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Globe Specialty Metals Announces Fourth Quarter and Fiscal Year 2009 Results
NEW YORK, Sep 28, 2009 (GlobeNewswire via COMTEX News Network) -- Globe Specialty Metals, Inc. (Nasdaq:GSM) (the "Company") today announces results for the quarter and fiscal year ended June 30, 2009. Key points are as follows:
* Net sales for the quarter were up 7%, to $81.7 million, from the March 2009 quarter and down 40% from last year's record fourth quarter. * Net income for the quarter was $1.6 million, an increase of 75% compared to net income of $0.9 million in the March 2009 quarter and down 91% from the June 2008 quarter. * EBITDA for the quarter increased 53% from the March 2009 quarter to $12.3 million and decreased 63% from the June 2008 quarter. EBITDA includes charges for non-cash stock compensation. * Net cash flow in the quarter was up significantly to $16.9 million, compared to decreases of $10.3 million in the March 2009 quarter and $0.8 million in the June 2008 quarter. * The Company completed its Initial Public Offering on August 4, 2009. The Company is now listed on NASDAQ under the symbol GSM. The Company had total cash and cash equivalents of $110.5 million at August 31, 2009, including $36.5 million raised in the IPO.
The Company posted diluted earnings per share of $0.02 in the June 2009 quarter, compared to $0.01 per diluted share in the March 2009 quarter and $0.22 per diluted share in the June 2008 quarter. Fourth quarter income tax expense includes additional deferred tax provisions as well as the impact of certain other foreign tax matters, which decreased diluted earnings per share by $0.03.
For fiscal 2009, the Company recorded a net loss of $42.0 million or $0.65 per diluted share, compared to net income of $36.5 million or $0.50 per diluted share last year. Despite a 25% decline in shipments, net sales for the year fell by only 6%, to $426.3 million, from the prior year. Annual results were negatively impacted by a $69.7 million pre-tax goodwill and intangible asset impairment charge, a $2.5 million pre-tax write-off of deferred offering costs, $1.7 million of pre-tax restructuring charges and a $5.8 million pre-tax inventory write-down, which in total reduced diluted earnings per share by $1.14. The Company had no similar charges in the prior year.
Shipments in the quarter increased 14% from the March 2009 quarter as a result of improvements in many of our end user segments, including silicones and aluminum. Average selling prices in the quarter declined by 6% from the March 2009 quarter, driven by lower silicon alloy pricing offset by modestly higher silicon metal prices. The Company is seeing growing demand and improved pricing for our products as our customers are ramping up production.
Capital expenditures were $51.4 million for fiscal 2009 and were largely comprised of the expansion and refurbishment of the Niagara Falls plant, $23.2 million, development of the Company's Solsil business unit, $11.2 million, and the expansion of the Company's electrode manufacturing facility in China, $6.6 million. These projects were largely completed by March 2009 and, as a result, the June 2009 quarter included only $4.9 million of capital expenditures. For fiscal 2010, total capital expenditures, including maintenance and scheduled enhancement projects, are expected to be approximately $20 million.
The Company generated $32.4 million of operating cash flow in the June 2009 quarter largely as a result of cash earnings and working capital reductions from improved inventory management and lower accounts receivable. Cash and cash equivalents totaled $61.9 million at June 30, 2009. Total fiscal 2009 operating cash flow was $64.0 million. As sales volumes increase, the Company would expect inventory levels to rise at a less than proportionate rate as our enhanced focus on inventory management should generate permanent reductions in working capital.
"The global economic events we encountered in fiscal 2009 were very challenging," said CEO Jeff Bradley. "I am proud to report that Globe was profitable in every quarter of the fiscal year, before a goodwill and intangible asset impairment charge, and generated free cash flow for the year. This is a testament to the Company's financial strength and discipline as well as our position as the lowest cost producer of silicon metal and silicon-based alloys in the world."
