Ferroglobe PLC
Ferroglobe PLC (Form: 6-K, Received: 08/30/2017 06:06:48)
 
 
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 August, 2017

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 by furnishing the information contained in this Form, the registrant 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 August 29, 2017 announcing results for the quarter ended June 30, 2017
• Second quarter earnings call presentation 


 
 
 
 

 
 
Ferroglobe Reports Results for Second Quarter 2017

·
Q2 2017 revenue of $425.8 million, up 8% from $396.0 million in Q1 2017 1
·
Q2 2017 net profit of $1.0 million, or $0.02 per share on a fully diluted basis, up from a net loss of $(8.1) million, or a $(0.04) loss per share on a fully diluted basis, in the prior quarter
·
Q2 2017 adjusted net profit attributable to the parent of $6.0 million, or $0.05 per share on a fully diluted basis, compared to a net loss attributable to the parent of $(4.8) million, or $(0.03) per share on a fully diluted basis
·
Q2 2017 reported EBITDA of $36.8 million, an increase of 19% compared to reported EBITDA of $30.9 million in Q1 2017
·
Q2 2017 adjusted EBITDA of $43.9 million, an increase of 42% compared to $30.9 million adjusted EBITDA in the prior quarter
·
Maintained strong balance sheet with Q2 2017 net debt of $435 million compared to $407 million in Q1 2017
·
Results exceeded expectations with first net profit reported since merger. Strong performance driven by   price recovery as a result of reduced inflow of low-priced imports of silicon metal and strong end-market demand

LONDON , August 30, 2017 – Ferroglobe PLC (NASDAQ: GSM), ("Ferroglobe" or the "Company"), one of the world's largest producers of silicon metal and silicon- and manganese-based alloys, today announced results for the second quarter of 2017.

In Q2 2017, Ferroglobe posted a net profit of $1.0 million, or $0.02 per share on a fully diluted basis. On an adjusted basis, Q2 2017 net profit attributable to the parent was $6.0 million, or $0.05 per share on a fully diluted basis.

Q2 2017 reported EBITDA was $36.8 million, up from $30.9 million in the prior quarter. On an adjusted basis, Q2 2017 EBITDA was $43.9 million, up 42% from Q1 2017 adjusted EBITDA of $30.9 million. The Company reported adjusted EBITDA margins of 10.3% for Q2 2017, compared to adjusted EBITDA margins of 7.8% for Q1 2017.

Net sales in Q2 2017 totaled $425.8 million, up 8% from $396.0 million in Q1 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 6.3% from $2,080/MT in Q1 2017 to $2,210/MT in Q2 2017, a significant improvement driven by reduced inflow of low-priced imports particularly in North America;
·
The average selling price for silicon-based alloys increased 7.7% to $1,586/MT in the quarter from $1,473/MT in the prior quarter;
·
The average selling price for manganese-based alloys remained broadly flat at $1,308/MT in Q2 2017 as compared to $1,298/MT in the prior quarter as a result of some pricing pressures, offset by lower manganese ore costs from inventory; and
·
In addition to these pricing trends, Ferroglobe continued to realize average sales prices in excess of the index.

The Company also saw stabilization of demand and volumes across its key products. In terms of sales volumes, silicon metal experienced a 9.4% increase quarter-over-quarter, silicon-based alloys experienced a 5.9% decrease quarter-over-quarter and manganese-based alloys experienced a 1.1% increase quarter-over-quarter.
 
                               
     
Quarter Ended
June 30, 2017
 
Quarter Ended
March 31, 2017
 
Quarter Ended
June 30, 2016
 
Six Months Ended
June 30, 2017
 
Six Months Ended
June 30, 2016
Shipments in metric tons:
                             
Silicon Metal
   
82,881
     
75,753
     
85,242
     
158,634
     
175,347
 
Silicon-based Alloys
   
70,913
     
75,386
     
74,786
     
146,299
     
148,259
 
Manganese-based Alloys
   
64,403
     
63,700
     
70,756
     
128,103
     
134,331
 
Total shipments*
   
218,197
     
214,839
     
230,784
     
433,036
     
457,937
 
                                         
                                         
     
Quarter Ended
June 30, 2017
 
Quarter Ended
March 31, 2017
 
Quarter Ended
June 30, 2016
 
Six Months Ended
June 30, 2017
 
Six Months Ended
June 30, 2016
Average selling price ($/MT):
                                 
