- Net income of $13.4 million, up $1.7 million from the prior year and down $7.2 million from the first quarter of fiscal 2012
- Diluted earnings per share of $0.18, up from $0.15 per share in the prior year and down from $0.27 per share in the first quarter of fiscal 2012
- EBITDA on a comparable basis of $36.6 million, up from $22.5 million in the prior year and down from $42.5 million in the first quarter of fiscal 2012
- EBITDA on a comparable basis in the quarter declined $5.9 million from the first quarter as a result of several major events including significant planned maintenance and upgrades, mark-to-market of the power hedge and foreign exchange translation and lower shipments and pricing.
NEW YORK, Feb. 6, 2012 (GLOBE NEWSWIRE) -- Globe Specialty Metals, Inc. (Nasdaq:GSM) (the "Company") today announces results for the second quarter and six months of fiscal 2012 ended December 31, 2011.
Net sales for the quarter of $165.5 million were up 6% from the prior year and down 5% from the first quarter of fiscal 2012. Shipments of 51,306 MT were down 13% from the prior year and down 5% from the first quarter. Net income attributable to GSM for the second quarter was $13.4 million, compared to $11.7 million in the prior year and $20.7 million in first quarter. Diluted earnings per share for the quarter were $0.18 per share, compared to $0.15 per share in the prior year and $0.27 per share in the first quarter.
EBITDA for the quarter was $30.8 million, compared to $26.7 million in the prior year and $41.3 million in the first quarter. EBITDA on a comparable basis was $36.6 million, compared to $22.5 million in the prior year and $42.5 million in the first quarter.
Sales in the quarter declined 5% from the first quarter, on a decrease in shipments of 5%. The decline in shipments was largely caused by reduced production from the Bridgeport, Alabama plant due to the fire and planned maintenance and upgrades on six of our other furnaces.
Cash and cash equivalents totalled $131.2 million at December 31, 2011 and total debt was $105.4 million, including the $50 million Alden acquisition financing and $15.0 million of bank financing for the Alloy, West Virginia joint venture.
Cash flow provided by operating activities was $12.3 million in the quarter, compared to $3.6 million in the prior year and $12.4 million in the first quarter. Capital expenditures totalled $17.3 million in the quarter, primarily related to maintenance and upgrades in Niagara Falls, New York, Beverly, Ohio, Alloy, West Virginia and Selma, Alabama, and the company made a $15.0 million dividend payment.
Diluted earnings per share on a comparable basis were as follows:
| FY 2012 | FY 2011 | Six months | |||
| Second Quarter | First Quarter | Second Quarter | FY 2012 | FY 2011 | |
| Reported Diluted EPS | $ 0.18 | $ 0.27 | $ 0.15 | $ 0.44 | $ 0.18 |
| Tax rate adjustment | (0.01) | -- | -- | -- | 0.02 |
| Contract settlements | -- | -- | (0.03) | -- | (0.03) |
| Bridgeport fire | 0.04 | -- | -- | 0.04 | -- |
| Niagara Falls and Selma start-up costs | -- | -- | -- | -- | 0.03 |
| Transaction and due diligence expenses | 0.01 | 0.01 | 0.01 | 0.02 | 0.01 |
| Diluted EPS, excluding above items | $ 0.22 | $ 0.28 | $ 0.13 | $ 0.50 | $ 0.21 |
Second quarter results were negatively impacted by $3.3 million of after-tax expenses and forgone gross margin from the Bridgeport fire, $0.6 million of after-tax transaction-related and due diligence expenses and results were positively impacted by $0.8 million of lower income tax expense in the quarter primarily related to state taxes, which are included in the above table. Not included as adjusting items in the table, are incremental costs related to the planned maintenance and upgrades and the mark-to-market of the power hedge and foreign exchange translation.
