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Libbey Inc. Reports Operating Results (10-Q)

May 10, 2010 | About:
10qk

10qk

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Libbey Inc. (LBY) filed Quarterly Report for the period ended 2010-03-31.

Libbey Inc. has a market cap of $222.98 million; its shares were traded at around $13.8 with and P/S ratio of 0.3.

Highlight of Business Operations:

For the quarter ended March 31, 2010, gross profit increased by $23.2 million, or 216.1 percent, to $33.9 million, compared to $10.7 million in the year-ago quarter. Gross profit as a percentage of net sales increased to 19.5 percent, compared to 6.8 percent in the year-ago quarter. Manufacturing costs were higher due to increased production activity, primarily in our North American Glass segment, but this higher activity resulted in a $14.3 million improvement in our gross profit as the impact of increased production carried more costs into inventory, offsetting increases of $4.1 million in labor and benefit costs and $8.7 million in costs of direct materials and purchased product. Favorable currency impact contributed another $4.1 million to the margin as the movement in the Mexican peso contributed $3.8 million with the other $0.3 million from movement in the euro. Higher levels of net sales and favorable mix contributed another $2.6 million to gross profit, while special charges related to facility closures decreased by $1.8 million and depreciation and amortization decreased by $1.4 million. These improvements were offset by a $0.7 million increase in distribution costs compared to the first quarter of last year.

Earnings (Loss) before Interest and Income Taxes (EBIT) for the quarter ended March 31, 2010 increased by $78.9 million, to $66.9 million in 2010 from a loss of $(12.1) million in 2009. EBIT as a percentage of net sales increased to 38.4 percent in the first quarter 2010, compared to (7.7) percent in the year-ago quarter. Key contributors to the increase in EBIT compared to the year-ago quarter are the same as those discussed above under Income (Loss) From Operations. In addition, we recorded a $56.8 million gain on redemption of debt in 2010, net of certain transaction expenses. See note 4 for a further discussion of this gain. Other expenses increased by $0.7 million primarily related to an unfavorable swing in foreign currency translation gains versus the prior year quarter.

Adjusted EBITDA increased by $16.9 million in the first quarter of 2010, to $20.8 million, compared to $3.9 million in the year-ago quarter. As a percentage of net sales, Adjusted EBITDA was 12.0 percent for the first quarter 2010, compared to 2.5 percent in the year-ago quarter. The key contributors to the increase in Adjusted EBITDA were those factors discussed above under Earnings (Loss) Before Interest, Taxes, Depreciation and Amortization (EBITDA), and the exclusion of a $56.8 million gain on redemption of debt and a $0.4 million facility closure charge in 2010, pension settlement charges of $2.5 million and facility closure charges of $2.4 million less $0.7 million of accelerated depreciation included in those charges in 2009.

EBIT increased to $64.8 million for the first quarter 2010, compared to a loss of $(8.6) million for the year-ago quarter. EBIT as a percentage of net sales increased to 53.7 percent in the first quarter 2010, compared to (7.9) percent in the year-ago quarter. The key factors in the increase in EBIT compared to the year-ago quarter were a $56.8 million gain on redemption of debt, $14.3 million due to higher production activity offset by higher manufacturing costs and $3.6 million due to favorable currency exchange movement. Selling, general and administrative costs included a $2.5 million pension settlement charge in 2009, which did not recur in 2010. However, due primarily to higher employee labor and benefit costs in 2010, selling, general and administrative expenses were essentially flat in the first quarter of 2010 when compared to the first quarter of prior year. Distribution costs increased $0.3 million, unfavorable changes in sales and sales mix, excluding exchange impact, caused a $0.9 million impact and other income decreased $0.6 million related to an unfavorable swing in foreign currency translation gains and changes in versus the prior year quarter.

EBIT increased by $4.3 million, or 383.8 percent, to $3.2 million for the first quarter of 2010, compared to a loss of $(1.1) million in the year-ago quarter. EBIT as a percentage of net sales increased to 16.2 percent in the first quarter of 2010, compared to (5.2) percent in the year-ago quarter. The key contributors to the increased EBIT were a decrease of $2.1 million in special charges, an improvement of $1.4 million due to improved sales volume and mix, and a $1.1 million decrease in depreciation and amortization expense. These improvements were primarily the result of the April 2009 closure of our Syracuse China production facility, as EBIT excluding special charges for the Syracuse China operations showed a $2.5 million improvement compared to the prior year period. These improvements were offset by increases of $0.3 million in increased manufacturing costs primarily related to increased resin prices at Traex, and $0.1 million in distribution costs related to the higher level of net sales.

EBIT improved by $1.2 million to a loss of $(1.1) million in the first quarter of 2010 from a loss of $(2.3) million in the year-ago quarter. EBIT as a percentage of net sales improved to (3.1) percent in the first quarter 2010, compared to (8.1) percent in the year-ago quarter. Improved sales volume and mix produced a $2.1 million favorable impact, offset by increases of $0.3 million in selling, general and administrative costs, $0.2 million in distribution costs related to the higher sales volume and $0.2 million in other expense.

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