- Diluted earnings per share of $0.27, up from $0.20 in the fourth quarter of fiscal 2011 and $0.03 per share in the first quarter of fiscal 2011.
- EBITDA on a comparable basis of $42.5 million, down slightly from $43.8 million in the fourth quarter of fiscal 2011 and up from 17.2 million in the first quarter of fiscal 2011.
- We are currently operating at full capacity, subject to planned maintenance outages, with all production made to fill specific customer contracts.
- We closed the acquisition of Alden Resources in July with the support of a $50 million term loan facility led by BNP Paribas.
NEW YORK, Nov. 7, 2011 (GLOBE NEWSWIRE) -- Globe Specialty Metals, Inc. (Nasdaq:GSM) (the "Company") today announces results for the fiscal first quarter of 2012 ended September 30, 2011.
Net sales for the quarter of $174.9 million were relatively flat with the fourth quarter of fiscal 2011 and 27% higher than the first quarter fiscal 2011. Shipments of 54,285 MT were 4% lower than the fourth quarter of fiscal 2011 and 7% lower than the first quarter of fiscal 2011. Net income attributable to GSM for the first quarter was $20.7 million, compared to $15.5 million in the fourth quarter of fiscal 2011 and $2.2 million in the first quarter of fiscal 2011. Diluted earnings per share for the quarter were $0.27 per share, compared to $0.20 per share in the fourth quarter of fiscal 2011 and $0.03 per share in the first quarter of fiscal 2011. Diluted earnings per share on a comparable basis were $0.28 per share, compared to the same amount in the fourth quarter of fiscal 2011 and $0.08 per share in the first quarter of fiscal 2011.
EBITDA for the quarter was $41.3 million, compared to $36.8 million in the fourth quarter of fiscal 2011 and $13.9 million in the first quarter of fiscal 2011. EBITDA on a comparable basis was $42.5 million, compared to $43.8 million in the fourth quarter of fiscal 2011 and $17.2 million in the first quarter of fiscal 2011.
As previously announced, we expected sales and EBITDA to decline modestly in the first quarter. However, sales in the quarter remained relatively flat with the fourth quarter of fiscal 2011, with a decline in shipments offset by an increase in average selling price. EBITDA on a comparable basis declined less than expected from the fourth quarter of fiscal 2011. The small decline is primarily due to the modest mix shift towards ferrosilicon being partially offset by an unrealized foreign exchange gain. Also as previously announced, we had a modest increase in finished goods inventory at the end of the quarter which is being used to fulfill customer contracts in the current quarter. Diluted earnings per share on a comparable basis remained flat with the fourth quarter of fiscal 2011 primarily due to a decline in our effective tax rate and the unrealized foreign exchange gain which offset the gross margin decline from the modest mix shift towards ferrosilicon.
Sales increased in the quarter from the first quarter of fiscal 2011 due to higher average selling prices and shipments declined primarily due to the end of the calendar 2010 arrangement to ship products at cost from our former plant in Brazil to a European customer. EBITDA on a comparable basis increased in the quarter from the first quarter of fiscal 2011 due to significantly higher average selling prices, which benefited from our long-term contracts expiring at the end of calendar 2010.
Cash and cash equivalents totalled $152.3 million at September 30, 2011 and total debt was $106.1 million, including the Alden acquisition financing, and included $15.0 million of bank financing for the Alloy, West Virginia joint venture.
Cash flow provided by operating activities was $12.4 million in the quarter, compared to $18.5 million in the fourth quarter of fiscal 2011 and $15.2 million in the first quarter of last year. Inventories increased by $13.7 million in the first quarter and are expected to return to previous levels by the end of the second quarter. During the first quarter, cash flows used in investing activities totalled $82.9 million and was comprised of $73.2 million for the acquisition of Alden Resources and $9.7 million for capital expenditures which were largely related to spending for planned maintenance outages at our Selma, Alabama, Alloy, West Virginia and Beverly, Ohio plants. Cash provided by financing activities totalled $56.9 million, including the $50.0 million term loan and a $5.0 million drawdown of our revolving credit facility used to finance the Alden acquisition.
