Globe Specialty Metals Reports Strong Fourth Quarter / Full Year Fiscal 2014 Results

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| Source: Globe Specialty Metals
  • Adjusted earnings per share on a fully diluted basis were $0.18 in the fourth quarter, up 100% from the fourth quarter of last year and up 29% from the prior quarter
  • Adjusted EBITDA in the fourth quarter was $33.1 million, up 39% from the fourth quarter of last year and up 12% from the prior quarter
  • Fiscal year 2014 adjusted EBITDA and adjusted EPS were up 11% and 33%, respectively, from last year
  • Adjusted gross margin percentage in the fourth quarter increased to 18.3% compared to 12.6% from the fourth quarter of last year and 16.8% from the prior quarter, due to improved sales mix
  • The Board of Directors announced a Quarterly Dividend of $0.075 per share to be paid on September 24, 2014 to Shareholders of Record as of September 10, 2014

MIAMI, Aug. 26, 2014 (GLOBE NEWSWIRE) -- Globe Specialty Metals, Inc. (Nasdaq:GSM) (the "Company") today announced results for the fourth quarter and for fiscal year 2014 ended June 30, 2014.

Sales volume for fiscal year 2014 was 277,991 metric tons ("MT"), an increase of 5% compared to fiscal year 2013, as demand for silicon metal and silicon-based alloys continued to be strong. Net sales for the fiscal year ended June 30, 2014 were $752.8 million compared to $757.6 million for the prior year. Adjusted EBITDA was $110.3 million in fiscal 2014 which is an 11% increase compared to $99.1 million in fiscal 2013, and adjusted earnings per share were $0.53 in fiscal 2014, a 33% increase compared to the prior year.

Sales volume of 75,414 MT and net sales of $205.4 million in the fourth quarter of fiscal 2014 were up 2% and 5%, respectively, from the third quarter. Adjusted diluted earnings per share of $0.18 in the fourth quarter were up 29% from the prior quarter, while adjusted EBITDA of $33.1 million in the fourth quarter was up 12% compared to the third quarter.    

The May 3, 2013 lockout of unionized employees at the Becancour plant concluded on December 27, 2013 with the ratification of a new collective bargaining agreement. The operations ramp-up was completed at the end of the third quarter of fiscal 2014 enabling the Becancour facility to be fully operational during the fourth quarter. As a result, we have not excluded any costs associated with the lock-out in our calculation of adjusted EBITDA for the fourth quarter.  

Excluding certain items, detailed in the table below, adjusted EBITDA was $33.1 million in the fourth quarter, compared to $23.8 million in the prior year and $29.5 million in the third quarter. On a reported basis, EBITDA for the fourth quarter was $30.2 million, compared to $27.7 million in the prior year and $17.1 million in the third quarter. 

Reported net income for the fourth quarter of fiscal 2014 was $7.1 million, compared to $2.0 million in the prior quarter, and $9.6 million in the fourth quarter of fiscal 2013. Reported Diluted EPS for the fourth quarter of fiscal 2014 was $0.08 per share, compared to $0.02 per share in the prior quarter and $0.13 per share in the fourth quarter of fiscal 2013.

Adjusted EBITDA was as follows:

  Fourth Quarter Twelve Months
  FY 2014 FY 2013 FY 2014 FY 2013
Reported EBITDA $30,178 $27,684 $79,499 $35,880
Transaction and due diligence expenses 560 1,075 1,081 3,374
Remeasurement of stock option liability (26) (6,624) 27,042 13,968
Siltech start-up costs 1,042 –  1,583 – 
Contract acquisition cost 1,600 –  16,000 – 
Quebec Silicon lockout costs –  1,400 6,645 1,400
Quebec Silicon curtailment gain –  –  (5,831) – 
Remeasurement/true-up of equity compensation –  –  200 – 
Business interruption  (243) –  2,454 (4,325)
Bonus payments –  –  3,885 – 
Bargain purchase gain –  –  (22,243) – 
Loss (gain) on remeasurement of equity investment –  222 –  (1,655)
Goodwill impairment –  –  –  13,130
Impairment of assets –  –  –  37,309
Adjusted EBITDA, excluding above items $33,111 $23,757 $110,315 $99,081

