GLOBE SPECIALTY METALS INC - FORM 8-K - EX-99.1 - PRESS RELEASE Q2 FY15

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8-K - FORM 8-K - GLOBE SPECIALTY METALS INC	form8k2q2015.htm
EX-99.2 - PRESENTATION Q2 FY15 - GLOBE SPECIALTY METALS INC	presentation2q2015.htm

Globe Specialty Metals Reports Increased Earnings and Margin Expansion

In Second Quarter Fiscal 2015

·	Adjusted EBITDA increased 43% to $37.4 million, from the second quarter of last year and up 8% from the prior quarter

·	Adjusted EBITDA Margin increased 29% to 18.9%, from the second quarter of last year and up by 2.1% from the prior quarter

·	Adjusted diluted earnings per share attributable to GSM increased 62% to $0.21, from the second quarter of last year and up 11% from the prior quarter

·	Sales of $198.0 million were 11% higher than the second quarter of last year and down 4% from the prior quarter

·	Converted silicon alloy capacity to more profitable silicon metal, increasing annual silicon metal capacity to more than 120,000 mt and moved that silicon alloy production to our South Africa silicon alloys facility, which commenced production in October 2014

·	The Board of Directors authorized an increase in the Quarterly Dividend to $0.08 per share to be paid on March 12, 2015 to Shareholders of Record as of February 26, 2015

MIAMI, February 9, 2015 – Globe Specialty Metals, Inc. (NASDAQ: GSM) (the “Company”) today announced results for the second quarter fiscal 2015 ended December 31, 2014.

Adjusted EBITDA of $37.4 million in the second quarter was up 43% from the second quarter of last year and up 8% compared to the prior quarter, while adjusted diluted earnings per share attributable to GSM for the second quarter were $0.21, up 62% from second quarter of last year and up 11% to the prior quarter. Adjusted net income of $15.5 million for the second quarter of fiscal 2015 was up 7% compared to the prior quarter. Reported net income of $10.8 million for the second quarter of fiscal 2015 was down 14% compared to the prior quarter. Net sales of $198.0 million in the second quarter were up 11% from the second quarter of last year and down 4% compared to the first quarter of fiscal 2015.

Excluding certain items, detailed in the table below, adjusted EBITDA was $37.4 million in the second quarter, compared to $26.2 million in the prior year and $34.6 million in the first quarter. On a reported basis, EBITDA for the second quarter was $30.1 million, compared to $32.9 million in the prior year and $33.2 million in the first quarter of fiscal 2015.

Globe CEO Jeff Bradley commented, “As a result of the strong demand in our key end markets, and as we approached the end of the year in a near sold out position for 2015, we successfully increased our silicon metal production capacity. We completed the proprietary conversion process before the end of December and entered 2015 with more than 120,000 metric tons of annual capacity to enable us to be active on the spot market. We are offsetting the impact to our silicon alloy business of this conversion, with the increasing output of our South African operation“.

Reported Diluted EPS for the second quarter of fiscal 2015 was $0.13 per share, compared to $0.16 per share in the prior quarter and $0.28 per share in the second quarter of fiscal 2014.

Adjusted EBITDA was as follows:

			Second Quarter			Six Months
			FY 2015	FY 2014		FY 2015	FY 2014
Reported EBITDA		$	30,137	32,895	$	63,333	39,464
	Remeasurement of stock option liability		(1,036)	7,825		(3,441)	19,889
	Siltech start-up costs		1,178	–		3,060	–
	Transaction and due diligence expenses		631	308		1,114	469
	Business interruption		899	–		2,352	–
	Lease termination		457	–		457	–
	Plant relocation		568	–		568	–
	Divestiture indemnification payment		4,559	–		4,559	–
	Quebec Silicon lockout costs		–	2,290		–	4,898
	Quebec Silicon curtailment gain		–	(5,831)		–	(5,831)
	Contract acquisition cost		–	14,400		–	14,400
	Variable compensation		–	3,885		–	3,885
	Bargain purchase gain		–	(29,538)		–	(29,538)
Adjusted EBITDA, excluding above items		$	37,393	26,234	$	72,002	47,636

Second quarter fiscal 2015 results were negatively impacted by $3.1 million after-tax related to a divestiture indemnification payment, $0.8 million after-tax for expenses related to the start-up of Siltech (acquired November 2013), $0.6 million after-tax related to loss of profits from business interruption at one of our North America plants, $0.4 million for expenses related transaction fees and due diligence expenses, $0.4 million related to a plant relocation, and $0.3 million after tax related to a lease termination. Second quarter was positively impacted by $0.7 million after-tax due to the re-measurement of stock option liability.