Diluted earnings per share on a comparable basis were as follows:
| FY 2012 | FY 2011 | ||
| First Quarter | Fourth Quarter | First Quarter | |
| Reported Diluted EPS | $ 0.27 | $ 0.20 | $ 0.03 |
| Tax rate adjustment | -- | -- | 0.02 |
| (Gain) loss on sale of business and associated FX gain | -- | 0.06 | -- |
| Niagara Falls and Selma start-up costs | -- | -- | 0.03 |
| Transaction and due diligence expenses | 0.01 | 0.02 | -- |
| Diluted EPS, excluding above items | $ 0.28 | $ 0.28 | $ 0.08 |
First quarter results were negatively impacted by $1.0 million of after-tax transaction-related and due diligence expenses and $0.3 million of after-tax currency gain related to the settlement of a liability for our former Brazilian plant, which are included in the above table.
First quarter EBITDA, excluding the items listed below, was $42.5 million. EBITDA on a comparable basis was as follows:
| FY 2012 | FY 2011 | ||
| First Quarter | Fourth Quarter | First Quarter | |
| Reported EBITDA | $ 41,251 | $ 36,800 | $ 13,934 |
| (Gain) loss on sale of business and associated FX gain | (473) | 4,249 | -- |
| Niagara Falls and Selma start-up costs | -- | -- | 3,236 |
| Transaction and due diligence expenses | 1,680 | 2,745 | -- |
| EBITDA, excluding above items | $ 42,458 | $ 43,794 | $ 17,170 |
In July 2011 Globe completed the acquisition of Alden Resources, a leading global provider of specialty metallurgical coal for the silicon metal and silicon-based alloy industries. Specialty metallurgical coal is a key ingredient in the production of silicon metal. By acquiring Alden, Globe secures a stable, long-term and low-cost supply of this key raw material while maintaining Alden's position as a leading supplier to other silicon and silicon-based alloy producers. The acquisition was partially financed with a $50 million term loan facility led by BNP Paribas.
Globe CEO Jeff Bradley commented, "Results for the quarter were better than expected and we currently continue to operate at full capacity with all our production made to fill specific customer contracts. Our order book is full for the remainder of the calendar year and we are continuing to negotiate and book contracts for calendar 2012 delivery." Bradley continued, "We are very pleased to have recently closed the Alden acquisition and are already beginning to benefit from having a captive high-quality supply of this critical raw material as we continue to identify other ways to increase production and lower costs. We are executing our integration strategy and growth plans for Alden and remain actively engaged in pursuing other growth opportunities."
Conference Call
Globe will review first quarter results during its quarterly conference call tomorrow, November 8, 2011, at 9:00 a.m. Eastern Time. The dial-in number for the call is 877-293-5491. International callers should dial 914-495-8526. Please dial in at least five minutes prior to the call to register. The call may also be accessed via an audio webcast available on the GSM website at http://investor.glbsm.com. Click on the November 8, 2011 Conference Call link to access the call.
About Globe Specialty Metals
Globe Specialty Metals, Inc. is among the world's largest producers of silicon metal and silicon-based specialty alloys, critical ingredients in a host of industrial and consumer products with growing markets. Customers include major silicone chemical, aluminum and steel manufacturers, auto companies and their suppliers, ductile iron foundries, manufacturers of photovoltaic solar cells and computer chips, and concrete producers. The Company is headquartered in New York City. For further information please visit our web site at www.glbsm.com.
Forward-Looking Statements
This release may contain ''forward-looking statements'' within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as ''anticipates,'' ''intends,'' ''plans,'' ''seeks,'' ''believes,'' ''estimates,'' ''expects'' and similar references to future periods, or by the inclusion of forecasts or projections. Forward-looking statements are based on the current expectations and assumptions of Globe Specialty Metals, Inc. (the "Company") regarding its business, financial condition, the economy and other future conditions.
Because forward-looking statements relate to the future, by their nature, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. The Company's actual results may differ materially from those contemplated by the forward-looking statements. The Company cautions you therefore that you should not rely on any of these forward-looking statements as statements of historical fact or as guarantees or assurances of future performance. Important factors that could cause actual results to differ materially from those in the forward-looking statements include regional, national or global political, economic, business, competitive, market and regulatory conditions including, among others, changes in metals prices; increases in the cost of raw materials or energy; competition in the metals and foundry industries; environmental and regulatory risks; ability to identify liabilities associated with acquired properties prior to their acquisition; ability to manage price and operational risks including industrial accidents and natural disasters; ability to manage foreign operations; changes in technology; and ability to acquire or renew permits and approvals.
Any forward-looking statement made by the Company or management in this release speaks only as of the date on which it or they make it. Factors or events that could cause the Company's actual results to differ may emerge from time to time, and it is not possible for the Company to predict all of them. The Company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, unless otherwise required to do so under the law or the rules of the NASDAQ Global Market.
