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Ferroglobe Reports Results for First Quarter of 2018

  • Sales of $560.7 million, an increase of 19.8% from $468.2 million in Q4 2017
  • Net profit of $35.6 million, or $0.21 on a fully diluted per share basis, up from a net profit of $6.3 million, or  $0.04 per share, in the prior quarter. Adjusted net profit of $33.3 million, or $0.19 on a fully diluted per share basis, compared to a net profit of $8.1 million, or $0.05 on a fully diluted per share basis, in the prior quarter
  • Reported EBITDA of $93.5 million, an increase of 321.2% compared to reported EBITDA of $22.2 million in Q4 2017
  • Adjusted EBITDA of $89.6 million, an increase of 66.9% compared to $53.7 million adjusted EBITDA in Q4 2017
  • The Board decided to reinstate the dividend with an interim payment of $0.06 per share with a record date of June 8, 2018 and a payment date of June 29, 2018

LONDON, May 21, 2018 (GLOBE NEWSWIRE) -- Ferroglobe PLC (NASDAQ:GSM), the world’s leading producer of silicon metal, and a leading silicon- and manganese-based specialty alloys producer, today announced results for the first quarter of 2018.

In Q1 2018, Ferroglobe posted a net profit of $35.6 million, or $0.21 per share on a fully diluted basis. On an adjusted basis, Q1 2018 net profit was $33.3 million, or $0.19 per share on a fully diluted basis.

Q1 2018 reported EBITDA was $93.5 million, up from $22.2 million in the prior quarter. On an adjusted basis, Q1 2018 EBITDA was $89.6 million, up 66.9% from Q4 2017 adjusted EBITDA of $53.7 million. The Company reported adjusted EBITDA margins of 16.0% for Q1 2018, compared to adjusted EBITDA margins of 11.5% for Q4 2017.

Sales in Q1 2018 totaled $560.7 million, up 19.8% from $468.2 million in Q4 2017. Selling prices for Ferroglobe’s key products continued to improve over the course of the quarter across both the U.S. and Europe:

  • The average selling price for silicon metal increased by 13.2% to $2,762/MT in Q1 2018, as compared to $2,440/MT in Q4 2017;
  • The average selling price for silicon-based alloys increased by 12.3% to $1,956/MT in Q1 2018, as compared to $1,741/MT in Q4 2017; and
  • The average selling price for manganese-based alloys increased by 2.2% to $1,375/MT in Q1 2018, as compared to $1,346/MT in Q4 2017.

In addition to improved pricing, the Company saw solid demand across its key products. In terms of sales volumes, silicon metal experienced a 9.3% increase quarter-over-quarter, silicon-based alloys experienced a 8.4% increase quarter-over-quarter, while manganese-based alloys experienced a 1.7% decrease quarter-over-quarter. Note that the acquisition of the two manganese-based alloys production plants (at Dunkirk and Mo i Rana) was completed on February 1, 2018. All inventory of finished product at that date was retained by the party from whom the plants were acquired; sales and volumes of product produced after that date will be shown in the Company’s results for the second quarter of 2018.

 

    Quarter Ended   Quarter Ended   Quarter Ended   Year Ended  
    March 31, 2018   December 31, 2017   March 31, 2017   December 31, 2017  
Shipments in metric tons:                          
Silicon Metal       91,615       83,785       75,753       325,884  
Silicon-based Alloys       76,328       70,399       75,386       283,021  
Manganese-based Alloys       71,176       72,374       63,700       274,119  
Total shipments*       239,119       226,558       214,839       883,024  
                           
    Quarter Ended   Quarter Ended   Quarter Ended   Year Ended  
    March 31, 2018   December 31, 2017   March 31, 2017   December 31, 2017  
Average selling price ($/MT):                          
Silicon Metal   $   2,762   $   2,440   $   2,080   $   2,270  
Silicon-based Alloys   $   1,956   $   1,741   $   1,473   $   1,608  
Manganese-based Alloys   $   1,375   $   1,346   $   1,298   $   1,327  
Total*   $   2,092   $   1,873   $   1,635   $   1,765  
                           