Silicon Metal
 
$
2,210
   
$
2,080
   
$
2,230
   
$
2,148
   
$
2,311
 
Silicon-based Alloys
 
$
1,586
   
$
1,473
   
$
1,430
   
$
1,528
   
$
1,432
 
Manganese-based Alloys
 
$
1,308
   
$
1,298
   
$
777
   
$
1,303
   
$
771
 
Total*
 
$
1,741
   
$
1,635
   
$
1,525
   
$
1,688
   
$
1,574
 
                                         
                                         
     
Quarter Ended
June 30, 2017
 
Quarter Ended
March 31, 2017
 
Quarter Ended
June 30, 2016
 
Six Months Ended
June 30, 2017
 
Six Months Ended
June 30, 2016
Average selling price ($/lb.):
                                       
Silicon Metal
 
$
1.00
   
$
0.94
   
$
1.01
   
$
0.97
   
$
1.05
 
Silicon-based Alloys
 
$
0.72
   
$
0.67
   
$
0.65
   
$
0.69
   
$
0.65
 
Manganese-based Alloys
 
$
0.59
   
$
0.59
   
$
0.35
   
$
0.59
   
$
0.35
 
Total*
 
$
0.79
   
$
0.74
   
$
0.69
   
$
0.77
   
$
0.71
 
                                         
* Excludes by-products and other
                                 
                                         
 
__________________________
1 Q1 2017 income statement has been revised to include Ferroglobe's energy business in Spain as no longer discontinued operations, including sales, net profit and reported and adjusted EBITDA.
1

"Ferroglobe delivered strong performance in Q2 2017 with quarter-over-quarter earnings growth and improved profitability, having delivered positive net income for the first time since the merger. A significant reduction in the flow of low-priced imports of silicon metal resulted in continued pricing improvement particularly in North America and sustained strong end-market demand across all our products continued to drive the stabilization of shipment volumes. We continue to benefit from our diversification strategy, with the business now generating almost equal earnings from our three main products," said CEO Pedro Larrea. "Having focused on carefully managing our cost structure in prior quarters, combined with disciplined execution of our commercial strategy, we have been able to capture the benefits of the market environment with a significant improvement in our margins. We expect prices to continue to improve through the year and we remain focused on sustained performance across all business segments as we move through the remainder of 2017."

Strong cash flow generation continues to support liquidity

Working capital increased by $35.4 million during Q2 2017, primarily a result of the recovery cycle - year-to-date the Company has increased total working capital by $20.3 million. Ferroglobe continued to generate positive cash flows. During the quarter, the Company generated operating cash flow of $20.1 million and free cash flow of $5.8 million.

Ferroglobe's net debt was $435 million at the end of Q2 2017, up by $28 million compared to $407 million at the end of Q1 2017. To further strengthen liquidity, on July 31, 2017 Ferroglobe entered into a $250 million accounts receivable securitization to obtain financing in connection with its receivables generated in the U.S., Canada, Spain and France under one program. This arrangement provides several benefits to the Company, including risk mitigation, liquidity maximization and the ability to replace multiple factoring arrangements with one consolidated, centrally-managed program.
 
Adjusted EBITDA:
 
   
Quarter Ended
June 30, 2017
 
Quarter Ended
March 31, 2017
 
Quarter Ended
June 30, 2016
 
Six Months Ended
June 30, 2017
 
Six Months Ended
June 30, 2016
                                         
Profit (loss) attributable to the parent
 
$
2,859
     
(6,554
)
   
(42,238
)
   
(3,695
)
   
(67,937
)
Loss attributable to non-controlling interest
   
(1,859
)
   
(1,561
)
   
(7,080
)
   
(3,420
)
   
(13,291
)
Income tax benefit
   
(1,949
)
   
(1,214
)
   
(29,038
)
   
(3,163
)
   
(28,261
)
Net finance expense
   
14,547
     
12,970
     
6,908
     
27,517
     
14,523
 
Financial derivatives loss
   
4,071
     
-
     
-
     
4,071
     
-
 
Exchange differences
   
(7,263
)
   
20
     
276
     
(7,243
)
   
2,004
 
Depreciation and amortization charges, operating allowances and write-downs
   
26,401
     
27,222
     
24,534
     
53,623
     
67,532
 
EBITDA
   
36,807
     
30,883
     
(46,638
)
   
67,690
     
(25,430
)
Non-controlling interest settlement
   
1,751
     
-
     
-
     
1,751
     
-
 
Power credit
   
(3,696
)
   
-
     
-
     
(3,696
)
   
-
 
Long lived asset charge due to reclassification of discontinued operations to continuing operations
   
