Seeking Alpha
We cover over 5K calls/quarter
Profile| Send Message|
( followers)  

Libbey, Inc. (NYSEMKT:LBY)

Q2 2014 Earnings Conference Call

July 31, 2014 11:00 AM ET

Executives

Kenneth Boerger – VP and Treasurer

Stephanie Streeter – CEO

Sherry Buck – VP and CFO

Analysts

Arnie Ursaner – CJS Securities, Inc.

Christopher McGinnis – Sidoti & Company

Jeremy Hamblin – Dougherty & Company

Operator

Good day, ladies and gentlemen, and welcome to the Second Quarter 2014 Libbey Earnings Conference Call. My name is Jackie, and I will be your operator for today. At this time all participants are in listen-only mode. And towards the end of the presentation we will be conducting a question-and-answer session. (Operator Instructions). As a reminder this conference is being recorded for replay purposes.

I would now like to turn the conference over to Mr. Ken Boerger, Vice President and Treasurer. Please proceed.

Kenneth Boerger

Thank you, Jackie. Good morning, everyone. Welcome to Libbey’s second quarter 2014 earnings conference call. Our press release and supplemental financials were distributed this morning and are available on our website in the Investor Relations section. We are hosting a live webcast of today’s call, which can be accessed on the same section of the website. The replay of today’s call will be available on our website for 14 days.

Before we get underway, I’I like to say that this conference call will contain forward-looking statements under the Securities Act of 1933 and other federal securities laws. These statements are based on current expectations, estimates and projections about the market and the industry in which the company operates in addition to management’s beliefs and assumptions.

Forward-looking statements are not guarantees of performance and actual operating results may be affected by a wide variety of factors. For a list of these factors, please refer to the forward-looking statement notice included within our SEC filings.

I would now like to introduce the members of the management team here with me today: Stephanie Streeter, Chief Executive Officer; Sherry Buck, Vice President and Chief Financial Officer; and Ronni Smith, Vice President and Corporate Controller.

I will now turn the call over to Stephanie.

Stephanie Streeter

Thanks very much, Ken, and good morning, everyone. Thank you for joining us for a review of our second quarter 2014 operating and financial results. Today I will provide my thoughts on our business, the current operating and competitive environment and discuss our overall perspective for the balance of 2014. Sherry will then walk you through our detailed financial results for the second quarter. After which we will take your questions.

As you saw in our earnings release this morning, we’ve reported second quarter revenues that were 6.5% higher than the prior year. We are very pleased with this performance as sales growth was strong across the company. Volume as measured by units sold grew in every region except EMEA and revenue increased in all three of our channels food service, retail and B2B.

Sales were particularly strong in the Americas segment and we were not only able to defend our market share but we’re able to grow share despite a very challenging competitive environment and a soft consumer economy.

Our adjusted EBITDA of $41 million was the second highest adjusted EBITDA in our company’s history and was only a $1 million below the record that we achieved in last year’s second quarter. Even though our adjusted EBITDA margin of 18.4% was impacted by higher input cost currency and competitive market actions it was still higher than the financial goals we’ve established of 15% to 18% adjusted EBITDA margins.

The actions that we have taken over the past two years to become more cost competitive and the strength in our balance sheet combined with our more recent actions to invest in sales marketing and product development have positioned us well to successfully compete in a very dynamic global marketplace.

I am pleased with our growth and overall performance in the second quarter, but I still want to reiterate that our constant focus is to get stronger. We continue to work on improving our cost position in all regions in order to optimize our manufacturing, warehousing and distribution network, which we expect to be able to leverage in an improved sales environment.

Our realignment of manufacturing from Shreveport to our Toledo and Monterrey facilities is complete and we expect to realize approximately $7 million of cost savings in 2014 after realizing over $2 million in benefits during the first half of the year. We are also continuing to ramp up on our drive to further increase productivity in all locations.

