Ferroglobe PLC
Ferroglobe PLC (Form: 6-K, Received: 11/28/2017 06:05:52)
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 November, 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 the registrant by furnishing the information contained in this Form 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 November 27, 2017 announcing results for the quarter ended September 30, 2017
• Third quarter earnings call presentation 
 
 

Ferroglobe Reports Results for Third Quarter 2017

·
Q3 2017 revenue of $451.6 million, up 6% from $425.8 million in Q2 2017
·
Q3 2017 net loss of $(5.0) million and a diluted loss per share of $(0.02), down from a net profit of $1.0 million and diluted earnings per share of $0.02 in the prior quarter, driven by tax adjustments/valuation allowances
·
Q3 2017 adjusted net profit of $9.2 million, or $0.05 on a fully diluted per share basis,  compared to a net profit of $6.0 million, or $0.05 on a fully diluted per share basis in the prior quarter
·
Q3 2017 reported EBITDA of $54.3 million, an increase of 48% compared to reported EBITDA of $36.8 million in Q2 2017
·
Q3 2017 adjusted EBITDA of $56.1 million, an increase of 28% compared to $43.9 million adjusted EBITDA in the prior quarter
·
Maintained strong balance sheet with Q3 2017 net debt of $394.3 million 1 compared to $434.6 million in Q2 2017
·
Results exceeded expectations with strong performance driven by   price recovery and volume improvements in both silicon metal and manganese based alloys

LONDON , Nov. 27, 2017 – 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 third quarter of 2017.

In Q3 2017, Ferroglobe posted a net loss of $(5.0) million, or $(0.02) per share on a fully diluted basis. On an adjusted basis, Q3 2017 net profit was $9.2 million, or $0.05 per share on a fully diluted basis.

Q3 2017 reported EBITDA was $54.3 million, up from $36.8 million in the prior quarter. On an adjusted basis, Q3 2017 EBITDA was $56.1 million, up 27.9% from Q2 2017 adjusted EBITDA of $43.9 million. The company reported adjusted EBITDA margins of 12.4% for Q3 2017, compared to adjusted EBITDA margins of 10.3% for Q2 2017.

Net sales in Q3 2017 totaled $451.6 million, up 6.1% from $425.8 million in Q2 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 5.4% from $2,210/MT in Q2 2017 to $2,330/MT in Q3 2017, a significant improvement driven mainly by the market impact of the ongoing trade cases in the United States;
·
The average selling price for silicon-based alloys increased 3.7% to $1,645/MT in the quarter from $1,586/MT in the prior quarter;
·
The average selling price for manganese alloys increased 3.1% to $1,349/MT in Q3 as compared to $1,308/MT in the prior quarter; and,
·
In addition to these pricing trends, Ferroglobe continued to realize average sales prices in excess of the index.

In addition to improved pricing, the company also saw stabilization of demand and volumes across its key products. In terms of sales volumes, silicon metal experienced a 0.7% increase quarter-over-quarter, manganese alloys experienced a 14.3% increase quarter-over-quarter and silicon alloys experienced a 5.7% decrease quarter-over-quarter.

   
Quarter Ended September 30, 2017
 
Quarter Ended
June 30, 2017
 
Quarter Ended September 30, 2016
 
Nine Months Ended September 30, 2017
 
Nine Months Ended September 30, 2016
Shipments in metric tons:
                 
Silicon Metal
 
83,465
   
82,881
   
81,091
   
242,099
   
259,016
Silicon-based Alloys
 
66,873
   
70,913
   
69,539
   
212,622
   
218,271
Manganese-based Alloys
 
73,642
   
64,403
   
59,368
   
201,745
   
193,985
Total shipments*
 
223,980
   
218,197
   
209,998
   
656,466
   
671,272
                             
                             
   
Quarter Ended September 30, 2017
 
Quarter Ended
June 30, 2017
 
Quarter Ended September 30, 2016
 
Nine Months Ended September 30, 2017
 
Nine Months Ended September 30, 2016
Average selling price ($/MT):
                           
