Ferroglobe Reports Solid First Quarter 2024 Financial Results

  • Posted adjusted EBITDA of $25.8 million for the first quarter of 2024
  • Net cash positive for the first time in the Company’s history; all-time low gross debt of $81 million
  • Initiated a quarterly cash dividend of $0.013 per share, paid on March 28, 2024; announcing a second quarter dividend of $0.013 per share, payable on June 27
  • Board approved stock buyback program; shareholder vote to approve buyback scheduled for June 2024 AGM
  • Successfully restarted French operations on April 1, 2024, with all furnaces running
  • Applying for permit to expand silicon metal production in the U.S. to address strong secular trends in solar and EV batteries
  • Signed a memorandum of understanding with Coreshell, followed by an investment post-quarter after strong test results in our lab

LONDON, May 14, 2024 (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 financial results for the first quarter 2024.

Financial Highlights

             %       %
($ in millions, except EPS) Q1 2024   Q4 2023   Q/Q   Q1 2023   Y/Y
                           
Sales $ 391.9     $ 376.0     4%   $ 400.9     (2%)
Net (loss) income $ (2.0 )   $ (11.1 )   82%   $ 21.0     (110%)
Adjusted diluted EPS $     $ 0.07     82%   $ 0.05     (110%)
Adj. EBITDA $ 25.8     $ 60.3     (57%)   $ 44.8     (42%)
Operating cash flow $ 198.0     $ 25.1     688%   $ 134.8     47%
Capital expenditures1 $ 18.2     $ 25.5     (29%)   $ 18.0     1%
Free cash flow2 $ 179.8     $ (0.4 )   (45.509%)   $ 116.8     54%
(1)   Cash outflows for capital expenditures
(2)   Free cash flow is calculated as operating cash flow less capital expenditures

Dr. Marco Levi, Ferroglobe’s Chief Executive Officer, commented, “In the first quarter, we continued to make progress in improving Ferroglobe’s financial position, ending the quarter with a positive net cash position for the first time, representing the strongest financial position in the Company’s history. We announced a dividend last quarter and are declaring another dividend of $0.013. Our board recently approved a buyback initiative, and we expect our shareholders to do the same during our annual shareholders’ meeting in June. We will continue to focus on policies that return value to our shareholders.

“As we position the Company to exploit the strong anticipated demand in silicon metal to address the solar and EV battery markets, we are in the process of applying for a permit to expand our silicon metal operations in North America. This will be in the form of a brownfield expansion, which is significantly less costly than a greenfield buildout. In March, we signed a memorandum of understanding with Coreshell, a leading US-based battery technology company, working towards building the world’s first battery-grade metallurgical silicon for electric vehicles. Recently we solidified this relationship by making a strategic investment in Coreshell. This is an important opportunity for Ferroglobe to play a key role in the ongoing evolution of the electric vehicle battery market. Using silicon in EV batteries has significant advantages over graphite, including lower cost, an increase of up to 40% in driving range as well as significantly faster charging times. We believe silicon will be an important component in the innovation of EV batteries and we are positioning the company to be an integral part of it.

“The indices across all our businesses are up from the lows. While the initial improvement in prices was driven by supply-related issues, these prices have held strong and we are starting to see some signs of fundamental improvements in demand in the U.S. Accordingly, we are raising the low end of our annual adjusted EBITDA guidance, increasing the range from $100-170 million to $130-170 million,” concluded Dr. Levi.

Consolidated Sales

In the first quarter of 2024, Ferroglobe reported net sales of $391.9 million, an increase of 4% over the prior quarter and a decrease of 2% over the year-ago period. The increase in our first quarter results is primarily attributable to higher volumes across our product portfolio, partly offset by lower pricing in silicon metal and silicon-based alloys. Over the prior quarter, the sales increase was primarily driven by silicon-based alloys, which accounted for $5 million, and manganese-based alloys, which accounted for $6 million of the increase, while silicon metals sales remained stable.