We expect these initiatives combined with the significant progress that we’ve made in our 2011 through 2013 restructuring actions to position Libby to continue to deliver industry leading operating margins, cash flow and returns on invested capital in spite of an extremely competitive sales environment such as what we saw in the second quarter of 2014.

I’d like to take this opportunity to welcome our Schönwald partners into the Libby family. Effective January 1, 2015 Libby will become be the exclusive food service distributor of Schönwald dinnerware products for the US and Canada. Schönwald is one of the world’s leading provider of high end porcelain in the food service industry. This agreement directly supports our strategic goal to grow our business in the food service channel.

We believe that these new choices for dinnerware especially in combination with our Spiegelau and Nachtmann partnership dramatically extend our high quality premium offerings. When you add that to the hundreds of new products that we’ve introduced this year alone, it provides our food service customers with the broadest tabletop choices available in the US and Canada.

Now let me provide some perspective on the balance of 2014. In the second half of 2014, we look forward to continued strong sales performance as we build upon our second quarter momentum and leverage the investments we’ve made in new product development, sales and marketing capabilities. We anticipate input cost headwinds and ongoing competitive pressures in the short term which will make it difficult to recover from the significant impact of weather, currency and higher input cost that we experienced in the first quarter.

For the second half of 2014, we expect to deliver sales growth similar to what we achieved in the second quarter of this year and adjusted EBITDA margin that are close to the 16.4% adjusted EBITDA margins we delivered for the full year and 2013.

Now I’d like to turn the discussion over the Sherry Buck our Chief Financial Officer, who will further detail our second quarter results and will provide some key cash flow assumptions for 2014. Sherry?

Sherry Buck

Thank you, Stephanie and good morning everyone. I will review our second quarter financial results and each of our reporting segments using the categories Americas, Europe, Middle East and Africa or EMEA, US Sourcing and Other.

We recorded sales for the second quarter of 2014 of $223.5 million compared to $209.9 million for the second quarter of 2013, an impressive 6.5% increase. Sales in our Americas segment were a $154.5 million compared to a $141.8 million in the second quarter of 2013.

This was driven by over 24% growth in Americas B2B business and nearly 7% increase in the retail channel of distribution and a modest increase in the food service channel. We are quite pleased with our ability to grow revenues nearly 9% in the Americas during the quarter in what we can describe as a truly competitive environment.

Sales in our EMEA segment were strong throughout 2013 when they were up nearly 9% for the full year 2013 compared to the prior year and they continue to grow in 2014. Despite an economic environment that continues to be challenging our EMEA segment increased sales for the 6th consecutive quarter with revenue increasing 3.6% over the same period in 2013 to $39.3 million.

The increase in EMEA was the result of sales in both the food service and retail channels increasing more than 10% while the B2B channel was down 6.5%. The competitive environment also impacted results in the US Sourcing segment, which includes our sourced ceramic dinnerware, metal tableware, hallowware and serveware.

The increase in volumes of approximately 9% was such that in a very aggressive pricing environment it still netted to a nearly 1% increase in sales. As revenues in the segment increased from $21.2 million to $21.4 million. We believe the rate of revenue and unit growth we have achieved in the past six quarters far exceeds the overall market growth for these products. These share gains are a positive results of our investment and additional marketing and sales capabilities and new products to meet our customers evolving needs and interest.

Other sales were $8.4 million as compared to $8.9 million in the prior year second quarter. This was the result of a 6.2% decrease in sales in the Asia-Pacific region.

Second quarter selling, general and administrative expenses or SG&A increased $1.1 million or approximately 4% as compared to the second quarter of 2013. Adjusting for special items in the second quarter of 2013, SG&A increased $3.6 million or approximately 13% compared to the prior year quarter. The primary driver of the increase is our investment in sales, marketing, new product development and R&D which we expect to drive both 2014 sales and to set the foundation for growth in the future.

