Libbey Inc. Announces Second-Quarter 2019 Results

08/01/2019
Expanded gross profit margins and improved net cash provided by operating activities drove solid second-quarter performance; Company reaffirms full-year outlook

TOLEDO, Ohio, Aug. 1, 2019 /PRNewswire/ -- Libbey Inc. (NYSE American: LBY), one of the world's largest glass tableware manufacturers, today reported results for the second quarter ended June 30, 2019.

Second-quarter 2019 Financial & Operating Highlights

  • Net sales were $206.2 million, a decrease of 3.5 percent, or a decrease of 2.5 percent in constant currency versus the prior-year period.
  • Gross profit margin was 22.7 percent, an increase of 90-basis points versus the prior year.
  • Net loss was ($43.8) million, compared to net income of $4.0 million in the second quarter of 2018. Net loss in the second quarter of 2019 was affected by non-cash impairment charges for goodwill and an intangible asset totaling $46.9 million in the quarter.
  • Adjusted Income from Operations (see Table 4) increased 22.8 percent to $15.9 million.
  • Adjusted EBITDA (see Table 1) was $25.3 million, compared to $26.8 million in the prior year's second quarter. Adjusted EBITDA improved 4.4 percent after further adjusting for a negative $2.7 million currency impact.
  • Net cash provided by operating activities improved $10.7 million, driving a Free Cash Flow (see Table 2) improvement of $12.9 million compared to the second quarter of 2018.

"I am pleased to report that Libbey delivered a solid second-quarter performance with operating results that outpaced expectations," said Mike Bauer, chief executive officer of Libbey. "Although modest sales growth in our USC segment was more than offset by declines and soft market conditions in EMEA and LATAM, our e-commerce business continues to make solid contributions to our quarterly results, aiding growth in our USC retail business and advancing our efforts to bring Libbey's industry-leading products to a broader collection of customers."

Bauer continued, "The Company's intense focus on disciplined spending and strong operating performance in our manufacturing plants helped drive a 90-basis-point increase to gross profit margin, a 22.8 percent increase to Adjusted Income from Operations and, importantly, an improvement in cash generation. I'm proud of the organization's efforts toward sharpening our focus and better leveraging Libbey's market-leading position and competitive advantages to drive positive results in the face of continued headwinds resulting from soft market conditions in several of our key regions and channels."

Three months ended June 30,

(dollars in thousands)


Net Sales


Increase/(Decrease)


Currency
Effects


Constant
Currency
Sales
Growth
(Decline)


2019


2018


$ Change


% Change

U.S. & Canada (USC)


$

128,897



$

128,474



$

423



0.3

%


$

(15)



0.3

%

Latin America (LATAM)


38,208



40,290



(2,082)



(5.2)

%


227



(5.7)

%

EMEA


32,678



38,175



(5,497)



(14.4)

%


(1,921)



(9.4)

%

Other


6,375



6,595



(220)



(3.3)

%


(407)



2.8

%

Consolidated


$

206,158



$

213,534



$

(7,376)



(3.5)

%


$

(2,116)



(2.5)

%

 

  • Net sales in the U.S. & Canada segment increased 0.3 percent, primarily driven by higher volume and price realization, partially offset by unfavorable channel and product mix.
  • In Latin America, net sales decreased 5.2 percent (a decrease of 5.7 percent excluding currency fluctuation) as a result of unfavorable product mix within the business-to-business channel, partially offset by favorable price and currency impacts in the segment.
  • Net sales in the EMEA segment decreased 14.4 percent (a decrease of 9.4 percent excluding currency fluctuation), driven primarily by lower volume and an unfavorable currency impact.
  • Net sales in Other decreased 3.3 percent (an increase of 2.8 percent excluding currency fluctuation) primarily as a result of unfavorable price and mix of product sold and an unfavorable currency impact, partially offset by higher volume.

