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 May, 2018
Commission File Number: 001-37668
FERROGLOBE PLC
(Name of Registrant)
2nd Floor West Wing, Lansdowne House
57 Berkeley Square
London, W1J 6ER
(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): ☐
Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes ☐ | No ☒ |
If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): N/A
This Form 6-K consists of the following materials, which appear immediately following this page:
· | Press release dated May 21, 2018 announcing results for the quarter ended March 31, 2018 |
· | First quarter earnings call presentation |
Ferroglobe Reports Results for First Quarter of 2018
o | Sales of $560.7 million, an increase of 19.8% from $468.2 million in Q4 2017 |
o | 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 |
o | Reported EBITDA of $93.5 million, an increase of 321.2% compared to reported EBITDA of $22.2 million in Q4 2017 |
o | Adjusted EBITDA of $89.6 million, an increase of 66.9% compared to $53.7 million adjusted EBITDA in Q4 2017 |
o | 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 – 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 |
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: May 21, 2018 | ||
FERROGLOBE PLC | ||
by | /s/ Joseph Ragan | |
Name: Joseph Ragan | ||
Title: Chief Financial Officer and Principal Accounting Officer (Principal Financial Officer) |
Advancing Materials Innovation NASDAQ: GSM First Quarter 2018
Forward-Looking Statements and non-IFRS Financial Metrics 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," 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 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.EBITDA, adjusted EBITDA, adjusted diluted profit (loss) per ordinary share and adjusted profit (loss) attributable to Ferroglobe are, we believe, pertinent non-IFRS financial metrics that Ferroglobe utilizes to measure its 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 February 26, 2018 accompanying this presentation, which is incorporated by reference herein.
Table of Contents Q1 2018 OverviewSelected Financial HighlightsPositioned for Growth
Opening Remarks Q1 confirms the positive fundamentals of our business Higher volumes and stable pricing expected in Q2, with continued volatility in input costs Generation of free cash flow supports return of value to shareholders and strengthening of balance sheet
I. Q1 2018 Overview Pedro Larrea, Chief Executive Officer
Q1 2018 Confirms The Positive Fundamentals Of Our Business Strong ‘pull-through’ of volumes balanced with portfolio optimization (Volume change vs Q4 2017)Si Metal +9.4%Si alloys +8.4%Mn alloys -1.7% Disciplined execution of commercial strategy (ASP change vs Q4 2017)Si Metal +13.2%Si alloys +12.3%Mn alloys +2.2% Revenue +19.8% vs Q4 2017 Adjusted EBITDA $89.6 million+67.0% vs Q4 2017 Adjusted EBITDA margin improvementof 452 bps to 16.0% Q1 net profit$35.6 million – adjusted net profit $33.3 million* *Adjusted net profit attributable to the parent Global business platform Optionality in: Geography Foreign exchange Product mixDoubled the size of Manganese assetsActively evaluating additional growth opportunities
Diversified Portfolio Uniquely Positions Us To Benefit From Market Fluctuations Qtr / Qtr Revenue Growth by Product Other Strong sales performance in Silicon Metal and Silicon-based alloys more than offset weaker performance in Manganese-based alloys Revenue Contribution by Product and Market (LTM Ended March 31, 2018) Silicon-BasedAlloys28% Manganese-Based Alloys19% Other6% Aluminum Silicones Solar Foundry Specialty Steel Steel Other 1Q-2018 results do not include any contribution from the newly acquired manganese alloys facilities
Q1 2018 Revenue Up ~20% vs Previous Quarter Stronger volumes and higher prices in Silicon Metal and Silicon-Based Alloys Contributed to a significant increase in revenue 1 1Q-2018 results do not include any contribution from the newly acquired manganese alloys facilities 1
Q1 2018 Adjusted EBITDA Up 67% vs Previous Quarter Including:($2.4m) Mn ore costs($2.1m) Electrodes;($2.8m) Coal & Coke prices($0.5m) Energy prices;($1.2m) Ramping up of production at South Africa;($1.3m) Annual overhaul (US and EU) Stronger volumes and higher prices in the quarter offset by raw material cost increases and one-time costs associated with ramping up production
Silicon Metal Snapshot Volume Trends Sequential Quarter Product EBITDA Contribution ($m) Commentary Price recovery in N.A., Europe and Chinese markets in 2017 — limited price movement in N.A. following ITC decision — recent slide in Chinese prices reflects short-term seasonal impact of rainy season; expected to reverseVolumes strong across all end marketsDrivers of cost increase are electrodes and energy prices, and ramping up of production at South Africa Pricing Trends ($/mt) 1 1 FX impact excluded
