EX-99.1 2 ex-991.htm EXHIBIT 99.1 Exhibit


Exhibit 99.1
graphica03.jpg
Libbey Inc.
300 Madison Ave
Toledo, OH 43699
 
 
NEWS RELEASE

MEDIA CONTACT:
 
INVESTOR INQUIRIES:
Jamie Burt, Media
 
Chris Hodges or Bobby Winters
(419) 325-2672
 
Alpha IR Group
jburt@libbey.com
 
(312) 445-2870
 
 
LBY@alpha-ir.com
 
 
 

FOR IMMEDIATE RELEASE
WEDNESDAY, FEBRUARY 20, 2019

LIBBEY INC. ANNOUNCES FOURTH-QUARTER AND FULL-YEAR 2018 FINANCIAL RESULTS
 
Company reports annual net sales growth of 2.1 percent and announces strategic alternatives review of its China-based business; introduces outlook for fiscal-year 2019

TOLEDO, OHIO, February 20, 2019--Libbey Inc. (NYSE American: LBY), one of the world's largest glass tableware manufacturers, today reported results for the fourth quarter ended December 31, 2018.

Fourth-quarter 2018 Financial & Operating Highlights

•
Net sales were $211.6 million, compared to $224.0 million in the prior-year period, a 5.5 percent decrease (or a decrease of 4.4 percent, excluding a $2.6 million currency impact).
•
Net loss was $4.0 million, compared to a net loss of $7.2 million in the fourth quarter of 2017.
•
New products, defined as products introduced within the previous 36 months, contributed $15.9 million in net sales, or 7.5 percent of total net sales, during the fourth quarter.
•
E-commerce sales were approximately 13.0 percent of total U.S. & Canada retail sales, an increase of 29.8 percent compared to the fourth quarter of 2017.
•
Adjusted EBITDA (see Table 1) was $16.2 million, compared to $24.2 million in the fourth quarter of 2017. Currency fluctuations had a negative impact of $1.8 million for the quarter.
•
Net inventories were reduced by $18.5 million during the quarter.

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Libbey Inc.
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•
The Company announced that its board of directors has approved a plan to pursue strategic alternatives for its business in China, including a potential sale or closure, within the next 12 to 18 months, of Libbey’s manufacturing and distribution facility in Langfang, China.

"The top-line momentum we delivered through the first three quarters of 2018 was interrupted in the fourth quarter, particularly in the month of December, as a slowdown in economic activity was felt across most of the geographies and markets we serve," said Chief Executive Officer William Foley. "This was exacerbated by cautious buying patterns from some of our distributors as well as a specific competitive action directed at one of our larger customers late in the quarter. As a result, unfavorable price and product mix in our foodservice markets in the U.S. and Canada caused us to under-perform our expectations during the fourth quarter."
Foley continued, "While these short-term challenges are unfortunate, we remain confident in our ability to continue executing against our Creating Momentum Strategy, which helped us deliver top-line growth of 2.1 percent in fiscal-year 2018. We will continue to execute on this strategy with a relentless focus on new product introductions. The ongoing expansion of our industry-leading, e-commerce platform, combined with our focus on new product introductions, underpins our position as the most financially stable, innovative and forward-looking glass tableware manufacturer in the world today."

Three months ended December 31,
(dollars in thousands)
 
Net Sales
 
Increase/(Decrease)
 
Currency Effects
 
Constant Currency Sales Growth (Decline)
 
2018
 
2017
 
$ Change
 
% Change
 
 
U.S. & Canada
 
$
132,022

 
$
138,345

 
$
(6,323
)
 
(4.6
)%
 
$
—

 
(4.6
)%
Latin America
 
38,062

 
41,758

 
(3,696
)
 
(8.9
)%
 
(1,172
)
 
(6.0
)%
EMEA
 
34,687

 
36,796

 
(2,109
)
 
(5.7
)%
 
(1,094
)
 
(2.8
)%
Other
 
6,865

 
7,082

 
(217
)
 
(3.1
)%
 
(286
)
 
1.0
 %
Consolidated
 
$
211,636

 
$
223,981

 
$
(12,345
)
 
(5.5
)%
 
$
(2,552
)
 
