Libbey Inc. (LBY)
Q4 2008 Earnings Call
February 11, 2009 11:00 am ET
Ken Boerger - Vice President and Treasurer
John Meier - Chairman and Chief Executive Officer
Greg Geswein - Vice President and Chief Financial Officer
Scott Sellick - Vice President and Chief Accounting Officer
Arnie Ursaner - CJS Securities
Doug Lane - Jefferies & Co.
Carla Casella - J.P. Morgan
Amy Greene - Avondale
Brian Schinderle - Wolf Point Capital
Jim Barrett - CL King and Associates
Umesh Mahajan - Merrill Lynch
Previous Statements by LBY
» Libbey, Inc. Q3 2008 Earnings Call Transcript
» Libbey Inc. Q2 2008 Earnings Call Transcript
» Libbey Inc. Q1 2008 Earnings Call Transcript
Welcome to Libbey’s fourth-quarter conference call. I’m Ken Boerger, Libbey’s Vice President and Treasurer. With me on today’s call are John Meier, Chairman and Chief Executive Officer, Greg Geswein, Vice President and Chief Financial Officer, and Scott Sellick, Vice President and Chief Accounting Officer.
I will start by reading the cautionary statement, and then I will turn the call over to John Meier for his opening comments. Material presented today includes forward-looking statements about Libbey, Inc. These statements only reflect Libbey’s best assessment at this time and are subject to risk and uncertainties, including market conditions, competitive pressures, significant cost increases, and currency fluctuation. Investors should not place undue reliance on such statements.
For further information and other important factors potentially affecting performance, please refer to today’s press release and/or the Company’s Form 10-K for the year ended December 31, 2007. With that, I will turn the call over to John Meier.
Thanks, Ken. Good morning, everyone, and welcome to Libbey’s press conference or teleconference covering the fourth quarter and year-end 2008. Some highlights from today’s release are; our fourth-quarter sales were $186.6 million, they were off 17%.
Total 2008 revenues were $810 million, off one half of 1%. Special charges recorded, $45.5 million, and they were recorded in Q4 and we will talk further, of course. Cash flow enhancements for 2009 are now planned in the range of $46 million to $50 million as compared to 2008.
As noted in the press release and as signaled in our December 9 pre-release, our month of November was a very challenging month and missed expectations considerably. This fueled the Q4 fallout. I might remind the audience that, through the first eight months of 2008, we were tracking to have a record year.
The worldwide economic events of the last four months of the year, most notably in the USA, and the continued deterioration of key markets all around the world, heavily impacted our full-year performance. I will comment briefly on our core businesses.
As noted in the press release, our food service business in the USA was off 25% in Q4. This is food-service glass. November was the most damaging month. Subsequent months have shown some improvement, but are not where they need to be. To put a reference on that, January of ‘09 was off 10% versus prior year, directionally making progress but still a journey.
Our retail business finished the year up over 4%. Of significant and as announced in this release, we did again dramatically gained market share. Our USA retail market share is now 40.6%, gaining 600 basis points over the prior year. This was consistent with what we had said throughout the year.
We continue as the clear leader in casual beverageware. We are very pleased with this performance and while the retail landscape is littered with challenged performers, we have no significant exposure to any of those retailers filing Chapter 11 in the recent weeks.
Mexico finished the year up slightly. I am happy to report their January had a solid double-digit increase over January of 2008. While this is in local currency and clearly the devaluation of September will come into play, the point is that their core business started well and that they are being opportunistic.
International sales were off 14% with 6% being unfavorable currency effects. China sales offset the tough European performance. Our business in China was up 58%. We are now serving over 55 countries from our China facility as well as every province in the country itself.
On the international front, our full year showed sales of $153.5 million, up 12.3%, with China driving the overall increase. All units were up, but China drove the numbers. Greg will provide more detail momentarily. Commenting overall, I would like to suggest that we are seeing an overall marketplace turnaround, we cannot yet make that statement. Some pockets of promise are surfacing, but the reality is much of our global marketplace is challenged.
We have accordingly announced today increased emphasis on cash enhancement. With today’s press release, we now have identified $46 million to $50 million of improvement versus 2008. A number of these programs are deep cuts, notably our CapEx program, which now is planned for approximately $20 million. Recent history has added in the $45 million range.
In addition, personnel reduction in North America and, as announced today, in our international subsidiaries, now totals over 800 people. Coupled with the USA salary reductions, as announced and suspensions of the dividend and 401(k) match, we have moved aggressively to focus on our cash goals.