February 9, 2015

Globe Specialty Metals Reports Increased Earnings and Margin Expansion in Second Quarter Fiscal 2015

  • 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          
CONTACT: Globe Specialty Metals, Inc.



         Joe Ragan, 786-509-6925

         Chief Financial Officer

         Email: jragan@glbsm.com

         Or

         Jeff Bradley, 786-509-6908

         Chief Executive Officer

         Email: jbradley@glbsm.com


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