(4.4
)%

•
Net sales in the U.S. & Canada segment decreased 4.6 percent, driven by unfavorable price and product mix sold in the foodservice channel, partially offset by higher volume in the foodservice and business-to-business channels.
•
In Latin America, net sales decreased 8.9 percent (a decrease of 6.0 percent excluding currency fluctuation) as a result of lower volume in the business-to-business channel and an unfavorable currency impact.
•
Net sales in the EMEA segment decreased 5.7 percent, driven primarily by lower volume and an unfavorable currency impact.
•
Net sales in Other decreased 3.1 percent as a result of unfavorable price and mix in China and an unfavorable currency impact.

Full-year 2018 Financial & Operating Highlights

•
Net sales were $797.9 million, compared to $781.8 million for full-year 2017, a 2.1 percent increase (or an increase of 1.5 percent, excluding a $4.3 million currency impact).
•
Net loss was $8.0 million, compared to a net loss of $93.4 million during the full-year 2017, which included a $79.7 million non-cash goodwill impairment charge associated with the Latin America segment.

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Libbey Inc.
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•
New products, defined as products introduced within the previous 36 months, contributed $54.1 million in net sales, or 6.8 percent of total net sales.
•
E-commerce sales were approximately 12.1 percent of total U.S. & Canada retail sales, an increase of 34.1 percent compared to the full-year 2017.
•
Adjusted EBITDA (see Table 1) was $71.0 million, compared to $70.6 million for full-year 2017.
Full Year ended December 31,
(dollars in thousands)
 
Net Sales
 
Increase/(Decrease)
 
Currency Effects
 
Constant Currency Sales Growth (Decline)
 
2018
 
2017
 
$ Change
 
% Change
 
 
U.S. & Canada
 
$
483,741

 
$
481,797

 
$
1,944

 
0.4
 %
 
$
69

 
0.4
 %
Latin America
 
148,091

 
144,322

 
3,769

 
2.6
 %
 
(1,482
)
 
3.6
 %
EMEA
 
138,399

 
126,924

 
11,475

 
9.0
 %
 
5,118

 
5.0
 %
Other
 
27,627

 
28,785

 
(1,158
)
 
(4.0
)%
 
568

 
(6.0
)%
Consolidated
 
$
797,858

 
$
781,828

 
$
16,030

 
2.1
 %
 
$
4,273

 
1.5
 %

•
Net sales in the U.S. & Canada segment increased 0.4 percent, driven by higher volume, partially offset by unfavorable channel mix.
•
In Latin America, net sales increased 2.6 percent (an increase of 3.6 percent excluding currency fluctuation) as a result of higher volume and favorable pricing. The increase was achieved despite unfavorable product mix in the retail and business-to-business channels and an unfavorable currency impact.
•
Net sales in the EMEA segment increased 9.0 percent and were favorably impacted by $5.1 million of currency. Favorable pricing on product mix sold in all three channels, as well as higher sales volume in the retail and business-to-business channels, also contributed to year-over-year improvement.
•
Net sales in Other were down primarily as a result of lower sales volume in China, partially offset by favorable price and product mix and a favorable currency impact.

Balance Sheet and Liquidity
•
The Company had remaining available capacity of $71.6 million under its ABL credit facility at December 31, 2018, with $19.9 million in loans outstanding and cash on hand of $25.1 million.
•
At December 31, 2018, Trade Working Capital (see Table 3), defined as inventories and accounts receivable less accounts payable, was $201.2 million, an increase of $1.7 million from $199.5 million at December 31, 2017. The increase was a result of higher inventories and lower accounts payable, partially offset by lower accounts receivable.

2019 Outlook and Strategic Alternatives Review of China Business
The Company anticipates that uncertain, global macroeconomic conditions, as well as a challenging competitive environment, will continue through the first half of 2019, but expects to offset some of those pressures through continued execution against its strategic plan. As a result, the outlook for full-year 2019 includes:
•
Net sales increase in the low-single digits, compared to full-year 2018 sales, on a U.S. GAAP basis;
•
Adjusted EBITDA margins between 8.5 percent and 10 percent (see table 6);
•
Capital expenditures in the range of $35 million to $40 million; and
•
Adjusted selling, general and administrative expense of approximately 16 percent of net sales (see table 7).

