6 December 2011

5N Plus reports record results

For the four-month period to end-September 2011, 5N Plus Inc of Montreal, Quebec, Canada, a producer of specialty metal and chemical products, has reported record revenue, earnings, EBITDA and funds from operations, largely exceeding corresponding numbers for previous quarters even when results for the period are pro-rated to a quarterly basis. Numbers for the comparable period to end-August 2010 have been restated to reflect changes resulting from the implementation of IFRS and the adoption of the US dollar as the firm’s functional and reporting currency.

Founded in 2000, 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 materials subsidiaries including: 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). However, 5N Plus now operates and reports operating performance under two business segments, namely Electronic Materials and Eco-Friendly Materials.

In addition, on 11 April, 5N Plus acquired MCP Group SA of Tilly, Belgium, a producer and distributor of bismuth and bismuth chemicals as well as other specialty metals (including gallium, indium, selenium and tellurium).

Consequently, revenue for the four-month period to end-September 2011 is up by 1243% to $242.3m compared with $18m for the quarter to end-August 2010.

“Contributions from both of our business units were approximately equal and very much in line with expectations as demand for our products remained strong for most of the period,” says president & CEO Jacques L’Ecuyer. “No single customer represented more than 10% of total revenues during the period, confirming the success of our diversification strategy,” he adds.

“This is the first reporting period following the acquisition of MCP for which we operated throughout the period as a combined entity with the corresponding positive impact on revenues and earnings, which reached record levels,” says L’Ecuyer.

Net earnings attributable to equity holders of 5N Plus for the four-month period to end-September were $15.6m, up on $2.8m for the quarter to end-August 2010. Earnings before interest, taxes, depreciation and amortization (EBITDA) rose to $29.5m, up from $5.4m for the quarter to end-August 2010. Funds from operations (cash generated from operating activities before changes in non-cash working capital) were $17m, up on $3.6m for the quarter to end-August 2010.

At the end of September, the backlog of orders expected to translate into sales over the following 12 months was $212.1m, almost quadruple the $54m at the end of August 2010.

The firm increased its financial flexibility after closing a new CA$250m (USD$250m as of 2 December) senior secured multi-currency revolving credit facility with a banking syndicate on 12 August. The financing was finalized in October and, as a result, the firm has the ability to borrow an additional $82m.

Corresponding growth initiatives announced in the period to end-September (or shortly thereafter) include acquiring the outstanding 40% stake in joint venture firm Lao Industrial Resources Co Ltd, and plans for setting up a new gallium chemicals plant in Korea, and a new primary gallium facility (for which the Company has signed a memorandum of understanding with Rio Tinto Alcan).

“The integration of the former MCP activities is progressing in accordance with our initial plan,” L’Ecuyer says. “We have rebranded under one single name, 5N Plus, and made progress towards complete organizational alignment. In this respect, we have integrated former MCP executives into our senior management team... Most of our activities now fall into one of our two customer-centric business units with complete integration of our procurement activities, where we expect to develop significant synergies,” he adds.

“We are closely monitoring recent developments in Europe and expect some softening in demand in the coming months, which may be compounded by the usual year-end seasonality,” L’Ecuyer notes. “Negative developments in the solar market resulting from large module oversupply are equally monitored, even though this market now contributes less than 10% of our total revenues,” he adds.

“We are now well diversified in terms of markets, customers and geographic footprint, and have yet to reap the full benefits of the recent acquisition of MCP,” L’Ecuyer concludes. “We therefore remain cautiously optimistic for the coming quarters, despite the current economic uncertainty.”

See related items:

5N Plus reports record quarterly revenue, earnings, EBITDA, funds from operations, and backlog

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

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

5N Plus’ sales match company record

Tags: 5N Plus

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