6-K
Ferroglobe PLC (GSM)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
Pursuant to Rule 13a-16 or 15d-16
under the Securities Exchange Act of 1934
For the Month of November 2022
Commission File Number: 001-37668
FERROGLOBE PLC
(Name of Registrant)
5 Fleet Place
London, EC4M7RD
(Address of Principal Executive Office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
| Form 20-F ☒ | Form 40-F ☐ |
|---|
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐
This Form 6-K consists of the following materials, which appear immediately following this page:
| ● | Press release dated November 15, 2022 announcing results for the quarter ended September 30, 2022 |
|---|---|
| ● | Third quarter 2022 earnings call presentation |
| --- | --- |
This Form 6-K is being furnished for the purpose of incorporating by reference the information in this Form 6-K into (a) Registration Statement No. 333-208911 on Form S-8, (b) Registration Statement No. 333-259445 on Form F-3, (c) Registration Statement No. 333-258254 on Form F-3 and (d) Registration Statement No. 333-255973 on Form F-3 and related prospectuses, as such registration statements and prospectuses may be amended from time to time.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Date: November 15, 2022 | |
|---|---|
| FERROGLOBE PLC | |
| by | /s/ Marco Levi |
| Name: Marco Levi | |
| Title: Chief Executive Officer (Principal Executive Officer) |
****
Ferroglobe Reports Solid Third Quarter 2022 Results Despite Weaker Market Conditions
LONDON, November 15, 2022 (GLOBE NEWSWIRE) – Ferroglobe PLC (NASDAQ: GSM) (“Ferroglobe”, the “Company”, or the “Parent”), a leading producer globally of silicon metal, silicon-based and manganese-based specialty alloys, today announced results for the third quarter 2022.
FINANCIAL HIGHLIGHTS
| ● | Q3 2022 revenue of $593.2 million, down 29.5% over the prior quarter |
|---|---|
| ● | Q3 2022 Adjusted EBITDA of $185.3 million, down 38.9% over the prior quarter |
| --- | --- |
| ● | Adjusted EBITDA margin decrease of 5 percentage points to 31% in Q3 2022, down from 36% over the prior quarter |
| --- | --- |
| ● | Net profit of $98.8 million (diluted earnings per share of $0.52), compared to net profit of $185.1 million (diluted earnings per share of $0.98) in Q2 2022 |
| --- | --- |
| ● | Net debt of $194 million at quarter end, similar at the end of Q2 |
| --- | --- |
| ● | Total cash of $236.8 million at quarter-end, down $69.7 million from the prior quarter |
| --- | --- |
BUSINESS HIGHLIGHTS
| ● | Solid third quarter results despite weaker market conditions |
|---|---|
| ● | Redeemed all $60 million of the 9% super senior secured notes due 2025 |
| --- | --- |
| ● | Board approval of our new medium to long term strategy |
| --- | --- |
| ● | Planned restart of the Polokwane facility, adding 55,000 tons of silicon metal capacity in South Africa, providing access to strategically located lower-cost asset |
| --- | --- |
| ● | Ramping up industrial production of 99.999% (3N) and 99.9999% (4N) micrometer size silicon metal at our Puertollano facility in Spain |
| --- | --- |
Dr. Marco Levi, Ferroglobe’s Chief Executive Officer, commented, “During the third quarter, we have seen a challenging environment driven by demand slowdown and continued volatility in energy prices in Europe. Steel production has been heavily curtailed in Europe, where we have also seen massive closures of aluminum plants.
“Despite a difficult environment during the third quarter, Ferroglobe continues to perform well, generating robust sales and healthy profitability. The various initiatives that we have implemented over the past two years have enabled us to perform well during challenging periods and declining prices. We continue to focus on improving our overall competitiveness in the market and optimizing our cost position. The restart of our Polokwane facility will provide us with a competitive source of silicon metal with a location that will provide the flexibility to move production away from plants impacted by burdened energy costs and expand business in new geographies. As we have mentioned in prior earnings calls, we continue reducing our leverage with the objective of further strengthening our balance sheet. During the third quarter we redeemed $60 million of our 9% super senior secured notes, reducing our annual interest expense by over $5 million. We will continue to focus on optimizing our costs to improve the efficiency of our organization,” concluded Dr. Levi.
Third Quarter 2022 Financial Highlights
| | | | | | | | | | | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | Quarter Ended | Quarter Ended | | Quarter Ended | | % | | % | | | Nine Months Ended | | Nine Months Ended | | % | |||||||||
| $,000 (unaudited) | | September 30, 2022 | | June 30, 2022 | | September 30, 2021 | | CQ/PQ | | CYQ/PYQ | | | September 30, 2022 | | September 30, 2021 | | CY/PY | |||||||
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Sales | | $ | 593,218 | | $ | 840,808 | | $ | 429,210 | | | (29%) | | | 38% | | | $ | 2,149,291 | | $ | 1,209,137 | | 78% |
| Raw materials and energy consumption for production | | $ | (285,210) | | $ | (369,749) | | $ | (295,273) | | | (23%) | | | (3%) | | | $ | (995,514) | | $ | (813,377) | | 22% |
| Operating profit (loss) | | $ | 154,424 | | $ | 265,298 | | $ | 11,260 | | | (42%) | | | 1,271% | | | $ | 630,853 | | $ | (24,502) | | 2,675% |
| Operating margin | | | 26.0% | | | 31.6% | | | 3% | | | | | | | | | | 29.4% | | | (2%) | | |
| Adjusted net income (loss) <br>attributable to the parent | | $ | 118,264 | | $ | 213,170 | | $ | (64,214) | | | (45%) | | | 284% | | | $ | 496,737 | | $ | (79,424) | | 725% |
| Adjusted diluted EPS | | $ | 0.64 | | $ | 1.14 | | $ | (0.36) | | | | | | | | | $ | 2.66 | | $ | (0.45) | | |
| Adjusted EBITDA | | $ | 185,293 | | $ | 303,159 | | $ | 37,592 | | | (39%) | | | 393% | | | $ | 729,568 | | $ | 93,747 | | 678% |
| Adjusted EBITDA margin | | | 31.2% | | | 36.1% | | | 8.8% | | | | | | | | | | 33.9% | | | 7.8% | | |
| Operating cash flow | | $ | 54,972 | | $ | 164,818 | | $ | (34,677) | | | (67%) | | | 259% | | | $ | 285,698 | | $ | (23,050) | | 1,339% |
| Free cash flow^1^ | | $ | 40,141 | | $ | 151,109 | | $ | (42,845) | | | (73%) | | | 194% | | | $ | 248,033 | | $ | (39,440) | | 729% |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Working Capital | | $ | 717,283 | | $ | 687,345 | | $ | 395,867 | | | 4% | | | 81% | | | $ | 717,283 | | $ | 395,867 | | 81% |
| Working Capital as % of Sales^2^ | | | 30.2% | | | 20.4% | | | 23.1% | | | | | | | | | | 25.0% | | | 24.6% | | |
| Cash and Restricted Cash | | $ | 236,789 | | $ | 306,511 | | $ | 95,043 | | | (23%) | | | 149% | | | $ | 236,789 | | $ | 95,043 | | 149% |
| Adjusted Gross Debt^3^ | | $ | 431,207 | | $ | 500,472 | | $ | 499,270 | | | (14%) | | | (14%) | | | $ | 431,207 | | $ | 499,270 | | (14%) |
| Equity | | $ | 700,340 | | $ | 637,710 | | $ | 281,910 | | | 10% | | | 148% | | | $ | 700,340 | | $ | 281,910 | | 148% |
| (1) | Free cash flow is calculated as operating cash flow plus investing cash flow | |||||||||||||||||||||||
| --- | --- | |||||||||||||||||||||||
| (2) | Working capital based on annualized quarterly sales respectively | |||||||||||||||||||||||
| --- | --- | |||||||||||||||||||||||
| (3) | Adjusted gross debt excludes bank borrowings on factoring program and impact of leasing standard IFRS16 at September 30, 2022 June 30, 2022 & September 30, 2021 | |||||||||||||||||||||||
| --- | --- |
Sales
In the third quarter of 2022, Ferroglobe reported net sales of $593.2 million, a decrease of 29% compared with the prior quarter and an increase of 38% compared with the third quarter of 2021. The decrease in our third quarter results is primarily attributable to lower volumes across our product portfolio, and lower pricing in our main products. The $248 million decrease in sales over the prior quarter was primarily driven by silicon metal, which accounted for $92 million of the decrease, silicon based alloys, which accounted for $57 million and manganese-based alloys, which accounted for $95 million.