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Jim Burmeister, senior vice president, chief financial officer, commented, "In the fourth quarter, we continued to focus our capital investments in important strategic areas while curtailing other spending. As a result, our annual capital expenditures totaled $45.1 million which was below our previously guided range of $50 million to $55 million. We will remain disciplined with our capital investment decisions in 2019, with an emphasis toward maximizing cash-flow generation and maintaining the competitive strength of our balance sheet. This includes a reduction in the capital expenditure expectations set last summer during our Investor Day, and an ongoing rationalization of our footprint, the next step of which we are announcing today with the strategic review of our business in China. That said, planned investments in our critical growth areas such as e-commerce and new product innovation, as well as our ERP initiatives, will remain a priority. We have made strong initial progress on our ERP implementation, and we believe that it will drive significant efficiencies allowing us to focus on improving our long-term operating performance. We anticipate that once fully implemented, our ERP investments will help us achieve run-rate benefits between $15 million and $20 million annually."

Webcast Information
Libbey will hold a conference call for investors on Thursday, February 21, 2019, at 8 a.m. Eastern Standard Time. The conference call will be webcast live on the Internet and is accessible from the Investor Relations section of www.libbey.com. To listen to the call, please go to the website at least 10 minutes early to register, download and install any necessary software.

About Libbey Inc.
Based in Toledo, Ohio, Libbey Inc. is one of the largest glass tableware manufacturers in the world. Libbey Inc. operates manufacturing plants in the U.S., 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 2018, Libbey Inc.'s net sales totaled $797.9 million. Additional information is available at www.libbey.com.

Use of Non-GAAP Financial Measures
To supplement the condensed financial statements presented in accordance with U.S. Generally Accepted Accounting Principles (U.S. GAAP), we use non-GAAP measures of certain components of financial performance. These non-GAAP measures include Adjusted EBITDA, Adjusted EBITDA Margin, Free Cash Flow, Trade Working Capital, Adjusted Selling, General & Administrative Expense (Adjusted SG&A), Adjusted SG&A Margin and our Debt Net of Cash to Adjusted EBITDA Ratio. Reconciliations to the nearest U.S. GAAP measures of all non-GAAP measures included in this press release can be found in the tables below.

Our non-GAAP measures, as defined below, are used by analysts, investors and other interested parties to compare our performance with the performance of other companies that report similar non-GAAP measures. Libbey believes these non-GAAP measures provide meaningful supplemental information regarding financial performance by excluding certain expenses and benefits that may not be indicative of core business operating results. We believe the non-GAAP measures, when viewed in conjunction with U.S. GAAP results and the accompanying reconciliations, enhance the comparability of results against prior periods and allow for additional transparency of financial results and business outlook. In addition, we use non-GAAP data internally to assess performance and facilitate management's internal comparison of our financial performance to that of prior periods, as well as trend analysis for budgeting and planning purposes. The presentation of our non-GAAP measures is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with U.S. GAAP. Furthermore, our non-GAAP measures may not be comparable to similarly titled measures reported by other companies and may have limitations as an analytical tool. We define our non-GAAP measures as follows:

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•
We define Adjusted EBITDA and Adjusted EBITDA Margin as U.S. GAAP net income (loss) plus interest expense, provision for income taxes, depreciation and amortization, and special items, when applicable, that Libbey believes are not reflective of our core operating performance.

•
We define Trade Working Capital as net accounts receivable plus net inventories less accounts payable.

•
We define Adjusted SG&A and Adjusted SG&A Margin as U.S. GAAP selling, general and administrative expenses less special items that Libbey believes are not reflective of our core operating performance.

•
We define our Debt Net of Cash to Adjusted EBITDA Ratio as gross debt before unamortized discount and finance fees, less cash and cash equivalents, divided by last twelve months Adjusted EBITDA (defined above).

