LIBBEY INC. TOLEDO, Ohio, Feb. 28, 2017 /PRNewswire/ -- Libbey Inc. (NYSE MKT: LBY), one of the largest glass tableware manufacturers in the world, today reported results for the fourth quarter ended December 31, 2016.
Full-Year 2016 Highlights
-- Net sales $793.4 million, down 3.5 percent versus prior year, or down
1.1 percent in constant currency
-- Net income $10.1 million, down $56.3 million versus prior year; 2015
included a non-repeating $43.8 million tax benefit; 2016 net income
margin of 1.3 percent
-- Adjusted EBITDA $109.8 million, down $6.4 million versus prior year;
2016 Adjusted EBITDA margin of 13.8 percent
-- Company estimates Toledo work stoppage negatively impacted net sales by
$7 million to $9 million and pre-tax income by $7 million to $8 million
-- During the year, the Company returned $12.1 million to shareholders
through a combination of share repurchases and dividends
"Fourth quarter results continued to be impacted by the recent trends we've observed in our foodservice and retail channels, consistent with the activity that we saw in the preceding quarter," said William A. Foley, chairman and chief executive officer of Libbey Inc. "Foodservice unit volumes increased slightly, despite the impact of a Toledo work stoppage and an ongoing decline in restaurant traffic trends. By executing against our business strategy, we have continued to outperform our industry, and we are encouraged by indications that Libbey is continuing to win market share amidst a challenging, competitive environment."
Foley added, "2016 was an important year from an operational standpoint, as we began to make proactive changes to ensure the business is adapting to shifts in consumer behaviors and addressing legacy issues of our business. Our new product development capabilities are improving, we've rationalized and streamlined our product portfolio and we're taking new approaches to the ways in which we evaluate our manufacturing footprint to maximize profitability. We are seeing positive impacts from many of these initiatives that we prioritized during the year, and we remain confident that we are taking the appropriate steps to improve the long-term performance of the Company."
Fourth Quarter Financial & Operating Highlights
-- Net sales in fourth quarter 2016 were $205.8 million, compared to $219.1
million in the prior-year fourth quarter, a 6.1 percent decrease (or a
3.6 percent decrease excluding $5.4 million currency impact).
-- Net loss in fourth quarter 2016 was $2.2 million, compared to net income
of $32.1 million in fourth quarter 2015. The fourth quarter 2015
included the reversal of substantially all of the U.S. deferred tax
asset valuation allowance of $43.8 million.
-- Adjusted EBITDA (see Table 1) in fourth quarter 2016 was $22.8 million,
compared to $31.0 million in fourth quarter 2015.
-- Net sales in the U.S. and Canada segment were $129.5 million, a decrease
of 7.3 percent versus net sales of $139.8 million in fourth quarter
2015. The decrease was primarily driven by lower retail and
business-to-business net sales, which were down 17.2 percent and 6.9
percent, respectively, compared to fourth quarter 2015. Foodservice net
sales decreased 1.4 percent compared to the prior-year fourth quarter.
-- Toledo work stoppage negatively impacted net sales by an estimated $7
million to $9 million and income before income taxes by approximately $7
million to $8 million. Adjusted EBITDA was negatively impacted by the
estimated lost sales by approximately $3 million to $4 million.
-- Net sales in the Latin America segment were $36.4 million, compared to
$40.2 million in fourth quarter 2015, a 9.5 percent decrease (or a 1.3
percent increase excluding $4.3 million currency impact). Retail net
sales growth of 5.0 percent (or an 18.8 percent increase excluding $2.4
million currency impact) was primarily offset by weakness in
business-to-business net sales.
-- Net sales in the EMEA segment were $31.7 million, compared to $31.5
million in fourth quarter 2015, an increase of 0.8 percent (or an
increase of 2.3 percent adjusted for currency). Growth in the retail and
business-to-business channels was partially offset by slower foodservice
net sales.
-- Net sales in Other were $8.2 million in fourth quarter 2016, compared to
$7.7 million in the comparable prior-year quarter, reflecting an
increase of 6.3 percent (or an increase of 13.1 percent adjusted for
currency).
