Libbey Inc. Announces Third-Quarter Results

TOLEDO, Ohio, Nov. 6, 2018 /PRNewswire/ -- Libbey Inc. LBY, one of the world's largest glass tableware manufacturers, today reported results for the third quarter ended September 30, 2018.

Third-quarter 2018 Financial & Operating Highlights

  • Net sales were $190.8 million, compared to $187.3 million in the prior-year period, a 1.8 percent increase (or an increase of 2.9 percent, excluding a $2.0 million currency impact).
  • Net loss was $5.0 million, compared to a net loss of $78.8 million in the third quarter of 2017. Included in third-quarter 2017 results was a $79.7 million non-cash goodwill impairment charge associated with the Latin America segment.
  • New products, defined as products introduced within the previous 36 months, contributed $15.9 million in sales, or 8.3 percent of total net sales, during the third quarter.
  • E-commerce sales were approximately 12.0 percent of total U.S. & Canada retail sales, an increase of 46.4 percent compared to the third quarter of 2017.
  • Adjusted EBITDA (see Table 1) was $16.1 million, compared to $20.0 million in the third quarter of 2017.

"We were pleased to see many of the positive trends we observed across our business during the first half of the year continue during the third quarter, and we were able to deliver a fourth consecutive quarter of year-over-year net sales growth," said Chief Executive Officer William Foley. "Our efforts to improve product margins remain on track, driven by our new products and e-commerce initiatives along with favorable price and mix. We also believe price competition across the industry remains in balance, and we're maintaining our track record of outperforming foodservice industry sales growth, which gives us confidence that our market share is increasing."

Foley continued, "Our performance in the back half of this year has been impacted by increased storage costs associated with higher inventory, increased utility costs and production downtime to reduce inventory. We have actions in place to lower costs and our inventory levels while ensuring our best-in-class service for customers. In addition, currency translation, most notably in Latin America, had a significant impact on third-quarter results compared to our prior year. Despite these short-term impacts, we're entering the upcoming holiday selling season with great momentum behind our products in the marketplace, and we expect to enter fiscal year 2019 well positioned to stay on track with our long-term financial goals."

Three months ended September 30,

(dollars in thousands)



Net Sales



Increase/(Decrease)



Currency

Effects



Constant Currency Sales Growth (Decline)





2018



2017



$ Change



% Change





U.S. & Canada



$

115,304





$

112,252





$

3,052





2.7

%



$

(5)





2.7

%

Latin America



35,406





35,339





67





0.2

%



(1,449)





4.3

%

EMEA



33,289





33,743





(454)





(1.3)

%



(397)





(0.2)

%

Other



6,776





6,005





771





12.8

%



(150)





15.3

%

Consolidated



$

190,775





$

187,339





$

3,436





1.8

%



$

(2,001)





2.9

%

 

  • Net sales in the U.S. & Canada segment increased 2.7 percent, driven by favorable price and product mix sold in the foodservice and business-to-business channels, as well as improved channel mix and volume in the segment.
  • In Latin America, net sales increased 0.2 percent (an increase of 4.3 percent excluding currency fluctuation) as a result of higher volume and favorable pricing, offset primarily by unfavorable currency impacts.
  • Net sales in the EMEA segment decreased 1.3 percent driven primarily by lower volume. Partially offsetting the decrease was favorable price and product mix on product sold across all channels, as well as favorable channel mix.
  • Net sales in Other increased 12.8 percent as a result of higher sales volume and favorable price and mix in China.
  • The Company's effective tax rate was (54.9) percent for the third quarter of 2018, compared to (3.6) percent in the prior-year quarter. The change in the effective tax rate was driven by differing levels of pretax income, significantly higher non-deductible expenses in the prior-year quarter including a $79.7 million impairment of goodwill in our Mexico reporting unit, and the timing and mix of pretax income earned in tax jurisdictions with varying tax rates differing from that forecasted for the full year.