Adjusted EBITDA as detailed as in Table 3, of $41 million was the second highest quarterly adjusted EBITDA in company’s history. It was only $1 million left than the record adjusted EBITDA of $42 million reported in the prior year quarter. The primary factors to the change in adjusted EBITDA was a 6.5% sales increase offset by higher input cost for natural gas, packaging and electricity of $1.8million and nearly $1.5 million in currency impact primarily in Mexico, partially offsetting these costs with the realization of savings of over $1 million from the North American capacity realignment and an increase in capacity utilization as during the quarter plant utilization was above 90% across our entire footprint.

Special items in the quarter as detailed in Table 1 included a $47.2 million loss on redemption of debt associated with our refinancing and $600,000 related to the unexpected expenses and under utilization of capacity resulting from the furnace malfunction in our Toledo, Ohio manufacturing facility which occurred during the third quarter of 2013.

As we previously shared the furnace was back online at the end of Q1 and we expect no further special items until 2014 relating to this furnace issue other than any additional insurance proceeds.

As we continue to move down the income statement, interest expense was $5.5 million, a decrease in the quarter of $2.6 million primarily driven by lower interest rates as a result of the refinancing completed in May. Our new $440 million senior secured credit facility is expected to generate over $10 million in annual interest expense savings based on our current rate.

Our effective tax rate was negative 10.3% for the quarter ended June 30, 2014, compared to 28.2% for the quarter ended June 30, 2013. This rate was primarily influenced by foreign earnings with different statutory rates, foreign withholding tax, accruals related to uncertain tax positions, intra-period tax allocation and other activity in jurisdictions with recorded valuation allowances.

We had available capacity of $79.7 million under our ABL credit facility as of June 30, 2014 with $7 million in loans outstanding. The company also had cash on hand of $23.2 million at June 30, 2014.

During the first six months of 2014, we have invested $21.8 million in CapEx compared with $19.8 million during the first half of 2013. Depreciation and amortization amounted to $21.3 million in the first half of 2014 compared to $22.4 million in the first six months of 2013. We expect depreciation and amortization for the full year of 2014 to be between $42 million and $43 million.

And finally working capital which we define as inventories and accounts receivable less accounts payable as of June 30, 2014 was $207.9 million which was $200,000 lower than the prior year compared to $208.1 million. Despite a sales increase of 6.5% working capital was lower than the prior year due to higher accounts payable partially offset by higher account receivable and higher inventories.

With the debt refinancing just completed during the second quarter, we are refreshing our strategy on capital allocation in order to maximize total shareholder return. We will analyze all of our alternatives including share repurchases, strengthening of our balance sheet through debt repayments, reinvesting in the growth of the business through investments in new technology or in financially attractive acquisitions that support our strategy as well as dividend.

We anticipate providing further details on our financial strategy by the end of 2014 as we look at some of the key assumptions for the full year 2014, cash flow you could expect CapEx of $55 million to $59 million. This higher than normal expenditure in CapEx includes $17 million to $18 million related to our planned investment in new technology in our Shreveport, Louisiana facility announced in November of 2013.

Working capital is likely to increase around 5% in dollars driven by higher accounts receivable due to the expected sales growth in the second half of 2014 versus the prior year period.

We expect pension expense of approximately [$40 million] in 2014 and cash contributions of approximately $11 million. After completion of the recent new senior secured credit facility, cash interest should be in the range of $20 million to $22 million. As far as cash taxes for 2014, we currently believe they will be around $10 million compared to $10 million compared to $11 million in 2013. We would now like to open the call for any questions. And Stephanie will have some brief summary comments at the end of the Q&A.

Question-and-Answer Session

Operator

(Operator Instructions). And your first question comes from the line of Arnie Ursaner with CJS Securities. Please proceed.

Arnie Ursaner – CJS Securities, Inc.

Hi good morning.

Kenneth Boerger

Good morning Arnie.

Stephanie Streeter

Good morning Arnie.

Arnie Ursaner – CJS Securities, Inc.