First Six Months of 2019 Financial & Operating Highlights

Six months ended June 30,

(dollars in thousands)


Net Sales


Increase/(Decrease)


Currency
Effects


Constant
Currency
Sales
Growth
(Decline)


2019


2018


$ Change


% Change



U.S. & Canada (USC)


$

238,803



$

236,415



$

2,388



1.0

%


$

(43)



1.0

%

Latin America (LATAM)


68,609



74,623



(6,014)



(8.1)

%


(302)



(7.7)

%

EMEA


60,720



70,423



(9,703)



(13.8)

%


(4,144)



(7.9)

%

Other


12,992



13,986



(994)



(7.1)

%


(783)



(1.5)

%

Consolidated


$

381,124



$

395,447



$

(14,323)



(3.6)

%


$

(5,272)



(2.3)

%

 

  • Net sales in the U.S. & Canada segment increased 1.0 percent, primarily driven by higher volume, price realization and product mix, partially offset by unfavorable channel mix.
  • In Latin America, net sales decreased 8.1 percent (a decrease of 7.7 percent excluding currency fluctuation) as a result of lower volume, unfavorable product mix and currency. This was partially offset by favorable pricing in the segment.
  • Net sales in the EMEA segment decreased 13.8 percent (a decrease of 7.9 percent excluding currency fluctuation), driven primarily by lower volume and an unfavorable currency impact, partially offset by favorable price and product mix.
  • Net sales in Other decreased 7.1 percent primarily as a result of unfavorable currency and price and mix of product sold, partially offset by higher volume.

Balance Sheet and Liquidity

  • As part of our on-going assessment of goodwill at June 30, 2019, we determined that a triggering event had occurred due to the Company's market capitalization being less than the carrying value, resulting from the significant decline in the Company's share price during the quarter. Impairment testing resulted in a non-cash goodwill impairment of $46.0 million associated with the Mexico reporting unit and a non-cash impairment of $0.9 million for a trade name associated with the EMEA reporting segment.
  • The Company had available capacity of $43.7 million under its ABL credit facility at June 30, 2019, with $47.7 million in loans outstanding and cash on hand of $32.3 million.
  • At June 30, 2019, Trade Working Capital (see Table 3), defined as accounts receivable plus inventories less accounts payable, was $215.9 million, a $5.2 million improvement compared to $221.1 million at June 30, 2018. The improvement was a result of lower accounts receivable, partially offset by higher inventories and lower accounts payable.

Jim Burmeister, chief financial officer, commented, "In the second quarter, we drove the Company's Adjusted EBITDA results higher on a constant currency basis, despite the decline in net sales. We achieved this performance through solid operational execution and tighter management of costs. We reduced SG&A costs year over year by 8.1 percent, while continuing to fund critical projects like our ERP initiative. At the same time, we have tightened controls around working capital and operating costs to deliver an improvement of nearly $13 million in our Free Cash Flow compared to the prior-year quarter."

Burmeister continued, "In addition to the progress we made in Q2, we are in the process of taking more meaningful costs out of the business and, as a result, we expect to finish the year with reduced run rate costs that will further improve our ability to drive cash generation while sustaining support for our strategic initiatives."

Given the steps taken to better manage costs, and the addition of improved contributions from our e-commerce platform, the Company is reaffirming its full-year 2019 outlook, which includes:

  • Net sales increase in the low single digits, compared to full-year 2018;
  • Adjusted selling, general and administrative expense of approximately 16 percent of net sales (see Table 8);
  • Adjusted EBITDA margins between 8.5 percent and 10 percent (see Table 7);
  • Capital expenditures and ERP capital in the range of $35 million to $40 million.

Webcast Information

Libbey will hold a conference call for investors on Thursday, August 1, 2019, at 11 a.m. Eastern Daylight Time. The conference call will be webcast live on the Internet and is accessible from the Investor Relations section of www.libbey.com. To listen to the call, please go to the website at least 10 minutes early to register, download and install any necessary software.

About Libbey Inc.

Based in Toledo, Ohio, Libbey Inc. is one of the largest glass tableware manufacturers in the world. Libbey Inc. operates manufacturing plants in the U.S., Mexico, China, Portugal and the Netherlands. In existence since 1818, the Company supplies tabletop products to retail, foodservice and business-to-business customers in over 100 countries. Libbey's global brand portfolio, in addition to its namesake brand, includes Libbey Signature®, Master's Reserve®, Crisa®, Royal Leerdam®, World® Tableware, Syracuse® China, and Crisal Glass®. In 2018, Libbey Inc.'s net sales totaled $797.9 million. Additional information is available at www.libbey.com.

