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