I guess my first question relates to – I just want to make sure, I got some of the information you gave in your prepared remarks. In the sales of Americas segment, which was up 8.9% I just want to drill down a little bit, I believe I am sourcing you said you have volume up 9% which led to only a 1% again – a 1% increase in revenue. But I wanted to focus on the B2B and retail and food service. So, food service – let’s start with [BNB] 24% increase sometimes you have one-time items in there was there any that would have affected that number in a materially way?

Stephanie Streeter

Generally speaking food service – I am sorry generally speaking B2B items are one-time, I mean there are program that typically don’t repeat, they might with similar customers, but they are typically programs don’t necessarily repeat. Like there are breweries or promotional or floral or thing or candles or things like that but there wasn’t one large item or order that drove that, it was many.

Arnie Ursaner – CJS Securities, Inc.

Okay. And then obviously dealing with the competitive environment it would have impacted retail and food service a lot more, food service was essentially flat, what was the volume in food service?

Stephanie Streeter

The volume in food service for Americas or for the company?

Arnie Ursaner – CJS Securities, Inc.

For Americas, please?

Stephanie Streeter

The volume was right about 4%.

Arnie Ursaner – CJS Securities, Inc.

And so you had put in a price increase obviously with the competitive environment that’s difficult, that’s not impossible to realize is that fair to say?

Stephanie Streeter

That would be fair to say, yes.

Arnie Ursaner – CJS Securities, Inc.

Okay. And on retail again similar thing, what was volume versus price?

Stephanie Streeter

The volume was up about 3% – little right around 3%.

Arnie Ursaner – CJS Securities, Inc.

Okay.

Stephanie Streeter

And sales was about 7%.

Arnie Ursaner – CJS Securities, Inc.

Okay. The second thing I wanted to double check on is your factory utilization I think you indicated you were 90% across the whole footprint, which is a staggeringly good number that is including the furnace that went back online at the end of Q1?

Stephanie Streeter

Yes. That furnace is up in running.

Arnie Ursaner – CJS Securities, Inc.

So, I mean that’s a dramatic increase from Q1 and probably the way you got to your gross margin percentage, is that a fair way to think of this?

Stephanie Streeter

Yes. Yeah, that’s a big contributor. So I mean if you think about it there are sort of three drivers to the margin question. The first is the mix which you already called out so you have got B2B in retail much higher than food service in terms of the mix of sales. Obviously B2B and retail have a smaller gross margin. Then there is the input cost that we called out so energy was up cartons and raw material, shipping, currency those types of things that we talked about offset by the North American realignment. So we made good on about a $1 million or $2 million or so there and then capacity utilization. And then the third thing affecting margins would be the competitive environment.

So as we said sales were up 6.5% but for the full company volume was up about 8%. And so we think it’s hard to tell but we think that our margins were impacted by at least a 100 basis points due to the competitive environment

Arnie Ursaner – CJS Securities, Inc.

Okay. Final question from me is you are dealing with your customers on a daily basis who are possibly reacting to the very weakened competitors to desperate to raise cash. Maybe just take a step back and describe the environment you are seeing, what your customers are asking you to do, customers maybe you haven’t dealt with in a while that enable you to have an outlook for very, very strong second half revenue, maybe talk about that?

Stephanie Streeter

So I think just to be fair, the competitive environment is probably roughly I would say 50% if I had to guess I’d say 50% of the sales increase is from the competitive environment and us taking share in this environment. But there is a number of things that we’ve had in place through I’d say before we started to put them in an effect third and fourth quarter of last year through the first quarter and second quarter of this year.

So you know we talked about the increased size of our sales force and we have armed them with new tools and training, we’ve increased our marketing spend fairly dramatically. We introduced over 400 new products in U.S and Canada alone and they are absolutely flying off the shells.

We talked about a number of B2B customers where we’ve been able to use our manufacturing capabilities to offer them something completely new and different from what they had in the past.