Raw materials and energy consumption for production
Raw materials and energy consumption for production was $285.2 million in the third quarter of 2022 versus $369.8 million in the prior quarter, a decrease of 23%. As a percentage of sales, raw materials and energy consumption for production was 48% in the third quarter of 2022 versus 44% in the prior quarter. This variance is mainly due to the larger energy benefit in France recognized in the second quarter, the increase in the price of energy and inflationary pressure on raw material prices, particularly coal.
Net Income (Loss) Attributable to the Parent
In the third quarter of 2022, net profit attributable to the Parent was $97.6 million, or $0.52 per dilutedshare, compared to a net profit attributable to the Parent of $185.3 million, or $0.98 per diluted share in the second quarter.
Adjusted EBITDA
In the third quarter of 2022, Adjusted EBITDA was $185.3 million, or 31% of sales, a decrease of 5 percentage points compared to adjusted EBITDA of $303.2 million, or 36% of sales in the second quarter of 2022. The decrease in the the third quarter of 2022 Adjusted EBITDA as a percentage of sales is primarily attributable to the decrease in sale volumes and price.
Total Cash
The total cash balance was $236.8 million as of September 30, 2022, down $69.7 million from $306.5 million as of June 30, 2022.
During the third quarter of 2022, we generated positive operating cash flow of $54.9 million, had negative cash flow from investing activities of $14.8 million, and $108.9 million in negative cash flow from financing activities, primarily driven by the $60 million of 9% super senior notes redeemed in July 2022.
Total Working Capital
Total working capital was $717.3 million at September 30, 2022, increasing from $687.3 million at June 30, 2022. The $30.0 million increase in working capital during the quarter was due primarily to a $108.6 million increase in inventories, partially offset by a $84.9 million decrease in accounts receivables. On a relative basis, our working capital as a percentage of sales increased during the third quarter to 30.2%, compared to 20.4% during the prior quarter.
Beatriz García-Cos, Ferroglobe’s Chief Financial Officer, commented, “During the third quarter we continued to follow through on our stated commitment to deleverage the balance sheet with the redemption of our 9% super senior notes that was completed in July. This reduced our adjusted gross debt by $60 million. This was in addition to the $19 million of the senior notes that we purchased in the open market during the second quarter.
“While our end-markets were challenging in the third quarter, we were able to successfully manage our cost to report healthy EBITDA, which remained relatively strong, as well as EBITDA margins, which were the third highest in the Company’s history. The third quarter results highlight that the cost cutting initiatives that we have implemented over the past couple of years enable us to perform well in both challenging markets as well as healthy ones.
“Ferroglobe’s financial condition is strong with $237 million in total cash, with provides us with much flexibility to manage our business” concluded Mrs. García-Cos.
Product Category Highlights
Silicon Metal
| | | | | | | | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | Quarter Ended | Quarter Ended | | | Quarter Ended | | | | Nine Months Ended | | Nine Months Ended | | |||||||||
| | | September 30, 2022 | | June 30,<br><br>2022 | | Change | | September 30, 2021 | | Change | | September 30, 2022 | | September 30, 2021 | | Change | |||||
| Shipments in metric tons: | | | 50,545 | | | 62,988 | | (19.8)% | | | 61,713 | | (18.1)% | | | 169,883 | | | 190,311 | | (10.7)% |
| Average selling price ($/MT): | | | 5,220 | | | 5,649 | | (7.6)% | | | 2,467 | | 111.6% | | | 5,489 | | | 2,366 | | 132.0% |
| | | | | | | | | | | | | | | | | | | | | | |
| Silicon Metal Revenue ($,000) | | | 263,845 | | | 355,819 | | (25.8)% | | | 152,246 | | 73.3% | | | 932,488 | | | 450,276 | | 107.1% |
| Silicon Metal Adj.EBITDA ($,000) | | | 113,151 | | | 175,108 | | (35.4)% | | | 11,428 | | 890.1% | | | 439,920 | | | 39,845 | | 1004.1% |
| Silicon Metal Adj.EBITDA Mgns | | | 42.9% | | | 49.2% | | | | | 7.5% | | | | | 47.2% | | | 8.8% | | |
Silicon metal revenue in the third quarter was $263.8 million, a decrease of 25.8% over the prior quarter. The average realized selling price decreased by 7.6%, while total shipments decreased by 19.8%, primarily due to a decline in market demand. Adjusted EBITDA for silicon metal decreased to $113.2 million during the third quarter, a decrease of 35.4% compared with $175.1 million for the prior quarter.
Silicon-Based Alloys
| | | | | | | | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | Quarter Ended | Quarter Ended | | | Quarter Ended | | | | Nine Months<br><br>Ended | | Nine Months Ended | | |||||||||
| | | September 30, 2022 | | June 30,<br><br>2022 | | Change | | September 30, 2021 | | Change | | September 30, 2022 | | September 30, 2021 | | Change | |||||
| Shipments in metric tons: | | | 48,977 | | | 57,658 | | (15.1)% | | | 55,863 | | (12.3)% | | | 164,230 | | | 182,688 | | (10.1)% |
| Average selling price ($/MT): | | | 3,655 | | | 4,097 | | (10.8)% | | | 1,992 | | 83.5% | | | 3,819 | | | 1,824 | | 109.4% |
| | | | | | | | | | | | | | | | | | | | | | |
| Silicon-based Alloys Revenue ($,000) | | | 179,011 | | | 236,225 | | (24.2)% | | | 111,279 | | 60.9% | | | 627,194 | | | 333,223 | | 88.2% |
| Silicon-based Alloys Adj.EBITDA ($,000) | | | 59,668 | | | 97,141 | | (38.6)% | | | 8,375 | | 612.5% | | | 235,220 | | | 29,849 | | 688.0% |
| Silicon-based Alloys Adj.EBITDA Mgns | | | 33.3% | | | 41.1% | | | | | 7.5% | | | | | 37.5% | | | 9.0% | | |
Silicon-based alloy revenue in the third quarter was $179.0 million, a decrease of 24.2% over the prior quarter. The average realized selling price decreased by 10.8%, due to a decline in demand for ferrosilicons linked to general industry declines in the steel sector. Total shipments of silicon-based alloys decreased 15.1%, driven by lower demand in our foundry business during the quarter due to the broader commodities slowdown. Adjusted EBITDA for the silicon-based alloys portfolio decreased to $59.7 million in the third quarter of 2022, a decrease of 38.6% compared with $97.1 million for the prior quarter.
