Feb 26, 2018

Ferroglobe Reports Results for Fourth Quarter and Calendar Year 2017

•  Q4 2017 results:

  • Revenue of $468.2 million, up 3.7% from $451.6 million in Q3 2017
  • Net profit of $32.1 million, or $0.19 on a fully diluted per share basis, up from a net loss of $(5.0) million, or a $(0.02) per share, in the prior quarter.  The Q4 results include a tax benefit from recent US tax reform of $30.9 million
  • Adjusted net profit of $11.0 million, or $0.06 on a fully diluted per share basis, compared to a net profit of $9.2 million, or $0.05 on a fully diluted per share basis, in the prior quarter.  The US tax reforms did not impact these figures
  • Reported EBITDA of $48.9 million, a decrease of 9.9% compared to reported EBITDA of $54.3 million in Q3 2017
  • Adjusted EBITDA of $54.9 million, a decrease of 2.1% compared to $56.1 million adjusted EBITDA in Q3 2017               

•  Calendar Year 2017 results:

  • Revenue of $1.7 billion up 10.5% from $1.6 billion in 2016
  • Net profit of $20.0 million, or $0.15 on a fully diluted per share basis, up from a net loss of $(358.6) million, or a $(1.97) per share, in 2016.  The 2017 results include the tax benefit from US tax reform of $30.9 million
  • Adjusted net profit of $21.5 million, or $0.13 on a fully diluted per share basis, compared to a net loss of $(39.3) million, or $(0.23) on a fully diluted per share basis, in 2016.  The US tax reforms did not impact these figures
  • Reported EBITDA of $170.9 million, compared to reported EBITDA of $(247.4) million in 2016
  • Adjusted EBITDA of $185.8 million, an increase of 163.9%, compared to $70.4 million adjusted EBITDA in 2016

•  Maintained strong balance sheet with net debt of $386.9 million as of year end 2017, compared to $394.3 million as of September 30, 20171 and $405.0 million at year end 2016 

LONDON, Feb. 26, 2018 (GLOBE NEWSWIRE) -- Ferroglobe PLC (NASDAQ:GSM), the world's leading producer of silicon metal, and a leading silicon and manganese-based specialty alloys producer, today announced results for the fourth quarter and Calendar Year of 2017.

Q4 Summary:

In Q4 2017, Ferroglobe posted a net profit of $32.1 million, or $0.19 per share on a fully diluted basis, which includes a benefit resulting from US tax reform of $30.9 million. On an adjusted basis, Q4 2017 net profit was $11.0 million, or $0.06 per share on a fully diluted basis. US tax reform did not impact adjusted net profit.

Q4 2017 reported EBITDA was $48.9 million, down from $54.3 million in the prior quarter. On an adjusted basis, Q4 2017 EBITDA was $54.9 million, down 2.1% from Q3 2017 adjusted EBITDA of $56.1 million. The company reported adjusted EBITDA margins of 11.7% for Q4 2017, compared to adjusted EBITDA margins of 12.4% for Q3 2017.

Net sales in Q4 2017 totaled $468.2 million, up 3.7% from $451.6 million in Q3 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 4.7% to $2,440/MT in Q4 2017, as compared to $2,330/MT in Q3 2017
  • The average selling price for silicon-based alloys increased by 5.8% to $1,741/MT in Q4 2017, as compared to $1,645/MT in Q3 2017; and
  • The average selling price for manganese-based alloys decreased by 0.2% to $1,346/MT in Q4 2017, as compared to $1,349/MT in Q3 2017

In addition to improved pricing, the company saw solid demand across its key products. In terms of sales volumes, silicon metal experienced a 0.4% increase quarter-over-quarter, silicon-based alloys experienced a 5.3% increase quarter-over-quarter and manganese-based alloys experienced a 1.7% decrease quarter-over-quarter.

