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ore at the end of 2016, which negatively impacted manganese alloy volumes in Q1 2017. These conditions were temporary and volume trends are expected to normalize in Q2 2017.

 

 

 

 

 

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		Quarter Ended March 31, 2017				Quarter Ended December 31, 2016				Quarter Ended March 31, 2016				Year Ended December 31, 2016
Loss attributable to the parent		$	(6,554	)			(241,964	)			(25,699	)			(338,427	)
Loss attributable to non-controlling interest			(1,561	)			(4,350	)			(6,211	)			(20,186	)
(Profit) loss from discontinued operations			(2,494	)			2,095				(338	)			3,065
Income tax (benefit) expense			(2,167	)			(7,816	)			455				(46,609	)
Net finance expense			12,124				6,507				5,287				23,051
Exchange differences			20				628				1,727				3,513
Depreciation and amortization charges, operating allowances and write-downs			27,219				27,007				41,778				121,346
EBITDA			26,587				(217,893	)			16,999				(254,247	)
Transaction and due diligence expenses			-				-				2,641				7,979
Impairment loss			-				199,834				-				267,449
Globe purchase price allocation adjustments			-				-				10,022				10,022
Business interruption			-				-				-				2,532
Inventory impairment			-				1,080				-				5,410
Executive severance			-				24,430				-				24,430
Adjusted EBITDA, excluding above items		$	26,587				7,451				29,662				63,575

 

Adjusted diluted loss per share: 

 

	●	On May 16, 2017, the CBSA exercised an extension for 45 days to complete its review for this phase of the investigation. The preliminary determinations for anti-dumping and countervailing duties will now take effect on or around July 5, 2017.
	●	The company expects that the U.S. Department of Commerce will make preliminary determinations on countervailing duties in the third quarter, and on anti-dumping duties early in the fourth quarter of 2017.

 

 

 

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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.

 

 

 Advancing Materials Innovation  NASDAQ: GSM      First Quarter 2017   

 

 Forward-Looking Statement  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 us 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 the businesses of Globe Specialty Metals Inc. and Grupo FerroAtlántica (together, “we,” “us,” “Ferroglobe,” the “Company”) will not be integrated successfully or that we will not realize estimated cost savings, value of certain tax assets, synergies and growth, 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.  

 

 Table of Contents  1Q-2017 OverviewSelected Financial Highlights 

 

 Q1 Overview     Pedro Larrea, Chief Executive Officer 

 

 First quarter of 2017 confirms expectations    Actions taken delivering results  Marketing focusFinancial disciplineProduction allocationSynergies    Improving price environment & decisive market leadership  (ASP increase vs Q4 2016)Mn alloys +46%Si alloys +10%SiM flat    Leveraging diversified product and market portfolio  Remarkable Mn alloys performanceIdentifying tight markets      …    EBITDA + 257% vs Q4 2016  EBITDA margin x3.6  Working capital reduction  Net debt stable 

 

 Source: Company information  Antidumping and Countervailing Duties   Sale of Spanish Hydro-Electric Assets  Internal control  Update on corporate matters    Favorable first milestones from both the U.S. and Canada cases. Respective government agencies have decided to move forward with their investigations Impact on market prices pending final determination  Progress made during the quarter to gain further support Filed all necessary requests with relevant government bodiesStarted the required internal administrative procedures (i.e., corporate restructuring)  Audit process has revealed material weaknesses in internal control proceduresRemediation is taking place with decisive action from management 

 

 Diversified product portfolio maximizes impact of recovery   Silicon-BasedAlloys30%  Mn-Based Alloys21%  Other8%  Aluminum  Silicones  Solar  Foundry  Specialty Steel  Steel  Qtr / Qtr Revenue Growth by Product  Other  Source: Company informationEnd market data reflects 2016 sales  2  Business benefits from a diversified portfolio, with various products at different stages of the recovery cycle  Revenue Contribution by Product and Market (1Q-17)  5%  21%  1 

 

 Continue to see supportive trends across key end markets  7    Recent Trends:Crude steel production is up 5.7% in Q1-17 y/yWorld steel capacity utilization reached a two-year high in MarchNorth American crude steel production (+7.1%), while Europe was up (+3.8%) during the quarter   Polysilicon / Electronics  Recent Trends:North American volumes of electronic and PV materials severely hampered by Chinese dumping actions against polysilicon; volumes down from 2016In Europe, solar growth will support polysilicon industry which is projected to grow 8% worldwide in 2017  Recent Trends:During Q1-17, vehicle sales were weaker in the USA and Brazil. USA was (-1.5%) in Q1-17Auto sales were strongest in India (+11.1%), Europe (+8.2%) and Japan (+7.8%)China remained the world’s largest single-country car market (up 5.7%)   Aluminum / Auto  Recent Trends:North American market is running strong with both participants running at capacityChemical sector will follow GDP growth projected at 1.7% in Eurozone for 2017   Chemicals / Silicones  XX%  XX%  XX%  Steel and Specialty Metal       

 

 Revenue level in Q1 2017 remains flat vs previous quarter  Shipments volumes have been affected by “one-off” events, but the recovery in prices has helped maintain revenue levels 