We’ve been more aggressive at retail, we made a point of saying that in the first quarter that we were going to get more aggressive. The North American realignment has made us much more cost competitive, so we can go after additional business. So it’s really not just the competitive environment it’s a whole host of things that we have had in place and been able to take advantage of our financial stability in order to invest in things to be able to take advantage of the opportunities as well as weakened competitors.

Arnie Ursaner – CJS Securities, Inc.

Thank you very much.

Stephanie Streeter

Thank you.

Operator

And your next question comes from the line of Chris McGinnis with Sidoti & Company. Please proceed.

Christopher McGinnis – Sidoti & Company

Good morning. Thank you for taking my question.

Stephanie Streeter

Good morning, Chris.

Christopher McGinnis – Sidoti & Company

Just as the follow up I guess on the competitive environment. Did it escalate throughout quarter and is it worse at the moment or is it kind of just stabilized at this point?

Stephanie Streeter

It’s certainly escalated throughout the quarter beginning in May but I wouldn’t say it’s any worse now or better, it’s just kind of stabilized a little bit and but it definitely took an uptick in May.

Christopher McGinnis – Sidoti & Company

Great. And then just quickly on I guess the end market demand and I guess the strength you are seeing in the America region, you shed a little bit of light on it. But can you just maybe dig a little bit more into if B2B was so strong but it’s a one-time sale, and maybe just the other end markets or other channels maybe that are,– you think are going to accelerate?

Stephanie Streeter

So let me clarify B2B and generally speaking you have a program or a project or something like that, that goes over multiple quarters, it’s not just a one-time sale and then asta-la-vista. So but I wanted to make sure that people didn’t feel that it was just one customer or something like that. So what we see is a soft economy the traffic through food service is down depending on who you, – where you look anywhere from 0.5% to a 1.5%.

The retail environment is looking a little bit better than last year and so traffic is looking a little bit better than last year. What’s mainly happening is the average unit retail is increasing and then we talked about B2B – we see that increasing for a variety of reasons, some of it is our capability, some of it is we can go after additional business because our costs are lower that would be true in retail as well and the capabilities that we’re able to offer.

Christopher McGinnis – Sidoti & Company

Thank you very much.

Kenneth Boerger

My pleasure.

Operator

(Operator Instructions). And your next question comes from the line of Jeremy Hamblin with Dougherty & Company. Please proceed.

Jeremy Hamblin – Dougherty & Company

Good morning. Thanks for taking my questions and congratulations on really strong performance. I wanted to ask in terms of thinking about the pricing environment, when do you think given the kind of the latest news that’s going on two of your competitors that are seeing struggle, when do you think you will see a more rationalized environment. Is this something that is going to spill into Q4 or do you think that you are going to see some more rationality by the time we get out of Q3?

Stephanie Streeter

Yeah, we don’t, I have no idea when it will return to normal. We have anticipated all along that we would have strong credible competitors and that this environment we’re assuming that it will be short term whether that means a quarter or two quarters or three quarters, we don’t know, but I think as we have proven in the second quarter, we’re willing to make the investments in order to defend our share and growth and we think we put the right things in place to enable us to do that.

Jeremy Hamblin – Dougherty & Company

And you think if there was additional consolidation in the industry that, that would be helpful overall for margins simply because of the possibility that capacity could be taken out of the industry?

Stephanie Streeter

I suppose it would help, but what we’re seeing is more capacity come online, not capacity being taken out of the industry. So you know what we are looking for is or looking at is an environment much the same. We, as I said we think we’ve put a number of things in place, we’ve invested and continued to invest and we think we’ll be a very strong performer throughout the rest of the year.

Jeremy Hamblin – Dougherty & Company

Okay. I wanted to ask about the Schönwald relationship and in terms of providing a little additional color – the relationship I guess will start in earnest in January. Do you expect that to be something that would be additive to your gross margin rates in 2015 and is it something that you would anticipate to have a positive EPS impact?

