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Globe Specialty Metals Announces Second Quarter Fiscal 2010 Results
NEW YORK, Feb 11, 2010 (GlobeNewswire via COMTEX News Network) -- Globe Specialty Metals, Inc. (Nasdaq:GSM) (the "Company") today announces results for the quarter and six months ended December 31, 2009. Key points are as follows:
-- Net sales for the second quarter ended December 31, 2009 were up 3%, to
$108.3 million, and shipments increased 11% to 44,508 MT, from our first
quarter ended September 30, 2009.
-- Net income attributable to GSM for the second quarter was $18.5 million,
compared to $8.4 million in our first quarter. Diluted earnings per
share were $0.25 in the quarter, compared to $0.12 per share in our
first quarter.
-- Increased silicon metal demand led us to reopen our Niagara Falls, NY
and Selma, AL plants. Niagara Falls had been closed for more than five
years and is now producing silicon metal in both of its furnaces. Selma
had been idled since April 2009 and we expect it to be operating at
capacity by the end of February.
-- We closed two major transactions with Dow Corning on November 4, 2009
that provided us with $175.0 million of gross cash proceeds
(approximately $135.0 million of net cash proceeds) to fund acquisitions
and other growth initiatives. As a result of the transactions, our
second quarter includes a net after tax gain of $14.0 million ($75.0
million of gross proceeds less our cost basis, taxes and transaction
fees from the sale of our Brazilian plant) and our balance sheet
includes additional paid-in capital and non-controlling interest of
$69.0 million ($100.0 million of gross proceeds less taxes and
transaction fees as a result of the formation of a joint venture with
Dow Corning, which we control and consolidate).
The Company posted second quarter net income attributable to GSM of $18.5 million, or $0.25 a diluted share, compared to net income of $8.4 million or $0.12 per diluted share in our first quarter of 2010 and a $61.5 million net loss, or $0.97 a diluted share, in the second quarter of last year. Diluted earnings per share on a comparable basis were as follows:
FY 2010 FY 2009
---------------- -------
Second First Second
Quarter Quarter Quarter
------- ------- -------
Reported Diluted EPS $ 0.25 0.12 (0.97)
Goodwill impairment -- -- 1.03
Gain on sale of Brazil (0.19) -- --
Write-off of deferred IPO offering costs -- -- 0.02
Niagara Falls and Selma startup costs 0.03 -- --
Inventory write-downs and fixed asset
impairment 0.01 -- 0.05
------- ------- -------
Diluted EPS, excluding above items $ 0.10 0.12 0.13
======= ======= =======
Second quarter results benefited from a $14.0 million after tax gain on the sale of our Brazilian plant and were negatively impacted by $2.4 million of after tax start-up costs for the Niagara Falls, NY and Selma, AL plants and a $0.7 million after tax impairment charge on certain furnaces at our electrode plant in China, which in total increased diluted earnings per share by $0.15.
Shipments in the second quarter increased 11% from the preceding quarter as a result of stronger demand from our end markets. Our average selling price declined by 5% from the preceding quarter, with a 3% decline in silicon metal and an 8% decline in silicon-based alloys. Adjusting for the material provided to Dow Corning under the joint venture our average silicon metal price actually increased 1%. The decline in the average selling price of silicon-based alloys is primarily a result of an 8% increase in overall silicon-based alloy shipments in the second quarter coming mostly from additional standard grade ferrosilicon which is our lowest priced alloy.
Second quarter EBITDA was $37.0 million, compared to $19.9 million in our first quarter and a $56.9 million loss in the second quarter of last year. EBITDA on a comparable basis was as follows:
FY 2010 FY 2009
------------------ ---------
Second First Second
Quarter Quarter Quarter
--------- ------- ---------
Reported EBITDA $ 37,039 19,919 (56,891)
Goodwill impairment -- -- 69,560
Gain on sale of Brazil (23,368) 461 --
Write-off of deferred IPO offering costs -- -- 2,527
Niagara Falls and Selma startup costs 3,892 -- --
Inventory write-downs and fixed asset
impairment 685 (68) 3,461
--------- ------- ---------
EBITDA, excluding above items $ 18,248 20,312 18,657
========= ======= =========
For the first half of fiscal 2010 the Company posted net income attributable to GSM of $27.0 million, or $0.37 a diluted share, compared to a net loss of $44.6 million or $0.70 per diluted share in the first half of fiscal 2009. Last year's results included an after tax impairment charge of $65.2 million. EBITDA for the first half of fiscal 2010 was $57.0 million, compared to a loss of $24.6 million in the first half of fiscal 2009.
