Ferroglobe Reports Results for Third Quarter 2017

• Q3 2017 revenue of $451.6 million, up 6% from $425.8 million in Q2 2017
• Q3 2017 net loss of $(5.0) million and a diluted loss per share of $(0.02), down from a net profit of $1.0 million and diluted earnings per share of $0.02 in the prior quarter, driven by tax adjustments/valuation allowances
• Q3 2017 adjusted net profit of $9.2 million, or $0.05 on a fully diluted per share basis, compared to a net profit of $6.0 million, or $0.05 on a fully diluted per share basis in the prior quarter  
• Q3 2017 reported EBITDA of $54.3 million, an increase of 48% compared to reported EBITDA of $36.8 million in Q2 2017
• Q3 2017 adjusted EBITDA of $56.1 million, an increase of 28% compared to $43.9 million adjusted EBITDA in the prior quarter
• Maintained strong balance sheet with Q3 2017 net debt of $394.3 million¹ compared to $434.6 million in Q2 2017
• Results exceeded expectations with strong performance driven by price recovery and volume improvements in both silicon metal and manganese based alloys  

LONDON, Nov. 27, 2017 (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 third quarter of 2017.

In Q3 2017, Ferroglobe posted a net loss of $(5.0) million, or $(0.02) per share on a fully diluted basis. On an adjusted basis, Q3 2017 net profit was $9.2 million, or $0.05 per share on a fully diluted basis.

Q3 2017 reported EBITDA was $54.3 million, up from $36.8 million in the prior quarter. On an adjusted basis, Q3 2017 EBITDA was $56.1 million, up 27.9% from Q2 2017 adjusted EBITDA of $43.9 million. The company reported adjusted EBITDA margins of 12.4% for Q3 2017, compared to adjusted EBITDA margins of 10.3% for Q2 2017.

Net sales in Q3 2017 totaled $451.6 million, up 6.1% from $425.8 million in Q2 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 5.4% from $2,210/MT in Q2 2017 to $2,330/MT in Q3 2017, a significant improvement driven mainly by the market impact of the ongoing trade cases in the United States;  
• The average selling price for silicon-based alloys increased 3.7% to $1,645/MT in the quarter from $1,586/MT in the prior quarter;
• The average selling price for manganese alloys increased 3.1% to $1,349/MT in Q3 as compared to $1,308/MT in the prior quarter; and,
• In addition to these pricing trends, Ferroglobe continued to realize average sales prices in excess of the index.

In addition to improved pricing, the company also saw stabilization of demand and volumes across its key products. In terms of sales volumes, silicon metal experienced a 0.7% increase quarter-over-quarter, manganese alloys experienced a 14.3% increase quarter-over-quarter and silicon alloys experienced a 5.7% decrease quarter-over-quarter.  

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¹ As of September 30, 2017, the balance sheet includes the securitized accounts receivables under the Company’s new global accounts receivables securitization program which began in July 2017.  As such, $120.1M is included in debt and accounts receivables in the balance sheet as of September 30, 2017, which reflects the receivables sold into the program.  However, the impact of the securitization is included in the calculation of certain key metrics, such as net debt, working capital, cash flows from operations and free cash flow in order make such metrics comparable.

“Ferroglobe delivered strong performance with quarter-over-quarter earnings growth and improved profitability. The ongoing trade cases in the United States resulted in continued pricing improvement for silicon metal in that market and sustained strong end-market demand continued to drive the stabilization of shipment volumes,” said CEO Pedro Larrea. “The business continues to perform through the recovery, and we are focused on carefully managing our costs to fully capture the benefits of the new market environment. At the same time, as the recently announced deal with Glencore proves, we are increasing our presence in the core businesses. We expect prices to continue to improve through the year and we remain focused on sustained performance across all business segments as we move into the final quarter of 2017 and beyond.”

Strong cash flow generation continues to support liquidity

Working capital decreased by $11.6 million¹ during the quarter, primarily a result of the increased securitization of receivables. Year-to-date the company has increased total working capital by $8.6 million¹ due to the recovery cycle. Ferroglobe continued to generate positive cash flows. During the third quarter, the company generated operating cash flows of $67.4 million¹, free cash flow of $52.7 million¹, with total free cash flow of $58.5 million¹ year to date.

Ferroglobe’s net debt was $394.3 million¹ at the end of Q3 2017, down compared to $434.6 million at the end of Q2 2017.

Adjusted EBITDA:

Adjusted net profit (loss) attributable to Ferroglobe:

Adjusted diluted profit (loss) per share:

Recent developments

The trade cases in the United States and the favorable demand environment have allowed Ferroglobe to return to close to full capacity utilization. The Selma facility (Alabama, US) has restarted operations, and the remainder of Ferroglobe’s European and North American plants are running at full capacity. Facilities in Argentina and South Africa are at 50% and 65% utilization, respectively, as a result of unfavorable local conditions, but are planning to restart full operations in the near future. Ferroglobe’s plant in Venezuela has halted operations since May, as the company awaits further developments in the country. 

In the ongoing trade cases that Ferroglobe filed in the U.S., the Department of Commerce (“DOC”) issued preliminary determinations on August 7, 2017 imposing countervailing duties on silicon metal imports from Australia, Brazil and Kazakhstan. The duties imposed ranged from 3.69% to 120%. The DOC made preliminary determinations on October 5, 2017 in the antidumping cases against Australia, Brazil and Norway. The antidumping duties imposed ranged from 3.74% to 134.92%. Now more than 63% of silicon metal imports into the U.S. are subject to cash deposit requirements.  

On November 2, 2017, the Canadian International Trade Tribunal (“CITT”) determined that dumped silicon metal imports from Laos and Thailand, subsidized imports from Norway, and dumped and subsidized imports from Brazil, Kazakhstan and Malaysia had not caused injury and were not threatening to cause injury to the sole Canadian producer, Quebec Silicon Limited Partnership and QSIP Canada ULC (“Quebec Silicon”).

The CITT issued its reasons for decision on November 17, 2017. We believe the CITT made several critical errors regarding, among others, the impact and relevance of global price declines on Canadian market pricing and the basis on which silicon metal is negotiated and sold to customers in Canada. Ferroglobe intends to appeal the CITT’s decision to the Federal Court of Appeal.

We note this decision has no relevance for or impact on the ongoing antidumping and countervailing duty cases in the United States against silicon metal imports from Australia, Brazil, Kazakhstan and Norway because these are different proceedings in different jurisdictions, based on different facts and different legal standards. 

On November 21, Ferroglobe announced that it has entered into an agreement for the acquisition of a 100% interest in Glencore’s manganese alloys plants in Dunkirk (France) and Mo I Rana (Norway). The parties expect the transaction to close in the first quarter of 2018, subject to obtaining certain regulatory approvals in France, Germany and Poland and other customary conditions.

Conference Call

Ferroglobe will review the results for the third quarter of 2017 during a conference call at 9:00 a.m. Eastern Time on Tuesday, November 28, 2017.

The dial-in number for the call for participants in the United States is +1 877-293-5491 (conference ID 4495559). International callers should dial +1 914-495-8526 (conference ID 4495559).  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/zre43hs5

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 presently available to the Company and assumptions that we 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: +1 786 509 6925, UK: +44 (0) 7827 227 688
Chief Financial Officer
Email: jragan@ferroglobe.com