First Nine Months of 2018 Financial & Operating Highlights

Nine months ended September 30,

(dollars in thousands)



Net Sales



Increase/(Decrease)



Currency

Effects



Constant Currency Sales Growth (Decline)





2018



2017



$ Change



% Change





U.S. & Canada



$

351,719





$

343,452





$

8,267





2.4

%



$

72





2.4

%

Latin America



110,029





102,564





7,465





7.3

%



(338)





7.6

%

EMEA



103,712





90,128





13,584





15.1

%



6,344





8.0

%

Other



20,762





21,703





(941)





(4.3)

%



838





(8.2)

%

Consolidated



$

586,222





$

557,847





$

28,375





5.1

%



$

6,916





3.8

%

 

  • Net sales in the U.S. & Canada segment increased 2.4 percent, driven by favorable price and product mix sold, as well as higher volume, partially offset by unfavorable channel mix.
  • In Latin America, net sales increased 7.3 percent (an increase of 7.6 percent excluding currency fluctuation) as a result of higher volume and favorable pricing. Partially offsetting the increase is unfavorable product mix in the retail channel.
  • Net sales in the EMEA segment increased 15.1 percent and were favorably impacted by $6.3 million of currency. Also leading to the year-over-year improvement is favorable price and product mix on product sold in all three channels as well as higher sales volume in those channels.
  • Net sales in Other were down primarily as a result of lower sales volume in China, partially offset by favorable price and product mix and favorable currency impacts.
  • The Company's effective tax rate was 314.3 percent for the first nine months of 2018, compared to (2.0) percent in the year-ago period. The change in the effective tax rate was driven by differing levels of pretax income, significantly higher non-deductible expenses in the prior year (including a $79.7 million impairment of goodwill in our Mexico reporting unit) and the timing and mix of pretax income earned in tax jurisdictions with varying tax rates differing from that forecasted for the full year. Cash taxes paid for the first nine months of 2018 and 2017 were approximately $7.2 million and $2.6 million, respectively, with the increase principally attributable to higher pretax income in Mexico.

Balance Sheet and Liquidity

  • The Company had remaining available capacity of $59.6 million under its ABL credit facility at September 30, 2018, with $32.0 million in loans outstanding and cash on hand of $19.1 million.
  • At September 30, 2018, Trade Working Capital (see Table 3), defined as inventories and accounts receivable less accounts payable, was $228.7 million, an increase of $13.1 million from $215.6 million at September 30, 2017. The increase was a result of higher inventories, higher accounts receivable and lower accounts payable.

Outlook

Today, the Company affirmed its previously provided full-year 2018 sales outlook and expects to achieve the lower end of its full-year profitability outlook. As of the date of this news release, the Company now expects:

  • Net sales increase in the low-single digits, compared to full-year 2017 sales, on a reported basis;
  • Adjusted EBITDA margins (see Table 6) at the lower end of the previously communicated 10 percent to 11 percent range;
  • Capital expenditures near $50 million, which is at the low end of the previously estimated $50 million to $55 million range; and
  • Adjusted selling, general and administrative expense in the range of 15.5 percent to 16.0 percent of net sales.

Jim Burmeister, senior vice president, chief financial officer, commented, "Cost controls implemented across the business have enabled us to improve our full-year outlook for selling, general, and administrative expenses as a percent of net sales for the second consecutive quarter. These improvements will offset the higher operating costs previously mentioned and improve financial performance in the fourth quarter. We also expect capital spending to come in at the low end of our previously communicated range which will help offset higher inventory. In addition to our focus on improving operating performance, we remain committed to pursuing a capital allocation strategy that assigns greater priority to debt reduction while maintaining appropriate levels of investment in strategic initiatives that are expected to enhance long-term value for shareholders."

Webcast Information

Libbey will hold a conference call for investors on Tuesday, November 6, 2018, at 11 a.m. Eastern Standard Time. The conference call will be webcast live on the Internet and is accessible from the Investor Relations section of www.libbey.com. To listen to the call, please go to the website at least 10 minutes early to register, download and install any necessary software.

About Libbey Inc.

