May 9, 2011
Globe Specialty Metals Reports 100% Increase in Net Income in Third Quarter Fiscal 2011
| · | Net income of $23.4 million, up 100% from second quarter fiscal 2011 |
| · | Diluted earnings per share of $0.30, up 100% from second quarter fiscal 2011 |
| · | EBITDA of $43.3 million, up 62% from second quarter fiscal 2011 |
| · | EBITDA excluding items listed below of $44.7 million, up 99% from second quarter fiscal 2011 |
| · | Strong end market performance, led by chemicals, polysilicon and aluminium |
New York, May 9, 2011 – Globe Specialty Metals, Inc. (NASDAQ: GSM) (the “Company”) today announces results for the quarter ended March 31, 2011.
Net sales for the quarter of $172.8 million were up 11% and shipments of 59,276 MT were approximately equal to the second quarter. Sales and shipments were up 54% and 24%, respectively, from the third quarter of last year.
Net income attributable to GSM for the quarter was $23.4 million, compared to $11.7 million in the second quarter and $0.5 million in the third quarter of last year. Diluted earnings per share were $0.30 for the quarter, compared to $0.15 per share in the second quarter and $0.01 per share in the third quarter of last year. Diluted earnings per share on a comparable basis, as noted in the table below, were $0.31 per share in the third quarter, $0.13 per share in the second quarter and $0.05 per share in the third quarter of last year.
Third quarter EBITDA was $43.3 million, compared to $26.7 million in the second quarter and $8.8 million in the third quarter of last year. EBITDA on a comparable basis, as noted in the table below, was $44.7 million in the third quarter, $22.5 million in the second quarter and $12.3 million in the third quarter of last year.
Cash and cash equivalents totalled $155.3 million at March 31, 2011 and total debt was $47.5 million, which included $12.0 million of bank financing for the Alloy, West Virginia joint venture. During the quarter the domestic subsidiaries’ revolving credit facility was refinanced in order to provide additional liquidity. GSM currently has $52.8 million available on the facility.
Silicon metal average selling price increased 20% for the quarter as all long-term and annual 2010 contracts expired and GSM benefited from higher pricing in annual 2011 contracts. Silicon-based alloy average selling price increased 12%, with increases in each of the four individual alloys, and the sales mix changed toward higher priced alloys as GSM converted one furnace in Beverly, Ohio to silicon metal from ferrosilicon in January 2011.
Cash flow from operating activities was $23.9 million in the quarter, compared to $3.6 million in the second quarter and a usage of $44.0 million in the third quarter of last year. During the quarter cash flows from investing activities included a $17.0 million advance to acquire exploration mining licenses in Nigeria to mine for manganese ore, a raw material used in the production of certain silicon and manganese based alloys and $7.5 million for capital expenditures which were largely related to planned maintenance outages at the Beverly, Ohio and Niagara Falls, New York plants.
Diluted earnings per share on a comparable basis were as follows:
| | | | FY 2011 | | | FY 2010 | | | Nine Months |
| | | | Third Quarter | | Second Quarter | | | Third Quarter | | | FY 2011 | | FY 2010 |
| Reported Diluted EPS | $ | 0.30 | | 0.15 | | $ | 0.01 | | $ | 0.49 | | 0.37 |
| | Tax rate adjustment | | - | | - | | | 0.01 | | | 0.02 | | 0.01 |
| | Gain on sale of business | | - | | - | | | - | | | - | | (0.19) |
| | Niagara Falls and Selma start-up costs | | - | | - | | | 0.02 | | | 0.03 | | 0.05 |
| | Transaction and due diligence expenses | | 0.01 | | 0.01 | | | 0.01 | | | 0.02 | | 0.01 |
| | Inventory write-down | | - | | - | | | - | | | - | | 0.01 |
| | Contract settlements | | - | | (0.03) | | | - | | | (0.03) | | - |
| Diluted EPS, excluding above items | $ | 0.31 | | 0.13 | | $ | 0.05 | | $ | 0.53 | | 0.26 |
Third quarter results were negatively impacted by $0.9 million of after-tax transaction and due diligence expenses, which are included in the above table. The increase in diluted EPS, excluding the above items, from $0.13 per share in the second quarter to $0.31 per share in the third quarter is primarily due to improved average selling prices in silicon metal and silicon-based alloys.
Third quarter EBITDA, excluding the items listed below, was $44.7 million. EBITDA on a comparable basis was as follows:
| | | | FY 2011 | | | FY 2010 | | | Nine Months |
| | | | Third Quarter | | Second Quarter | | | Third Quarter | | | FY 2011 | | FY 2010 |
| Reported EBITDA | $ | 43,338 | | 26,681 | | $ | 8,844 | | $ | 83,953 | | 64,927 |
| | Gain on sale of business | | - | | - | | | - | | | - | | (22,907) |
| | Niagara Falls and Selma start-up costs | | - | | - | | | 2,975 | | | 3,236 | | 6,867 |
| | Transaction and due diligence expenses | | 1,350 | | 935 | | | 521 | | | 2,285 | | 521 |
| | Inventory write-down | | - | | - | | | - | | | - | | 617 |
| | Contract settlements | | - | | (5,125) | | | - | | | (5,125) | | - |
| EBITDA, excluding above items | $ | 44,688 | | 22,491 | | $ | 12,340 | | $ | 84,349 | | 50,025 |
Globe CEO Jeff Bradley commented, “As expected, calendar 2011 started out very positively for Globe. Our profits increased significantly in the quarter as our long-term contracts expired, new annual 2011 silicon metal contracts took effect and silicon-based alloy pricing increased. Our markets continue to grow and our plants are running well. We are now fully focused on driving operating excellence and lowering our costs.” Bradley continued, “We are also actively engaged in numerous growth opportunities, including potential acquisitions and building our plant in Iceland, and intend to continue to grow our business in the same disciplined fashion that has served us so well.”
Conference Call
Globe will review third quarter results during its quarterly conference call tomorrow, May 10, 2011, 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 May 10, 2011 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.