We expect volumes to improve as output from our Niagara Falls, NY and Selma, AL plants more than make up for the lost capacity from the sale of our Brazilian plant. In our fiscal third quarter we expect the average selling price of silicon metal to be somewhat lower than the second quarter as a result of material shipped under the joint venture and the expiration of a small volume of above-market calendar 2009 contracts. As demand increases we would expect spot prices for silicon metal and silicon-based alloys to improve.
Capital expenditures were $5.7 million in the second quarter. We expect a modest increase in capital expenditures in our third quarter to support the reopening of the Selma plant.
Cash and cash equivalents totalled $252.2 million at December 31, 2009, which included approximately $160.0 million of net cash proceeds from the Dow Corning transactions, with a tax payment of approximately $30.0 million still due to be paid in our third quarter. Accounts receivable and inventories declined by 5% each from September 30, 2009 to December 31, 2009 as a result of the sale of our Brazilian plant, partially offset by the start-up of Niagara Falls. Accounts payable increased 43% from September 30, 2009 to December 31, 2009 largely from the amounts due to Dow Corning for shipments to our retained Brazilian customers.
Globe CEO Jeff Bradley commented: "Improving trends in our end markets led us to reopen our Niagara Falls, NY and Selma, AL plants. We are optimistic that the demand increases we are seeing from the chemical, aluminum, steel and solar industries will continue. Spot prices are also strengthening as demand increases." Bradley continued, "We expect calendar 2010 to be a very solid year."
Conference Call
Globe will review first quarter results during its quarterly conference call tomorrow, February 12, 2010, at 9:00 a.m. Eastern Time. The dial-in number for the call is 888-778-9052. International callers should dial 913-312-1471. 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 12, 2010 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 (loss) is provided in the attached financial statements.
GLOBE SPECIALTY METALS, INC.
AND SUBSIDIARY COMPANIES
Condensed Consolidated Balance Sheets
(In thousands)
December September June
31, 30, 30,
2009 2009 2009
----------- ----------- -------
(Unaudited) (Unaudited)
Assets
Current assets:
Cash and cash equivalents $252,231 114,020 61,876
Accounts receivable, net of
allowance for doubtful
accounts 36,673 38,513 24,094
Inventories 54,508 57,283 67,394
Prepaid expenses and other
current assets 12,123 19,996 24,675
----------- ----------- -------
Total current assets 355,535 229,812 178,039
Property, plant, and
equipment, net 188,803 215,353 217,507
Goodwill 51,836 51,835 51,828
Other intangible assets 477 967 1,231
Investments in
unconsolidated affiliates 8,171 7,910 7,928
Deferred tax assets 49 1,737 1,598
Other assets 2,284 14,203 15,149
----------- ----------- -------
Total assets $607,155 521,817 473,280
=========== =========== =======
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $36,505 25,585 21,341
Current portion of
long-term debt 9,641 18,906 16,561
Short-term debt 14,013 7,628 6,688
Accrued expenses and other
current liabilities 58,974 49,787 46,725
----------- ----------- -------
Total current liabilities 119,133 101,906 91,315
Long-term liabilities:
Long-term debt 12,730 28,854 36,364
Deferred tax liabilities 14,549 18,890 18,890
Other long-term liabilities 14,782 16,108 15,359
----------- ----------- -------
Total liabilities 161,194 165,758 161,928
----------- ----------- -------
Stockholders' equity:
Common stock 7 7 7
Additional paid-in capital 384,404 339,923 303,364
Retained earnings 31,636 13,102 4,660
Accumulated other
comprehensive loss (3,676) (3,666) (3,644)
Treasury stock at cost (4) (4) (4)
----------- ----------- -------
Total Globe Specialty
Metals, Inc.
stockholders' equity 412,367 349,362 304,383
Noncontrolling interest 33,594 6,697 6,969
----------- ----------- -------
Total stockholders' equity 445,961 356,059 311,352
----------- ----------- -------
Total liabilities and
stockholders' equity $607,155 521,817 473,280
=========== =========== =======
GLOBE SPECIALTY METALS, INC.
