- THE MAGAZINE
Sales to U.S. foodservice customers were approximately 2% lower than in the second quarter of 2007. North American Other sales decreased 1.2%, as shipments of Syracuse China products decreased approximately 14% and sales of World Tableware and Traex products were up approximately 7% and 5%, respectively. International sales increased 29.6% as the result of increased sales to customers of Libbey China, Royal Leerdam and Crisal. A majority of the increased sales is attributable to Libbey China and a favorable currency impact on European sales. Excluding the currency impact, international sales increased approximately 14.0%.
The company reported income from operations of $18.7 million during the quarter, compared with income from operations of $20.5 million in the year-ago quarter. Factors contributing to the decrease in income from operations were lower production activity in Mexico as the result of a scheduled furnace rebuild, along with higher natural gas and electricity costs. Higher sales partially offset these increased costs.
Earnings before interest and taxes (EBIT) were $19.3 million, compared with $21.2 million in the year-ago quarter. EBIT was $14.9 million for North American Glass, compared with $16.5 million in the second quarter of 2007, as a result of the lower production activity in Mexico due to the furnace rebuild and higher natural gas expenses. North American Other reported EBIT of $3.6 million for the second quarter of 2008, compared with $4.3 million in the second quarter of 2007. The decrease was primarily a result of the lower sales at Syracuse China. The International segment reported EBIT of $0.7 million, which was a $0.4 million improvement compared with the year-ago quarter. This improvement was primarily related to Libbey China being in full operation, along with higher international sales, partially offset by higher natural gas costs in Europe. Libbey reported that earnings before interest, taxes, depreciation and amortization (EBITDA) were $30.5 million in the second quarter of 2008, compared with EBITDA of $31.9 million in the year-ago quarter.
“To have achieved record second quarter sales -- and our second-highest quarterly sales performance ever -- in the face of this difficult economic environment is a testimony to the soundness of the transformational strategy we put in place 10 quarters ago,” said John F. Meier, chairman and chief executive officer. “Clearly, our efforts to dramatically reshape our global ‘footprint’ by expanding our international manufacturing base are paying off handsomely, as we have seen strong sales of Crisa, our Mexican product line, and in our Libbey China glassware. Similarly, we are quite pleased with the relative strength of our total North American Glass business performance, which continues to aggressively combat unprecedented natural gas and electricity costs. We are seeing the benefits of our lean manufacturing efforts while continuing to provide the quality and service our customers have come to expect from Libbey.”
For the six months ended June 30, 2008, sales increased 6.6% to $412.1 million from $386.6 million in the year-ago period. North American Glass sales increased 4.0% to $282.5 million from $271.7 million in the year-ago period. The increase in sales was attributable to an approximate 11% increase in both Crisa’s sales and in shipments to retail glassware customers in the U.S. and Canada. Partially offsetting this increase was a 6.4% decrease in U.S. foodservice glassware sales. As a result of lower Syracuse China sales, North American Other sales decreased 2.1%. International sales increased 26% as a result of significantly increased shipments to customers of Libbey China and favorable currency impact on European sales. Excluding the currency impact, international sales increased approximately 11.3%.
For the third quarter of 2008, the company currently expects sales to continue to be solid, in the range of $220 million to $225 million, and EBITDA to be between $27 million and $29 million. “As the result of our performance to date, including EBITDA within our previous guidance and expectations for ongoing energy cost pressure, we now anticipate full-year 2008 EBITDA to be in the range of $114 million to $118 million on expected sales of slightly more than $870 million,” said Meier.
Additional details are available at www.libbey.com.