×

Globe Specialty Metals Reports Second Quarter Fiscal 2013 Earnings

  • Sales of $179.9 million in the second quarter were up 9% from the prior year
  • Shipments of 61,972 MT increased 21% from the prior year
  • EPS of $0.20 is up from $0.18 in the prior year
  • Adjusted EPS of $0.15 is down from $0.22 in the prior year
  • GSM declared a $0.0625 per share dividend to be paid on March 25th to shareholders of record on March 15th

NEW YORK, Feb. 7, 2013 (GLOBE NEWSWIRE) -- Globe Specialty Metals, Inc. (Nasdaq:GSM), one of the world's largest and most efficient producers of silicon metal, today reported financial results for the second quarter of fiscal 2013.

Net sales in the Company's second quarter, ended December 31, 2012, reached $179.9 million, up 9% from $165.5 million in the same quarter of the prior year. Shipments of silicon and silicon-based alloy products were 61,972 metric tons in the quarter, up 21% from the year-ago period. Results in the second quarter include the Quebec Silicon acquisition which was completed in June 2012.

Net income attributable to GSM in the quarter was $15.1 million, up 12% from $13.4 million in the prior-year period. On a diluted per share basis, reported earnings for the second quarter reached $0.20, up from $0.18 per share in the same quarter a year ago. Excluding certain items, detailed in the table below, adjusted diluted earnings per share were $0.15 in the second quarter, down from $0.22 in the second quarter last year.

Reported EBITDA in the second quarter reached $34.2 million, compared to $30.8 million in the prior year. Excluding certain items detailed in the table below, adjusted EBITDA was $30.2 million in the second quarter compared to $36.6 million in the prior year.

Globe Specialty Metals' cash and cash equivalents, as of December 31, 2012, totalled $163.5 million and total debt was $153.1 million. Cash flow used by operating activities was $3.2 million in the quarter, including a $10.7 million increase in inventory and a $20.3 million decline in accrued expenses. Capital expenditures totalled $10.2 million and dividend payments to shareholders totalled $14.1 million in the quarter.

Adjusted diluted earnings per share were as follows:

Second Quarter Six Months
FY 2013 FY 2012 FY 2013 FY 2012
Reported Diluted EPS $ 0.20 0.18 0.12 0.44
Tax rate adjustment (0.01) (0.01) -- --
Gain on remeasurement of equity investment (0.02) -- (0.02) --
Remeasurement of stock option liability (0.03) -- 0.19 --
Bridgeport Fire -- 0.04 -- 0.04
Transaction and due diligence expenses 0.01 0.01 0.02 0.02
Adjusted Diluted EPS $ 0.15 0.22 0.31 0.50

Second quarter fiscal 2013 results were negatively impacted by $0.9 million of after-tax transaction and due diligence-related expenses and positively impacted by $2.5 million of after-tax re-measurement income for stock option liabilities, $1.7 million of income from the revaluation of an equity investment and a $1.1 million reduction of tax expense related to an acquisition.

Adjusted EBITDA was as follows:

Second Quarter Six Months
FY 2013 FY 2012 FY 2013 FY 2012
Reported EBITDA $ 34,232 30,752 40,987 72,003
Gain on remeasurement of equity investment (1,707) -- (1,707) --
Remeasurement of stock option liability (3,673) -- 20,058 --
Bridgeport Fire -- 5,000 -- 5,000
Gain on sale of business and associated Fx gain -- -- -- (473)
Transaction and due diligence expenses 1,336 846 1,987 2,526
Adjusted EBITDA $ 30,188 36,598 61,325 79,056

Globe CEO Jeff Bradley commented, "We are pleased with our second quarter results as we continue to integrate the Quebec Silicon assets and continue to lower production costs through efficiency and cost reduction initiatives. We are optimistic about 2013. We have maintained a strong balance sheet and a high level of liquidity which allowed us to return over $14 million to shareholders through dividends in the second quarter and positions us to actively pursue acquisition and business development opportunities."

Conference Call

Globe will review second quarter results during its quarterly conference call on February 8, 2013 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 February 8, 2013 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.

Non-GAAP Measures

EBITDA, Adjusted EBITDA and Adjusted Diluted Earnings per share are non-GAAP measures.