-- The Company recorded tax expense of $5.7 million for fourth quarter
2016, compared to a tax benefit of $39.7 million in same period in 2015.
The benefit recorded for fourth quarter 2015 included a tax benefit of
$43.8 million related to the reversal of the valuation allowance
recorded against U.S. deferred tax assets. In addition, 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.
Full-Year 2016 Financial & Operating Highlights
-- Net sales for full-year 2016 were $793.4 million, compared to $822.3
million for full-year 2015, a decrease of 3.5 percent (or a decrease of
1.1 percent excluding $19.6 million currency impact).
-- Net income for full-year 2016 was $10.1 million, compared to $66.3
million during full-year 2015; 2015 included the reversal of
substantially all of the U.S. deferred tax asset valuation allowance of
$43.8 million.
-- Adjusted EBITDA (see Table 1) was $109.8 million for full-year 2016,
compared to $116.1 million for full-year 2015.
-- Net sales in the U.S. and Canada segment were $488.2 million for
full-year 2016, compared to $497.7 million for full-year 2015, a
decrease of 1.9 percent. Retail net sales declined 10.2 percent, more
than offsetting a 2.3 percent increase in foodservice net sales.
Business-to-business net sales were down 0.7 percent.
-- Toledo work stoppage negatively impacted net sales by an estimated $7
million to $9 million and income before income taxes by approximately $7
million to $8 million. Adjusted EBITDA was negatively impacted by the
estimated lost sales by approximately $3 million to $4 million.
-- Net sales in the Latin America segment were $151.4 million, compared to
$167.1 million for full-year 2015; the 9.4 percent decrease (or 0.8
percent increase excluding $17.0 million currency impact) was primarily
due to weakness in the business-to-business channel. Retail net sales
for full-year 2016 increased 1.5 percent compared to the prior year (or
increased 14.4 percent excluding $9.0 million currency impact).
-- Net sales in the EMEA segment decreased 2.4 percent (or decreased 2.0
percent adjusted for currency) to $119.8 million, compared to $122.7
million for full-year 2015. The decrease was primarily the result of
weakness in the business-to-business channel.
-- Net sales in Other were $34.1 million for full-year 2016, compared to
$34.9 million for full year 2015, reflecting a decrease of 2.2 percent
(or an increase of 3.7 percent adjusted for currency).
-- The Company recorded tax expense of $17.7 million for 2016, compared to
a tax benefit of $38.2 million for 2015. The benefit recorded for
full-year 2015 includes a tax benefit of $43.8 million related to the
reversal of the valuation allowance against its U.S. deferred tax
assets. In addition, the effective tax rates for both years were
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
-- The Company had available capacity of $88.4 million under its ABL credit
facility at December 31, 2016, with no loans outstanding, and cash on
hand of $61.0 million.
-- At December 31, 2016, Trade Working Capital, defined as inventories and
accounts receivable less accounts payable, was $183.5 million, a
decrease of $17.3 million from $200.8 million at December 31, 2015 (see
Table 3). The decrease was a result of lower accounts receivable and
inventories with almost no change in accounts payable.
Outlook
The Company expects macroeconomic, industry and competitive trends to remain consistent year-over-year and thus projects the following outlook for full-year 2017:
-- Net sales flat to slightly down on an as reported basis, compared to
full-year 2016, as negative currency impacts offset projected growth.
-- Adjusted EBITDA margin of 13 percent to 14 percent.
-- Capital expenditures in the range of $50 million to $55 million.
Foley concluded, "As we look toward 2017, we plan to take the next steps to strengthen the functions we emphasized last year by maintaining an active new product development pipeline and continually evaluating opportunities to optimize the performance of our global manufacturing network. Longer term, we believe significant opportunities exist to grow sales through new product and category introductions, as well as continued market share expansion in underpenetrated categories."
"While we're focused on taking advantage of opportunities we see in our markets to drive the long-term growth of our business, we need also to continue to improve our operational and organizational excellence to support growth. Therefore, we will pursue ecommerce and begin an ERP implementation during 2017. For full-year 2017, we expect to be able to offset much of the cost of these initiatives, and we project our full year Adjusted EBITDA margin to be similar to, or slightly down from, last year. We see these investments as both defensive and offensive. They provide critical platforms for our growth and help position us for enhanced alignment with consumer purchasing preferences and improved operating efficiencies."