Calendar Year 2017 Summary:

For the Calendar Year 2017, Ferroglobe posted a net profit of $20.0 million, or $0.15 per share on a fully diluted basis, which includes a benefit resulting from US tax reforms of $30.9 million. On an adjusted basis, the Calendar Year 2017 net profit was $21.5 million, or $0.13 per share on a fully diluted basis - a result not impacted by the US tax reforms.

For the Calendar Year 2017 reported EBITDA was $170.9 million, up from ($247.4) million in the prior year.  On an adjusted basis, 2017 EBITDA was $185.8 million, up 163.9% from 2016 adjusted EBITDA of $70.4 million. The company reported adjusted EBITDA margins of 10.7% for the Calendar Year 2017, compared to adjusted EBITDA margins of 4.5% for 2016.

Net sales for the Calendar Year 2017 totaled $1.7 billion, up 10.5% from $1.6 billion in 2016. Selling prices for Ferroglobe's key products continued to improve over the course of the year across both the U.S. and Europe:

  • The average selling price for silicon metal increased by 3.1% to $2,270/MT in 2017, as compared to $2,201/MT in 2016
  • The average selling price for silicon-based alloys increased by 14.9% to $1,608/MT in 2017, as compared to $1,400/MT in 2016; and
  • The average selling price for manganese-based alloys increased by 60.7% to $1,327/MT in 2017, as compared to $826/MT in 2016
              
     Quarter Ended
December 31, 2017
 Quarter Ended
September 30, 2017
 Quarter Ended
December 31, 2016
 Year Ended
December 31, 2017
 Year Ended
December 31, 2016
Shipments in metric tons:          
 Silicon Metal    83,785     83,465     82,372     325,884     341,388
 Silicon-based Alloys    70,399     66,873     78,698     283,021     297,669
  Manganese-based Alloys    72,374     73,642     76,445     274,119     270,430
  Total shipments*    226,558     223,980     237,515     883,024     909,487
              
              
     Quarter Ended
December 31, 2017
 Quarter Ended
September 30, 2017
 Quarter Ended
December 31, 2016
 Year Ended
December 31, 2017
 Year Ended
December 31, 2016
Average selling price ($/MT):          
 Silicon Metal $2,440 $2,330 $2,080 $2,270 $2,201
 Silicon-based Alloys  $1,741 $1,645 $1,340 $1,608 $1,400
 Manganese-based Alloys $1,346 $1,349 $890 $1,327 $826
  Total* $1,873 $1,803 $1,452 $1,765 $1,530
               
              
     Quarter Ended
December 31, 2017
 Quarter Ended
September 30, 2017
 Quarter Ended
December 31, 2016
 Year Ended
December 31, 2017
 Year Ended
December 31, 2016
Average selling price ($/lb.):          
 Silicon Metal $1.11 $1.06 $0.94 $1.03 $1.00
 Silicon-based Alloys $0.79 $0.75 $0.61 $0.73 $0.64
 Manganese-based Alloys $0.61 $0.61 $0.40 $0.60 $0.37
  Total* $0.85 $0.82 $0.66 $0.80 $0.69
              
* Excludes by-products and other          
              


"2017 has been an exceptional turnaround year for Ferroglobe, and we are thrilled that the business has performed according to our expectations through Q4. Our swift actions, with continued focus on cost reduction, flexible capacity deployment and financial discipline, have returned the company to profitability, and brought net leverage close to our target level of 2.0x," said Pedro Larrea, CEO of Ferroglobe.  "Robust fundamentals for the global demand of advanced materials, strong performance in our end markets and pricing momentum, as well as our timely capacity restarts, will contribute to stronger results throughout 2018.  Acceleration in cash flow generation this year will further strengthen our company, and is reinforcing our focus on value creation for our stakeholders."

Strong cash flow generation continues to support liquidity

Working capital decreased by $80.4 million during the year, primarily a result of the accounts receivable securitization. Ferroglobe continued to generate positive cash flows. During the fourth quarter, the company generated operating cash flows of $61.3 million, and free cash flow of $24.0 million, resulting in total free cash flow of $82.0 million for Calendar Year 2017.