He added, "We are experiencing a rebound in the chemical, aluminum, steel and iron foundry markets. As a result, we have restarted almost all of the furnaces that were idled earlier in the fiscal year. Our plants in Argentina, Brazil, Ohio and West Virginia are now operating at full capacity and we will reopen our Niagara Falls facility very soon. We are also continuing to invest in our China operation to increase capacity and improve the quality of the carbon electrodes produced at that facility."
Mr. Bradley continued, "We are better positioned today for long-term profitable growth than at any time in our history. The Company's strong balance sheet and cost structure, the drive and dedication to excellence of all employees and our ability to react to the markets we serve will fuel this growth."
Fiscal 2009 Actions in Review
The Company has worked aggressively to reduce costs, rationalize capacity and manage working capital to partially offset the effects of the global recession and remain profitable throughout fiscal 2009, excluding the goodwill and intangible asset impairment charge. Certain of these actions are expected to have a permanent effect on our cost structure by reducing fixed costs and better positioning the Company for profitable growth. Actions taken during the year included:
* Idling the Selma, Alabama plant in April 2009. * Reducing headcount by 35%, or 455, from 1,283 in June 2008 to 828 in June 2009. * Reducing inventory by 12%, or $9.6 million, from March 2009 to June 2009. * Refurbishing and expanding our Niagara Falls plant with a capacity of 30,000 MT of silicon metal annually.
Conference Call
Globe will review fourth quarter and fiscal 2009 results during its quarterly conference call tomorrow, September 29, 2009, at 10:00 a.m. Eastern Daylight Time. Details regarding the conference call can be found on the Company's web site at www.glbsm.com.
About Globe Specialty Metals
Globe Specialty Metals, Inc. is among the world's largest producers of silicon metal and silicon-based 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, N.Y. For further information please visit our web site at www.glbsm.com.
Forward-Looking Statements
This release contains "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. 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 and Adjusted EBITDA
EBITDA and adjusted EBITDA are non-GAAP measures.
The Company has included EBITDA and adjusted EBITDA to provide supplemental measures of our performance, which it believes are important because they eliminate items that have less bearing on our current and future operating performance and so highlight trends in our core business that may not otherwise be apparent when relying solely on GAAP financial measures. Adjusted EBITDA represents EBITDA as further adjusted by the removal of goodwill and intangible asset impairment charges which are of an unusual and / or non-recurring nature. A reconciliation of EBITDA and adjusted EBITDA to net (loss) income is provided in the attached condensed financial statements.
GLOBE SPECIALTY METALS, INC.
AND SUBSIDIARY COMPANIES
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
June 30, June 30,
2009 2008
-------- --------
Assets
Current assets:
Cash and cash equivalents $ 61,876 73,994
Accounts receivable, net of allowance for
doubtful accounts 24,094 53,801
Inventories 67,394 63,568
Prepaid expenses and other current assets 24,675 25,223
-------- --------
Total current assets 178,039 216,586
Property, plant, and equipment, net 217,507 180,659
Goodwill 51,828 107,257
Other intangible assets 1,231 16,884
Investments in unconsolidated affiliates 7,928 7,965
Deferred tax assets 1,598 2,720
Other assets 15,149 16,103
-------- --------
Total assets $473,280 548,174
======== ========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 21,341 40,493
Current portion of long-term debt 16,561 17,045
Short-term debt 6,688 20,140
Accrued expenses and other current liabilities 46,725 26,841
-------- --------
Total current liabilities 91,315 104,519
Long-term liabilities:
Long-term debt 36,364 52,020
Deferred tax liabilities 18,890 22,756
Other long-term liabilities 16,431 22,642
-------- --------
Total liabilities 163,000 201,937
-------- --------
Minority interest 5,897 3,956
Stockholders' equity:
Common stock 7 6
Additional paid-in capital 303,364 296,137
Retained earnings 4,660 46,641
Accumulated other comprehensive loss (3,644) (503)
Treasury stock at cost (4) --
-------- --------
Total stockholders' equity 304,383 342,281
-------- --------
Total liabilities and stockholders' equity $473,280 548,174
======== ========
GLOBE SPECIALTY METALS, INC.