    Quarter Ended   Quarter Ended   Quarter Ended   Year Ended  
    March 31, 2018   December 31, 2017   March 31, 2017   December 31, 2017  
Average selling price ($/lb.):                          
Silicon Metal   $   1.25   $   1.11   $   0.94   $   1.03  
Silicon-based Alloys   $   0.89   $   0.79   $   0.67   $   0.73  
Manganese-based Alloys   $   0.62   $   0.61   $   0.59   $   0.60  
Total*   $   0.95   $   0.85   $   0.74   $   0.80  
__________________________                          
* Excludes by-products and other                          
                           

“First quarter results reflect the strong fundamentals of our Company and of the markets we are serving. We have significantly increased volumes in most of our products and the newly acquired assets will start to contribute to our shipment volumes and financials in Q2. All of our end markets are showing strong demand and high capacity utilizations,” said Pedro Larrea, CEO of Ferroglobe. “Prices in all of our products have continued to increase, and supply/demand dynamics in our industry provide a good support for continued healthy pricing levels.”

Cash flow generation affected by acquisition of new assets

Working capital increased by $57.5 million during the period. The new assets acquired from Glencore AG on February 1, 2018 have contributed $55.5 million to this working capital increase.

Ferroglobe continued to generate positive cash flows. During the first quarter, cash flows used for operations was $20.4 million.  Excluding the cash flows related to Glencore AG, the Company generated operating cash flows of $35.5 million.

Ferroglobe’s net debt was $449.3 million as of  March 31, 2018, up from $386.9 million as of  December 31, 2017.  The increase in net debt is mainly due to the $55.5 million working capital increase from the  acquisition of the new assets from Glencore AG on February 1, 2018, including the build-up of  inventories of raw materials (mostly manganese ore) and finished goods (ferromanganese and silicomanganese) of the new plants. Excluding the impact of the Glencore AG acquisition, net debt increased by $6.6 million as compared to December 31, 2017.  Net of one-off items, the Company generated over $35 million of cash during Q1.

The Company has decided to reinstate a dividend payment

The Board of Ferroglobe has decided to declare an interim dividend of $0.06 per share, reflecting the confidence in the underlying strength of the business and the Company’s long-term outlook.  The dividend will have a record date of June 8, 2018 and a payment date of June 29, 2018.

About the Board’s decision, Javier López Madrid, Executive Chairman of Ferroglobe, said, “As we balance our capital allocation alternatives, we believe this level of dividend is an effective way of returning value to shareholders, while continuing to focus on strengthening our balance sheet.”

Adjusted EBITDA:

                 
    Quarter Ended   Quarter Ended   Quarter Ended   Year Ended
    March 31, 2018   December 31, 2017   March 31, 2017   December 31, 2017
Profit (loss) attributable to the parent   $   36,680     $   6,364     $   (6,554)     $   (678)  
Loss attributable to non-controlling interest       (1,066)         (84)         (1,561)         (5,144)  
Income tax (benefit) expense       15,668         (26,022)         (1,214)         (14,821)  
Net finance expense       13,156         19,659         12,970         61,704  
Financial derivatives loss       1,765         956         —         6,850  
Exchange differences       (729)         (2,500)         20         (8,214)  
Depreciation and amortization charges, operating allowances and write-downs       28,016         23,830         27,222         104,529  
EBITDA       93,490         22,203         30,883         144,226  
Non-controlling interest settlement       —         —         —         1,751  
Power credit       —         —         —         (3,696)  
Long lived asset charge due to reclassification of discontinued operations to
continuing operations
      —         —         —         2,608  
Accrual of contingent liabilities       —         6,044         —         12,444  
Impairment loss       —         30,618         —         30,618  
Business interruption       —         —         —         (1,980)  
Revaluation of biological assets       —         (5,195)         —         (5,195)  
Step-up valuation adjustment       —         —         —         3,757  
Share-based compensation       (3,886)         —         —         —  
Adjusted EBITDA   $   89,604     $   53,670     $   30,883     $   184,533  
                         

 

Adjusted profit (loss) attributable to Ferroglobe:

 