Stephanie Streeter

It, it should be positive, but it’s not going to be just as Spiegelau announcement was positive and gave us entry to a different set of customers, Schönwald will also do the same thing and offer us additional opportunities, but it’s not huge, it’s not going to move the needle appreciably in terms of the whole company and our margins and EPS.

Sherry Buck

I’d say it’s more about having the whole bandwidth from the, penetrating the high end whole tabletop have that dinnerware to match up with the high end glassware. So it’s really the complete offering for the customer.

Jeremy Hamblin – Dougherty & Company

Are you looking to strike more of these relationships in that portion of your business?

Stephanie Streeter

We would like to strike more relationships in food service for sure. Yes, it’s a definite strategy of ours to grow in that arena.

Jeremy Hamblin – Dougherty & Company

Okay. And then just coming back to the impressive sales. Did you establish any new retail or food service relationships during the quarter or see any significant increase in exposure of skews with the existing relationships?

Stephanie Streeter

Yes to both. We were able to regain our presence with a couple of retailers and we were able to increase our shelf space at a number of other large retailers as well.

Jeremy Hamblin – Dougherty & Company

Great. And then just on the interest expense. Did Q2 see the full benefit of the restructuring or would you – given the timing of when that occurred would we expect to see slightly more benefit even in Q3 and Q4?

Sherry Buck

Yeah. So we didn’t see the full benefit of it in Q2 because that happened during the course of the quarter. So you expect to see a little bit more. We said that the annual impact of that would be about $10 million.

Stephanie Streeter

And that would obviously be – throughout the quarters at the current interest rates.

Jeremy Hamblin – Dougherty & Company

Great. And then just a one last question on China. Can you discuss at all, it seems like you had at least a little bit of modest improvement compared to the last couple of quarters there. Have you,– is there any update or commentary you can provide on where the state of the affairs are in that country the relationships kind of the credit issues that or access – lack of access to credit for some of your customers. Is that improving at all or is it kind of – we continue to think that’s going to drag for little while?

Stephanie Streeter

So let me give an overall update. So GDP growth in China was announced at 7.1% that was below the government target of 7.5%. The tight credit does remain in place. We are not seeing any appreciable movement for smaller customers there might be for very large companies but not for distributors at our level.

The regulations that we have called out that have been impacting everything from watches, clothing, electronics and of course glassware. Those remain in place and if anything they are being enforced in a more stringent way.

The high inflationary environment continues to exist where you’ve got wage increases of 9% or 10% or 15%, input cost increasing at 20% to 35%. And so what we’ve been trying to do is change our go-to-market strategy there, we talked about that in the first quarter. So we are going after different types of customers, we are over indexed in food service, we are going after retail and e-tail, moving our distributor or trying to sign up distributors in smaller cities, so what we would call Tier 3 and 4 cities, remember, Tier 3 and 4 cities by our standards wouldn’t be small cities, they are like the size of Boston. But for them they are Tier 3 and 4.

And what we’ve seen – you are right Jeremy we did have a bit of an uptick in terms of volume. So in the first quarter we saw volume improve, in the second quarter we saw volume improve but sales are still behind because of the channel mix and the pricing environment in China.

Jeremy Hamblin – Dougherty & Company

Okay. And then last question I just wanted to make sure that I heard the guidance correctly. In terms of sales you are expecting to have some similar success to what you saw in the second quarter in the remaining two quarters of this year, did I hear that right?

Sherry Buck

Yes, correct.

Stephanie Streeter

Yes you heard that’s correct.

Jeremy Hamblin – Dougherty & Company

And then in terms of the EBIDTA margins I believe you are speaking to you are expecting to for the last two quarters kind of an average similar to what you produced to 16.4% last year is that correct?

Sherry Buck

That’s correct.

Jeremy Hamblin – Dougherty & Company

Okay. Thanks so much for taking my questions. And best of luck.

Stephanie Streeter

Thank you very much.

Operator

And now we have a follow up from Mr. Arnie Ursaner. Please proceed.

Arnie Ursaner – CJS Securities, Inc.