Cash decreased by $1.9 million contributing to the increase in net debt of $3.9 million from the end of the first quarter fiscal 2015 to $15.0 million. Cash flow from operating activities in the second quarter was $17.9 million, capital expenditures totalled $13.8 million (Siltech was $3.7 million of the total capital expenditures for the quarter), and dividends totalled $5.5 million. Capital expenditures were primarily related to maintenance. Net working capital increased $8.0 million in the second quarter as compared to the first quarter primarily due to the conversion of silicon alloys to silicon metals production during the quarter and to the ramping up of South African facility. Total debt outstanding in the second quarter remained flat to the prior quarter at $125.2 million. Total cash and cash equivalents and marketable securities were $110.2 million as of December 31, 2014.

Adjusted diluted earnings per share, which excludes the items listed below, were as follows:

			Second Quarter			Six Months
			FY 2015	FY 2014		FY 2015	FY 2014
Reported Diluted EPS		$	0.13	0.28	$	0.29	0.18
	Tax rate adjustment		0.01	0.01		0.03	0.03
	Remeasurement of stock option liability		(0.01)	0.07		(0.03)	0.18
	Siltech start-up costs		0.01	-		0.03	-
	Transaction and due diligence expenses		0.01	-		0.01	-
	Business interruption		0.01	-		0.02	-
	Plant relocation		0.01	-		0.01	-
	Divestiture indemnification payment		0.04	-		0.04	-
	Quebec Silicon lockout costs		-	0.02		-	0.04
	Quebec Silicon curtailment gain		-	(0.03)		-	(0.03)
	Contract acquisition cost		-	0.13		-	0.13
	Variable compensation		-	0.04		-	0.04
	Bargain purchase gain		-	(0.39)		-	(0.39)
	Deferred financing fees write-off		-	-		-	0.03
Adjusted diluted EPS, excluding above items		$	0.21	0.13	$	0.40	0.21

Adjusted net income attributable to GSM, which excludes the items listed below, was as follows:

			Second Quarter			Six Months
			FY 2015	FY 2014		FY 2015	FY 2014
Reported net income attritbutable to GSM		$	9,973	20,768	$	21,675	13,916
	Tax rate adjustment		549	1,588		2,328	1,930
	Remeasurement of stock option liability		(704)	5,321		(2,339)	13,525
	Siltech start-up costs		801	-		2,081	-
	Transaction and due diligence expenses		429	209		757	318
	Business interruption		611	-		1,599	-
	Lease termination		311	-		311	-
	Plant relocation		386	-		386	-
	Divestiture indemnification payment		3,100	-		3,100	-
	Quebec Silicon lockout costs		-	1,557		-	3,330
	Quebec Silicon curtailment gain		-	(2,022)		-	(2,022)
	Contract acquisition cost		-	9,792		-	9,792
	Variable compensation		-	2,642		-	2,642
	Bargain purchase gain		-	(29,538)		-	(29,538)
	Deferred financing fees write-off		-	-		-	2,281
Adjusted net income attritbutable to GSM		$	15,456	10,317	$	29,898	16,174

Conference Call

Globe will review second quarter fiscal 2015 results during its quarterly conference call on February 10, 2015 at 9:00 AM 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 Second Quarter Fiscal 2015 Earnings 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 Miami, Florida. 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, adjusted net income and adjusted diluted earnings per share are non-GAAP measures.

We have included these measures to provide supplemental measures of our performance which we believe are important because they eliminate 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. Reconciliations of these measures to the comparable GAAP financial measures are provided in the attached financial statements.

CONTACT: Globe Specialty Metals, Inc.

