million to $100.0 million."

Meier continued, "While we are still in the process of completing the 2009 budget, we have identified $20 to $23 million of cash flow enhancements that we expect to achieve in 2009. These include a number of cost reduction initiatives, led by capital expenditure reductions."

Webcast Information

Libbey will hold a conference call for investors on Thursday, October 30, 2008, at 11 a.m. Eastern Daylight 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 30 days after the conclusion of the call.

This press release includes forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. 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, that actual results may differ materially from such 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 17, 2008. 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; 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, corrugated packaging, and other purchased materials; higher indebtedness related to the Crisa acquisition; higher interest rates that increase the Company's borrowing costs; 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 Crisa, 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. With respect to its expectations regarding the Crisa acquisition, these factors also include the ability of Vitro to supply necessary services to Crisa.

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 expanding its international presence with facilities in China, Mexico, the Netherlands and Portugal;

-- 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, for 120 years, 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 Syracuse China subsidiary designs, manufactures 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. Its Traex subsidiary, located in Wisconsin, designs, manufactures and distributes an extensive line of plastic items for the foodservice industry. In 2007, Libbey Inc.'s net sales totaled $814.2 million.

In accordance with the SEC's Regulation G, table 1 provides 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 Net (Loss) Income to Earnings Before Interest, Taxes,
    Depreciation and Amortization (EBITDA)
    (Dollars in thousands)


                                      Three Months ended    Nine Months ended
                                        September 30,         September 30,
                                        2008     2007         2008     2007

    Reported net (loss) income         $(5,958)    $445     $(11,554)  $2,647

    Add:
    Interest expense                    17,509   16,956       52,280   48,949
    Provision (benefit) for income
     taxes                               2,006   (1,161)       2,365   (1,969)
    Depreciation and amortization       10,899   11,785       33,433   31,711
    EBITDA                             $24,456  $28,025      $76,524  $81,338



    Table 2
    Summary Business Segment information
    (Dollars in thousands)


                                       Three months ended  Nine months ended
                                         September 30,       September 30,
                                        2008      2007      2008      2007
    Net Sales:
    North American Glass               $143,630  $140,983  $426,120  $412,672
    North American Other                 28,339    29,410    85,042    87,335
    International                        42,014    35,783   120,166    97,801
    Eliminations                         (2,447)   (3,745)   (7,688)   (8,758)
    Consolidated Net Sales             $211,536  $202,431  $623,640  $589,050


    Earnings (Loss) before Interest &
     Taxes (EBIT):
    North American Glass                 $9,695   $11,318   $31,704   $38,802
    North American Other                  2,130     3,243     9,590    11,293
    International                         1,732     1,679     1,797      (468)
    Consolidated EBIT                   $13,557   $16,240   $43,091   $49,627

    Depreciation & Amortization:
    North American Glass                 $6,627    $7,638   $19,605   $19,841
    North American Other                    700       831     2,211     2,592
    International                         3,572     3,316    11,617     9,278
    Consolidated Depreciation &
     Amortization                       $10,899   $11,785   $33,433   $31,711

    Reconciliation of EBIT to Net Loss:
    Segment EBIT                        $13,557   $16,240   $43,091   $49,627
    Interest Expense                    (17,509)  (16,956)  (52,280)  (48,949)
    Income Taxes                         (2,006)    1,161    (2,365)    1,969
    Net Loss                            $(5,958)     $445  $(11,554)   $2,647


    Note:
    North American Glass - includes sales of glass tableware from subsidiaries
    throughout the United States, Canada and Mexico.

    North American Other - includes sales of ceramic dinnerware, metal
    tableware, holloware and serveware and plastic items.

    International - includes worldwide sales of glass tableware from
    subsidiaries outside the United States, Canada and Mexico.



