Libbey announces second quarter results

Libbey has reported net sales results in line with company expectations; second-half outlook expected to demonstrate growth as compared to the prior-year.

Libbey Inc., one of the largest glass tableware manufacturers in the world, has reported results for the second quarter ended 30 June 2017.
* Net sales USD 197.5 million, down 5.0% versus prior year, or down 4.1% in constant currency
* Net loss of USD 0.8 million, down USD 9.5 million versus prior year
* Adjusted EBITDA USD 20.2 million, compared to USD 40.6 million in the second quarter of the prior year
"Second quarter sales results were in line with our expectations, as an intensely competitive pricing environment continues to linger on a global basis," said Chairman and Chief Executive Officer William Foley. "We remain confident that we are taking the appropriate measures to improve the long-term performance of our business. We're seeing indications that certain pricing initiatives we implemented last quarter are taking hold, and that our new product initiatives are beginning to gain traction in the marketplace. We're also very pleased that our new e-commerce platform launched on time and on budget in mid-July."

Foley concluded, "As we look to the second half of the year, we believe that the strategic initiatives we've been focused on over the last year will start to contribute and alleviate some of the short-term competitive pressures in our market. We remain the strongest, most innovative glass tableware company in the world, and we look forward to a better second half compared to the prior-year period, supported by improved profitability in EMEA as a result of our furnace realignment activities, improved operating performance and cost reductions, and sales contributions from new products and e-commerce."

Net sales in the US and Canada segment were lower due to softer sales in the retail and business-to-business channels, which were down approximately 10% and 2%, respectively. US and Canada foodservice net sales were flat versus prior year, despite volume increases in the channel.
In Latin America, net sales declined as a result of lower net sales across all channels, primarily due to lower volume in the retail channel. Decreased volume in the business-to-business channel was offset by favourable price and mix.

Net sales in the EMEA segment decreased primarily as a result of unfavourable currency.

Net sales in Other were down as a result of softer sales in China.
The company's effective tax rate was 163.0% for the second quarter of 2017, compared to 43.5% in the year-ago period. The change in the effective tax rate was driven by several items, including lower pretax income, the timing and mix of pretax income earned in tax jurisdictions with varying tax rates, and the impact of foreign exchange losses compared to gains in the prior period.

During the first six months of 2017:
* Net sales in the US and Canada segment were lower due to softer retail and foodservice channel sales, which were down approximately 9% and 2%, respectively. US and Canada business-to-business net sales increased compared to prior year approximately 4%, mainly related to an increase in volume.

* In Latin America, net sales declined as a result of lower net sales across all channels, specifically due to lower volume in the retail and business-to-business channels and unfavourable currency.

* Net sales in the EMEA segment decreased primarily as a result of unfavourable currency across all three channels, as well as lower volume in the retail channel.

* Net sales in Other were down as a result of softer sales in China.
* The company's effective tax rate was 12.6% for the first six months of 2017, compared to 41.0% in the year-ago period. The change in the effective tax rate was driven by several items, including lower pretax income, the timing and mix of pretax income earned in tax jurisdictions with varying tax rates, and the impact of foreign exchange losses compared to gains in the prior period.

The company had available capacity of USD 90.3 million under its ABL credit facility at 30 June 2017, with no loans outstanding and cash on hand of USD 28.2 million.

At 30 June 2017, Trade Working Capital, defined as inventories and accounts receivable less accounts payable, was USD 202.4 million, a decrease of USD 17.0 million from USD 219.4 million at 30 June 2016. The decrease was a result of lower accounts receivable and inventories and higher accounts payable.

The company affirmed its previous full-year 2017 outlook, but indicated that it expects Adjusted EBITDA margin to be near the low end of its previously provided 11% to 13%. The company still expects:
* Net sales decline in the low-to-mid single digits, compared to the full year 2016, on a reported basis, with continued currency headwinds
* Capital expenditures of approximately USD 50 million
"Competitive pressures have remained elevated through the first half of the year, and as a result, we believe Adjusted EBITDA margins for the full year will be near the low end of our previously provided outlook range," said Jim Burmeister, vice president, chief financial officer. "During the second quarter, we repaid another optional USD 5.0 million on our Term Loan B, as we continue to pursue our goal of reaching our target Debt Net of Cash to Adjusted EBITDA leverage ratio of 2.5x to 3.0x."