Silicon Metal
$
2,330
 
$
2,210
 
$
2,090
 
$
2,211
 
$
2,240
Silicon-based Alloys
$
1,645
 
$
1,586
 
$
1,391
 
$
1,564
 
$
1,421
Manganese-based Alloys
$
1,349
 
$
1,308
 
$
865
 
$
1,320
 
$
801
Total*
$
1,803
 
$
1,741
 
$
1,512
 
$
1,727
 
$
1,558
                             
                             
   
Quarter Ended September 30, 2017
 
Quarter Ended
June 30, 2017
 
Quarter Ended September 30, 2016
 
Nine Months Ended September 30, 2017
 
Nine Months Ended September 30, 2016
Average selling price ($/lb.):
                           
Silicon Metal
$
1.06
 
$
1.00
 
$
0.95
 
$
1.00
 
$
1.02
Silicon-based Alloys
$
0.75
 
$
0.72
 
$
0.63
 
$
0.71
 
$
0.64
Manganese-based Alloys
$
0.61
 
$
0.59
 
$
0.39
 
$
0.60
 
$
0.36
Total*
$
0.82
 
$
0.79
 
$
0.69
 
$
0.78
 
$
0.71
                             
* Excludes by-products and other
                           
 
"Ferroglobe delivered strong performance with quarter-over-quarter earnings growth and improved profitability. The ongoing trade cases in the United States resulted in continued pricing improvement for silicon metal in that market and sustained strong end-market demand continued to drive the stabilization of shipment volumes," said CEO Pedro Larrea. "The business continues to perform through the recovery, and we are focused on carefully managing our costs to fully capture the benefits of the new market environment. At the same time, as the recently announced deal with Glencore proves, we are increasing our presence in the core businesses. We expect prices to continue to improve through the year and we remain focused on sustained performance across all business segments as we move into the final quarter of 2017 and beyond."
 
Strong cash flow generation continues to support liquidity

Working capital decreased by $11.6 million 1 during the quarter, primarily a result of the increased securitization of receivables. Year-to-date the company has increased total working capital by $8.6 million 1 due to the recovery cycle. Ferroglobe continued to generate positive cash flows. During the third quarter, the company generated operating cash flows of $67.4 million 1 , free cash flow of $52.7 million 1 , with total free cash flow of $58.5 million 1 year to date.

Ferroglobe's net debt was $394.3 million 1 at the end of Q3 2017, down compared to $434.6 million at the end of Q2 2017.


1 As of September 30, 2017, the balance sheet includes the securitized accounts receivables under the Company's new global accounts receivables securitization program which began in July 2017.  As such, $120.1M is included in debt and accounts receivables in the balance sheet as of September 30, 2017, which reflects the receivables sold into the program.  However, the impact of the securitization is included in the calculation of certain key metrics, such as net debt, working capital, cash flows from operations and free cash flow in order make such metrics comparable.

 
Adjusted EBITDA:

   
Quarter Ended
September 30, 2017
 
Quarter Ended
June 30, 2017
 
Quarter Ended
September 30, 2016
 
Nine Months Ended September 30, 2017
 
Nine Months Ended September 30, 2016
                               
(Loss) profit  attributable to the parent
 
$
(3,347
)
   
2,859
     
(28,523
)
   
(7,042
)
   
(96,460
)
Loss attributable to non-controlling interest
   
(1,640
)
   
(1,859
)
   
(2,545
)
   
(5,060
)
   
(15,836
)
Income tax expense (benefit)
   
14,364
     
(1,949
)
   
(10,158
)
   
11,201
     
(38,419
)
Net finance expense
   
14,528
     
14,547
     
6,693
     
42,045
     
21,216
 
Financial derivatives loss
   
1,823
     
4,071
     
-
     
5,894
     
-
 
Exchange differences
   
1,529
     
(7,263
)
   
876
     
(5,714
)
   