Second quarter EBITDA, excluding the items listed below, was $36.6 million. EBITDA on a comparable basis was as follows:
| FY 2012 | FY 2011 | Six months | |||
| Second Quarter | First Quarter | Second Quarter | FY 2012 | FY 2011 | |
| Reported EBITDA | $ 30,752 | $ 41,251 | $ 26,681 | $ 72,003 | $ 40,615 |
| Gain on sale of business & associated Fx gain | -- | (473) | -- | (473) | -- |
| Contract settlements | -- | -- | (5,125) | -- | (5,125) |
| Bridgeport fire | 5,000 | -- | -- | 5,000 | -- |
| Niagara Falls and Selma start-up costs | -- | -- | -- | -- | 3,236 |
| Transaction and due diligence expenses | 846 | 1,680 | 935 | 2,526 | 935 |
| EBITDA, excluding above items | $ 36,598 | $ 42,458 | $ 22,491 | $ 79,056 | $ 39,661 |
EBITDA on a comparable basis declined $5.9 million from the first quarter primarily as a result of: incremental costs related to the planned maintenance and upgrades, which had a $2.5 million impact on EBITDA; the mark-to-market of our power hedge and foreign exchange, which had a $2.5 million impact; and, a decline in shipments and pricing.
Net sales for the six months ended December 31, 2011 of $340.4 million were up 16% from the prior year. Shipments of 105,591 MT were down 10% from the prior year, primarily due to the expiration of the calendar 2010 arrangement to ship material at cost to certain European customers from our former Brazilian plant. Net income attributable to GSM for the six months was $34.1 million, compared to $13.9 million in the prior year. Diluted earnings per share for the six months were $0.44 per share, compared to $0.18 per share in the prior year. EBITDA for the six months was $72.0 million, compared to $40.6 million in the prior year. EBITDA on a comparable basis was $79.1 million, compared to $39.7 million in the prior year.
Globe CEO Jeff Bradley commented, "Results for the quarter were impacted by the Bridgeport fire and our many planned furnace maintenance and upgrade outages. All of that is now behind us and all furnaces are operating to meet customer demand. We also expect our furnaces to have improved costs and output. Demand is improving as indicated in recent reports on our end markets."
Conference Call
Globe will review second quarter results during its quarterly conference call today, February 6, 2012, 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 February 6, 2012 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 | Six Months Ended | ||||
|
December 31, 2011 |
September 30, 2011 |
December 31, 2010 |
December 31, 2011 |
December 31, 2010 |
|
| Net sales | $165,547 | 174,862 | 155,775 | 340,409 | 293,127 |
| Cost of goods sold | 129,448 | 127,650 | 123,220 | 257,098 | 240,101 |
| Selling, general, and administrative expenses | 14,316 | 14,801 | 12,313 | 29,117 | 24,524 |
| Research and development | 3 | -- | 13 | 3 | 45 |
| Business interruption insurance recovery | (450) | -- | -- | (450) | -- |
| Gain on sale of business | -- | (54) | -- | (54) | -- |
| Operating income | 22,230 | 32,465 | 20,229 | 54,695 | 28,457 |
| Other income (expense): | |||||
| Interest income | 4 | 12 | 24 | 16 | 59 |
| Interest expense, net of capitalized interest | (1,459) | (1,388) | (706) | (2,847) | (1,689) |
| Foreign exchange (loss) gain | (308) | 1,324 | (80) | 1,016 | (376) |
| Other income | 198 | 162 | 322 | 360 | 550 |
| Income before provision for income taxes | 20,665 | 32,575 | 19,789 | 53,240 | 27,001 |
| Provision for income taxes | 6,070 | 11,488 | 6,143 | 17,558 | 10,497 |
| Net income | 14,595 | 21,087 | 13,646 | 35,682 | 16,504 |
