- THE MAGAZINE
Libbey Inc. recently announced that net sales were $157.9 million in the first quarter of 2009, compared to $187.3 million in the prior year first quarter. Libbey reported a net loss of $27.9 million, or $1.89 per diluted share, for the quarter ended March 31, 2009, compared to a net loss of $3.5 million, or $0.24 per diluted share, in the prior-year first quarter.
As of March 31, 2009, working capital, defined as inventories and accounts receivable less accounts payable, decreased by $13.8 million from $206.9 million to $193.1 million compared to December 31, 2008. This is primarily the result of significantly lower inventories and reduced receivables as the company continues to be successful in its cash management efforts. Working capital as a percentage of the last 12 months’ net sales was 24.7%, the lowest percentage in over 10 years.
Free cash flow was $9.5 million, compared to a use of $37.5 million in the first quarter of 2008. The primary contributors were the improved working capital performance and lower capital expenditures, as well as the fact that, during the first quarter of 2008, a $19.6 million payment to Vitro S.A. was made related to the purchase of Crisa in 2006. This was the highest first quarter free cash flow generation in over 10 years and represented a $16.5 million improvement compared to the fourth quarter of 2008.
Libbey reported that it had available capacity of $49.0 million under its asset-based loan (ABL) credit facility as of March 31, 2009, and cash on hand of $16.5 million. This compares to availability of $44.6 million and cash on hand of $13.3 million at December 31, 2008. Total debt outstanding decreased by $9.9 million during the quarter.
“We exceeded our expectations in cash flow generation and inventory reduction for the quarter, resulting in improved liquidity,” said John F. Meier, chairman and chief executive officer. “While we continued to be impacted by the global economic recession, we were pleased with the stronger performance in both our U.S. foodservice and retail shipments in February and March.”
In the first quarter of 2009, Libbey recorded pretax special charges of $4.9 million, or $0.34 per share. These charges included pretax restructuring and other charges of $2.4 million associated with the recent closure of the company's ceramic dinnerware manufacturing facility in Syracuse, N.Y., and the planned closure of its distribution center in Mira Loma, Calif., in May 2009. The principal components of the charges included inventory write-downs, depreciation expense, employee severance and other expenses. Approximately $0.2 million of these charges resulted in cash payments during the first quarter of 2009. The remaining $2.5 million of special charges recorded relates to a pension settlement charge arising from lump-sum payments to retirees during the first quarter of 2009.
For the quarter ended March 31, 2009, net sales were $157.9 million, compared to $187.3 million in the year-ago quarter. North American Glass net sales were $108.7 million, compared to $127.5 million in the first quarter of 2008. The sales results were attributable to a reduction of over 29% in the sales of Crisa product and a decline in sales to U. S. and Canadian customers of 7% in retail glassware and 4% in foodservice glassware. Foodservice sales to glassware customers in the U.S. were down less than 1%.
Approximately 14% of the over 29% reduction at Crisa was related to the devaluation of the Mexican peso. These decreases were partially offset by higher shipments to U.S. business-to-business customers, which were up over 2%. North American Other sales decreased $5.2 million, as shipments to Syracuse China, World Tableware and Traex customers were down approximately 20%.
International sales decreased nearly 21% as the result of reduced sales to customers of Royal Leerdam and Crisal, partially offset by a 5% increase in sales to Libbey China customers. Approximately half of the decreased sales in the International segment are attributable to an unfavorable currency impact on European sales. Excluding the currency impact, international sales decreased approximately 11%.
The company reported a loss from operations of $12.1 million during the quarter, compared to income from operations of $9.5 million in the year-ago quarter. Normalized loss from operations was $7.3 million. Contributing to the decrease in normalized income from operations were reduced capacity utilization, reflecting the company’s effort to reduce inventories, and lower sales. These factors were partially offset by lower spending on labor, raw materials, packaging, repairs, natural gas, electricity and distribution costs, as well as a reduction of $1.0 million in selling, general and administrative expenses.
Additional details are available at www.libbey.com.