Manganese-Based Alloys
| | | | | | | | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | Quarter Ended | | Quarter Ended | | | | Quarter Ended | | | | Nine Months Ended | | Nine Months Ended | | |||||||
| | | September 30, 2022 | | June 30,<br><br>2022 | | Change | | September 30, 2021 | | Change | | September 30, 2022 | | September 30, 2021 | | Change | |||||
| Shipments in metric tons: | | | 61,583 | | | 97,007 | | (36.5)% | | | 76,454 | | (19.5)% | | | 233,672 | | | 217,386 | | 7.5% |
| Average selling price ($/MT): | | | 1,584 | | | 1,986 | | (20.2)% | | | 1,574 | | 0.6% | | | 1,860 | | | 1,390 | | 33.8% |
| | | | | | | | | | | | | | | | | | | | | | |
| Manganese-based Alloys Revenue ($,000) | | | 97,547 | | | 192,656 | | (49.4)% | | | 120,339 | | (18.9)% | | | 434,630 | | | 302,167 | | 43.8% |
| Manganese-based Alloys Adj.EBITDA ($,000) | | | 14,681 | | | 32,871 | | (55.3)% | | | 22,494 | | (34.7)% | | | 67,923 | | | 48,330 | | 40.5% |
| Manganese-based Alloys Adj.EBITDA Mgns | | | 15.1% | | | 17.1% | | | | | 18.7% | | | | | 15.6% | | | 16.0% | | |
Manganese-based alloy revenue in the third quarter was $97.5 million, a decrease of 49.4% over the prior quarter. The average realized selling price decreased by 20.2% and total shipments decreased 36.5%. Shipments declined, as a result of lower demand following an extraordinarily high second quarter, production self-constraint in Spain due to high energy prices, and higher pressure from Asian suppliers. Adjusted EBITDA for the manganese-based alloys portfolio decreased to $14.7 million in the third quarter of 2022, a decrease of 55.3% compared with $32.9 million for the prior quarter.
Russia – Ukraine War
The ongoing war between Russia and Ukraine has disrupted supply chains and caused instability in the global economy, while the United States, United Kingdom and European Union, among other countries, announced sanctions against Russia. The ongoing conflict could result in the imposition of further economic sanctions against Russia. Sanctions imposed on coal and assimilated products such as anthracite and metallurgical coke have obliged Ferroglobe to redirect its sourcing of such products to other origins at a moment of strong market demand, leading to a temporary increase in raw materials prices. The uncertain supply and logistical conditions in Russia have also led Ferroglobe to diversify its sourcing of carbon electrodes. New sourcing was put in place during the course of the quarter allowing Ferroglobe to ensure supply continuity to its operations worldwide while maintaining compliance with applicable sanctions.
Subsequent event
Restart of Polokwane facility
In October 2022, the company announced the intention to restart its 55,000-ton silicon metal facility in Polokwane, South Africa. The decision to restart the Polokwane facility was made as part of Ferroglobe’s strategic plan to increase its capacity of silicon metal to address strong market demand. The Polokwane plant will enable the Company to add capacity that is lower cost and strategically located, optimizing its asset footprint, and providing flexibility in addressing the volatile energy markets in Europe.
The Polokwane facility provides a lower-cost source of silicon metal that is driven by competitive energy rates, an efficient asset base and a strategic location that can serve customers in Europe, the United States, the Middle East and Asia. Ferroglobe expects to begin production of the three-furnace operation by the end of November 2022, with initial production of approximately 1,150 metric tons per month, gradually ramping up to approximately 3,750 metric tons per month by the end of the second quarter of 2023.
Conference Call
Ferroglobe invites all interested persons to participate on its conference call at 8:30 AM, U.S. Eastern Standard Time on November 16, 2022. Please dial-in at least five minutes prior to the call to register. The call may also be accessed via an audio webcast.
To join via phone: Conference call participants should pre-register using this link: https://register.vevent.com/register/BI5ce939a3c6fa4ea1b91f9b12ba70c281 Once registered, you will receive the dial-in numbers and a personal PIN, which are required to access the conference call.
To join via webcast: A simultaneous audio webcast, and replay will be accessible here: https://edge.media-server.com/mmc/p/bq7jdch6
About Ferroglobe
Ferroglobe is one of the world’s leading suppliers of silicon metal, silicon- and manganese-based specialty alloys, and other 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”, “target”, “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 referenced 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
This document may contain summarized, non-audited or non-GAAP financial information. The information contained herein should therefore be considered as a whole and in conjunction with all the public information regarding the Company available, including any other documents released by the Company that may contain more detailed information. Adjusted EBITDA, adjusted EBITDA as a percentage of sales, working capital as a percentage of sales, adjusted EBITDA margin, adjusted net profit, adjusted profit per share, working capital, adjusted gross debt and net debt, are non-IFRS financial metrics that management uses in its decision making. Ferroglobe has included these financial metrics to provide supplemental measures of its performance. The Company believes these metrics are important and useful to investors 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:
Anis Barodawalla Vice President – Investor Relations Email: investor.relations@ferroglobe.com
MEDIA CONTACT:
Cristina Feliu Roig
Executive Director – Communications & Public Affairs
Email: corporate.comms@ferroglobe.com
Ferroglobe PLC and Subsidiaries
Unaudited Condensed Consolidated Income Statement
(in thousands of U.S. dollars, except per share amounts)
| | | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | Quarter Ended | | Quarter Ended | Quarter Ended | Nine Months Ended | | Nine Months Ended | | |||||||
| | September 30, 2022 | June 30, 2022 | | September 30, 2021 | | September 30, 2022 | | September 30, 2021 | | |||||||
| Sales | $ | 593,218 | $ | 840,808 | | $ | 429,210 | | $ | 2,149,291 | | $ | 1,209,137 | | ||
| Raw materials and energy consumption for production | | (285,210) | | (369,749) | | | (295,273) | | | (995,514) | | | (813,377) | | ||
| Other operating income | | 19,711 | | 26,223 | | | 31,447 | | | 68,942 | | | 70,466 | | ||
| Staff costs | | (75,689) | | (80,704) | | | (50,386) | | | (238,379) | | | (208,849) | | ||
| Other operating expense | | (77,954) | | (130,992) | | | (79,785) | | | (292,122) | | | (209,793) | | ||
| Depreciation and amortization charges, operating allowances and write-downs | | (19,719) | | (20,185) | | | (23,971) | | | (61,012) | | | (72,779) | | ||