Based in Toledo, Ohio, Libbey Inc. is one of the largest glass tableware manufacturers in the world. Libbey Inc. operates manufacturing plants in the U.S., Mexico, China, Portugal and the Netherlands. In existence since 1818, the Company supplies tabletop products to retail, foodservice and business-to-business customers in over 100 countries. Libbey's global brand portfolio, in addition to its namesake brand, includes Libbey Signature®, Master's Reserve®, Crisa®, Royal Leerdam®, World® Tableware, Syracuse® China, and Crisal Glass®. In 2017, Libbey Inc.'s net sales totaled $781.8 million. Additional information is available at www.libbey.com.

Use of Non-GAAP Financial Measures

To supplement the condensed financial statements presented in accordance with U.S. Generally Accepted Accounting Principles (U.S. GAAP), we use non-GAAP measures of certain components of financial performance. These non-GAAP measures include Adjusted EBITDA, Adjusted EBITDA Margin, Free Cash Flow, Trade Working Capital, Adjusted Selling, General & Administrative Expense (Adjusted SG&A), Adjusted SG&A Margin and our Debt Net of Cash to Adjusted EBITDA Ratio. Reconciliations to the nearest U.S. GAAP measures of all non-GAAP measures included in this press release can be found in the tables below.

Our non-GAAP measures, as defined below, are used by analysts, investors and other interested parties to compare our performance with the performance of other companies that report similar non-GAAP measures. Libbey believes these non-GAAP measures provide meaningful supplemental information regarding financial performance by excluding certain expenses and benefits that may not be indicative of core business operating results. We believe the non-GAAP measures, when viewed in conjunction with U.S. GAAP results and the accompanying reconciliations, enhance the comparability of results against prior periods and allow for additional transparency of financial results and business outlook. In addition, we use non-GAAP data internally to assess performance and facilitate management's internal comparison of our financial performance to that of prior periods, as well as trend analysis for budgeting and planning purposes. The presentation of our non-GAAP measures is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with U.S. GAAP. Furthermore, our non-GAAP measures may not be comparable to similarly titled measures reported by other companies and may have limitations as an analytical tool. We define our non-GAAP measures as follows:

  • We define Adjusted EBITDA and Adjusted EBITDA Margin as U.S. GAAP net income (loss) plus interest expense, provision for income taxes, depreciation and amortization, and special items, when applicable, that Libbey believes are not reflective of our core operating performance.
  • We define Trade Working Capital as net accounts receivable plus net inventories less accounts payable.
  • We define Adjusted SG&A and Adjusted SG&A Margin as U.S. GAAP selling, general and administrative expenses less special items that Libbey believes are not reflective of our core operating performance.
  • We define our Debt Net of Cash to Adjusted EBITDA Ratio as gross debt before unamortized discount and finance fees, less cash and cash equivalents, divided by last twelve months Adjusted EBITDA (defined above).

Constant Currency

We translate revenue and expense accounts in our non-U.S. operations at current average exchange rates during the year. References to "constant currency," "excluding currency impact" and "adjusted for currency" are considered non-GAAP measures. Constant currency references regarding net sales reflect a simple mathematical translation of local currency results using the comparable prior period's currency conversion rate. Constant currency references regarding Adjusted EBITDA and Adjusted EBITDA Margin comprise a simple mathematical translation of local currency results using the comparable prior period's currency conversion rate plus the transactional impact of changes in exchange rates from revenues, expenses and assets and liabilities that are denominated in a currency other than the functional currency. We believe this non-GAAP constant currency information provides valuable supplemental information regarding our core operating results, better identifies operating trends that may otherwise be masked or distorted by exchange rate changes and provides a higher degree of transparency of information used by management in its evaluation of our ongoing operations. These non-GAAP measures should be viewed in addition to, and not as an alternative to, the reported results prepared in accordance with U.S. GAAP. Our currency market risks include currency fluctuations relative to the U.S. dollar, Canadian dollar, Mexican peso, euro and RMB.