EBITDA
EBITDA is a non-GAAP measure.
We have included EBITDA to provide a supplemental measure of our performance which we believe is important because it eliminates items that have less bearing on our current and future operating performance and so highlights trends in our core business that may not otherwise be apparent when relying solely on GAAP financial measures. A reconciliation of EBITDA to net income is provided in the attached financial statements.
| GLOBE SPECIALTY METALS, INC. | |||
| AND SUBSIDIARY COMPANIES | |||
| Condensed Consolidated Income Statements | |||
| (In thousands, except per share amounts) | |||
| (Unaudited) | |||
| Three Months Ended | |||
|
September 30, 2011 |
June 30, 2011 |
September 30, 2010 |
|
| Net sales | $ 174,862 | 175,934 | 137,352 |
| Cost of goods sold | 127,650 | 126,296 | 116,881 |
| Selling, general, and administrative expenses | 14,801 | 15,819 | 12,211 |
| Research and development | -- | 10 | 32 |
| (Gain) loss on sale of business | (54) | 4,249 | -- |
| Operating income | 32,465 | 29,560 | 8,228 |
| Other income (expense): | |||
| Interest income | 12 | 131 | 35 |
| Interest expense, net of capitalized interest | (1,388) | (988) | (983) |
| Foreign exchange gain (loss) | 1,324 | (139) | (296) |
| Other income | 162 | 674 | 228 |
| Income before provision for income taxes | 32,575 | 29,238 | 7,212 |
| Provision for income taxes | 11,488 | 12,509 | 4,354 |
| Net income | 21,087 | 16,729 | 2,858 |
| Income attributable to noncontrolling interest, net of tax | (394) | (1,184) | (696) |
| Net income attributable to Globe Specialty Metals, Inc. | $ 20,693 | 15,545 | 2,162 |
| Weighted average shares outstanding: | |||
| Basic | 75,019 | 74,933 | 74,580 |
| Diluted | 76,789 | 76,777 | 76,121 |
| Earnings per common share: | |||
| Basic | $ 0.28 | 0.21 | $ 0.03 |
| Diluted | 0.27 | 0.20 | 0.03 |
| EBITDA: | |||
| Net income | $ 21,087 | 16,729 | 2,858 |
| Provision for income taxes | 11,488 | 12,509 | 4,354 |
| Net interest expense | 1,376 | 857 | 948 |
| Depreciation and amortization | 7,300 | 6,705 | 5,774 |
| EBITDA | $ 41,251 | 36,800 | 13,934 |
| GLOBE SPECIALTY METALS, INC. | |||
| AND SUBSIDIARY COMPANIES | |||
| Condensed Consolidated Balance Sheets | |||
| (In thousands) | |||
| (Unaudited) | |||
|
September 30, 2011 |
June 30, 2011 |
September 30, 2010 |
|
| Assets | |||
| Current assets: | |||
| Cash and cash equivalents | $ 152,320 | 166,208 | 159,549 |
| Accounts receivable, net | 68,158 | 60,871 | 50,594 |
| Inventories | 123,612 | 109,292 | 94,780 |
| Prepaid expenses and other current assets | 22,706 | 27,876 | 24,054 |
| Total current assets | 366,796 | 364,247 | 328,977 |
| Property, plant, and equipment, net | 321,427 | 229,977 | 224,802 |
| Goodwill | 53,642 | 53,503 | 51,988 |
| Other intangible assets | 477 | 477 | 477 |
| Investments in unconsolidated affiliates | 8,806 | 8,640 | 8,359 |
| Deferred tax assets | 217 | 217 | 71 |
| Other assets | 25,943 | 21,208 | 3,177 |
| Total assets | $ 777,308 | 678,269 | 617,851 |
| Liabilities and Stockholders' Equity | |||
| Current liabilities: | |||
| Accounts payable | $ 41,302 | 39,947 | 49,823 |
| Current portion of long-term debt | 11,111 | -- | 10,045 |
| Short-term debt | 1,105 | 1,094 | 6,219 |
| Revolving credit agreements | 15,000 | 12,000 | -- |
| Dividend payable | 15,007 | -- | 11,269 |
| Accrued expenses and other current liabilities | 41,351 | 34,475 | 39,273 |
| Total current liabilities | 124,876 | 87,516 | 116,629 |
| Long-term liabilities: | |||
| Revolving credit agreements | 39,989 | 34,989 | 16,000 |