| Impairment losess | | | — | | | — | | | (363) | | | — | | | (363) | |
| Other gain (loss) | | | 67 | | | (103) | | | 381 | | | (353) | | | 1,056 | |
| Operating profit (loss) | | | 154,424 | | | 265,298 | | | 11,260 | | | 630,853 | | | (24,502) | |
| Net finance expense | | (16,630) | | (12,829) | | | (103,379) | | | (41,914) | | | (130,420) | | ||
| Exchange differences | | (1,770) | | (7,882) | | | (6,180) | | | (14,045) | | | (12,257) | | ||
| Profit (loss) before tax | **** | | 136,024 | **** | | 244,587 | | | (98,299) | | | 574,894 | | | (167,179) | |
| Income tax benefit (loss) | | (37,184) | | (59,529) | | | 680 | | | (140,207) | | | 1,774 | | ||
| Profit (loss) for the period | | | 98,840 | | | 185,058 | | | (97,619) | | | 434,687 | | | (165,405) | |
| Profit (loss) attributable to non-controlling interest | | (1,212) | | 265 | | | 1,023 | | | (570) | | | 3,338 | | ||
| Profit (loss) attributable to the parent | $ | 97,628 | $ | 185,323 | | $ | (96,596) | | $ | 434,117 | | $ | (162,067) | | ||
| | | | | | | | | | | | | | | | ||
| | | | | | | | | | | | | | | | | |
| EBITDA | | $ | 174,143 | | $ | 285,483 | | $ | 35,231 | | $ | 691,865 | | $ | 48,277 | |
| Adjusted EBITDA | | $ | 185,293 | | $ | 303,159 | | $ | 37,592 | | $ | 729,568 | | $ | 93,747 | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Weighted average shares outstanding | | | | | | | | | | | | | | | | |
| Basic | | | 187,424 | | | 187,441 | | | 179,849 | | | 187,454 | | | 172,852 | |
| Diluted | | | 188,850 | | | 188,538 | | | 179,849 | | | 188,804 | | | 172,852 | |
| | | | | | | | | | | | | | | | | |
| Profit (loss) per ordinary share | | | | | | | | | | | | | | | | |
| Basic | | $ | 0.52 | | $ | 0.99 | | $ | (0.54) | | $ | 2.32 | | $ | (0.94) | |
| Diluted | | $ | 0.52 | | $ | 0.98 | | $ | (0.54) | | $ | 2.30 | | $ | (0.94) | |
Ferroglobe PLC and Subsidiaries
Unaudited Condensed Consolidated Statement of Financial Position
(in thousands of U.S. dollars)
| | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|
| | | September 30, | | June 30, | | December 31, | ||||
| | 2022 | 2022 | 2021 | |||||||
| ASSETS | ||||||||||
| Non-current assets | | | | | | | | | | |
| Goodwill | | $ | | 29,702 | | $ | 29,702 | | $ | 29,702 |
| Other intangible assets | | | | 97,467 | | | 94,866 | | | 100,642 |
| Property, plant and equipment | | | | 511,256 | | | 528,198 | | | 554,914 |
| Other non-current financial assets | | | | 3,904 | | | 3,920 | | | 4,091 |
| Deferred tax assets | | | | 158 | | | 124 | | | 7,010 |
| Non-current receivables from related parties | | | | 1,462 | | | 1,558 | | | 1,699 |
| Other non-current assets | | | | 17,072 | | | 17,818 | | | 18,734 |
| Non-current restricted cash and cash equivalents | | | | 1,950 | | | 2,077 | | | 2,272 |
| Total non-current assets | | | | 662,971 | | | 678,263 | | | 719,064 |
| Current assets | | | | | | | | | | |
| Inventories | | | | 511,557 | | | 403,004 | | | 289,797 |
| Trade and other receivables | | | | 413,722 | | | 498,619 | | | 381,073 |
| Current receivables from related parties | | | | 2,445 | | | 2,605 | | | 2,841 |
| Current income tax assets | | | | 1,155 | | | 2,314 | | | 7,660 |
| Other current financial assets | | | | 2 | | | 203 | | | 104 |
| Other current assets | | | | 35,581 | | | 15,518 | | | 8,408 |
| Current restricted cash and cash equivalents | | | | — | | | — | | | — |
| Cash and cash equivalents | | | | 234,839 | | | 304,434 | | | 114,391 |
| Total current assets | | | | 1,199,301 | | | 1,226,697 | | | 804,274 |
| Total assets | | $ | | 1,862,272 | | $ | 1,904,960 | | $ | 1,523,338 |
| | | | | | | | | | | |
| EQUITY AND LIABILITIES | ||||||||||
| Equity | | $ | | 700,340 | | $ | 637,710 | | $ | 320,031 |
| Non-current liabilities | | | | | | | | | | |
| Deferred income | | | | 23,130 | | | 48,961 | | | 895 |
| Provisions | | | | 53,487 | | | 55,771 | | | 60,958 |
| Bank borrowings | | | | 2,534 | | | 2,922 | | | 3,670 |
| Lease liabilities | | | | 9,181 | | | 9,514 | | | 9,968 |
| Debt instruments | | | | 330,990 | | | 385,911 | | | 404,938 |
| Other financial liabilities ^(1)^ | | | | 34,695 | | | 37,020 | | | 4,549 |
| Other Obligations ^(2)^ | | | | 43,009 | | | 43,232 | | | 38,082 |
| Other non-current liabilities ^(2)^ | | | | — | | | — | | | 1,476 |
| Deferred tax liabilities | | | | 34,461 | | | 41,228 | | | 25,145 |
| Total non-current liabilities | | | | 531,487 | | | 624,559 | | | 549,681 |
| Current liabilities | | | | | | | | | | |
| Provisions | | | | 121,826 | | | 95,300 | | | 137,625 |
| Bank borrowings | | | | 68,446 | | | 96,412 | | | 95,297 |
| Lease liabilities | | | | 7,800 | | | 7,342 | | | 8,390 |
| Debt instruments | | | | 5,146 | | | 15,075 | | | 35,359 |
| Other financial liabilities ^(1)^ | | | | 56,078 | | | 57,653 | | | 62,464 |
| Payables to related parties | | | | 848 | | | 9,605 | | | 9,545 |
| Trade and other payables | | | | 207,996 | | | 214,278 | | | 206,000 |
| Current income tax liabilities | | | | 70,564 | | | 43,193 | | | 1,775 |
| Other Obligations ^(2)^ | | | | 7,171 | | | 16,469 | | | 22,843 |
| Other current liabilities ^(2)^ | | | | 84,570 | | | 87,364 | | | 74,328 |
| Total current liabilities | | | | 630,445 | | | 642,691 | | | 653,626 |
| Total equity and liabilities | | $ | | 1,862,272 | | $ | 1,904,960 | | $ | 1,523,338 |
| (1) | On January 25, 2022, the Ministry opened a hearing to decide on reimbursement of the loan. The company presented its allegations on February 15, 2022. Based on those allegations, the reimbursement procedure has been suspended and a new final report is expected to be made by the Ministry by the end of 2022 ending the administrative procedure and establishing the definitive amount of the partial reimbursement to be made. However, for accounting purposes the entire loan was considered short-term |
|---|---|
| (2) | In 2021 we disaggregated “Other liabilities” into an additional line to the balance sheet “Other obligations“ to separately present certain contractual obligations whose nature and function differs from other items presented in the “Other liabilities line”, so as to allow a better understanding of the Company´s financial position. |
| --- | --- |
Ferroglobe PLC and Subsidiaries
Unaudited Condensed Consolidated Statement of Cash Flows
| | | | | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | Quarter Ended | Quarter Ended | Quarter Ended | | Nine Months Ended | | | Nine Months Ended | | | |||||||
| | September 30, 2022 | | June 30,<br><br>2022 | | September 30, 2021 | | September 30, 2022 | | | September 30, 2021 | | | ||||||
| Cash flows from operating activities: | | | | | | | | | | | | | | | | | | |
| Profit (loss) for the period | | $ | 98,840 | | $ | 185,058 | | $ | (97,619) | | $ | 434,687 | | | $ | (165,405) | | |
| Adjustments to reconcile net (loss) profit to net cash used by operating activities: | | | | | | | | | | | | | | | | | | |