Ferroglobe's net debt was $386.9 million as of December 2017, down from $394.3 million1 as of September 30, 2017 and $405.0 million at end of December 2016.

____________________
1 As of September 30, 2017, the Balance Sheet includes financing of $120.1 million related to the Company's accounts receivable securitization program. The net debt figure of $394.3 million excludes these securitized accounts receivables for comparison purposes.

Adjusted EBITDA:

                
  Quarter Ended
December 31, 2017
  Quarter Ended
September 30, 2017
  Quarter Ended
December 31, 2016
  Year Ended
December 31, 2017
  Year Ended
December 31, 2016
Profit (loss) attributable to the parent$  32,210      (3,347)    (241,967)    25,168      (338,427)
Loss attributable to non-controlling interest    (84)    (1,640)    (4,350)    (5,144)    (20,186)
Income tax (benefit) expense   (22,120)    14,364      (8,276)    (10,919)    (46,695)
Net finance expense   16,567      14,528      7,499       58,612      28,715  
Financial derivatives loss   956      1,823      -       6,850       -   
Exchange differences   (2,491)    1,529       633      (8,205)    3,513  
Depreciation and amortization charges, operating allowances and write-downs   23,830      27,076      27,705      104,529      125,677  
EBITDA   48,868      54,333      (218,756 )    170,891      (247,403)
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   -       -       199,834      -       267,449  
Transaction and due diligence expenses   -       -       -       -       7,979  
Business interruption   -       (1,980)    -       (1,980)    2,532  
Inventory impairment   -       -       1,080      -       5,410  
Executive severance   -       -       24,430      -       24,430  
Step-up valuation adjustment   -       3,757      -       3,757      -   
Globe purchase price allocation adjustments   -       -       -       -       10,022  
Adjusted EBITDA$  54,912      56,110      6,588      185,775      70,419  
               

Adjusted net profit (loss) attributable to Ferroglobe:

                
   Quarter Ended
December 31, 2017
  Quarter Ended
September 30, 2017
  Quarter Ended
December 31, 2016
  Year Ended
December 31, 2017
  Year Ended
December 31, 2016
                
Profit (loss) attributable to the parent $   32,210      (3,347)     (241,967)    25,168      (338,427)
 Tax rate adjustment   (25,322)    11,363      73,195      (13,833)    83,004  
 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   -       -       135,887      -       181,865  
 Transaction and due diligence expenses   -       -        -       -       5,426  
 Business interruption   -       (1,346)    -       (1,346)    1,722  
 Inventory impairment   -       -       735      -       3,679  
 Executive severance   -       -       16,612      -       16,612  
  Step-up valuation adjustment   -       2,555      -       2,555      -   
 Globe purchase price allocation adjustments   -       -       -       -       6,815  
Adjusted profit (loss) attributable to the parent $   10,998      9,225      (15,538)    21,457      (39,304)
                

Adjusted diluted profit (loss) per share:

                
   Quarter Ended
December 31, 2017
  Quarter Ended
September 30, 2017
  Quarter Ended
December 31, 2016
  Year Ended
December 31, 2017
  Year Ended
December 31, 2016
Diluted profit (loss) per ordinary share $   0.19      (0.02)    (1.41)    0.15      (1.97)
 Tax rate adjustment   (0.15)    0.07      0.43      (0.08)    0.48  
 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   -       -       0.79      -       1.06  
 Transaction and due diligence expenses   -       -       -       -       0.03  
 Business interruption   -       (0.01)    -       (0.01)    0.01  
 Inventory impairment   -       -       -       -       0.02  
 Executive severance   -       -       0.10      -       0.10  
 Step-up valuation adjustment   -       0.01      -       0.01      -   
 Globe purchase price allocation adjustments   -       -       -       -       0.04  
Adjusted diluted profit (loss) per ordinary share $   0.06      0.05      (0.09)    0.13      (0.23)
                 

Conference Call

Ferroglobe will review the results for the fourth quarter and Calendar Year of 2017 during a conference call at 9:00 a.m. Eastern Time on Tuesday, February 27, 2018.