"We also will continue to take a balanced approach to our capital allocation policies and remain committed to our dividend policy, which we recently increased by two percent to 11.75 cents per quarter. However, given the continued softness that we're seeing in some of our end markets, we believe it is prudent to continue prioritizing debt reduction with our excess capital over the near term. We believe we are well positioned to return the Company to growth and look forward to driving value for shareholders in the future.
Webcast Information
Libbey will hold a conference call for investors on Tuesday, February 28, 2017, 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.
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(®), Libbey Signature(®), Masters Reserve(®), World(®) Tableware, Syracuse(®) China, and Crisal Glass(®). In 2016, Libbey Inc.'s net sales totaled $793.4 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, Free Cash Flow, Trade Working Capital 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, liquidity 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 and Adjusted EBITDA Margin as U.S. GAAP net
income plus interest expense, provision for income taxes, depreciation
and amortization, and special items that Libbey believes are not
reflective of our core operating performance.
-- We define Free Cash Flow as net cash provided by (used in) operating
activities less capital expenditures plus proceeds from asset sales and
other.
-- We define Trade Working Capital as net accounts receivable plus net
inventories less accounts payable.
-- 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 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 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 by 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 29, 2016. 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.
Libbey Inc.
Condensed Consolidated Statements of Operations
(dollars in thousands, except per share amounts)
(unaudited)
Three months ended December 31,
2016 2015
---- ----
Net sales $205,838 $219,145
Freight billed to customers 807 810
--- ---
Total revenues 206,645 219,955
Cost of sales 172,618 190,703
------- -------
Gross profit 34,027 29,252
Selling, general and administrative expenses 27,636 33,717
Income (loss) from operations 6,391 (4,465)
Other income 2,327 1,603
----- -----
Earnings (loss) before interest and income taxes 8,718 (2,862)
Interest expense 5,259 4,722
----- -----
Income (loss) before income taxes 3,459 (7,584)
Provision (benefit) for income taxes 5,708 (39,692)
----- -------
Net income (loss) $(2,249) $32,108
======= =======
Net income (loss) per share:
Basic $(0.10) $1.47
====== =====
Diluted $(0.10) $1.45
====== =====
Dividends declared per share $0.115 $0.110
====== ======
Weighted average shares:
Basic 21,908 21,819
====== ======
Diluted 21,908 22,111
====== ======
Libbey Inc.
Condensed Consolidated Statements of Operations
(dollars in thousands, except per share amounts)
(unaudited)
Year ended December 31,
2016 2015
---- ----
Net sales $793,420 $822,345
Freight billed to customers 2,790 2,885
----- -----
Total revenues 796,210 825,230
Cost of sales 629,916 648,902
------- -------
Gross profit 166,294 176,328
Selling, general and administrative expenses 120,984 132,607
------- -------
Income from operations 45,310 43,721
Other income 3,362 2,880
----- -----
Earnings before interest and income taxes 48,672 46,601
Interest expense 20,888 18,484
------ ------
Income before income taxes 27,784 28,117
Provision (benefit) for income taxes 17,711 (38,216)
------ -------
Net income $10,073 $66,333
======= =======
Net income per share:
Basic $0.46 $3.04
===== =====
Diluted $0.46 $2.99
===== =====
Dividends declared per share $0.46 $0.44
===== =====
Weighted average shares:
Basic 21,880 21,817
====== ======
Diluted 22,049 22,159
====== ======
Libbey Inc.