Product Category Highlights

Silicon Metal

($,000) Q1 2024   Q4 2023   % Q/Q   Q1 2023   % Y/Y
Shipments in metric tons:   53,183       49,761     6.9 %     36,942     44.0 %
Average selling price ($/MT):   3,155       3,371     (6.4 )%     4,351     (27.5 )%
                         
Silicon Metal Revenue   167,792       167,744     0.0 %     160,735     4.4 %
Silicon Metal Adj.EBITDA   16,071       22,188     (27.6 )%     31,120     (48.4 )%
Silicon Metal Adj.EBITDA Margin   9.6 %     13.2 %         19.4 %    

Silicon metal revenue in the first quarter was $167.8 million, in line with the prior quarter. The average realized selling price decreased by 6.4%, primarily due to a price decline of 10% in the U.S. Total shipments increased due to higher volumes in EMEA. Adjusted EBITDA for silicon metal decreased to $16.1 million during the first quarter, a decrease of 27.6% compared with $22.2 million for the prior quarter. The Adjusted EBITDA margin in the quarter decreased mainly driven by reduced energy compensation in France in the first quarter of 2024.

Silicon-Based Alloys

($,000) Q1 2024   Q4 2023   % Q/Q   Q1 2023   % Y/Y
Shipments in metric tons:   51,171       46,446     10.2 %     49,100     4.2 %
Average selling price ($/MT):   2,188       2,300     (4.9 )%     2,756     (20.6 )%
                         
Silicon-based Alloys Revenue   111,962       106,826     4.8 %     135,320     (17.3 )%
Silicon-based Alloys Adj.EBITDA   14,412       34,973     (58.8 )%     21,924     (34.3 )%
Silicon-based Alloys Adj.EBITDA Margin   12.9 %     32.7 %         16.2 %    

Silicon-based alloy revenue in the first quarter was $112.0 million, an increase of 4.8% over the prior quarter. The shipment increase of 10.2% is attributable to stronger volumes in the U.S. Adjusted EBITDA for the silicon-based alloys decreased to $14.4 million in the first quarter of 2024, a decrease of 58.8% compared with $35.0 million for the prior quarter. The Adjusted EBITDA margin decreased in the quarter mainly due to the decrease in average realized price during the first quarter of 2024.

Manganese-Based Alloys

($,000) Q1 2024   Q4 2023   % Q/Q   Q1 2023   % Y/Y
Shipments in metric tons:   62,320       61,404     1.5 %     46,867     33.0 %
Average selling price ($/MT):   1,066       985     8.2 %     1,316     (19.0 )%
                         
Manganese-based Alloys Revenue   66,433       60,483     9.8 %     61,677     7.7 %
Manganese-based Alloys Adj.EBITDA   5,520       23,886     (76.9 )%     2,043     170.2 %
Manganese-based Alloys Adj.EBITDA Margin   8.3 %     39.5 %         3.3 %    

Manganese-based alloy revenue in the first quarter was $66.4 million, an increase of 9.8% over the prior quarter. The average realized selling price increased by 8.2% and total shipments increased 1.5%. Adjusted EBITDA for the manganese-based alloys portfolio decreased to $5.5 million in the first quarter of 2024, a decrease of 76.9% compared with $23.9 million for the prior quarter. The Adjusted EBITDA margin decrease was mainly driven by reduced energy compensation in France.

Raw materials and energy consumption for production

Raw materials and energy consumption for production was $257.4 million in the first quarter of 2024 versus $199.9 million in the prior quarter, an increase of 29%. As a percentage of sales, raw materials and energy consumption for production was 66% in the first quarter of 2024 versus 53% in the prior quarter. This variance was mainly due to higher production costs in Europe related to the idling of operations in France during the first quarter of 2024 compared to the fourth quarter of 2023.

Net (Loss) Income Attributable to the Parent

In the first quarter of 2024, net loss attributable to the parent was $2.0 million, or ($0.01) per diluted share, compared to a net loss attributable to the parent of $11.1 million, or ($0.06) per diluted share in the fourth quarter.

Adjusted EBITDA

In the first quarter of 2024, adjusted EBITDA was $25.8 million, or 6.6% of sales, a decrease of 57.2% compared to adjusted EBITDA of $60.3 million, or 16% of sales in the fourth quarter of 2023. The decrease in the first quarter of 2024 adjusted EBITDA as a percentage of sales is primarily attributable to lower realized prices and lower indirect CO2 and energy compensation in France.