2,608
     
-
     
-
     
2,608
     
-
 
Accrual of contingent liabilities related to commercial disputes
   
6,400
     
-
     
-
     
6,400
     
-
 
Impairment loss
   
-
     
-
     
58,587
     
-
     
58,587
 
Transaction and due diligence expenses
   
-
     
-
     
5,227
     
-
     
7,868
 
Globe purchase price allocation adjustments
   
-
     
-
     
-
     
-
     
10,022
 
Adjusted EBITDA
 
$
43,870
     
30,883
     
17,176
     
74,753
     
51,047
 
                                         
 
Adjusted net profit (loss) attributable to Ferroglobe:
 
   
Quarter Ended
June 30, 2017
 
Quarter Ended
March 31, 2017
 
Quarter Ended
June 30, 2016
 
Six Months Ended
June 30, 2017
 
Six Months Ended
June 30, 2016
                               
Profit (loss) attributable to the parent
 
$
2,859
     
(6,554
)
   
(42,238
)
   
(3,695
)
   
(67,937
)
Tax rate adjustment
   
(1,645
)
   
1,771
     
(3,964
)
   
126
     
6,775
 
Non-controlling interest settlement
   
1,191
     
-
     
-
     
1,191
     
-
 
Power credit
   
(2,513
)
   
-
     
-
     
(2,513
)
   
-
 
Long lived asset charge due to reclassification of discontinued operations to continuing operations
   
1,773
     
-
     
-
     
1,773
     
-
 
Accrual of contingent liabilities related to commercial disputes
   
4,352
     
-
     
-
     
4,352
     
-
 
Impairment loss
   
-
     
-
     
39,839
     
-
     
39,839
 
Transaction and due diligence expenses
   
-
     
-
     
3,555
     
-
     
5,351
 
Globe purchase price allocation adjustments
   
-
     
-
     
-
     
-
     
6,815
 
Adjusted profit (loss) attributable to the parent
 
$
6,017
     
(4,783
)
   
(2,808
)
   
1,234
     
(9,157
)
                                         
 
 Adjusted diluted profit (loss) per share:
   
Quarter Ended
June 30, 2017
 
Quarter Ended
March 31, 2017
 
Quarter Ended
June 30, 2016
 
Six Months Ended
June 30, 2017
 
Six Months Ended
June 30, 2016
                                         
Diluted profit (loss) per ordinary share
 
$
0.02
     
(0.04
)
   
(0.25
)
   
(0.02
)
   
(0.40
)
Tax rate adjustment
   
(0.01
)
   
0.01
     
(0.01
)
   
0.00
     
0.05
 
Non-controlling interest settlement
   
0.01
     
-
     
-
     
0.01
     
-
 
Power credit
   
(0.01
)
   
-
     
-
     
(0.01
)
   
-
 
Long lived asset charge due to reclassification of discontinued operations to continuing operations
   
0.01
     
-
     
-
     
0.01
     
-
 
Accrual of contingent liabilities related to commercial disputes
   
0.03
     
-
     
-
     
0.03
     
-
 
Impairment loss
   
-
     
-
     
0.23
     
-
     
0.23
 
Transaction and due diligence expenses
   
-
     
-
     
0.02
     
-
     
0.03
 
Globe purchase price allocation adjustments
   
-
     
-
     
-
     
-
     
0.04
 
Adjusted diluted profit (loss) per ordinary share
 
$
0.05
     
(0.03
)
   
(0.01
)
   
0.02
     
(0.05
)
                                         
2

 
Recent developments

The favorable demand environment has allowed Ferroglobe to return to close to full capacity utilization. The Selma facility (Alabama, US) restarted one of its two furnaces. Ferroglobe's European and other North American plants are now running at full capacity. Facilities in Argentina and South Africa are currently at 50% and 65% utilization, respectively, in Q2 2017 as a result of unfavorable local conditions. Ferroglobe's plant in Venezuela has halted operations since May 2017, as the Company awaits further developments in the country.

Regarding the ongoing trade cases that Ferroglobe filed in the United States, the Department of Commerce (the "DOC") issued preliminary determinations on August 7, 2017 imposing countervailing duties on silicon metal imports from Australia, Brazil and Kazakhstan. The duties imposed ranged from 3.69% to 120%, with more than 54% of silicon metal imports into the United States being subject to cash deposit requirements. The Company has also filed antidumping cases against imports from Australia, Brazil, and Norway to address unfairly low import pricing. The DOC is expected to make preliminary determinations in the antidumping cases on October 4, 2017, which may result in the imposition of additional duties.  

Ferroglobe Executive Chairman, Javier López Madrid, commented, "We are confident that the affirmative preliminary determinations issued on August 7, 2017 will be the first step in ensuring a more competitive and fair silicon metal market in the U.S., and we look forward to receiving a favorable outcome in the ongoing antidumping investigations."