| Income tax (benefit) expense | | | 37,184 | | | 59,529 | | | (680) | | | 140,207 | | | | (1,774) | | |
| Depreciation and amortization charges, <br>operating allowances and write-downs | | | 19,719 | | | 20,185 | | | 23,971 | | | 61,012 | | | | 72,779 | | |
| Net finance expense | | | 16,630 | | | 12,829 | | | 103,379 | | | 41,914 | | | | 130,420 | | |
| Exchange differences | | | 1,770 | | | 7,882 | | | 6,180 | | | 14,045 | | | | 12,257 | | |
| Impairment losses | | | — | | | — | | | 363 | | | — | | | | 363 | | |
| Net loss (gain) due to changes in the value of asset | | | (124) | | | (10) | | | (424) | | | (140) | | | | (688) | | |
| Gain on disposal of non-current assets | | | 142 | | | — | | | — | | | 444 | | | | (351) | | |
| Share-based compensation | | | 1,118 | | | 970 | | | 1,269 | | | 3,895 | | | | 2,163 | | |
| Other adjustments | | | (85) | | | 112 | | | 43 | | | 48 | | | | (17) | | |
| Changes in operating assets and liabilities | | | | | | | | | | | | | | | | — | | |
| (Increase) decrease in inventories | | | (129,210) | | | (59,568) | | | (51,835) | | | (262,389) | | | | (49,159) | | |
| (Increase) decrease in trade receivables | | | 60,654 | | | (25,963) | | | (27,683) | | | (87,076) | | | | (78,000) | | |
| Increase (decrease) in trade payables | | | 1,656 | | | (10,959) | | | 9,138 | | | 30,770 | | | | 51,474 | | |
| Other | | | (40,841) | | | 5,654 | | | (1,138) | | | (47,650) | | | | 3,764 | | |
| Income taxes paid | | | (12,481) | | | (30,901) | | | 359 | | | (44,069) | | | | (876) | | |
| Net cash provided (used) by operating activities | | | 54,972 | | | 164,818 | | | (34,677) | | | 285,698 | | | | (23,050) | | |
| Cash flows from investing activities: | | | | | | | | | | | | | | | | | | |
| Interest and finance income received | | | 1,055 | | | 140 | | | 21 | | | 1,263 | | | | 184 | | |
| Payments due to investments: | | | | | | | | | | | | | | | | | | |
| Other intangible assets ^(1)^ | | | (229) | | | — | | | — | | | (229) | | | | — | | |
| Property, plant and equipment | | | (15,657) | | | (13,855) | | | (8,189) | | | (38,705) | | | | (17,117) | | |
| Other | | | — | | | 6 | | | — | | | 6 | | | | — | | |
| Disposals: | | | | | | | | | | | | | | | | — | | |
| Other non-current assets | | | — | | | — | | | — | | | — | | | | 543 | | |
| Net cash (used) provided by investing activities | | | (14,831) | | | (13,709) | | | (8,168) | | | (37,665) | | | | (16,390) | | |
| Cash flows from financing activities: | | | | | | | | | | | | | | | | | | |
| Payment for debt and equity issuance costs | | | (693) | | | (100) | | | (26,064) | | | (793) | | | | (43,755) | | |
| Proceeds from equity issuance | | | — | | | — | | | 40,000 | | | — | | | | 40,000 | | |
| Proceeds from debt issuance | | | — | | | — | | | 20,000 | | | (4,943) | | | | 60,000 | | |
| Increase/(decrease) in bank borrowings: | | | | | | | | | | | | | | | | — | | |
| Borrowings | | | 193,502 | | | 301,360 | | | 159,861 | | | 739,026 | | | | 437,496 | | |
| Payments | | | (218,593) | | | (292,253) | | | (158,118) | | | (748,473) | | | | (460,565) | | |
| Amounts paid due to leases | | | (2,412) | | | (2,277) | | | (2,602) | | | (7,207) | | | | (8,615) | | |
| Other amounts received/(paid) due to financing activities | | | (60,655) | | | (19,119) | | | — | | | (41,476) | | | | — | | |
| Interest paid | | | (20,078) | | | (2,376) | | | (1,125) | | | (57,253) | | | | (21,473) | | |
| Net cash (used) provided by financing activities | | | (108,929) | | | (14,765) | | | 31,952 | | | (121,119) | | | | 3,088 | | |
| Total net cash flows for the period | | | (68,788) | | | 136,344 | | | (10,893) | | | 126,914 | | | | (36,352) | | |
| Beginning balance of cash and cash equivalents | | | 306,511 | | | 176,022 | | | 106,089 | | | 116,663 | | | | 131,557 | | |
| Exchange differences on cash and <br>cash equivalents in foreign currencies | | | (934) | | | (5,855) | | | (153) | | | (6,788) | | | | (162) | | |
| Ending balance of cash and cash equivalents | | $ | 236,789 | | $ | 306,511 | | $ | 95,043 | | $ | 236,789 | | | $ | 95,043 | | |
| Cash from continuing operations | | | 234,839 | | | 304,434 | | | 89,047 | | | 234,839 | | | | 89,047 | | |
| Current/Non-current restricted cash and cash equivalents | | | 1,950 | | | 2,077 | | | 5,996 | | | 1,950 | | | | 5,996 | | |
| Cash and restricted cash in the statement of financial position | | $ | 236,789 | | $ | 306,511 | | $ | 95,043 | | $ | 236,789 | | | $ | 95,043 | | |
Adjusted EBITDA ($,000):
| | | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | Quarter Ended | Quarter Ended | Quarter Ended | | Nine Months Ended | | Nine Months Ended | | |||||||
| | September 30, 2022 | | June 30,<br><br>2022 | | September 30, 2021 | | September 30, 2022 | | September 30, 2021 | | ||||||
| Profit (loss) attributable to the parent | | $ | 97,628 | | $ | 185,323 | | $ | (96,596) | | $ | 434,117 | | $ | (162,067) | |
| Profit (loss) attributable to non-controlling interest | | | 1,212 | | | (265) | | | (1,023) | | | 570 | | | (3,338) | |
| Income tax (benefit) expense | | | 37,184 | | | 59,529 | | | (680) | | | 140,207 | | | (1,774) | |
| Net finance expense | | | 16,630 | | | 12,829 | | | 103,379 | | | 41,914 | | | 130,420 | |
| Exchange differences | | | 1,770 | | | 7,882 | | | 6,180 | | | 14,045 | | | 12,257 | |
| Depreciation and amortization charges, operating allowances and write-downs | | | 19,719 | | | 20,185 | | | 23,971 | | | 61,012 | | | 72,779 | |
| EBITDA | | | 174,143 | | | 285,483 | | | 35,231 | | | 691,865 | | | 48,277 | |
| Impairment | | | — | | | — | | | 363 | | | — | | | 363 | |
| Restructuring and termination costs | | | — | | | 3,406 | | | 1,313 | | | 9,315 | | | 44,422 | |
| New strategy implementation | | | 7,354 | | | 14,270 | | | — | | | 24,592 | | | — | |
| Pension Plan buyout | | | — | | | — | | | 685 | | | — | | | 685 | |
| Subactivity | | | 3,796 | | | — | | | — | | | 3,796 | | | — | |
| Adjusted EBITDA | | $ | 185,293 | | $ | 303,159 | | $ | 37,592 | | $ | 729,568 | | $ | 93,747 | |
Adjusted profit attributable to Ferroglobe ($,000):
| | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | Quarter Ended | Quarter Ended | Quarter Ended | | Nine Months Ended | | Nine Months Ended | |||||||
| | September 30, 2022 | | June 30,<br><br>2022 | | September 30, 2021 | | September 30, 2022 | | September 30, 2021 | ||||||
| Profit (loss) attributable to the parent | | $ | 97,628 | | $ | 185,323 | | $ | (96,596) | | $ | 434,117 | | $ | (162,067) |
| Tax rate adjustment | | | 11,584 | | | 13,498 | | | 30,776 | | | 32,012 | | | 51,723 |
| Impairment | | | — | | | — | | | 247 | | | — | | | 247 |
| Restructuring and termination costs | | | — | | | 2,765 | | | 893 | | | 7,562 | | | 30,207 |
| New strategy implementation | | | 5,970 | | | 11,584 | | | — | | | 19,964 | | | — |
