Form 8-K GLOBAL BRASS & COPPER For: Oct 29

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November 3, 2015 6:04 AM EST
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
FORM 8-K
 
 
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 30, 2015
 
 
GLOBAL BRASS AND COPPER HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
 
 
 
Delaware
 
001-35938
 
06-1826563
(State or other jurisdiction
of incorporation)
 
(Commission
File Number)
 
(IRS Employer
Identification Number)
 
475 N. Martingale Road Suite 1050
Schaumburg, IL
 
60173
(Address of principal executive offices)
 
(Zip Code)
(847) 240-4700
(Registrant’s telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
 
Check the appropriate box below if the Form 8-K filing is intended to satisfy simultaneously the filing obligation of the registrant under any of the following provisions:
 
¨
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 



Section 2 – Financial Information
Item 2.02 Results of Operations and Financial Condition.
On November 2, 2015, Global Brass and Copper Holdings, Inc. (the “Company”) issued a press release reporting financial results for the third quarter of 2015 and reaffirming its guidance for the full year of 2015. A copy of the press release is attached hereto as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated by reference herein.
The information contained in this Item 2.02, including Exhibit 99.1, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
Section 8 – Other Events
Item 8.01 Other Events.
On November 2, 2015, the Company announced that, on October 30, 2015, its Board of Directors declared a quarterly cash dividend of $0.0375 per share on the Company’s common stock for the third quarter of 2015. The dividend will be paid on November 24, 2015 to stockholders of record on the close of business on November 12, 2015.
A copy of the press release announcing the dividend is attached hereto as Exhibit 99.2 and incorporated herein by reference.
Section 9 – Financial Statements and Exhibits
Item 9.01 Financial Statements and Exhibits
 
(d)
Exhibits:
Exhibit
Number
  
Exhibit Description
 
 
99.1
  
Press release issued November 2, 2015, announcing financial results, furnished herewith.
 
 
99.2
  
Press release issued November 2, 2015, announcing the dividend declaration.

1


SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
GLOBAL BRASS AND COPPER HOLDINGS, INC
 
 
By:
 
/s/ Robert T. Micchelli
 
 
Robert T. Micchelli
 
 
Chief Financial Officer
Date: November 2, 2015




 

2


EXHIBIT INDEX
 
Exhibit
Number
  
Exhibit Description
 
 
99.1
  
Press release issued November 2, 2015, announcing financial results, furnished herewith.
 
 
99.2
  
Press release issued November 2, 2015, announcing the dividend declaration.


3


Exhibit 99.1


FOR IMMEDIATE RELEASE

GLOBAL BRASS AND COPPER HOLDINGS, INC. REPORTS THIRD QUARTER 2015 FINANCIAL RESULTS

Third Quarter Highlights
•
Volume of 129.8 million pounds, a decrease of 1.5% year-over-year;
•
Adjusted sales of $134.5 million, a decrease of 1.6% year-over-year;
•
Adjusted EBITDA of $30.6 million, an increase of 0.7% year-over-year;
•
Adjusted diluted earnings per common share of $0.54, an increase from $0.51 in the prior year period;
•
Net sales of $367.7 million, a decrease of 15.8% year-over-year;
•
Net income attributable to GBC of $6.9 million, which includes a $2.3 million lower of cost or market charge and a $2.3 million loss on extinguishment of debt arising from our $21.1 million principal amount of senior secured notes purchased in the open market;
•
Diluted earnings per common share of $0.32 versus $0.48 per diluted share in the prior year period; and
•
The Company reaffirms 2015 full-year guidance.

Schaumburg, IL., November 2, 2015 Global Brass and Copper Holdings, Inc. (NYSE: BRSS) (“GBC” or the “Company”) today announced the results for the third quarter ended September 30, 2015.

Third Quarter Operating Results
Volume for the third quarter of 2015 decreased by 1.5% to 129.8 million pounds compared to 131.8 million pounds in the third quarter of 2014. Volumes declined as a result of lower demand in the munitions and industrial machinery and equipment markets being partially offset by higher demand in the coinage market.

“We achieved solid third quarter results and cash flows with operating improvements at Olin Brass, growth at A.J. Oster, and increased green portfolio product sales at Chase Brass, and we achieved these results despite lower volumes in our munitions market and lower brass rod shipments into the industrial machinery market. We are focused on driving the productivity improvements and cost reduction initiatives we implemented last year across all business segments,” said John Wasz, GBC’s President and Chief Executive Officer.

Mr. Wasz continued, “As we mentioned last quarter, ongoing commodity price fluctuations, particularly in copper, are having minimal impact on our Adjusted EBITDA. The commodity price sell off has been significant with metals such as copper, which reached its lowest level in more than six and a half years in late September 2015. While we recorded a non-cash lower of cost or market charge on non-copper inventories, we believe our strong results amid this declining copper price environment demonstrate that our balanced book approach is effective in mitigating the effect of fluctuations in commodity prices on our Adjusted EBITDA.”