Regarding the ongoing trade case filed in Canada, the Canadian Border Services Agency (the "Agency") issued its preliminary determinations on July 5, 2017. The Agency found dumping and/or subsidy margins for Brazil, Kazakhstan, Laos, Malaysia, Norway and Thailand. It terminated its investigation against Russia on the basis of insufficient import volumes. The final determination of the Agency's investigations is expected to be issued on October 3, 2017. The Canadian International Trade Tribunal hearing is scheduled to take place on October 2, 2017, with a final finding expected to be issued on November 2, 2017.

The Company announced on July 26, 2017 that it has not received the required regulatory approvals to divest hydro-electric operations in Spain. The Company will continue to explore all options, including further efforts to gain formal approval for the divestiture of these non-core assets to capture the assets full value.


Conference Call

Ferroglobe will review the results for the second quarter of 2017 during a conference call at 9:00 a.m. Eastern Time on Wednesday, August 30, 2017.

The dial-in number for the call for participants in the United States is 877-293-5491 (conference ID 69657476). International callers should dial 914-495-8526 (conference ID 69657476). 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 http://edge.media-server.com/m/p/xyge3xid.


About Ferroglobe

Ferroglobe PLC is one of the world's largest producers of silicon metal and silicon- and manganese-based alloys, 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 headquartered in London. For more information, visit http://investor.ferroglobe.com .


Forward-Looking Statements

This release 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 the company's future plans, strategies and expectations. Forward-looking statements generally can be identified by the use of forward-looking terminology, including, but not limited to, "may," "could," "seek," "guidance," "predicts," "potential," "likely," "believe," "will," "expect," "anticipate, "estimate," "plan," "intends" or "forecast," variations of these terms and similar expressions, or the negative of these terms or similar expressions.

Forward-looking statements contained in this press release are based on information presently available to the company and assumptions that we 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.

You are cautioned that all such statements involve risks and uncertainties, including, without limitation, risks that the legacy businesses of Globe and FerroAtlántica 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 not limited to: (i) risks relating to unanticipated costs of integration, including operating costs, customer loss and business disruption being greater than expected; (ii) Ferroglobe's 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 for 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 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. Ferroglobe does not give any assurance (1) that the company will achieve its 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 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 or assume any obligation to update publicly any of the forward-looking statements in this press release to reflect actual results, new information or future events, changes in assumptions or changes in other factors affecting forward-looking statements. If the company updates one or more forward-looking statements, no inference should be drawn that it will make additional updates with respect to those or other forward-looking statements. The company cautions you not to place undue reliance on any forward-looking statements, which are made only as of the date of this press release.
 
3

Non-IFRS Financial Metrics

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. Reconciliations of these measures to the comparable IFRS financial measures are provided above and in the attached financial statements.

*   *   *
INVESTOR CONTACT:
Ferroglobe PLC
Joe Ragan, US: +1 917 209 8581, UK: +44 (0) 7827 227 688
Chief Financial Officer
Email: jragan@ferroglobe.com



 
4

 
Ferroglobe PLC and Subsidiaries
Unaudited Condensed Consolidated Income Statement
(in thousands of U.S. dollars, except per share amounts) 
                               
   
Quarter Ended
June 30, 2017
 
Quarter Ended
March 31, 2017*
 
Quarter Ended
June 30, 2016
 
Six Months Ended
June 30, 2017
 
Six Months Ended
June 30, 2016
                               
Sales
 
$
425,810
     
396,037
     
397,953
     
821,847
     
821,432
 
Cost of sales
   
(250,279
)
   
(241,138
)
   
(252,764
)
   
(491,417
)
   
(534,607
)
Other operating income
   
4,008
     
1,629
     
3,717
     
5,637
     
6,050
 
Staff costs
   
(74,168
)
   
(66,485
)
   
(72,050
)
   
(140,653
)
   
(139,233
)
Other operating expense
   
(65,009
)
   
(60,124
)
   
(64,374
)
   
(125,133
)
   
(119,315
)
Depreciation and amortization charges, operating allowances and write-downs
   
(26,401
)
   
(27,222
)
   
(24,534
)
   
(53,623
)
   
(67,532
)
Impairment losses
   
-
     
-
     
(58,587
)
   
-
     
(58,587
)
Other (loss) gain
   
(3,555
)
   
964
     
(533
)
   
(2,591
)
   
(1,170
)
Operating profit (loss)
   
10,406
     
3,661
     
(71,172
)
   
