- Adjusted EBITDA increased 43% to $37.4 million, from the second quarter of last year and up 8% from the prior quarter
- Adjusted EBITDA Margin increased 29% to 18.9%, from the second quarter of last year and up by 2.1% from the prior quarter
- Adjusted diluted earnings per share attributable to GSM increased 62% to $0.21, from the second quarter of last year and up 11% from the prior quarter
- Sales of $198.0 million were 11% higher than the second quarter of last year and down 4% from the prior quarter
- Converted silicon alloy capacity to more profitable silicon metal, increasing annual silicon metal capacity to more than 120,000 mt and moved that silicon alloy production to our South Africa silicon alloys facility, which commenced production in October 2014
- The Board of Directors authorized an increase in the Quarterly Dividend to $0.08 per share to be paid on March 12, 2015 to Shareholders of Record as of February 26, 2015
MIAMI, Feb. 9, 2015 (GLOBE NEWSWIRE) -- Globe Specialty Metals, Inc. (Nasdaq:GSM) (the "Company") today announced results for the second quarter fiscal 2015 ended December 31, 2014.
Adjusted EBITDA of $37.4 million in the second quarter was up 43% from the second quarter of last year and up 8% compared to the prior quarter, while adjusted diluted earnings per share attributable to GSM for the second quarter were $0.21, up 62% from the second quarter of last year and up 11% compared to the prior quarter. Adjusted net income of $15.5 million for the second quarter of fiscal 2015 was up 7% compared to the prior quarter. Reported net income of $10.8 million for the second quarter of fiscal 2015 was down 14% compared to the prior quarter. Net sales of $198.0 million in the second quarter were up 11% from the second quarter of last year and down 4% compared to the first quarter of fiscal 2015.
Excluding certain items, detailed in the table below, adjusted EBITDA was $37.4 million in the second quarter, compared to $26.2 million in the prior year and $34.6 million in the first quarter. On a reported basis, EBITDA for the second quarter was $30.1 million, compared to $32.9 million in the prior year and $33.2 million in the first quarter of fiscal 2015.
Globe CEO Jeff Bradley commented, "As a result of the strong demand in our key end markets, and as we approached the end of the year in a near sold out position for 2015, we successfully increased our silicon metal production capacity. We completed the proprietary conversion process before the end of December and entered 2015 with more than 120,000 metric tons of annual capacity to enable us to be active on the spot market. We are offsetting the impact to our silicon alloy business of this conversion, with the increasing output of our South African operation."
Reported Diluted EPS for the second quarter of fiscal 2015 was $0.13 per share, compared to $0.16 per share in the prior quarter and $0.28 per share in the second quarter of fiscal 2014.
Adjusted EBITDA was as follows:
| Second Quarter | Six Months | |||
| FY 2015 | FY 2014 | FY 2015 | FY 2014 | |
| Reported EBITDA | $ 30,137 | $ 32,895 | $ 63,333 | $ 39,464 |
| Remeasurement of stock option liability | (1,036) | 7,825 | (3,441) | 19,889 |
| Siltech start-up costs | 1,178 | -- | 3,060 | -- |
| Transaction and due diligence expenses | 631 | 308 | 1,114 | 469 |
| Business interruption | 899 | -- | 2,352 | -- |
| Lease termination | 457 | -- | 457 | -- |
| Plant relocation | 568 | -- | 568 | -- |
| Divestiture indemnification payment | 4,559 | -- | 4,559 | -- |
| Quebec Silicon lockout costs | -- | 2,290 | -- | 4,898 |
| Quebec Silicon curtailment gain | -- | (5,831) | -- | (5,831) |
| Contract acquisition cost | -- | 14,400 | -- | 14,400 |
| Variable compensation | -- | 3,885 | -- | 3,885 |
| Bargain purchase gain | -- | (29,538) | -- | (29,538) |
| Adjusted EBITDA, excluding above items | $ 37,393 | $ 26,234 | $ 72,002 | $ 47,636 |
Second quarter fiscal 2015 results were negatively impacted by $3.1 million after-tax related to a divestiture indemnification payment, $0.8 million after-tax for expenses related to the start-up of Siltech (acquired November 2013), $0.6 million after-tax related to loss of profits from business interruption at one of our North America plants, $0.4 million for expenses related transaction fees and due diligence expenses, $0.4 million related to a plant relocation, and $0.3 million after tax related to a lease termination. Second quarter was positively impacted by $0.7 million after-tax due to the re-measurement of stock option liability.
