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Press release from CNW Group

5N Plus Inc. Reports Results for the Second Quarter Ended June 30, 2012

Tuesday, August 07, 2012

5N Plus Inc. Reports Results for the Second Quarter Ended June 30, 201207:00 EDT Tuesday, August 07, 2012MONTREAL, Aug. 7, 2012 /CNW Telbec/ - 5N Plus Inc. (TSX: VNP), the leading producer of specialty metal and chemical products, today reported financial results for the second quarter ended June 30, 2012. Numbers for the comparable period ended May 31, 2011 have been restated to reflect changes resulting from the implementation of IFRS and the adoption of the US dollar as the Company's functional and reporting currency.Impairment charges of $26.1 million were booked at the end of the quarter as the Company adjusted the value of its inventories to reflect significantly reduced net realizable values for certain products following abrupt declines in the prices of corresponding underlying commodities.Revenues for the second quarter 2012 increased by 15% to $140.1 million compared to $122.0 for the quarter ended May 31, 2011. Revenues for the first semester 2012 increased by 112% to $302.3 million compared to $142.6 million for the six-month period ended May 31, 2011.Net losses attributable to equity holders of 5N Plus the second quarter 2012 and the first semester 2012 were $21.9 million or ($0.29) per share and $17.0 million or ($0.23) per share respectively. Excluding impairment charges, adjusted net earnings1 yielded a loss of $2.1 million or ($0.03) per share for the second quarter 2012 and earnings of $2.8 million or $0.04 per share for the first semester 2012. This compares with net earnings of $8.5 million or $0.14 per share and net earnings of $14.1 million or $0.26 per share for the three and six-month periods ended May 31, 2011 respectively.Net debt1 amounted to $175.8 million at June 30, 2012 compared to $260.6 million at December 31, 2011 and decreased by $56.4 million in the second quarter 2012 and by $84.8 million in the first semester 2012. Total debt amounted to $187.6 million at June 30, 2012 compared to $341.9 million at December 31, 2011 and decreased by $90.5 million in the second quarter 2012 and by $154.3 million in first semester 2012.Negative EBITDA1 of $20.5 million and $3.6 million in the second quarter 2012 and in the first semester 2012 are primarily attributable to impairment charges. AdjustedEBITDA1 amounted to $5.6 million in the second quarter 2012 and $22.5 million in the first semester 2012. This compares to $20.0 million and $26.0 million in the three and six-month periods ended May 31, 2011 respectively.As at June 30, 2012, the backlog1 of orders expected to translate into sales over the following twelve months stood at $189.0 million compared to $223.2 million as at December 31, 2011 and $215.6 million as at March 31, 2012.On June 6, 2012, the Company issued 12,903,613 stock units for net proceeds of $37.1 million. This led to an increase in shareholder equity which stood at $358.2 million as at June 30, 2012, up from $344.6 million as at March 31, 2012 and $339.2 million as at December 31, 2011.__________________________1 Non-IFRS MeasuresJacques L'Ecuyer, President and Chief Executive Officer, said "We saw relatively strong demand for most of our products during the quarter which enabled us to continue reducing working capital and debt levels through significant cash flow generation. In our Electronic Materials business unit, although sales of gallium and indium products were somewhat softer than in the previous quarter, partly because of the relocation of some of the production activities previously located at our Fairfield offices, sales to our main customers for solar products increased and we also made progress in our germanium-related activities. In our Eco-Friendly Materials business unit, we continued to increase market share with strong sales of bismuth-related products in a market which is continuing to grow, as efforts to replace lead accelerate."Mr. L'Ecuyer continued, "Unfortunately, these positive developments were overshadowed from an earnings and revenue standpoint by two main factors. On the one hand, the quarter was characterized by sharp decreases in the prices of almost all of our underlying commodities, especially in the back-end of the quarter, which led to decreases in average selling prices and further impairment charges on our inventories at the end of the quarter. On the other hand, we also sold to our main customer in the solar market at lower margins than normal, such sales having been made from previously impaired units in accordance with the terms of our new agreement with the customer. Both factors severely impacted our earnings and revenue levels providing a somewhat distorted picture of the Company's overall performance. In this respect, we believe a more appropriate assessment would be that we are holding our ground and doing better than most of our competitors in a challenging environment. We expect earning levels to be more reflective of the Company's actual performance once both the underlying commodity pricing stabilizes and the inventory of impaired units has been used up, especially with respect to our contract with our main customer in the solar market."Continuing, Mr. L'Ecuyer added, "Our decision to further strengthen our balance sheet through an equity raise of CDN $40 million on June 6, 2012 was largely determined by the relative uncertainty in the global economic environment and the Company's exposure to the solar and European markets. Regardless of its short-term impact, we are confident that this financing will deliver long-term shareholder value by enabling us to execute more effectively on our strategic growth plan which calls for further deleveraging and redeployment of capital into less volatile and higher value-added opportunities. The current year is thus key in many respects as we gradually transition the entire Company towards this business model and complete the full integration of former MCP activities, realigning the Company towards greater sustainability in our commercial practices and greater efficiencies throughout the group."Mr. L'Ecuyer concluded, "Current outlook for the rest of the year and corresponding financial performance will be largely determined by underlying commodity pricing and the performance of the European economy. We remain committed to a further reduction in our working capital requirements and a corresponding decrease in our debt levels. Although we may continue to experience short-term volatility in our financial performance, we are confident that our Company remains well positioned to continue growing and to deliver increasing shareholder value. I would like to thank our employees for their efforts in these challenging times and for their commitment towards our plan of delivering a more efficient and sustainable organization, the positioning and skill set of which remains both remarkable and truly unique."Webcast Information5N Plus will host a conference call on Wednesday, August 8, 2012 at 8:00 am ET with financial analysts to discuss results of the second quarter ended June 30, 2012. All interested parties are invited to participate in the live broadcast on the Company's Web site at www.5nplus.com. A replay of the webcast and a recording of the Q&A will be available until August 31, 2012.To participate in the conference call:Montreal area:  514-807-9895Toronto area:   647-427-7450Toll-Free :   1- 888-231-8191Enter access code 17434059.About 5N Plus Inc.5N Plus is the leading producer of specialty metal and chemical products. Fully integrated with closed-loop recycling facilities, the Company is headquartered in Montreal, Québec, Canada and operates manufacturing facilities and sales offices in several locations in Europe, the Americas and Asia. 5N Plus deploys a range of proprietary and proven technologies to produce products which are used in a number of advanced pharmaceutical, electronic and industrial applications. Typical products include purified metals such as bismuth, gallium, germanium, indium, selenium and tellurium, inorganic chemicals based on such metals and compound semiconductor wafers. Many of these are critical precursors and key enablers in markets such as solar, light-emitting diodes and eco-friendly materials.Forward-Looking Statements and DisclaimerThis press release may contain forward-looking information within the meaning of applicable securities laws. All information and statements other than statements of historical facts contained in this press release are forward-looking information. Such statements and information may be identified by words such as "about", "approximately", "may", "believes", "expects", "will", "intends", "should", "plans", "predicts", "potential", "projects", "anticipates", "estimates", "continues" or similar words or the negative thereof or other comparable terminology. Forward-looking statements are based on the best estimates available to 5N Plus at this time and involve known and unknown risks, uncertainties and other factors that may cause 5N Plus' actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. A description of the risks affecting 5N Plus' business and activities appears under the heading "Risks and Uncertainties" in Management's Discussion and Analysis for the fiscal year ended December 31, 2011 available on SEDAR at www.sedar.com. No assurance can be given that any events anticipated by the forward-looking information in this press release will transpire or occur, or if any of them do so, what benefits that 5N Plus will derive therefrom. In particular, no assurance can be given as to the future financial performance