14,067
     
(92,962
)
Finance income
   
162
     
795
     
442
     
957
     
685
 
Finance expense
   
(14,709
)
   
(13,765
)
   
(7,350
)
   
(28,474
)
   
(15,208
)
Financial derivatives loss
   
(4,071
)
   
-
     
-
     
(4,071
)
   
-
 
Exchange differences
   
7,263
     
(20
)
   
(276
)
   
7,243
     
(2,004
)
Loss before tax
   
(949
)
   
(9,329
)
   
(78,356
)
   
(10,278
)
   
(109,489
)
Income tax benefit
   
1,949
     
1,214
     
29,038
     
3,163
     
28,261
 
Profit (loss) for the period
   
1,000
     
(8,115
)
   
(49,318
)
   
(7,115
)
   
(81,228
)
Loss attributable to non-controlling interest
   
1,859
     
1,561
     
7,080
     
3,420
     
13,291
 
Profit (loss) attributable to the parent
 
$
2,859
     
(6,554
)
   
(42,238
)
   
(3,695
)
   
(67,937
)
                                         
                                         
EBITDA
   $
36,807
     
30,883
     
(46,638
)
   
67,690
     
(25,430
)
Adjusted EBITDA
   
43,870
     
30,883
     
17,176
     
74,753
     
51,047
 
                                         
Weighted average shares outstanding
                                       
Basic
   
171,947
     
171,838
     
171,838
     
171,947
     
171,838
 
Diluted
   
172,047
     
171,838
     
171,838
     
171,947
     
171,838
 
                                         
Profit (loss) per ordinary share
                                       
Basic
   $
0.02
     
(0.04
)
   
(0.25
)
   
(0.02
)
   
(0.40
)
Diluted
   
0.02
     
(0.04
)
   
(0.25
)
   
(0.02
)
   
(0.40
)
                                         
* Revised data presents the results of Ferroglobe's energy business in Spain as no longer discontinued operations.
                         
                                         
 
 
 
 
5

 
 
 
Ferroglobe PLC and Subsidiaries
Unaudited Condensed Consolidated Statement of Financial Position
(in thousands of U.S. dollars)
                   