2,880
 
Depreciation and amortization charges, operating allowances and write-downs
   
27,076
     
26,401
     
30,440
     
80,699
     
97,972
 
EBITDA
   
54,333
     
36,807
     
(3,217
)
   
122,023
     
(28,647
)
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
   
-
     
-
     
9,043
     
-
     
67,630
 
Transaction and due diligence expenses
   
-
     
-
     
111
     
-
     
7,979
 
Business interruption
   
(1,980
)
   
-
     
2,532
     
(1,980
)
   
2,532
 
Inventory impairment
   
-
     
-
     
4,330
     
-
     
4,330
 
Step-up valuation adjustment
   
3,757
     
-
     
-
     
3,757
     
-
 
Globe purchase price allocation adjustments
   
-
     
-
     
-
     
-
     
10,022
 
Adjusted EBITDA
 
$
56,110
     
43,870
     
12,799
     
130,863
     
63,846
 
 
 
Adjusted net profit (loss) attributable to Ferroglobe:
 
   
Quarter Ended
September 30, 2017
 
Quarter Ended
June 30, 2017
 
Quarter Ended
September 30, 2016
 
Nine Months Ended
September 30, 2017
 
Nine Months Ended
September 30, 2016
                               
(Loss) profit attributable to the parent
 
$
(3,347
)
   
2,859
     
(28,523
)
   
(7,042
)
   
(96,460
)
Tax rate adjustment
   
11,363
     
(1,645
)
   
3,035
     
11,489
     
9,810
 
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
   
-
     
-
     
6,149
     
-
     
45,988
 
Transaction and due diligence expenses
   
-
     
-
     
75
     
-
     
5,426
 
Business interruption
   
(1,346
)
   
-
     
1,722
     
(1,346
)
   
1,722
 
Inventory impairment
   
-
     
-
     
2,944
     
-
     
2,944
 
Step-up valuation adjustment
   
2,555
     
-
     
-
     
2,555
     
-
 
Globe purchase price allocation adjustments
   
-
     
-
     
-
     
-
     
6,815
 
Adjusted profit (loss) attributable to the parent
 
$
9,225
     
6,017
     
(14,598
)
   
10,459
     
(23,755
)
 

Adjusted diluted profit (loss) per share:
 
   
Quarter Ended September 30, 2017
 
Quarter Ended
June 30, 2017
 
Quarter Ended
September 30, 2016
 
Nine Months Ended
September 30, 2017
 
Nine Months Ended
September 30, 2016
                               
Diluted profit (loss) per ordinary share
 
$
(0.02
)
   
0.02
     
(0.17
)
   
(0.04
)
   
(0.56
)
Tax rate adjustment
   
0.07
     
(0.01
)
   
0.01
     
0.07
     
0.06
 
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
   
-
     
-
     
0.04
     
-
     
0.27
 
Transaction and due diligence expenses
   
-
     
-
     
-
     
-
     
0.03
 
Business interruption
   
(0.01
)
   
-
     
0.01
     
(0.01
)
   
0.01
 
Inventory impairment
   
-
     
-
     
0.02
     
-
     
0.02
 
Executive severance
   
-
     
-
     
-
     
-
     
-
 
Step-up valuation adjustment
   
0.01
     
-
     
-
     
0.01
     
-
 
Globe purchase price allocation adjustments
   
-
     
-
     
-
     
-
     
0.04
 
Adjusted diluted profit (loss) per ordinary share
 
$
0.05
     
0.05
     
(0.09
)
   
0.07
     
(0.13
)

 

Recent developments

The trade cases in the United States and the favorable demand environment have allowed Ferroglobe to return to close to full capacity utilization. The Selma facility (Alabama, US) has restarted operations, and the remainder of Ferroglobe's European and North American plants are running at full capacity. Facilities in Argentina and South Africa are at 50% and 65% utilization, respectively, as a result of unfavorable local conditions, but are planning to restart full operations in the near future. Ferroglobe's plant in Venezuela has halted operations since May, as the company awaits further developments in the country.

