updated 5/9/2011 6:16:26 PM ET 2011-05-09T22:16:26

  • 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 NEWSWIRE) -- 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.

GLOBE SPECIALTY METALS, INC.
AND SUBSIDIARY COMPANIES
Condensed Consolidated Income Statements
(In thousands, except per share amounts)
(Unaudited)
             
    Three Months Ended Nine Months Ended
    March 31, 2011 December 31, 2010 March 31, 2010 March 31, 2011 March 31, 2010
             
Net sales   $ 172,802 155,775 112,486 $ 465,929 326,222
Cost of goods sold   121,621 123,220 99,135 361,722 267,087
Selling, general, and administrative expenses   14,396 12,313 10,008 38,920 35,873
Research and development   32 13 36 77 151
Restructuring charges    --   --   --   --  (81)
Gain on sale of business    --   --   --   --  (22,907)
Operating income    36,753 20,229 3,307 65,210 46,099
Other income (expense):            
Interest income   24 24 4 83 205
Interest expense, net of capitalized interest    (521) (706) (997) (2,210) (3,416)
Foreign exchange gain (loss)    125 (80) (64) (251) 3,222
Other income    94 322 546 644 738
Income before provision for income taxes   36,475 19,789 2,796 63,476 46,848
Provision for income taxes    12,982  6,143 1,751  23,479 19,702
Net income    23,493 13,646 1,045 39,997 27,146
(Income) losses attributable to noncontrolling interest, net of tax    (100)  (1,938) (529)  (2,734) 346
Net income attributable to Globe Specialty Metals, Inc.   $ 23,393 11,708 516 $ 37,263 27,492
Weighted average shares outstanding:            
Basic   75,078 75,115 74,320 74,922 73,239
Diluted   76,868 76,734 75,570 76,574 74,411
Earnings per common share:            
Basic   $ 0.31  0.16  0.01 $ 0.50  0.38
Diluted   0.30 0.15  0.01 0.49  0.37
             
EBITDA:            
Net income   $ 23,493 13,646 1,045 $ 39,997 27,146
Provision for income taxes   12,982 6,143 1,751 23,479 19,702
Net interest expense    497 682 993 2,127 3,211
Depreciation and amortization    6,366  6,210 5,055  18,350 14,868
EBITDA   $ 43,338 26,681 8,844 $ 83,953 64,927
             
GLOBE SPECIALTY METALS, INC.
AND SUBSIDIARY COMPANIES
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
       
  March 31,  December 31,  March 31, 
  2011 2010 2010
Assets
Current assets:      
Cash and cash equivalents $ 155,313 159,314 219,787
Accounts receivable, net  61,761 47,585 45,325
Inventories 101,077 100,003 62,983
Prepaid expenses and other current assets 25,032 22,477 21,826
Total current assets 343,183 329,379 349,921
Property, plant, and equipment, net  227,819 226,567 189,404
Goodwill 53,406 52,074 51,837
Other intangible assets 477 477 477
Investments in unconsolidated affiliates 8,538 8,642 8,288
Deferred tax assets 71 71 49
Other assets 21,033 3,000 2,290
Total assets $ 654,527 620,210 602,266
       
Liabilities and Stockholders' Equity
Current liabilities:      
Accounts payable $ 44,136 46,843 36,592
Current portion of long-term debt 10 8,450 8,571
Short-term debt 532 936 13,859
Revolving credit agreements  12,000  15,000  -- 
Accrued expenses and other current liabilities 33,504 26,890 29,806
Total current liabilities 90,182 98,119 88,828
Long-term liabilities:      
Revolving credit agreements 34,989 23,000  22,000
Long-term debt  --  2,728 10,609
Deferred tax liabilities 14,311 6,645 15,032
Other long-term liabilities 18,032 17,787 14,658
Total liabilities 157,514 148,279 151,127
Stockholders' equity:      
Common stock 8 8 7
Additional paid-in capital 399,217 397,792 389,019
Retained earnings 64,755 41,362 32,152
Accumulated other comprehensive loss (3,846) (4,010) (3,671)
Treasury stock at cost (4) (4) (4)
Total Globe Specialty Metals, Inc. stockholders' equity 460,130 435,148 417,503
Noncontrolling interest 36,883 36,783 33,636
Total stockholders' equity 497,013 471,931 451,139
Total liabilities and stockholders' equity $ 654,527 620,210 602,266
       
