Libbey Inc. (NYSE MKT: LBY) has reported its results for the first quarter ended March 31, 2016.
First Quarter Financial Highlights
Net sales for first quarter 2016 were $182.8 million, compared to $187.4 million in first quarter 2015, a decrease of 2.4 percent (or an increase of 0.5 percent excluding currency fluctuation).
Net income for first quarter 2016 was $0.7 million, compared to net income of $3.1 million in the prior-year first quarter. Adjusted net income (see Table 1) for first quarter 2016 was $3.6 million, flat compared to the same period of 2015.
Adjusted EBITDA for first quarter 2016 was $22.5 million, compared to $19.7 million in the prior-year first quarter.
The Company reiterates full-year expectations to generate sales growth of approximately 1 percent, as reported, and Adjusted EBITDA margins of approximately 14 percent.
“During the first quarter of 2016, our core foodservice channel delivered its 12th consecutive quarter of volume growth, despite continued softness in restaurant traffic,” said William A. Foley, chairman and chief executive officer of Libbey Inc. “This further demonstrates our market strength and continued commitment to this important part of our business. Improving performance in our other channels continues to be a priority and is critical to the long-term success and potential growth profile of our business. Over the past several months, we have made initial strides across all of our key strategic priority areas, including improving our capability to develop innovative new products, strengthening relationships with our customers across the globe and simplifying our business to enable it to operate more efficiently and effectively. We are actively pursuing strategic improvements to address these needs and anticipate that this work will progress for the balance of the year.”
First Quarter Segment Sales and Operational Review
Net sales in the U.S. and Canada segment were $113.1 million, compared to $109.9 million in first quarter 2015, an increase of 2.9 percent. Foodservice sales remained strong during the quarter, growing 8.9 percent versus last year, partially offset by a reduction in net sales in the business-to-business channel. Retail sales were in-line with the prior-year quarter.
Net sales in the Latin America segment were $34.2 million, compared to $39.9 million in first quarter 2015, a decrease of 14.1 percent (or a decrease of 2.9 percent excluding currency impact), due to weakness in the business-to-business and foodservice channels, more than offsetting a 1.0 percent (constant currency) increase in net sales in the retail channel.
Net sales in the EMEA segment were $26.6 million, compared to $28.5 million in first quarter 2015, a decrease of 6.6 percent (or a decrease of 4.7 percent excluding currency impact), due to softness in the business-to-business channel that more than offset a 5.1 percent (constant currency) growth in net sales in the retail channel.
Net sales in Other were $8.9 million in first quarter 2016, compared to $9.1 million in the comparable prior-year quarter, reflecting a decrease of 2.5 percent (or an increase of 3.2 percent excluding currency impact) in net sales in the Asia Pacific region.
The Company’s effective tax rate was (23.8) percent for the quarter ended March 31, 2016, compared to 29.3 percent for the quarter ended March 31, 2015. The change in the effective tax rate was primarily driven by lower pre-tax income in 2016 as compared with the first quarter of 2015. Other less material factors were 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 $91.4 million under its ABL credit facility at March 31, 2016, with no loans currently outstanding. The Company also had cash on hand of $25.6 million at March 31, 2016.
At March 31, 2016, working capital, defined as inventories and accounts receivable less accounts payable, was $216.7 million, an increase of $17.8 million, compared to $198.9 million at March 31, 2015 (see Table 4). The increase was a result of higher inventories and lower accounts payable, partially offset by lower accounts receivable.
Sherry Buck, chief financial officer, commented: “The first quarter saw a continuation of many trends we have witnessed over the last few quarters. Our U.S. and Canada segment saw fairly stable conditions, while our international businesses continued to be impacted by an extremely competitive environment. We are on track to return fifty percent of free cash flow to shareholders, from 2015 through 2017, through a combination of our increased dividend and share repurchases. We will continue to take a balanced approach to capital allocation throughout 2016. This includes the maintenance of our strong and flexible financial profile, which includes the goal of maintaining a leverage ratio in the range of 2.5x to 3.0x net debt to Adjusted EBITDA over the long-term.”
More information is available from the company website: www.libbey.com