AND SUBSIDIARY COMPANIES
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
Year Ended Three Months Ended
------------------ ----------------------------
June 30, June 30, June 30, March 31, June 30,
2009 2008 2009 2009 2008
-------- -------- -------- -------- --------
Net sales $426,291 452,639 $ 81,681 76,146 135,888
Cost of goods sold 324,535 346,227 66,821 61,875 94,849
Selling, general,
and administrative
expenses 61,823 48,548 13,348 11,519 14,245
Research and
development 1,394 901 272 246 494
Goodwill and
intangible asset
impairment 69,704 -- -- 144 --
Restructuring charges 1,711 -- 324 1,387 --
-------- -------- -------- -------- --------
Operating (loss)
income (32,876) 56,963 916 975 26,300
Other income
(expense):
Interest income 729 2,626 99 77 331
Interest expense,
net of capitalized
interest (6,947) (9,652) (1,351) (1,427) (2,054)
Foreign exchange
gain 2,202 642 5,163 465 618
Other income 3,117 1,099 749 862 923
-------- -------- -------- -------- --------
(Loss) income
before provision
for income taxes (33,775) 51,678 5,576 952 26,118
Provision for
income taxes 11,609 15,936 4,319 916 8,593
-------- -------- -------- -------- --------
Net (loss) income
before minority
interest (45,384) 35,742 1,257 36 17,525
Losses attributable
to minority
interest, net of tax 3,403 721 381 901 695
-------- -------- -------- -------- --------
Net (loss) income $(41,981) 36,463 $ 1,638 937 18,220
======== ======== ======== ======== ========
Weighted average
shares outstanding:
Basic 64,362 58,982 66,944 63,930 63,050
Diluted 64,362 72,954 66,944 66,896 82,550
(Loss) earnings per
common share:
Basic $ (0.65) 0.62 $ 0.02 0.01 0.29
Diluted (0.65) 0.50 0.02 0.01 0.22
EBITDA and Adjusted
EBITDA:
Net (loss) income $(41,981) 36,463 $ 1,638 937 18,220
Provision for
income taxes 11,609 15,936 4,319 916 8,593
Net interest expense 6,218 7,026 1,252 1,350 1,723
Depreciation and
amortization 19,807 19,339 5,067 4,807 5,084
-------- -------- -------- -------- --------
EBITDA (4,347) 78,764 12,276 8,010 33,620
Goodwill and
intangible asset
impairment 69,704 -- -- 144 --
-------- -------- -------- -------- --------
Adjusted EBITDA $ 65,357 78,764 $ 12,276 8,154 33,620
======== ======== ======== ======== ========
GLOBE SPECIALTY METALS, INC.
