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