In the ongoing trade cases that Ferroglobe filed in the U.S., the Department of Commerce ("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%. The DOC made preliminary determinations on October 5, 2017 in the antidumping cases against Australia, Brazil and Norway. The antidumping duties imposed ranged from 3.74% to 134.92%. Now more than 63% of silicon metal imports into the U.S. are subject to cash deposit requirements.

On November 2, 2017, the Canadian International Trade Tribunal ("CITT") determined that dumped silicon metal imports from Laos and Thailand, subsidized imports from Norway, and dumped and subsidized imports from Brazil, Kazakhstan and Malaysia had not caused injury and were not threatening to cause injury to the sole Canadian producer, Quebec Silicon Limited Partnership and QSIP Canada ULC ("Quebec Silicon").

The CITT issued its reasons for decision on November 17, 2017. We believe the CITT made several critical errors regarding, among others, the impact and relevance of global price declines on Canadian market pricing and the basis on which silicon metal is negotiated and sold to customers in Canada. Ferroglobe intends to appeal the CITT's decision to the Federal Court of Appeal.
We note this decision has no relevance for or impact on the ongoing antidumping and countervailing duty cases in the United States against silicon metal imports from Australia, Brazil, Kazakhstan and Norway because these are different proceedings in different jurisdictions, based on different facts and different legal standards.
On November 21, Ferroglobe announced that it has entered into an agreement for the acquisition of a 100% interest in Glencore's manganese alloys plants in Dunkirk (France) and Mo I Rana (Norway). The parties expect the transaction to close in the first quarter of 2018, subject to obtaining certain regulatory approvals in France, Germany and Poland and other customary conditions.
Conference Call

Ferroglobe will review the results for the third quarter of 2017 during a conference call at 9:00 a.m. Eastern Time on Tuesday, November 28, 2017.

The dial-in number for the call for participants in the United States is +1 877-293-5491 (conference ID 4495559).  International callers should dial +1 914-495-8526 (conference ID 4495559).  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/zre43hs5


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 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.

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: +1 786 509 6925, 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
September 30, 2017
 
Quarter Ended
June 30, 2017
 
Quarter Ended
September 30, 2016
 
Nine Months Ended
September 30, 2017
 
Nine Months Ended
September 30, 2016
                               
Sales
 
$
451,628
     
425,810
     
364,727
     
1,273,475
     
1,186,159
 
Cost of sales
   
(267,364
)
   
(250,279
)
   
(236,631
)
   
(758,781
)
   
(771,238
)
Other operating income
   
7,404
     
4,008
     
4,963
     
13,041
     
11,013
 
Staff costs
   
(74,183
)
   
(74,168
)
   
(67,586
)
   
(214,836
)
   
(206,819
)
Other operating expense
   
(59,741
)
   
(65,009
)
   
(60,490
)
   
(184,874
)
   
(179,805
)
Depreciation and amortization charges, operating allowances and write-downs
   
(27,076
)
   
(26,401
)
   
(30,440
)
   
(80,699
)
   
(97,972
)
Impairment losses
   
(98
)
   
-
     
(9,044
)
   
(98
)
   
(67,631
)
Other gain (loss)
   
(3,313
)
   
(3,555
)
   
844
     
(5,904
)
   
(326
)
Operating profit (loss)
   
27,257
     
10,406
     
(33,657
)
   
41,324
     
(126,619
)
Finance income
   
258
     
162
     
548
     
1,215
     
1,233
 
Finance expense
   
(14,786
)
   
(14,709
)
   
(7,241
)
   
(43,260
)
   
(22,449
)
Financial derivatives loss
   
(1,823
)
   
(4,071
)
   
-
     
(5,894
)
   
-
 
Exchange differences
   
(1,529
)
   
7,263
     
(876
)
   
5,714
     
(2,880
)
Profit (loss) before tax
   
9,377
     
(949
)
   