   
June 30,
 
March 31,
 
December 31,
   
2017
 
2017
 
2016
ASSETS
Non-current assets
                 
Goodwill
 
$
232,250
     
230,733
     
230,210
 
Other intangible assets
   
60,282
     
56,854
     
62,839
 
Property, plant and equipment
   
888,844
     
790,501
     
781,606
 
Non-current financial assets
   
6,198
     
5,967
     
5,823
 
Non-current financial assets from related parties
   
-
     
-
     
9,845
 
Deferred tax assets
   
52,214
     
47,768
     
44,950
 
Non-current receivables from related parties
   
2,282
     
2,139
     
2,108
 
Other non-current assets
   
22,337
     
20,892
     
20,245
 
Total non-current assets
   
1,264,407
     
1,154,854
     
1,157,626
 
Current assets
                       
Inventories
   
337,555
     
312,757
     
316,702
 
Trade and other receivables
   
229,703
     
214,738
     
209,406
 
Current receivables from related parties
   
3,684
     
5,576
     
11,971
 
Current income tax assets
   
11,272
     
16,614
     
19,869
 
Current financial assets
   
3,661
     
3,640
     
4,049
 
Other current assets
   
12,568
     
10,703
     
9,810
 
Cash and cash equivalents
   
183,561
     
172,647
     
196,931
 
Assets and disposal groups classified as held for sale
   
-
     
120,094
     
92,937
 
Total current assets
   
782,004
     
856,769
     
861,675
 
Total assets
 
$
2,046,411
     
2,011,623
     
2,019,301
 
                         
EQUITY AND LIABILITIES
Equity
 
$
906,518
     
902,872
     
892,042
 
Non-current liabilities
                       
Deferred income
   
5,960
     
3,656
     
3,949
 
Provisions
   
85,029
     
83,993
     
81,957
 
Bank borrowings
   
62,776
     
78,123
     
179,473
 
Obligations under finance leases
   
72,647
     
1,906
     
3,385
 
Debt instruments
   
338,202
     
339,693
     
-
 
Other financial liabilities
   
116,492
     
86,962
     
86,467
 
Other non-current liabilities
   
2,449
     
2,317
     
5,737
 
Deferred tax liabilities
   
144,345
     
132,753
     
139,535
 
Total non-current liabilities
   
827,900
     
729,403
     
500,503
 
Current liabilities
                       
Provisions
   
22,091
     
11,915
     
19,627
 
Bank borrowings
   
1,021
     
1,545
     
241,818
 
Obligations under finance leases
   
12,030
     
586
     
1,852
 
Debt instruments
   
12,537
     
4,156
     
-
 
Other financial liabilities
   
2,460
     
1,616
     
1,592
 
Payables to related parties
   
8,813
     
10,283
     
30,738
 
Trade and other payables
   
178,602
     
177,015
     
157,706
 
Current income tax liabilities
   
4,673
     
3,616
     
961
 
Other current liabilities
   
69,766
     
63,346
     
64,780
 
Liabilities associated with assets classified as held for sale
   
-
     
105,270
     
107,682
 
Total current liabilities
   
311,993
     
379,348
     
626,756
 
Total equity and liabilities
 
$
2,046,411
     
2,011,623
     
2,019,301
 
                         
 
 
 
 
6

 
 
 
 
Ferroglobe PLC and Subsidiaries
Unaudited Condensed Consolidated Statement of Cash Flows
(in thousands of U.S. dollars)
                               
   
Quarter Ended
June 30, 2017
 
Quarter Ended
March 31, 2017
 
Quarter Ended
June 30, 2016
 
Six Months Ended
June 30, 2017
 
Six Months Ended
June 30, 2016
CASH FLOWS FROM OPERATING ACTIVITIES:
                             
Profit (loss) for the period
 
$
1,000
     
(8,115
)
   
(49,318
)
   
(7,115
)
   
(81,228
)
Adjustments to reconcile net loss to net cash provided by operating activities:
                                 
Income tax benefit
   
(1,949
)
   
(1,214
)
   
(29,038
)
   
(3,163
)
   
(28,261
)
Depreciation and amortization charges, operating allowances and write-downs
   
26,401
     
27,222
     
24,534
     
53,623
     
67,532
 
Finance income
   
(162
)
   
(795
)
   
(442
)
   
(957
)
   
(685
)
Finance expense
   
14,709
     
13,765
     
7,350
     
28,474
     
15,208
 
Financial derivatives loss
   
4,071
     
-
     
-
     
4,071
     
-
 
Exchange differences
   
(7,263
)
   
20
     
276
     
(7,243
)
   
2,004
 
Impairment losses
   
-
     
-
     
58,587
     
-
     
58,587
 
Loss on disposals of non-current and financial assets
   
1,348
     
(558
)
   
242
     
790
     
191
 
Other adjustments
   
2,208
     
(406
)
   
291
     
1,802
     
979
 
Changes in operating assets and liabilities
                                       
(Increase) decrease in inventories
   
(11,943
)
   
7,108
     
14,347
     
(4,835
)
   
57,696
 
Decrease in trade receivables
   
9,456
     
3,765
     
28,439
     
13,221
     
54,236
 
(Decrease) increase in trade payables
   
(8,943
)
   
18,156
     
(10,651
)
   
9,213
     
(8,741
)
Other*
   
(506
)
   
(34,545
)
   
(16,050
)
   
(35,051
)
   
(58,901
)
Income taxes (paid) received
   
(3,919
)
   
(2,297
)
   
1,497
     
(6,216
)
   
(11,277
)
Interest paid
   
(4,378
)
   
(9,729
)
   
(5,767
)
   
(14,107
)
   
(13,469
)
Net cash provided by operating activities
   
20,130
     
12,377
     
24,297
     
32,507
     
53,871
 
CASH FLOWS FROM INVESTING ACTIVITIES:
                                       
Payments due to investments:
                                       
Other intangible assets
   
-
     
(410
)
   
(87
)
   
(410
)
   
(523
)
Property, plant and equipment
   
(14,319
)
   
(12,362
)
   
(15,676
)
   
(26,681
)
   
(42,484
)
Non-current financial assets
   
-
     
(14
)
   
(273
)
   
(14
)
   
(273
)
Current financial assets
   
-
     
-
     
(13,865
)
   
-
     
(13,918
)
Disposals:
                                       
Intangible assets
   
-
     
-
     
(30
)
   
-
     
-
 
Property, plant and equipment
   
-
     
-
     
(104
)
   
-
     
-
 
Current financial assets
   
-
     
-
     
99
     
-
     
99
 
Interest received
   
211
     
353
     
466
     
564
     
709
 
Net cash used by investing activities
   
(14,108
)
   
(12,433
)
   
(29,470
)
   
(26,541
)
   
(56,390
)
CASH FLOWS FROM FINANCING ACTIVITIES:
                                       
Dividends paid
   
-
     
-
     
-
     
-
     
(13,747
)
Payment for debt issuance costs
   
(3,078
)
   