Constant Currency
We translate revenue and expense accounts in our non-U.S. operations at current average exchange rates during the year. References to "constant currency," "excluding currency impact" and "adjusted for currency" are considered non-GAAP measures. Constant currency references regarding net sales reflect a simple mathematical translation of local currency results using the comparable prior period’s currency conversion rate. Constant currency references regarding Adjusted EBITDA and Adjusted EBITDA Margin comprise a simple mathematical translation of local currency results using the comparable prior period's currency conversion rate plus the transactional impact of changes in exchange rates from revenues, expenses and assets and liabilities that are denominated in a currency other than the functional currency. We believe this non-GAAP constant currency information provides valuable supplemental information regarding our core operating results, better identifies operating trends that may otherwise be masked or distorted by exchange rate changes and provides a higher degree of transparency of information used by management in its evaluation of our ongoing operations. These non-GAAP measures should be viewed in addition to, and not as an alternative to, the reported results prepared in accordance with U.S. GAAP. Our currency market risks include currency fluctuations relative to the U.S. dollar, Canadian dollar, Mexican peso, euro and RMB.

Caution on Forward-Looking Statements
This press release includes forward-looking statements as defined in Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements reflect only the Company's best assessment at this time and are indicated by words or phrases such as "goal," "expects," " believes," "will," "estimates," "anticipates," or similar phrases. Investors are cautioned that forward-looking statements involve risks and uncertainty and that actual results may differ materially from these statements. Investors should not place undue reliance on such statements. These forward-looking statements may be affected by the risks and uncertainties in the Company's business. This information is qualified in its entirety by cautionary statements and risk factor disclosures contained in the Company's Securities and Exchange Commission filings, including the Company's report on Form 10-K filed with the Commission on March 1, 2018. Important factors potentially affecting performance include but are not limited to risks related to increased competition from foreign suppliers endeavoring to sell glass tableware, ceramic dinnerware and metalware in our core markets; global economic conditions and the related impact on consumer spending levels; major slowdowns or changes in trends in the retail, travel, restaurant and bar or entertainment industries that impact demand for our products; inability to meet the demand for new products; material restructuring charges related to involuntary employee terminations, facility abandonments, or other various restructuring activities; significant increases in per-unit costs for natural gas, electricity, freight, corrugated packaging, and other purchased materials; our ability to borrow under our ABL credit agreement; high levels of indebtedness; high interest rates that increase the Company's borrowing costs or volatility in the financial markets that could constrain liquidity and credit availability; protracted work stoppages related to collective bargaining agreements; increases in expense associated with higher medical costs, increased pension expense associated with lower returns on pension investments and increased pension

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obligations; devaluations and other major currency fluctuations relative to the U.S. dollar and the euro that could reduce the cost competitiveness of the Company's products compared to foreign competition; the effect of exchange rate changes to the value of the euro, the Mexican peso, the RMB and the Canadian dollar and the earnings and cash flows of our international operations, expressed under U.S. GAAP; the effect of high levels of inflation in countries in which we operate or sell our products; the inability to achieve savings and profit improvements at targeted levels in the Company's operations or within the intended time periods; the failure of our investments in e-commerce, new technology and other capital expenditures to yield expected returns; failure to prevent unauthorized access, security breaches and cyber attacks to our information technology systems; compliance with, or the failure to comply with, legal requirements relating to health, safety and environmental protection; our failure to protect our intellectual property; and the inability to effectively integrate future business we acquire or joint ventures into which we enter. Any forward-looking statements speak only as of the date of this press release, and the Company assumes no obligation to update or revise any forward-looking statement to reflect events or circumstances arising after the date of this press release.

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Libbey Inc.
Condensed Consolidated Statements of Operations
(dollars in thousands, except per share amounts)
(unaudited)

 
Three months ended December 31,
 
2018
 
2017 (1)
 
 
 
 
Net sales
$
211,636

 
$
223,981

Freight billed to customers
760

 
847

Total revenues
212,396

 
224,828

Cost of sales
174,908

 
181,378

Gross profit
37,488

 
43,450

Selling, general and administrative expenses
29,455

 
29,330

Income from operations
8,033

 
14,120

Other income (expense)
(1,784
)
 
(1,861
)
Earnings before interest and income taxes
6,249

 
12,259

Interest expense
5,787

 
5,277

Income before income taxes
462

 
6,982

Provision for income taxes
4,486

 
14,133

Net loss
$
(4,024
)
 
$
(7,151
)
 
 
 
 
Net loss per share:
 
 
 
    Basic
$
(0.18
)
 
$
(0.32
)
    Diluted
$
(0.18
)
 
$
(0.32
)
Dividends declared per share
$
—

 
$
0.1175

 
 
 
 
Weighted average shares:
 
 
 
    Basic
22,231

 
22,078

    Diluted
22,231

 
22,078

___________________________
(1) 
In connection with our January 1, 2018 adoption of ASU 2017-07, Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Post-retirement Benefit Cost, we reclassed the 2017 non-service cost components of pension and post-retirement benefit costs previously reported within income from operations to other income (expense).






