Libbey announces fourth quarter and full-year 2017 financial results

Libbey has announced its results for the fourth quarter ended 31 December 2017

Libbey reports fourth quarter net sales growth of 8.8%; introduces fiscal year 2018 outlook.

Libbey Inc., one of the largest glass tableware manufacturers in the world, has reported results for the fourth quarter ended 31 December 2017.
Net sales in the fourth quarter of 2017 were USD 224.0 million, compared to USD 205.8 million in the prior-year fourth quarter, an 8.8% increase (or an increase of 6.7%, excluding a USD 4.4 million currency impact.)
Net loss in the fourth quarter 2017 was USD 7.2 million, compared to a net loss of USD 2.2 million in fourth quarter 2016. The fourth quarter 2017 included a USD 6.7 million unfavourable revaluation of net deferred tax assets as a result of the latest US tax reform.
Adjusted EBITDA in fourth quarter 2017 was USD 24.2 million, including a USD 2.8 million unfavourable currency impact related to the company’s tax provision, compared to USD 23.5 million in fourth quarter 2016.
“We were pleased to see the business return to sales growth during the fourth quarter. This and several other performance indicators give us confidence that our strategies to drive long-term, profitable growth are gaining traction,” said Chief Executive Officer William Foley. “We saw improved sales contributions from both our new e-commerce platform and new products during the fourth quarter. Profitability in our EMEA and Latin America segments also improved for a second consecutive quarter, and we’re continuing to implement additional opportunities to improve our margin profile.”
Net sales in the US and Canada segment increased 8.2%, driven by segment volume and favourable price and mix of product sold in the foodservice channel.
In Latin America, net sales increased 14.7% (an increase of 11.3% excluding currency fluctuation) as a result of higher net sales in the business-to-business and retail channels, primarily due to favourable price and mix of product sold and a favourable currency impact, partially offset by expected lower volume as a result of margin improvement initiatives.
Net sales in the EMEA segment were favourably impacted by price and mix of product sold in the foodservice and retail channels, as well as a USD 1.9 million favourable currency impact for the fourth quarter of 2017 versus the prior-year quarter.
Net sales in Other were down primarily as a result of lower sales in China.
The company’s effective tax rate was 202.4% for the fourth quarter of 2017, compared to 165.0% in the prior-year quarter. The high effective tax rates relative to the US statutory rate of 35% were driven by several items, including a 2017 charge of USD 6.7 million related to the revaluation of net deferred tax assets caused by the U.S. tax reform, low pre-tax income relative to unfavourable tax adjustments for non-deductible expenses, the timing and mix of pre-tax income earned in tax jurisdictions with varying tax rates, and the impact of foreign exchange gains and losses.
Net sales for full-year 2017 were USD 781.8 million, compared to USD 793.4 million for full-year 2016, a decrease of 1.5% (or a decrease of 1.6% excluding the USD 1.1 million currency impact).
Net loss for full-year 2017 was USD 93.4 million, compared to net income of USD 10.1 million during full-year 2016; 2017 included a USD 79.7 million non-cash goodwill impairment charge associated with the Latin America segment, and a USD 6.7 million charge related to the revaluation of net deferred tax assets as a result of the latest US tax reform.
Adjusted EBITDA was USD 70.6 million for full-year 2017, compared to USD 111.6 million for full-year 2016.
Net sales in the US and Canada segment were lower due to lower price and mix of product sold, partially offset by increased volumes and a favourable currency impact.
In Latin America, net sales declined as a result of lower net sales across the retail and business-to-business channels, specifically due to lower volume and unfavourable currency. The decline was partially offset by favourable price and mix.
Net sales in the EMEA segment increased primarily as a result of favourable price and mix of product sold, partially offset by lower volumes and an unfavourable currency impact.
Net sales in Other were down primarily as a result of lower sales in China.
The company’s effective tax rate was (20.4)% for 2017, compared to 63.7% in the year-ago period. The change in the effective tax rate was driven by several items, including the non-deductible goodwill impairment charge, a 2017 charge of USD 6.7 million related to the revaluation of net deferred tax assets caused by the US tax reform, low pre-tax income relative to unfavourable tax adjustments for non-deductible expenses, the timing and mix of pre-tax 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 91.9 million under its ABL credit facility at 31 December 2017, with no loans outstanding and cash on hand of USD 24.7 million.
At 31 December 2017, Trade Working Capital, defined as inventories and accounts receivable less accounts payable, was USD 199.5 million, an increase of USD 16.0 million from USD 183.5 million at 31 December 2016. The increase was a result of higher inventories and higher accounts receivable, partially offset by higher accounts payable. USD 7.8 million of the increase in Trade Working Capital was attributable to the effect of currency.
The company is anticipating improved global macroeconomic conditions in 2018. In addition, the company expects that our industry and competitive trends will improve, but remain challenged. As such, outlook for full-year 2018 includes the following:
* Net sales increase in the low single digits, compared to the full-year 2017, on a reported basis
* Adjusted EBITDA margins of 10% to 11%
* Capital expenditures in the range of USD 50 million to USD 55 million
* Selling, general and administrative expense as a percent of net sales around 17%
For the first half of 2018, the company projects the following:
* Net sales increase in the low single digits, when compared to the first half of 2017, on a reported basis
* Adjusted EBITDA margins of 8.5% to 9.5%
Jim Burmeister, vice president, chief financial officer, commented, “We successfully amended and extended our ABL credit facility during the fourth quarter and our liquidity remains strong. Over the course of fiscal year 2017, we paid USD 24.4 million on our Term Loan B debt, and plan to continue to prioritize debt reduction with excess cash flow over the near-term horizon.”