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Globe Specialty Metals Reports First Quarter Fiscal 2013 Results

  • Sales of $200.7 million and shipments of 70,030 MT for the first quarter increased 5% over the fourth quarter
  • Diluted earnings per share on a comparable basis for the first quarter of $0.16 per share compares to $0.17 per share in the fourth quarter
  • EBITDA on a comparable basis for the first quarter of $31.1 million compares to $32.5 million in the fourth quarter
  • The quarter also included a $23.6 million charge for the change to our existing stock option plan allowing for cash settlement of options as discussed in our Form 10-K filed in August 2012

NEW YORK, Nov. 6, 2012 (GLOBE NEWSWIRE) -- Globe Specialty Metals, Inc. (Nasdaq:GSM) (the "Company") today announces results for the first quarter of fiscal 2013 ended September 30, 2012.

Net sales for the first quarter of fiscal 2013 of $200.7 million were up 5% from the fourth quarter of fiscal 2012 and 15% from the prior year. Shipments of 70,030 MT were up 5% from the fourth quarter and up 29% from the prior year. The increase is largely due to the combination of the acquisition of Quebec Silicon and expansion of the existing business.

Net loss attributable to GSM for the first quarter was $5.7 million, compared to a net income of $8.8 million in fourth quarter and net income of $20.7 million in the prior year. Diluted loss per share for the first quarter was $0.08, compared to diluted earnings per share of $0.12 in the fourth quarter and diluted earnings per share of $0.27 in the prior year. Diluted earnings per share on a comparable basis were $0.16 in the first quarter, compared to $0.17 in the fourth quarter and $0.28 in the prior year.

EBITDA for the first quarter was $6.8 million, compared to $28.7 million in the fourth quarter and $41.3 million in the prior year. EBITDA on a comparable basis was $31.1 million in the first quarter, $32.5 million in the fourth quarter and $42.5 million in the prior year.

Cash and cash equivalents totalled $182.1 million at September 30, 2012, an increase of $4.1 million from the fourth quarter, and total debt was $143.7 million, compared to $140.7 million in the fourth quarter, including the $30.1 million used to finance the Canadian acquisition and $16.7 million of financing for our two manufacturing joint ventures. Cash flow provided by operating activities was $15.9 million in the quarter and capital expenditures totalled $8.0 million in the quarter. Capital expenditures were primarily related to equipment purchases for planned maintenance outages in Alloy, West Virginia and Bridgeport, Alabama.

Diluted earnings per share on a comparable basis were as follows:

FY 2013 FY 2012
First Quarter Fourth Quarter First Quarter
Reported Diluted EPS $ (0.08) 0.12 0.27
Tax rate adjustment 0.01 -- --
Deferred financing fees write-off -- 0.01 --
Remeasurement of stock option liability 0.22 -- --
Transaction and due diligence expenses 0.01 0.04 0.01
Diluted EPS, excluding above items $ 0.16 0.17 0.28

First quarter fiscal 2013 results were negatively impacted by a $16.1 million after-tax charge for the modification of the stock option plan to allow for the settlement of options in cash, $0.4 million of after-tax transaction-related and due diligence expenses and $0.8 million tax adjustments to normalize the tax rate.

First quarter fiscal 2013 EBITDA, excluding the items listed below, was $31.1 million. EBITDA on a comparable basis was as follows:

FY 2013 FY 2012
First Quarter Fourth Quarter First Quarter
Reported EBITDA $ 6,755 28,719 41,251
Gain on sale of business and associated Fx gain -- -- (473)
Remeasurement of stock option liability 23,731 -- --
Transaction and due diligence expenses 651 3,765 1,680
EBITDA, excluding above items $ 31,137 32,484 42,458

GSM announces that pursuant to its previously announced approval of the payment of an annual dividend of $0.25 per common share on a quarterly basis, it will pay a quarterly cash dividend of $0.0625 per common share on December 14, 2012 to shareholders of record at the close of business on November 20, 2012.

Globe CEO Jeff Bradley commented, "We are continuing to successfully integrate Quebec Silicon into GSM and are achieving significant production efficiencies and a lowered cost of production. In addition, we continue to realize company-wide benefits from our overall efficiency initiatives. The diverse end markets that we serve including steel, autos, consumer goods and solar continue to show consistent demand. We continue to actively work on additional growth opportunities including acquisitions and internal growth."

Conference Call

Globe will review first quarter results during its quarterly conference call on November 7, 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 November 7, 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; 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.