Cash decreased by $1.9 million contributing to the increase in net debt of $3.9 million from the end of the first quarter fiscal 2015 to $15.0 million. Cash flow from operating activities in the second quarter was $17.9 million, capital expenditures totalled $13.8 million (Siltech was $3.7 million of the total capital expenditures for the quarter), and dividends totalled $5.5 million. Capital expenditures were primarily related to maintenance. Net working capital increased $8.0 million in the second quarter as compared to the first quarter primarily due to the conversion of silicon alloys to silicon metals production during the quarter and to the ramping up of South African facility. Total debt outstanding in the second quarter remained flat to the prior quarter at $125.2 million. Total cash and cash equivalents and marketable securities were $110.2 million as of December 31, 2014.
Adjusted diluted earnings per share, which excludes the items listed below, were as follows:
| Second Quarter | Six Months | |||
| FY 2015 | FY 2014 | FY 2015 | FY 2014 | |
| Reported Diluted EPS | $ 0.13 | $ 0.28 | $ 0.29 | $ 0.18 |
| Tax rate adjustment | 0.01 | 0.01 | 0.03 | 0.03 |
| Remeasurement of stock option liability | (0.01) | 0.07 | (0.03) | 0.18 |
| Siltech start-up costs | 0.01 | -- | 0.03 | -- |
| Transaction and due diligence expenses | 0.01 | -- | 0.01 | -- |
| Business interruption | 0.01 | -- | 0.02 | -- |
| Plant relocation | 0.01 | -- | 0.01 | -- |
| Divestiture indemnification payment | 0.04 | -- | 0.04 | -- |
| Quebec Silicon lockout costs | -- | 0.02 | -- | 0.04 |
| Quebec Silicon curtailment gain | -- | (0.03) | -- | (0.03) |
| Contract acquisition cost | -- | 0.13 | -- | 0.13 |
| Variable compensation | -- | 0.04 | -- | 0.04 |
| Bargain purchase gain | -- | (0.39) | -- | (0.39) |
| Deferred financing fees write-off | -- | -- | -- | 0.03 |
| Adjusted diluted EPS, excluding above items | $ 0.21 | $ 0.13 | $ 0.40 | $ 0.21 |
Adjusted net income attributable to GSM, which excludes the items listed below, was as follows:
| Second Quarter | Six Months | |||
| FY 2015 | FY 2014 | FY 2015 | FY 2014 | |
| Reported net income attributable to GSM | $ 9,973 | $ 20,768 | $ 21,675 | $ 13,916 |
| Tax rate adjustment | 549 | 1,588 | 2,328 | 1,930 |
| Remeasurement of stock option liability | (704) | 5,321 | (2,339) | 13,525 |
| Siltech start-up costs | 801 | -- | 2,081 | -- |
| Transaction and due diligence expenses | 429 | 209 | 757 | 318 |
| Business interruption | 611 | -- | 1,599 | -- |
| Lease termination | 311 | -- | 311 | -- |
| Plant relocation | 386 | -- | 386 | -- |
| Divestiture indemnification payment | 3,100 | -- | 3,100 | -- |
| Quebec Silicon lockout costs | -- | 1,557 | -- | 3,330 |
| Quebec Silicon curtailment gain | -- | (2,022) | -- | (2,022) |
| Contract acquisition cost | -- | 9,792 | -- | 9,792 |
| Variable compensation | -- | 2,642 | -- | 2,642 |
| Bargain purchase gain | -- | (29,538) | -- | (29,538) |
| Deferred financing fees write-off | -- | -- | -- | 2,281 |
| Adjusted net income attributable to GSM | $ 15,456 | $ 10,317 | $ 29,898 | $ 16,174 |