(41,226
)
   
(901
)
   
(150,715
)
Income tax (expense) benefit
   
(14,364
)
   
1,949
     
10,158
     
(11,201
)
   
38,419
 
(Loss) profit for the period
   
(4,987
)
   
1,000
     
(31,068
)
   
(12,102
)
   
(112,296
)
Loss attributable to non-controlling interest
   
1,640
     
1,859
     
2,545
     
5,060
     
15,836
 
(Loss) profit attributable to the parent
 
$
(3,347
)
   
2,859
     
(28,523
)
   
(7,042
)
   
(96,460
)
                                         
                                         
EBITDA
   
54,333
     
36,807
     
(3,217
)
   
122,023
     
(28,647
)
Adjusted EBITDA
   
56,110
     
43,870
     
12,799
     
130,863
     
63,846
 
                                         
Weighted average shares outstanding
                                       
Basic
   
171,947
     
171,947
     
171,838
     
171,947
     
171,838
 
Diluted
   
171,947
     
172,047
     
171,838
     
171,947
     
171,838
 
                                         
(Loss) profit per ordinary share
                                       
Basic
   
(0.02
)
   
0.02
     
(0.17
)
   
(0.04
)
   
(0.56
)
Diluted
   
(0.02
)
   
0.02
     
(0.17
)
   
(0.04
)
   
(0.56
)
                                         
                           

 


Ferroglobe PLC and Subsidiaries
 
Unaudited Condensed Consolidated Statement of Financial Position
 
(in thousands of U.S. dollars)
 
                   
   