| Long-term debt | 38,889 | -- | 4,814 |
| Deferred tax liabilities | 22,794 | 23,264 | 6,645 |
| Other long-term liabilities | 28,362 | 17,224 | 18,167 |
| Total liabilities | 254,910 | 162,993 | 162,255 |
| Stockholders' equity: | |||
| Common stock | 8 | 8 | 7 |
| Additional paid-in capital | 400,683 | 399,900 | 395,312 |
| Retained earnings | 85,986 | 80,300 | 29,654 |
| Accumulated other comprehensive loss | (2,736) | (2,995) | (4,218) |
| Treasury stock at cost | (4) | (4) | (4) |
| Total Globe Specialty Metals, Inc. stockholders' equity | 483,937 | 477,209 | 420,751 |
| Noncontrolling interest | 38,461 | 38,067 | 34,845 |
| Total stockholders' equity | 522,398 | 515,276 | 455,596 |
| Total liabilities and stockholders' equity | $ 777,308 | 678,269 | 617,851 |
| GLOBE SPECIALTY METALS, INC. | |||
| AND SUBSIDIARY COMPANIES | |||
| Condensed Consolidated Statements of Cash Flows | |||
| (In thousands) | |||
| (Unaudited) | |||
| Three Months Ended | |||
| September 30, 2011 | June 30, 2011 | September 30, 2010 | |
| Cash flows from operating activities: | |||
| Net income | $ 21,087 | 16,729 | 2,858 |
| Adjustments to reconcile net income to net cash provided by operating activities: | |||
| Depreciation and amortization | 7,300 | 6,705 | 5,774 |
| Share-based compensation | 461 | 457 | 1,275 |
| (Gain) loss on sale of business | (54) | 4,249 | -- |
| Deferred taxes | (516) | 4,958 | -- |
| Changes in operating assets and liabilities: | |||
| Accounts receivable, net | (6,809) | 919 | 5,214 |
| Inventories | (13,719) | (10,603) | (7,777) |
| Prepaid expenses and other current assets | 1,204 | 777 | 1,527 |
| Accounts payable | (3,251) | (4,587) | 1,368 |
| Accrued expenses and other current liabilities | 8,757 | (3,856) | 4,117 |
| Other | (2,095) | 2,767 | 853 |
| Net cash provided by operating activities | 12,365 | 18,515 | 15,209 |
| Cash flows from investing activities: | |||
| Capital expenditures | (9,711) | (8,263) | (10,124) |
| Acquisition of business, net of cash acquired | (73,194) | -- | -- |
| Working capital adjustments from acquisition of businesses, net | -- | -- | (2,038) |
| Net cash used in investing activities | (82,905) | (8,263) | (12,162) |
| Cash flows from financing activities: | |||
| Net borrowings (payments) of long-term debt | 50,000 | (10) | (2,153) |
| Net borrowings (payments) of short-term debt | 11 | 562 | (1,851) |
| Net borrowings on revolving credit agreements | 8,000 | -- | -- |
| Proceeds from stock option exercises | 112 | 226 | 3,683 |
| Other financing activities | (1,241) | -- | -- |
| Net cash provided by (used in) financing activities | 56,882 | 778 | (321) |
| Effect of exchange rate changes on cash and cash equivalents | (230) | (135) | (206) |
| Net (decrease) increase in cash and cash equivalents | (13,888) | 10,895 | 2,520 |
| Cash and cash equivalents at beginning of period | 166,208 | 155,313 | 157,029 |
| Cash and cash equivalents at end of period | $ 152,320 | 166,208 | 159,549 |
| Supplemental disclosures of cash flow information: | |||
| Cash paid for interest, net | $ 701 | 848 | 615 |
| Cash paid for income taxes, net | 4,145 | 15,377 | 1,159 |
| GLOBE SPECIALTY METALS, INC. | ||||||
| AND SUBSIDIARY COMPANIES | ||||||
| Supplemental Statistics | ||||||
| (Unaudited) | ||||||
| Three Months Ended | ||||||
|
September 30, 2011 |
June 30, 2011 |
September 30, 2010 |
||||
| Shipments in metric tons*: | 54,285 | 56,580 | 58,448 | |||
| Average selling price ($/MT): | $ 2,894 | 2,862 | 2,161 | |||
| Average selling price ($/lb.): | $ 1.31 | 1.30 | 0.98 | |||
| * Excludes by-products and other | ||||||