                 
    Quarter Ended   Quarter Ended   Quarter Ended   Year Ended
    March 31, 2018   December 31, 2017   March 31, 2017   December 31, 2017
Profit (loss) attributable to the parent   $   36,680     $   6,364     $   (6,554)     $   (678)  
Tax rate adjustment       (742)         (19,705)         1,771         (8,215)  
Non-controlling interest settlement       —         —         —         1,191  
Power credit       —         —         —         (2,513)  
Long lived asset charge due to reclassification of discontinued operations to
continuing operations
      —         —         —         1,773  
Accrual of contingent liabilities       —         4,110         —         8,462  
Impairment loss       —         20,820         —         20,820  
Business interruption       —         —         —         (1,346)  
Revaluation of biological assets       —         (3,533)         —         (3,533)  
Step-up valuation adjustment       —         —         —         2,555  
Share-based compensation       (2,642)         —         —         —  
Adjusted profit (loss) attributable to the parent   $   33,296     $   8,056     $   (4,783)     $   18,516  
                         

 

Adjusted diluted profit (loss) per share:

 

                     
    Quarter Ended     Quarter Ended   Quarter Ended   Year Ended  
    March 31, 2018   December 31, 2017   March 31, 2017   December 31, 2017  
Diluted profit (loss) per ordinary share   $   0.21     $   0.04     $   (0.04)     $       
Tax rate adjustment       —         (0.11)         0.01         (0.05)    
Non-controlling interest settlement       —         —         —         0.01    
Power credit       —         —         —         (0.01)    
Long lived asset charge due to reclassification of discontinued operations to continuing operations       —         —         —         0.01    
Accrual of contingent liabilities       —         0.02         —         0.05    
Impairment loss       —         0.12         —         0.12    
Business interruption       —         —         —         (0.01)    
Revaluation of biological assets       —         (0.02)         —         (0.02)    
Step-up valuation adjustment       —         —         —         0.01    
Share-based compensation       (0.02)         —         —         —    
Adjusted diluted profit (loss) per ordinary share   $   0.19     $   0.05     $   (0.03)     $   0.11    
                           

Conference Call

Ferroglobe will review the first quarter results of 2018 during a conference call at 9:00 a.m. Eastern Time on Tuesday, May 22, 2018.

The dial-in number for the call for participants in the United States is 877‑293‑5491 (conference ID 7495697). International callers should dial +1 914‑495‑8526 (conference ID 7495697). Please dial in at least five minutes prior to the call to register. The call may also be accessed via an audio webcast available at https://edge.media-server.com/m6/p/8pjs2qum

About Ferroglobe

Ferroglobe PLC is one of the world’s leading suppliers of silicon metal, silicon-based specialty alloys, and ferroalloys serving a customer base across the globe in dynamic and fast-growing end markets, such as solar, automotive, consumer products, construction and energy. The Company is based in London. For more information, visit http://investor.ferroglobe.com.

Forward-Looking Statements

This release contains "forward-looking statements" within the meaning of U.S. securities laws. Forward-looking statements are not historical facts but are based on certain assumptions of management and describe the Company’s future plans, strategies and expectations. Forward-looking statements often use forward-looking terminology, including words such as "anticipate", "believe", "could", "estimate", "expect", "forecast", "guidance", "intends", "likely", "may", "plan", "potential", "predicts", "seek", "will" and  words of similar meaning or the negative thereof.

Forward-looking statements contained in this press release are based on information currently available to the Company and assumptions that management believe to be reasonable, but are inherently uncertain. As a result, Ferroglobe’s actual results, performance or achievements may differ materially from those expressed or implied by these forward-looking statements, which are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors that are, in some cases, beyond the Company’s control.

Forward-looking financial information and other metrics presented herein represent the Company’s goals and are not intended as guidance or projections for the periods presented herein or any future periods.

All information in this press release is as of the date of its release. Ferroglobe does not undertake any obligation to update publicly any of the forward-looking statements contained herein to reflect new information, events or circumstances arising after the date of this press release. You should not place undue reliance on any forward-looking statements, which are made only as of the date of this press release.

Non-IFRS Measures

EBITDA, adjusted EBITDA, adjusted diluted profit (loss) per ordinary share and adjusted profit (loss) attributable to the parent are, we believe, pertinent non-IFRS financial metrics that Ferroglobe utilizes to measure its success.

