Libbey Inc. (LBY)
Q1 2010 Earnings Call Transcript
April 29, 2010 11:00 am ET
Ken Boerger – Vice President & Treasurer
John Meir – Chairman & CEO
Greg Geswein – Vice President & CFO
Arnie Ursaner – CJS Securities
Reza Vahabzadeh – Barclays Capital
Per Orslan [ph] – Jefferies & Company
Richard Fullerton – RBF Capital
» Libbey, Inc. Q3 2008 Earnings Call Transcript
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Good morning and welcome to Libbey's first quarter 2010 conference call. I'm Ken Boerger, Libbey's Vice President and Treasurer, and 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 the Company's most recent Form 10-K filed on March 15, 2010. With that, I will turn the call over to John Meier.
Thanks, Ken. Good morning everyone, and welcome to Libbey's first quarter earnings call. We released our earnings this morning and I'd like to just touch on some key highlights.
Sales were $173.9 million, up 10.2%. Income from operations of $10.8 million was an improvement of $22.9 million over the prior year period. Adjusted EBITDA of $20.8 million was an improvement of $16.9 million, and finally debt reduction from year-end levels of just over $63 million.
As reported we had a very strong sales performance in key regions of the world and we see that continuing. Strong double digit increases were registered in Mexico, Europe, China, and in the USA and Canada in our core retail business. While we do not expect the robust double digit numbers as cited in Q1 for the totality of the year, we do expect meaningful growth.
Our products are performing on the shells of our retailers in the foodservice industry while still fragile is sequentially improving. Noted in the press release was the fact that our foodservice glass business in the USA and Canada lagged the prior year period by 4.5% truly the heavy storms of late January through mid-February clearly impacted key sections of the marketplace.
We are encouraged with how the month of March performed, and are the early part of Q2 is shaping up in Foodservice. Our customer base is showing signs of continued strength in our core businesses. Our retail and b-to-b businesses are expected to continue to build momentum as the year goes forward, and we are expecting a solid performance in those areas in North America.
At the investment community would know our domestic retail business is been on a strong course for four years running, and we are encouraged further by some of the industry signs we see in the USA foodservice business. Hotel occupancy is progressing in some of the more notable high end hotels are forecasting solid business improvement.
Order flow is improving across our distributor base giving us some further cause for positive outlook is the tonality of the business dialog with our future distributors plus some movement in key chain restaurants to reduce the discounting they had been using and also in upsizing some servicing win portions and getting away from the price-driven reduced portion mentality of the debts of the recession.
They are doing this because the market is open and receptive to it. On the hotel front, the most recent statistics from Smith Travel Research for the week ending April 17 continued to indicative pickup. In the top 25 USA markets, occupancy was up 5.5% to 60.4%. Revenue for available room was up 7% to $59.52, and average daily rate was up 1.6% to $98.67.
I do not mean to overstate things. To be clear we will be, we will continue to be a very deliberate and methodical improvement in foodservice, but we are seeing positive directional improvement. Rounding out foodservice even in Mexico, the comparables will improve. While that country is challenged in various ways as we all know, the burdens of last year's H1N1 virus and the collapsed hotel occupancy in Q2 of last year is not expected to be seen.
Accordingly, we are cautiously optimistic. Further to Mexico, our retail business and our OEM business is literally tracking expectations and we are encouraged for the balance of the year. Our broader international markets are also meeting expectations and we expect that to continue.
China and select international markets have started the year very strong for Libbey as noted in the press release. Yes, we are mindful of the issues in Europe involving the Euro Greek sovereign (inaudible) and the challenges now faced in Portugal. We will remain very vigilant on those topics.