Total Cash, Adjusted Gross Debt and Working Capital

                             %
($ in millions) Q1 2024   Q4 2023   $   %   Q1 2023   $   Y/Y
                                   
Total Cash $ 159.8     $ 137.6     22   16%   $ 344.2     (184)   (54%)
Adjusted Gross Debt1   80.8       238.5     (158)   (66%)     399.7     (319)   (80%)
Net (Cash)/Debt $ (79.0 )   $ (100.9 )   22   22%   $ 55.5     (134)   (242%)
Total Working Capital $ 487.5     $ 510.7     (23)   (5%)   $ 582.3     (95)   (16%)
(1)  Adjusted gross debt excludes bank borrowings on factoring program and impact of leasing standard IFRS16 for each of the periods presented

The total cash balance was $159.8 million as of March 31, 2024, up $22.1 million from $137.6 million as of December 31, 2023.

During the first quarter of 2024, we generated $198.0 million of operating cash flow and had a negative cash flow from investing activities of $17.5 million. Cash flow from financing activities was negative $156.3 million as we paid the remaining senior secured notes of approximately $150 million.

Total working capital was $487.5 million on March 31, 2024, improving from $510.7 million as of December 31, 2023. The $23.2 million decrease in working capital balance during the quarter was mainly due to a $22.2 million decrease in inventories and a $6.3 million decrease in trade and other receivables, partially offset by a $5.3 million decrease in trade and other payables.

Beatriz García-Cos, Ferroglobe’s Chief Financial Officer, commented, “This quarter Ferroglobe turned net cash positive for the first time in its history, a significant milestone for the Company. We achieved a net cash balance of $79 million at quarter end, representing a total cash of $160 million and adjusted gross debt of $81 million. Our operating cash flow in the quarter was strong, driven by a payment of $154 million from our French energy agreement. Also, for the first time in the Company’s history, we declared a dividend last quarter of $0.013, which was paid on March 28th and are announcing another dividend this quarter of $0.013, which will be payable on June 27th. With a strong financial position, we are working on various strategies to return value to shareholders. Our board has approved a share buyback program and once approved by our shareholders at our annual general meeting we will implement the buyback strategy.”

Enhanced Capital Return Policy

Ferroglobe’s board of directors approved a share buyback program, which requires a shareholder vote as a UK company listed on Nasdaq. As part of the annual general meeting in June, we are seeking authorization of $200 million for a share repurchase program over a 5-year period.

The company paid a quarterly cash dividend of $0.013 per share on March 28, 2024, to shareholders of record as of the close of business on March 22, 2024. A cash dividend of $0.013 per share will be paid on June 27, 2024, to shareholders of record as of June 17, 2024.

Conference Call

Ferroglobe invites all interested persons to participate on its conference call at 8:30 AM, Eastern Time on May 15, 2024. 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/BI3710d5099e3c4756b47a1496c71ce9ab
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/ur2yewsw

About Ferroglobe

Ferroglobe PLC is a leading global producer of silicon metal, silicon- and manganese- based specialty alloys and ferroalloys, serving a customer base across the globe in dynamic and fast-growing end markets, such as solar, electronics, 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, working capital, adjusted net profit, adjusted profit per share, adjusted gross debt and net cash/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:

Alex Rotonen, CFA
Vice President, Investor Relations
Email:  [email protected]

MEDIA CONTACT:

Cristina Feliu Roig
Executive Director, Communications & Public Affairs
Email:  [email protected]

 
Ferroglobe PLC and Subsidiaries
Unaudited Condensed Consolidated Income Statement
(in thousands of U.S. dollars, except per share amounts)
                 
  For the Three Months Ended   For the Three Months Ended     For the Three Months Ended
  March 31, 2024      December 31, 2023     March 31, 2023
Sales $ 391,854      $ 375,951     $ 400,868  
Raw materials and energy consumption for production   (257,357 )      (199,911 )     (255,036 )
Energy consumption for production (PPA impact)   (1,932 )     339       23,193  
Other operating income   10,836        34,944       14,814  
Staff costs   (70,519 )      (79,761 )     (67,543 )
Other operating expense   (52,348 )      (73,071 )     (54,145 )
Depreciation and amortization charges   (18,669 )      (20,090 )     (17,990 )
Impairment (loss) gain         (23,614 )     246  
Other gain (loss)   696       (563 )     47  
Operating profit   2,561       14,224       44,454  
Net finance income (expense)   (7,669 )      (12,331 )     (10,980 )
Exchange differences   1,383        (4,897 )     1,455  
(Loss) profit before tax   (3,725 )      (3,004 )     34,929  
Income tax (expense) benefit   1,155        (4,160 )     (9,461 )
Total (Loss) profit for the period   (2,570 )     (7,164 )     25,468  
                 