Conference Call
Globe will review second quarter fiscal 2015 results during its quarterly conference call on February 10, 2015 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 Second Quarter Fiscal 2015 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, Florida. 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, adjusted net income 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 Income Statements | |||||
| (In thousands, except per share amounts) | |||||
| (Unaudited) | |||||
| Three Months Ended | Six Months Ended | ||||
|
December 31, 2014 |
September 30, 2014 |
December 31, 2013 |
December 31, 2014 |
December 31, 2013 |
|
| Net sales | $ 198,016 | 206,083 | 178,406 | 404,099 | 351,400 |
| Cost of goods sold | 157,745 | 168,617 | 150,713 | 326,362 | 302,993 |
| Selling, general, and administrative expenses | 23,024 | 15,565 | 26,499 | 38,589 | 51,637 |
| Contract acquisition cost | -- | -- | 14,400 | -- | 14,400 |
| Curtailment gain | -- | -- | (5,831) | -- | (5,831) |
| Operating income (loss) | 17,247 | 21,901 | (7,375) | 39,148 | (11,799) |
| Other income (expense): | |||||
| Bargain purchase gain | -- | -- | 29,538 | -- | 29,538 |
| Interest income | 57 | 81 | 4 | 138 | 132 |
| Interest expense, net of capitalized interest | (1,130) | (1,243) | (1,050) | (2,373) | (5,928) |
| Foreign exchange loss | (85) | (905) | (728) | (990) | (1,109) |
| Other income (expense) | 214 | 575 | (3) | 789 | 18 |
| Income before provision for (benefit from) income taxes | 16,303 | 20,409 | 20,386 | 36,712 | 10,852 |
| Provision for (benefit from) income taxes | 5,478 | 7,845 | (3,207) | 13,323 | (5,916) |
| Net income | 10,825 | 12,564 | 23,593 | 23,389 | 16,768 |
| Income attributable to noncontrolling interest, net of tax | (852) | (862) | (2,825) | (1,714) | (2,852) |
| Net income attributable to Globe Specialty Metals, Inc. | $ 9,973 | 11,702 | 20,768 | 21,675 | 13,916 |
| Weighted average shares outstanding: | |||||
| Basic | 73,749 | 73,754 | 75,267 | 73,752 | 75,289 |
| Diluted | 73,877 | 73,897 | 75,388 | 73,887 | 75,377 |
| Earnings per common share: | |||||
| Basic | $ 0.14 | 0.16 | 0.28 | 0.29 | 0.18 |
| Diluted | 0.13 | 0.16 | 0.28 | 0.29 | 0.18 |
| EBITDA: | |||||
| Net income | $ 10,825 | 12,564 | 23,593 | 23,389 | 16,768 |
| Provision for (benefit from) income taxes | 5,478 | 7,845 | (3,207) | 13,323 | (5,916) |
| Net interest expense | 1,073 | 1,162 | 1,046 | 2,235 | 5,796 |
| Depreciation, depletion, amortization and accretion | 12,761 | 11,625 | 11,463 | 24,386 | 22,816 |
| EBITDA | $ 30,137 | 33,196 | 32,895 | 63,333 | 39,464 |
| GLOBE SPECIALTY METALS, INC. | |||
| AND SUBSIDIARIES | |||
| Condensed Consolidated Balance Sheets | |||
| (In thousands) | |||
| (Unaudited) | |||
|
December 31, 2014 |
September 30, 2014 |
December 31, 2013 |
|
| Assets | |||
| Current assets: | |||
| Cash and cash equivalents | $ 104,533 | 106,395 | 158,564 |
| Marketable securities | 5,660 | 7,694 | 150 |
| Accounts receivable, net | 67,644 | 91,989 | 70,341 |