| Pension Plan buyout | | | — | | | — | | | 466 | | | — | | | 466 |
| Subactivity | | | 3,082 | | | — | | | — | | | 3,082 | | | — |
| Adjusted profit (loss) attributable to the parent | | $ | 118,264 | | $ | 213,170 | | $ | (64,214) | | $ | 496,737 | | $ | (79,424) |
Adjusted diluted profit per share:
| | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | Quarter Ended | Quarter Ended | Quarter Ended | | Nine Months Ended | | Nine Months Ended | |||||||
| | September 30, 2022 | | June 30,<br><br>2022 | | September 30, 2021 | | September 30, 2022 | | September 30, 2021 | ||||||
| Diluted profit (loss) per ordinary share | | $ | 0.52 | | $ | 0.98 | | $ | (0.54) | | $ | 2.30 | | $ | (0.94) |
| Tax rate adjustment | | | 0.06 | | | 0.08 | | | 0.18 | | | 0.18 | | | 0.31 |
| Restructuring and termination costs | | | 0.01 | | | 0.02 | | | 0.00 | | | 0.04 | | | 0.18 |
| New strategy implementation | | | 0.03 | | | 0.06 | | | — | | | 0.12 | | | — |
| Subactivity | | | 0.02 | | | — | | | — | | | 0.02 | | | — |
| Adjusted diluted profit (loss) per ordinary share | | $ | 0.64 | | $ | 1.14 | | $ | (0.36) | | $ | 2.66 | | $ | (0.45) |
| Advancing Materials Innovation NASDAQ: GSM Third Quarter 2022 Results November 16th, 2022 |
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| Forward-Looking Statements and non-IFRS Financial Metrics 2 This presentation contains forward-looking statements within the meaning of Section 27A of the United States Securities Act of 1933, as amended, and Section 21E of the United States Securities Exchange Act of 1934, as amended. Forward-looking statements are not historical facts but are based on certain assumptions of management and describe our future plans, strategies and expectations. Forward-looking statements can generally be identified by the use of forward-looking terminology, including, but not limited to, "may," “could,” “seek,” “guidance,” “predict,” “potential,” “likely,” "believe," "will," "expect," "anticipate," "estimate," "plan," "intend," "forecast," “aim,” “target,” or variations of these terms and similar expressions, or the negative of these terms or similar expressions. Forward-looking statements contained in this presentation are based on information presently available to Ferroglobe PLC (“we,” “us,” “Ferroglobe,” the “Company” or the “Parent”) and assumptions that we believe to be reasonable, but are inherently uncertain. As a result, our 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 our control. You are cautioned that all such statements involve risks and uncertainties, including without limitation, risks that Ferroglobe will not successfully integrate the businesses of Globe Specialty Metals, Inc. and Grupo FerroAtlántica SAU, that we will not realize estimated cost savings, value of certain tax assets, synergies and growth, and/or that such benefits may take longer to realize than expected. Important factors that may cause actual results to differ include, but are not limited to: (i) risks relating to unanticipated costs of integration, including operating costs, customer loss and business disruption being greater than expected; (ii) our organizational and governance structure; (iii) the ability to hire and retain key personnel; (iv) regional, national or global political, economic, business, competitive, market and regulatory conditions including, among others, changes in metals prices; (v) increases in the cost of raw materials or energy; (vi) competition in the metals and foundry industries; (vii) environmental and regulatory risks; (viii) ability to identify liabilities associated with acquired properties prior to their acquisition; (ix) ability to manage price and operational risks including industrial accidents and natural disasters; (x) ability to manage foreign operations; (xi) changes in technology; (xii) ability to acquire or renew permits and approvals; (xiii) changes in legislation or governmental regulations affecting Ferroglobe; (xiv) conditions in the credit markets; (xv) risks associated with assumptions made in connection with critical accounting estimates and legal proceedings; (xvi) Ferroglobe's international operations, which are subject to the risks of currency fluctuations and foreign exchange controls; and (xvii) the potential of international unrest, economic downturn or effects of currencies, tax assessments, tax adjustments, anticipated tax rates, raw material costs or availability or other regulatory compliance costs. The foregoing list is not exhaustive. You should carefully consider the foregoing factors and the other risks and uncertainties that affect our business, including those described in the “Risk Factors” section of our Registration Statement on Form F-1, Annual Reports on Form 20-F, Current Reports on Form 6-K and other documents we file from time to time with the United States Securities and Exchange Commission. We do not give any assurance (1) that we will achieve our expectations or (2) concerning any result or the timing thereof, in each case, with respect to any regulatory action, administrative proceedings, government investigations, litigation, warning letters, consent decree, cost reductions, business strategies, earnings or revenue trends or future financial results. Forward- looking financial information and other metrics presented herein represent our key goals and are not intended as guidance or projections for the periods presented herein or any future periods. We do not undertake or assume any obligation to update publicly any of the forward-looking statements in this presentation to reflect actual results, new information or future events, changes in assumptions or changes in other factors affecting forward-looking statements. If we update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements. We caution you not to place undue reliance on any forward-looking statements, which are made only as of the date of this presentation. Adjusted EBITDA, adjusted EBITDA margin, adjusted net profit, adjusted profit per share, working capital, adjusted gross debt and net debt, are non-IFRS financial metrics that, we believe, are pertinent measures of Ferroglobe’s success. The Company has included these financial metrics to provide supplemental measures of its performance. We believe 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. For additional information, including a reconciliation of the differences between such non-IFRS financial measures and the comparable IFRS financial measures, refer to the press release dated November 15, 2022 accompanying this presentation, which is incorporated by reference herein. |
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| Q3 Business Review |