Net debt increased by $6.2 million from the end of the third quarter to $12.9 million. Cash flow from operating activities in the fourth quarter was $21.3 million, capital expenditures totalled $19.1 million, and dividends totalled $5.5 million. Capital expenditures were primarily related to planned maintenance. Net working capital increased $5.0 million in the fourth quarter as a result of increased revenue and shipments compared to the prior quarter. Total debt outstanding increased to $125.2 million in the fourth quarter, which is an increase of $0.2 million compared to the third quarter and a $14.3 million decrease compared to the fourth quarter of fiscal 2013.  Total cash and cash equivalents and marketable securities was $112.4 million as of June 30, 2014.

Fourth quarter fiscal 2014 results were negatively impacted by $0.4 million after-tax related to transaction fees and due diligence expenses, $0.7 million after-tax for expenses related to the start-up of Siltech (acquired November 2013), and expenses of $1.1 million after-tax due to the impact of contract acquisition costs. The Company collected $0.2 million after-tax of insurance proceeds in the fourth quarter related to business interruption expense incurred in the third quarter.

Adjusted diluted earnings per share, which excludes the items listed below, were as follows:

  Fourth Quarter Twelve Months
  FY 2014 FY 2013 FY 2014 FY 2013
Reported Diluted EPS  $0.08 $0.13 $0.19 ($0.28)
Tax rate adjustment 0.07 0.10 (0.01)
Transaction and due diligence expenses 0.01 0.01 0.01 0.03
Remeasurement of stock option liability (0.06) 0.25 0.13
Siltech start-up costs 0.01 0.01
Contract acquisition cost 0.01 0.15
Quebec Silicon lockout costs 0.01 0.06 0.01
Quebec Silicon curtailment gain (0.03)
Business interruption  0.02 (0.04)
Bonus payments 0.04
Bargain purchase gain (0.30)
Deferred financing fees write-off 0.03
Loss (gain) on remeasurement of equity investment (0.02)
Goodwill impairment 0.17
Impairment of assets 0.41
Adjusted diluted EPS, excluding above items $0.18 $0.09 $0.53 $0.40

Globe CEO Jeff Bradley commented, "Strong operational and sales performance during the quarter and over the entire fiscal year drove our gross margins and overall results higher when compared to last year. We expect price improvements to drive margins even higher in fiscal 2015. We are pleased to announce a Quarterly Dividend of $0.075 per share in our continued commitment to returning value to our shareholders."

Conference Call

Globe will review fourth quarter fiscal 2014 results during its quarterly conference call on August 27, 2014 at 9:00 AM 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 August 27, 2014 Earnings 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 Miami.  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; ability to acquire or renew permits and approvals; and, other factors identified in the Company's periodic reports filed with the SEC.

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.

Non-GAAP Measures

EBITDA, adjusted EBITDA and adjusted diluted earnings per share are non-GAAP measures.

We have included these measures to provide supplemental measures of our performance which we believe are important because they eliminate 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. Reconciliations of these measures to the comparable GAAP financial measures are provided in the attached financial statements.

GLOBE SPECIALTY METALS, INC.
AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
           
  Twelve Months Ended Three Months Ended
  June 30,
2014
June 30,
2013
June 30,
2014
March 31,
2014
June 30,
2013
           
Net sales  $ 752,817 757,550  $ 205,360 196,057 181,057
Cost of goods sold 635,735 657,911 167,816 164,926 159,702
Selling, general, and administrative expenses 92,103 64,663 17,074 23,392 4,560
Contract acquisition cost 16,000  --   1,600  --   --
Curtailment gain (5,831)  --   --   --  --
Business interruption insurance recovery  --  (4,594)  --   --   --
Goodwill impairment  --  13,130  --   --   --
Impairment of long-lived assets  --  35,387  --   --   --
Operating income (loss)  14,810 (8,947) 18,870 7,739 16,795
Other income (expense):          
           