| Inventories | 117,753 | 93,293 | 88,562 |
| Deferred tax assets | 484 | 2,906 | 17,877 |
| Prepaid expenses and other current assets | 22,376 | 20,116 | 14,124 |
| Total current assets | 318,450 | 322,393 | 349,618 |
| Property, plant, and equipment, net | 463,091 | 468,733 | 459,963 |
| Deferred tax assets | 840 | 334 | 125 |
| Goodwill | 43,343 | 43,343 | 43,343 |
| Other intangible assets | 477 | 477 | 477 |
| Investments in unconsolidated affiliates | 5,973 | 5,973 | 5,973 |
| Other assets | 1,871 | 1,941 | 4,385 |
| Total assets | $ 834,045 | 843,194 | 863,884 |
| Liabilities and Stockholders' Equity | |||
| Current liabilities: | |||
| Accounts payable | $ 42,546 | 50,054 | 40,935 |
| Short-term debt | 72 | 58 | 15 |
| Revolving credit agreements | -- | -- | 9,000 |
| Share-based liabilities | 9,919 | 10,206 | 38,400 |
| Accrued expenses and other current liabilities | 36,437 | 37,310 | 32,524 |
| Total current liabilities | 88,974 | 97,628 | 120,874 |
| Long-term liabilities: | |||
| Revolving credit agreements and other long-term debt | 125,122 | 125,132 | 100,000 |
| Deferred tax liabilities | 47,595 | 48,554 | 46,749 |
| Other long-term liabilities | 50,038 | 49,377 | 53,832 |
| Total liabilities | 311,729 | 320,691 | 321,455 |
| Stockholders' equity: | |||
| Common stock | 8 | 8 | 8 |
| Additional paid-in capital | 401,802 | 400,821 | 397,415 |
| Retained earnings | 81,487 | 77,045 | 74,188 |
| Accumulated other comprehensive loss | (17,697) | (11,463) | (5,766) |
| Treasury stock at cost | (29,208) | (29,208) | (7,287) |
| Total Globe Specialty Metals, Inc. stockholders' equity | 436,392 | 437,203 | 458,558 |
| Noncontrolling interest | 85,924 | 85,300 | 83,871 |
| Total stockholders' equity | 522,316 | 522,503 | 542,429 |
| Total liabilities and stockholders' equity | $ 834,045 | 843,194 | 863,884 |
| GLOBE SPECIALTY METALS, INC. | |||||
| AND SUBSIDIARIES | |||||
| Condensed Consolidated Statements of Cash Flows | |||||
| (In thousands) | |||||
| (Unaudited) | |||||
| Three Months Ended | Six Months Ended | ||||
|
December 31, 2014 |
September 30, 2014 |
December 31, 2013 |
December 31, 2014 |
December 31, 2013 |
|
| Cash flows from operating activities: | |||||
| Net income | $ 10,825 | 12,564 | 23,593 | 23,389 | 16,768 |
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||
| Depreciation, depletion, amortization and accretion | 12,761 | 11,625 | 11,463 | 24,386 | 22,816 |
| Share-based compensation | 958 | 2,079 | (261) | 3,037 | (1,819) |
| Curtailment gain | -- | -- | (5,831) | -- | (5,831) |
| Bargain purchase gain | -- | -- | (29,538) | -- | (29,538) |
| Amortization of deferred financing fees | 42 | 46 | 53 | 88 | 3,577 |
| Unrealized foreign exchange loss (gain) | 336 | (300) | -- | 36 | -- |
| Deferred taxes | 1,475 | 3,170 | (3,405) | 4,645 | (9,935) |
| Amortization of customer contract liabilities | (1,831) | (1,896) | (1,636) | (3,727) | (3,366) |
| Changes in operating assets and liabilities: | |||||
| Accounts receivable, net | 23,551 | 8,505 | 6,458 | 32,056 | 13,661 |
| Inventories | (25,697) | (13,636) | 3,275 | (39,333) | 14,275 |