Libbey Inc.
Condensed Consolidated Statements of Operations
(dollars in thousands, except per share amounts)


 
 
 
 
 
Year ended December 31,
 
2018
 
2017 (1)
 
(unaudited)
 
 
 
 
 
 
Net sales
$
797,858

 
$
781,828

Freight billed to customers
3,235

 
3,328

Total revenues
801,093

 
785,156

Cost of sales
646,202

 
631,115

Gross profit
154,891

 
154,041

Selling, general and administrative expenses
127,851

 
126,205

Goodwill impairment
—

 
79,700

Income (loss) from operations
27,040

 
(51,864
)
Other income (expense)
(2,764
)
 
(5,306
)
Earnings (loss) before interest and income taxes
24,276

 
(57,170
)
Interest expense
21,979

 
20,400

Income (loss) before income taxes
2,297

 
(77,570
)
Provision for income taxes
10,253

 
15,798

Net loss
$
(7,956
)
 
$
(93,368
)
 
 
 
 
Net loss per share:
 
 
 
    Basic
$
(0.36
)
 
$
(4.24
)
    Diluted
$
(0.36
)
 
$
(4.24
)
Dividends declared per share
$
0.1175

 
$
0.4700

 
 
 
 
Weighted average shares:
 
 
 
    Basic
22,180

 
22,031

    Diluted
22,180

 
22,031

 
 
 
 
____________________________________
(1) 
In connection with our January 1, 2018 adoption of ASU 2017-07, Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Post-retirement Benefit Cost, we reclassed the 2017 non-service cost components of pension and post-retirement benefit costs previously reported within income from operations to other income (expense).



Libbey Inc.
Condensed Consolidated Balance Sheets
(dollars in thousands)
 
December 31, 2018
 
December 31, 2017
 
(unaudited)
 
 
ASSETS:
 
 
 
Cash and cash equivalents
$
25,066

 
$
24,696

Accounts receivable — net
83,977

 
89,997

Inventories — net
192,103

 
187,886

Prepaid and other current assets
15,097

 
12,550

Total current assets
316,243

 
315,129

Pension asset
—

 
2,939

Purchased intangible assets — net
13,385

 
14,565

Goodwill
84,412

 
84,412

Deferred income taxes
26,090

 
24,892

Other assets
9,085

 
9,627

Property, plant and equipment — net
264,960

 
265,675

Total assets
$
714,175

 
$
717,239

 
 
 
 
LIABILITIES AND SHAREHOLDERS' EQUITY:
 
 
 
Accounts payable
$
74,836

 
$
78,346

Salaries and wages
27,924

 
27,409

Accrued liabilities
43,728

 
43,920

Accrued income taxes
3,639

 
1,862

Pension liability (current portion)
3,282

 
2,185

Non-pension post-retirement benefits (current portion)
3,951

 
4,185

Long-term debt due within one year
4,400

 
7,485

Total current liabilities
161,760

 
165,392

Long-term debt
393,300

 
376,905

Pension liability
45,206

 
43,555

Non-pension post-retirement benefits
43,015

 
49,758

Deferred income taxes
2,755

 
1,850

Other long-term liabilities
18,246

 
12,885

Total liabilities
664,282

 
650,345

 
 
 
 
Common stock and capital in excess of par value
335,739

 
333,231

Retained deficit
(171,441
)
 
(161,165
)
Accumulated other comprehensive loss
(114,405
)
 
(105,172
)
Total shareholders’ equity
49,893

 
66,894

Total liabilities and shareholders’ equity
$
714,175

 
$
717,239



Libbey Inc.
Condensed Consolidated Statements of Cash Flows
(dollars in thousands)

 
 
 
 
 
Year ended December 31,
 
2018
 
2017
 
(unaudited)
 
 
Operating activities:
 
 
 
Net loss
$
(7,956
)
 
$
(93,368
)
Adjustments to reconcile net loss to net cash provided by operating activities:
 
 
 
Depreciation and amortization
44,333

 
45,544

Goodwill impairment
—

 
79,700

Change in accounts receivable
5,203

 
(2,698
)
Change in inventories
(6,424
)
 
(13,443
)
Change in accounts payable
(4,759
)
 
5,574

Accrued interest and amortization of discounts and finance fees
1,158

 
1,318

Pension & non-pension post-retirement benefits, net
(283
)
 
1,680

Accrued liabilities & prepaid expenses
267

 
2,737

Income taxes
3,591

 
13,121

Share-based compensation expense
2,827

 
3,460

Other operating activities
(1,087
)
 
1,683

Net cash provided by operating activities
36,870

 
45,308

 
 
 
 
Investing activities:
 
 
 
Additions to property, plant and equipment
(45,087
)
 
(47,628
)
Net cash used in investing activities
(45,087
)
 
(47,628
)
 
 
 
 
Financing activities:
 

 
 

Borrowings on ABL credit facility
129,769

 
34,086

Repayments on ABL credit facility
(109,901
)
 
(34,086
)
Other repayments
(3,077
)
 
(632
)
Repayments on Term Loan B
(4,400
)
 
(24,400
)
Stock options exercised
5

 
466

Taxes paid on distribution of equity awards
(336
)
 
(627
)
Dividends
(2,595
)
 
(10,355
)
Other financing activities
—

 
334

Net cash provided by (used in) financing activities
9,465

 
(35,214
)
 
 
 
 
Effect of exchange rate fluctuations on cash
(878
)
 
1,219

Increase (decrease) in cash
370

 
(36,315
)
 
 
 
 
Cash & cash equivalents at beginning of year
24,696

 
61,011

Cash & cash equivalents at end of year
$
25,066

 
$
24,696




In accordance with the SEC’s Regulation G, the following tables provide non-GAAP measures used in this earnings release and a reconciliation to the most closely related U.S. GAAP measure. See the above text for additional information on our non-GAAP measures. Although Libbey believes that the non-GAAP financial measures presented enhance investors' understanding of Libbey's business and performance, these non-GAAP measures should not be considered an alternative to U.S. GAAP.
Table 1
 
 
 
 
 
 
 
 
Reconciliation of Net Loss to Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (Adjusted EBITDA)
(dollars in thousands)
 
 
 
 
 
 
 
 
(unaudited)
 
 
 
 
 
 
 
 
 
 
Three months ended December 31,
 
Year ended December 31,
 
 
2018
 
2017
 
2018
 
2017
Reported net loss (U.S. GAAP)
 
$
(4,024
)
 
$
(7,151
)
 
$
(7,956
)
 
$
(93,368
)
Add:
 
 
 
 
 
 
 
 
   Interest expense
 
5,787

 
5,277

 
21,979

 
20,400

   Provision for income taxes
 
4,486

 
14,133

 
10,253

 
15,798

   Depreciation and amortization
 
9,944

 
11,928

 
44,333

 
45,544

Add special items before interest and taxes:
 
 
 
 
 
 
 
 
   Fees associated with strategic initiative (1)
 
—

 
—

 
2,341

 
—

   Goodwill impairment (2)
 
—

 
—

 
—

 
79,700

   Reorganization charges (3)
 
—

 
—

 
—

 
2,488

Adjusted EBITDA (non-GAAP)
 
$
16,193

 
$
24,187

 
$
70,950

 
$
70,562

 
 
 
 
 
 
 
 
 
Net sales
 
$
211,636

 
$
223,981

 
$
797,858

 
$
781,828

Net loss margin (U.S. GAAP)
 
(1.9
)%
 
(3.2
)%
 
(1.0
)%
 
(11.9
)%
Adjusted EBITDA margin (non-GAAP)
 
7.7
 %
 
10.8
 %
 
8.9
 %
 
9.0
 %
_____________________
(1) Legal and professional fees associated with a strategic initiative that was terminated during the third quarter of 2018.
(2) Non-cash goodwill impairment charge recorded in our Latin America segment in the third quarter of 2017.
(3) Workforce reorganization as a part of our cost savings initiatives.