All Trade Cases Involving Silicon Metal Have Been Concluded Status of SiMeTrade Cases Involving Ferroglobe Illustrative 2018 Shipment Volumes (t) Global~400 kt E.U. / RoW~225 kt North America~175 kt Canada:~40 kt U.S.:~135 kt J.V.:~35,000 t Fixed price:~40,000 t Subject to Spot:~60,000 t Silicon Metal47% Silicon-BasedAlloys28% Mn-Based Alloys19%c Other6% U.S.A. vs.Brazil, Kazakhstan, Norway, Australia U.S.A. vs. China Europe vs. Brazil and Bosnia Canada vs. Brazil, Kazakhstan, Laos, Malaysia, Norway, Thailand ITC negative injury determination (March 23, 2018)Decision not to appeal Withdrawn appeal ITC confirmed determination after sunset review (May 1, 2018)Antidumping duties confirmed at a 139.49% rate Ferroglobe withdrew the case (May 7, 2018) In 2018, U.S. Silicon Metal sales subject to spot prices represent~ 15% of total SiMe~5% of total Ferroglobe shipments REMINDER
Silicon-Based Alloys Snapshot Volume Trends Commentary Ferrosilicon prices remain near historical levels starting to see some pressure recentlyStrong demand worldwide tightened the supply-demand balance in all markets.Increased costs reflect annual overhaul costs, and higher energy costs in EuropeHigher value added and non-commodity foundry products now account for 30% of silicon-based alloys, with 10% y/y growth Sequential Quarter Product EBITDA Contribution ($m) Pricing Trends ($/mt) 1 1 FX impact excluded
Manganese-Based Alloys Snapshot Commentary Transaction for newly acquired plants closed Feb 2nd — incremental volumes not reflected in Q1Manganese-based alloy volumes lower due overhaul downtime Product margin affected by increasing manganese ore prices and higher energy costsSome recent improvement in manganese ore prices, impact to be realized in Q3 Volume Trends Pricing Trends ($/mt) Sequential Quarter Product EBITDA Contribution ($m) FX impact excluded 1 1
Recent Decrease In Mn Ore Prices Likely To Continue —Expansion In Spreads During The Coming Quarters Mn Ore Prices ($/dmtu) Mn ore prices have been increasing very significantly since Q1 2017, with alloys prices remaining relatively stableAs a consequence, spreads have been contracting in the past few quartersRecent decline in Mn ore prices could anticipate an improvement in spreads Source: Metal Bulletin
Selected Financial Highlights Joe Ragan, Chief Financial Officer
Q1 2018 Key Performance Indicators And Overview 1 Free cash flow defined as “Net cash provided by operating activities” minus “Payments for property, plant and equipment.”Source: Company information Notes Key Performance Indicators Q1 2018 Q4 2017 CY 2017 CY 2016 Revenue ($m) 560.7 468.2 1,741.7 1,576.0 Operating Profit ($m) 65.5 -1.6 39.7 -373.1 Profit Attributable to the Parent ($m) 36.7 6.4 -0.7 -338.4 Adjusted EBITDA ($m) 89.6 53.7 184.5 70.4 Adjusted EBITDA Margin 16.0% 11.5% 10.6% 4.5% Working Capital ($m) 337.3 279.8 279.8 368.4 Free Cash Flow1 ($m) -43.0 76.2 75.8 45.1
Balance Sheet Summary Financial results are unauditedNet Debt includes finance lease obligations Capital is calculated as book equity plus net debt Notes ($mm) 03/31/20181 12/31/2017 12/31/2016 Total Assets 2,301.1 2,000.3 2,019.3 Net Debt2 449.3 386.93 405.0 Book Equity 979.5 937.8 892.0 Net Debt2 / Adjusted EBITDA 1.85x 2.10x 5.76x Net Debt2 / Total Assets 19.5% 19.3% 20.1% Net Debt2 / Capital3 31.5% 29.2% 31.2%
Increase in Net Debt Primarily Attributable to Acquisition Related Costs Net Debt ($m)
Q1 2018 net debt bridge vs Previous Quarter Cash flow associated with acquisition of Mn alloys plants One-off non-recurrent effects
Increase in Working Capital Primarily Attributable Two Acquired Plants Reduced WC significantly while sales have increased by 41.6% over 2017 Working Capital ($m) $55.5 million from acquired Mn alloys facilities
Reinstatement of dividend — $0.06 per sharebalanced approach to capital allocationconfidence in maintaining this stable levelreturning value to shareholdersConservative capital structure — company positioned to pursue growth opportunitiesFocus on deleveraging the balance sheetAchieved leverage target of below 2x in 1Q-2018 — aiming to be around 1x by year-end 2018 Successful refinancing has simplified the debt structure and improved the solvency with regard to covenants Delivering Value for Shareholders and Positioning For The Long Term Q1 2018 Performance Remain Focused on Delivering Value Reported EBITDA of $93.5 million, +321 % vs reported EBITDA of $22.2 million in Q4 2017. Adjusted EBITDA of $89.6 million for the quarter.Net profit of $36.7 million, or $0.21 per share on a fully diluted basis. Working capital increased to $337.3 million during the quarter, primarily due integration of newly acquired business.Operating cash flow of $-20.4 million and free cash flow of $-43.0 millionBalance sheet strength maintained:Net debt of $449.3 million at end of Q1 2018, up from $386.9 million at the end of Q4 2017 — largely attributable to the acquisition of the two manganese alloys facilities acquired on February 1, 2018 and other non-recurring circumstancesNet Debt to EBITDA metrics have improved