Caution on Forward-Looking Statements

This press release includes forward-looking statements as defined in Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements reflect only the Company's best assessment at this time and are indicated by words or phrases such as "goal," "expects," " believes," "will," "estimates," "anticipates," or similar phrases. Investors are cautioned that forward-looking statements involve risks and uncertainty and that actual results may differ materially from these statements. Investors should not place undue reliance on such statements. These forward-looking statements may be affected by the risks and uncertainties in the Company's business. This information is qualified in its entirety by cautionary statements and risk factor disclosures contained in the Company's Securities and Exchange Commission filings, including the Company's report on Form 10-K filed with the Commission on March 1, 2018. Important factors potentially affecting performance include but are not limited to risks related to increased competition from foreign suppliers endeavoring to sell glass tableware, ceramic dinnerware and metalware in our core markets; global economic conditions and the related impact on consumer spending levels; major slowdowns or changes in trends in the retail, travel, restaurant and bar or entertainment industries that impact demand for our products; inability to meet the demand for new products; material restructuring charges related to involuntary employee terminations, facility abandonments, or other various restructuring activities; significant increases in per-unit costs for natural gas, electricity, freight, corrugated packaging, and other purchased materials; our ability to borrow under our ABL credit agreement; high levels of indebtedness; high interest rates that increase the Company's borrowing costs or volatility in the financial markets that could constrain liquidity and credit availability; protracted work stoppages related to collective bargaining agreements; increases in expense associated with higher medical costs, increased pension expense associated with lower returns on pension investments and increased pension obligations; devaluations and other major currency fluctuations relative to the U.S. dollar and the euro that could reduce the cost competitiveness of the Company's products compared to foreign competition; the effect of exchange rate changes to the value of the euro, the Mexican peso, the RMB and the Canadian dollar and the earnings and cash flows of our international operations, expressed under U.S. GAAP; the effect of high levels of inflation in countries in which we operate or sell our products; the inability to achieve savings and profit improvements at targeted levels in the Company's operations or within the intended time periods; the failure of our investments in e-commerce, new technology and other capital expenditures to yield expected returns; failure to prevent unauthorized access, security breaches and cyber attacks to our information technology systems; compliance with, or the failure to comply with, legal requirements relating to health, safety and environmental protection; our failure to protect our intellectual property; and the inability to effectively integrate future business we acquire or joint ventures into which we enter. Any forward-looking statements speak only as of the date of this press release, and the Company assumes no obligation to update or revise any forward-looking statement to reflect events or circumstances arising after the date of this press release.

Libbey Inc.

Condensed Consolidated Statements of Operations

(dollars in thousands, except per share amounts)

(unaudited)





Three months ended September 30,



2018



2017 (1)









Net sales

$

190,775





$

187,339



Freight billed to customers

780





1,058



Total revenues

191,555





188,397



Cost of sales

154,315





150,396



Gross profit

37,240





38,001



Selling, general and administrative expenses

33,336





29,460



Goodwill impairment





79,700



Income (loss) from operations

3,904





(71,159)



Other income (expense)

(1,453)





193



Earnings (loss) before interest and income taxes

2,451





(70,966)



Interest expense

5,652





5,118



Loss before income taxes

(3,201)





(76,084)



Provision for income taxes

1,758





2,731



Net loss

$

(4,959)





$

(78,815)











Net loss per share:







    Basic

$

(0.22)





$

(3.57)



    Diluted

$

(0.22)





$

(3.57)



Dividends declared per share

$





$

0.1175











Weighted average shares:







    Basic

22,223





22,075



    Diluted

22,223





22,075





 

___________________

(1)

In connection with our January 1, 2018 adoption of ASU 2017-07, Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Post-retirement Benefit Cost, we reclassed the 2017 non-service cost components of pension and post-retirement benefit costs previously reported within income from operations to other income (expense).

 

Libbey Inc.

Condensed Consolidated Statements of Operations

(dollars in thousands, except per share amounts)

(unaudited)





Nine months ended September 30,



2018



2017 (1)









Net sales

$

586,222





$

557,847



Freight billed to customers

2,475





2,481



Total revenues

588,697





560,328



Cost of sales

471,294





449,737



Gross profit

117,403





110,591



Selling, general and administrative expenses

98,396





96,875



Goodwill impairment





79,700



Income (loss) from operations

19,007





(65,984)



Other income (expense)

(980)





(3,445)



Earnings (loss) before interest and income taxes

18,027





(69,429)



Interest expense

16,192





15,123



Income (loss) before income taxes

1,835





(84,552)