(Loss) profit attributable to the parent $ (2,024 )    $ (11,118 )   $ 20,991  
(Loss) profit attributable to non-controlling interest   (546 )      3,954       4,477  
                 
EBITDA $ 22,613     $ 29,417     $ 63,899  
Adjusted EBITDA $ 25,803     $ 60,262     $ 44,767  
                 
                 
Weighted average shares outstanding                
Basic   187,927       187,872       187,873  
Diluted   187,927       187,872       189,629  
                 
Profit (loss) per ordinary share                
Basic $ (0.01 )   $ (0.06 )   $ 0.11  
Diluted $ (0.01 )   $ (0.06 )   $ 0.11  
 
Ferroglobe PLC and Subsidiaries
Unaudited Condensed Consolidated Statement of Financial Position
(in thousands of U.S. dollars)
                       
  As of March 31,   As of December 31,   As of March 31,
  2024      2023      2023
ASSETS
Non-current assets                      
Goodwill $ 29,702     $ 29,702     $ 29,702  
Intangible assets   193,592       138,345       223,447  
Property, plant and equipment   500,940       501,396       497,557  
Other financial assets   13,944       19,792       14,702  
Deferred tax assets   10,636       8,760       7,123  
Receivables from related parties   1,622       1,658       2,915  
Other non-current assets   21,770       22,156       19,297  
Restricted cash and cash equivalents               2,175  
Total non-current assets   772,206       721,809       796,918  
Current assets                      
Inventories   361,602       383,841       417,042  
Trade and other receivables   303,942       310,243       312,452  
Receivables from related parties   2,712       2,772       2,728  
Current income tax assets   10,740       15,977       7,652  
Other financial assets   2       2       2  
Other current assets   27,894       186,477       26,914  
Assets and disposal groups classified as held for sale               1,088  
Restricted cash and cash equivalents   298       1,179       2,411  
Cash and cash equivalents   159,470       136,470       339,611  
Total current assets   866,660       1,036,961       1,109,900  
Total assets $ 1,638,866     $ 1,758,770     $ 1,906,818  
                       
EQUITY AND LIABILITIES
Equity $ 843,702     $ 869,886     $ 658,490  
Non-current liabilities                      
Deferred income   77,185       26,980       128,125  
Provisions   22,102       19,970       25,027  
Provision for pensions   29,293       29,805       25,910  
Bank borrowings   14,643       14,913       15,590  
Lease liabilities   54,361       20,304       11,744  
Debt instruments         149,015       304,621  
Other financial liabilities   68,186       65,231       39,276  
Other obligations   1,536       35,883       36,310  
Other non-current liabilities   224       199       22  
Deferred tax liabilities   30,253       32,582       35,272  
Total non-current liabilities   297,783       394,882       621,897  
Current liabilities                      
Provisions   127,533       122,757       146,308  
Provision for pensions   165       169       193  
Bank borrowings   42,762       31,635       31,462  
Lease liabilities   12,297       8,083       7,492  
Debt instruments         5,765       4,688  
Other financial liabilities   15,190       16,052       123,281  
Payables to related parties   3,527       2,429       2,377  
Trade and other payables   178,038       183,375       147,150  
Current income tax liabilities   6,262       8,351       48,326  
Other obligations   11,999       14,183       18,790  
Other current liabilities   99,608       101,203       96,364  
Total current liabilities   497,381       494,002       626,431  
Total equity and liabilities $ 1,638,866     $ 1,758,770     $ 1,906,818  
 
Ferroglobe PLC and Subsidiaries
Unaudited Condensed Consolidated Statement of Cash Flows
                 
