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, August 20, 2012 – 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.
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 | |
| 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, amortization and accretion | | 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 | | | | | | | | | | |
