“Overall, we are pleased with this quarter’s results. While disappointed with a sales decline in the US and Canada, we are very encouraged by our significant sales increase in Mexico and Latin America,” said Stephanie A. Streeter, chief executive officer of Libbey.
Libbey Inc. has reported results for the first quarter-ended 31 March 2013, in revised reporting segments to align with the company’s previously announced regionally focused organizational structure which will enable Libbey to better serve customers across the globe. Under this structure, Libbey will now report financial results for the Americas; Europe, the Middle East and Africa (EMEA); and Other. In addition, sales and segment EBIT reflect a change to end market reporting that has sales and related costs in segment EBIT based on the geographical destination of the sale. The revised segment results do not affect the company’s previously reported consolidated financial results.
Sales for the first quarter were USD183.5 million, compared to USD 187.8 million for the first quarter of 2012, a decrease of 2.3% (2.8% excluding currency fluctuation).
Net income grew to USD 2.0 million from USD 0.6 million in the first quarter of 2012.
Adjusted income from operations grew 9.9%, compared to the first quarter of 2012, increasing to an all-time first quarter record of USD 16.4 million from USD 14.9 million in the year-ago quarter.
Adjusted EBITDA increased 5.2% to a record for any first quarter of USD 26.2 million (after adjusting for USD 4.3 million of restructuring charges relating to our previously announced plans to discontinue production of certain glassware in North America and reduce manufacturing capacity at our Shreveport, Louisiana, manufacturing facility), compared to USD 24.9 million for the first quarter of 2012.
“Overall, we are pleased with this quarter’s results. While disappointed with a sales decline in the US and Canada, we are very encouraged by our significant sales increase in Mexico and Latin America. The critical story, however, is our success in cost reductions, which resulted in record adjusted income from operations and adjusted EBITDA for any first quarter ever. This performance is even more notable, given that we had an extensive amount of maintenance activity which led to underutilized capacity during the quarter,” said Stephanie A. Streeter, chief executive officer of Libbey Inc.
“We are building a track record of success improving our cost structure, focusing on productivity improvements, leveraging our advantaged businesses and strengthening our balance sheet. We believe this solid start to the year should enable continued improved financial and operational performance for the remainder of 2013.”
Sales in the Americas segment were USD 123.5 million, compared to USD 129.7 million in the first quarter of 2012, a decrease of 4.7% (5.2% excluding currency fluctuation). Sales performance was led by a 4.5% increase in sales within our Mexican and Latin American end market (2.8% excluding currency impact), offset by an 8.6% decrease within our US and Canada end market.
Sales in the EMEA segment increased 11.2% (10.4% excluding currency impact) to USD 34.2 million, compared to USD 30.8 million in the first quarter of 2012.
Sales in Other were USD 25.7 million, compared to USD 27.4 million in the prior-year quarter. This decrease was largely the result of lower sales in the Asia Pacific end market.
Interest expense decreased by USD 2.0 million to USD 8.4 million, compared to USD 10.4 million in the year-ago period, primarily driven by lower interest rates.
Our effective tax rate was 25.0% for the quarter-ended 31 March 2013, compared to 83.7% for the quarter-ended 31 March 2012. The effective tax rate was influenced by jurisdictions with recorded valuation allowances and changes in the mix of earnings with differing statutory rates.
As of 31 March 2013, working capital, defined as inventories and accounts receivable less accounts payable, was USD 196.4 million, compared to USD 191.7 million at 31 March 2012. This increase in working capital resulted primarily from higher inventories.
Libbey reported that it had available capacity of USD 73.3 million under its ABL credit facility as of 31 March 2013, with no loans currently outstanding. The company also had cash on hand of USD 45.9 million at 31 March 2013.
Sherry Buck, chief financial officer added, “This quarter, the fifth consecutive quarter of margin and earnings improvement, represents a solid start to the year. The first quarter results, along with our previously announced plan to repay USD 45 million of our senior notes in May 2013, puts us solidly on track to further reduce costs, improve cash flow and strengthen our balance sheet in 2013 while investing to grow our business.”