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| OPENING REMARKS 4 BUSINESS HIGHLIGHTS $593 million SALES 29% Q/Q decrease $185 million ADJ. EBITDA 39% Q/Q decrease 31% ADJ. EBITDA MARGIN 5% decrease Q/Q $99 million NET INCOME $0.52 EPS 47% decrease Q/Q $194 million NET DEBT (9/30/22) Flat Q/Q Q3 FINANCIAL HIGHLIGHTS $237 million CASH EQUIV (9/30/22) 23% decrease Q/Q Solid third quarter results despite weaker market conditions Weaker demand impacting all our products Margin compression due to lower price and higher energy & raw materials costs Restart of our Polokwane plant progressing as planned Initiated restart in November, providing 55,000 tons of low-cost strategically located silicon metal Strengthened balance sheet Bolstered liquidity: lower-rate asset-based loan facility & redeemed $60m of 9% super senior notes with further deleveraging underway Board approval of strategy for enhanced company performance & sustained growth Sales, Adj. EBITDA, net income & earnings down from record levels but still high in historical context |
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| PRODUCT CATEGORY SNAPSHOT Silicon Metal 5 Volume trends Sequential quarters Adj. EBITDA evolution ($m) Index pricing trends ($/mt) Avg. realized price down 7.6% Q/Q (excl. JV shipments, avg. realized price down 4.7% Q/Q). Market index was (18)% US, (22)% EU Volumes decreased 19.8% Q/Q due to challenging market conditions as a result of macroeconomic uncertainty & slower growth Cost was negatively impacted by higher raw materials costs, primarily coal ($6.4 million) and energy ($1.4 million) Energy cost still high in China with increasing risk of power curtailments during dry season 54,912 61,275 67,322 61,713 63,681 56,349 62,988 50,545 Q4-20 Q1-21 Q2-21 Q3-21 Q4-21 Q1-22 Q2-22 Q3-22 1,500 3,500 5,500 7,500 9,500 11,500 US CRU spot - import EU CRU spot (5.5.3) |
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| PRODUCT CATEGORY SNAPSHOT Silicon-Based Alloys 6 Volume trends Sequential quarters Adj. EBITDA evolution ($m) Index pricing trends ($/mt) Avg. realized selling price declined 10.8% Q/Q. Market prices for ferrosilicon down from peak levels but still high in historical context. Market Index was (18)% US and (28)% EU Volumes decreased 15.1% Q/Q. Ferrosilicon demand declining due to slowdown in steel sector Cost had a slight negative impact driven by higher coal price in Europe $(1.3) million Low steel demand visibility is pushing customers towards depleting inventories 57,351 61,604 65,222 55,863 60,078 57,594 57,658 48,977 Q4-20 Q1-21 Q2-21 Q3-21 Q4-21 Q1-22 Q2-22 Q3-22 500 1,500 2,500 3,500 4,500 5,500 FeSi US CRU spot - import FeSi EU CRU spot |
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| PRODUCT CATEGORY SNAPSHOT Manganese-Based Alloys 7 Volume trends Sequential quarters Adj. EBITDA evolution ($m) Index pricing trends ($/mt) Avg. realized selling price down 20.2% Q/Q. Price pressure due to large imports from India and Asia Volumes decreased 36.5% Q/Q. Q3 Demand normalized after an extraordinary high Q2 Average costs remain stable due to the slow down of the Spanish assets Positive one-off affecting the costs due to the mark-to-market adjustment related to the earn-out provision ($25 million) Low steel demand visibility is pushing customers towards depleting inventories 78,611 72,609 68,323 76,454 97,053 75,082 97,007 61,583 Q4-20 Q1-21 Q2-21 Q3-21 Q4-21 Q1-22 Q2-22 Q3-22 800 1,300 1,800 2,300 High-carbon ferromanganese EU CRU spot Silico-manganese EU CRU spot |
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| Q3 Financial Review |
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| INCOME STATEMENT SUMMARY Q3-22 vs. Q2-22 9 Strong third quarter results despite difficult energy markets, especially in Spain with temporary shutdowns Limited increase in raw materials as a percentage of sales despite inflationary impact on raw materials and energy costs Other operating expense decrease mainly driven by the mark-to-market adjustment related to the earn-out provision for the Mn-based alloys segment Fourth consecutive quarter of net profitability ($'000) Q3-22 Q2-22 vs Q Sales 593,218 840,808 (29%) Raw materials and energy consumption for production (285,210) (369,749) (23%) Raw materials / sales % 48% 44% Other operating income 19,711 26,223 (25%) Staff costs (75,689) (80,704) (6%) Other operating expense (77,954) (130,992) (40%) Depreciation and amortization (19,719) (20,185) (2%) Operating profit/(loss) before adjustments 154,357 265,401 (42%) Others 67 (103) 165% Operating profit/(loss) 154,424 265,298 (42%) Net finance expense (16,630) (12,829) 30% FX differences & other gains/losses (1,770) (7,882) (78%) Profit/(loss) before tax 136,024 244,587 (44%) Income tax (37,184) (59,529) (38%) Profit/(loss) 98,840 185,058 (47%) Profit/(loss) attributable to non-controlling interest (1,212) 265 (557%) Profit/(loss) attributable to the parent 97,628 185,323 (47%) EBITDA 174,143 285,483 (39%) Adjusted EBITDA 185,293 303,159 (39%) Adjusted EBITDA % 31% 36% |
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| ADJUSTED EBITDA BRIDGE Q3-22 vs Q2-22 ($m) 10 Average selling price across core products decreased (10.1)%: Silicon Metal (7.6)%, Silicon-based alloys (10.8)% and Mn-based alloys (20.2)% Volume across core products decreased (21.8)%: Silicon Metal (19.8)%, Si-based alloys (15.1)% and Mn-based alloys (36.5)% Cost negative impacted by high raw material prices mainly Coal $(7.8) million and Energy $(1.4) million offset by the earn-out accrual variance $25 million Non recurrent items was mainly impacted by profit sharing accruals in France |
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| CASH AND DEBT EVOLUTION 11 Adjusted gross and net debt ($m) Cash trends ($m) Adjusted gross debt decreased by $69 million primarily driven by the $60 million of 9% super senior notes redeemed in July 2022 and coupon payment Net debt has remained flat as during the quarter the cash generated was reinvested in the business $60 m of 9% super sr. notes redeemed in July 2022 498 513 518 500 431 403 397 342 194 194 Q3-21 Q4-21 Q1-22 Q2-22 Q3-22 Gross Debt Net Debt 95 116 176 307 237 Q3-21 Q4-21 Q1-22 Q2-22 Q3-22 |
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| BALANCE SHEET SUMMARY 12 Unaudited Financial Statements Adjusted gross debt excludes bank borrowings on factoring program at Sep. 30, 2022, Jun. 30, 2022 & Sep. 30, 2021 Cash and restricted cash includes the following as at the respective period ends: Sep. 30, 2021 - Unrestricted cash of $99.9 million, and current, non-current restricted cash and cash equivalents of $6.0 million Jun. 30, 2022 - Unrestricted cash of $304.4 million, and current, non-current restricted cash and cash equivalents of $2.1 million Sep. 30, 2022 - Unrestricted cash of $234.8 million, and current, non-current restricted cash and cash equivalents of $1.9 million Net Leverage and Working Capital as % of sales based on annualized quarterly Adjusted EBITDA and sales respectively ($’000) Q3-221 Q2-221 Q3-211 Cash and Restricted Cash3 236,789 306,511 95,047 Total Assets 1,862,272 1,904,960 1,420,315 Adjusted Gross Debt2 431,207 500,472 499,270 Net Debt 194,418 193,961 404,227 Book Equity 700,340 637,710 281,910 Total Working Capital 717,283 687,345 395,867 Working capital as a % of sales4 30.2% 20.4% 23.1% Net Debt / Adjusted EBITDA4 0.26x 0.16x 2.7x Net Debt / Total Assets 10.4% 10.2% 28.5% Net Debt / Capital 21.7% 23.3% 58.9% |