                                 LIBBEY INC.
               CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
               (Dollars in thousands, except per-share amounts)
                                 (unaudited)

                                                  THREE MONTHS ENDED
                                         September 30, 2008 September 30, 2007

    Net sales                                     $211,536          $202,431
    Freight billed to customers                        664               507
    Total revenues                                 212,200           202,938

    Cost of sales                                  174,266           164,688
    Gross profit                                    37,934            38,250

    Selling, general and administrative expenses    23,377            23,571
    Income from operations                          14,557            14,679
    Other (expense) income                          (1,000)            1,561

    Earnings before interest and income taxes       13,557            16,240

    Interest expense                                17,509            16,956

    Loss before income taxes                        (3,952)             (716)

    Provision for (benefit from) income taxes        2,006            (1,161)

    Net (loss) income                              $(5,958)             $445


    Net (loss) income per share:
    Basic                                           $(0.40)            $0.03
    Diluted                                         $(0.40)            $0.03

    Weighted average shares:
    Outstanding                                     14,730            14,535
    Diluted                                         14,730            14,924



                                 LIBBEY INC.
               CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
               (Dollars in thousands, except per-share amounts)
                                 (unaudited)

                                                  NINE MONTHS ENDED
                                         September 30, 2008 September 30, 2007

    Net sales                                     $623,640          $589,050
    Freight billed to customers                      1,947             1,531
    Total revenues                                 625,587           590,581

    Cost of sales                                  515,148           475,727
    Gross profit                                   110,439           114,854

    Selling, general and administrative expenses    67,687            69,272
    Income from operations                          42,752            45,582
    Other income                                       339             4,045

    Earnings before interest and income taxes       43,091            49,627

    Interest expense                                52,280            48,949

    (Loss) income before income taxes               (9,189)              678

    Provision for (benefit from) income taxes        2,365            (1,969)

    Net (loss) income                             $(11,554)           $2,647


    Net (loss) income per share:
    Basic                                           $(0.79)            $0.18
    Diluted                                         $(0.79)            $0.18

    Weighted average shares:
    Outstanding                                     14,652            14,445
    Diluted                                         14,652            14,759



                                 LIBBEY INC.
                    CONDENSED CONSOLIDATED BALANCE SHEETS
                            (Dollars in thousands)

                                           September    December   September
                                            30, 2008    31, 2007   30, 2007
                                          (unaudited)             (unaudited)
    ASSETS

    Cash                                      $8,719     $36,539     $13,406
    Accounts receivable -- net               102,781      93,333     108,993
    Inventories -- net                       204,485     194,079     199,294
    Deferred taxes                               --          --        4,120
    Other current assets                      21,018      20,431      11,526
    Total current assets                     337,003     344,382     337,339

    Other assets                              14,924      17,221      26,778

    Goodwill and purchased intangibles -
     net                                     207,865     208,091     207,829

    Property, plant and equipment - net      328,369     329,777     325,334

    Total assets                            $888,161    $899,471    $897,280


    LIABILITIES AND SHAREHOLDERS' EQUITY


    Notes payable                             $3,289        $622      $1,637
    Accounts payable                          58,468      73,593      56,045
    Accrued liabilities                       87,101      70,112      97,618
    Pension liability (current portion)        1,882       1,883       1,389
    Nonpension postretirement benefits
     (current portion)                         3,528       3,528       3,252
    Payable to Vitro                             --       19,575      19,471
    Other current liabilities                 20,620      11,558       7,705
    Long-term debt due within one year           913         913         794
    Total current liabilities                175,801     181,784     187,911

    Long-term debt                           521,500     495,099     489,311
    Pension liability                         54,591      71,709      75,372
    Nonpension postretirement benefits        50,335      45,667      37,608
    Other liabilities                          9,989      12,097       8,809
    Total liabilities                        812,216     806,356     799,011

    Common stock, treasury stock, capital
     in excess of par value and warrants     202,440     196,281     178,408
    Retained deficit                         (75,855)    (60,689)    (38,750)
    Accumulated other comprehensive loss     (50,640)    (42,477)    (41,389)
    Total shareholders' equity                75,945      93,115      98,269