Table 2
 
 
 
 
Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow
(dollars in thousands)
 
 
 
 
(unaudited)
 
 
 
 
 
 
Year ended December 31,
 
 
2018
 
2017
Net cash provided by operating activities (U.S. GAAP)
 
$
36,870

 
$
45,308

Net cash used in investing activities (U.S. GAAP)
 
(45,087
)
 
(47,628
)
Free Cash Flow (non-GAAP)
 
$
(8,217
)
 
$
(2,320
)
 
 
 
 
 

Table 3
 
 
 
 
 
 
Reconciliation to Trade Working Capital
 
 
(dollars in thousands)
 
 
 
 
 
 
(unaudited)
 
 
 
 
 
 
 
 
December 31, 2018
 
September 30, 2018
 
December 31, 2017
 
 
 
 
 
 
 
Accounts receivable — net
 
$
83,977

 
$
91,082

 
$
89,997

Inventories — net
 
192,103

 
210,591

 
187,886

Less: Accounts payable
 
74,836

 
72,927

 
78,346

Trade Working Capital (non-GAAP)
 
$
201,244

 
$
228,746

 
$
199,537



Table 4
 
 
 
 
 
 
 
 
Summary Business Segment Information
 
 
 
 
 
 
 
 
(dollars in thousands)
(unaudited)
 
Three months ended December 31,
 
Year ended
December 31,
Net Sales:
 
2018
 
2017
 
2018
 
2017
 
 
 
 
 
 
 
 
U.S. & Canada (1)
 
$
132,022

 
$
138,345

 
$
483,741

 
$
481,797

Latin America (2)
 
38,062

 
41,758

 
148,091

 
144,322

EMEA (3)
 
34,687

 
36,796

 
138,399

 
126,924

Other (4)
 
6,865

 
7,082

 
27,627

 
28,785

Consolidated
 
$
211,636

 
$
223,981

 
$
797,858

 
$
781,828

 
 
 
 
 
 
 
 
 
Segment Earnings Before Interest & Taxes (Segment EBIT) (5) :
 
 
 
 
 
 
U.S. & Canada (1)
 
$
11,185

 
$
14,737

 
$
36,805

 
$
48,044

Latin America (2)
 
1,289

 
4,041

 
12,599

 
6,590

EMEA (3)
 
2,235

 
2,733

 
7,219

 
1,321

Other (4)
 
1,489

 
(240
)
 
1,872

 
(3,838
)
Segment EBIT
 
$
16,198

 
$
21,271

 
$
58,495

 
$
52,117

 
 
 
 
 
 
 
 
 
Reconciliation of Segment EBIT to Net Loss:
 
 
 
 
 
 
 
 
Segment EBIT
 
$
16,198

 
$
21,271

 
$
58,495

 
$
52,117

Retained corporate costs (6)
 
(9,949
)
 
(9,012
)
 
(31,878
)
 
(27,099
)
Goodwill impairment
 
—

 
—

 
—

 
(79,700
)
Fees associated with strategic initiative
 
—

 
—

 
(2,341
)
 
—

Reorganization charges
 
—

 
—

 
—

 
(2,488
)
Interest expense
 
(5,787
)
 
(5,277
)
 
(21,979
)
 
(20,400
)
Provision for income taxes
 
(4,486
)
 
(14,133
)
 
(10,253
)
 
(15,798
)
Net loss
 
$
(4,024
)
 
$
(7,151
)
 
$
(7,956
)
 
$
(93,368
)
 
 
 
 
 
 
 
 
 
Depreciation & Amortization:
 
 
 
 
 
 
 
 
U.S. & Canada (1)
 
$
3,069

 
$
3,649

 
$
13,358

 
$
12,665

Latin America (2)
 
4,045

 
4,819

 
17,457

 
18,576

EMEA (3)
 
1,628

 
1,869

 
7,412

 
7,377

Other (4)
 