Ferroglobe has included these financial metrics to provide supplemental measures of its performance. The Company believes these metrics are important because they eliminate items that have less bearing on the Company’s current and future operating performance and highlight trends in its core business that may not otherwise be apparent when relying solely on IFRS financial measures.

INVESTOR CONTACT:
Ferroglobe PLC
Joe Ragan, US: +1 917 2098581, UK: +44 (0) 7827 227 688
Chief Financial Officer
Email: jragan@ferroglobe.com

 

   
Ferroglobe PLC and Subsidiaries  
Unaudited Condensed Consolidated Income Statement  
(in thousands of U.S. dollars, except per share amounts)  
                           
    Quarter Ended 
March 31, 2018
  Quarter Ended 
December 31, 2017
  Quarter Ended 
March 31, 2017
  Year Ended 
December 31, 2017
 
Sales   $   560,704     $   468,218     $   396,037     $   1,741,693    
Cost of sales       (320,678)         (284,614)         (241,138)         (1,043,395)    
Other operating income       6,786         5,158         1,629         18,199    
Staff costs       (82,423)         (87,127)         (66,485)         (301,963)    
Other operating expense       (70,862)         (55,052)         (60,124)         (239,926)    
Depreciation and amortization charges, operating allowances
and write-downs
      (28,016)         (23,830)         (27,222)         (104,529)    
Impairment losses       —         (30,859)         —         (30,957)    
Other (loss) gain       (37)         6,479         964         575    
Operating profit (loss)       65,474         (1,627)         3,661         39,697    
Finance income       4,445         2,493         795         3,708    
Finance expense       (17,601)         (22,152)         (13,765)         (65,412)    
Financial derivatives loss       (1,765)         (956)         —         (6,850)    
Exchange differences       729         2,500         (20)         8,214    
Profit (loss) before tax       51,282         (19,742)         (9,329)         (20,643)    
Income tax (expense) benefit       (15,668)         26,022         1,214         14,821    
Profit (loss) for the period       35,614         6,280         (8,115)         (5,822)    
Loss attributable to non-controlling interest       1,066         84         1,561         5,144    
Profit (loss) attributable to the parent   $   36,680     $   6,364     $   (6,554)     $   (678)    
                           
                           
EBITDA   $   93,490     $   22,203     $   30,883     $   144,226    
Adjusted EBITDA   $   89,604     $   53,670     $   30,883     $   184,533    
                           
Weighted average shares outstanding                          
Basic       171,977         171,953         171,838         171,949    
Diluted       172,215         172,128         171,838         171,949    
                           
Profit (loss) per ordinary share                          
Basic   $   0.21     $   0.04     $   (0.04)     $   —    
Diluted   $   0.21     $   0.04     $   (0.04)     $   —    
                           

 

 
Ferroglobe PLC and Subsidiaries
Unaudited Condensed Consolidated Statement of Financial Position
(in thousands of U.S. dollars)
                 
  March 31,     December 31,     March 31,
  2018     2017     2017
ASSETS
Non-current assets                
Goodwill $   204,537   $   205,287   $   230,733
Other intangible assets     61,774       58,658       56,854
Property, plant and equipment     980,101       917,974       790,501
Non-current financial assets      147,744       89,315       5,967
Deferred tax assets     6,581       5,273       47,768
Non-current receivables from related parties     2,464       2,400       2,139
Other non-current assets     32,125       30,059       20,892
Total non-current assets     1,435,326       1,308,966       1,154,854
Current assets                
Inventories     493,108       361,231       312,757
Trade and other receivables     142,641       111,463       214,738
Current receivables from related parties     8,841       4,572       5,576
Current income tax assets     6,524       17,158       16,614
Current financial assets     897       2,469       3,640
Other current assets     16,095       9,926       10,703
Cash and cash equivalents     197,669       184,472       172,647
Assets and disposal groups classified as held for sale     —       —       120,094
Total current assets     865,775       691,291       856,769
Total assets $   2,301,101   $   2,000,257   $   2,011,623
                 
