delicious
Digg
Facebook
LinkedIn
Mixx
Twitter
Yahoo! Buzz
Globe Specialty Metals Announces Third Quarter Fiscal 2010 Results
NEW YORK, May 11, 2010 (GlobeNewswire via COMTEX News Network) -- Globe Specialty Metals, Inc. (Nasdaq:GSM) (the "Company") today announces results for the quarter and nine months ended March 31, 2010. Key points are as follows:
-- Net sales for the third quarter ended March 31, 2010 were up 4%, to
$112.5 million, and shipments increased 7% to 47,684 MT, from our second
quarter ended December 31, 2009.
-- Net income attributable to GSM for the third quarter was $0.5 million,
compared to $18.5 million in our second quarter, which included a $14.0
million after-tax gain on the sale of our Brazilian operations. Diluted
earnings per share was $0.01 in the third quarter, compared to $0.25 per
share in our second quarter, which included a $0.19 per diluted share
gain on the sale of our Brazilian operations.
-- Increased demand for silicon metal and silicon-based alloys caused us to
run all our furnaces. We reopened our Selma, Alabama plant in January
2010 after idling it for eight months. It is now running at full
capacity, but has not yet reached its normalized cost of production. We
reopened our Niagara Falls plant in November 2009 after it had been
closed for more than five years and, due to certain start-up issues, the
plant is currently operating at approximately 75% of capacity and at a
higher than normalized cost of production. We have made significant
improvements in employee training and maintenance and expect Niagara
Falls to achieve full capacity by the end of our fourth fiscal quarter.
Our other plants are running near full capacity and at normalized
production costs.
-- On April 1, 2010 we acquired Core Metals Group, one of North America's
largest producers and marketers of high-purity ferrosilicon and other
specialty steel ingredients. Globe paid $37 million in cash and borrowed
$15 million on its revolver to fund the acquisition. Core's main asset
is a 40,000 MT ferrosilicon plant in Bridgeport, Alabama, which is
operating at full capacity. In April, we sold Core's ancillary Canadian
business for $3.0 million in cash.
The Company posted third quarter net income attributable to GSM of $0.5 million, or $0.01 a diluted share, compared to $18.5 million, or $0.25 per diluted share, in our second quarter of 2010 and $0.9 million, or $0.01 a diluted share, in the third quarter of last year. Diluted earnings per share on a comparable basis were as follows:
FY 2010 FY 2009
---------------- -------
Third Second Third
Quarter Quarter Quarter
------- ------- -------
Reported Diluted EPS $ 0.01 $ 0.25 $ 0.01
Gain on sale of Brazil -- (0.19) --
Niagara Falls and Selma startup costs 0.02 0.03 --
Restructuring charges -- -- 0.01
Transaction expenses 0.01 -- --
Inventory write-downs and fixed asset
impairment -- 0.01 0.02
------- ------- -------
Diluted EPS, excluding above items $ 0.04 $ 0.10 $ 0.04
======= ======= =======
Third quarter results were negatively impacted by $1.9 million of after-tax start-up costs for the Niagara Falls, NY and Selma, AL plants and $0.3 million of after-tax transaction expenses related to the Core Metals acquisition. The decline in diluted EPS excluding the above items from $0.10 per share in our second quarter to $0.04 per share in our third quarter is primarily due to lower gross margin on material purchased from our former Brazilian plant, a lower average selling price and higher costs of production at our newly re-opened facilities.
Shipments in the third quarter increased 7% from the preceding quarter as a result of stronger demand from our end markets. Our average selling price declined by 4% from the preceding quarter, with an 8% decline in silicon metal partially offset by a 4% increase in silicon-based alloys. The decline in the silicon metal average price was a result of a full quarter's shipments under the joint venture at our Alloy plant and the run-off of volume under certain 2009 annual contracts that were priced above current market. The increase in the average selling price of silicon-based alloys is primarily related to rising ferrosilicon prices and our focus on higher-margin specialty grades.
Third quarter EBITDA was $8.8 million, compared to $36.4 million in our second quarter and $7.1 million in the third quarter of last year. EBITDA on a comparable basis was as follows:
FY 2010 FY 2009
-------------------- ---------
Third Second Third
Quarter Quarter Quarter
--------- --------- ---------
Reported EBITDA $ 8,844 $ 36,437 $ 7,109
Goodwill and intangible asset
impairment -- -- 144
Gain on sale of Brazil -- (23,368) --
Niagara Falls and Selma startup
costs 2,975 3,892 --
Restructuring charges -- -- 1,387
Transaction expenses 521 -- --
Inventory write-downs and fixed
asset impairment -- 685 1,600
--------- --------- ---------
EBITDA, excluding above items $ 12,340 $ 17,646 $ 10,240
========= ========= =========
For the nine months ended March 31, 2010, the Company posted net income attributable to GSM shareholders of $27.5 million, or $0.37 a diluted share, compared to a net loss of $43.6 million, or $0.68 per diluted share, in the comparable period of the prior year. Last year's results included an after-tax impairment charge of $65.3 million. EBITDA for the nine months ended March 31, 2010 was $64.9 million, compared to a loss of $19.6 million in the comparable period of the prior year.
We expect sales volumes to increase in our fiscal fourth quarter from the Core Metals acquisition and increased output as we operate all our furnaces at full capacity, including reaching full capacity at Niagara Falls by the end of that quarter. As demand continues to improve, the spot price for silicon metal and silicon-based alloys has risen, a trend which we anticipate to continue. However, we expect our average selling price of silicon metal to decline modestly in our fiscal fourth quarter as we ship a higher volume of material under a long-term below-market priced contract, which expires on December 31, 2010.
Capital expenditures were $6.5 million in the third quarter. We expect a modest increase in capital expenditures in our fourth quarter for planned furnace outages.
Cash and cash equivalents totalled $219.8 million at March 31, 2010, including $15 million drawn on our revolver in anticipation of closing the Core Metals acquisition. We funded the acquisition on April 1, 2010 with approximately $52 million of cash and subsequently sold Core's ancillary Canadian business for $3.0 million of cash. Working capital increased by $22.1 million from the second quarter as we reopened Selma and Niagara Falls and purchased certain raw material inventory in anticipation of expanding our silicon-based alloy offerings. We do not expect any further increases in working capital in our fiscal fourth quarter other than from the acquisition of Core Metals.
Globe CEO Jeff Bradley commented, "Customer demand and spot prices continue to rise and all of our end markets are growing. Our key near-term challenge is to increase our production levels to meet strong demand while lowering our production costs. We are making good progress on these goals with major advances at Niagara Falls and with April production levels at all other plants running near full capacity." Bradley continued, "We expect our earnings to increase in the coming quarters on higher production levels and spot pricing, and the Core acquisition, with the most meaningful increase coming at the beginning of calendar 2011 when our existing long-term low-priced contracts expire. We expect calendar 2010 to be a very solid year and calendar 2011 to be a record year of earnings."
Conference Call
Globe will review third quarter results during its quarterly conference call tomorrow, May 12, 2010, at 9:00 a.m. Eastern Daylight 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 May 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.
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
© Copyright 2010 GlobeNewswire, Inc. All rights reserved.
News Provided by COMTEX