AND SUBSIDIARY COMPANIES
Condensed Consolidated Statement of Operations
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Six Months Ended
----------------------------- ------------------
December September December December December
31, 2009 30, 2009 31, 2008 31, 2009 31, 2008
-------- --------- -------- -------- --------
Net sales $108,278 105,458 119,307 213,736 268,464
Cost of goods sold 87,974 79,978 91,957 167,952 199,095
Selling, general, and
administrative expenses 13,142 12,723 19,668 25,865 33,700
Research and development 77 38 283 115 876
Restructuring charges (13) (68) -- (81) --
Gain on sale of business (23,368) 461 -- (22,907) --
Goodwill and intangible asset
impairment -- -- 69,560 -- 69,560
-------- --------- -------- -------- --------
Operating income (loss) 30,466 12,326 (62,161) 42,792 (34,767)
Other income (expense):
Interest income 65 136 150 201 553
Interest expense, net of
capitalized interest (1,101) (1,318) (2,118) (2,419) (4,169)
Foreign exchange gain (loss) 871 2,415 (2,117) 3,286 (3,426)
Other income (loss) 199 (7) 662 192 1,506
-------- --------- -------- -------- --------
Income (loss) before
provision for (benefit
from) income taxes 30,500 13,552 (65,584) 44,052 (40,303)
Provision for (benefit from)
income taxes 12,568 5,383 (2,328) 17,951 6,374
-------- --------- -------- -------- --------
Net income (loss) 17,932 8,169 (63,256) 26,101 (46,677)
Losses attributable to
noncontrolling interest, net
of tax 602 273 1,735 875 2,121
-------- --------- -------- -------- --------
Net income (loss)
attributable to Globe
Specialty Metals, Inc. $18,534 8,442 (61,521) 26,976 (44,556)
======== ========= ======== ======== ========
Weighted average shares
outstanding:
Basic 74,314 71,115 63,455 72,710 63,296
Diluted 75,154 72,543 63,455 73,844 63,296
Earnings (loss) per common
share:
Basic $0.25 0.12 (0.97) 0.37 (0.70)
Diluted 0.25 0.12 (0.97) 0.37 (0.70)
EBITDA:
Net income (loss)
attributable to Globe
Specialty Metals, Inc. $18,534 8,442 (61,521) 26,976 (44,556)
Provision for (benefit from)
income taxes 12,568 5,383 (2,328) 17,951 6,374
Net interest expense 1,036 1,182 1,968 2,218 3,616
Depreciation and amortization 4,901 4,912 4,990 9,813 9,933
-------- --------- -------- -------- --------
EBITDA $37,039 19,919 (56,891) 56,958 (24,633)
======== ========= ======== ======== ========
GLOBE SPECIALTY METALS, INC.
