2 March 2015

5N Plus grows 10.7% in 2014, despite Q4 slump in commodity pricing

For full-year 2014, specialty metal and chemical products firm 5N Plus Inc of Montreal, Québec, Canada has reported revenue of $508.2m, up 10.7% on $459m for 2013.

5N Plus provides purified metals such as bismuth, gallium, germanium, indium, antimony, cadmium, selenium and tellurium, 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 solar, LED and eco-friendly materials applications.

"The year was mainly characterized by strong demand for most of our products," says president & CEO Jacques L'Ecuyer. "Demand for our solar products was also high, as one of our main customers continues to make significant progress in terms of efficiency and costs, demonstrating the overall competitiveness of the CdTe technology over other technologies and its ability to penetrate unsubsidized markets. This was recently highlighted by Apple's decision to enter into a 25-year commercial power purchase agreement [PPA], the largest of its kind, for 130MW of electricity produced using CdTe solar cells," he adds. "Sales of our other products were in line with expectations, with important advances having been made during the year in our semiconductor substrate business where we are now fully qualified with both of the main US-based suppliers of space solar cells."

For fourth-quarter 2014, revenue was $114.8m, roughly level with $114.4m last quarter but down 4.2% on $119.4m a year ago. "We experienced however a relatively soft fourth quarter, with demand being negatively impacted by significant underlying commodity price volatility," says L'Ecuyer. "This is especially true for bismuth and gallium, the pricing of which has been under severe downward pressure following latest developments at the Fanya Metal Exchange, which has forced us to record inventory impairment charges of $5.3m in the quarter. We expect demand to recover in the first quarter, although pricing volatility may continue."

Full-year adjusted EBITDA rose from $30.4m in 2013 to $35m in 2014. "Fiscal year 2014 was close to our highest level in terms of profitability as we reached record EBITDA [excluding the $45.2m gain realized in 2013 from the litigation settlement related to MCP Group S.A.], despite a relatively soft fourth quarter," notes L'Ecuyer. Q4 adjusted EBITDA was $5.7m, down from $8.1m last quarter and $7.9m a year ago. Net debt at the end of December 2014 stood at $84m, up from $75.9m at end-September and $58.3m at the end of 2013.

"We improved financial flexibility in 2014, through the issuance of a convertible debenture and the renewal of our credit facility, enabling us to continue making progress in several strategic initiatives aimed at strengthening our position throughout the entire value chain," says L'Ecuyer. "This included, on one hand, additional investments in our Laos facility, with the intent of expanding our primary refining capabilities and providing an efficient footprint for the treatment of the bismuth feedstock produced in Vietnam; and on the other, investments aimed at expanding our value-added product portfolio by fully leveraging our industrial and technological platform in the semiconductor substrate business and by acquiring the AM&M business and technology as we intend to rapidly position ourselves in the metal powder business." On 3 April 2014, 5N Plus announced that it had acquired the remaining 33.33% ownership stake in germanium substrate subsidiary Sylarus Technologies LLC in St. George, UT, and had changed its name to 5N Plus Semiconductors LLC. Then, on 5 May, the firm completed the acquisition of AM&M Advanced Machine and Materials Inc (and its metal powder atomization technology for electronic packaging, solar modules and additive manufacturing applications).

On 29 May, 5N Plus announced that it had entered into new supply agreements with cadmium telluride (CdTe) photovoltaic (PV) module maker First Solar Inc of Tempe, AZ, USA, the world's leading thin-film solar module manufacturer, covering its compound semiconductor needs until end-March 2019.

Bookings were $130.8m in Q4, up on $101.3m last quarter but down on $156.1m a year ago. Order backlog at the end of December was $153.2m, up from $137.2m last quarter but down on $170.1m a year ago, essentially due to decreases in selling prices following the latest trends in underlying commodity prices.

"Current underlying commodity pricing volatility is likely to continue to weigh on our financial performance but we remain cautiously optimistic about future demand and our ability to grow as we execute our strategic plan," concludes L'Ecuyer.

See related items:

5N Plus receives approval for share repurchase plan

5N Plus ranked in Deloitte's Technology Fast 50 list for fifth year

5N Plus reports Q3 revenue up 5% year-on-year

5N Plus announces new US$125m credit facility

5N Plus' Q2 revenue up 21% year-on-year

5N Plus closes over-allotment option for additional $6m of debentures

5N Plus renews First Solar CdTe supply & recycling deal until end-March 2019

5N Plus acquires remaining stake in Sylarus

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