EQUITY AND LIABILITIES
Equity $   979,504   $   937,758   $   902,872
Non-current liabilities                
Deferred income     7,321       3,172       3,656
Provisions     82,957       82,397       83,993
Bank borrowings     71,242       —       78,123
Obligations under finance leases     68,101       69,713       1,906
Debt instruments      341,036       339,332       339,693
Other financial liabilities     58,288       49,011       86,962
Other non-current liabilities     64,457       3,536       2,317
Deferred tax liabilities     64,733       65,142       132,753
Total non-current liabilities     758,135       612,303       729,403
Current liabilities                
Provisions     30,162       33,095       11,915
Bank borrowings     850       1,003       1,545
Obligations under finance leases     13,478       12,920       586
Debt instruments      2,735       10,938       4,156
Other financial liabilities     91,243       88,420       1,616
Payables to related parties     10,671       12,973       10,283
Trade and other payables     298,438       192,859       177,015
Current income tax liabilities     5,889       7,419       3,616
Other current liabilities     109,996       90,569       63,346
Liabilities associated with assets classified as held for sale     —       —       105,270
Total current liabilities     563,462       450,196       379,348
Total equity and liabilities $   2,301,101   $   2,000,257   $   2,011,623
                 

  

 
Ferroglobe PLC and Subsidiaries
Unaudited Condensed Consolidated Statement of Cash Flows 
(in thousands of U.S. dollars) 
                       
    Quarter Ended
March 31, 2018
      Quarter Ended
March 31, 2017
      Year Ended
December 31, 2017
 
Cash flows from operating activities:                      
Profit (loss) for the period $ 35,614     $   (8,115)     $   (5,822)  
Adjustments to reconcile net profit (loss) to net cash (used) provided by operating activities:                      
Income tax expense (benefit)   15,668         (1,214)         (14,821)  
Depreciation and amortization charges, operating allowances and write-downs   28,016         27,222         104,529  
Finance income   (4,445)         (795)         (3,708)  
Finance expense   17,601         13,765         65,412  
Financial derivatives loss   1,765         —         6,850  
Exchange differences   (729)         20         (8,214)  
Impairment losses     —         —         30,957  
(Gain) loss on disposals of non-current and financial assets     —       (558)         4,316  
Share-based compensation     699         —         2,405  
Other adjustments     37       (406)         (4,891)  
Changes in operating assets and liabilities                      
(Increase) decrease in inventories     (107,481)       7,108         (16,274)  
(Increase) decrease in trade receivables     (513)       3,765         50,168  
Increase in trade payables     70,375       18,156         17,613  
Other     (49,770)       (34,545)         (12,251)  
Income taxes paid     (9,982)       (2,297)         (26,764)  
Interest paid     (17,301)       (9,729)         (39,130)  
Net cash (used) provided by operating activities   (20,446)       12,377         150,375  
Cash flows from investing activities:                      
Payments due to investments:                      
Other intangible assets   (703)       (410)       (811)  
Property, plant and equipment   (22,531)       (12,362)       (74,616)  
Non-current financial assets    —       (14)       (343)  
Disposals:                      
Non-current financial assets     942         —         —  
Acquisition of subsidiary     (20,379)         —         —  
Interest and finance income received     3,147       353         952  
Net cash used by investing activities     (39,524)       (12,433)         (74,818)  
Cash flows from financing activities:                      
Dividends paid     —         —         —  
Payment for debt issuance costs     (4,476)         (10,477)         (16,765)  
Proceeds from debt issuance     —         350,000         350,000  
Increase/(decrease) in bank borrowings:                      
Borrowings     182,364       31,425         31,455  
Payments     (106,514)       (372,380)         (453,948)  
Proceeds from stock option exercises     —         —         180  
Other amounts paid due to financing activities     (2,987)       (7,211)         (24,319)  
Net cash provided (used) by financing activities     68,387       (8,643)         (113,397)  
Total net cash flows for the period   8,417       (8,699)         (37,840)  
Beginning balance of cash and cash equivalents   184,472       196,982         196,982  
Exchange differences on cash and cash equivalents in foreign currencies     4,780       4,748         25,330  
Ending balance of cash and cash equivalents $ 197,669     $ 193,031     $   184,472  
                     

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