Bargain purchase gain 22,243  --   --   --   --
Gain on remeasurement of equity investment  --  1,655  --   --  (222)
Interest income 67 820 34 1 221
Interest expense, net of capitalized interest  (8,022) (6,887) (1,082) (1,012) (1,739)
Foreign exchange loss  (3,121) (4,360) (113) (1,999) (1,587)
Other income  339 644 316 5 721
Income (loss) before provision for income taxes 26,316 (17,075) 18,025 4,734 14,189
Provision for income taxes  7,705  2,734  10,904  2,717  4,571
Net income (loss)  18,611 (19,809) 7,121 2,017 9,618
(Income) loss attributable to noncontrolling interest, net of tax  (4,203)  (1,219)  (895)  (456)  126
Net income (loss) attributable to Globe Specialty Metals, Inc.  $ 14,408 (21,028)  $ 6,226 1,561 9,744
Weighted average shares outstanding:          
Basic 74,674 75,207 73,806 74,291 75,304
Diluted 74,793 75,207 73,949 74,435 75,373
Earnings (loss) per common share:          
Basic  $ 0.19 (0.28)  $ 0.08 0.02 0.13
Diluted 0.19 (0.28) 0.08 0.02 0.13
           
EBITDA:          
Net income (loss)   $ 18,611 (19,809)  $ 7,121 2,017 9,618
Provision for income taxes 7,705 2,734 10,904 2,717 4,571
Net interest expense  7,955 6,067 1,048 1,011 1,518
Depreciation, depletion, amortization and accretion  45,228  46,888  11,105  11,307  11,977
EBITDA  $ 79,499 35,880  $ 30,178 17,052 27,684
           
GLOBE SPECIALTY METALS, INC.
AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
       
  June 30,  March 31,  June 30, 
  2014 2014 2013
Assets
Current assets:      
Cash and cash equivalents  $ 97,792 112,922 169,676
Marketable securities 10,399 5,475 148
Accounts receivable, net  100,829 95,330 83,816
Inventories 80,924 77,167 101,197
Deferred tax assets 7,042 4,173 11,504
Prepaid expenses and other current assets 26,155 22,094 26,190
Total current assets 323,141 317,161 392,531
Property, plant, and equipment, net  469,386 458,144 422,447
Deferred tax assets 901 125 125
Goodwill 43,343 43,343 43,177
Other intangible assets 477 477 477
Investments in unconsolidated affiliates 5,973 5,973 5,973
Other assets 2,018 3,375 6,893
Total assets $845,239 828,598 871,623
       
Liabilities and Stockholders' Equity
Current liabilities:      
Accounts payable  $ 46,509 43,759 41,039
Short-term debt 59 15 284
Revolving credit agreements   --   --   9,000
Accrued expenses and other current liabilities 51,567 57,000 48,886
Total current liabilities 98,135 100,774 99,209
Long-term liabilities:      
Revolving credit agreements and other long-term debt 125,145 125,000 130,250
Deferred tax liabilities 49,746 44,980 37,375
Other long-term liabilities 59,515 48,568 58,709
Total liabilities 332,541 319,322 325,543
Stockholders' equity:      
Common stock 8 8 8
Additional paid-in capital 398,685 398,139 399,234
Retained earnings 63,580 62,895 70,628
Accumulated other comprehensive loss (5,912) (8,917) (4,918)
Treasury stock at cost (28,966) (26,618) (4)
Total Globe Specialty Metals, Inc. stockholders' equity 427,395 425,507 464,948
Noncontrolling interest 85,303 83,769 81,132
Total stockholders' equity 512,698 509,276 546,080
Total liabilities and stockholders' equity  $ 845,239 828,598 871,623
       
GLOBE SPECIALTY METALS, INC.
AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
           
  Twelve Months Ended Three Months Ended
  June 30,
2014
June 30,
2013
June 30,
2014
March 31,
2014
June 30,
2013
           