| Prepaid expenses and other current assets | (3,319) | 2,762 | 5,416 | (557) | 12,015 |
| Accounts payable | (5,808) | 1,989 | 2,277 | (3,819) | 2,513 |
| Accrued expenses and other current liabilities | 757 | (893) | 8,772 | (136) | 22,188 |
| Other | 3,829 | (1,126) | 2,631 | 2,703 | 4,637 |
| Net cash provided by operating activities | 17,879 | 24,889 | 23,267 | 42,768 | 61,961 |
| Cash flows from investing activities: | |||||
| Capital expenditures | (13,798) | (16,836) | (10,861) | (30,634) | (18,064) |
| Acquisition of businesses, net of cash acquired | -- | -- | (3,800) | -- | (3,800) |
| Proceeds from sale of marketable securities | 350 | 7,005 | -- | 7,355 | -- |
| Net cash used in investing activities | (13,448) | (9,831) | (14,661) | (23,279) | (21,864) |
| Cash flows from financing activities: | |||||
| Net borrowings (payments) of short-term debt | 4 | (14) | -- | (10) | (269) |
| Net payments on revolving credit agreements | -- | -- | -- | -- | (30,250) |
| Debt issuance costs | -- | -- | -- | -- | (1,080) |
| Dividend payment | (5,531) | (5,532) | (5,178) | (11,063) | (10,356) |
| Proceeds from stock option exercises | 23 | 57 | -- | 80 | -- |
| Purchase of treasury shares | -- | (242) | (7,283) | (242) | (7,283) |
| Other financing activities | (646) | (646) | (630) | (1,292) | (1,263) |
| Net cash used in financing activities | (6,150) | (6,377) | (13,091) | (12,527) | (50,501) |
| Effect of exchange rate changes on cash and cash equivalents | (143) | (78) | (35) | (221) | (708) |
| Net (decrease) increase in cash and cash equivalents | (1,862) | 8,603 | (4,520) | 6,741 | (11,112) |
| Cash and cash equivalents at beginning of period | 106,395 | 97,792 | 163,084 | 97,792 | 169,676 |
| Cash and cash equivalents at end of period | $ 104,533 | 106,395 | 158,564 | 104,533 | 158,564 |
| Supplemental disclosures of cash flow information: | |||||
| Cash paid for interest, net | $ 534 | 526 | 850 | 1,060 | 1,859 |
| Cash paid (refunded) for income taxes, net | 9,700 | 212 | (4,136) | 9,912 | (3,536) |
| GLOBE SPECIALTY METALS, INC. | |||||
| AND SUBSIDIARIES | |||||
| Supplemental Statistics | |||||
| (Unaudited) | |||||
| Three Months Ended | Six Months Ended | ||||
|
December 31, 2014 |
September 30, 2014 |
December 31, 2013 |
December 31, 2014 |
December 31, 2013 |
|
| Shipments in metric tons: | |||||
| Silicon metal | 38,436 | 39,416 | 31,631 | 77,852 | 63,250 |
| Silicon-based alloys | 32,450 | 33,900 | 34,985 | 66,350 | 65,401 |
| Total shipments* | 70,886 | 73,316 | 66,616 | 144,202 | 128,651 |
| Average selling price ($/MT): | |||||
| Silicon metal | $ 2,916 | $ 2,807 | $ 2,766 | $ 2,861 | $ 2,732 |
| Silicon-based alloys | 2,030 | 2,048 | 1,983 | 2,039 | 2,000 |
| Total* | $ 2,511 | $ 2,456 | $ 2,355 | $ 2,483 | $ 2,360 |
| Average selling price ($/lb.): | |||||
| Silicon metal | $ 1.32 | $ 1.27 | $ 1.25 | $ 1.30 | $ 1.24 |
| Silicon-based alloys | 0.92 | 0.93 | 0.90 | 0.92 | 0.91 |
| Total* | $ 1.14 | $ 1.11 | $ 1.07 | $ 1.13 | $ 1.07 |
| * Excludes by-products and other | |||||