Use of Non-GAAP Financial Measures

To supplement the condensed financial statements presented in accordance with U.S. Generally Accepted Accounting Principles (U.S. GAAP), we use non-GAAP measures of certain components of financial performance. These non-GAAP measures include Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Income from Operations (Adjusted IFO), Adjusted IFO Margin, Free Cash Flow, Trade Working Capital, Adjusted Selling, General & Administrative Expense (Adjusted SG&A), Adjusted SG&A Margin and our Debt Net of Cash to Adjusted EBITDA Ratio. Reconciliations to the nearest U.S. GAAP measures of all non-GAAP measures included in this press release can be found in the tables below.

Our non-GAAP measures, as defined below, are used by analysts, investors and other interested parties to compare our performance with the performance of other companies that report similar non-GAAP measures. Libbey believes these non-GAAP measures provide meaningful supplemental information regarding financial performance by excluding certain expenses and benefits that may not be indicative of core business operating results. We believe the non-GAAP measures, when viewed in conjunction with U.S. GAAP results and the accompanying reconciliations, enhance the comparability of results against prior periods and allow for additional transparency of financial results and business outlook. In addition, we use non-GAAP data internally to assess performance and facilitate management's internal comparison of our financial performance to that of prior periods, as well as trend analysis for budgeting and planning purposes. The presentation of our non-GAAP measures is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with U.S. GAAP. Furthermore, our non-GAAP measures may not be comparable to similarly titled measures reported by other companies and may have limitations as an analytical tool. We define our non-GAAP measures as follows:

  • We define Adjusted EBITDA as U.S. GAAP net income (loss) plus interest expense, provision for income taxes, depreciation and amortization, and special items, when applicable, that Libbey believes are not reflective of our core operating performance, and we define Adjusted EBITDA Margin as Adjusted EBITDA divided by net sales.
  • We define Adjusted IFO as U.S. GAAP net income (loss) plus interest expense, provision for income taxes, other (income) expense, and special items, when applicable, that Libbey believes are not reflective of our core operating performance, and we define Adjusted IFO Margin as Adjusted IFO divided by net sales.
  • We define Trade Working Capital as net accounts receivable plus net inventories less accounts payable.
  • We define Adjusted SG&A as U.S. GAAP selling, general and administrative expenses less special items that Libbey believes are not reflective of our core operating performance, and we define Adjusted SG&A Margin as Adjusted SG&A divided by net sales.
  • We define Free Cash Flow as the sum of net cash provided by operating activities and net cash used in investing activities.
  • We define our Debt Net of Cash to Adjusted EBITDA Ratio as gross debt before unamortized discount and finance fees, less cash and cash equivalents, divided by last twelve months Adjusted EBITDA (defined above).

Constant Currency

We translate revenue and expense accounts in our non-U.S. operations at current average exchange rates during the year. References to "constant currency," "excluding currency impact" and "adjusted for currency" are considered non-GAAP measures. Constant currency references regarding net sales reflect a simple mathematical translation of local currency results using the comparable prior period's currency conversion rate. Constant currency references regarding Gross Profit, Adjusted IFO, Adjusted EBITDA and Adjusted EBITDA Margin comprise a simple mathematical translation of local currency results using the comparable prior period's currency conversion rate plus the transactional impact of changes in exchange rates from revenues, expenses and assets and liabilities that are denominated in a currency other than the functional currency. We believe this non-GAAP constant currency information provides valuable supplemental information regarding our core operating results, better identifies operating trends that may otherwise be masked or distorted by exchange rate changes and provides a higher degree of transparency of information used by management in its evaluation of our ongoing operations. These non-GAAP measures should be viewed in addition to, and not as an alternative to, the reported results prepared in accordance with U.S. GAAP. Our currency market risks include currency fluctuations relative to the U.S. dollar, Canadian dollar, Mexican peso, euro and RMB.

