Globe Specialty Metals Reports Increased Sequential Quarter Earnings, Record Fiscal 2012 Results And Increases Its Dividend By 25%

  • Net income on a comparable basis for the fourth quarter of $12.9 million increased 5% over the third quarter
  • EBITDA on a comparable basis for the fourth quarter of $32.5 million increased 10% over the third quarter
  • Record net income of $54.6 million for fiscal 2012 increased 3% from fiscal 2011
  • Record EBITDA of $129.1 million for fiscal 2012 increased 7% from fiscal 2011
  • Cash flow from operating activities of $56.2 million in the fourth quarter, compared to $23.0 million in the third quarter
  • GSM increased its annual dividend by 25% to $0.25 per share, payable quarterly in September, December, March and June.

NEW YORK, Aug. 20, 2012 (GLOBE NEWSWIRE) -- Globe Specialty Metals, Inc. (Nasdaq:GSM) (the "Company") today announces results for the fourth quarter and fiscal 2012 ended June 30, 2012.

Net sales for the fiscal year ended June 30, 2012 of $705.5 million were up 10% from the prior year. Shipments of 233,102 MT were flat with the prior year. Net income attributable to GSM for the year was $54.6 million, a record, compared to $52.8 million in the prior year. Diluted earnings per share for the year were $0.71 per share, compared to $0.69 per share in the prior year. EBITDA for the year was $129.1 million, a record, compared to $120.8 million in the prior year. EBITDA on a comparable basis was $140.9 million, a record, compared to $128.1 million in the prior year.

Net sales for the quarter of $191.7 million were up 11% from the third quarter of fiscal 2012 and 9% from the prior year. Shipments of 66,683 MT were up 10% from the third quarter and up 18% from the prior year. The increase from the third quarter is largely due to the timing of customer shipments and the acquisition of Quebec Silicon.

Net income attributable to GSM for the fourth quarter was $8.8 million, compared to $11.6 million in third quarter and $15.5 million in the prior year. Diluted earnings per share for the quarter were $0.12 per share, compared to $0.15 per share in the third quarter and $0.20 per share in the prior year.

EBITDA for the quarter was $28.7 million, compared to $28.4 million in the third quarter and $36.8 million in the prior year. EBITDA on a comparable basis was $32.5 million, compared to $29.4 million in the third quarter and $43.8 million in the prior year.

Cash and cash equivalents totalled $178.0 million at June 30, 2012, an increase of $37.4 million from the third quarter, and total debt was $140.7 million, including the $31.8 million used to finance the Canadian acquisition and $12.3 million of financing for our two manufacturing joint ventures.

Cash flow provided by operating activities was $56.2 million in the quarter, compared to $23.0 million in the third quarter and $18.5 million in the prior year. Working capital, excluding acquisitions, declined $29.8 million in the quarter. Capital expenditures totalled $3.5 million of cash spent in the quarter, in addition to several capital leases. Capital expenditures were primarily related to acquiring mining equipment for the Alden coal mining operations in order to open new mines and planned furnace and equipment maintenance at Beverly, Ohio and Mendoza, Argentina.

Diluted earnings per share on a comparable basis were as follows:
  FY 2012 FY 2011 Twelve Months
  Fourth Quarter Third Quarter Fourth Quarter FY 2012 FY 2011
Reported Diluted EPS  $ 0.12  0.15  0.20  $ 0.71  0.69
Tax rate adjustment  --   --   --   --   0.02
Contract settlements  --   --   --   --   (0.03)
Loss on sale of business   --   --   0.06  --   0.06
Niagara Falls and Selma start-up costs  --   --   --   --   0.03
Bridgeport fire  --   --   --   0.04  -- 
Deferred financing fees write-off  0.01  --   --   0.01  -- 
Transaction and due diligence expenses  0.04  0.01  0.02  0.07  0.04
Diluted EPS, excluding above items  $ 0.17  0.16  0.28  $ 0.83  0.81

Fourth quarter fiscal 2012 results were negatively impacted by $3.0 million of after-tax transaction-related and due diligence expenses, which include $1.0 million of after-tax legal fees and a $1.3 million after-tax write-off of prepaid expenses related to the Iceland project, and a $1.1 million after-tax write-off of deferred financing fees which are included in the above table. 

Fourth quarter fiscal 2012 EBITDA, excluding the items listed below, was $32.5 million. EBITDA on a comparable basis was as follows:

  FY 2012 FY 2011 Twelve Months
  Fourth Quarter Third Quarter Fourth Quarter FY 2012 FY 2011
Reported EBITDA  $ 28,719  28,359  36,800  $ 129,081  120,753
Loss (gain) on sale of business and associated Fx gain  --   --   4,249  (473)  4,249
Contract settlements  --   --   --   --   (5,125)
Bridgeport fire  --   --   --   5,000  -- 
Niagara Falls and Selma start-up costs  --   --   --   --   3,236
Transaction and due diligence expenses  3,765  1,047  2,745  7,338  5,030
EBITDA, excluding above items  $ 32,484  29,406  43,794  $ 140,946  128,143

EBITDA on a comparable basis increased $3.1 million from the third quarter primarily as a result of higher shipments and lower costs of production, partially offset by lower average selling prices.