Provision for income taxes

5,767





1,665



Net loss

$

(3,932)





$

(86,217)











Net loss per share:







    Basic

$

(0.18)





$

(3.92)



    Diluted

$

(0.18)





$

(3.92)



Dividends declared per share

$

0.1175





$

0.3525











Weighted average shares:







    Basic

22,162





22,015



    Diluted

22,162





22,015





___________________________

(1)

In connection with our January 1, 2018 adoption of ASU 2017-07, Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Post-retirement Benefit Cost, we reclassed the 2017 non-service cost components of pension and post-retirement benefit costs previously reported within income from operations to other income (expense).

 

Libbey Inc.

Condensed Consolidated Balance Sheets

(dollars in thousands)





September 30, 2018



December 31, 2017



(unaudited)





ASSETS:







Cash and cash equivalents

$

19,088





$

24,696



Accounts receivable — net

91,082





89,997



Inventories — net

210,591





187,886



Prepaid and other current assets

18,051





12,550



Total current assets

338,812





315,129



Pension asset

4,249





2,939



Purchased intangible assets — net

13,685





14,565



Goodwill

84,412





84,412



Deferred income taxes

25,482





24,892



Other assets

9,429





9,627



Property, plant and equipment — net

264,057





265,675



Total assets

$

740,126





$

717,239











LIABILITIES AND SHAREHOLDERS' EQUITY:







Accounts payable

$

72,927





$

78,346



Salaries and wages

27,171





27,409



Accrued liabilities

51,568





43,223



Accrued income taxes

4,798





1,862



Pension liability (current portion)

2,286





2,185



Non-pension post-retirement benefits (current portion)

4,181





4,185



Derivative liability





697



Long-term debt due within one year

4,400





7,485



Total current liabilities

167,331





165,392



Long-term debt

406,252





376,905



Pension liability

41,295





43,555



Non-pension post-retirement benefits

48,599





49,758



Deferred income taxes

1,864





1,850



Other long-term liabilities

12,616





12,885



Total liabilities

677,957





650,345











Common stock and capital in excess of par value

335,083





333,231



Retained deficit

(167,417)





(161,165)



Accumulated other comprehensive loss

(105,497)





(105,172)



Total shareholders' equity

62,169





66,894



Total liabilities and shareholders' equity

$

740,126





$

717,239





 

Libbey Inc.

Condensed Consolidated Statements of Cash Flows

(dollars in thousands)

(unaudited)





Nine months ended September 30,



2018



2017

Operating activities:







Net loss

$

(3,932)





$

(86,217)



Adjustments to reconcile net loss to net cash provided by operating activities:







Depreciation and amortization

34,389





33,616



Goodwill impairment





79,700



Loss on asset sales and disposals

256





224



Change in accounts receivable

(1,688)





(2,000)



Change in inventories

(24,445)





(25,944)



Change in accounts payable

(5,139)





3,283



Accrued interest and amortization of discounts and finance fees

801





929



Pension & non-pension post-retirement benefits, net

1,154





3,007



Accrued liabilities & prepaid expenses

6,938





8,716



Income taxes

(1,662)





(1,942)



Share-based compensation expense

2,127





2,930



Other operating activities

(1,213)





(94)



Net cash provided by operating activities

7,586





16,208











Investing activities:







Additions to property, plant and equipment

(35,123)





(39,140)



Net cash used in investing activities

(35,123)





(39,140)











Financing activities:







Borrowings on ABL credit facility

78,850





21,004



Repayments on ABL credit facility

(46,876)





(12,277)



Other repayments

(3,077)





(632)



Repayments on Term Loan B

(3,300)





(18,300)



Stock options exercised

5





466



Taxes paid on distribution of equity awards

(304)





(623)



Dividends

(2,595)





(7,762)



Other financing activities





888



Net cash provided by (used in) financing activities

22,703





(17,236)











Effect of exchange rate fluctuations on cash

(774)





731



Decrease in cash

(5,608)





(39,437)











Cash & cash equivalents at beginning of period

24,696





61,011



Cash & cash equivalents at end of period

$

19,088





$

21,574





In accordance with the SEC's Regulation G, the following tables provide non-GAAP measures used in this earnings release and a reconciliation to the most closely related U.S. GAAP measure. See the above text for additional information on our non-GAAP measures. Although Libbey believes that the non-GAAP financial measures presented enhance investors' understanding of Libbey's business and performance, these non-GAAP measures should not be considered an alternative to U.S. GAAP.