Condensed Consolidated Balance Sheets
(dollars in thousands)
December 31, 2016 December 31, 2015
----------------- -----------------
(unaudited)
ASSETS:
Cash and cash equivalents $61,011 $49,044
Accounts receivable - net 85,113 94,379
Inventories - net 170,009 178,027
Other current assets 16,777 19,326
------ ------
Total current assets 332,910 340,776
Pension asset - 977
Purchased intangibles - net 15,225 16,364
Goodwill 164,112 164,112
Deferred income taxes 40,016 48,662
Other assets 9,514 9,019
----- -----
Total other assets 228,867 239,134
Property, plant and equipment - net 256,392 272,534
------- -------
Total assets $818,169 $852,444
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Accounts payable $71,582 $71,560
Salaries and wages 27,018 27,266
Accrued liabilities 41,807 45,179
Accrued income taxes 1,384 4,009
Pension liability (current portion) 2,461 2,297
Non-pension postretirement benefits (current portion) 4,892 4,903
Derivative liability 1,928 4,265
Long-term debt due within one year 5,009 4,747
----- -----
Total current liabilities 156,081 164,226
Long-term debt 402,831 426,272
Pension liability 43,934 44,274
Non-pension postretirement benefits 55,373 55,282
Deferred income taxes 1,859 2,822
Other long-term liabilities 12,972 11,186
------ ------
Total liabilities 673,050 704,062
Common stock and capital in excess of par value 329,941 330,974
Treasury stock - (4,448)
Retained deficit (59,625) (57,912)
Accumulated other comprehensive loss (125,197) (120,232)
-------- --------
Total shareholders' equity 145,119 148,382
------- -------
Total liabilities and shareholders' equity $818,169 $852,444
======== ========
Libbey Inc.
Condensed Consolidated Statements of Cash Flows
(dollars in thousands)
(unaudited)
Three months ended December 31,
2016 2015
---- ----
Operating activities:
Net income
(loss) $(2,249) $32,108
Adjustments to reconcile
net income (loss) to net
cash provided by operating
activities:
Depreciation
and
amortization 11,817 11,426
Loss on
asset
sales and
disposals 122 177
Change in
accounts
receivable 12,374 1,390
Change in
inventories 18,928 19,898
Change in
accounts
payable 6,188 5,190
Accrued
interest
and
amortization
of
discounts
and
finance
fees 424 345
Pension &
non-
pension
postretirement
benefits,
net (860) 17,412
Accrued
liabilities
& prepaid
expenses (11,142) (8,660)
Income
taxes 3,952 (40,078)
Share-
based
compensation
expense 432 368
Excess tax
benefit
from
share-
based
compensation
arrangements - (2,797)
Other
operating
activities (936) (2,728)
---- ------
Net cash
provided
by
operating
activities 39,050 34,051
Investing activities:
Additions
to
property,
plant and
equipment (11,081) (6,656)
Proceeds
from
asset
sales and
other - 5
Net cash
used in
investing
activities (11,081) (6,651)
Financing activities:
Borrowings
on ABL
credit
facility - 18,400
Repayments
on ABL
credit
facility - (25,400)
Repayments
on Term
Loan B (6,100) (1,100)
Stock
options
exercised 247 4
Excess tax
benefit
from
share-
based
compensation
arrangements - 2,797
Dividends (2,519) (2,400)
Net cash
used in
financing
activities (8,372) (7,699)
Effect of
exchange
rate
fluctuations
on cash (1,256) (758)
------ ----
Increase
in cash 18,341 18,943
Cash &
cash
equivalents
at
beginning
of period 42,670 30,101
------ ------
Cash &
cash
equivalents
at end of
period $61,011 $49,044
======= =======
Libbey Inc.