(10,477
)
   
-
     
(13,555
)
   
-
 
Proceeds from debt issuance
   
-
     
350,000
     
-
     
350,000
     
-
 
Increase/(decrease) in bank borrowings:
                                       
Borrowings
   
30
     
31,425
     
25,978
     
31,455
     
82,969
 
Payments
   
(15,300
)
   
(372,380
)
   
11,623
     
(387,680
)
   
(38,075
)
Other amounts paid due to financing activities
   
(10,694
)
   
(7,211
)
   
(3,851
)
   
(17,905
)
   
(4,563
)
Net cash (used) provided by financing activities
   
(29,042
)
   
(8,643
)
   
33,750
     
(37,685
)
   
26,584
 
TOTAL NET CASH FLOWS FOR THE PERIOD
   
(23,020
)
   
(8,699
)
   
28,577
     
(31,719
)
   
24,065
 
Beginning balance of cash and cash equivalents
   
193,031
     
196,982
     
114,019
     
196,982
     
116,666
 
Exchange differences on cash and cash equivalents in foreign currencies
   
13,550
     
4,748
     
(6,822
)
   
18,298
     
(4,957
)
Ending balance of cash and cash equivalents
 
$
183,561
     
193,031
     
135,774
     
183,561
     
135,774
 
                                         
* Includes the cash outflow impact of the $32.5M shareholder settlement during the quarter ended March 31, 2016.
                         
                                         
 
 
 
7

 
 
 
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: August 29, 2017  
  FERROGLOBE PLC  
       
 
By:
/s/ Joseph Ragan  
    Name:  Joseph Ragan  
    Title:    Chief Financial Officer and Principal Accounting Officer (Principal Financial Officer)
 
 
8

     Advancing Materials Innovation  NASDAQ: GSM    Second Quarter 2017 
 

 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 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.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. For additional information, including a reconciliation of the differences between the non-IFRS financial measures and the comparable IFRS financial measures, refer to the press release dated August 30, 2017 accompanying this presentation, which is incorporated by reference herein. 
 

 Table of Contents  Q2 2017 OverviewSelected Financial Highlights 
 

 Q2 2017 Overview     Pedro Larrea, Chief Executive Officer 
 

 Q2 2017 results exceeded expectations; first net profit since merger    Volumes stabilizing in core products  (Volume change vs Q1 2017)SiM +9.4%Si alloys -5.9%Mn alloys +1.1%    Capturing benefits of improved market environment  (ASP increase vs Q1 2017)SiM +6.3%Si alloys +7.7%Mn alloys +0.8%  Optimized business platform  Successful commercial strategyStreamlining of best practicesDiversified product portfolio Actions underway to optimize production facilities       Sales +8% vs Q1 2017  Adjusted EBITDA +42 % vs Q1 2017  Adjusted EBITDA margin improvement of 250 bps to 10.3%  Q2 net profit $1.0 million – adjusted net profit $6.0 million*     *Adjusted net profit attributable to the parent  
 

 Source: Company information  Antidumping and Countervailing Duties   Sale of Spanish Hydro-Electric Assets   Accounts Receivable Securitization  Update on corporate matters    The U.S. Department of Commerce has issued a preliminary determination imposing countervailing duties ranging from 3.69% to 120% on silicon metal imports from Australia, Brazil and Kazakhstan. The Department of Commerce is expected to make preliminary determinations in the antidumping cases on October 4, 2017Canadian authority determined margins of dumping ranging from 4.2% to 135.3%. Final determination of the Agency’s investigations is expected to be issued on October 3, 2017. The Canadian International Trade Tribunal is expected to issue final findings on November 2, 2017  Announced on July 26, 2017 that Ferroglobe had not received the required regulatory approvals to complete divestitureIntend to continue to explore all options, including further efforts to gain formal approval for the divestiture of these non-core assets in order to capture their full value   Entered into $250 million accounts receivable securitization on July 31, to obtain financing in connection with receivables generated in U.S., Canada, Spain and France Provides several benefits, including risk mitigation, liquidity maximization and the ability to replace multiple factoring arrangements with one consolidated, centrally-managed program 
 

 Diversified portfolio provides exposure to improved pricing across key products  Silicon-BasedAlloys26%  Mn-Based Alloys20%  Other11%  Aluminum  Silicones  Solar  Foundry  Specialty Steel  Steel  Qtr / Qtr Revenue Growth by Product  Other  Source: Company informationEnd market data reflects FY 2016 sales  Business benefits from a diversified portfolio, now generating almost equal earnings from three main product segments   Revenue Contribution by Product and Market (Q2 2017)  1 
 