Caution on Forward-Looking Statements

This press release includes forward-looking statements as defined in Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements reflect only the Company's best assessment at this time and are indicated by words or phrases such as "goal," "expects," " believes," "will," "estimates," "anticipates," or similar phrases. Investors are cautioned that forward-looking statements involve risks and uncertainty and that actual results may differ materially from these statements. Investors should not place undue reliance on such statements. These forward-looking statements may be affected by the risks and uncertainties in the Company's business. This information is qualified in its entirety by cautionary statements and risk factor disclosures contained in the Company's Securities and Exchange Commission filings, including the Company's report on Form 10-K filed with the Commission on February 27, 2019. Important factors potentially affecting performance include but are not limited to risks related to increased competition from foreign suppliers endeavoring to sell glass tableware, ceramic dinnerware and metalware in our core markets; global economic conditions and the related impact on consumer spending levels; major slowdowns or changes in trends in the retail, travel, restaurant and bar or entertainment industries, and in the retail and foodservice channels of distribution generally, that impact demand for our products; inability to meet the demand for new products; material restructuring charges related to involuntary employee terminations, facility sales or closures, or other various restructuring activities; significant increases in per-unit costs for natural gas, electricity, freight, corrugated packaging, and other purchased materials; our ability to borrow under our ABL credit agreement; high levels of indebtedness; high interest rates that increase the Company's borrowing costs or volatility in the financial markets that could constrain liquidity and credit availability; protracted work stoppages related to collective bargaining agreements; increased pension expense associated with lower returns on pension investments and increased pension obligations; increased tax expense resulting from changes to tax laws, regulations and evolving interpretations thereof; devaluations and other major currency fluctuations relative to the U.S. dollar and the euro that could reduce the cost competitiveness of the Company's products compared to foreign competition; the effect of exchange rate changes to the value of the euro, the Mexican peso, the RMB and the Canadian dollar and the earnings and cash flows of our international operations, expressed under U.S. GAAP; the effect of high levels of inflation in countries in which we operate or sell our products; the inability to achieve savings and profit improvements at targeted levels in the Company's operations or within the intended time periods; the failure of our investments in e-commerce, new technology and other capital expenditures to yield expected returns; failure to prevent unauthorized access, security breaches and cyber attacks to our information technology systems; compliance with, or the failure to comply with, legal requirements relating to health, safety and environmental protection; our failure to protect our intellectual property; and the inability to effectively integrate future business we acquire or joint ventures into which we enter. Any forward-looking statements speak only as of the date of this press release, and the Company assumes no obligation to update or revise any forward-looking statement to reflect events or circumstances arising after the date of this press release.


Libbey Inc.

Condensed Consolidated Statements of Operations

(dollars in thousands, except per share amounts)

(unaudited)



Three months ended June 30,


2019


2018





Net sales

$

206,158



$

213,534


Freight billed to customers

811



938


Total revenues

206,969



214,472


Cost of sales

160,244



167,979


Gross profit

46,725



46,493


Selling, general and administrative expenses

30,813



33,537


Impairment of goodwill and other intangible assets

46,881




Income (loss) from operations

(30,969)



12,956


Other income (expense)

(620)



2,580


Earnings (loss) before interest and income taxes

(31,589)



15,536


Interest expense

5,879



5,456


Earnings (loss) before income taxes

(37,468)



10,080


Provision for income taxes

6,299



6,092


Net income (loss)

$

(43,767)



$

3,988






Net income (loss) per share:




    Basic

$

(1.95)



$

0.18


    Diluted

$

(1.95)



$

0.18


Dividends declared per share

$



$






Weighted average shares:




    Basic

22,400



22,170


    Diluted

22,400



22,356


 

Libbey Inc.

Condensed Consolidated Statements of Operations

(dollars in thousands, except per share amounts)

(unaudited)







Six months ended June 30,


2019


2018









Net sales

$

381,124



$

395,447


Freight billed to customers

1,494



1,695


Total revenues

382,618



397,142


Cost of sales

301,935



316,979


Gross profit

80,683



80,163


Selling, general and administrative expenses

63,393



65,060


Impairment of goodwill and other intangible assets

46,881




Income (loss) from operations

(29,591)



15,103


Other income (expense)

(2,204)



473


Earnings (loss) before interest and income taxes

(31,795)



15,576


Interest expense

11,511



10,540


Income (loss) before income taxes

(43,306)



5,036


Provision for income taxes

5,003



4,009


Net income (loss)

$

(48,309)



$

1,027






Net income (loss) per share:




    Basic

$

(2.16)



$

0.05


    Diluted

$

(2.16)



$

0.05


Dividends declared per share

$



$

0.1175






Weighted average shares:




    Basic

22,332



22,131


    Diluted

22,332



22,167






 


Libbey Inc.