GLOBE SPECIALTY METALS, INC.
AND SUBSIDIARY COMPANIES
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
           
  Three Months Ended Nine Months Ended
  March 31, 2011 December 31, 2010 March 31, 2010 March 31, 2011 March 31, 2010
           
Cash flows from operating activities:          
Net income $ 23,493 13,646 1,045 $ 39,997 27,146
Adjustments to reconcile net income          
to net cash provided by (used in) operating activities:          
Depreciation and amortization 6,366 6,210 5,055 18,350 14,868
Share-based compensation 1,327 1,273 1,260 3,875 4,491
Gain on sale of business  --   --   --   --  (22,907)
Deferred taxes 8,580  --   --  8,580 (74)
Changes in operating assets and liabilities:          
Accounts receivable, net (14,080) 3,283 (8,709) (5,583) (25,788)
Inventories (1,857) (5,118) (8,526) (14,752) (5,542)
Prepaid expenses and other current assets (3,448) (505) (9,422) (2,426) (9)
Accounts payable (2,659) (1,955) 953 (3,246) 22,569
Accrued expenses and other current liabilities 6,004 (12,444) 3,274 (2,323) (14,009)
Other  141 (793) (28,933) 201 (28,401)
Net cash provided by (used in) operating activities 23,867 3,597 (44,003) 42,673 (27,656)
Cash flows from investing activities:          
Capital expenditures  (7,465)  (9,187) (6,517)  (26,776) (16,432)
Sale of businesses, net of cash disposed  --   2,500  --  2,500  58,445
Working capital adjustments from acquisition of businesses, net  --   --   --  (2,038)  --
Other investing activities  (16,935)  --   --  (16,935)  (733)
Net cash (used in) provided by investing activities  (24,400)  (6,687) (6,517)  (43,249) 41,280
Cash flows from financing activities:          
Net payments of long-term debt  (11,168)  (3,681) (3,192)  (17,002) (19,750)
Net (payments) borrowings of short-term debt  (404)  (5,280) (154)  (7,535) 7,170
Net borrowings on revolving credit agreements  8,989  22,000  22,000  30,989  22,000
Dividend payment  --   (11,269)  --   (11,269)  --
Proceeds from stock option exercises  98  1,208  --   4,989  --
Proceeds from warrants exercised  --   --   --   --   1,287
Proceeds from UPOs exercised  --   --   --   --   210
Sale of noncontrolling interest  --   --   (133)  --   98,329
Sale of common stock  --   --   --   --   36,456
Other financing activities  (869)  --   (450)  (869) (1,387)
Net cash (used in) provided by financing activities (3,354) 2,978 18,071 (697) 144,315
Effect of exchange rate changes on cash and cash equivalents (114) (123) 5 (443) (28)
Net (decrease) increase in cash and cash equivalents (4,001) (235) (32,444) (1,716) 157,911
Cash and cash equivalents at beginning of period 159,314 159,549 252,231 157,029 61,876
Cash and cash equivalents at end of period $ 155,313 159,314 219,787 $ 155,313 219,787
           
Supplemental disclosures of cash flow information:          
Cash paid for interest, net $ 401 669 479 $ 1,685 2,198
Cash paid for income taxes, net 1,234 2,049 37,413 4,442 50,412
           
GLOBE SPECIALTY METALS, INC.
AND SUBSIDIARY COMPANIES
Supplemental Statistics
(Unaudited)
           
  Three Months Ended Nine Months Ended
  March 31, 2011 December 31, 2010 March 31, 2010 March 31, 2011 March 31, 2010
Shipments in metric tons:          
Silicon metal 32,266 29,922 30,681 91,511 85,402
Silicon-based alloys 27,010 29,249 17,003 85,384 46,862
Total shipments* 59,276 59,171 47,684 176,895 132,264
           
Average selling price ($/MT):          
Silicon metal $ 3,071 2,550 2,380 $ 2,712 2,536
Silicon-based alloys 2,264 2,031 2,011 2,039 2,008
Total* $ 2,703 2,294 2,248 $ 2,387 2,349
Average selling price ($/lb.):          
Silicon metal $ 1.39 1.16 1.08 $ 1.23 1.15
Silicon-based alloys 1.03 0.92 0.91 0.92 0.91
Total* $ 1.23 1.04 1.02 $ 1.08 1.07
           
* 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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