Ferroglobe Reports Solid First Quarter 2024 Financial Results

Ferroglobe PLC

Increasing annual Adj. EBITDA guidance to $130-170 million, up from $100-170 million previously

• 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 28^th and are announcing another dividend this quarter of $0.013, which will be payable on June 27^th. 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:  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)
	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