Joe Ragan, 786-509-6925

Chief Financial Officer

Email: jragan@glbsm.com

Jeff Bradley, 786-509-6908

Chief Executive Officer

Email: jbradley@glbsm.com

GLOBE SPECIALTY METALS, INC.
AND SUBSIDIARIES
Condensed Consolidated Income Statements
(In thousands, except per share amounts)
(Unaudited)

				Three Months Ended				Six Months Ended
				December 31,	September 30,	December 31,		December 31,	December 31,
				2014	2014	2013		2014	2013

Net sales			$	198,016	206,083	178,406	$	404,099	351,400
Cost of goods sold				157,745	168,617	150,713		326,362	302,993
Selling, general, and administrative expenses				23,024	15,565	26,499		38,589	51,637
Contract acquisition cost				-	-	14,400		-	14,400
Curtailment gain				-	-	(5,831)		-	(5,831)
		Operating income (loss)		17,247	21,901	(7,375)		39,148	(11,799)
Other income (expense):
	Bargain purchase gain			-	-	29,538		-	29,538
	Interest income			57	81	4		138	132
	Interest expense, net of capitalized interest			(1,130)	(1,243)	(1,050)		(2,373)	(5,928)
	Foreign exchange loss			(85)	(905)	(728)		(990)	(1,109)
	Other income (expense)			214	575	(3)		789	18
		Income before provision for (benefit from) income taxes		16,303	20,409	20,386		36,712	10,852
Provision for (benefit from) income taxes				5,478	7,845	(3,207)		13,323	(5,916)
		Net income		10,825	12,564	23,593		23,389	16,768
Income attributable to noncontrolling interest, net of tax				(852)	(862)	(2,825)		(1,714)	(2,852)
		Net income attributable to Globe Specialty Metals, Inc.	$	9,973	11,702	20,768	$	21,675	13,916
Weighted average shares outstanding:
	Basic			73,749	73,754	75,267		73,752	75,289
	Diluted			73,877	73,897	75,388		73,887	75,377
Earnings per common share:
	Basic		$	0.14	0.16	0.28	$	0.29	0.18
	Diluted			0.13	0.16	0.28		0.29	0.18

EBITDA:
Net income			$	10,825	12,564	23,593	$	23,389	16,768
Provision for (benefit from) income taxes				5,478	7,845	(3,207)		13,323	(5,916)
Net interest expense				1,073	1,162	1,046		2,235	5,796
Depreciation, depletion, amortization and accretion				12,761	11,625	11,463		24,386	22,816
	EBITDA		$	30,137	33,196	32,895	$	63,333	39,464

GLOBE SPECIALTY METALS, INC.
AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)

				December 31,	September 30,	December 31,
				2014	2014	2013
Assets
Current assets:
	Cash and cash equivalents		$	104,533	106,395	158,564
	Marketable securities			5,660	7,694	150
	Accounts receivable, net			67,644	91,989	70,341
	Inventories			117,753	93,293	88,562
	Deferred tax assets			484	2,906	17,877
	Prepaid expenses and other current assets			22,376	20,116	14,124
		Total current assets		318,450	322,393	349,618
Property, plant, and equipment, net				463,091	468,733	459,963
Deferred tax assets				840	334	125
Goodwill				43,343	43,343	43,343
Other intangible assets				477	477	477
Investments in unconsolidated affiliates				5,973	5,973	5,973
Other assets				1,871	1,941	4,385
		Total assets	$	834,045	843,194	863,884

Liabilities and Stockholders’ Equity
Current liabilities:
	Accounts payable		$	42,546	50,054	40,935
	Short-term debt			72	58	15
	Revolving credit agreements			-	-	9,000
	Share-based liabilities			9,919	10,206	38,400
	Accrued expenses and other current liabilities			36,437	37,310	32,524
		Total current liabilities		88,974	97,628	120,874
Long-term liabilities:
	Revolving credit agreements and other long-term debt			125,122	125,132	100,000
	Deferred tax liabilities			47,595	48,554	46,749
	Other long-term liabilities			50,038	49,377	53,832
		Total liabilities		311,729	320,691	321,455
Stockholders’ equity:
	Common stock			8	8	8
	Additional paid-in capital			401,802	400,821	397,415
	Retained earnings			81,487	77,045	74,188
	Accumulated other comprehensive loss			(17,697)	(11,463)	(5,766)
	Treasury stock at cost			(29,208)	(29,208)	(7,287)
		Total Globe Specialty Metals, Inc. stockholders’ equity		436,392	437,203	458,558
	Noncontrolling interest			85,924	85,300	83,871
		Total stockholders’ equity		522,316	522,503	542,429
		Total liabilities and stockholders’ equity	$	834,045	843,194	863,884

GLOBE SPECIALTY METALS, INC.
AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)