We have included these measures to provide supplemental indications of our performance which we believe are important because they eliminate items that have less bearing on our current and future operating performance and therefore highlight trends in our core business that may not otherwise be apparent when relying solely on GAAP financial measures. A reconciliation of these measures to the comparable GAAP financial measures is provided elsewhere in this release.

GLOBE SPECIALTY METALS, INC.
AND SUBSIDIARY COMPANIES
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Six Months Ended
December 31,
2012
September 30,
2012
December 31,
2011
December 31,
2012
December 31,
2011
Net sales $ 179,940 200,708 165,547 380,648 340,409
Cost of goods sold 148,331 168,640 129,448 316,971 257,098
Selling, general, and administrative expenses 9,053 37,720 14,316 46,773 29,117
Research and development -- -- 3 -- 3
Business interruption insurance recovery -- -- (450) -- (450)
Gain on sale of business -- -- -- -- (54)
Operating income (loss) 22,556 (5,652) 22,230 16,904 54,695
Other income (expense):
Gain on remeasurement of equity investment 1,707 -- -- 1,707 --
Interest income 217 171 4 388 16
Interest expense, net of capitalized interest (1,826) (1,516) (1,459) (3,342) (2,847)
Foreign exchange (loss) gain (1,632) 545 (308) (1,087) 1,016
Other (loss) income (13) 115 198 102 360
Income (loss) before provision for (benefit from) income taxes 21,009 (6,337) 20,665 14,672 53,240
Provision for (benefit from) income taxes 5,373 (1,269) 6,070 4,104 17,558
Net income (loss) 15,636 (5,068) 14,595 10,568 35,682
Income attributable to noncontrolling interest, net of tax (568) (637) (1,151) (1,205) (1,545)
Net income (loss) attributable to Globe Specialty Metals, Inc. $ 15,068 (5,705) 13,444 9,363 34,137
Weighted average shares outstanding:
Basic 75,174 75,051 75,038 75,112 75,029
Diluted 75,247 75,051 76,732 75,275 76,759
Earnings (Loss) per common share:
Basic $ 0.20 (0.08) 0.18 0.12 0.45
Diluted 0.20 (0.08) 0.18 0.12 0.44
EBITDA:
Net income (loss) $ 15,636 (5,068) 14,595 10,568 35,682
Provision for (benefit from) income taxes 5,373 (1,269) 6,070 4,104 17,558
Net interest expense 1,609 1,345 1,455 2,954 2,831
Depreciation, depletion, amortization and accretion 11,614 11,747 8,632 23,361 15,932
EBITDA $ 34,232 6,755 30,752 40,987 72,003
GLOBE SPECIALTY METALS, INC.
AND SUBSIDIARY COMPANIES
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
December 31, September 30, December 31,
2012 2012 2011
Assets
Current assets:
Cash and cash equivalents $ 163,461 182,109 131,198
Accounts receivable, net 79,714 82,969 60,796
Inventories 146,605 134,120 118,747
Prepaid expenses and other current assets 29,634 35,560 24,764
Total current assets 419,414 434,758 335,505
Property, plant, and equipment, net 436,189 432,896 329,907
Goodwill 60,269 56,848 53,707
Other intangible assets 477 477 477
Investments in unconsolidated affiliates 5,973 9,316 9,003
Deferred tax assets 416 200 304
Other assets 24,279 26,396 25,711
Total assets $ 947,017 960,891 754,614
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 51,513 56,960 34,699
Current portion of long-term debt -- -- 16,667
Short-term debt 329 323 385
Revolving credit agreements 9,000 9,000 15,000
Accrued expenses and other current liabilities 55,912 72,813 23,961
Total current liabilities 116,754 139,096 90,712
Long-term liabilities:
Revolving credit agreements 143,742 134,374 39,989
Long-term debt -- -- 33,333
Deferred tax liabilities 27,748 28,931 24,325
Other long-term liabilities 68,663 70,933 28,271
Total liabilities 356,907 373,334 216,630
Stockholders' equity:
Common stock 8 8 8
Additional paid-in capital 398,648 396,968 404,340
Retained earnings 110,432 109,467 99,430