Condensed Consolidated Balance Sheets

(dollars in thousands)



June 30, 2019


December 31, 2018


(unaudited)



ASSETS:




Cash and cash equivalents

$

32,298



$

25,066


Accounts receivable — net

92,950



83,977


Inventories — net

202,564



192,103


Prepaid and other current assets

18,496



16,522


Total current assets

346,308



317,668


Purchased intangible assets — net

11,977



13,385


Goodwill

38,431



84,412


Deferred income taxes

27,797



26,090


Other assets

11,623



7,660


Operating lease right-of-use assets

65,571




Property, plant and equipment — net

256,900



264,960


Total assets

$

758,607



$

714,175






LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT):




Accounts payable

$

79,635



$

74,836


Salaries and wages

23,120



27,924


Accrued liabilities

48,017



43,728


Accrued income taxes

3,726



3,639


Pension liability (current portion)

3,497



3,282


Non-pension post-retirement benefits (current portion)

3,957



3,951


Operating lease liabilities (current portion)

12,800




Long-term debt due within one year

4,400



4,400


Total current liabilities

179,152



161,760


Long-term debt

419,413



393,300


Pension liability

44,079



45,206


Non-pension post-retirement benefits

39,833



43,015


Noncurrent operating lease liabilities

53,750




Deferred income taxes

2,522



2,755


Other long-term liabilities

22,529



18,246


Total liabilities

761,278



664,282






Common stock and capital in excess of par value

337,378



335,739


Retained deficit

(219,750)



(171,441)


Accumulated other comprehensive loss

(120,299)



(114,405)


Total shareholders' equity (deficit)

(2,671)



49,893


Total liabilities and shareholders' equity (deficit)

$

758,607



$

714,175


 


Libbey Inc.

Condensed Consolidated Statements of Cash Flows

(dollars in thousands)

(unaudited)



Six months ended June 30,


2019


2018





Operating activities:




Net income (loss)

$

(48,309)



$

1,027


Adjustments to reconcile net income (loss) to net cash provided by operating activities:




Depreciation and amortization

19,922



23,119


Impairment of goodwill and other intangible assets

46,881




Change in accounts receivable

(9,060)



(11,477)


Change in inventories

(10,593)



(13,956)


Change in accounts payable

6,743



919


Accrued interest and amortization of discounts and finance fees

557



449


Pension & non-pension post-retirement benefits, net

(1,165)



176


Accrued liabilities & prepaid expenses

(2,768)



1,215


Income taxes

(2,483)



(1,698)


Share-based compensation expense

1,935



1,456


Other operating activities

(908)



(430)


Net cash provided by operating activities

752



800






Investing activities:




Additions to property, plant and equipment

(18,300)



(21,349)


Net cash used in investing activities

(18,300)



(21,349)






Financing activities:




Borrowings on ABL credit facility

73,871



51,131


Repayments on ABL credit facility

(46,300)



(28,631)


Other repayments



(1,383)


Repayments on Term Loan B

(2,200)



(2,200)


Taxes paid on distribution of equity awards

(409)



(214)


Dividends



(2,595)


Net cash provided by financing activities

24,962



16,108






Effect of exchange rate fluctuations on cash

(182)



(437)


Increase (decrease) in cash

7,232



(4,878)






Cash & cash equivalents at beginning of period

25,066



24,696


Cash & cash equivalents at end of period

$

32,298



$

19,818


In accordance with the SEC's Regulation G, the following tables provide non-GAAP measures used in this earnings release and a reconciliation to the most closely related U.S. GAAP measure. See the above text for additional information on our non-GAAP measures. Although Libbey believes that the non-GAAP financial measures presented enhance investors' understanding of Libbey's business and performance, these non-GAAP measures should not be considered an alternative to U.S. GAAP.

