Libbey (LBY) Reports Q2 Loss of $1.95, Revenues Miss

Libbey (NYSE: LBY) reported Q2 EPS of ($1.95), versus $0.18 reported last year. Revenue for the quarter came in at $206.16 million versus the consensus estimate of $210.19 million.

Second-quarter 2019 Financial & Operating Highlights

• Net sales were $206.2 million, a decrease of 3.5 percent, or a decrease of 2.5 percent in constant currency versus the prior-year period.
• Gross profit margin was 22.7 percent, an increase of 90-basis points versus the prior year.
• Net loss was ($43.8) million, compared to net income of $4.0 million in the second quarter of 2018. Net loss in the second quarter of 2019 was affected by non-cash impairment charges for goodwill and an intangible asset totaling $46.9 million in the quarter.
• Adjusted Income from Operations (see Table 4) increased 22.8 percent to $15.9 million.
• Adjusted EBITDA (see Table 1) was $25.3 million, compared to $26.8 million in the prior year's second quarter. Adjusted EBITDA improved 4.4 percent after further adjusting for a negative $2.7 million currency impact.
• Net cash provided by operating activities improved $10.7 million, driving a Free Cash Flow (see Table 2) improvement of $12.9 million compared to the second quarter of 2018.

"I am pleased to report that Libbey delivered a solid second-quarter performance with operating results that outpaced expectations," said Mike Bauer, chief executive officer of Libbey. "Although modest sales growth in our USC segment was more than offset by declines and soft market conditions in EMEA and LATAM, our e-commerce business continues to make solid contributions to our quarterly results, aiding growth in our USC retail business and advancing our efforts to bring Libbey's industry-leading products to a broader collection of customers."

Bauer continued, "The Company's intense focus on disciplined spending and strong operating performance in our manufacturing plants helped drive a 90-basis-point increase to gross profit margin, a 22.8 percent increase to Adjusted Income from Operations and, importantly, an improvement in cash generation. I'm proud of the organization's efforts toward sharpening our focus and better leveraging Libbey's market-leading position and competitive advantages to drive positive results in the face of continued headwinds resulting from soft market conditions in several of our key regions and channels."

Jim Burmeister, chief financial officer, commented, "In the second quarter, we drove the Company's Adjusted EBITDA results higher on a constant currency basis, despite the decline in net sales. We achieved this performance through solid operational execution and tighter management of costs. We reduced SG&A costs year over year by 8.1 percent, while continuing to fund critical projects like our ERP initiative. At the same time, we have tightened controls around working capital and operating costs to deliver an improvement of nearly $13 million in our Free Cash Flow compared to the prior-year quarter."

Burmeister continued, "In addition to the progress we made in Q2, we are in the process of taking more meaningful costs out of the business and, as a result, we expect to finish the year with reduced run rate costs that will further improve our ability to drive cash generation while sustaining support for our strategic initiatives."

Given the steps taken to better manage costs, and the addition of improved contributions from our e-commerce platform, the Company is reaffirming its full-year 2019 outlook, which includes:

• Net sales increase in the low single digits, compared to full-year 2018;
• Adjusted selling, general and administrative expense of approximately 16 percent of net sales (see Table 8);
• Adjusted EBITDA margins between 8.5 percent and 10 percent (see Table 7);
• Capital expenditures and ERP capital in the range of $35 million to $40 million.

For earnings history and earnings-related data on Libbey (LBY) click here.

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