Table 1

















Reconciliation of Net Loss to Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (Adjusted EBITDA)

(dollars in thousands)

















(unaudited)





















Three months ended September 30,



Nine months ended September 30,





2018



2017



2018



2017

Reported net loss (U.S. GAAP)



$

(4,959)





$

(78,815)





$

(3,932)





$

(86,217)



Add:

















   Interest expense



5,652





5,118





16,192





15,123



   Provision for income taxes



1,758





2,731





5,767





1,665



   Depreciation and amortization



11,270





11,233





34,389





33,616



Add special items before interest and taxes:

















   Fees associated with strategic initiative (1)



2,341









2,341







   Goodwill impairment (2)







79,700









79,700



   Reorganization charges (3)















2,488



Adjusted EBITDA (non-GAAP)



$

16,062





$

19,967





$

54,757





$

46,375





















Net sales



$

190,775





$

187,339





$

586,222





$

557,847



Net loss margin (U.S. GAAP)



(2.6)

%



(42.1)

%



(0.7)

%



(15.5)

%

Adjusted EBITDA margin (non-GAAP)



8.4

%



10.7

%



9.3

%



8.3

%





(1) Legal and professional fees associated with a strategic initiative that we terminated during the third quarter.

(2) Non-cash goodwill impairment charge recorded in our Latin America segment.

(3) Workforce reorganization as a part of our cost savings initiatives.

 

Table 2









Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow

(dollars in thousands)









(unaudited)













Nine months ended September 30,





2018



2017

Net cash provided by operating activities (U.S. GAAP)



$

7,586





$

16,208



Net cash used in investing activities (U.S. GAAP)



(35,123)





(39,140)



Free Cash Flow (non-GAAP)



$

(27,537)





$

(22,932)



 

Table 3













Reconciliation to Trade Working Capital





(dollars in thousands)













(unaudited)

















September 30, 2018



December 31, 2017



September 30, 2017















Accounts receivable — net



$

91,082





$

89,997





$

89,084



Inventories — net



210,591





187,886





200,181



Less: Accounts payable



72,927





78,346





73,645



Trade Working Capital (non-GAAP)



$

228,746





$

199,537





$

215,620



 



Table 4

















Summary Business Segment Information

















(dollars in thousands)

(unaudited)



Three months ended

September 30,



Nine months ended

September 30,

Net Sales:



2018



2017



2018



2017

















U.S. & Canada (1)



$

115,304





$

112,252





$

351,719





$

343,452



Latin America (2)



35,406





35,339





110,029





102,564



EMEA (3)



33,289





33,743





103,712





90,128



Other (4)



6,776





6,005





20,762





21,703



Consolidated



$

190,775





$

187,339





$

586,222





$

557,847





















Segment Earnings Before Interest & Taxes (Segment EBIT) (5) :

































U.S. & Canada (1)



$

7,538





$

10,761





$

25,620





$

33,307



Latin America (2)



1,727





3,721





11,310





2,549



EMEA (3)



1,358





1,482





4,984





(1,412)



Other (4)



852





(1,529)





383





(3,598)



Segment EBIT



$

11,475





$

14,435





$

42,297





$

30,846





















Reconciliation of Segment EBIT to Net Loss:

















Segment EBIT



$

11,475





$

14,435





$

42,297





$

30,846



Retained corporate costs (6)



(6,683)





(5,701)





(21,929)





(18,087)



Goodwill impairment







(79,700)









(79,700)



Fees associated with strategic initiative



(2,341)









(2,341)







Reorganization charges















(2,488)



Interest expense



(5,652)





(5,118)





(16,192)





(15,123)



Provision for income taxes



(1,758)





(2,731)





(5,767)





(1,665)



Net loss



$

(4,959)





$

(78,815)





$

(3,932)