  For the Three Months Ended   For the Three Months Ended   For the Three Months Ended
  March 31, 2024   December 31, 2023   March 31, 2023
Cash flows from operating activities:                
(Loss) profit for the period $ (2,570 )   $ (7,164 )   $ 25,468  
Adjustments to reconcile net profit (loss) to net cash provided by operating activities:                
Income tax (benefit) expense   (1,155 )     4,160       9,461  
Depreciation and amortization charges   18,669       20,090       17,990  
Net finance expense   7,669       12,331       10,980  
Exchange differences   (1,383 )     4,897       (1,455 )
Impairment loss (gain)         23,614       (246 )
Share-based compensation   928       683       1,905  
Other loss (gain)   (696 )     562       (47 )
Changes in operating assets and liabilities                
Decrease (increase) in inventories   19,011       (1,746 )     86,275  
Decrease (increase) in trade receivables   320       (5,399 )     118,714  
(Decrease) increase in trade payables   (1,925 )     2,879       (73,864 )
Other changes in operating assets and liabilities   154,596       (17,067 )     (44,100 )
Income taxes (paid) received   4,580       (12,701 )     (16,298 )
Net cash provided by (used in ) operating activities:   198,044       25,139       134,783  
Cash flows from investing activities:                
Interest and finance income received   741       1,349       668  
Payments due to investments:                
Intangible assets   (584 )     (1,331 )      
Property, plant and equipment   (17,641 )     (24,204 )     (17,960 )
Disposals:                
Other non-current assets         935        
Net cash used in by investing activities   (17,484 )     (23,251 )     (17,292 )
Cash flows from financing activities:                
Dividends paid   (2,438 )            
Proceeds from debt issuance   (147,624 )            
Repayment of debt instruments         (1,050 )     (26,283 )
Increase/(decrease) in bank borrowings:                
Borrowings   94,611       39,239       109,762  
Payments   (83,012 )     (58,052 )     (141,900 )
Payments for lease liabilities   (2,973 )     (3,309 )     (2,247 )
Other (payments) receipts from financing activities   (192 )     (4,289 )     (17,377 )
Interest paid   (14,634 )     (2,923 )     (18,192 )
Net cash (used in) provided by financing activities   (156,262 )     (30,384 )     (96,237 )
Total net (decrease) increase in cash and cash equivalents   24,298       (28,496 )     21,254  
Beginning balance of cash and cash equivalents   137,649       165,973       322,943  
Exchange differences on cash and cash equivalents in foreign currencies   (2,179 )     172        
Ending balance of cash and cash equivalents $ 159,768     $ 137,649     $ 344,197  
Restricted cash and cash equivalents   298       1,179       4,586  
Cash and cash equivalents   159,470       136,470       339,611  
Ending balance of cash and cash equivalents $ 159,768     $ 137,649     $ 344,197  


Adjusted EBITDA ($,000):

  Q1´24   Q4´23   Q1´23
Profit (loss) attributable to the parent $ (2,024 )   $ (11,118 )   $ 20,991  
Profit (loss) attributable to non-controlling interest   (546 )     3,954       4,477  
Income tax (benefit) expense   (1,155 )     4,160       9,461  
Net finance expense   7,669       12,331       10,980  
Depreciation and amortization charges   18,669       20,090       17,990  
EBITDA   22,613       29,417       63,899  
Exchange differences   (1,383 )     4,897       (1,455 )
Impairment         23,614       (246 )
New strategy implementation   1,361       (1,000 )     2,049  
Subactivity   942       2,995       3,713  
PPA Energy   2,270       339       (23,193 )
Adjusted EBITDA $ 25,803     $ 60,262     $ 44,767  


Adjusted profit attributable to Ferroglobe ($,000):

  Q1´24   Q4´23   Q1´23
(Loss) profit attributable to the parent $ (2,024 )   $ (11,118 )   $ 20,991  
Tax rate adjustment   17       4,959       (599 )
Impairment         17,333       (175 )
New strategy implementation   933       (734 )     1,459  
Subactivity   646       2,198       2,644  
PPA Energy   1,556       249       (16,513 )
Adjusted profit attributable to the parent $ 1,168     $ 12,887     $ 7,807  


Adjusted diluted profit per share:

  Q1´24   Q4´23   Q1´23
Diluted (loss) profit per ordinary share $ (0.01 )   $ (0.06 )   $ 0.11  
Tax rate adjustment   0.00       0.03       (0.00 )
Impairment         0.09       (0.00 )
New strategy implementation   0.00             0.01  
Subactivity   0.00       0.01       0.01  
PPA Energy   0.01       0.00       (0.09 )
Adjusted diluted (loss) profit per ordinary share $     $ 0.07     $ 0.05  


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