| Income attributable to noncontrolling interest, net of tax | (1,151) | (394) | (1,938) | (1,545) | (2,634) |
| Net income attributable to Globe Specialty Metals, Inc. | $13,444 | 20,693 | 11,708 | 34,137 | 13,870 |
| Weighted average shares outstanding: | |||||
| Basic | 75,038 | 75,019 | 75,115 | 75,029 | 74,847 |
| Diluted | 76,732 | 76,789 | 76,734 | 76,759 | 76,430 |
| Earnings per common share: | |||||
| Basic | $0.18 | 0.28 | 0.16 | 0.45 | 0.19 |
| Diluted | 0.18 | 0.27 | 0.15 | 0.44 | 0.18 |
| EBITDA: | |||||
| Net income | $14,595 | 21,087 | 13,646 | 35,682 | 16,504 |
| Provision for income taxes | 6,070 | 11,488 | 6,143 | 17,558 | 10,497 |
| Net interest expense | 1,455 | 1,376 | 682 | 2,831 | 1,630 |
| Depreciation and amortization | 8,632 | 7,300 | 6,210 | 15,932 | 11,984 |
| EBITDA | $30,752 | 41,251 | 26,681 | 72,003 | 40,615 |
| GLOBE SPECIALTY METALS, INC. | |||||||
| AND SUBSIDIARY COMPANIES | |||||||
| Condensed Consolidated Balance Sheets | |||||||
| (In thousands) | |||||||
| (Unaudited) | |||||||
| December 31, | September 30, | December 31, | |||||
| 2011 | 2011 | 2010 | |||||
| Assets | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | $131,198 | 152,320 | 159,314 | ||||
| Accounts receivable, net | 60,796 | 68,158 | 47,585 | ||||
| Inventories | 118,747 | 123,612 | 100,003 | ||||
| Prepaid expenses and other current assets | 24,764 | 22,706 | 22,477 | ||||
| Total current assets | 335,505 | 366,796 | 329,379 | ||||
| Property, plant, and equipment, net | 329,907 | 321,427 | 226,567 | ||||
| Goodwill | 53,707 | 53,642 | 52,074 | ||||
| Other intangible assets | 477 | 477 | 477 | ||||
| Investments in unconsolidated affiliates | 9,003 | 8,806 | 8,642 | ||||
| Deferred tax assets | 304 | 217 | 71 | ||||
| Other assets | 25,711 | 25,943 | 3,000 | ||||
| Total assets | $754,614 | 777,308 | 620,210 | ||||
| Liabilities and Stockholders' Equity | |||||||
| Current liabilities: | |||||||
| Accounts payable | $34,699 | 41,302 | 46,843 | ||||
| Current portion of long-term debt | 16,667 | 11,111 | 8,450 | ||||
| Short-term debt | 385 | 1,105 | 936 | ||||
| Revolving credit agreements | 15,000 | 15,000 | 15,000 | ||||
| Dividend payable | -- | 15,007 | -- | ||||
| Accrued expenses and other current liabilities | 23,961 | 41,351 | 26,890 | ||||
| Total current liabilities | 90,712 | 124,876 | 98,119 | ||||
| Long-term liabilities: | |||||||
| Revolving credit agreements | 39,989 | 39,989 | 23,000 | ||||
| Long-term debt | 33,333 | 38,889 | 2,728 | ||||
| Deferred tax liabilities | 24,325 | 22,794 | 6,645 | ||||
| Other long-term liabilities | 28,271 | 28,362 | 17,787 | ||||
| Total liabilities | 216,630 | 254,910 | 148,279 | ||||
| Stockholders' equity: | |||||||
| Common stock | 8 | 8 | 8 | ||||
| Additional paid-in capital | 403,882 | 400,683 | 397,792 | ||||
| Retained earnings | 99,430 | 85,986 | 41,362 | ||||
| Accumulated other comprehensive loss | (2,364) | (2,736) | (4,010) | ||||
| Treasury stock at cost | (4) | (4) | (4) | ||||
| Total Globe Specialty Metals, Inc. stockholders' equity | 500,952 | 483,937 | 435,148 | ||||
| Noncontrolling interest | 37,032 | 38,461 | 36,783 | ||||
| Total stockholders' equity | 537,984 | 522,398 | 471,931 | ||||
| Total liabilities and stockholders' equity | $754,614 | 777,308 | 620,210 | ||||
| GLOBE SPECIALTY METALS, INC. | |||||
| AND SUBSIDIARY COMPANIES | |||||
| Condensed Consolidated Statements of Cash Flows | |||||
| (In thousands) | |||||
| (Unaudited) | |||||
