Libbey has reported results for the second quarter ended 30 June 2018
Net sales growth of 8.1% translates to strong improvement in earnings and Adjusted EBITDA; Company reaffirms full-year sales and profitability outlook.
Libbey Inc., one of the world’s largest glass tableware manufacturers, has reported results for the second quarter ended 30 June 2018.
Net sales were USD 213.5 million, compared to USD 197.5 million in the prior-year period, an 8.1% increase (or an increase of 7.0%, excluding a USD 2.3 million currency impact).
Net income was USD 4.0 million, compared to a net loss of USD 0.8 million in the second quarter of 2017.
Adjusted EBITDA was USD 26.8 million, compared to USD 20.2 million in the second quarter of 2017, a 32.7% increase compared to the prior-year period.
New products, defined as products introduced within the previous 36 months, contributed USD 13.3 million in sales, or 6.2% of total net sales, during the second quarter.
E-commerce platform sales were approximately 12.6% of total US and Canada retail sales.
“For the second quarter of 2018, we were pleased to deliver results that exceeded our internal expectations and reflected the strong momentum we are building this year,” said Chief Executive Officer William Foley. “Net sales improved in all of our geographic regions with the exception of Asia Pacific, and we continued to experience strong contributions from new product introductions as well as our e-commerce platform. The strength of our competitive position, our new product offerings and our ability to service customers are enabling us to continue to improve our performance. We remain confident that the strategies we are implementing are the right decisions to drive profitable growth and long-term improvements in our financial performance.”
Net sales in the US and Canada segment increased 5.4%, driven by favourable price and product mix sold in all three channels as well as higher volume. Partially offsetting the increase was unfavourable channel mix.
In Latin America, net sales increased 10.4% (an increase of 13.1% excluding currency fluctuation) as a result of higher volume and favourable pricing, partially offset by unfavourable product mix in the business-to-business and retail channels and an unfavourable currency impact.
Net sales in the EMEA segment increased 22.9% and were favourably impacted by currency, higher volume and favourable price and product mix on product sold across all channels.
Net sales in Other were down primarily as a result of lower sales volume in China, partially offset by favourable price and product mix and favourable currency impacts.
The Company’s effective tax rate was 60.4% for the second quarter of 2018, compared to 163.0% in the prior-year quarter. The change in the effective tax rate was driven by differing levels of pre-tax income and the timing and mix of pre-tax income earned in tax jurisdictions with varying tax rates differing from that forecasted for the full year. The impact of US tax reform did not materially affect the effective tax rate for 2018 due to the relatively low proportion of US income compared with global income.
Net sales in the US and Canada segment increased 2.3%, driven by favourable price and product mix sold, as well as higher volume, partially offset by unfavourable channel mix.
In Latin America, net sales increased 11.0% (an increase of 9.3% excluding currency fluctuation) as a result of higher volume, favourable pricing and a favourable currency impact, partially offset by unfavourable product mix in the business-to-business and retail channels and unfavourable channel mix.
Net sales in the EMEA segment increased 24.9% and were favourably impacted by currency, higher volume and favourable price and product mix on product sold across all channels.
Net sales in Other were down primarily as a result of lower sales volume in China, partially offset by favourable price and product mix and favourable currency impacts.
The Company’s effective tax rate was 79.6% for the first six months of 2018, compared to 12.6% in the year-ago period. The change in the effective tax rate was driven by differing levels of pre-tax income and the timing and mix of pre-tax income earned in tax jurisdictions with varying tax rates differing from that forecasted for the full year. The impact of US tax reform did not materially affect the effective tax rate for 2018 due to the relatively low proportion of US income compared with global income.
The Company had remaining available capacity of USD 68.0 million under its ABL credit facility at 30 June 2018, with USD 22.5 million in loans outstanding and cash on hand of USD 19.8 million.
At 30 June 2018, Trade Working Capital, defined as inventories and accounts receivable less accounts payable, was USD 221.1 million, an increase of USD 18.7 million from USD 202.4 million at 30 June 2017. The increase was primarily a result of higher inventories and higher accounts receivable, partially offset by higher accounts payable. USD 1.7 million of the increase in Trade Working Capital was attributable to the effect of currency.
The Company affirmed its previously provided full-year 2018 sales and Adjusted EBITDA outlook, with expected Adjusted EBITDA margins within the 10% to 11% range, but has modified selling, general and administrative guidance. The Company expects:
* Net sales increase in the low-single digits, compared to full-year 2017, on a reported basis;
* Capital expenditures in the range of USD 50 million to USD 55 million; and
* Selling, general and administrative expense around 16% to 16.5% of net sales.
Jim Burmeister, senior vice president, chief financial officer, commented, “Key performance indicators across the business are continuing to show improvement. Anticipating that there may be challenges in retail channels as well as foreign trade policy uncertainty, we are tightly managing items within our control. We expect to deliver full-year SG%A as a% of net sales in a range of 16 to 16.5% compared to our previous guidance of 17%. We’re maintaining our previously provided outlook for full-year net sales and Adjusted EBITDA.”
Based in Toledo, Ohio, Libbey Inc. is one of the largest glass tableware manufacturers in the world. Libbey Inc. operates manufacturing plants in the US, 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 totalled USD 781.8 million.