 

 Silicon metal snapshot   Pricing Trends  Volume Trends  Sequential Quarter Product EBITDA Contribution ($m)  Commentary  Now-resolved strike at one of the largest customers in U.S. resulting in reduced volumes and a delay in price rebound - expect to gradually recover sales volume in 2Q-17 and benefit from price reversion.European plants faced with increased costs, primarily driven by seasonally higher power rates. Improved plant utilization and increased efficiency helped reduce North American costs.  US Index ($)  EU Index($)  Actual Realized Price ($) 

 

 Silicon based alloys snapshot   Pricing Trends  Volume Trends  Commentary  Increased steel production and tightening of supply resulted in strong fundamentals for ferrosilicon market.Converted a furnace in Spain from silicon to ferrosilicon during the quarter. Higher power rates in Spain had a negative impact on costs.Idling of Venezuela plant impacted volumes, though not margins.  Sequential Quarter Product EBITDA Contribution ($m)  FeSi US Index ($)  FeSi EU Index ($)  Actual Realized Price ($) (Silicon-Based Alloys) 

 

 Manganese based alloys snapshot  FeMn EU Index  SiMnEU Index  Commentary  Volatility in manganese ore cost continued, spreads have increased and remain solid into Q2.Deliberate decision to avoid the purchase of high-priced ore in order to maintain margins: negative effect on volumes in Q1.Volume and price improvement in the higher grade products, resulting in higher margins.  Sequential Quarter Product EBITDA Contribution ($m)    Spread$13.6  Actual Realized Price (Mn-Based Alloys)  Pricing Trends  Volume Trends 

 

 Significant margin improvement has enhanced operating results    Ferroglobe Actions Leading to Results  Commercial strategy has captured the recovery of the market and should yield additional results in coming quartersFinancial discipline has focused the organization on productivity and cash managementRealizing benefits of synergies captured in 2016Business has normalizedIdling of certain facilities has been executedFinancial adjustments minimalized Streamlined production plans to optimize utilization rates; including the conversion of furnaces to optimize on market opportunitiesOverhead costs have leveled off   Sequential Quarter EBITDA Contribution ($m)  1  1  Note:1 Net of $17.7mm manganese ore cost 

 

 EBITDA of $26.6 million for the quarter1: +257% vs adjusted EBITDA of $7.5 million in Q4 2016 Including non-core Energy division, EBITDA would have reached $30.9 million, +368% compared with $6.6 million in 4Q 2016Continued to reduce working capital. Improvement of $18 million in the quarter; total working capital reduction of more than $200 million since December 2015Balance sheet strength maintained:Net debt of $407 million at end of 1Q; stable versus end of 2016, in spite of “one-off” disbursements of $24 millionLiquidity of $315 million at end of 1Q   Source: Company information1 Reported EBITDA, which excludes non-core Energy division. Reported and adjusted EBITDA are identical in Q1 2017, as there are no “non-recurrent” items 2 Free cash flow defined as “Net cash provided by operating activities” minus “Payments for property, plant and equipment.”     Business decisions, including M&A and CapEx, are made with a focus on financial metricsImmediately accretive transactionsConservative capital structure — position company to pursue growth opportunitiesSuccessful refinancing has simplified the debt structure and improved the solvency with regard to covenantsFocus on deleveraging the balance sheetCycle leverage target of below 2xContinue to pursue cost improvements through technical performance, portfolio optimization and streamlining of SG&A  Delivering immediate value for shareholders and positioning for the long term   1Q-17 Performance  Remain Focused on Delivering Long-Term Value 

 

    Selected Financial Highlights  Joe Ragan, Chief Financial Officer 

 

 1Q-17 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  Key performance indicators  Q1 2017  Q4 2016  FY 2016  Sales ($m)  388.2  386.8  1,555.7  Operating Profit ($m)  -0.6  -244.9  -375.6  Profit Attributable to the Parent ($m)  -6.6  -242.0  -338.4  Adjusted EBITDA ($m)  26.6  7.5  63.6  Adjusted EBITDA Margin  6.8%  1.9%  4.1%  Working capital ($m)  350.5  368.4  368.4  Free Cash Flow1 ($m)  -11.2  17.9  72.7 

 

 Balance sheet summary  ($mm)  Q1 20171  12/31/2016  Total Assets  2,012  2,019  Net Debt2  407  405  Book Equity   903  892        Net Debt2 / Total Assets  20%  20%  Net Debt2 / Capital3  31%  31%  Financial results are unauditedNet Debt includes finance lease obligationsCapital is calculated as book equity plus net debt  Notes 

 

 Debt evolution ($m)  Quarterly debt evolution 

 

 Working capital evolution ($m) 

 

 Liquidity  $100m represents minimum cash required to operate given cash trapped in certain locations   

 

   Concluding Remarks   Supportive market environment: past inflection  Business well-positioned: cost structure and commercial strategy  Positive outlook for remainder of 2017 

 

    Q&A  

 

 Advancing Materials Innovation  NASDAQ: GSM      First Quarter 2017