Libbey Inc. announced that sales for the first quarter of 2011 were USD 181.0 million, compared to USD 173.9 million in the first quarter of 2010, up more than 4%. The company reported a net loss of U…
Libbey Inc. announced that sales for the first quarter of 2011 were USD 181.0 million, compared to USD 173.9 million in the first quarter of 2010, up more than 4%. The company reported a net loss of USD 1.0 million, or USD 0.05 per diluted share, for the first quarter ended 31 March 2011, compared to net income of USD 55.4 million, or USD 2.76 per diluted share, in the prior-year quarter. Excluding special items of USD 0.3 million during the first quarter of 2011, Libbey had a net loss of USD 0.7 million or USD 0.03 per diluted share, compared to a net loss (excluding special items of USD 56.4 million), of USD 1.0 million and diluted loss per share of USD 0.05 for the first quarter of 2010. The special items in the first quarter of 2010 included a gain of USD 70.2 million, which represented the difference between the carrying value and the face value of the Payment in Kind (PIK) notes which were redeemed in February 2010. This gain was partially offset by the write-off of USD 13.4 million of unamortized fees and discounts on the refinanced floating rate senior notes and ABL credit facility and call premium payments. Libbey also presented its revised segment financial results, which reflect the company“s new reporting structure reorganization from geographical regions to one global company. Under the new structure, Libbey has Glass Operations and Other Operations. The revised segment results do not affect the company“s previously reported consolidated financial results. For the quarter ended 31 March 2011, sales were USD 181.0 million, compared to USD 173.9 million in the year-ago quarter. Sales in the Glass Operations segment were USD 162.1 million, an increase of over 4%, compared to USD 155.1 million in the first quarter of 2010. Primary contributors to the increased sales included sales increases in excess of 50% in the China sales region and over 5% in the US and Canada region. Sales in the US and Canada region grew as the result of an over 12% increase in sales to US and Canadian business-to-business customers and sales increases of almost 7% to US and Canadian retail customers, compared to the prior-year quarter. Sales to US and Canadian foodservice glassware customers increased less than 1% in the quarter, as severe winter weather in January and early February adversely impacted sales of foodservice glassware. Sales in February and March of foodservice glassware rebounded slightly, increasing over 4% compared to February and March 2010. Other Operations segment sales were USD 19.2 million, compared to USD 18.9 million in the prior-year quarter, as sales to World Tableware customers increased over 6% during the quarter and the total sales of Syracuse China and Traex products were lower by approximately 5% versus the prior year. The company reported income from operations of USD 10.7 million during the quarter, compared to income from operations of USD 10.8 million in the year-ago quarter. Income from operations, excluding special items (see Table 1), was USD 10.7 million in the first quarter of 2011, compared to income from operations of USD 11.1 million during the first quarter of 2010. Factors contributing to the small decline in income from operations (both including and excluding special items) were higher selling, general and administrative expenses offset by higher sales and higher gross profit margins. Gross profit margin increased to 20.0% in the first quarter of 2011, compared to 19.5% in the first quarter of 2010. Libbey reported earnings before interest and taxes (EBIT) of USD 10.9 million, compared to EBIT of USD 66.9 million in the year-ago quarter. Adjusted EBIT, excluding special items, was USD 10.3 million in the first quarter of 2011, compared to USD 10.4 million during the first quarter 2010. Adjusted segment EBIT was USD 17.4 million for Glass Operations, compared to USD 15.4 million in the year-ago quarter. The Other Operations segment reported adjusted segment EBIT for the first quarter of 2011 of USD 2.9 million, compared to USD 3.5 million in the year-ago quarter. Libbey reported that adjusted EBITDA was USD 21.2 million for the first quarter, compared to USD 20.8 million in the first quarter of 2010. Interest expense increased by USD 2.0 million in the first quarter of 2011 to USD 11.6 million, compared to USD 9.6 million in the year-ago period. The primary driver of this increase was the fact that a portion of the Company“s debt carried a low effective interest rate in January 2010, prior to the debt refinancing completed in February 2010. Lower debt levels in 2011 partially offset the change in interest rates. Libbey reported a net loss of USD 1.0 million, or USD 0.05 per diluted share, for the first quarter ended 31 March 2011, compared to net income of USD 55.4 million, or USD 2.76 per diluted share, in the prior-year quarter. Excluding special items of USD 0.3 million during the first quarter of 2011, Libbey had a net loss of USD 0.7 million or USD 0.03 per diluted share, compared to a net loss (excluding special items of USD 56.4 million), of USD 1.0 million and diluted loss per share of USD 0.05 for the first quarter of 2010. The special items in the first quarter of 2010 included a gain of USD 70.2 million, representing the difference between the carrying value and the face value of the Payment in Kind (PIK) notes which were redeemed in February 2010. This gain was partially offset by the write-off of USD 13.4 million of unamortized fees and discounts on the floating rate senior notes and the ABL credit facility and call premium payments. As of 31 March 2011, working capital, defined as inventories and accounts receivable less accounts payable, was USD 199.1 million, compared to USD 181.2 million at December 31, 2010, and USD 190.5 million at 31 March 2010. A principal factor in the increased working capital was a planned growth of inventories in Mexico to accommodate scheduled furnace rebuilds. Working capital as a percentage of last 12-month net sales was 24.7% at 31 March 2011, compared to 24.9% at 31 March 2010. Free cash flow was a use of USD 27.0 million in the first quarter of 2011, compared to a use of USD 20.9 million in the first quarter of 2010. The primary contributors were increases in inventories and the timing of cash interest payments. Libbey reported that it had available capacity of USD 64.9 million under its Asset Backed Loan (ABL) credit facility as of 31 March 2011, with USD 4.4 million in loans outstanding. The company also had cash on hand of USD 13.1 million at 31 March 2011. Libbey also announced that it expects to close later today on the sale of substantially all of the assets of its Traex subsidiary to the Vollrath Company. Libbey expects to receive net proceeds of over USD 13 million, which will contribute to additional debt reduction. Libbey expects to record a gain on the sale of between USD 2.5 million and USD 3.5 million during the second quarter of 2011. John F. Meier, chairman and chief executive officer said, “We were pleased with the solid sales and gross profit margin improvements we saw in our Glass Operations segment in the first quarter, especially in light of the weather related impact in the US. We were also encouraged by the sales growth we experienced in China as well as both the US and Canadian retail and business-to-business channels of distribution.”