The dial-in number for the call for participants in the United States is 877-293-5491 (conference ID 5384356).  International callers should dial +1 914-495-8526 (conference ID 5384356).  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/ekx96f53  

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
December 31, 2017
  Quarter Ended
September 30, 2017
  Quarter Ended
December 31, 2016
  Year Ended
December 31, 2017
  Year Ended
December 31, 2016
 
                 
Sales  $   468,218     451,628     389,878     1,741,693     1,576,037  
Cost of sales    (285,201)    (267,364)    (272,174)    (1,043,982)    (1,043,412) 
Other operating income    5,122     7,404     15,202     18,163     26,215  
Staff costs    (87,304)    (74,183)    (89,580)    (302,140)    (296,399) 
Other operating expense    (53,156)    (59,741)    (64,141)    (238,030)    (243,946) 
Depreciation and amortization charges, operating allowances and write-downs    (23,830)    (27,076)    (27,705)    (104,529)    (125,677) 
Impairment losses     (241)    (98)    (200,458)    (339)    (268,089) 
Other gain (loss)    1,430     (3,313)    2,517     (4,474)    2,191  
Operating profit (loss)    25,038      27,257      (246,461)    66,362      (373,080 ) 
Finance income    2,487     258      303     3,702     1,536  
Finance expense    (19,054)    (14,786)    (7,802)    (62,314)    (30,251) 
Financial derivatives loss    (956)    (1,823)    -      (6,850)    -   
Exchange differences    2,491     (1,529)    (633)    8,205     (3,513) 
Profit (loss) before tax    10,006      9,377      (254,593)    9,105      (405,308) 
Income tax benefit (expense)     22,120     (14,364)    8,276     10,919     46,695  
Profit (loss) for the period    32,126      (4,987)    (246,317)    20,024      (358,613) 
Loss attributable to non-controlling interest    84     1,640     4,350     5,144     20,186  
Profit (loss) attributable to the parent  $   32,210      (3,347)    (241,967)    25,168      (338,427) 
                  
                 
EBITDA  $   48,868     54,333     (218,756)    170,891     (247,403) 
Adjusted EBITDA    54,912     56,110     6,588     185,775     70,419  
                 
Weighted average shares outstanding                
Basic    171,953     171,947     171,838     171,948     171,838  
Diluted    172,128     171,947     171,838      172,119     171,838  
                  
Profit (loss) per ordinary share                
Basic  $   0.19     (0.02)    (1.41)    0.15     (1.97) 
Diluted    0.19     (0.02)    (1.41)    0.15     (1.97) 
                 

 

         
Ferroglobe PLC and Subsidiaries  
Unaudited Condensed Consolidated Statement of Financial Position  
(in thousands of U.S. dollars)  
         
  December 31, September 30,  December 31,  
  2017 2017 2016  
ASSETS  
Non-current assets        
Goodwill $   236,455   234,613   230,210  
Other intangible assets   57,141   59,120   62,839  
Property, plant and equipment   917,974   890,084   781,606  
Non-current financial assets    6,677   6,372   5,823  
Non-current financial assets from related parties   -    -    9,845  
Deferred tax assets   2,000   49,463   44,950  
Non-current receivables from related parties   2,400   2,363   2,108  
Other non-current assets   33,830   21,971   20,245  
Total non-current assets   1,256,477    1,263,986    1,157,626   
Current assets        
Inventories   361,914   353,296   316,702  
Trade and other receivables   121,525   328,056   209,406  
Current receivables from related parties   4,572   3,351   11,971  
Current income tax assets   7,313   7,896   19,869  
Current financial assets   80,156   3,681   4,049  
Other current assets    10,566   12,834   9,810  
Cash and cash equivalents   184,472   189,763   196,931  
Assets and disposal groups classified as held for sale   -    -    92,937  
Total current assets   770,518    898,877    861,675   
Total assets $   2,026,995    2,162,863    2,019,301   
         