Condensed Consolidated Statements of Cash Flows
(dollars in thousands)
(unaudited)
Year ended December 31,
2016 2015
---- ----
Operating activities:
Net income $10,073 $66,333
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation
and
amortization 48,486 42,712
Loss on
asset
sales and
disposals 287 567
Change in
accounts
receivable 8,660 (6,312)
Change in
inventories 5,979 (12,006)
Change in
accounts
payable (481) (3,466)
Accrued
interest
and
amortization
of
discounts
and
finance
fees (1,086) 1,291
Pension &
non-
pension
postretirement
benefits,
net (2,513) 18,865
Accrued
liabilities
& prepaid
expenses 4,032 4,140
Income
taxes 6,296 (45,003)
Share-
based
compensation
expense 4,766 5,917
Excess tax
benefit
from
share-
based
compensation
arrangements (366) (2,797)
Other
operating
activities (1,490) (4,142)
------ ------
Net cash
provided
by
operating
activities 82,643 66,099
Investing activities:
Additions
to
property,
plant and
equipment (34,604) (48,136)
Proceeds
from asset
sales and
other - 7
--- ---
Net cash
used in
investing
activities (34,604) (48,129)
Financing activities:
Borrowings
on ABL
credit
facility 6,000 62,900
Repayments
on ABL
credit
facility (6,000) (62,900)
Other
repayments (350) (3,267)
Other
borrowings 339 -
Repayments
on Term
Loan B (24,400) (4,400)
Stock
options
exercised 1,400 3,338
Excess tax
benefit
from
share-
based
compensation
arrangements 366 2,797
Dividends (10,070) (9,597)
Treasury
shares
purchased (2,000) (15,275)
------ -------
Net cash
used in
financing
activities (34,715) (26,404)
Effect of
exchange
rate
fluctuations
on cash (1,357) (2,566)
------ ------
Increase
(decrease)
in cash 11,967 (11,000)
Cash & cash
equivalents
at
beginning
of year 49,044 60,044
------ ------
Cash & cash
equivalents
at end of
year $61,011 $49,044
======= =======
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. Generally Accepted Accounting Principle (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 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 Year ended December 31,
December 31,
2016 2015 2016 2015
---- ---- ---- ----
Reported net income (loss) (U.S. GAAP) $(2,249) $32,108 $10,073 $66,333
Add:
Interest expense 5,259 4,722 20,888 18,484
Provision (benefit) for income taxes 5,708 (39,692) 17,711 (38,216)
Depreciation and amortization 11,817 11,426 48,486 42,712
Add special items before interest and taxes:
Pension settlement (1) (44) 21,693 168 21,693
Product portfolio optimization (2) (1,091) - 5,693 -
Work Stoppage (3) 4,162 - 4,162 -
Reorganization charges (4) - 125 - 4,316
Executive terminations (61) 635 4,460 870
Derivatives (5) (710) (93) (1,860) (218)
Environmental obligation (6) - 34 - 157
Adjusted EBITDA (non-GAAP) $22,791 $30,958 $109,781 $116,131
======= ======= ======== ========
Net sales $205,838 $219,145 $793,420 $822,345
Net income (loss) margin (U.S. GAAP) (1.1)% 14.7% 1.3% 8.1%
===== ==== === ===
Adjusted EBITDA margin (non-GAAP) 11.1% 14.1% 13.8% 14.1%
==== ==== ==== ====
(1) The 2015 pension settlement charge
relates to EMEA unwinding direct
ownership of its Dutch defined
benefit pension plan.
(2) Product portfolio optimization relates
to inventory reductions to simplify
and improve our operations.
(3) Work stoppage relates to the lower
production volume impact, shipping
costs and other direct expenses
associated with the two-week Toledo,
Ohio work stoppage in the fourth
quarter of 2016.
(4) Management reorganization to support
our growth strategy.
(5) Derivatives relate to hedge
ineffectiveness on our natural gas
contracts 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.
