Sep. 16, 2010 - Globe Specialty Metals Inc. announces results for the quarter and fiscal year ended June 30, 2010. Key points are as follows:
-- Net sales for the fourth quarter ended June 30, 2010 were up 30%, to $146.4 million, and shipments increased 30% to 62,207 MT, from our third quarter ended March 31, 2010. Core Metals Group, acquired on April 1, 2010, accounted for 61% of the increase in sales and 68% of the increase in shipments. Net sales and shipments increased 79% and 93%, respectively, from the quarter ended June 30, 2009.
-- Net income attributable to GSM for the fourth quarter was $6.6 million, compared to $0.5 million in our third quarter and $1.6 million in the fourth quarter of last year. Diluted earnings per share were $0.09 in the fourth quarter, compared to $0.01 per share in our third quarter and $0.02 per share in the fourth quarter of last year.
-- Other than maintenance outages, we are currently running all of our silicon metal and silicon-based alloy furnaces at full capacity. Customer demand remains strong.
-- The Board of Directors today approved an annual dividend of $0.15 per common share. The dividend is payable October 29, 2010, to stockholders of record as of October 15, 2010. This dividend represents an aggregate cash payment of $11.1 million to our stockholders. The Company is initiating this dividend based on its historical earnings and expectations for continued earnings growth. We believe our expected future free cash flow, modest debt levels and net cash balance are sufficient to fund a dividend of this amount and provide adequate financial flexibility to support our growth initiatives. In the future, we intend to continue to consider declaring dividends on an annual basis, subject to reviewing our earnings and then current circumstances.
Fourth Quarter Results
Fourth quarter results were negatively impacted by $3.2 million of after-tax costs for retained liabilities related to a disposed business, which partially reduced a prior gain, and $1.9 million of after-tax start-up related costs for the Niagara Falls, NY plant. Results were positively impacted by a reduction in our tax rate in the fourth quarter due to certain state tax credits, which resulted in a $2.1 million benefit in our provision for income taxes, and a $1.0 million retroactive adjustment to power costs. The increase in diluted EPS, excluding the above items, from $0.05 per share in our third quarter to $0.11 per share in our fourth quarter is primarily due to the acquisition of Core Metals Group, as well as a higher volume of shipments and a modest increase in average selling prices in our existing businesses, partially offset by higher variable compensation expense.
Shipments in the fourth quarter increased 30% from the preceding quarter as a result of improving demand from our end markets and the Core Metals Group acquisition. As expected, our average selling price, including Core Metals Group, declined by 4% from the preceding quarter, with a 2% increase in silicon metal offset by an 8% decrease in silicon-based alloys. The decline in the silicon-based alloy average selling price was a result of the acquisition of Core Metals Group, which increased our mix of ferrosilicon, our lowest priced alloy, which also has our lowest cost of production. The increase in the average selling price of silicon metal was primarily a result of a greater percentage of sales coming from annual contracts and spot pricing.
Fourth quarter EBITDA was $14.6 million, compared to $8.8 million in our third quarter and $11.9 million in the fourth quarter of last year. Fourth quarter EBITDA, excluding the items listed below, was $19.4 million.
"Globe's better than expected F4Q results affirm our view that increasing silicon metal demand and prices, coupled with an end to operational/ facility start-up issues and below-market sales contracts should lead to a compelling earnings outlook," Globe CEO Jeff Bradley said.
Full Year Fiscal 2010 Results
For the year ended June 30, 2010, the Company posted net income attributable to GSM shareholders of $34.1 million, or $0.46 a diluted share, compared to a net loss of $42.0 million, or $0.65 per diluted share, in the prior year. Last year's results included an after-tax impairment charge of $65.3 million. EBITDA for the year ended June 30, 2010 was $79.5 million, compared to a loss of $7.8 million in the comparable period of the prior year.
We expect sales volumes to decrease modestly in our fiscal first quarter of 2011 as a result of planned maintenance outages. This is expected to lead to a modest decrease in sales and earnings in the fiscal first quarter of 2011. Other than maintenance outages, we expect to continue to operate at full capacity.
Capital expenditures were $6.5 million in the fourth quarter and $22.9 million for the full fiscal year. We expect a modest increase in capital expenditures in our fiscal first and second quarters of 2011 for planned maintenance outages.
Cash and cash equivalents totalled $157.0 million at June 30, 2010 and total debt was $41.1 million. Cash provided by operating activities was $8.4 million in the fourth quarter.
Jeff Bradley commented, "We are pleased with the results and expect demand from the markets we serve to remain solid. Our Niagara Falls plant is now running at expected output levels and we have instituted a rigorous maintenance schedule for all our plants to improve operating efficiency and reduce costs. Our recent acquisition of Core Metals Group has proved significantly accretive, making a meaningful contribution to our sales and earnings, as well as to our overall operational capabilities." Bradley continued, "We expect a modest decline in shipments and earnings in our first fiscal quarter of 2011 due to planned maintenance outages. In the subsequent quarters, we expect continued growth in volume and earnings, with the most meaningful increase coming at the beginning of calendar 2011 when our existing low-priced silicon metal contracts expire. We also anticipate positive benefits from the improving ferrosilicon market and the completion of our planned outages."
