Libbey reports results for full year and fourth quarter-ended 31 December 2013

45.9% improvement in income from operations to USD 19.1 million for the fourth quarter of 2013, compared to USD 13.1 million in the prior-year quarter. Adjusted income from operations of USD 26.7 million and adjusted earnings before interest, taxes, depreciation and amortization (adjusted EBITDA) of USD 37.6 million were both records for any fourth quarter in company history.

Libbey Inc. has reported results for the full year and fourth quarter-ended 31 December 2013, presenting its results with an additional reporting segment. The US Sourcing segment includes US sales of sourced ceramic dinnerware, metal tableware, hollowware, and serveware. Libbey will now report financial results for the Americas; Europe, the Middle East and Africa (EMEA); US Sourcing; and Other. The addition of US Sourcing reflects the increasing importance of this segment where sales grew 11.5% during the fourth quarter of 2013 and 8.4% for the full year.
Sales for the fourth quarter were USD 221.0 million, compared to USD 219.1 million for the fourth quarter of 2012, an increase of 0.9% (0.1% excluding currency fluctuation).
Gross profit for the fourth quarter was USD 47.7 million, compared to USD 44.6 million for the fourth quarter of 2012, an increase of 7.1%.
Adjusted gross profit for the quarter was USD 53.8 million, compared to USD 45.5 million in the prior-year quarter. A 24.3% adjusted gross profit margin was achieved during the fourth quarter of 2013, compared to 20.8% in the fourth quarter of 2012 and was the highest fourth quarter adjusted gross profit margin percentage since 2000.
The adjusted EBITDA margin was 17.0%, compared to 13.6% in the prior-year fourth quarter.
“Fourth quarter revenues were in line with our expectations and, along with the benefits of our much improved cost platform, allowed us to achieve a 25.9% increase in adjusted EBITDA, compared to the fourth quarter of 2012. We remain on track with our longer-term goals, including increasing profitability, increasing cash generation and reducing leverage. Our restructuring initiatives over the last two years have strengthened our cost position considerably, and we are now focused on maintaining the hard won margin increase and profitably growing our business,” said Stephanie A. Streeter, chief executive officer of Libbey Inc. Streeter continued, “We look forward to a stronger sales environment in 2014 and the opportunity to better leverage our global capabilities.”
Sales in the Americas segment were USD 154.1 million, compared to USD 156.3 million in the fourth quarter of 2012, a decrease of 1.4%. This was comprised of a 1.9% increase in sales in the company’s foodservice channel, a decrease of 10.0% in retail and a 9.9% increase in the business-to-business channel.
Sales in the EMEA segment increased 8.2% (3.4% excluding currency impact) to USD 38.7 million, compared to USD 35.8 million in the fourth quarter of 2012.
Sales in US Sourcing were USD 19.8 million in the fourth quarter of 2013, compared to USD 17.7 million in the prior-year quarter, as sales of World Tableware and Syracuse China flatware and dinnerware increased 11.5%.
Sales in Other were USD 8.5 million, compared to USD 9.2 million in the prior-year quarter. This decrease was the result of an 8.4% decrease in sales (10.7% excluding currency impact) in the Asia Pacific region.
Earnings before interest and income taxes (EBIT) increased to USD 23.9 million in the fourth quarter of 2013, compared to USD 13.6 million for the fourth quarter of 2012.
Adjusted EBITDA of USD 37.6 million (see Tables 1 and 3) was USD 7.7 million more than the USD 29.9 million reported in the prior-year quarter, an increase of 25.9%. The primary factors contributing to the improvement in adjusted EBITDA from the prior-year quarter include higher capacity utilization, adjusted for the furnace malfunction in Toledo, and lower labour and benefit costs partially offset by increased energy costs and higher direct material costs.
Interest expense decreased by USD 0.9 million to USD 7.7 million, compared to USD 8.6 million in the year-ago period, primarily driven by lower debt.
Libbey’s effective tax rate was 42.5% for the quarter-ended 31 December 2013, compared to 67.7% for the quarter-ended December 31, 2012. The effective tax rate was influenced by foreign jurisdictions with differing statutory rates, the impact of tax legislation in certain foreign jurisdictions, accruals related to uncertain tax positions, foreign withholding tax and other activity in jurisdictions with recorded valuation allowances.
Sales for the full year 2013 were USD 818.8 million, compared to USD 825.3 million for 2012, a decrease of 0.8% (1.8% excluding currency fluctuation).
Net income for 2013 grew to USD 28.5 million, compared to net income of USD 7.0 million during the full year 2012.
EBIT increased to USD 73.7 million during 2013, compared to USD 50.4 million for 2012.
Adjusted EBITDA was an all-time record USD 134.4 million, compared to USD 132.4 million for the year ending 31 December 2012.
The adjusted EBITDA margin for the full year 2013 grew to 16.4%, which was the highest percentage in a full year since 2002, from 16.0% in 2012.
Sales in the Americas segment were USD 560.8 million, compared to USD 580.7 million in 2012, a decrease of 3.4% (4.0% excluding currency fluctuation). This was comprised of a 0.8% decrease in sales in our foodservice channel, a decrease of 7.7% in retail and a 0.2% increase in the business-to-business channel.
Sales in the EMEA segment increased 8.7% (5.4% excluding currency impact) to USD 146.5 million, compared to USD 134.8 million in 2012.
Sales in US Sourcing were USD 78.3 million in 2013, compared to USD 72.2 million in 2012, an increase of 8.4% in sales of World Tableware and Syracuse China flatware and dinnerware products.
Sales in Other were USD 33.2 million, compared to USD 37.5 million in the prior-year period. This decrease was the result of an 11.5% decrease in sales (13.0% excluding currency impact) in the Asia Pacific region.
Interest expense in 2013 decreased by USD 5.7 million to USD 32.0 million, compared to USD 37.7 million in 2012, primarily driven by lower interest rates.
Libbey’s effective tax rate was 31.8% for the year-ended 31 December 2013, compared to 45.0% for the year-ended 31 December 2012. The effective tax rate was influenced by foreign jurisdictions with differing statutory rates, the impact of tax legislation in certain foreign jurisdictions, accruals related to uncertain tax positions, foreign withholding tax and other activity in jurisdictions with recorded valuation allowances.
Libbey continued to strengthen its balance sheet as it realized a net reduction in debt outstanding of USD 10.2 million during the fourth quarter, primarily as the result of debt repayment in China.
Libbey reported that it had available capacity of USD 70.5 million under its ABL credit facility as of 31 December 2013, with no loans currently outstanding. The company also had cash on hand of USD 42.2 million at 31 December 2013.
As of 31 December 2013, working capital, defined as inventories and accounts receivable excluding a USD 5.0 million receivable in insurance claims less accounts payable (see Table 5), was USD 173.1 million, compared to USD 172.7 million at 31 December 2012. Working capital remained flat with the prior year, as the result of higher inventories and receivables offset by higher accounts payable.
Sherry Buck, chief financial officer, added, “We continued to make progress on our financial goals, as outlined in our Libbey 2015 strategy, in adjusted EBITDA margins, leverage ratio and Return on Invested Capital (ROIC). We have a strong foundation to further increase our adjusted EBITDA margins in 2014 as we realize the benefits of our North American capacity realignment.”
Libbey reported that Hard Rock International recently named Libbey as its 2013 Culinary Partner of the Year. This award is presented to the outstanding vendor partner among all of the equipment and supplies, small wares and food companies Hard Rock works with globally.