    Total liabilities and shareholders'
     equity                                 $888,161    $899,471    $897,280



                                 LIBBEY INC.
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
                            (Dollars in thousands)
                                 (unaudited)

                                                  THREE MONTHS ENDED
                                        September 30, 2008 September 30, 2007

    Operating activities
    Net (loss) income                              $(5,958)              $445
    Adjustments to reconcile net (loss)
     income to net cash provided by operating
     activities:
    Depreciation and amortization                   10,899             11,785
    Loss on asset sales                                159                307
    Change in accounts receivable                    7,109             (3,698)
    Change in inventories                           (5,712)            (8,801)
    Change in accounts payable                      (9,695)           (11,400)
    Pension & nonpension postretirement            (12,544)            (5,042)
    Accrued liabilities & prepaid expenses           6,553              8,294
    Income taxes                                     1,790              2,446
    Accrued interest expense                        17,128             14,307
    Other operating activities                       3,580              2,709
    Net cash provided by operating
     activities                                     13,309             11,352

    Investing activities
    Additions to property, plant and equipment     (12,390)            (9,366)
    Proceeds from asset sales and other                 71                678
    Net cash used in investing activities          (12,319)            (8,688)

    Financing activities
    Net repayments                                  (9,256)            (4,717)
    Dividends                                         (369)              (364)
    Net cash used in financing activities           (9,625)            (5,081)

    Effect of exchange rate fluctuations on cash      (529)               247

    Decrease in cash                                (9,164)            (2,170)

    Cash at beginning of period                     17,883             15,576

    Cash at end of period                           $8,719            $13,406



                                 LIBBEY INC.
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
                            (Dollars in thousands)
                                 (unaudited)

                                                   NINE MONTHS ENDED
                                         September 30, 2008 September 30, 2007

    Operating activities
    Net (loss) income                              $(11,554)           $2,647
    Adjustments to reconcile net (loss)
     income to net cash (used in) provided
     by operating activities:
    Depreciation and amortization                    33,433            31,711
    Loss (gain) on asset sales                           35            (1,268)
    Change in accounts receivable                   (10,351)           (6,476)
    Change in inventories                           (10,756)          (28,367)
    Change in accounts payable                      (15,607)          (13,442)
    PIK interest                                     10,216             8,758
    Pension & nonpension postretirement             (13,982)           (2,805)
    Payable to Vitro                                (19,575)               --
    Accrued liabilities & prepaid expenses            5,113            11,936
    Income taxes                                      3,661            (1,067)
    Accrued interest expense                         15,055            12,477
    Other operating activities                        4,562             1,573
    Net cash (used in) provided by
     operating activities                            (9,750)           15,677

    Investing activities
    Additions to property, plant and equipment      (30,002)          (31,992)
    Proceeds from asset sales and other                 117             2,631
    Net cash used in investing activities           (29,885)          (29,361)

    Financing activities
    Net borrowings (repayments)                      13,253           (14,015)
    Dividends                                        (1,098)           (1,083)
    Net cash provided by (used in) financing
     activities                                      12,155           (15,098)

    Effect of exchange rate fluctuations on cash       (340)              422

    Decrease in cash                                (27,820)          (28,360)

    Cash at beginning of period                      36,539            41,766

    Cash at end of period                            $8,719           $13,406

SOURCE Libbey Inc. 10/30/2008
CONTACT: Kenneth Boerger, VP-Treasurer, 1-419-325-2279,
or
Greg Geswein, VP-Chief Financial Officer, 1-419-325-2451,
both of Libbey Inc.
Web site: http://www.libbey.com (LBY)

EMAIL ALERTS

Email Address *
Mailing Lists *





 
Enter the code shown above.

Commercial News

Upcoming Events

There are currently no events scheduled.