Libbey reports first-quarter results

Libbey Inc. announced on 30 April that its net sales were USD 157.9 million in the first quarter of this year ended 31 March 2009, compared to USD 187.3 million in the same quarter of 2008. Libbey als…

Libbey Inc. announced on 30 April that its net sales were USD 157.9 million in the first quarter of this year ended 31 March 2009, compared to USD 187.3 million in the same quarter of 2008. Libbey also reported a net loss of USD 27.9 million, or USD 1.89 per diluted share, for the first quarter, compared to a net loss of USD 3.5 million, or USD 0.24 per diluted share, in the first quarter of 2008. As of 31 March 2009, working capital, defined as inventories and accounts receivable less accounts payable, dropped USD 13.8 million from USD 206.9 million to USD 193.1 million compared to 31 December 2008. This is mainly the result of significantly lower inventories and reduced receivables, as Libbey continues to be successful in cash management efforts. Working capital as a percentage of the last 12 months net sales was 24.7%, which is the lowest percentage in over ten years. Free cash flow was USD 9.5 million, compared to a use of USD 37.5 million in the same quarter of 2008. Primary contributors were better working capital performance and lower capital expenditures, as well as the fact that a USD 19.6 million payment to Vitro S.A. was also made forthe purchase of Crisa in 2006 during the first quarter of 2008,. This was the highest first quarter free cash flow generation in over ten years, a USD 16.5 million improvement compared to the fourth quarter of 2008. Libbey also has available capacity of USD 49.0 million under its Asset Based Loan (ABL) credit facility as of 31 March 2009, and cash on hand of USD 16.5 million. At 31 December 2008 these figures were USD 44.6 million for availability and USD 13.3 million for cash on hand. Total debt outstanding also saw a decrease of USD 9.9 million during the quarter. Libbey recorded pre-tax special charges of USD 4.9 million, or USD 0.34 per share in the first quarter of 2009, which included pre-tax restructuring and other charges of USD 2.4 million associated with the recent closure of its ceramic dinnerware manufacturing facility, and the planned closure of its distribution centre in May 2009, first announced on 9 December 2008. These charges mainly included inventory write-downs, depreciation expense, employee severance, and other expenses, while about USD 0.2 million were cash payments during the first quarter of 2009. The figure of USD 2.5 million regards a pension settlement charge coming from lump sum payments to retirees during the first quarter of 2009. Libbey“s net sales in the first quarter were USD 157.9 million, compared to USD 187.3 million in the 2008 quarter. North American Glass net sales came to USD 108.7 million, compared to USD 127.5 million in the same quarter of 2008. These results were due to a reduction of more than 29% in Crisa product sales and decreased sales of 7% of retail glassware and 4% in foodservice glassware to US and Canadian customers. Foodservice sales to US glassware customers decreased by less than 1%. About 14% of the more than 29% decrease at Crisa was caused by the devaluation of the Mexican peso. These same decreases were partially offset by increased shipments to US business-to-business customers, which saw an increase of more than 2%. Other sales in North American dropped USD 5.2 million, as shipments to Syracuse China, World Tableware and Traex customers decreased about 20%. International sales saw a decrease of almost 21% caused by reduced sales to Royal Leerdam and Crisal customers, partially offset by increased sales to Libbey China customers of 5%. Approximately 50% of the decreased sales in the International segment are related to an unfavourable currency impact on European sales. International sales dropped almost 11%, not including the currency impact. Libbey reported a loss from operations of USD 12.1 million during the quarter, while income from operations in the first quarter of 2008 was USD 9.5 million, and normalized loss from operations was USD 7.3 million. The decrease in normalized income from operations were caused by reduced capacity utilization, reflecting company efforts to reduce inventories, and lower sales. These factors were, in any case, partially offset by a decrease in spending on labour, raw materials, packaging, repairs, natural gas, electricity, distribution costs and a reduction of USD 1.0 million in selling, general and administrative expenses. Loss before interest and taxes was USD 12.1 million, compared to earnings before interest and taxes (EBIT) of USD 10.2 million in the same quarter of 2008. Normalized EBIT for the first quarter of 2009 saw a loss of USD 7.1 million, while normalized EBIT was a loss of USD 6.1 million for North American Glass, compared to normalized EBIT of USD 7.1 million in the same quarter of 2008, caused by lower sales and lower capacity utilization. North American Other reported normalized EBIT for the first quarter of 2009 of USD 1.3 million, a decrease from USD 3.8 million in the same quarter of 2008. The decrease in normalized EBIT in 2009 was caused by lower income from World Tableware, Syracuse China and Traex operations. The International segment reported an EBIT loss of USD 2.3 million, compared to an EBIT loss of USD 0.7 million in the 2008 first quarter quarter, mainly related to lower capacity utilization at Libbey China and a decrease in international sales. Normalized earnings before interest, taxes, depreciation and amortization (EBITDA) at Libbey, were USD 3.9 million, compared to normalized EBITDA of USD 21.5 million in the year-ago quarter, due to the lower income from operations. Interest expense came to USD 17.2 million, consistent with the year-ago-period, while increased debt, mainly caused by payment-in-kind (PIK) notes, was offset by lower variable interest rates. The effective tax rate for the quarter dropped to 4.7%, compared to 49.8% in the same quarter of 2008,mainly caused by the recognition of valuation allowances in the United States, the Netherlands and Portugal. Moreover, the effective tax rate has also been affected by changes in the mix of earnings in countries with differing statutory tax rates, changes in accruals related to uncertain tax positions, tax planning structures and changes in tax laws. Libbey reported net loss of USD 27.9 million, or USD 1.89 per diluted share, compared to a net loss of USD 3.5 million, or diluted loss per share of USD 0.24, in the first quarter of 2008.