AND SUBSIDIARY COMPANIES
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Year Ended Three Months Ended
------------------ ----------------------------
June 30, June 30, June 30, March 31, June 30,
2009 2008 2009 2009 2008
-------- -------- -------- -------- --------
Cash flows from
operating
activities:
Net (loss) income $(41,981) 36,463 $ 1,638 937 18,220
Adjustments to
reconcile net
(loss) income to
net cash provided
by operating
activities:
Depreciation and
amortization 19,807 19,339 5,067 4,807 5,084
Amortization of
customer
contracts (434) (3,039) -- 5 (230)
Share-based
compensation 6,395 8,176 1,691 1,508 1,559
Goodwill and
intangible asset
impairment 69,704 -- -- 144 --
Losses
attributable to
minority
interest, net of
tax (3,403) (721) (381) (901) (695)
Deferred taxes 4,735 2,265 8,812 471 1,892
Changes in
operating assets
and liabilities,
net of
acquisitions:
Accounts
receivable, net 29,449 (18,173) 6,783 9,605 (4,706)
Inventories (6,463) (17,730) 8,965 (3,281) (3,472)
Prepaid expenses
and other
current assets (6,889) (5,993) (5,128) 1,121 (6,240)
Accounts payable (20,499) (2,381) 659 (12,712) (189)
Accrued expenses
and other
current
liabilities 18,487 8,930 1,573 17,961 6,714
Other (4,894) 5,070 2,696 (12,209) 9,589
-------- -------- -------- -------- --------
Net cash
provided by
operating
activities 64,014 32,206 32,375 7,456 27,526
-------- -------- -------- -------- --------
Cash flows from
investing
activities:
Capital expenditures (51,437) (22,357) (4,930) (11,753) (9,259)
Held-to-maturity
treasury securities 2,987 (2,987) -- -- --
Note receivable from
Solsil, Inc. -- (1,500) -- -- --
Other investing
activities 265 236 -- (75) 523
-------- -------- -------- -------- --------
Net cash used
in investing
activities (48,185) (26,608) (4,930) (11,828) (8,736)
-------- -------- -------- -------- --------
Cash flows from
financing
activities:
Proceeds from
warrants exercised 833 3,497 -- -- (1)
Net (payments)
borrowings of
long-term debt (16,163) 13,722 (5,307) (6,152) 91
Net payments of
short-term debt (11,878) (15,247) (4,978) (3,447) (17,947)
Solsil, Inc. common
share issuance 1,570 509 -- -- 135
Change in restricted
cash -- -- -- 3,580 --
Other financing
activities (2,316) (1,876) (271) 35 (1,876)
-------- -------- -------- -------- --------
Net cash (used
in) provided
by financing
activities (27,954) 605 (10,556) (5,984) (19,598)
-------- -------- -------- -------- --------
Effect of exchange
rate changes on cash
and cash equivalents 7 50 (35) 57 50
-------- -------- -------- -------- --------
Net (decrease)
increase in
cash and cash
equivalents (12,118) 6,253 16,854 (10,299) (758)
Cash and cash
equivalents at
beginning of period 73,994 67,741 45,022 55,321 74,752
-------- -------- -------- -------- --------
Cash and cash
equivalents at end
of period $ 61,876 73,994 $ 61,876 45,022 73,994
======== ======== ======== ======== ========
Supplemental
disclosures of cash
flow information:
Cash paid for
interest $ 6,932 7,091 $ 1,195 1,452 1,734
Cash paid for
income taxes 10,498 13,833 1,256 1,213 6,149
GLOBE SPECIALTY METALS, INC.
AND SUBSIDIARY COMPANIES
Supplemental Statistics
(Unaudited)
Year Ended Three Months Ended
------------------ ----------------------------
June 30, June 30, June 30, March 31, June 30,
2009 2008 2009 2009 2008
-------- -------- -------- -------- --------
Shipments in
metric tons:
Silicon metal 100,461 145,675 20,089 18,564 39,292
Silicon-based alloys 59,554 68,731 12,093 9,762 17,166
-------- -------- -------- -------- --------
Total shipments^ 160,015 214,406 32,182 28,326 56,458
======== ======== ======== ======== ========
Average selling
price:
Silicon metal $ 2,564 2,260 $ 2,594 2,563 2,520
Silicon-based alloys 2,374 1,532 2,044 2,471 1,795
-------- -------- -------- -------- --------
Total^ $ 2,493 2,027 $ 2,388 2,531 2,300
======== ======== ======== ======== ========
^ Excludes by-products
This news release was distributed by GlobeNewswire, www.globenewswire.com
SOURCE: Globe Specialty Metals
CONTACT: Globe Specialty Metals, Inc. Jeff Bradley, Chief Executive Officer 212-798-8122 jbradley@glbsm.com Mal Appelbaum, Chief Financial Officer 212-798-8123 mappelbaum@glbsm.com
(C) Copyright 2009 GlobeNewswire, Inc. All rights reserved.
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