Positioned for Growth Pedro Larrea, Chief Executive Officer
End Market Dynamics: Solid Fundamentals Recent Trends:Global steel production hit the highest level on record in 1Q-18World steel capacity utilization remains at healthy and stable levelsInventory levels remain near multi-year lowsGrowth in North America stands to benefit from an new infrastructure spending program Polysilicon / Electronics Recent Trends:More than 100 GW of new global PV installations expected in 2018North American volumes of PV materials remain under pressure following Chinese dumping actions against polysilicon; new demand regions emerging. Electronics demand continues to be strongPV market in Europe expected to grow by 35% in 2018 , which will support polysilicon industry Recent Trends:Alumina and aluminum deficit expected for 2018Considerable uncertainty remains in the global supply chain due to multiple trade actions, potential sanctions and supply disruptionsContinued benefit from megatrends (EV vehicles, light weighting) Aluminum / Auto Recent Trends:Leading indicators from manufacturing output, unemployment and consumer spending remain largely positive, reflecting increased economic activityStrong market sentiment for public companies Chemical sector will follow GDP growth projected at 2.0+% in Eurozone for 2018 Chemicals / Silicones XX% XX% XX% Steel and Specialty Metal
Si-Based Alloy Order Book Commercial Outlook Across Our Portfolio For the Remainder of 2018 Silicon Metal Order Book Mn-Based Alloy Order Book Healthy global economies Positive supply/demand dynamics — tightness in end market expected through the yearIncreased raw material costs for producers globally supporting higher prices (potential for surcharges)China environmental crackdown and financial reform — reduced domestic production resulting in reduced exports from China
New Plants Expand the Breadth and Depthof Manganese-Alloys Operations Ferroglobe and Glencore Europe production in 2017 (kt). Mo I Rana 134 96 Cee 0 Monzón SiMn FeMn 55 83 Boo 132 Dunkirk Acquired facilities Existing facilities Over 1 million tonnes of manganese ore will be consumed annually by the combined operation 199 TOTAL 500 Total of 230 Total of 270 Transaction closed on February 1, 2018Finished goods inventories at that date belonged to selling partyNeed to manufacture new finished goods for Ferroglobe’s salesFinancial contribution from acquired facilities to commence in 2Q-2018
7 Acquisition Of New Manganese-Alloys Plants Highlights Disciplined M&A Approach Closed the acquisition on February 1, 2018 Transaction was immediately accretiveCash disbursements of $55.5 million made during Q1-2018,No sales revenue or financial contributions were made by these assets in Q1Future payments in the form of an ‘earn-out’ Inventories: ($101.6)Accounts Receivable ($27.8)Accounts Payable $73.9Working Capital ($55.5) Balance Sheet Impact (March 31, 2018) Highlights
New UMG Solar Silicon Plant Is On-Track Construction Phase (as of May 9, 2018) Plant Update Location: Puertollano, SpainInitial phase UMG capacity: 1,400 mt/yConstruction to be completed by year-end 2018Total capital expenditure in-line with previous estimate of €72 million:Spent in 2015 – 2017: €22mSpent in Q1 2018: €4.9mCommitted Capex: €23mPending: €22m
Ferroglobe Is Well Positioned For 2018 And Beyond Ferroglobe is stronger than ever… …and well positioned to capitalize on strong market fundamentals Strong balance sheet presents flexibility and the ability to pursue growth initiativesBest practices drive cost management and continuous improvementSuccessful execution of raw material procurement, including electrodes, allows for security of supplyBooked business at attractive prices in 2018 provides a floor for revenuesCash-flow generation allows deleveraging and return of value to shareholders Strong fundamentals in all end markets, supported by megatrends that are requiring increased supply of advanced materialsSolid pull-through demand across all core products and geographies Favorable structural supply/demand dynamics in our marketsBalanced product portfolio with unrivalled capabilitiesLeveraging optionality of global production footprint to capitalize on market opportunities
Closing Remarks Q1 confirms the positive fundamentals of our business Higher volumes and stable pricing expected in Q2, with continued volatility in input costs Generation of free cash flow supports return of value to shareholders and strengthening of balance sheet
Q&A
Advancing Materials Innovation NASDAQ: GSM First Quarter 2018