EQUITY AND LIABILITIES  
Equity $   970,776    915,837    892,042   
Non-current liabilities        
Deferred income   3,172   5,077   3,949  
Provisions   82,397   87,490   81,957  
Bank borrowings   -    -    179,473  
Obligations under finance leases   69,713   71,894   3,385  
Debt instruments    339,332   338,772   -   
Other financial liabilities   102,558   97,560   86,467  
Other non-current liabilities   1,962   2,385   5,737  
Deferred tax liabilities   65,412   143,789   139,535  
Total non-current liabilities   664,546    746,967    500,503   
Current liabilities         
Provisions   31,580   23,736   19,627   
Bank borrowings *   1,003   146,221   241,818  
Obligations under finance leases   12,920   12,572   1,852  
Debt instruments    10,938   2,738   -   
Other financial liabilities   34,873   34,375   1,592  
Payables to related parties   12,973   10,466   30,738  
Trade and other payables   195,477   184,244   157,706  
Current income tax liabilities   168   8,350   961  
Other current liabilities   91,741   77,357   64,780  
Liabilities associated with assets classified as held for sale   -    -    107,682  
    391,673    500,059    626,756   
Total equity and liabilities $    2,026,995    2,162,863    2,019,301   
Total current liabilities         
 
* As of September 30, 2017, includes $120,091 related to the Company's accounts receivable securitization program that are recorded "off balance sheet" as of December 31, 2017
          


         
Ferroglobe PLC and Subsidiaries
Unaudited Condensed Consolidated Statement of Cash Flows
(in thousands of U.S. dollars)
         
     Year Ended
December 31, 2017
  Year Ended
December 31, 2016
CASH FLOWS FROM OPERATING ACTIVITIES:      
Profit (loss) for the period $20,024      (358,613)
Adjustments to reconcile net loss to net cash provided by operating activities:      
 Income tax benefit  (10,919)    (46,695)
 Depreciation and amortization charges, operating allowances and write-downs  104,529      125,677  
 Finance income  (3,702)    (1,536)
 Finance expense  62,314      30,251  
 Financial derivatives loss  6,850      -   
 Exchange differences  (8,205)    3,513  
 Impairment losses   339      268,089  
 Loss (gain) on disposals of non-current and financial assets  4,172      (340)
 Share-based compensation  2,385      -   
 Other adjustments  303      (1,851)
Changes in operating assets and liabilities      
 (Increase) decrease in inventories  (15,835)    108,207  
 Decrease in trade receivables  131,756      56,297  
 Increase in trade payables  20,079      28,572  
 Other  (87,687)    (50,001)
Income taxes paid  (26,764)    (10,933)
Interest paid  (38,473)    (29,468)
Net cash provided by operating activities  161,166      121,169  
CASH FLOWS FROM INVESTING ACTIVITIES:      
Payments due to investments:      
 Other intangible assets  (642)    (4,914)
 Property, plant and equipment  (78,517)    (71,119)
 Non-current financial assets  (343)    (9,807)
 Current financial assets  -      (105)
Disposals:      
 Non-current financial assets  -      11  
 Current financial assets  -      99  
Interest received  503      1,554  
Net cash used by investing activities  (78,999)    (84,281 )
CASH FLOWS FROM FINANCING ACTIVITIES:      
Dividends paid  -      (54,988)
Payment for debt issuance costs  (16,765)    -   
Proceeds from debt issuance  350,000      -   
Increase/(decrease) in bank borrowings:       
 Borrowings  31,455      124,384  
 Payments  (453,948)    (81,237)
Proceeds from stock option exercises  180      -  
Other amounts paid due to financing activities  (24,139)    61,758  
Net cash (used) provided by financing activities  (113,217)    49,917  
TOTAL NET CASH FLOWS FOR THE PERIOD  (31,050)    86,805  
Beginning balance of cash and cash equivalents  196,982      116,666  
Exchange differences on cash and cash equivalents in foreign currencies  18,540      (6,489)
Ending balance of cash and cash equivalents $184,472      196,982  
          

 

Primary Logo

Source: Ferroglobe PLC

News Provided by Acquire Media