EveryWare Posts Q1 Loss; Suspends North American Manufacturing
May 19, 2014,
LANCASTER, Ohio-In the midst of reporting a $38.3 million first-quarter net loss, EveryWare Global also said it intends to idle its North American manufacturing facilities for three to four weeks.
Sam Solomon, the company's interim CEO, said EveryWare is shutting its North American production "to reduce inventory and improve liquidity." Solomon added that the company would continue to service its customers and distribute products from existing inventory.
Mounting expenses and weak sales led to the red ink for EveryWare in its first quarter, which ended on March 31. Selling, general and administrative expenses jumped 23.5 percent in dollars and 618 basis points as a percentage of sales, to 27.2 percent, resulting from employee separation expenses; consulting fees for Alvarez & Marsal, a consulting firm taken on to help develop cost savings initiatives; impairment charges; and costs associated with the operations of U.K.-based Metalrax, which the company acquired in June of last year.
Gross margin plummeted by 1,157 basis points to 14.9 percent. The dropoff in margin resulted from unfavorable changes in cost absorption from lower production levels, higher utility costs due to the colder-than-normal weather in the quarter, increased freight and packaging costs, and the impact of EveryWare's acquisition of Metalrax.
Net sales were down 4.6 percent to $93.2 million. The adverse weather in the quarter contributed to declines in sales in both the foodservice and consumer segments. In addition, EveryWare decided during the quarter not to pursue lower-margin business in beverageware.
Solomon said EveryWare is expanding Alvarez & Marsal's role to intensify its efforts to turn its business around. "While our initiatives will take time to have an impact on the business, I remain confident in the long-term prospects of this business," he said.