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 Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended
September 30,
2012
June 30,
2012
September 30,
2011
Net sales $ 200,708 191,698 174,862
Cost of goods sold 168,640 156,367 127,650
Selling, general, and administrative expenses 37,720 18,527 14,801
Research and development -- 24 --
Gain on sale of business -- -- (54)
Operating (loss) income (5,652) 16,780 32,465
Other income (expense):
Interest income 171 98 12
Interest expense, net of capitalized interest (1,516) (3,065) (1,388)
Foreign exchange gain 545 366 1,324
Other income 115 979 162
(Loss) income before (benefit from) provision for income taxes (6,337) 15,158 32,575
(Benefit from) provision for income taxes (1,269) 5,230 11,488
Net (loss) income (5,068) 9,928 21,087
Income attributable to noncontrolling interest, net of tax (637) (1,108) (394)
Net (loss) income attributable to Globe Specialty Metals, Inc. $ (5,705) 8,820 20,693
Weighted average shares outstanding:
Basic 75,051 75,049 75,019
Diluted 75,051 76,568 76,789
(Loss) earnings per common share:
Basic $ (0.08) 0.12 0.28
Diluted (0.08) 0.12 0.27
EBITDA:
Net (loss) income $ (5,068) 9,928 21,087
(Benefit from) provision for income taxes (1,269) 5,230 11,488
Net interest expense 1,345 2,967 1,376
Depreciation, depletion, amortization and accretion 11,747 10,594 7,300
EBITDA $ 6,755 28,719 41,251
GLOBE SPECIALTY METALS, INC.
AND SUBSIDIARY COMPANIES
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
September 30, June 30, September 30,
2012 2012 2011
Assets
Current assets:
Cash and cash equivalents $ 182,109 178,010 152,320
Accounts receivable, net 82,969 85,258 68,158
Inventories 134,120 119,441 123,612
Prepaid expenses and other current assets 35,560 27,915 22,706
Total current assets 434,758 410,624 366,796
Property, plant, and equipment, net 432,896 432,761 321,427
Goodwill 56,848 56,740 53,642
Other intangible assets 477 477 477
Investments in unconsolidated affiliates 9,316 9,217 8,806
Deferred tax assets 200 200 217
Other assets 26,396 26,728 25,943
Total assets $ 960,891 936,747 777,308
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 56,960 52,005 41,302
Current portion of long-term debt -- -- 11,111
Short-term debt 323 317 1,105
Revolving credit agreements 9,000 9,000 15,000
Dividend payable -- -- 15,007
Accrued expenses and other current liabilities 72,813 40,602 41,351
Total current liabilities 139,096 101,924 124,876
Long-term liabilities:
Revolving credit agreements 134,374 131,386 39,989
Long-term debt -- -- 38,889
Deferred tax liabilities 28,931 28,835 22,794
Other long-term liabilities 70,933 70,803 28,362
Total liabilities 373,334 332,948 254,910
Stockholders' equity:
Common stock 8 8 8
Additional paid-in capital 396,968 405,675 400,683
Retained earnings 109,467 119,863 85,986
Accumulated other comprehensive loss (4,616) (6,840) (2,736)
Treasury stock at cost (4) (4) (4)
Total Globe Specialty Metals, Inc. stockholders' equity 501,823 518,702 483,937
Noncontrolling interest 85,734 85,097 38,461
Total stockholders' equity 587,557 603,799 522,398
Total liabilities and stockholders' equity $ 960,891 936,747 777,308
GLOBE SPECIALTY METALS, INC.
AND SUBSIDIARY COMPANIES
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Three Months Ended
September 30, 2012 June 30, 2012 September 30, 2011
Cash flows from operating activities:
Net (loss) income $ (5,068) 9,928 21,087
Adjustments to reconcile net (loss) income
to net cash provided by operating activities:
Depreciation, depletion, amortization and accretion 11,747 10,594 7,300
Share-based compensation (8,707) 668 461
Gain on sale of business -- -- (54)
Amortization of deferred financing fees 200 1,657 --
Deferred taxes (9,045) 6,537 (516)
Amortization of customer contract liabilities (1,343) -- --
Changes in operating assets and liabilities:
Accounts receivable, net 2,819 13,644 (6,809)
Inventories (13,528) 12,225 (13,719)
Prepaid expenses and other current assets 1,290 293 1,204
Accounts payable 4,891 304 (3,251)
Accrued expenses and other current liabilities 34,102 3,381 8,757
Other (1,435) (2,995) (2,095)
Net cash provided by operating activities 15,923 56,236 12,365
Cash flows from investing activities:
Capital expenditures (8,025) (3,511) (9,711)
Acquisition of business, net of cash acquired -- (36,523) (73,194)
Other investing activities -- (152) --
Net cash used in investing activities (8,025) (40,186) (82,905)
Cash flows from financing activities:
Net (payments) borrowings of long-term debt -- (50,000) 50,000
Net (payments) borrowings of short-term debt -- (1,086) 11
Net borrowings on revolving credit agreements 2,597 76,946 8,000
Dividend payment (4,691) -- --
Proceeds from stock option exercises -- -- 112
Other financing activities (627) (4,346) (1,241)
Net cash (used in) provided by financing activities (2,721) 21,514 56,882
Effect of exchange rate changes on cash and cash equivalents (1,078) (209) (230)
Net increase (decrease) in cash and cash equivalents 4,099 37,355 (13,888)
Cash and cash equivalents at beginning of period 178,010 140,655 166,208
Cash and cash equivalents at end of period $ 182,109 178,010 152,320
Supplemental disclosures of cash flow information:
Cash paid for interest, net $ 1,080 1,173 701
Cash paid for income taxes, net 1,857 879 4,145
GLOBE SPECIALTY METALS, INC.
AND SUBSIDIARY COMPANIES
Supplemental Statistics
(Unaudited)
Three Months Ended
September 30,
2012
June 30,
2012
September 30,
2011
Shipments in metric tons:
Silicon metal 40,487 35,343 27,434
Silicon-based alloys 29,543 31,340 26,851
Total shipments* 70,030 66,683 54,285
Average selling price ($/MT):
Silicon metal $ 2,789 2,762 3,279
Silicon-based alloys 2,273 2,267 2,501
Total* $ 2,571 2,530 2,894
Average selling price ($/lb.):
Silicon metal $ 1.27 1.25 1.49
Silicon-based alloys 1.03 1.03 1.13
Total* $ 1.17 1.15 1.31
* 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.comSource:Globe Specialty Metals