						Three Months Ended				Six Months Ended
						December 31,	September 30,	December 31,		December 31,	December 31,
						2014	2014	2013		2014	2013
Cash flows from operating activities:
	Net income				$	10,825	12,564	23,593	$	23,389	16,768
	Adjustments to reconcile net income
	to net cash provided by operating activities:
		Depreciation, depletion, amortization and accretion				12,761	11,625	11,463		24,386	22,816
		Share-based compensation				958	2,079	(261)		3,037	(1,819)
		Curtailment gain				-	-	(5,831)		-	(5,831)
		Bargain purchase gain				-	-	(29,538)		-	(29,538)
		Amortization of deferred financing fees				42	46	53		88	3,577
		Unrealized foreign exchange loss (gain)				336	(300)	-		36	-
		Deferred taxes				1,475	3,170	(3,405)		4,645	(9,935)
		Amortization of customer contract liabilities				(1,831)	(1,896)	(1,636)		(3,727)	(3,366)
		Changes in operating assets and liabilities:
			Accounts receivable, net			23,551	8,505	6,458		32,056	13,661
			Inventories			(25,697)	(13,636)	3,275		(39,333)	14,275
			Prepaid expenses and other current assets			(3,319)	2,762	5,416		(557)	12,015
			Accounts payable			(5,808)	1,989	2,277		(3,819)	2,513
			Accrued expenses and other current liabilities			757	(893)	8,772		(136)	22,188
			Other			3,829	(1,126)	2,631		2,703	4,637
				Net cash provided by operating activities		17,879	24,889	23,267		42,768	61,961
Cash flows from investing activities:
	Capital expenditures					(13,798)	(16,836)	(10,861)		(30,634)	(18,064)
	Acquisition of business, net of cash acquired					-	-	(3,800)		-	(3,800)
	Proceeds from sale of marketable securities					350	7,005	-		7,355	-
				Net cash used in investing activities		(13,448)	(9,831)	(14,661)		(23,279)	(21,864)
Cash flows from financing activities:
	Net borrowings (payments) of short-term debt					4	(14)	-		(10)	(269)
	Net payments on revolving credit agreements					-	-	-		-	(30,250)
	Debt issuance costs					-	-	-		-	(1,080)
	Dividend payment					(5,531)	(5,532)	(5,178)		(11,063)	(10,356)
	Proceeds from stock option exercises					23	57	-		80	-
	Purchase of treasury shares					-	(242)	(7,283)		(242)	(7,283)
	Other financing activities					(646)	(646)	(630)		(1,292)	(1,263)
				Net cash used in financing activities		(6,150)	(6,377)	(13,091)		(12,527)	(50,501)
Effect of exchange rate changes on cash and cash equivalents						(143)	(78)	(35)		(221)	(708)
				Net (decrease) increase in cash and cash equivalents		(1,862)	8,603	(4,520)		6,741	(11,112)
Cash and cash equivalents at beginning of period						106,395	97,792	163,084		97,792	169,676
Cash and cash equivalents at end of period					$	104,533	106,395	158,564	$	104,533	158,564

Supplemental disclosures of cash flow information:
	Cash paid for interest, net				$	534	526	850	$	1,060	1,859
	Cash paid (refunded) for income taxes, net					9,700	212	(4,136)		9,912	(3,536)

GLOBE SPECIALTY METALS, INC.
AND SUBSIDIARIES
Supplemental Statistics
(Unaudited)

				Three Months Ended				Six Months Ended
				December 31,	September 30,	December 31,		December 31,	December 31,
				2014	2014	2013		2014	2013
Shipments in metric tons:
	Silicon metal			38,436	39,416	31,631		77,852	63,250
	Silicon-based alloys			32,450	33,900	34,985		66,350	65,401
		Total shipments*		70,886	73,316	66,616		144,202	128,651

Average selling price ($/MT):
	Silicon metal		$	2,916	2,807	2,766	$	2,861	2,732
	Silicon-based alloys			2,030	2,048	1,983		2,039	2,000
		Total*	$	2,511	2,456	2,355	$	2,483	2,360
Average selling price ($/lb.):
	Silicon metal		$	1.32	1.27	1.25	$	1.30	1.24
	Silicon-based alloys			0.92	0.93	0.90		0.92	0.91
		Total*	$	1.14	1.11	1.07	$	1.13	1.07

* Excludes by-products and other

GLOBE SPECIALTY METALS INC - FORM 8-K - EX-99.1 - PRESS RELEASE Q2 FY15 - February 9, 2015

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GLOBE SPECIALTY METALS INC Reports