Accumulated other comprehensive loss (5,792) (5,728) (2,364)
Treasury stock at cost (4) (4) (4)
Total Globe Specialty Metals, Inc. stockholders' equity 503,292 500,711 501,410
Noncontrolling interest 86,818 86,846 36,574
Total stockholders' equity 590,110 587,557 537,984
Total liabilities and stockholders' equity $ 947,017 960,891 754,614
GLOBE SPECIALTY METALS, INC.
AND SUBSIDIARY COMPANIES
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Three Months Ended Six Months Ended
December 31,
2012
September 30,
2012
December 31,
2011
December 31,
2012
December 31,
2011
Cash flows from operating activities:
Net income (loss) $ 15,636 (5,068) 14,595 10,568 35,682
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation, depletion, amortization and accretion 11,614 11,747 8,632 23,361 15,932
Share-based compensation 680 (8,707) 686 (8,027) 1,147
Gain on remeasurement of equity investment (1,707) -- -- (1,707) --
Gain on purchase/sale of business -- -- -- -- (54)
Amortization of deferred financing fees 200 200 -- 400 --
Unrealized foreign exchange loss (gain) 976 (976) -- -- --
Deferred taxes 1,623 (9,045) 3,409 (7,422) 2,893
Amortization of customer contract liabilities (1,531) (1,343) -- (2,874) --
Changes in operating assets and liabilities:
Accounts receivable, net 5,105 2,819 7,362 7,924 553
Inventories (10,660) (13,528) 5,141 (24,188) (8,578)
Prepaid expenses and other current assets 2,487 1,290 (4,092) 3,777 (2,888)
Accounts payable (7,302) 4,891 (5,587) (2,411) (8,838)
Accrued expenses and other current liabilities (20,281) 34,102 (16,871) 13,821 (8,114)
Other (7) (459) (1,000) (466) (3,095)
Net cash (used by) provided by operating activities (3,167) 15,923 12,275 12,756 24,640
Cash flows from investing activities:
Capital expenditures (10,179) (8,025) (17,335) (18,204) (27,046)
Acquisition of business, net of cash acquired (844) -- -- (844) (73,194)
Net cash used in investing activities (11,023) (8,025) (17,335) (19,048) (100,240)
Cash flows from financing activities:
Net borrowings of long-term debt -- -- -- -- 50,000
Net payments of short-term debt -- -- (720) -- (709)
Net borrowings on revolving credit agreements 9,566 2,597 -- 12,163 8,000
Dividend payment (14,103) (4,691) (15,007) (18,794) (15,007)
Proceeds from stock option exercises 1,000 -- 83 1,000 195
Other financing activities (648) (627) (601) (1,275) (1,842)
Net cash (used in) provided by financing activities (4,185) (2,721) (16,245) (6,906) 40,637
Effect of exchange rate changes on cash and cash equivalents (273) (1,078) 183 (1,351) (47)
Net (decrease) increase in cash and cash equivalents (18,648) 4,099 (21,122) (14,549) (35,010)
Cash and cash equivalents at beginning of period 182,109 178,010 152,320 178,010 166,208
Cash and cash equivalents at end of period $ 163,461 182,109 131,198 163,461 131,198
Supplemental disclosures of cash flow information:
Cash paid for interest, net $ 1,334 1,080 1,420 2,414 2,121
Cash paid for income taxes, net 9,794 1,857 15,664 11,651 19,809
GLOBE SPECIALTY METALS, INC.
AND SUBSIDIARY COMPANIES
Supplemental Statistics
(Unaudited)
Three Months Ended Six Months Ended
December 31,
2012
September 30,
2012
December 31,
2011
December 31,
2012
December 31,
2011
Shipments in metric tons:
Silicon metal 35,273 40,487 26,647 75,760 54,081
Silicon-based alloys 26,699 29,543 24,659 56,242 51,510
Total shipments* 61,972 70,030 51,306 132,002 105,591
Average selling price ($/MT):
Silicon metal $ 2,908 2,789 3,208 2,844 3,244
Silicon-based alloys 2,152 2,273 2,501 2,215 2,501
Total* $ 2,582 2,571 2,868 2,576 2,882
Average selling price ($/lb.):
Silicon metal $ 1.32 1.27 1.46 1.29 1.47
Silicon-based alloys 0.98 1.03 1.13 1.00 1.13
Total* $ 1.17 1.17 1.30 1.17 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