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| CASH FLOW SUMMARY 13 (1) Free cash flow is calculated as operating cash flow plus investing cash flow ($’000) Q3-22 Q2-22 Q1-22 Q4-21 Q3-21 EBITDA 174,143 285,483 232,239 80,434 35,231 Non-cash items (20,050) 1,072 2,124 (6,477) 1,250 Changes in Working Capital (86,640) (90,835) (167,768) (55,626) (71,518) Changes in Accounts Receivables 60,654 (25,963) (121,767) (83,434) (27,683) Changes in Accounts Payable 1,656 (10,959) 40,073 12,908 9,138 Changes in Inventory (129,210) (59,568) (73,611) (11,137) (51,835) CO2 and Others (19,740) 5,655 (12,463) 26,037 (1,138) Less Cash Tax Payments (12,481) (30,901) (687) (2,918) 359 Operating cash flow 54,972 164,819 65,908 21,707 (34,677) Cash-flow from Investing Activities (14,831) (13,709) (9,125) (7,458) (8,168) Cash-flow from Financing Activities (108,929) (14,764) 2,575 7,364 31,952 Bank Borrowings 193,502 301,360 244,164 221,587 159,861 Bank Payments (218,593) (292,253) (237,627) (210,902) (158,118) Amount paid due to leases (2,412) (2,277) (2,518) (2,617) (2,602) Other amounts paid due to financing activities (60,655) (19,119) 38,298 - - Payment of debt issuance costs (693) (100) - - (26,060) Proceeds from equity issuance - - - - 40,000 Proceeds from debt issuance - - (4,943) - 20,000 Interest Paid (20,078) (2,376) (34,799) (704) (1,125) Net cash flow (68,788) 136,346 59,358 21,613 (10,893) Total cash * (Beginning Bal.) 306,511 176,022 116,663 95,043 106,089 Exchange differences on cash and cash equivalents in foreign currencies (934) (5,857) 1 7 (153) Total cash * (Ending Bal.) 236,789 306,511 176,022 116,663 95,043 Free cash flow (1) 40,141 151,110 56,783 14,249 (42,845) Fourth consecutive quarter with positive operating cash flow: NWC investment $(87) million redemption of $60 million of 9% Super Senior Notes in July 2022 Senior Notes Payment of $20 million of interest including Super Senior Notes accrued interest Non cash items includes mainly the mark-to-market earn-out provision for the Mn-alloys segment and other provisions |
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| FINANCING UPDATE 14 9% Super Senior Notes In Q3, successfully redeemed 100% of the super senior notes at par value to the bond holders for a total amount of $60 million Moody’s credit upgrade Moody’s upgraded the 9.375% senior notes due 2025 to B3 in Q3 |
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| b Corporate Update |
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| GENERAL CORPORATE UPDATE 16 France Energy contract for 2023 Proactive cost & cash management Reduce exposure against volatile & higher spot energy cost in France Idle production in the first quarter of 2023, in order manage our rates to be similar to 2022 No market supply disruption anticipated, thanks to our global flexible asset footprint Board approval of strategy for enhanced company performance & sustained growth Strategy, focused on identifying the businesses to invest to grow and to optimize margins Short-term focus on further deleveraging the company balance sheet and fix asset footprint Long-term strategy: Run the silicon metal business for growth and expand into high-end segments such as silicon in batteries and solar; run for cash and optimize Manganese and Foundry business Achieving new industry milestones in our silicon metal powders for batteries and high-end products Ramping up industrial production of 99.999% (3N) and 99.9999% (4N) of micrometre size liquid silicon metal at our Puertollano facility in Spain Silicon metal is expected to be the key to green energy transition driven by growth in batteries, solar & others Advanced discussions with Si/C(silicon carbon) composite producers, joint development agreements 1 2 3 |
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| Q&A |
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| Appendix ─ Supplemental Information |
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| QUARTERLY SALES AND ADJUSTED EBITDA 19 Note: The amounts for prior periods have been restated to show the results of the Company’s Spanish hydroelectric plants within (Loss) profit for the period from discontinued operations and therefore these results are also excluded from adjusted EBITDA Adjusted EBITDA Quarterly Sales $ millions Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Silicon Metal 124 140 158 152 187 313 356 264 Silicon Alloys 88 104 119 111 166 212 236 179 Mn Alloys 81 85 97 121 167 144 193 97 Other Business 28 33 45 43 50 46 56 53 Total Revenue 321 361 419 429 570 715 841 593 06 22 34 38 86 241 303 185 Q4-20 Q1-21 Q2-21 Q3-21 Q4-21 Q1-22 Q2-22 Q3-22 |
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| ADJUSTED GROSS DEBT As of September 30, 2022 20 Notes: Operating leases are excluded for comparison purposes and to align to the balance sheet prior to IFRS16 adoption LBP and Bankinter Factoring excluded for comparison purposes Other bank loans relates to COVID-19 funding received in France with a supported guarantee from the French Government Other government loans include primarily COVID-19 funding received in Canada from the Government for $3.0 million SEPI loans are part of the SEPI fund intended to provide assistance to non-financial companies operating in strategically important sectors within Spain in the wake of the COVID-19 pandemic ($´000) Current Non-current Total balance sheet Less operating leases1 Less LBP Factoring2 Less Bankinter Factoring2 Adj. Gross debt Bank borrowings 68,446 2,534 70,980 - (59,474) (7,935) 3,571 Lease liabilities 7,800 9,181 16,981 (16,254) - - 727 Debt instruments 5,146 330,990 336,136 - - - 336,136 Other financial liabilities 56,078 34,695 90,773 - - - 90,773 Total 137,470 377,400 514,870 (16,254) (59,474) (7,935) 431,207 ($´000) Adj. Gross debt Nominal Bank borrowings: PGE (3) 3,571 3,488 3,571 3,488 Finance leases: Other finance leases 727 727 727 727 Debt instruments: Reinstated Senior Notes 350,037 345,010 Repurchase Bond (19,048) (19,048) Accrued coupon interest Repurchase Bond (297) (297) Accrued coupon interest 5,444 5,444 336,136 331,109 Other financial liabilities: Reindus loan 54,354 56,301 SEPI (5) 31,152 33,631 Canada an others loans (4) 5,267 5,630 90,773 95,562 Total 431,207 430,886 |
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| THANK YOU www.ferroglobe.com 21 |
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