 

Table 1









Reconciliation of Net Income (Loss) to Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (Adjusted EBITDA)

(dollars in thousands)









(unaudited)











Three months ended June 30,


Six months ended June 30,



2019


2018


2019


2018

Reported net income (loss) (U.S. GAAP)


$

(43,767)



$

3,988



$

(48,309)



$

1,027


Add:









   Interest expense


5,879



5,456



11,511



10,540


   Provision for income taxes


6,299



6,092



5,003



4,009


   Depreciation and amortization


9,991



11,240



19,922



23,119


Add special item before interest and taxes:









   Impairment of goodwill and other intangible assets (1)


46,881





46,881




Adjusted EBITDA (non-GAAP)


$

25,283



$

26,776



$

35,008



$

38,695











Net sales


$

206,158



$

213,534



$

381,124



$

395,447


Net income (loss) margin (U.S. GAAP)


(21.2)

%


1.9

%


(12.7)

%


0.3

%

Adjusted EBITDA margin (non-GAAP)


12.3

%


12.5

%


9.2

%


9.8

%



(1) 

Includes a non-cash goodwill impairment charge of $46.0 million in our Latin America segment and a $0.9 million non-cash impairment charge for a trade name in our EMEA segment.

 

Table 2









Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow

(dollars in thousands)





(unaudited)







Three months ended June 30,


Six months ended June 30,



2019


2018


2019


2018

Net cash provided by operating activities  (U.S. GAAP)


$

24,657



$

13,944



$

752



$

800


Net cash used in investing activities (U.S. GAAP)


(7,939)



(10,078)



(18,300)



(21,349)


Free Cash Flow (non-GAAP)


$

16,718



$

3,866



$

(17,548)



$

(20,549)











 

Table 3







Reconciliation to Trade Working Capital



(dollars in thousands)







(unaudited)









June 30, 2019


December 31, 2018


June 30, 2018








Accounts receivable — net


$

92,950



$

83,977



$

100,948


Inventories — net


202,564



192,103



200,818


Less: Accounts payable


79,635



74,836



80,686


Trade Working Capital (non-GAAP)


$

215,879



$

201,244



$

221,080


 

Table 4









Reconciliation of Net Income (Loss) to Adjusted Income from Operations

(dollars in thousands)





(unaudited)







Three months ended June 30,


Six months ended June 30,



2019


2018


2019


2018

Reported net income (loss) (U.S. GAAP)


$

(43,767)



$

3,988



$

(48,309)



$

1,027


Add:









   Interest expense


5,879



5,456



11,511



10,540


   Provision for income taxes


6,299



6,092



5,003



4,009


   Other (income) expense


620



(2,580)



2,204



(473)


Add special item before interest and taxes:









   Impairment of goodwill and other intangible assets (1)


46,881





46,881




Adjusted Income from Operations (non-GAAP)


$

15,912



$

12,956



$

17,290



$

15,103











Net sales


$

206,158



$

213,534



$

381,124



$

395,447


Net income (loss) margin (U.S. GAAP)


(21.2)

%


1.9

%


(12.7)

%


0.3

%

Adjusted Income from Operations margin (non-GAAP)


7.7

%


6.1

%


4.5

%


3.8

%



(1) 

Includes a non-cash goodwill impairment charge of $46.0 million in our Latin America segment and a $0.9 million non-cash impairment charge for a trade name in our EMEA segment.

 

Table 5





Summary Business Segment Information



(dollars in thousands)
(unaudited)


Three months ended June 30,


Six months ended June 30,

Net Sales:


2019


2018


2019


2018









U.S. & Canada (1)


$

128,897



$

128,474



$

238,803



$

236,415


Latin America (2)


38,208



40,290



68,609



74,623


EMEA (3)


32,678



38,175



60,720



70,423


Other (4)


6,375



6,595



12,992



13,986


Consolidated


$

206,158



$

213,534



$

381,124



$

395,447











Segment Earnings Before Interest & Taxes (Segment EBIT) (5) :







U.S. & Canada (1)


$

17,267



$

13,358



$

27,064



$

18,082


Latin America (2)


3,187



7,433



3,836



9,583


EMEA (3)


2,763



2,621



2,713



3,626


Other (4)


(1,169)



660



(2,321)



(469)


Segment EBIT


$

22,048



$

24,072



$

31,292



$

30,822











Reconciliation of Segment EBIT to Net Income (Loss):









Segment EBIT


$

22,048



$

24,072



$

31,292



$

30,822


Retained corporate costs (6)


(6,756)



(8,536)



(16,206)



(15,246)


Impairment of goodwill and other intangible assets


(46,881)





(46,881)




Interest expense


(5,879)



(5,456)



(11,511)



(10,540)


Provision for income taxes


(6,299)



(6,092)



(5,003)



(4,009)