of 5N Plus. The forward-looking information contained in this press release is made as of the date hereof and 5N Plus undertakes no obligation to publicly update such forward-looking information to reflect new information, subsequent or otherwise, unless required by applicable securities laws. The reader is warned against placing undue reliance on these forward-looking statements.5N PLUS INC.CONDENSED INTERIM CONSOLIDATED STATEMENTS OF EARNINGSFor the periods of three and six months ended June 30, 2012 and May 31, 2011(All figures in thousands of United States dollars, except per share information)(Unaudited)           Three months Six months           2012 2011 2012 2011  $ $ $ $         Revenues 140,076 121,976 302,311 142,639Cost of sales 150,935 96,975 283,182 109,534Selling, general and administrative expenses 11,551 6,279 23,563 8,123Other expenses, net 4,100 9,615 10,621 10,599Share of loss (gain) from joint ventures 55 (197) 219 (197)  166,641 112,672 317,585 128,059Operating income (loss) (26,565) 9,304 (15,274) 14,580Financial expenses (income)        Interest on long-term debt 2,391 662 4,777 827Other interest expense 27 1,476 638 1,313Foreign exchange loss (gain) and derivative 630 (5,392) 2,312 (6,492)  3,048 (3,254) 7,727 (4,352)Earnings (loss) before income tax (29,613) 12,558 (23,001) 18,932Income tax (7,551) 4,384 (5,830) 5,207Net earnings (loss) for the period (22,062) 8,174 (17,171) 13,725         Attributable to:        Equity holders of 5N Plus Inc. (21,922) 8,549 (16,950) 14,075Non-controlling interest (140) (375) (221) (350)Net earnings (loss) for the period (22,062) 8,174 (17,171) 13,725Earnings (loss) per share attributable to equity holders of 5N Plus Inc. (0.29) 0.14 (0.23) 0.27Basic earnings (loss) per share (0.30) 0.14 (0.24) 0.26Diluted earnings (loss) per share (0.30) 0.14 (0.24) 0.26                  5N PLUS INC.CONDENSED INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION(All figures in thousands of United States dollars)           As at June 30, 2012 As at December 31, 2011  $ $  (unaudited)  ASSETS    Current    Cash and cash equivalents 11,846 29,449Temporary investments (restricted) - 51,882Accounts receivable 90,478 76,641Inventories 216,485 315,333Income tax receivable 14,677 11,022Other current assets 4,516 2,762Total current assets 338,002 487,089Property, plant and equipment 89,957 86,483Intangible assets 62,287 68,148Deferred tax asset 13,800 6,646Goodwill 124,910 124,910Investments accounted for using the equity method 1,294 1,513Other assets 11,753 11,495Total non-current assets 304,001 299,195Total assets 642,003 786,284     LIABILITIES AND EQUITY    Current     Bank indebtedness and short-term debt 12,017 73,430Trade and accrued liabilities 48,591 59,029Income tax payable 2,857 354Derivative financial liabilities 4,570 3,814Long-term debt due within one year 27,847 14,757Total current liabilities 95,882 151,384Long-term debt 147,759 253,719Deferred tax liability 23,394 23,083Retirement benefit obligation 11,423 12,315Derivative financial liabilities 3,314 1,902Other liabilities 1,790 4,171Total liabilities 283,562 446,574Shareholders' equity 358,193 339,241Non-controlling interest 248 469Total equity 358,441 339,710Total liabilities and equity 642,003 786,284                  5N PLUS INC.Cash Flows         (in thousands of United States dollars) Q2 2012 Q4 2011 YTD 2012 Q3 and Q4 2011  $  $ $  $Funds from operations (407) 9,329 10,829 16,304Net changes in non-cash working capital items 17,063 (65,243) 44,034 (76,132)Operating activities 16,656 (55,914) 54,863 (59,828)Investing activities 31,910 (161,965) 45,197 (168,374)Financing activities (49,890) 199,970 (118,366) 200,663Effect of foreign exchange rate changes on cash and cash equivalents related to operations 1,126 - 703 366       Net decrease in cash and cash equivalents (198) (17,909) (17,603) (27,173)         Electronic Materials Business Unit                 (in thousands of United States dollars) Q2 2012 Q4 2011 YTD 2012 Q3 and Q4 2011  $ $ $ $Revenues 54,763 64,227 128,128 84,890Cost of goods & expenses, before amortization (61,955) (46,820) (124,554) (60,959)EBITDA (7,192) 17,407 3,574 23,931Impairment of inventory 15,558 - 15,558 -Adjusted EBITDA 8,366 17,407 19,132 23,931Bookings 37,379 147,982 94,453 180,814         Eco-Friendly Material Business Unit                 (in thousands of United States dollars) Q2 2012 Q2 2011 YTD 2012 YTD 2011  $ $ $ $Revenues 85,313 57,749 174,183 57,749Cost of goods & expenses, before amortization (94,363) (52,961) (173,166) (52,961)EBITDA  (9,050) 4,788 1,017 4,788Impairment of inventory 10,510 - 10,510 -Adjusted EBITDA 1,460 4,788 11,527 4,788Bookings 76,090 164,541 173,664 164,541  SOURCE: 5N PLUS INC.For further information: Jacques L'Ecuyer President and Chief Executive Officer 5N Plus Inc. (514) 856-0644jacques.lecuyer@5nplus.com