September 30,
 
June 30,
 
December 31,
   
2017
 
2017
 
2016
ASSETS
 
Non-current assets
                 
Goodwill
 
$
234,613
     
232,250
     
230,210
 
Other intangible assets
   
59,120
     
60,282
     
62,839
 
Property, plant and equipment
   
890,084
     
888,844
     
781,606
 
Non-current financial assets
   
6,372
     
6,198
     
5,823
 
Non-current financial assets from related parties
   
-
     
-
     
9,845
 
Deferred tax assets
   
49,463
     
52,214
     
44,950
 
Non-current receivables from related parties
   
2,363
     
2,282
     
2,108
 
Other non-current assets
   
21,971
     
22,337
     
20,245
 
Total non-current assets
   
1,263,986
     
1,264,407
     
1,157,626
 
Current assets
                       
Inventories
   
353,296
     
337,555
     
316,702
 
Trade and other receivables
   
328,056
     
229,703
     
209,406
 
Current receivables from related parties
   
3,351
     
3,684
     
11,971
 
Current income tax assets
   
7,896
     
11,272
     
19,869
 
Current financial assets
   
3,681
     
3,661
     
4,049
 
Other current assets
   
12,834
     
12,568
     
9,810
 
Cash and cash equivalents
   
189,763
     
183,561
     
196,931
 
Assets and disposal groups classified as held for sale
   
-
     
-
     
92,937
 
Total current assets
   
898,877
     
782,004
     
861,675
 
Total assets
 
$
2,162,863
     
2,046,411
     
2,019,301
 
                         
EQUITY AND LIABILITIES
 
Equity
 
$
915,837
     
906,518
     
892,042
 
Non-current liabilities
                       
Deferred income
   
5,077
     
5,960
     
3,949
 
Provisions
   
87,490
     
85,029
     
81,957
 
Bank borrowings
   
-
     
62,776
     
179,473
 
Obligations under finance leases
   
71,894
     
72,647
     
3,385
 
Debt instruments
   
338,772
     
338,202
     
-
 
Other financial liabilities
   
97,560
     
116,492
     
86,467
 
Other non-current liabilities
   
2,385
     
2,449
     
5,737
 
Deferred tax liabilities
   
143,789
     
144,345
     
139,535
 
Total non-current liabilities
   
746,967
     
827,900
     
500,503
 
Current liabilities
                       
Provisions
   
23,736
     
22,091
     
19,627
 
Bank borrowings *
   
146,221
     
1,021
     
241,818
 
Obligations under finance leases
   
12,572
     
12,030
     
1,852
 
Debt instruments
   
2,738
     
12,537
     
-
 
Other financial liabilities
   
34,375
     
2,460
     
1,592
 
Payables to related parties
   
10,466
     
8,813
     
30,738
 
Trade and other payables
   
184,244
     
178,602
     
157,706
 
Current income tax liabilities
   
8,350
     
4,673
     
961
 
Other current liabilities
   
77,357
     
69,766
     
64,780
 
Liabilities associated with assets classified as held for sale
   
-
     
-
     
107,682
 
Total current liabilities
   
500,059
     
311,993
     
626,756
 
Total equity and liabilities
 
$
2,162,863
     
2,046,411
     
2,019,301
 
                         
* As of September 30, 2017, includes financing of $120,091 related to the Company's accounts receivable securitization program.
 




Ferroglobe PLC and Subsidiaries
 
Unaudited Condensed Consolidated Statement of Cash Flows
 
(in thousands of U.S. dollars)
 
                               
   
Quarter Ended September 30, 2017
 
Quarter Ended
June 30, 2017
 
Quarter Ended September 30, 2016
 
Nine Months Ended September 30, 2017
 
Nine Months Ended September 30, 2016
CASH FLOWS FROM OPERATING ACTIVITIES:
                             
(Loss) profit for the period
 
$
(4,987
)
   
1,000
     
(31,068
)
   
(12,102
)
   
(112,296
)
Adjustments to reconcile net loss to net cash provided by operating activities:
                                 
Income tax expense (benefit)
   
14,364
     
(1,949
)
   
(10,158
)
   
11,201
     
(38,419
)
Depreciation and amortization charges, operating allowances and write-downs
   
27,076
     
26,401
     
30,440
     
80,699
     
97,972
 
Finance income
   
(258
)
   
(162
)
   
(548
)
   
(1,215
)
   
(1,233
)
Finance expense
   
14,786
     
14,709
     
7,241
     
43,260
     
22,449
 
Financial derivatives loss
   
1,823
     
4,071
     
-
     
5,894
     
-
 
Exchange differences
   
1,529
     
(7,263
)
   
876
     
(5,714
)
   
2,880
 
Impairment losses
   
98
     
-
     
9,044
     
98
     
67,631
 
(Gain) loss on disposals of non-current and financial assets
   
3,711
     
1,348
     
217
     
4,501
     
408
 
Other adjustments
   
(364
)
   
2,208
     
3,269
     
1,438
     
4,248
 
Changes in operating assets and liabilities
                                       
(Increase) decrease in inventories
   
(4,372
)
   
(11,943
)
   
2,135
     
(9,207
)
   
59,831
 
(Increase) decrease in trade receivables
   
(90,108
)
   
9,456
     
17,547
     
(76,887
)
   
71,783
 
Increase (Decrease) increase in trade payables
   
3,370
     
(8,943
)
   
9,834
     
12,583
     
1,093
 
Other*
   
6,631
     
(506
)
   
(603
)
   
(28,420
)
   
(59,504
)
Income taxes paid
   
(3,768
)
   
(3,919
)
   
(8,911
)
   
(9,984
)
   
(20,188
)
Interest paid
   
(22,249
)
   
(4,378
)
   
(6,837
)
   
(36,356
)
   
(20,306
)
Net cash (used) provided by operating activities
   
(52,718
)
   
20,130
     
22,478
     
(20,211
)
   
76,349
 
CASH FLOWS FROM INVESTING ACTIVITIES:
                                       
Payments due to investments:
                                       
Other intangible assets
   
(88
)
   
-
     
(2,020
)
   
(498
)
   
(2,543
)
Property, plant and equipment
   
(14,692
)
   
(14,319
)
   
(10,805
)
   
(41,373
)
   
