12 April 2011

5N Plus grows sales 7% year-on-year to a record $20.6m

For its fiscal third-quarter 2011 (to end-February), 5N Plus Inc of Montreal, Quebec, Canada has reported (in Canadian dollars) record sales of $20.6m, up 4.6% on $19.7m last quarter and 7% on $19.3m a year ago.

5N Plus focuses on specialty high-purity metals such as tellurium, cadmium, selenium, germanium, indium and antimony and also produces related II-VI semiconducting compounds such as cadmium telluride (CdTe), cadmium sulphide (CdS) and indium antimonide (InSb) as precursors for the growth of crystals for electronic applications, including solar photovoltaic, radiation detector and infrared markets. The firm owns four material subsidiaries: 5N PV GmbH (Eisenhuttenstadt, Germany), Firebird Technologies Inc (Trail, BC, Canada), 5N Plus Corp (DeForest, WI, USA) and Sylarus Technologies LLC (St George, UT, USA).

Earnings before interest, taxes, depreciation and amortization (EBITDA) were $5.98m (29.1% of sales), down on $6.2m (31.6% of sales) last quarter. EBITDA was adversely affected by (i) SG&A (selling, general & administrative) expenses related to new facilities in Wisconsin and Malaysia as well as the acquisitions of MCP Group SA and Sylarus Technologies LLC (incurred without 5N Plus yet benefitting from the full revenue potential of these four new initiatives); and (ii) a $536,426 increase in R&D expenses.

During the quarter, cash and cash equivalents fell further to $42.8m, from $54.7m and $66m at the end of May, due mainly to a strategic increase in inventories of about $21m and capital expenditures totalling $15m related primarily to Firebird’s new facility and the new plant in Wisconsin.

5N Plus has also completed a $50m two-year senior secured revolving facility with National Bank of Canada, replacing a $17.5m revolving credit facility with another Canadian bank (currently undrawn). It intends to use the new revolving facility for corporate purposes, including capital expenditure and permitted acquisitions.

On 10 January, the US$3m convertible note previously provided by 5N Plus to Sylarus (a producer of germanium substrates for solar cells) was converted into a 66.67% majority interest that 5N Plus now owns.

“We made great progress in the execution of our growth plan,” says president & CEO Jacques L’Ecuyer. On 3 February, 5N Plus announced the signature of new long-term supply agreements with cadmium telluride (CdTe) thin-film photovoltaic (PV) module maker First Solar Inc of Tempe, AZ, USA extending until end-December 2015, and plans to build a new recycling facility in Malaysia. The increase in CdTe to be ordered by First Solar will initially be 30% and will reach 60% by 2013, compared to the minimum quantities prescribed in the original agreements. The new Malaysian plant is expected to be operational by mid-2012.

“This has greatly contributed to our record quarter in terms of sales and backlog and provides a firm base for all of our organic growth initiatives, which include — in addition to our other solar and medical-imaging product initiatives — our germanium-related activities, for which investments are still underway,” says president & CEO Jacques L’Ecuyer. “These initiatives include the construction of our new facility in Trail, British Columbia and investments enabling us to acquire a majority ownership in Sylarus, aimed at allowing us to develop a germanium-wafer manufacturing capability for photovoltaic applications,” he adds.

Also, just yesterday, 5N Plus completed the acquisition of MCP Group SA of Tilly, Belgium (announced at the end of February) for $317m, and closed the associated ‘bought deal’ equity financing of 13,590,000 common shares at a price of $9.20 per share (for total gross proceeds of $125m). The MCP acquisition is a “transformational transaction enabling us to become a global leader in the production and distribution of specialty metals”, says L’Ecuyer. “This acquisition is both highly strategic, as it provides a means for business diversification and further growth, and financially accretive. It is thus well aligned with our vision of becoming a global leader in the production of specialty metals for the clean technology markets,” he adds. “Together we now form a stronger company that is well positioned to grow and take advantage of opportunities in a number of exciting new markets, including solar, light-emitting diodes and eco-friendly materials.”

“Such investments are expected to begin generating significant revenues in fiscal 2012 and should contribute to a further strengthening of our base business, the outlook for which remains very promising,” L’Ecuyer continues.

5N Plus notes that, at the end of the quarter, its backlog of orders expected to translate into sales over the next 12 months was a record $71.2m, up 13.7% on $62.6m last quarter and 32.4% on $53.8m a year ago (despite changes in currency exchange rates having an adverse impact of about $5.7m).

See related items:

5N Plus completes MCP acquisition and $125m public offering

5N Plus’ sales match company record

5N Plus’ revenue supplemented by non-solar products as Firebird ramps up

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