AND SUBSIDIARY COMPANIES
Condensed Consolidated Statements of Cash Flows
(In thousands)
(UNAUDITED)
Three Months Ended Six Months Ended
----------------------------- ------------------
December September December December December
31, 2009 30, 2009 31, 2008 31, 2009 31, 2008
-------- --------- -------- -------- --------
Cash flows from operating activities:
Net income (loss) $17,932 8,169 (63,256) 26,101 (46,677)
Adjustments to reconcile net income
(loss)
to net cash provided by operating
activities:
Depreciation and amortization 4,901 4,912 4,990 9,813 9,933
Share-based compensation 1,476 1,755 791 3,231 3,196
Gain on sale of business (23,368) 461 -- (22,907) --
Goodwill and intangible asset
impairment -- -- 69,560 -- 69,560
Deferred taxes (19) (55) (5,131) (74) (4,548)
Changes in operating assets and
liabilities:
Accounts receivable, net (2,614) (14,465) 12,805 (17,079) 13,061
Inventories (6,821) 9,805 (4,809) 2,984 (12,147)
Prepaid expenses and other current
assets 5,221 4,192 932 9,413 (2,882)
Accounts payable 16,263 5,353 (7,616) 21,616 (8,446)
Accrued expenses and other current
liabilities (19,507) 2,224 (4,433) (17,283) (1,047)
Other 572 2,374 4,223 2,946 4,180
-------- --------- -------- -------- --------
Net cash (used in) provided by
operating activities (5,964) 24,725 8,056 18,761 24,183
-------- --------- -------- -------- --------
Cash flows from investing activities:
Capital expenditures (5,660) (4,255) (20,537) (9,915) (34,754)
Sale of business and noncontrolling
interest 158,445 -- -- 158,445 --
Held-to-maturity treasury securities -- -- -- -- 2,987
Other investing activities (4,685) -- 328 (4,685) 340
-------- --------- -------- -------- --------
Net cash provided by (used in)
investing activities 148,100 (4,255) (20,209) 143,845 (31,427)
-------- --------- -------- -------- --------
Cash flows from financing activities:
Proceeds from warrants exercised 1,287 -- -- 1,287 833
Proceeds from UPOs exercised 210 -- -- 210 --
Net payments of long-term debt (11,391) (5,167) (4,366) (16,558) (4,704)
Net borrowings (payments) of short-term
debt 6,384 940 1,147 7,324 (3,453)
Sale of common stock -- 36,456 1,570 36,456 1,570
Change in restricted cash -- -- (3,580) -- (3,580)
Other financing activities (410) (527) (380) (937) (2,080)
-------- --------- -------- -------- --------
Net cash (used in) provided by
financing activities (3,920) 31,702 (5,609) 27,782 (11,414)
-------- --------- -------- -------- --------
Effect of exchange rate changes on cash
and cash equivalents (5) (28) (71) (33) (15)
-------- --------- -------- -------- --------
Net increase (decrease) in cash and
cash equivalents 138,211 52,144 (17,833) 190,355 (18,673)
Cash and cash equivalents at beginning of
period 114,020 61,876 73,154 61,876 73,994
-------- --------- -------- -------- --------
Cash and cash equivalents at end of
period $252,231 114,020 55,321 252,231 55,321
======== ========= ======== ======== ========
Supplemental disclosures of cash flow information:
Cash paid for interest $729 990 1,091 1,719 4,285
Cash paid for income taxes, net of
refunds 6,001 (2,397) 6,902 3,604 8,029
GLOBE SPECIALTY METALS, INC.
AND SUBSIDIARY COMPANIES
Supplemental Statistics
(Unaudited)
Three Months Ended Six Months Ended
----------------------------- ------------------
December September December December December
31, 30, 31, 31, 31,
2009 2009 2008 2009 2008
-------- --------- -------- -------- --------
Shipments in metric tons:
Silicon metal 28,759 25,962 28,674 54,721 61,809
Silicon-based alloys 15,749 14,110 15,605 29,859 37,731
-------- --------- -------- -------- --------
Total shipments^ 44,508 40,072 44,279 84,580 99,540
======== ========= ======== ======== ========
Average selling price
($/MT):
Silicon metal $2,580 2,673 2,539 2,624 2,554
Silicon-based alloys 1,926 2,095 2,541 2,006 2,454
-------- --------- -------- -------- --------
Total^ $2,348 2,470 2,540 2,406 2,516
======== ========= ======== ======== ========
Average selling price
($/lb.):
Silicon metal $1.17 1.21 1.15 1.19 1.16
Silicon-based alloys 0.87 0.95 1.15 0.91 1.11
-------- --------- -------- -------- --------
Total^ $1.07 1.12 1.15 1.09 1.14
======== ========= ======== ======== ========
^ Excludes by-products
This news release was distributed by GlobeNewswire, www.globenewswire.com
SOURCE: Globe Specialty Metals
CONTACT: Globe Specialty Metals, Inc. Mal Appelbaum, Chief Financial Officer 212-798-8123 mappelbaum@glbsm.com Jeff Bradley, Chief Executive Officer 212-798-8122 jbradley@glbsm.com
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