Net sales for the third quarter of 2015 decreased to $367.7 million from $436.8 million in the third quarter of 2014. The decline in net sales was primarily attributable to lower metal prices. Adjusted sales, our non-GAAP financial measure that reflects the value added premium over metal replacement cost recovery, only decreased by 1.6% to $134.5 million from $136.7 million in 2014. A reconciliation of net sales to adjusted sales is provided later in this press release.


1


Net income attributable to Global Brass and Copper Holdings, Inc. for the third quarter of 2015 was $6.9 million, or $0.32 per diluted share, compared to $10.2 million, or $0.48 per diluted share, for the same period of 2014. The decrease was primarily due to a loss on extinguishment of debt and a non-cash lower of cost or market inventory charge.

Adjusted EBITDA, our non-GAAP measure of consolidated profitability, was $30.6 million for the third quarter of 2015, an increase of 0.7% compared to 2014. The slight increase was the result of lower manufacturing conversion costs, lower shrinkage costs due to a decline in metal costs and increases in average selling prices, largely offset by changes in product mix, lower volume, and increased selling, general and administrative expenses. A reconciliation of net income attributable to GBC to Adjusted EBITDA is provided later in this press release.

Adjusted diluted earnings per common share, another one of our non-GAAP measures of consolidated profitability, was $0.54 for the third quarter of 2015 compared to $0.51 in the prior year. A reconciliation of diluted net income attributable to GBC per common share to adjusted diluted earnings per common share is provided later in this press release.

Cash Flow and Leverage
During the third quarter of 2015, we generated $24.3 million of cash from operating activities largely due to our earnings and improvements in working capital.

After purchasing $21.1 million of our debt in the open market, we ended the quarter with cash of $73.5 million, $353.9 million senior secured notes, and $200.0 million available under our asset-based revolving loan facility.
2015 Guidance
We reaffirm our full-year 2015 guidance and expect:

•
Shipment volumes to range from 505 million pounds to 525 million pounds;
•
Adjusted sales to range from $520 million to $545 million; and
•
Adjusted EBITDA to range from $113 million to $122 million, which includes the gain on the sale of the Dowa Joint Venture.

Conference Call
The Company will host a teleconference and webcast at 8:30 a.m. (Central Time) on Tuesday, November 3, 2015 to review the results. To listen to the live call, individuals can access the webcast at the investor relations portion of the Company's website at http://ir.gbcholdings.com, or by dialing 855-878-0250, passcode #56272563 approximately 10 minutes before the scheduled start time. For those who cannot listen to the live broadcast, replays will be available shortly after the call on the Company’s website.

About Global Brass and Copper
Global Brass and Copper Holdings, Inc. through its wholly-owned principal operating subsidiary, Global Brass and Copper, Inc., is a leading, value-added converter, fabricator, processor and distributor of specialized copper and brass products in North America. We engage in metal melting and casting, rolling, drawing, extruding and stamping to fabricate finished and semi-finished alloy products from processed scrap, copper cathode and other refined metals. Our products include a wide range of sheet, strip, foil, rod, tube and fabricated metal component products that we sell under the Olin Brass, Chase Brass and A.J. Oster brand names. Our products are used in a variety of applications across diversified markets, including the building and housing, munitions, automotive, transportation, coinage, electronics/electrical components, industrial machinery and equipment and general consumer markets.

2



CONTACT:
 
Robert T. Micchelli
 
 
Global Brass and Copper Holdings, Inc.
 
 
Chief Financial Officer
 
 
(847) 240-4700
 
 
 
 
 
David Beré
 
 
FTI Consulting
 
 
(312) 252-4035





3


Global Brass and Copper Holdings, Inc.
Consolidated Statements of Operations (Unaudited)

 
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
(In millions, except per share data)
 
2015
 
2014
 
2015
 
2014
 
 
 
 
 
 
 
 
 
Net sales
 
$
367.7

 
$
436.8

 
$
1,182.8

 
$
1,321.1

Cost of sales
 
325.1

 
392.2

 
1,046.0

 
1,188.7

Gross profit
 
42.6

 
44.6

 
136.8

 
132.4

Selling, general and administrative expenses
 
20.2

 
18.8

 
63.5

 
57.5

Operating income
 
22.4

 
25.8

 
73.3

 
74.9

Interest expense
 
9.9

 
10.0

 
29.8

 
29.7

Loss on extinguishment of debt
 
2.3

 
—

 
2.3

 
—

Gain on the sale of investment in joint venture
 
—

 
—

 
(6.3
)
 
—

Other (income) expense, net
 
(0.1
)
 
0.1

 
(0.2
)
 
0.3

Income before provision for income taxes and equity income
 
10.3

 
15.7

 
47.7

 
44.9

Provision for income taxes
 
3.3

 
5.7

 
15.7

 
16.5

Income before equity income
 
7.0

 
10.0

 
32.0

 
28.4

Equity income, net of tax
 
—

 
0.3

 
0.3

 
0.8

Net income
 
7.0

 
10.3

 
32.3

 
29.2

Less: Net income attributable to noncontrolling interest
 
0.1

 
0.1

 
0.2

 
0.3

Net income attributable to Global Brass and Copper
 Holdings, Inc.
 
$
6.9

 
$
10.2

 
$
32.1

 
$
28.9

 
 
 
 
 
 
 
 
 
Net income attributable to Global Brass and
  Copper Holdings, Inc. per common share:
 
 
 
 
 
 
 
 
Basic
 
$
0.32

 
$
0.48

 
$
1.51

 
$
1.36

Diluted
 
$
0.32

 
$
0.48

 
$
1.50

 
$
1.36

Weighted average common shares outstanding:
 
 
 
 
 
 
 
 
Basic
 
21.3

 
21.2

 
21.3

 
21.2

Diluted
 
21.4

 
21.3

 
21.4

 
21.3

 
 
 
 
 
 
 
 
 
Supplemental Non-GAAP Reconciliation
 
 
 
 
 
 
 
 
Net sales
 
$
367.7

 
$
436.8

 
$
1,182.8

 
$
1,321.1

Metal component of net sales
 
233.2

 
300.1

 
772.9

 
905.6

Adjusted sales
 
$
134.5

 
$
136.7

 
$
409.9

 
$
415.5

 
 
 
 
 
 
 
 
 
Diluted net income attributable to Global Brass and
  Copper Holdings, Inc. per common share, as reported
 
$
0.32

 
$
0.48

 
$
1.50

 
$
1.36

Unrealized loss (gain) on derivative contracts
 
0.02

 
(0.01
)
 
—

 
0.01

Loss on extinguishment of debt
 
0.07

 
—

 
0.07

 
—

Non-cash accretion of income of Dowa Joint Venture
 
—

 
—

 
—

 
(0.01
)
Specified legal/professional expenses
 
0.02

 
0.04

 
0.07

 
0.09

Lower of cost or market adjustment to inventory
 
0.07

 
—

 
0.15

 
0.01

Share-based compensation expense
 
0.04

 
(0.01
)
 
0.10

 
0.03

Restructuring and other business transformation charges
 
—

 
0.01

 
0.02

 
0.01

Adjusted diluted earnings per common share (1)
 
$
0.54

 
$
0.51

 
$
1.91

 
$
1.50

 
 
 
 
 
 
 
 
 
(1) All adjustments include a tax effect.


4


Global Brass and Copper Holdings, Inc.
Adjusted EBITDA Reconciliation

 
 
Three Months Ended
September 30,
(in millions)
 
2015
 
2014
Net income attributable to Global Brass and Copper Holdings, Inc.
 
$
6.9

 
$
10.2

Interest expense
 
9.9

 
10.0

Provision for income taxes
 
3.3

 
5.7

Depreciation expense
 
3.4

 
3.5

Amortization expense
 
0.1

 
0.1

Unrealized loss (gain) on derivative contracts (a)
 
0.8

 
(0.1
)
Loss on extinguishment of debt (b)
 
2.3

 
—

Non-cash accretion of income of Dowa Joint Venture (c)
 
—

 
(0.1
)
Specified legal/professional expenses (d)
 
0.4

 
1.1

Lower of cost or market adjustment to inventory (e)
 
2.3

 
—

Share-based compensation expense (f)
 
1.2

 
(0.3
)
Restructuring and other business transformation charges (g)

—

 
0.3

Adjusted EBITDA
 
$
30.6

 
$
30.4



(a)
Represents unrealized gains and losses on derivative contracts.
(b)
Represents the loss on extinguishment of debt recognized in connection with the open market purchase of senior secured notes.
(c)
As a result of the application of purchase accounting in connection with the November 2007 acquisition, no carrying value was initially assigned to our equity investment in our Dowa Joint Venture. This adjustment represents the accretion of equity in our Dowa Joint Venture at the date of the acquisition over a 13-year period (which represents the estimated useful life of the technology and patents of the joint venture).
(d)
Represents selected professional fees for accounting, tax, legal and consulting services incurred as a public company that exceed our expected long-term requirements.
(e)
Represents non-cash lower of cost or market charges for the write down of domestic, non-copper metal inventory.
(f)
Represents share-based compensation expense resulting from the grant of non-qualified stock options, restricted stock and performance-based shares to certain employees, members of our management and our Board of Directors.
(g)
Restructuring and other business transformation charges for the three months ended September 30, 2014 represent severance charges at Olin Brass.
    














5


Global Brass and Copper Holdings, Inc.
Adjusted EBITDA Reconciliation

 
 
Nine Months Ended
September 30,
(in millions)
 
2015
 
2014
Net income attributable to Global Brass and Copper Holdings, Inc.
 
$
32.1

 
$
28.9

Interest expense
 
29.8

 
29.7

Provision for income taxes
 
15.7

 
16.5

Depreciation expense
 
10.0

 
8.8

Amortization expense
 
0.1

 
0.1

Unrealized loss on derivative contracts (a)
 
0.1

 
0.3

Loss on extinguishment of debt (b)
 
2.3

 
—

Non-cash accretion of income of Dowa Joint Venture (c)
 
(0.2
)
 
(0.5
)
Specified legal/professional expenses (d)
 
2.2

 
3.1

Lower of cost or market adjustment to inventory (e)
 
4.8

 
0.2

Share-based compensation expense (f)
 
3.1

 
1.3

Restructuring and other business transformation charges (g)
 
0.9

 
0.3

Adjusted EBITDA
 
$
100.9

 
$
88.7



(a)
Represents unrealized gains and losses on derivative contracts.
(b)
Represents the loss on extinguishment of debt recognized in connection with the open market purchase of senior secured notes.
(c)
As a result of the application of purchase accounting in connection with the November 2007 acquisition, no carrying value was initially assigned to our equity investment in our Dowa Joint Venture. This adjustment represents the accretion of equity in our Dowa Joint Venture at the date of the acquisition over a 13-year period (which represents the estimated useful life of the technology and patents of the joint venture).
(d)
Represents selected professional fees for accounting, tax, legal and consulting services incurred as a public company that exceed our expected long-term requirements.
(e)
Represents non-cash lower of cost or market charges for the write down of domestic, non-copper metal inventory.
(f)
Represents share-based compensation expense resulting from the grant of non-qualified stock options, restricted stock and performance-based shares to certain employees, members of our management and our Board of Directors.
(g)
Restructuring and other business transformation charges for the nine months ended September 30, 2015 and 2014 represent severance charges at Olin Brass.








6


Segment Results of Operations
(in millions)
 
Three Months Ended
September 30,
 
Change
2015 vs. 2014
 
 
2015
 
2014
 
Amount
 
Percent
Pounds shipped (a)
 
 
 
 
 
 
 
 
Olin Brass
 
66.8

 
68.8

 
(2.0
)
 
(2.9
)%
Chase Brass
 
53.5

 
55.7

 
(2.2
)
 
(3.9
)%
A.J. Oster
 
19.0

 
18.0

 
1.0

 
5.6
 %
Corporate and other (b)
 
(9.5
)
 
(10.7
)
 
1.2

 
11.2
 %
Total
 
129.8

 
131.8

 
(2.0
)
 
(1.5
)%
 
 
 
 
 
 
 
 
 
Net sales
 
 
 
 
 
 
 
 
Olin Brass
 
$
174.8

 
$
217.1

 
$
(42.3
)
 
(19.5
)%
Chase Brass
 
129.9

 
154.7

 
(24.8
)
 
(16.0
)%
A.J. Oster
 
74.9

 
81.9

 
(7.0
)
 
(8.5
)%
Corporate and other (b)
 
(11.9
)
 
(16.9
)
 
5.0

 
29.6
 %
Total
 
$
367.7

 
$
436.8

 
$
(69.1
)
 
(15.8
)%
 
 
 
 
 
 
 
 
 
Adjusted EBITDA
 
 
 
 
 
 
 
 
Olin Brass
 
$
15.0

 
$
11.0

 
$
4.0

 
36.4
 %
Chase Brass
 
15.5

 
18.1

 
(2.6
)
 
(14.4
)%
A.J. Oster
 
4.6

 
4.5

 
0.1

 
2.2
 %
 Total Adjusted EBITDA of operating segments
 
$
35.1

 
$
33.6

 
$
1.5

 
4.5
 %
 
 
 
 
 
 
 
 
 
(a) Amounts exclude quantity of unprocessed metal sold.
 
 
 
 
 
 
(b) Amounts represent intercompany eliminations.
 
 
 
 
 
 

(in millions)
 
Nine Months Ended
September 30,
 
Change
2015 vs. 2014
 
 
2015
 
2014
 
Amount
 
Percent
Pounds shipped (a)
 
 
 
 
 
 
 
 
Olin Brass
 
197.7

 
208.6

 
(10.9
)
 
(5.2
)%
Chase Brass
 
168.7

 
171.5

 
(2.8
)
 
(1.6
)%
A.J. Oster
 
56.3

 
52.0

 
4.3

 
8.3
 %
Corporate and other (b)
 
(31.6
)
 
(31.2
)
 
(0.4
)
 
(1.3
)%
Total
 
391.1

 
400.9

 
(9.8
)
 
(2.4
)%
 
 
 
 
 
 
 
 
 
Net sales
 
 
 
 
 
 
 
 
Olin Brass
 
$
567.3

 
$
657.6

 
$
(90.3
)
 
(13.7
)%
Chase Brass
 
429.0

 
470.0

 
(41.0
)
 
(8.7
)%
A.J. Oster
 
229.9

 
238.3

 
(8.4
)
 
(3.5
)%
Corporate and other (b)
 
(43.4
)
 
(44.8
)
 
1.4

 
3.1
 %
Total
 
$
1,182.8

 
$
1,321.1

 
$
(138.3
)
 
(10.5
)%
 
 
 
 
 
 
 
 
 
Adjusted EBITDA
 
 
 
 
 
 
 
 
Olin Brass
 
$
42.0

 
$
31.1

 
$
10.9

 
35.0
 %
Chase Brass
 
54.0

 
54.2

 
(0.2
)
 
(0.4
)%
A.J. Oster
 
12.8

 
12.6

 
0.2

 
1.6
 %
 Total Adjusted EBITDA of operating segments
 
$
108.8

 
$
97.9

 
$
10.9

 
11.1
 %
 
 
 
 
 
 
 
 
 
(a) Amounts exclude quantity of unprocessed metal sold.
 
 
 
 
 
 
(b) Amounts represent intercompany eliminations.
 
 
 
 
 
 

7


Global Brass and Copper Holdings, Inc.
Consolidated Balance Sheets (Unaudited)

 
 
As of
(In millions, except share and par value data)
 
September 30, 2015
 
December 31, 2014
 
September 30, 2014
Assets
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
Cash
 
$
73.5

 
$
44.6

 
$
17.4

Accounts receivable (net of allowance of $1.3, $1.0 and $1.0, respectively)
 
154.5

 
152.3

 
194.1

Inventories
 
197.0

 
189.0

 
216.2

Prepaid expenses and other current assets
 
16.3

 
26.2

 
23.6

Deferred income taxes
 
33.9

 
30.1

 
32.0

Income tax receivable
 
—

 
8.3

 
4.4

Total current assets
 
475.2

 
450.5

 
487.7

Property, plant and equipment, net
 
103.9

 
103.5

 
100.5

Investment in joint venture
 
—

 
2.0

 
2.5

Goodwill
 
4.4

 
4.4

 
4.4

Intangible assets, net
 
0.5

 
0.6

 
0.6

Deferred income taxes
 
2.5

 
0.8

 
1.2

Other noncurrent assets
 
12.1

 
14.7

 
15.6

Total assets
 
$
598.6

 
$
576.5

 
$
612.5

Liabilities and equity
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
Current portion of capital lease obligation
 
$
1.1

 
$
1.0

 
$
1.0

Accounts payable
 
91.8

 
82.5

 
106.0

Accrued liabilities
 
53.1

 
57.3

 
54.6

Accrued interest
 
11.5

 
3.2

 
12.2

Income tax payable
 
0.5

 
0.5

 
0.2

Total current liabilities
 
158.0

 
144.5

 
174.0

Non-current portion of debt
 
357.9

 
379.8

 
388.5

Deferred income taxes
 
—

 
0.8

 
—

Other noncurrent liabilities
 
25.4

 
25.4

 
25.6

Total liabilities
 
541.3

 
550.5

 
588.1

Commitments and contingencies
 
 
 
 
 
 
Global Brass and Copper Holdings, Inc. stockholders' equity:
 
 
 
 
 
 
Common stock - $0.01 par value; 80,000,000 shares authorized; 21,553,883, 21,369,407 and 21,369,407 shares issued, respectively
 
0.2

 
0.2

 
0.2

Additional paid-in capital
 
35.8

 
32.5

 
32.1

Retained earnings (accumulated deficit)
 
19.6

 
(10.1
)
 
(12.1
)
Treasury stock - 46,729, 29,200 and 29,200 shares, respectively
 
(0.7
)
 
(0.4
)
 
(0.4
)
Accumulated other comprehensive (loss) income
 
(1.9
)
 
(0.6
)
 
0.3

Total Global Brass and Copper Holdings, Inc. stockholders' equity
 
53.0

 
21.6

 
20.1

Noncontrolling interest
 
4.3

 
4.4

 
4.3

Total equity
 
57.3

 
26.0

 
24.4

Total liabilities and equity
 
$
598.6

 
$
576.5

 
$
612.5


8


Global Brass and Copper Holdings, Inc.
Consolidated Statements of Cash Flows (Unaudited)
 
 
Nine Months Ended
September 30,
(In millions)
 
2015
 
2014
Cash flows from operating activities
 
 
 
 
Net income
 
$
32.3

 
$
29.2

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
Lower of cost or market adjustment to inventory
 
4.8

 
0.2

Unrealized loss on derivatives
 
0.1

 
0.3

Depreciation
 
10.0

 
8.8

Amortization of intangible assets
 
0.1

 
0.1

Amortization of debt issuance costs
 
2.1

 
2.0

Loss on debt extinguishment
 
2.3

 
—

Share-based compensation expense
 
3.1

 
1.3

Excess tax benefit from share-based compensation
 
(0.1
)
 
(0.2
)
Provision for bad debts, net of reductions
 
0.4

 
(0.1
)
Deferred income taxes
 
(5.8
)
 
3.1

Loss on disposal of property, plant and equipment
 
0.4

 
—

Gain on sale of investment in joint venture
 
(6.3
)
 
—

Equity earnings, net of distributions
 
0.1

 
(0.4
)
Change in assets and liabilities:
 
 
 
 
Accounts receivable
 
(3.5
)
 
(22.3
)
Inventories
 
(13.9
)
 
(25.8
)
Prepaid expenses and other current assets
 
9.9

 
(1.4
)
Accounts payable
 
11.9

 
23.6

Accrued liabilities
 
(4.6
)
 
(1.3
)
Accrued interest
 
8.3

 
8.9

Income taxes, net
 
8.4

 
(0.2
)
Other, net
 
—

 
(1.1
)
Net cash provided by operating activities
 
60.0

 
24.7

Cash flows from investing activities
 
 
 
 
Capital expenditures
 
(13.0
)
 
(19.5
)
Proceeds from sale of property, plant and equipment
 
0.1

 
0.8

Proceeds from sale of investment in joint venture
 
8.0

 
—

Net cash used in investing activities
 
(4.9
)
 
(18.7
)
Cash flows from financing activities
 
 
 
 
Borrowings on ABL Facility
 
0.9

 
245.1

Payments on ABL Facility
 
(0.9
)
 
(242.1
)
Purchases of Senior Secured Notes
 
(21.1
)
 
—

Premium payment on partial debt extinguishment
 
(1.8
)
 
—

Principal payments under capital lease obligation
 
(0.7
)
 
—

Dividends paid
 
(2.4
)
 
(2.4
)
Distribution to noncontrolling interest owner
 
(0.2
)
 
—

Proceeds from exercise of stock options
 
0.1

 
0.1

Excess tax benefit from share-based compensation
 
0.1

 
0.2

Share repurchases
 
(0.3
)
 
(0.4
)
Net cash (used in) provided by financing activities
 
(26.3
)
 
0.5

Effect of foreign currency exchange rates
 
0.1

 
0.1

Net increase in cash
 
28.9

 
6.6

Cash at beginning of period
 
44.6

 
10.8

Cash at end of period
 
$
73.5

 
$
17.4

Noncash investing and financing activities
 
 
 
 
Purchases of property, plant and equipment not yet paid
 
$
1.8

 
$
1.4

Acquisition of equipment under capital lease obligation
 
$
—

 
$
6.0



9


Non-GAAP Measures
In addition to the results reported in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), we also report “Adjusted EBITDA,” “Adjusted diluted earnings per common share” and “Adjusted sales,” which are non-GAAP financial measures as defined below.
Adjusted EBITDA is not intended as an alternative to net income (loss), as an indicator of our operating performance, as an alternative to any other measure of performance in conformity with U.S. GAAP or as an alternative to cash flow provided by (used in) operating activities as a measure of liquidity. Adjusted Diluted Earnings per Common Share may not be comparable to similarly titled measures presented by other companies and is not a measure of operating performance or liquidity defined by U.S. GAAP. Adjusted sales may not be comparable to similarly titled measures presented by other companies and is not a measure of operating performance or liquidity defined by U.S. GAAP.
You should therefore not place undue reliance on Adjusted EBITDA, Adjusted diluted earnings per common share, Adjusted sales, or any ratios calculated using them. Our U.S. GAAP-based measures can be found in our consolidated financial statements included elsewhere in this press release.
Adjusted EBITDA
Adjusted EBITDA is earnings before interest, taxes, depreciation and amortization (“EBITDA”) adjusted to exclude the following: unrealized gains and losses on derivative contracts in support of our balanced book approach, unrealized gains and losses associated with derivative contracts related to electricity and natural gas costs, non-cash losses due to lower of cost or market adjustments to inventory, non-cash gains and losses due to the depletion of a LIFO layer of metal inventory, share-based compensation expense, loss on extinguishment of debt, non-cash income accretion related to the Dowa Joint Venture, restructuring and other business transformation charges, specified legal and professional expenses, and certain other items.
We believe Adjusted EBITDA represents a meaningful presentation of the financial performance of our core operations, without the impact of the various items excluded, in order to provide period-to-period comparisons that are more consistent and more easily understood. We also believe it is an important supplemental measure that is frequently used by securities analysts, investors and other interested parties in the evaluation of companies in our industry.
Adjusted EBITDA is the key metric used by our Chief Operating Decision Maker to evaluate the business performance of our segments in comparison to budgets, forecasts and prior-year financial results, providing a measure that management believes reflects our core operating performance. For example, we use Adjusted EBITDA per pound in order to measure the effectiveness of the balanced book approach in reducing the financial impact of metal price volatility on earnings and operating margins, and to measure the effectiveness of our business transformation initiatives in improving earnings and operating margins. In addition, measures similar to Adjusted EBITDA are defined and used in the agreements governing the ABL Facility and the Senior Secured Notes to determine compliance with various financial covenants and tests.
However, our Adjusted EBITDA may not be comparable to similarly titled measures presented by other companies. In addition, it has limitations as an analytical tool, and

10


you should not consider it in isolation or as a substitute for analysis of our results as reported under U.S. GAAP. Some of these limitations are that Adjusted EBITDA:
•
does not reflect every expenditure, future requirements for capital expenditures or contractual commitments;
•
does not reflect the significant interest expense or the amounts necessary to service interest or principal payments on our debt;
•
does not reflect income tax expense and therefore the cost of complying with applicable laws;
•
is an imperfect substitute for cash flow as it eliminates depreciation and amortization expense but does not include cash expended for capital expenditures required to operate our business;
•
does not reflect the impact of earnings or charges resulting from matters we consider not to be indicative of our ongoing operations; and
•
does not reflect limitations on our costs related to transferring earnings from our subsidiaries to us.
We compensate for these limitations by using Adjusted EBITDA along with other comparative tools, together with U.S. GAAP measurements, to assist in the evaluation of operating performance. Such U.S. GAAP measurements include operating income (loss), net income (loss), cash flows from operations and other cash flow data. We have significant uses of cash, including capital expenditures, interest payments, debt principal repayments, taxes and other non-recurring charges, which are not reflected in Adjusted EBITDA.
Adjusted diluted earnings per common share
Adjusted diluted earnings per common share is defined as diluted income (loss) per common share adjusted to remove the after-tax impact of the add backs to EBITDA in calculating Adjusted EBITDA. We believe that adjusted diluted earnings per common share supplements our U.S. GAAP results to provide a more complete understanding of the results of our business, and we believe it is useful to our investors and other parties for these same reasons. Adjusted diluted earnings per common share may not be comparable to similarly titled measures presented by other companies and is not a measure of operating performance or liquidity defined by U.S. GAAP.
Adjusted sales
Adjusted sales is defined as net sales less the metal component of net sales. Net sales is the most directly comparable U.S. GAAP measure to adjusted sales. Adjusted sales represents the value-added premium we earn over our conversion and fabrication costs. We use adjusted sales on a consolidated basis to monitor the revenues that are generated from our value-added conversion and fabrication processes excluding the effects of fluctuations in metal costs. We believe that adjusted sales supplements our U.S. GAAP results to provide a more complete understanding of the results of our business, and we believe it is useful to our investors and other parties for these same reasons.


11


Cautionary Statement Concerning Forward-Looking Statements

This press release contains “forward-looking statements” that involve risks and uncertainties. You can identify forward-looking statements because they contain words such as “believes,” “expects,” “projects,” “may,” “would,” “should,” “seeks,” “approximately,” “intends,” “plans,” “estimates,” “anticipates” or similar expressions that relate to our strategy, plans or intentions. All statements the Company makes relating to its estimated and projected earnings, margins, costs, expenditures, cash flows, growth rates and financial results or to its expectations regarding future industry trends are forward-looking statements. In addition, the Company, through its senior management, from time to time makes or may make forward-looking public statements concerning its expected future operations and performance and other developments. These forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may change at any time, and, therefore, the Company’s actual results may differ materially from those that it expected. The Company derives many of its forward-looking statements from its operating budgets and forecasts, which are based upon many detailed assumptions. While the Company believes that its assumptions are reasonable, it is very difficult to predict the impact of known factors, and, of course, it is impossible to anticipate all factors that could affect the Company’s actual results. Actual results may differ materially from these expectations due to various risks and uncertainties, including: the failure to maintain the Company’s balanced book approach which could cause increased volatility in the Company’s profitability and operating results and may result in significant losses; the loss in order volumes from any of the Company’s largest customers, which may reduce the Company’s sales volumes, revenues and cash flows; the disruption to the Company’s business if its customers shift their manufacturing offshore; the occurrence of any prolonged disruptions at or failures of the Company’s manufacturing facilities and equipment which could have a material adverse effect on its business, financial condition, results of operations and cash flows; disruptions arising from inclement weather; and the failure to implement the Company’s business strategy, including its growth initiatives, could adversely affect its business, financial condition, results of operations or cash flows. More detailed information about these and other risks and uncertainties are contained in the Company’s filings with the Securities and Exchange Commission, including under “Risk Factors” and elsewhere in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 16, 2015 and subsequent Quarterly Reports on Form 10-Q, copies of which may be obtained by visiting the Company’s Investor Relations website at http://ir.gbcholdings.com or the SEC’s website at www.sec.gov. All forward-looking information in this press release is expressly qualified in its entirety by these cautionary statements. All forward-looking statements contained in this press release are based upon information available to the Company on the date of this press release.

In addition, the matters referred to in the forward-looking statements contained in this press release may not in fact occur. Accordingly, investors should not place undue reliance on those statements. The Company undertakes no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law.




12


Exhibit 99.2

GLOBAL BRASS AND COPPER HOLDINGS, INC. ANNOUNCES CASH DIVIDEND
        
Quarterly dividend of $0.0375 per share to be paid on November 24, 2015

Schaumburg, IL. -- November 2, 2015 -- Global Brass and Copper Holdings, Inc. (NYSE: BRSS) (the “Company”) today announced that, on October 30, 2015, its Board of Directors declared a quarterly cash dividend of $0.0375 per share on the Company’s common stock for the third quarter of 2015. The dividend will be paid on November 24, 2015 to stockholders of record on the close of business on November 12, 2015.

The declaration and payment of any future dividend will be subject to the discretion of the Board of Directors and will depend on a variety of factors, including the Company’s financial condition and results of operations and contractual restrictions, such as the restrictive covenants contained in the Company’s indenture governing its 9.50% senior secured notes and in its credit agreement governing its asset-based revolving loan facility

About Global Brass and Copper
Global Brass and Copper Holdings, Inc., through its wholly-owned principal operating subsidiary, Global Brass and Copper, Inc., is a leading, value-added converter, fabricator, processor and distributor of specialized copper and brass products in North America. We engage in metal melting and casting, rolling, drawing, extruding and stamping to fabricate finished and semi-finished alloy products from processed scrap, copper cathode and other refined metals. Our products include a wide range of sheet, strip, foil, rod, tube and fabricated metal component products that we sell under the Olin Brass, Chase Brass and A.J. Oster brand names. Our products are used in a variety of applications across diversified markets, including the building and housing, munitions, automotive, transportation, coinage, electronics/electrical components, industrial machinery and equipment and general consumer markets.

Cautionary Statement Concerning Forward-Looking Statements
This press release contains “forward-looking statements” that involve risks and uncertainties. You can identify forward-looking statements because they contain words such as “believes”, “expects”, “projects”, “may”, “would”, “should”, “seeks”, “approximately”, “intends”, “plans”, “estimates”, “anticipates” or similar expressions that relate to our strategy, plans or intentions. All statements the Company makes relating to its estimated and projected earnings, margins, costs, expenditures, cash flows, growth rates and financial results or to its expectations regarding future industry trends are forward-looking statements. In addition, the Company, through its senior management, from time to time makes or may make forward-looking public statements concerning its expected future operations and performance and other developments. These forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may change at any time, and, therefore, the Company’s actual results may differ materially from those that it expected. The Company derives many of its forward-looking statements from its operating budgets and forecasts, which are based upon many detailed assumptions. While the Company believes that its assumptions are reasonable, it is very difficult to predict the impact of known factors, and, of course, it is impossible to anticipate all factors that could affect the Company’s actual results. Actual results may differ materially from these expectations due to various risks and uncertainties, including: the failure to maintain the Company’s balanced book approach which could cause increased volatility in the Company’s profitability and operating

1


results and may result in significant losses; the loss in order volumes from any of the Company’s largest customers, which may reduce the Company’s sales volumes, revenues and cash flows; the disruption to the Company’s business if its customers shift their manufacturing offshore; the occurrence of any prolonged disruptions at or failures of the Company’s manufacturing facilities and equipment which could have a material adverse effect on its business, financial condition, results of operations and cash flows; disruptions arising from inclement weather; and the failure to implement the Company’s business strategy, including its growth initiatives, could adversely affect its business, financial condition, results of operations or cash flows. More detailed information about these and other risks and uncertainties are contained in the Company’s filings with the Securities and Exchange Commission, including under “Risk Factors” and elsewhere in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 16, 2015 and subsequent Quarterly Reports on Form 10-Q, copies of which may be obtained by visiting the Company’s Investor Relations website at http://ir.gbcholdings.com or the SEC’s website at www.sec.gov. All forward-looking information in this press release is expressly qualified in its entirety by these cautionary statements. All forward-looking statements contained in this press release are based upon information available to the Company on the date of this press release.
In addition, the matters referred to in the forward-looking statements contained in this press release may not in fact occur. Accordingly, investors should not place undue reliance on those statements. The Company undertakes no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law.

CONTACT:
 
Robert T. Micchelli
 
 
Global Brass and Copper Holdings, Inc.
 
 
Chief Financial Officer
 
 
(847) 240-4700
 
 
 
 
 
David Beré
 
 
FTI Consulting
 
 
(312) 252-4035





2

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