Net income (loss)


$

(43,767)



$

3,988



$

(48,309)



$

1,027











Depreciation & Amortization:









U.S. & Canada (1)


$

3,214



$

3,052



$

6,347



$

6,439


Latin America (2)


3,837



4,494



7,617



9,204


EMEA (3)


1,706



1,940



3,405



3,949


Other (4)


893



1,309



1,775



2,623


Corporate


341



445



778



904


Consolidated


$

9,991



$

11,240



$

19,922



$

23,119




(1)

U.S. & Canada—includes sales of manufactured and sourced tableware having an end-market destination in the U.S and Canada, excluding glass products for Original Equipment Manufacturers (OEM), which remain in the Latin America segment.

(2)

Latin America—includes primarily sales of manufactured and sourced glass tableware having an end-market destination in Latin America, as well as glass products for OEMs regardless of end-market destination.

(3)

EMEA—includes primarily sales of manufactured and sourced glass tableware having an end-market destination in Europe, the Middle East and Africa.

(4)

Other—includes primarily sales of manufactured and sourced glass tableware having an end-market destination in Asia Pacific.

(5)

Segment EBIT represents earnings before interest and taxes and excludes amounts related to certain items we consider not representative of ongoing operations as well as certain retained corporate costs and other allocations that are not considered by management when evaluating performance. Segment EBIT also includes an allocation of manufacturing costs for inventory produced at a Libbey facility that is located in a region other than the end market in which the inventory is sold.  This allocation can fluctuate from year to year based on the relative demands for products produced in regions other than the end markets in which they are sold.

(6)

Retained corporate costs include certain headquarter, administrative and facility costs, and other costs that are not allocable to the reporting segments.

 

Table 6






Reconciliation of Net Loss to Adjusted EBITDA and Debt Net of Cash to Adjusted EBITDA Ratio

(dollars in thousands)






(unaudited)







Last twelve
months ended
June 30, 2019


Year ended
December 31, 2018


Last twelve
months ended
June 30, 2018




Reported net loss  (U.S. GAAP)

$

(57,292)



$

(7,956)



$

(84,939)


Add:






   Interest expense

22,950



21,979



20,935


   Provision for income taxes

11,247



10,253



20,873


   Depreciation and amortization

41,136



44,333



46,280


   Special items before interest and taxes

49,222



2,341



79,700


Adjusted EBITDA  (non-GAAP)

$

67,263



$

70,950



$

82,849








Reported debt on balance sheet  (U.S. GAAP)

$

423,813



$

397,700



$

403,711


   Plus: Unamortized discount and finance fees

1,867



2,368



2,874


Gross debt

425,680



400,068



406,585


   Less: Cash and cash equivalents

32,298



25,066



19,818


Debt net of cash

$

393,382



$

375,002



$

386,767








Debt Net of Cash to Adjusted EBITDA Ratio (non-GAAP)

5.8x



5.3x



4.7x


 

Table 7




2019 Outlook




Reconciliation of Net Income (Loss) margin to Adjusted EBITDA Margin



(percent of estimated 2019 net sales)




(unaudited)







Outlook for the year ended
December 31, 2019

Net income (loss) margin  (U.S. GAAP)(1)



(6.0%) - (5.0%)

Add:




   Interest expense



2.8%

   Provision for income taxes



0.9% - 1.4%

   Depreciation and amortization



5.0%

   Special items before interest and taxes (1)



5.8%

Adjusted EBITDA Margin  (non-GAAP)



8.5% - 10.0%



(1)

Potential special charges related to the strategic review of our business in China are not reflected in the reconciliation.

 

Table 8




Adjusted SG&A Margin

(percent of net sales)




(unaudited)





Outlook for the

year ended
December 31, 2019(1)


Year ended
December 31, 2018

SG&A margin (U.S. GAAP)

~16.0 %


16.0 %

Deduct special items in SG&A expenses:




   Fees associated with strategic initiative

— %


(0.3) %

Adjusted SG&A Margin (non-GAAP)

~16.0 %


15.7 %



(1)

Potential special charges related to the strategic review of our business in China are not reflected in the reconciliation.

 

Cision View original content:http://www.prnewswire.com/news-releases/libbey-inc-announces-second-quarter-2019-results-300894911.html

SOURCE Libbey Inc.

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