Okay. Couple of things to avoid problems, one is your new technology the $17 million or $18 million. Do you have any revenue assumption built in for that for this year?

Sherry Buck

No, we do not.

Arnie Ursaner – CJS Securities, Inc.

Okay. You mentioned prices like natural gas. Natural gas has actually come down very sharply in Q2. Were you locked in to some more expensive hedges or?

Kenneth Boerger

This is Ken. It’s come down in Q2 from Q1 certainly. But our comparisons are that what we were paying last year. And even though the price of this year have come back down they have 4’s in front of them, they have 3’s in front of them in 2013. So that’s the comparisons we were making.

Arnie Ursaner – CJS Securities, Inc.

Got it. And again to avoid quarterly misguidance or anything else. Do you have any known furnace rebuilds that would affect the second half of the year?

Kenneth Boerger

I think anything as you know we have rebuilds going on some place in most of the time. But anything that is going on would be included in the EBIDTA margin that we suggest we should be close to.

Arnie Ursaner – CJS Securities, Inc.

Okay. And I guess my follow up question relates to the 6.5% revenue growth. It’s very impressive and I guess my question is if we have uncertain pricing environment in many of the key categories maybe give us if you could take a step back to the building blocks to the 6.5% revenue growth?

Sherry Buck

Well, I think I mentioned most of them when we were talking at first which is – so you’ve got food service which even in a soft economy we were able to US Sourcing to be up about 9% in volume and 1%-ish in terms of sales. Overall company was up almost 4% in volume and modestly on the sales line. So I think we have put a number of programs in place, we’ve introduced a lot of new products, our SG&A is up and so you are seeing us spend certainly in marketing and we’ve increased the size of our sales force, B2B customers, new technology in terms of mold design and that sort of thing that allows them to have products that are new and different for them.

So all of that is really – all of the things that we started to put in place and made investment in and the realignment in North America that allows us to be more competitive on a cost basis. I’d be – press to tell you what percentage was attributable to which building block but that gives you a sense of there is a lot of irons in the fire, a lot of things going on and we are able to take advantage of the opportunities presented to us.

Arnie Ursaner – CJS Securities, Inc.

I guess my struggle is that if restaurant trends are indicating flat to down slightly there is price competition and food service is still the largest piece – one of the larger pieces of your business to get there you even need a lot of more gain in retail, continuation of B2B or some changes built in to your assumption in food service for revenue growth?

Sherry Buck

All of the above, I mean we are all of the above.

Arnie Ursaner – CJS Securities, Inc.

Okay. Thank you.

Sherry Buck

Thank you.

Operator

And at this time we have no further questions.

Stephanie Streeter

Okay. Well thank you very much Jackie. Thanks everybody for joining us on our call today. Let me conclude by saying again that we are very pleased with our 6.5% revenue growth during the second quarter in what was clearly a very competitive environment. We expect similar top-line growth in the second half of the year and believe that we can deliver adjusted EBIDTA margins in the last six months of the year that are close to the 16.4% adjusted EBIDTA margins that we delivered for the full year in 2013.

Our debt and operating restructuring initiatives over the past two years have strengthened our balance sheet and cost position considerably and enabled us during the second quarter to put in place a very attractive new $440 million credit facility with an initial interest rate of 3.75%.

We continue to expect annual interest rates savings in excess of $10 million at our current interest rates. We are now focused on productivity and growth improvement initiatives across our global operations. And these steps combined with our strong market position, the breadth of our product portfolio, our revised focus on marketing and sales innovation and superior customer service, we believe will position us well to realize these results in the second half of the year. So we thank you very much for your support of Libby. And we hope you have a terrific day. Thanks.

Operator

Ladies and gentlemen that concludes today’s conference. Thank you for your participation. You may now disconnect and have a great day.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!

Source: Libbey's (LBY) CEO Stephanie Streeter on Q2 2014 Results - Earnings Call Transcript
This Transcript
All Transcripts