Libbey earnings report casts doubt on its future

TOLEDO — Libbey Inc., which is in midst of a Chapter 11 bankruptcy reorganization, has released its second quarter financial statements which show that it lost $83.8 million in the quarter, or $3.64 a share. Additionally, the locally-based glass and stemware maker who historically helped create Toledo's identity as the Glass City, twice included in its quarterly report some warning language that it may not survive. For the second quarter, Libbey reported net sales of only $77.5 million, down from $206.2 million in the same period a year ago. Also a year ago the company had a quarter loss of $43.8 million, or $1.95 a share. Libbey filed for bankruptcy on June 1 after being unable to meet its monthly debt obligations. Since then the company has stated it will close a manufacturing plant in Shreveport, La., and will cut 15 percent of its salaried workforce. But twice in its quarterly financial statement, released late Monday, the company indicated there is doubt as to its ability to continue as a going concern. Such statements are often contained in bankruptcy filings, experts said, but in this case the language was stronger than typical and Libbey cited three factors that are specific to the company. It cited the risk of its bankruptcy, which will need to be approved by creditors and the court. It also cited the "events of default under our credit agreements," referring to its inability to meet its debt payment which came due at the end of May. Lastly, it cited the coronavirus pandemic, which has had an enormous impact on its operations. Libbey relies heavily on sales to the restaurant and hospitality industries, both of which have been devastated by the pandemic. "Our ability to continue as a going concern is dependent upon, among other things, our ability to become profitable, maintain profitability and successfully implement our Chapter 11 plan of reorganization," the company stated. "As the progress of these plans and transactions is subject to approval of the Bankruptcy Court and, therefore, not within our control, successful reorganization and emergence from bankruptcy cannot be considered probable and such plans do not alleviate substantial doubt about our ability to continue as a going concern," the company added. Libbey also stated that it anticipates that it will undergo an ownership change if it emerges from Chapter 11. But Kara Bruce, a University of Toledo law professor and bankruptcy expert, said that usually is the case from a company that reorganizes under the bankruptcy code. "It's pretty standard that there will be a new entity or new ownership," Bruce said. "Corporate restructuring often involves an ownership change." Libbey's revenue data showed clearly how badly the pandemic has hurt its ability to do business since March. For the second quarter, revenue from sales to the food service industry totaled just $9.5 million. A year ago, it had $87 million. Through the first six months of 2020, food service revenue totaled $64.8 million. A year ago it was $157.8 million. Likewise, retail revenue and business-to-business sales have been cut in half. Overall revenue for the second quarter from those three segments was $77.5 million, compared to $206.2 million a year ago. In an overview of the company's situation, Libbey said its business has been hurt domestically and internationally because of the pandemic and now fears of a second wave are keeping consumer confidence low. "Given the dynamic nature of the COVID-19 pandemic and related market conditions, the company cannot reasonably estimate the period of time that these events will persist or the full extend of the impact they will have on the business," Libbey said ——— ©2020 The Blade (Toledo, Ohio) Visit The Blade (Toledo, Ohio) at www.toledoblade.com Distributed by Tribune Content Agency, LLC.