 Q2 2017 revenues up 8% vs previous quarter  Improvement in prices and volumes for silicon metal as well as prices for silicon-based alloys are the key drivers in the quarter 
 

 Silicon metal snapshot   Volume Trends  Sequential Quarter Product EBITDA Contribution ($m)  Commentary  Silicon metal EBITDA more than doubled due to higher realized prices and increased volumes from new orders, especially in North AmericaSilicon metal prices:Continue to increase in North America as a result of the preliminary rulings in ongoing trade cases Upward trend in China: +500 $/t since mid-JulyFirst signs of European recovery during AugustVolumes were up 9.4% in Q2 2017 vs Q1 2017  Pricing Trends 
 

 Silicon-based alloys snapshot   Volume Trends  Commentary  Silicon-based alloys cost increase attributable to technical issues at Bridgeport facility and the conversion of one furnace at SabonFerrosilicon prices remain at historically strong levels and gained traction during August, especially in North America. Actively looking to fill up order book to take advantage of current levelsVolumes were down 5.9%   Sequential Quarter Product EBITDA Contribution ($m)  Pricing Trends 
 

 Manganese-based alloys snapshot  Commentary  Manganese-based alloys faced with pricing pressure, offset with lower manganese ore costs from inventoryMarket prices came down in Q2 2017 from historical highs. Prices are gaining momentum again in Q3 2017Volumes were up slightly compared to Q1 2017 – with plants running at full capacity   Volume Trends  Pricing Trends  Sequential Quarter Product EBITDA Contribution ($m) 
 

 Pricing momentum continues to drive performance   Ferroglobe Actions Leading to Results  Commercial strategy has captured the recovery of the market Continue to optimize business platform: Actions underway to optimize production facilities: minimizing the impact of idled facilities: streamlining production plans to increase utilization rates; including the conversion of furnaces to capture market opportunitiesStreamlining of best practicesDiversified product portfolio   Sequential Quarter EBITDA Contribution ($m) 
 

 Reported EBITDA of $36.8 million. Adjusted EBITDA of $43.9 million for the quarter +42% vs reported EBITDA of $30.9 million in Q1 2017 Net profit of $1.0 million, or $0.02 per share on a fully diluted basis. Adjusted net profit attributable to the parent of $6.0 million, or $0.05 per share on a fully diluted basis.Working capital increased by $35.4 million during the quarter, primarily a result of the recovery cycle - total working capital increase year-to-date of $20.3 millionOperating cash flow of $20.1 million and free cash flow of $5.8 millionBalance sheet strength maintained:Net debt of $435 million at end of Q2; up compared to $407 at the end of Q1Liquidity of $320 million at end of Q2 Net Debt to EBITDA metrics have improved dramatically    Conservative capital structure — company positioned to pursue growth opportunitiesSuccessful refinancing has simplified the debt structure and improved the solvency with regard to covenantsFocus on deleveraging the balance sheetLeverage target of below 2xContinue to focus on managing cost structure through technical performance, portfolio optimization and streamlining of SG&ABusiness decisions, including M&A and CapEx, are made with a focus on financial metrics – targeting immediately accretive transactions  Delivering value for shareholders and positioning for the long term   Q2 2017 Performance  Remain Focused on Delivering Long-Term Value 
 

    Selected Financial Highlights  Joe Ragan, Chief Financial Officer 
 

 Q2 2017 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  Q2 2017  Q1 2017  FY 2016  Sales ($m)  425.8  396.0  1,555.7  Operating Profit ($m)  10.4  3.7  -375.6  Profit Attributable to the Parent ($m)  2.9  -6.6  -338.4  Adjusted EBITDA ($m)  43.9  30.9  70.4  Adjusted EBITDA Margin  10.3%  7.8%  4.5%  Working Capital ($m)  388.7  353.3  368.4  Free Cash Flow1 ($m)  5.8  -  43.4  Notes 
 

 Balance sheet summary  ($mm)  Q2 20171  Q1 20171  12/31/2016  Total Assets  2,046  2,012  2,019  Net Debt2  435  407  405  Book Equity   907  903  892          Net Debt2 / Total Assets  21%  20%  20%  Net Debt2 / Capital3   32%  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)  +$26m Inventory+$10m A/R 
 

   Concluding remarks   Improved market environment: recovery trend continues across key products  Business well-positioned: cost structure and commercial strategy  Positive outlook for remainder of 2017  
 

    Q&A  
 

 Advancing Materials Innovation  NASDAQ: GSM      Second Quarter 2017