GSM's Board of Directors approved an annual dividend of $0.25 per common share, a 25% increase over the prior year. The dividend will be payable quarterly in September, December, March and June. This dividend represents an aggregate cash payment of approximately $18.8 million to our stockholders. The Company is increasing the dividend from last year's $0.20 per share annual dividend.

Globe CEO Jeff Bradley commented, "We successfully increased production efficiency and lowered costs during the quarter. The improved efficiency, driven partially by our high quality Alden coal, allowed us to increase EBITDA on a comparable basis by 10% from last quarter. The diverse end markets that we serve including steel, autos, consumer goods and solar continue to grow despite headwinds in Europe. We continue to pursue further efficiencies and cost reduction in order to improve margins throughout the company and are actively working on additional growth opportunities including acquisitions and internal growth."

Conference Call

Globe will review fourth quarter results during its quarterly conference call on August 21, 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 August 21, 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)
           
  Twelve Months Ended Three Months Ended
  June 30, 2012 June 30, 2011 June 30,  2012 March 31,  2012 June 30,  2011
           
Net sales  $ 705,544 641,863  $ 191,698 173,437 175,934
Cost of goods sold 552,873 488,018 156,367 139,408 126,296
Selling, general, and administrative expenses 61,623 54,739 18,527 13,979 15,819
Research and development 127 87 24 100 10
Business interruption insurance recovery (450)  --   --   --   -- 
(Gain) loss on sale of business (54) 4,249  --   --  4,249
Operating income  91,425 94,770 16,780 19,950 29,560
Other income (expense):          
Interest income 243 214 98 129 131
Interest expense, net of capitalized interest  (7,610) (3,198) (3,065) (1,698) (988)
Foreign exchange gain (loss)  1,191 (390) 366 (191) (139)
Other income  1,387 1,318 979 48 674
Income before provision for income taxes 86,636 92,714 15,158 18,238 29,238
Provision for income taxes  28,760  35,988 5,230  5,972  12,509
Net income  57,876 56,726 9,928 12,266 16,729
Income attributable to noncontrolling interest, net of tax  (3,306)  (3,918) (1,108)  (653)  (1,184)
Net income attributable to Globe Specialty Metals, Inc.  $ 54,570 52,808  $ 8,820 11,613 15,545
Weighted average shares outstanding:          
Basic 75,039 74,925 75,049 75,049 74,933
Diluted 76,624 76,624 76,568 76,617 76,777
Earnings per common share:          
Basic $ 0.73  0.70 $ 0.12 0.15  0.21
Diluted 0.71 0.69 0.12 0.15 0.20
           
EBITDA:          
Net income  $ 57,876 56,726  $ 9,928 12,266 16,729
Provision for income taxes 28,760 35,988 5,230 5,972 12,509
Net interest expense  7,367 2,984 2,967 1,569 857
Depreciation, depletion and amortization  35,078  25,055  10,594  8,552  6,705
EBITDA  $ 129,081 120,753  $ 28,719 28,359 36,800
 
 
GLOBE SPECIALTY METALS, INC.
AND SUBSIDIARY COMPANIES
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
       
  June 30,  March 31,  June 30, 
  2012 2012 2011
Assets      
Current assets:      
Cash and cash equivalents  $ 178,010 140,655 166,208
Accounts receivable, net  85,258 72,385 60,871
Inventories 119,441 111,656 109,292
Prepaid expenses and other current assets 27,915 27,808 27,876
Total current assets 410,624 352,504 364,247
Property, plant, and equipment, net  432,761 333,737 229,977
Goodwill 56,740 53,715 53,503
Other intangible assets 477 477 477
Investments in unconsolidated affiliates 9,217 9,036 8,640
Deferred tax assets 200 304 217
Other assets 26,728 26,782 21,208
Total assets  $ 936,747 776,555 678,269
       
Liabilities and Stockholders' Equity      
Current liabilities:      
Accounts payable  $ 52,005 39,331 39,947
Current portion of long-term debt  --  22,222  -- 
Short-term debt 317 1,403 1,094
Revolving credit agreements  9,000  12,000  12,000
Accrued expenses and other current liabilities 40,602 29,870 34,475
Total current liabilities 101,924 104,826 87,516
Long-term liabilities:      
Revolving credit agreements 131,386 39,989 34,989
Long-term debt  --  27,778  -- 
Deferred tax liabilities 28,835 25,347 23,264
Other long-term liabilities 70,803 27,681 17,224
Total liabilities 332,948 225,621 162,993
Stockholders' equity:      
Common stock 8 8 8
Additional paid-in capital 405,675 405,007 399,900
Retained earnings 119,863 111,043 80,300
Accumulated other comprehensive loss (6,840) (2,347) (2,995)
Treasury stock at cost (4) (4) (4)
Total Globe Specialty Metals, Inc. stockholders' equity 518,702 513,707 477,209
Noncontrolling interest 85,097 37,227 38,067
Total stockholders' equity 603,799 550,934 515,276
Total liabilities and stockholders' equity  $ 936,747 776,555 678,269
 
 
GLOBE SPECIALTY METALS, INC.
AND SUBSIDIARY COMPANIES
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
           
  Twelve Months Ended Three Months Ended
  June 30, 2012 June 30, 2011 June 30, 2012 March 31, 2012 June 30, 2011
           
Cash flows from operating activities:          
Net income  $ 57,876 56,726  $ 9,928 12,266 16,729
Adjustments to reconcile net income to net cash provided by operating activities:          
Depreciation, depletion, amortization and accretion 35,078 25,055 10,594 8,552 6,705
Share-based compensation 2,482 4,332 668 667 457
(Gain) loss on sale of business  (54) 4,249  --   --  4,249
Amortization of deferred financing fees 2,180 195 1,657 186 86
Deferred taxes 9,312 13,538 6,537 (118) 4,958
Changes in operating assets and liabilities:          
Accounts receivable, net 2,608 (4,664) 13,644 (11,589) 919
Inventories 10,729 (25,355) 12,225 7,082 (10,603)
Prepaid expenses and other current assets (4,505) (1,649) 293 (1,910) 777
Accounts payable (5,047) (7,833) 304 3,487 (4,587)
Accrued expenses and other current liabilities 2,038 (6,179) 3,381 6,771 (3,856)
Other  (8,790) 2,773 (2,995) (2,363) 2,681
Net cash provided by operating activities 103,907 61,188 56,236 23,031 18,515
Cash flows from investing activities:          
Capital expenditures (41,836) (35,039) (3,511) (11,279)  (8,263)
Sale of businesses, net of cash disposed  --   2,500  --   --   -- 
Acquisition of business, net of cash acquired  (109,717)  --   (36,523)  --   -- 
Working capital adjustments from acquisition of businesses, net  --   (2,038)  --   --   -- 
Other investing activities  (152)  (16,935)  (152)  --   -- 
Net cash used in investing activities (151,705) (51,512) (40,186) (11,279)  (8,263)
Cash flows from financing activities:          
Net (payments) of long-term debt  --  (17,012)  (50,000)  --   (10)
Net (payments) borrowings of short-term debt  (777)  (6,973)  (1,086)  1,018  562
Net borrowings (payments) on revolving credit agreements  81,946  30,989  76,946  (3,000)  -- 
Dividend payment  (15,007)  (11,269)  --   --   -- 
Proceeds from stock option exercises  195  5,215  --   --   226
Other financing activities (6,495) (869) (4,346) (307)  -- 
Net cash provided by (used in) financing activities 59,862 81 21,514 (2,289) 778
Effect of exchange rate changes on cash and cash equivalents (262) (578) (209) (6) (135)
Net increase in cash and cash equivalents 11,802 9,179 37,355 9,457 10,895
Cash and cash equivalents at beginning of period 166,208 157,029 140,655 131,198 155,313
Cash and cash equivalents at end of period  $ 178,010 166,208  $ 178,010 140,655 166,208
           
Supplemental disclosures of cash flow information:          
Cash paid for interest, net  $ 4,475 2,533  $ 1,173 1,181 848
Cash paid for income taxes, net 22,023 19,819  879 1,335 15,377
 
 
GLOBE SPECIALTY METALS, INC.
AND SUBSIDIARY COMPANIES
Supplemental Statistics
(Unaudited)
           
  Twelve Months Ended Three Months Ended
  June 30, 2012 June 30, 2011 June 30, 2012 March 31, 2012 June 30, 2011
Shipments in metric tons:          
Silicon metal 119,634 122,607 35,343 30,210 31,096
Silicon-based alloys 113,468 110,868 31,340 30,618 25,484
Total shipments* 233,102 233,475 66,683 60,828 56,580
           
Average selling price ($/MT):          
Silicon metal  $ 3,015 2,835  $ 2,762 2,901 3,198
Silicon-based alloys 2,379 2,134 2,267 2,287 2,452
Total*  $ 2,705 2,502  $ 2,530 2,592 2,862
Average selling price ($/lb.):          
Silicon metal  $ 1.37 1.29  $ 1.25 1.32 1.45
Silicon-based alloys 1.08 0.97 1.03 1.04 1.11
Total*  $ 1.23 1.13  $ 1.15 1.18 1.30
           
* Excludes by-products and other      
CONTACT: Globe Specialty Metals, Inc.         Mal Appelbaum, 212-798-8123         Chief Financial Officer         Email: mappelbaum@glbsm.com         Or         Jeff Bradley, 212-798-8122         Chief Executive Officer         Email: jbradley@glbsm.com

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