Cash flows from operating activities:          
Net income (loss)   $ 18,611  (19,809)  $ 7,121  2,017  9,618
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:          
Depreciation, depletion, amortization and accretion  45,228  46,888  11,105  11,307  11,977
Share-based compensation  (729)  (5,525)  546  544  2,187
(Gain) loss on remeasurement of equity investment  --   (1,655)  --   --   222
Curtailment gain (5,831)  --   --   --   -- 
Bargain purchase gain  (22,243)  --   --   --   -- 
Goodwill impairment  --   13,130  --   --   -- 
Impairment of long-lived assets  --   35,387  --   --   -- 
Amortization of deferred financing fees  3,668  812  47  44  212
Unrealized foreign exchange loss   373  1,635  (100)  580  722
Deferred taxes  3,731  (3,541)  386  13,280  6,451
Amortization of customer contract liabilities  (7,183)  (6,626)  (1,890)  (1,927)  (1,822)
Changes in operating assets and liabilities:          
Accounts receivable, net  (16,673)  3,513  (4,967)  (25,367)  5,610
Inventories  21,973  16,588  (3,254)  10,952  16,521
Prepaid expenses and other current assets  4,074  (4,533)  148  (8,089)  1,035
Accounts payable  7,251  (14,161)  3,277  1,461  (13,152)
Accrued expenses and other current liabilities  6,080  10,565  6,125  (22,233)  (4,877)
Other   4,226  72  2,796  (6,000)  (1,721)
Net cash provided by (used in) operating activities 62,556  72,740 21,340  (23,431)  32,983
Cash flows from investing activities:          
Capital expenditures  (47,075)  (44,509)  (19,057)  (9,954)  (8,204)
Acquisition of businesses, net of cash acquired  (3,800)  (4,520)  --   --   -- 
Purchase of marketable securities  (13,396)  --   (7,555)  (3,155)  -- 
Net cash used in investing activities  (64,271)  (49,029)  (26,612)  (13,109)  (8,204)
Cash flows from financing activities:          
Net (payments) borrowings of short-term debt  (225)  (39)  44  --   (11)
Net (payments) borrowings on revolving credit agreements  (14,105)  (1,225)  145  16,000  (11,241)
Debt issuance costs  (1,080)  --   --   --   -- 
Dividend payment  (21,456)  (28,207)  (5,541)  (5,559)  (4,707)
Proceeds from stock option exercises  180  1,023  --   180  23
Purchase of treasury shares  (28,962)  --   (2,348)  (19,331)  -- 
Other financing activities  (2,960)  (2,546)  (1,043)  (654)  (639)
Net cash used in financing activities  (68,608)  (30,994)  (8,743)  (9,364)  (16,575)
Effect of exchange rate changes on cash and cash equivalents  (1,561)  (1,051)  (1,115)  262  471
Net (decrease) increase in cash and cash equivalents  (71,884)  (8,334)  (15,130)  (45,642)  8,675
Cash and cash equivalents at beginning of period  169,676  178,010  112,922  158,564  161,001
Cash and cash equivalents at end of period  $ 97,792  169,676  $ 97,792  112,922  169,676
           
Supplemental disclosures of cash flow information:          
Cash paid for interest, net  $ 3,938  5,492  $ 1,155 924  1,096
Cash (refunded) paid for income taxes, net  (6,212)  13,303 (230) (2,446)  (116)
           
GLOBE SPECIALTY METALS, INC.
AND SUBSIDIARIES
Supplemental Statistics
(Unaudited)
           
  Twelve Months Ended Three Months Ended
  June 30,
2014
June 30,
2013
June 30,
2014
March 31,
2014
June 30,
2013
Shipments in metric tons:          
Silicon metal 136,664 150,369 36,884 36,530 34,299
Silicon-based alloys 141,327 115,766 38,530 37,396 30,452
Total shipments* 277,991 266,135 75,414 73,926 64,751
           
Average selling price ($/MT):          
Silicon metal $2,766 $2,810 $2,797 $2,791 $2,754
Silicon-based alloys 2,002 2,145 2,009 2,001 2,086
Total* $2,378 $2,521 $2,395 $2,391 $2,440
Average selling price ($/lb.):          
Silicon metal $1.25 $1.27 $1.27 $1.27 $1.25
Silicon-based alloys 0.91 0.97 0.91 0.91 0.95
Total* $1.08 $1.14 $1.09 $1.08 $1.11
           
* Excludes by-products and other          
Joe Ragan, 786-509-6925
Chief Financial Officer
Email: 
Or
Jeff Bradley, 786-509-6908
Chief Executive Officer
Email: