Stillwater Mining Company Reports Fourth Quarter and Full-Year 2015 Results

LITTLETON, Colo., Feb. 22, 2016 (GLOBE NEWSWIRE) -- Stillwater Mining Company (NYSE:SWC) today reported financial results for the quarter and year ended December 31, 2015.

Fourth Quarter 2015 Highlights:

• All-in sustaining costs (AISC)* of $613 per mined ounce of palladium and platinum, down 15.4% from $725 per mined ounce for the fourth quarter of 2014
  
• Cash and cash equivalents plus highly liquid investments of $463.8 million at quarter end, an increase of $3.5 million from the end of the third quarter of 2015
  
• Mined palladium and platinum production of 132,400 ounces, down slightly from the 137,600 ounces mined during the fourth quarter of 2014
  
• Processed 129,800 ounces of recycled palladium, platinum and rhodium, an increase of 12.0% over 115,900 ounces recycled during the fourth quarter of 2014
  
• General and administrative expenses of $6.4 million, a 9.5% reduction from the fourth quarter of 2014
  
• Consolidated net income attributable to common stockholders of $4.4 million or $0.04 per diluted share, reflecting the decrease in average sales price per mined ounce (palladium and platinum) to $667, a 24.4% decrease from $882 realized for the fourth quarter of 2014
  
  

Full-Year 2015 Highlights:

• Achieved or exceeded all 2015 guidance metrics
  
• Achieved the best safety results in the Company’s history with a reportable incidence rate reduction of 8.5% from 2014
  
• AISC* of $709 per mined ounce of palladium and platinum, down 9.6% from $784 per mined ounce for 2014
  
• Mined palladium and platinum of 520,800 ounces, an increase from 517,700 ounces mined during 2014
  
• Processed 551,100 ounces of recycled palladium, platinum and rhodium, a 17.4% increase from 469,400 processed during 2014
  
• Consolidated net loss attributable to common stockholders of $11.9 million or $0.10 per share, including a $46.8 million (before-tax) impairment of the Marathon properties, a $4.0 million (before-tax) net loss on the repurchase of a portion of the Company’s convertible debentures and $1.7 million (before-tax) reorganization charges
  
• Underlying earnings attributable to common stockholders* for 2015 were $26.1 million (after-tax) after adjusting for the Marathon impairment charge, net loss on repurchase of convertible debentures and reorganization charges
  
• East Boulder Mine four-year labor contract ratified; Stillwater Mine and Columbus processing facilities four-year contract ratified in early 2016
  
  

Commenting on the fourth quarter and full-year 2015 results, Mick McMullen, the Company’s President and Chief Executive Officer stated, "Stillwater Mining Company continues to deliver on our stated objectives. The Company has achieved or exceeded every 2015 guidance metric provided. In fact, we met or beat each of the original guidance metrics published prior to the reorganization plan that was implemented during the third quarter. AISC*, which is a key metric we use to evaluate our performance, was reduced to $613 per mined ounce for the fourth quarter and an average of $709 per mined ounce for the full-year 2015. This 2015 result is a reduction from $784 per mined ounce for 2014 and a result that is well below the low end of our guidance range.

“In addition, our safety performance in 2015 was the best in the Company’s history. The Company’s reportable safety incidence rate declined 8.5% in 2015 compared to the prior year. This is a remarkable accomplishment by our entire workforce as this improvement took place in conjunction with many changes and distractions including the negotiation of our two labor contracts covering the majority of the Company’s employees and the implementation of a significant reorganization plan at the Stillwater Mine.

“As PGM prices have declined to levels not seen in years, we are determined to continue our disciplined approach to capital deployment and operational efficiencies. Even with declining PGM prices and our continued investment in sustaining capital and growth projects, the Company was able to grow its cash and cash equivalents plus liquid investments balance during the fourth quarter, ending the year with a total of $463.8 million. This liquidity increase occurred despite the payment to buy out our joint venture partner at Marathon. With our strong balance sheet, cost reduction success and additional opportunities for operational improvements going forward, I believe Stillwater is well situated to withstand the current stage in the PGM price cycle. Stillwater possesses a leading position in the industry that will benefit our shareholders when a PGM price recovery occurs,” concluded Mr. McMullen.

2016 Full-Year Guidance:

Management has provided the following guidance for the full-year 2016 as detailed in the table below.

(1) Exploration includes expenses for Marathon, Altar and Montana operations.
(2) Excludes project capitalized interest and capitalized depreciation.

Fourth Quarter and Full-Year 2015 Results:

For the fourth quarter of 2015, the Company reported consolidated net income attributable to common stockholders of $4.4 million, or $0.04 per diluted share, compared to consolidated net income attributable to common stockholders of $14.7 million, or $0.12 per diluted share for the fourth quarter of 2014. Full-year 2015 consolidated net loss attributable to common stockholders was $11.9 million or $0.10 per diluted share. This compares to a 2014 consolidated net income attributable to common shareholders of $70.3 million or $0.56 per diluted share. The decrease for both the fourth quarter and full-year 2015 was impacted by significantly lower realized metal prices and lower sales volumes partially offset by lower costs. In addition, during 2015 the Company recorded a $46.8 million (before-tax) impairment charge against the Marathon properties (second quarter), a net loss of $4.0 million (before-tax) on the repurchase of a portion of the Company's convertible debentures (third quarter) and $1.7 million (before-tax) reorganization charges (third quarter). Underlying earnings attributable to common stockholders* for the year were $26.1 million (after-tax) after adjusting for the impairment charge, net loss on repurchase of the convertible debentures and reorganization charges, compared with underlying earnings attributable to common stockholders* of $77.3 million (after-tax) for 2014.

Mine Production Comparison:

Revenues from the Company’s Mine Production segment (including proceeds from the sale of by-products) totaled $84.7 million in the fourth quarter of 2015, down from $126.0 million for the fourth quarter of 2014. The combined average realized price for the sales of mined palladium and platinum decreased for the fourth quarter of 2015 to $667 per ounce, compared to $882 per ounce realized in the fourth quarter of 2014. The total quantity of mined palladium and platinum sold in the fourth quarter of 2015 was 120,300 ounces compared to 134,600 ounces sold in the fourth quarter of 2014. Production ounces were higher than sales ounces due to timing of sales and the desire to sell inventory during periods of better prices.

For the full-year 2015, the Company reported Mine Production segment revenue (including proceeds from the sale of by-products) of $415.8 million, down from $536.0 million in 2014. The combined average realized price for the sales of mined palladium and platinum was $774 for 2015, a decrease from $934 per ounce realized for 2014. The total quantity of mined palladium and platinum sold in 2015 was 507,300 ounces compared to 542,300 sold during 2014.

Total costs of metals sold in the Mine Production segment decreased to $64.3 million in the fourth quarter of 2015 from $79.9 million in the fourth quarter of 2014. For the full-year 2015 Mine Production costs of metals sold decreased to $294.0 million from $332.6 million in 2014.

Recycling Activity Comparison:

Total recycle PGM ounces fed to the smelter were up 12.0% from the prior year to 129,800 ounces, with a large amount of the growth coming from tolled material.

PGM Recycling revenues totaled $87.2 million for the 2015 fourth quarter, a decrease from $95.9 million in the same period of 2014. The Company's combined average realized price for sales of recycled palladium, platinum and rhodium was $782 per ounce in the fourth quarter of 2015 compared to $1,076 per ounce in the fourth quarter of 2014. Recycling sales volumes for the fourth quarter of 2015 increased to 108,700 ounces from 88,000 ounces sold in the fourth quarter of 2014. In conjunction, tolled ounces returned to customers increased to 54,700 ounces for the fourth quarter of 2015 from 18,900 ounces in the fourth quarter of 2014.

PGM Recycling revenue totaled $310.2 million for full-year 2015, compared to $401.7 million in 2014. For 2015, the Company’s combined average realized sales price for recycled palladium, platinum and rhodium was $886 per ounce, down from $1,031 per ounce for 2014. Recycling sales volumes for 2015 totaled 340,200 ounces, a decrease from 384,400 ounces sold for 2014. For 2015, 205,000 tolled ounces were returned, an increase from 72,800 returned in 2014.

PGM Recycling costs of metals sold totaled $84.6 million in the fourth quarter of 2015, down from the $93.7 million in the fourth quarter of 2014. For the full-year 2015 PGM Recycling costs of metals sold decreased to $300.7 million from $391.5 million for 2014.

General and administrative costs were $6.4 million in the fourth quarter of 2015, a decrease of 9.5% from $7.1 million incurred during the same period of 2014. For the full-year 2015 general and administrative costs were $34.0 million, down from $35.1 million in 2014.

All-In Sustaining Costs Per Mined Ounce:

AISC* per mined ounce totaled $613 for the fourth quarter of 2015, a decrease from $725 recorded for the same period of 2014. For the full-year 2015 the Company reported AISC* of $709 per mined ounce, a decrease from $784 in 2014. Reductions in cash costs, corporate costs and sustaining capital contributed to the lower AISC result. The 46.6% reduction in sustaining capital from the prior year for the fourth quarter was achieved whilst maintaining the capital necessary to preserve the developed state of the mines as productivity for development has improved.

Cash Costs Per Mined Ounce:

Total combined cash costs per mined ounce (net of by-product and recycling credits)* totaled $450 per ounce for the fourth quarter of 2015, compared to $483 per ounce for the fourth quarter of 2014. For the full-year 2015, total combined cash costs per mined ounce (net of by-product and recycling credits)* totaled $495 compared to $538 for 2014.

The table below illustrates the effect of by-product and recycling credits on the total combined cash costs per mined ounce, net of credits, for the Montana mining operations.

*These are non-GAAP financial measures. For a full description and reconciliation of these and other non-GAAP financial measures to GAAP financial measures, see Reconciliation of GAAP Financial Measures to Non-GAAP Financial Measures below.

Labor Matters:

On December 15, 2015, the union membership at the East Boulder Mine ratified a new four-year contract. The new agreement essentially rolls forward the previous contract, including a provision for no increase in base wages for each of the first two years of the agreement and other minor modifications. The effective date for this contract was January 1, 2016.

Separately, on January 29, 2016, union employees located at the Stillwater Mine and Columbus processing facilities voted and ratified a new four-year contract following a negotiation process that began in June of 2015. The new agreement includes a provision for no increase in base wages for each of the first two years of the contract, simplification of the incentive program and the introduction of metrics in the incentive program that align employee activities and shareholder outcomes. The contract was retroactively effective as of June 2, 2015.

Cash Flow and Liquidity:

At December 31, 2015, the Company’s cash and cash equivalents balance was $147.3 million, compared to $280.3 million at December 31, 2014. The Company’s cash and cash equivalents plus highly liquid investments totaled $463.8 million at December 31, 2015 (including $18.5 million of investments which have been reserved as collateral on letters of credit), compared to $531.5 million at December 31, 2014. A significant driver of the decrease in cash was the Company’s repurchase of a portion of its outstanding convertible debentures for $61.0 million during the third quarter of 2015. Net working capital decreased to $523.0 million at December 31, 2015, compared to $619.4 million at the end of 2014.

Net cash provided by operating activities (which includes changes in working capital) totaled $110.4 million for the year ended December 31, 2015, compared to $187.6 million of cash provided by operating activities for the same period in 2014. Cash capital expenditures were $107.4 million for the year ended December 31, 2015, compared to $119.7 million in the same period in 2014.

Outstanding total balance sheet debt reported at December 31, 2015, was approximately $259.6 million, a decrease from $296.2 million at December 31, 2014. The Company’s debt balance at December 31, 2015, included approximately $258.4 million of 1.75% convertible debentures (net of unamortized discount of approximately $76.8 million), $0.5 million of 1.875% convertible debentures and approximately $0.7 million for a capital lease and financing for a small installment land purchase. The change in debt balance is a result of the Company’s repurchase of a portion of its convertible debentures during the third quarter, partially offset by the accretion of the discount on the Company's outstanding 1.75% convertible debentures.

2015 Fourth Quarter and Full-Year Results Webcast and Conference Call:

Stillwater Mining Company will conduct a conference call to discuss fourth quarter and Full-Year 2015 results at 12:00 noon Eastern Standard Time on Monday, February 22, 2016.

A simultaneous webcast and presentation to accompany the conference call will be available through the Investor Relations section of the Company's website at www.stillwatermining.com. 

A telephone replay of the call will be available for one week following the event. The replay dial-in numbers are (877) 660-6853 (U.S.) and (201) 612-7415 (International), access code 13624356. In addition, the call transcript will be archived in the Investor Relations section of the Company's website.

About Stillwater Mining Company

Stillwater Mining Company is the only U.S. miner of platinum group metals (PGMs) and the largest primary producer of PGMs outside of South Africa and the Russian Federation. PGMs are rare precious metals used in a wide variety of applications, including automobile catalysts, fuel cells, hydrogen purification, electronics, jewelry, dentistry, medicine and coinage. The Company is engaged in the development, extraction and processing of PGMs from a geological formation in south-central Montana known as the J-M Reef. The J-M Reef is the only known significant source of PGMs in the U.S. and the highest-grade PGM resource known in the world. The Company also recycles PGMs from spent catalytic converters and other industrial sources. The Company owns the Marathon PGM-copper deposit in Ontario, Canada, and the Altar porphyry copper-gold deposit located in the San Juan province of Argentina. The Company’s shares are traded on the New York Stock Exchange under the symbol SWC. Information about the Company can be found at its website: www.stillwatermining.com. 

Cautionary Note Concerning Forward-Looking Statements

Some statements contained in this press release are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended, and, therefore, involve uncertainties or risks that could cause actual results to differ materially from management's expectations. These statements may contain words such as “believes,” “anticipates,” “plans,” “expects,” “intends,” “estimates,” “predicts,” “should,” “will,” “may” or similar expressions. Such statements also include, but are not limited to, comments regarding continuing to deliver on stated objectives; determination to continue a disciplined approach to capital deployment and operational efficiencies; additional opportunities for operational improvements going forward; Stillwater being well situated to withstand the current stage in the PGM pricing cycle; Stillwater possessing a leading position in the industry that will benefit shareholders when a PGM price recovery occurs; estimated 2016 production, cash costs per mined ounce, AISC, exploration expense, general and administrative costs and capital expenditures; and the usefulness of non-GAAP financial measures. The forward-looking statements in this release are based on assumptions and analyses made by management in light of experience and perception of historical trends, current conditions, expected future developments, and other factors that are deemed appropriate. These statements are not guarantees of the Company’s future performance and are subject to risks, uncertainties and other important factors that could cause its actual performance or achievements to differ materially from those expressed or implied by these forward-looking statements. Additional information regarding factors that could cause results to differ materially from management's expectations is found in the section entitled "Risk Factors" in the Company's Annual Report on Form 10-K. The Company intends that the forward-looking statements contained herein be subject to the above-mentioned statutory safe harbors. Investors are cautioned not to rely on forward-looking statements. The forward-looking statements herein speak only as of the date of this release. The Company disclaims any obligation to update forward-looking statements.

Stillwater Mining Company
Consolidated Statements of Comprehensive Income (Loss)

Stillwater Mining Company
Consolidated Balance Sheets

Stillwater Mining Company
Consolidated Statements of Cash Flows

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Key Operating Factors

Stillwater Mining Company
Key Operating Factors (Continued)

(1)  Sub-grade tons milled includes reef waste material only. Reef waste material is PGM-bearing mined material below the cutoff grade for proven and probable reserves but with sufficient economic value to justify processing it through the concentrator along with the mined ore. Total tons milled includes ore tons and sub-grade tons only. See “Proven and Probable Ore Reserves – Discussion” in the Company’s 2014 Annual Report on Form 10-K for further information. 
(2)  Total cash costs include total operating costs plus royalties, insurance and taxes other than income taxes. Total cash costs per mined ounce, net of credits is a non-GAAP financial measure that management uses to monitor and evaluate the efficiency of its mining operations. This measure of cost is not defined under U.S. Generally Accepted Accounting Principles (GAAP). Please see Reconciliation of GAAP Financial Measures to Non-GAAP Financial Measures and the accompanying discussion for additional detail.
(3)  The concentrate tonnage and grade values are inclusive of periodic re-processing of smelter slag and internal furnace brick PGM bearing materials.

Stillwater Mining Company
Key Operating Factors (Continued)

(1) Ounces sold and average realized price per ounce from PGM Recycling relate to ounces produced from processing of spent catalyst from catalytic converters and other industrial sources.
(2)  By-product metals sold reflect contained metal. Realized prices reflect net values (discounted due to product form and transportation and marketing charges) per unit received.
(3)  The Company’s average realized price represents revenues, hedging gains and losses realized on commodity instruments and agreement discounts, divided by ounces sold. The average market price represents the average London market for the actual months of the period.
(4)  The Company reports a combined average realized and market price of palladium and platinum at the same ratio as ounces that are produced from the base metal refinery.
(5)  Ounces sold and average realized price per ounce from Other relate to ounces acquired periodically in the open market and simultaneously resold to third parties.

RECONCILIATION OF GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES

The Company utilizes certain non-GAAP financial measures as indicators in assessing the performance of its mining and processing operations during any period. Because of the processing time required to complete the extraction of finished PGM products, there are typically lags of one to three months between ore production and sale of the finished product. Sales in any period include some portion of material mined and processed from prior periods as the revenue recognition process is completed. Consequently, while costs of revenues (a GAAP financial measure included in the Company’s Consolidated Statements of Comprehensive (Loss) Income) appropriately reflects the expense associated with the materials sold in any period, the Company has developed certain non-GAAP financial measures to assess the costs associated with its producing and processing activities in a particular period and to compare those costs between periods.

While the Company believes that these non-GAAP financial measures may also be of value to outside readers, both as general indicators of the Company’s mining efficiency from period to period and as insight into how the Company internally measures its operating performance, these non-GAAP financial measures are not standardized across the mining industry and in most cases will not be directly comparable to similar measures that may be provided by other companies. These non-GAAP financial measures are only useful as indicators of relative operational performance in any period, and because they do not take into account the inventory timing differences that are included in costs of revenues, they cannot meaningfully be used to develop measures of earnings or profitability. A reconciliation of these measures to costs of revenues, the most directly comparable GAAP financial measure, for each period shown is provided as part of the following tables, and a description of each non-GAAP financial measure is provided below.

Total Consolidated Costs of Revenues: For the Company as a whole, this measure is equal to total costs of revenues, as reported in the Company's Consolidated Statements of Comprehensive (Loss) Income. For the Stillwater Mine, the East Boulder Mine, and PGM Recycling and Other, the Company segregates the expenses within total costs of revenues that are directly associated with each of these activities and then allocates the remaining facility costs included in total cost of revenues in proportion to the monthly volumes from each activity. The resulting total costs of revenues measures for the Stillwater Mine, the East Boulder Mine and PGM Recycling and Other are equal in the aggregate, to total consolidated costs of revenues as reported in the Company’s Consolidated Statements of Comprehensive (Loss) Income.

Total Cash Costs (Non-GAAP): These non-GAAP financial measures are calculated as total costs of revenues adjusted to exclude costs of metals sold from PGM Recycling and Other, depletion and depreciation and amortization for Mine Production and PGM Recycling and Other, asset retirement costs, and timing differences resulting from changes in product inventories to arrive at Total Cash Costs before by-product and recycling credits. From this calculation, the Company deducts by-product and recycling income credits to arrive at Total Cash Costs, net of by-product and recycling credits. Total Cash Costs is a measure of extraction efficiency. The Company uses this measure as a comparative indication of the cash costs related to production and processing in its mining operations in any period.

When divided by the total recoverable PGM ounces from production in the respective period, Total Cash Costs per Ounce (Non-GAAP), measured for each mine or combined, provides an indication of the level of cash costs incurred per PGM ounce produced in that period. Recoverable PGM ounces from production are an indication of the amount of PGM product extracted through mining in any period. Because ultimately extracting PGM material is the objective of mining, the cash cost per ounce of extracting and processing PGM ounces in a period is a useful measure for comparing extraction efficiency between periods and between the Company’s mines. Consequently, Total Cash Costs per Ounce (Non-GAAP) in any period is a general measure of extraction efficiency, and is affected by the level of Total Cash Costs (Non-GAAP), by the grade of the ore produced and by the volume of ore produced in the period.

When divided by the total tons milled in the respective period, Total Cash Costs per Ore Ton Milled (Non-GAAP), measured for each mine or combined, provides an indication of the level of cash costs incurred per ore ton milled in that period. Because of variability of ore grade in the Company’s mining operations, mine production efficiency underground is frequently measured against ore tons produced rather than contained PGM ounces. Because ore tons are first weighed as they are fed into the mill, mill feed is the first point at which mine production tons are measured precisely. Consequently, Total Cash Costs per Ore Ton Milled (Non-GAAP) is a general measure of production efficiency, and is affected both by the level of Total Cash Costs (Non-GAAP) and by the volume of tons produced and fed to the mill.

With respect to 2016 guidance regarding Total Cash Costs per Mined ounce (net of by-product and recycling credits) and AISC per Mined Ounce, the Company cannot provide a quantitative reconciliation to the most directly comparable GAAP measure without unreasonable effort. However, the Company would expect to calculate these non-GAAP measures in the same manner they were calculated in the reconciliations included this press release.

Stillwater Mining Company
Reconciliation of GAAP Financial Measures to Non-GAAP Financial Measures

Stillwater Mining Company
Reconciliation of GAAP Financial Measures to Non-GAAP Financial Measures (Continued)

Stillwater Mining Company
Reconciliation of GAAP Financial Measures to Non-GAAP Financial Measures (Continued)

(1) PGM Recycling and Other include PGM recycling and metal acquired periodically in the open market and simultaneously resold to third parties.

Stillwater Mining Company
All-In Sustaining Costs (a Non-GAAP Financial Measure)

All-In Sustaining Costs (Non-GAAP): This non-GAAP financial measure is used as an indicator from period to period of the level of total cash required by the Company to maintain and operate the existing mines, including corporate administrative costs and replacement capital. The measure is calculated beginning with total combined cash costs (another non-GAAP financial measure, described above), and adding to it the recycling income credit, domestic corporate overhead and marketing costs (excluding any depreciation, research and development, and reorganization costs included in corporate overhead costs) and that portion of total capital expenditures associated with sustaining the current level of mining operations. (Capital expenditures for Blitz, Graham Creek (prior to 2015) and certain other one-time projects are not included in the calculation.)

When divided by the total recoverable PGM ounces in the respective period, All-In Sustaining Costs per Mined Ounce (Non-GAAP) provides an indication of the level of total cash required to maintain and operate the mines per PGM ounce produced in the period. Recoverable PGM ounces from production are an indication of the amount of PGM product extracted through mining in any period. Because the objective of PGM mining activity is to extract PGM material, the all-in cash costs per ounce to produce PGM material, administer the business and sustain the operating capacity of the mines is a useful measure for comparing overall extraction efficiency between periods. This measure is affected by the total level of spending in the period and by the grade and volume of mined ore produced.

Stillwater Mining Company 
Underlying Earnings 
(Non-GAAP Financial Measure)

Underlying Earnings (Non-GAAP): This non-GAAP financial measure is considered by the Company to be reflective of the actual income position. This non-GAAP financial measure provides to investors and analysts the ability to understand the results of the continuing operations of the Company relating to the production, processing and sale of PGMs, by excluding certain items that have a disproportionate impact on the results for the reported periods. The measure is calculated beginning with Net (loss) income attributable to common stockholders and adding back to it impairment charges, one-time event charges and charges infrequent to the Company's continuing operations. The net (loss) income adjustments are presented net of tax. Net loss attributable to noncontrolling interest has been adjusted for the noncontrolling interest's ownership percentage of any applicable impairment charges to which the noncontrolling interest has an ownership. The Company's determination of the components of Underlying earnings - net (loss) income attributable to common stockholders are evaluated periodically and based, in part, on a review of non-GAAP financial measures used by mining industry analysts.

Net income (loss) attributable to common stockholders is reconciled to Adjusted net income attributable to common stockholders as follows:

INVESTOR CONTACT:
Mike Beckstead
(720) 502-7671
investor-relations@stillwatermining.com