(6) 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 Net Cash Provided By Operating Activities to Free Cash Flow
(dollars in thousands)
(unaudited)
Three months ended December 31, Year ended December 31,
2016 2015 2016 2015
Net cash provided by operating activities (U.S. GAAP) $39,050 $34,051 $82,643 $66,099
Capital expenditures (11,081) (6,656) (34,604) (48,136)
Proceeds from asset sales and other - 5 - 7
--- --- --- ---
Free Cash Flow (non-GAAP) $27,969 $27,400 $48,039 $17,970
======= ======= ======= =======
Table 3
Reconciliation to Trade Working Capital
(dollars in thousands)
(unaudited)
December 31, 2016 September 30, 2016 December 31, 2015
----------------- ------------------ -----------------
Add:
Accounts receivable - net $85,113 98,547 $94,379
Inventories - net 170,009 191,479 178,027
Less: Accounts payable 71,582 63,191 71,560
Trade Working Capital (non-GAAP) $183,540 $226,835 $200,846
======== ======== ========
Table 4
Summary Business Segment Information
(dollars in thousands) Three months ended Year ended December 31,
(unaudited) December 31,
Net Sales: 2016 2015 2016 2015
---- ---- ---- ----
U.S. & Canada (1) $129,549 $139,774 $488,162 $497,728
Latin America (2) 36,418 40,231 151,406 167,069
EMEA (3) 31,707 31,457 119,750 122,664
Other (4) 8,164 7,683 34,102 34,884
Consolidated $205,838 $219,145 $793,420 $822,345
======== ======== ======== ========
Segment Earnings Before Interest & Taxes (Segment EBIT) (5) :
U.S. & Canada (1) $20,176 $23,389 $77,916 $80,406
Latin America (2) (3,353) 3,646 10,731 22,017
EMEA (3) 700 (23) (1,002) 1,251
Other (4) 17 539 915 4,390
--- --- --- -----
Segment EBIT $17,540 $27,551 $88,560 $108,064
======= ======= ======= ========
Reconciliation of Segment EBIT to Net Income (Loss):
Segment EBIT $17,540 $27,551 $88,560 $108,064
Retained corporate costs (6) (6,566) (8,019) (27,265) (34,645)
Pension settlement 44 (21,693) (168) (21,693)
Environmental obligation - (34) - (157)
Reorganization charges - (125) - (4,316)
Derivatives 710 93 1,860 218
Executive terminations 61 (635) (4,460) (870)
Product portfolio optimization 1,091 - (5,693) -
Work stoppage (4,162) - (4,162) -
Interest expense (5,259) (4,722) (20,888) (18,484)
Income tax benefit (expense) (5,708) 39,692 (17,711) 38,216
------ ------ ------- ------
Net income (loss) $(2,249) $32,108 $10,073 $66,333
======= ======= ======= =======
Depreciation & Amortization:
U.S. & Canada (1) $3,030 $3,425 $12,748 $12,214
Latin America (2) 5,343 4,361 19,068 14,738
EMEA (3) 1,717 2,065 9,377 8,510
Other (4) 1,426 1,421 5,588 5,855
Corporate 301 154 1,705 1,395
--- --- ----- -----
Consolidated $11,817 $11,426 $48,486 $42,712
======= ======= ======= =======
(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
including glass products for OEMs
that have an end market destination
outside of Latin America.
(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.
(6) Retained corporate costs include
certain headquarter, administrative
and facility costs, and other costs
that are not allocable to the
reporting segments.
Table 5
Reconciliation of Net Income to Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (Adjusted EBITDA)
and Debt Net of Cash to Adjusted EBITDA Ratio
(dollars in thousands)
(unaudited)
Year Ended Year Ended
December 31, 2016 December 31, 2015
----------------- -----------------
Reported net income (U.S. GAAP) $10,073 $66,333
Add:
Interest expense 20,888 18,484
Provision (benefit) for income taxes 17,711 (38,216)
Depreciation and amortization 48,486 42,712
Special items before interest and taxes 12,623 26,818
------ ------
Adjusted EBITDA (non-GAAP) $109,781 $116,131
======== ========
Reported debt on balance sheet (U.S. GAAP) $407,840 $431,019
Plus: Unamortized discount and finance fees 4,480 5,832
----- -----
Gross debt 412,320 436,851
Less: Cash and cash equivalents 61,011 49,044
------
Debt net of cash $351,309 $387,807
======== ========
Debt Net of Cash to Adjusted EBITDA Ratio (non-GAAP) 3.2 x 3.3 x
===== =====
Table 6
Full year Outlook
Reconciliation of Net Income margin to Adjusted EBITDA Margin
(percent of estimated 2017 net sales)
(unaudited)
Outlook for the
year ended
December 31, 2017
-----------------
Net income margin (U.S. GAAP) 2.5% - 3.5%
Add:
Interest expense 2.5%
Provision for income taxes 2.0%
Depreciation and amortization 6.0%
Special items before interest and taxes (1) -%
Adjusted EBITDA Margin (non-GAAP) 13.0% - 14.0%
============
(1) We have not estimated
any impact for special
items in 2017.
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/libbey-inc-announces-fourth-quarter-and-full-year-2016-financial-results-300414812.html
SOURCE Libbey Inc.