| Three Months Ended | Six Months Ended | ||||
|
December 31, 2011 |
September 30, 2011 |
December 31, 2010 |
December 31, 2011 |
December 31, 2010 |
|
| Cash flows from operating activities: | |||||
| Net income | $14,595 | 21,087 | 13,646 | 35,682 | 16,504 |
| Adjustments to reconcile net income | |||||
| to net cash provided by operating activities: | |||||
| Depreciation, depletion and amortization | 8,632 | 7,300 | 6,210 | 15,932 | 11,984 |
| Share-based compensation | 686 | 461 | 1,273 | 1,147 | 2,548 |
| Gain on sale of business | -- | (54) | -- | (54) | -- |
| Deferred taxes | 3,409 | (516) | -- | 2,893 | -- |
| Changes in operating assets and liabilities: | |||||
| Accounts receivable, net | 7,362 | (6,809) | 3,283 | 553 | 8,497 |
| Inventories | 5,141 | (13,719) | (5,118) | (8,578) | (12,895) |
| Prepaid expenses and other current assets | (4,092) | 1,204 | (505) | (2,888) | 1,022 |
| Accounts payable | (5,587) | (3,251) | (1,955) | (8,838) | (587) |
| Accrued expenses and other current liabilities | (16,871) | 8,757 | (12,444) | (8,114) | (8,327) |
| Other | (1,000) | (2,095) | (793) | (3,095) | 60 |
| Net cash provided by operating activities | 12,275 | 12,365 | 3,597 | 24,640 | 18,806 |
| Cash flows from investing activities: | |||||
| Capital expenditures | (17,335) | (9,711) | (9,187) | (27,046) | (19,311) |
| Sale of businesses, net of cash disposed | -- | -- | 2,500 | -- | 2,500 |
| Acquisition of business, net of cash acquired | -- | (73,194) | -- | (73,194) | -- |
| Working capital adjustments from acquisition of businesses, net | -- | -- | -- | -- | (2,038) |
| Other investing activities | (150) | -- | -- | (150) | -- |
| Net cash used in investing activities | (17,485) | (82,905) | (6,687) | (100,390) | (18,849) |
| Cash flows from financing activities: | |||||
| Net borrowings (payments) of long-term debt | -- | 50,000 | (3,681) | 50,000 | (5,834) |
| Net (payments) borrowings of short-term debt | (720) | 11 | (5,280) | (709) | (7,131) |
| Net borrowings on revolving credit agreements | -- | 8,000 | 22,000 | 8,000 | 22,000 |
| Dividend payment | (15,007) | -- | (11,269) | (15,007) | (11,269) |
| Proceeds from stock option exercises | 83 | 112 | 1,208 | 195 | 4,891 |
| Other financing activities | (451) | (1,241) | -- | (1,692) | -- |
| Net cash (used in) provided by financing activities | (16,095) | 56,882 | 2,978 | 40,787 | 2,657 |
| Effect of exchange rate changes on cash and cash equivalents | 183 | (230) | (123) | (47) | (329) |
| Net (decrease) increase in cash and cash equivalents | (21,122) | (13,888) | (235) | (35,010) | 2,285 |
| Cash and cash equivalents at beginning of period | 152,320 | 166,208 | 159,549 | 166,208 | 157,029 |
| Cash and cash equivalents at end of period | $131,198 | 152,320 | 159,314 | 131,198 | 159,314 |
| Supplemental disclosures of cash flow information: | |||||
| Cash paid for interest, net | $1,420 | 701 | 669 | 2,121 | 1,284 |
| Cash paid for income taxes, net | 15,664 | 4,145 | 3,562 | 19,809 | 4,721 |
| GLOBE SPECIALTY METALS, INC. | |||||
| AND SUBSIDIARY COMPANIES | |||||
| Supplemental Statistics | |||||
| (Unaudited) | |||||
| Three Months Ended | Six Months Ended | ||||
|
December 31, 2011 |
September 30, 2011 |
December 31, 2010 |
December 31, 2011 |
December 31, 2010 |
|
| Shipments in metric tons*: | 51,306 | 54,285 | 59,171 | 105,591 | 117,619 |
| Average selling price ($/MT): | $2,868 | 2,894 | 2,294 | 2,882 | 2,228 |
| Average selling price ($/lb.): | $1.30 | 1.31 | 1.04 | 1.31 | 1.01 |
| * Excludes by-products and other | |||||