$

(86,217)





















Depreciation & Amortization:

















U.S. & Canada (1)



$

3,850





$

2,850





$

10,289





$

9,016



Latin America (2)



4,208





4,850





13,412





13,757



EMEA (3)



1,835





1,816





5,784





5,508



Other (4)



992





1,138





3,615





3,821



Corporate



385





579





1,289





1,514



Consolidated



$

11,270





$

11,233





$

34,389





$

33,616





(1) U.S. & Canada—includes sales of manufactured and sourced tableware having an end-market destination in the U.S and 

    Canada, excluding glass products for Original Equipment Manufacturers (OEM), which remain in the Latin America 

    segment.

(2) Latin America—includes primarily sales of manufactured and sourced glass tableware having an end-market destination in 

    Latin America, as well as glass products for OEMs regardless of end-market destination.

(3) EMEA—includes primarily sales of manufactured and sourced glass tableware having an end-market destination in Europe, 

    the Middle East and Africa.

(4) Other—includes primarily sales of manufactured and sourced glass tableware having an end-market destination in Asia 

     Pacific.

(5) Segment EBIT represents earnings before interest and taxes and excludes amounts related to certain items we consider not 

     representative of ongoing operations as well as certain retained corporate costs and other allocations that are not considered 

     by management when evaluating performance. Segment EBIT also includes an allocation of manufacturing costs for 

     inventory produced at a Libbey facility that is located in a region other than the end market in which the inventory is sold. 

     This allocation can fluctuate from year to year based on the relative demands for products produced in regions other than the 

     end markets in which they are sold.

(6) Retained corporate costs include certain headquarter, administrative and facility costs, and other costs that are not allocable 

     to the reporting segments.

 



Table 5











Reconciliation of Net Loss to Adjusted EBITDA and Debt Net of Cash to Adjusted EBITDA Ratio

(dollars in thousands)











(unaudited)













Last twelve months

ended

September 30, 2018



Year ended

December 31, 2017



Last twelve months

ended

September 30, 2017







Reported net loss  (U.S. GAAP)

$

(11,083)





$

(93,368)





$

(88,466)



Add:











   Interest expense

21,469





20,400





20,382



   Provision for income taxes

19,900





15,798





7,373



   Depreciation and amortization

46,317





45,544





45,433



   Special items before interest and taxes

2,341





82,188





85,154



Adjusted EBITDA  (non-GAAP)

$

78,944





$

70,562





$

69,876















Reported debt on balance sheet  (U.S. GAAP)

$

410,652





$

384,390





$

398,882



   Plus: Unamortized discount and finance fees

2,622





3,295





3,588



Gross debt

413,274





387,685





402,470



   Less: Cash and cash equivalents

19,088





24,696





21,574



Debt net of cash

$

394,186





$

362,989





$

380,896















Debt Net of Cash to Adjusted EBITDA Ratio (non-GAAP)

5.0x





5.1 x





5.5 x



 

Table 6







2018 Outlook







Reconciliation of Net Loss margin to Adjusted EBITDA Margin





(percent of estimated 2018 net sales)







(unaudited)













Outlook for the year ended

December 31, 2018

Net loss margin  (U.S. GAAP)





(1.0%) - (0.7%)

Add:







   Interest expense





2.7%

   Provision for income taxes





2.4% - 3.1%

   Depreciation and amortization





5.6%

   Special items before interest and taxes





0.3%

Adjusted EBITDA Margin  (non-GAAP)





10.0% - 11.0%

 

Table 7









Adjusted SG&A Margin

(percent of net sales)









(unaudited)













Outlook for the

year ended 

December 31, 2018



Year ended

December 31, 2017

SG&A margin (U.S. GAAP)



15.8% - 16.3%



16.0%

Deduct special items in SG&A expenses:









   Fees associated with strategic initiative



(0.3)%



—%

   Reorganization charges



—%



(0.3)%

Adjusted SG&A Margin (non-GAAP)



15.5% - 16.0%



15.7%

 

Cision View original content:http://www.prnewswire.com/news-releases/libbey-inc-announces-third-quarter-results-300744678.html

SOURCE Libbey Inc.

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