5N Plus Inc. Reports Results for the Third Quarter Ended September 30, 2012

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MONTREAL , Nov. 7, 2012 /CNW Telbec/ - 5N Plus Inc. (VNP.TO), the leading producer of specialty metal and chemical products, today reported financial results for the third quarter ended September 30, 2012 .

These financial results include 5N Plus and former MCP Group for the entire YTD 2012, 
whereas less than six months of former MCP Group were included 
in the ten-month period ended September 30, 2011 .

  • Adjusted EBITDA1 for the third quarter 2012 was $9.0 million compared to $30.3 million for the four-month period ended September 30, 2011 . Adjusted EBITDA for the nine-month period ended September 30, 2012 was $31.5 million compared to $56.3 million for the ten-month period ended September 30, 2011 . Excluding inventory impairment charges and reversals, EBITDA1 was $9.0 million for the third quarter 2012 and $5.4 million for the nine-month period ended September 30, 2012 compared to $28.9 million and $54.9 million for the four and ten-month periods ended September 30, 2011 respectively.
     
  • Net debt1 amounted to $140.2 million on September 30, 2012 compared to $260.6 million on December 31, 2011 and decreased by $35.5 million in the third quarter 2012 and by $120.3 million in the nine-month period 2012. Total debt amounted to $149.8 million at September 30, 2012 compared to $341.9 million at December 31, 2011 and decreased by $37.8 million in the third quarter 2012 and by $192.1 million in the nine-month period 2012.
     
  • Revenues for the third quarter 2012 were $120.7 million compared to $242.3 million for the four-month period ended September 30 , 2011.  Revenues for the nine-month period ended September 30, 2012 increased by 9.9% to $423.1 million compared to $384.9 million for the ten-month period ended September 30, 2011 .
     
  • Net earnings (loss) for the third quarter 2012 was $1.3 million or $0.02 per share and ( $15.9 ) million or ( $0.21 ) per share for the nine-month period 2012 resulting from impairment charges of $26.1 million booked in the second quarter 2012. Net earnings was $14.9 million or $0.21 per share and $28.7 million or $0.48 per share for the four and ten-month periods ended September 30, 2011 respectively. Excluding impairment charges and reversals, restructuring costs and acquisition costs net of the related income tax, adjusted net earnings1 were $0.6 million or $0.01 per share for the third quarter 2012 and $4.0 million or $0.05 per share for the nine-month period 2012.
     
  • As at September 30, 2012 , the backlog1 of orders expected to translate into sales over the following twelve months stood at $162.3 million compared to $212.3 million as at September 30, 2011 and $189.0 million as at June 30, 2012 .

Jacques L'Ecuyer, President and Chief Executive Officer, said "Despite a very challenging business environment we managed to return to positive earnings in the quarter and generate strong cash flow which enabled us to further reduce debt levels and improve financial flexibility.  In our Electronic Materials business unit, demand for our solar products remained relatively strong and we expect this to continue in the fourth quarter.   We also reached technical and commercial milestones at our germanium substrate subsidiary, Sylarus, which was awarded a second government contract this year.  Demand was somewhat softer for most of our other products including those of our Eco-Friendly Materials business unit, our customers remaining cautious in their procurement plans in view of continuing concerns over European demand and the slowdown in the global economy. "

Mr. L'Ecuyer continued, "Revenues, backlog and profitability were negatively impacted in the quarter by low underlying commodity prices.  Our stocks remain somewhat close to their net realizable value, preventing us from capturing our full margins.  We expect this situation to gradually correct itself over the next quarters as we replenish our stocks and take advantage of what we believe will be a more favourable underlying commodity pricing environment."

Mr. L'Ecuyer added, "We continue to focus on improving financial and operational efficiency and at reducing costs.  Financial efficiency gains were made through a further reduction of $33.7 million in working capital and $35.5 million in net debt.  On the operational side, we were successful in the quarter in consolidating our gallium production activities previously carried out in Fairfield into our manufacturing facility in DeForest, Wisconsin.  We are also strengthening our presence in Asia and intend to fully leverage our developing footprint there, including our plant in Vientiane Laos which has now been in operation for close to one year, as well as our new plant in Kulim, Malaysia which is ready to begin operations, together with our international platform."

Mr. L'Ecuyer concluded, "We remain cautiously optimistic about the coming quarters.  Although challenging market conditions may well continue to prevail, leading to volatility in our financial performance, our continuing focus on improving efficiency throughout the organization will enable us to remain well positioned to take advantage of future growth opportunities and deliver increasing shareholder value.  Many thanks therefore to our employees for enabling us to do so."

Webcast Information
5N Plus will host a conference call on Thursday, November 8, 2012 at 8:00 am ET with financial analysts to discuss results of the third quarter ended September 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 November 30, 2012 .

To participate in the conference call:

  • Montreal area: 514-807-9895
  • Toronto area: 647-427-7450
  • Toll-Free : 1- 888-231-8191

Enter access code 63948066.

Non-IFRS Measures
Adjusted net earnings means the net earnings (loss) before the effect of charge and reversal of impairment related to inventory, PPE and intangible assets, restructuring charges and acquisitions costs net of the related income tax. We use adjusted net earnings (loss) because we believe it is a meaningful measure of the operating performance of our ongoing business without the effects of unusual inventory write-downs and property plant and equipment and intangible asset impairment charges, restructuring charges and acquisition costs. The definition of this non-IFRS measure used by the Company may differ from that used by other companies.

EBITDA means net earnings (loss) before financial expenses (income), income taxes, depreciation and amortization, impairment or reversal of impairment of property plant and equipment, restructuring costs and acquisition-related costs. We use EBITDA because we believe it is a meaningful measure of the operating performance of our ongoing business without the effects of certain expenses. The definition of this non-IFRS measure used by the Company may differ from that used by other companies.

Adjusted EBITDA means EBITDA as defined above before impairment of inventories. We use adjusted EBITDA because we believe it is a meaningful measure of the operating performance of our ongoing business without the effects of inventory write-downs. The definition of this non-IFRS measure used by the Company may differ from that used by other companies.

Net debt or net cash is a measure we use to monitor how much debt we have after taking into account cash and cash equivalents and temporary investments. We use it as an indicator of our overall financial position, and calculate it by taking our total debt, including the current portion, and subtracting cash and cash equivalents and temporary investments.

Backlog represents the expected value of orders we have received but have not yet executed and that are expected to translate into sales within the next 12 months. Bookings represents the value of orders received during the period considered and is calculated by adding revenues to the increase or decrease in backlog for the period considered.  We use backlog to provide an indication of expected future revenues, and bookings to determine our ability to sustain and increase our revenues.

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 Disclaimer
This 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 EARNINGS
For the periods of three and nine months ended September 30, 2012 with comparative figures for the periods of four and ten months ended September 30, 2011 (All figures in thousands of United States dollars, except per share information)
(Unaudited)

 

    2012   2011   2012   2011
    (3 months)   (4 months)   (9 months)   (10 months)
    $   $   $   $
                 
Revenues   120,744   242,289   423,055   384,928
Cost of sales   102,846   199,432   386,028   308,966
Selling, general and administrative expenses   9,618   16,054   33,181   24,177
Other expenses, net   3,900   5,454   14,521   16,053
Share of loss (gain) from joint ventures   161   (221)   380   (418)
    116,525   220,719   434,110   348,778
Operating income (loss)   4,219   21,570   (11,055)   36,150
Financial expenses (income)                
Interest on long-term debt   1,706   2,889   6,483   3,716
Other interest expense   244   551   882   1,864
Foreign exchange loss (gain) and derivative   807   (1,760)   3,119   (8,252)
    2,757   1,680   10,484   (2,672)
Earnings (loss) before income tax   1,462   19,890   (21,539)   38,822
Income tax   187   4,957   (5,643)   10,164
Net earnings (loss) for the period   1,275   14,933   (15,896)   28,658
                 
Attributable to:                
Equity holders of 5N Plus Inc.   1,218   15,565   (15,732)   29,640
Non-controlling interest   57   (632)   (164)   (982)
Net earnings (loss) for the period   1,275   14,933   (15,896)   28,658
Earnings (loss) per share attributable to equity holders of 5N Plus Inc.   0.01   0.22   (0.21)   0.49
Basic earnings (loss) per share   0.02   0.21   (0.21)   0.48
Diluted earnings (loss) per share   0.02   0.21   (0.21)   0.47

 

 

5N PLUS INC.
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(All figures in thousands of United States dollars)

  As at September 30, 2012   As at December 31, 2011
 
(unaudited)
  $
       
ASSETS      
Current      
Cash and cash equivalents 7,328   29,449
Temporary investments (restricted) 2,207   51,882
Accounts receivable 76,215   76,641
Inventories 193,560   315,333
Income tax receivable 17,274   11,022
Other current assets 3,616   2,762
Total current assets 300,200   487,089
Property, plant and equipment 92,859   86,483
Intangible assets 59,296   68,148
Deferred tax asset 12,120   6,646
Goodwill 124,910   124,910
Investments accounted for using the equity method 1,133   1,513
Other assets 9,681   11,495
Total non-current assets 299,999   299,195
Total assets 600,199   786,284
       
LIABILITIES AND EQUITY      
Current      
Bank indebtedness and short-term debt 11,235   73,430
Trade and accrued liabilities 43,436   59,029
Income tax payable 1,894   354
Derivative financial liabilities 4,074   3,814
Long-term debt due within one year 31,122   14,757
Total current liabilities 91,761   151,384
Long-term debt 107,406   253,719
Deferred tax liability 24,204   23,083
Retirement benefit obligation 11,865   12,315
Derivative financial liabilities 3,420   1,902
Other liabilities 1,638   4,171
Total liabilities 240,294   446,574
Shareholders' equity 359,600   339,241
Non-controlling interest 305   469
Total equity 359,905   339,710
Total liabilities and equity 600,199   786,284


 

5N PLUS INC.
Cash Flows

         
(in thousands of United States  dollars) Q3 2012 Four-month
period ended
September 30, 2011
YTD 2012 Ten-month
period ended
September 30, 2011
  $ $ $ $
Funds from operations 10,320 17,119 21,149 33,423
Net changes in non-cash working capital items 29,700 (31,344) 73,734 (107,476)
Operating activities 40,020 (14,225) 94,883 (74,053)
Investing activities (7,214) (4,640) 37,983 (173,014)
Financing activities (36,498) 19,843 (154,864) 220,506
Effect of foreign exchange rate changes on cash and cash
equivalents related to operations
(826) - (123) 366
Net (decrease) increase in cash and cash equivalents (4,518) 978  (22,121) (26,195)
         
Electronic Materials Business Unit        
         
(in thousands of United States dollars) Q3 2012 Four-month
period ended
September 30, 2011
YTD 2012 Ten-month
period ended
September 30, 2011
  $ $ $ $
Revenues 49,724 116,255 177,852 201,145
Cost of goods & expenses, before amortization (40,491) (97,362) (165,082) (158,321)
EBITDA 9,233 18,893 12,770 42,824
Impairment of inventory - 306 15,558 306
Adjusted EBITDA 9,233 19,199 28,328 43,130
Bookings 30,000 103,072 124,443 283,886
         
         
Eco-Friendly Material Business Unit        
         
(in thousands of United States  dollars) Q3 2012 Four-month
period ended
September 30, 2011
YTD 2012 Ten-month
period ended
September 30, 2011
  $ $ $ $
Revenues 71,020 126,034 245,203 183,783
Cost of goods & expenses, before amortization (68,721) (112,826) (241,840) (165,787)
EBITDA  2,299 13,208 3,363 17,996
Impairment of inventory - 1,070 10,510 1,070
Adjusted EBITDA 2,299 14,278 13,873 19,066
Bookings 64,094 87,599 237,757 252,140

 

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