816

 
1,267

 
4,431

 
5,088

Corporate
 
386

 
324

 
1,675

 
1,838

Consolidated
 
$
9,944

 
$
11,928

 
$
44,333

 
$
45,544


(1) U.S. & Canada—includes sales of manufactured and sourced tableware having an end-market destination in the U.S and Canada, excluding glass products for Original Equipment Manufacturers (OEM), which remain in the Latin America segment.
(2) Latin America—includes primarily sales of manufactured and sourced glass tableware having an end-market destination in Latin America, as well as glass products for OEMs regardless of end-market destination.
(3) EMEA—includes primarily sales of manufactured and sourced glass tableware having an end-market destination in Europe, the Middle East and Africa.
(4) Other—includes primarily sales of manufactured and sourced glass tableware having an end-market destination in Asia Pacific.
(5) Segment EBIT represents earnings before interest and taxes and excludes amounts related to certain items we consider not representative of ongoing operations as well as certain retained corporate costs and other allocations that are not considered by management when evaluating performance. Segment EBIT also includes an allocation of manufacturing costs for inventory produced at a Libbey facility that is located in a region other than the end market in which the inventory is sold. This allocation can fluctuate from year to year based on the relative demands for products produced in regions other than the end markets in which they are sold.
(6) Retained corporate costs include certain headquarter, administrative and facility costs, and other costs that are not allocable to the reporting segments.


Table 5
 
 
 
Reconciliation of Net Loss to Adjusted EBITDA and Debt Net of Cash to Adjusted EBITDA Ratio
(dollars in thousands)
 
 
 
(unaudited)
 
 
 
 
Year ended
December 31, 2018
 
Year ended
December 31, 2017
 
 
Reported net loss (U.S. GAAP)
$
(7,956
)
 
$
(93,368
)
Add:
 
 
 
   Interest expense
21,979

 
20,400

   Provision for income taxes
10,253

 
15,798

   Depreciation and amortization
44,333

 
45,544

   Special items before interest and taxes
2,341

 
82,188

Adjusted EBITDA (non-GAAP)
$
70,950

 
$
70,562

 
 
 
 
Reported debt on balance sheet (U.S. GAAP)
$
397,700

 
$
384,390

   Plus: Unamortized discount and finance fees
2,368

 
3,295

Gross debt
400,068

 
387,685

   Less: Cash and cash equivalents
25,066

 
24,696

Debt net of cash
$
375,002

 
$
362,989



 
 
Debt Net of Cash to Adjusted EBITDA Ratio (non-GAAP)
5.3x

 
5.1 x


Table 6
 
 
 
2019 Outlook
 
 
 
Reconciliation of Net Income margin to Adjusted EBITDA Margin
 
 
(percent of estimated 2019 net sales)
 
 
 
(unaudited)
 
 
 
 
 
 
Outlook for the year ended December 31, 2019
Net income margin (U.S. GAAP)(1)
 
 
0.4% - 0.8%

Add:
 
 
 
   Interest expense
 
 
2.8%

   Provision for income taxes
 
 
0.3% - 1.4%

   Depreciation and amortization
 
 
5.0
%
   Special items before interest and taxes (1)
 
 
—
%
Adjusted EBITDA Margin (non-GAAP)
 
 
8.5% - 10.0%

_____________________
(1) Anticipated special charges related to the strategic alternatives for our business in China are not reflected in the reconciliation


Table 7
 
 
 
 
 
Adjusted SG&A Margin
(percent of net sales)
 
 
 
 
 
(unaudited)
 
 
 
 
 
 
Outlook for the
year ended December 31, 2019(1)
 
Year ended
December 31, 2018
 
Year ended
December 31, 2017
SG&A margin (U.S. GAAP)
~16.0 %

 
16.0
 %
 
16.1
 %
Deduct special items in SG&A expenses:
 
 
 
 
 
   Fees associated with strategic initiative
—
%
 
(0.3
)%
 
—
 %
   Reorganization charges
—
%
 
—
 %
 
(0.2
)%
Adjusted SG&A Margin (non-GAAP)
~16.0 %

 
15.7
 %
 
15.9
 %
_____________________
(1) Anticipated special charges related to the strategic alternatives for our business in China are not reflected in the reconciliation