Tuesday, Nov 13, 2018
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Inventory struggles at Libbey offset strong online sales

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Libbey is seeing a boost from online sales of its glass tableware, though the company saw some weakening of earnings in its third quarter from inventory struggles, Libbey executives said Tuesday.

During an analyst call to explain the company’s third-quarter performance, CEO William Foley noted that e-commerce sales now represent 12 percent of U.S. and Canada sales. That’s an increase of 46percent compared with the year-earlier quarter, he said.

Toledo-based Libbey has been building on its relationship with Amazon and getting results, Mr. Foley said.

"Our efforts to improve product margins remain on track, driven by our new products and e-commerce initiatives along with favorable price and mix,” he said.

The cost of storing and managing inventory cost Libbey an extra $2.4 million in the quarter and production downtime to reduce supplies cost another $1.4 million, said Chief Financial Officer Jim Burmeister.

Those efforts contributed to Libbey in the quarter posting lower earnings before interest, taxes, depreciation, and amortization, a non-GAAP measure of operating performance.

Third-quarter adjusted EBITDA was $16.1 million versus $20 million in the year-earlier quarter. Sales in the quarter increased to $190.8 million from $187.3 million in the third quarter of 2017.

Mr. Foley said Libbey has installed software and put management emphasis on doing a better job of forecasting product demand and managing those supplies. Part of the reason for extra inventory this quarter was to improve shipping times to customers, he said.

Income from operations was $3.9 million in the quarter compared with a loss of $71.2 million in the year-earlier quarter. The previous year’s quarter was affected by a $79.7 million non-cash, accounting loss taken to write down the value of assets in the company’s Mexican operations, Mr. Burmeister said.

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