(53,289
)
Non-current financial assets
   
-
     
-
     
(411
)
   
(14
)
   
(684
)
Current financial assets
   
-
     
-
     
3,988
     
-
     
(9,930
)
Disposals:
                                       
Current financial assets
   
-
     
-
     
(99
)
   
-
     
-
 
Interest received
   
54
     
211
     
1,328
     
618
     
2,037
 
Net cash used by investing activities
   
(14,726
)
   
(14,108
)
   
(8,019
)
   
(41,267
)
   
(64,409
)
CASH FLOWS FROM FINANCING ACTIVITIES:
                                       
Dividends paid
   
-
     
-
     
(27,496
)
    -      
(41,243
)
Payment for debt issuance costs
   
(3,210
)
   
(3,078
)
   
-
     
(16,765
)
   
-
 
Proceeds from debt issuance
   
-
     
-
     
-
     
350,000
     
-
 
Increase/(decrease) in bank borrowings:
                                       
Borrowings
   
118,468
     
30
     
22,362
     
149,923
     
105,331
 
Payments
   
(38,296
)
   
(15,300
)
   
(19,623
)
   
(425,976
)
   
(57,698
)
Other amounts paid due to financing activities
   
(990
)
   
(10,694
)
   
(3,750
)
   
(18,895
)
   
(8,313
)
Net cash provided (used) by financing activities
   
75,972
     
(29,042
)
   
(28,507
)
   
38,287
     
(1,923
)
TOTAL NET CASH FLOWS FOR THE PERIOD
   
8,528
     
(23,020
)
   
(14,048
)
   
(23,191
)
   
10,017
 
Beginning balance of cash and cash equivalents
   
183,561
     
193,031
     
135,774
     
196,982
     
116,666
 
Exchange differences on cash and cash equivalents in foreign currencies
   
(2,326
)
   
13,550
     
(2,560
)
   
15,972
     
(7,517
)
Ending balance of cash and cash equivalents
 
$
189,763
     
183,561
     
119,166
     
189,763
     
119,166
 
                                         
* Includes the cash outflow impact of the $32.5M shareholder settlement during the quarter ended March 31, 2016.
 

 


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: November 27, 2017
  
FERROGLOBE PLC
 
 
 
 
by
/s/ Joseph Ragan
 
 
Name: Joseph Ragan
 
 
Title: Chief Financial Officer and Principal Accounting Officer (Principal Financial Officer)
 

 
     Advancing Materials Innovation  NASDAQ: GSM    Third 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  Q3 2017 OverviewSelected Financial Highlights 
 

 I. Q3 2017 Overview     Pedro Larrea, Chief Executive Officer 
 

 Q3 2017 results confirm recovery trend    Continued volumes recovery in most core products  (Volume change vs Q2 2017)Si Metal +0.7%Si alloys -5.7%Mn alloys +14.3%    Disciplined execution of commercial strategy  (ASP increase vs Q2 2017)Si Metal +5.4%Si alloys +3.7%Mn alloys +3.1%  Normalized business platform  Continuous margins improvementSuccessful commercial strategyTimely deployment (or closure when needed) of production facilitiesKTM program to optimize technical performance      Revenue +6.1% vs Q2 2017  Adjusted EBITDA $56.1million+27.9 % vs Q2 2017  Adjusted EBITDA margin improvement of 212 bps to 12.4%  Q3 net loss$-5.0 million – adjusted net profit $9.2 million*     *Adjusted net profit attributable to the parent  
 

 Q3 2017 results confirm recovery trend    Best two consecutive quarters since the creation of FerroglobeFlexible commercial and industrial strategy has allowed to adapt to market circumstancesEvolving towards full capacity utilizationHaving been able to generate cash flow even in the worst quarters  Adjusted EBITDA evolution($ million) 
 

 Source: Company information  Trade Actions  Update on corporate matters  On November 2, 2017 the Canadian International Trade Tribunal (CITT) determined that there is no injury from dumping and subsidized imports. