It took guts to float a early issue just as the offering window given after being shut tight during the recession.
But executives at silicon metal and silicon-based alloy producer Globe Specialty Metals (GSM) knew the timing was right when they took the company public on July 30, 2009.
“We believed we had the characteristics to be able to finished an IPO successfully, even though the market was just reopening for new offerings,” said Chief Financial Officer Malcolm Appelbaum. “We had very secure fundamentals. We made money throughout the recession other than a noncash impairment charge, and we had a very strong balance sheet.”
Keeping that in mind, Globe became the first domestic industrial company to go common since the market closed down during the recession, Appelbaum says.
Globe’s business has been thriving amid strong require, particularly for its main product, silicon metal. It’s an essential raw material in making silicone compounds, aluminum and polysilicon used in solar cells.
In fiscal Q3, profit surged 675% to 31 cents a share. Sales climbed 54% to $172.8 million.
“The silicon metal market is producing, and our capacity is running at full utilization as are the rest of the producers in the Western world,” said Appelbaum.
Demand has been strong in all of Globe’s key end markets.
Silicone Applications
Globe sells silicon metal to chemical firms such as Dow Chemical (DOW), which use the material to make silicone compounds. Silicone is used in a broad range of applications, including personal care items like shampoo and industrial products like caulking for insulation.
The demand for silicone chemicals has been growing for many years as new applications have been produced, particularly in emerging markets, says B. Riley & Co. analyst Ian Corydon.
People in developing nations are buying more consumer products, which have silicone as an ingredient such as shampoo and lipstick, adds Appelbaum.
Globe also markets to aluminum producers, which use silicon metal mainly to make auto components, which have a high content of the material.
The aluminum market has been quite strong, says Corydon. He sites a report by aluminum great Alcoa (AA) that estimates primary globally aluminum demand will grow 12% in 2011 on top of a 13% gain in 2010.
A key driver of demand is the fact that the aluminum content of cars keep going up because cars are goes made lighter to meet fuel efficiency requirements, Corydon says.
A third end market, polysilicon producers, use silicon metal to make solar cells.
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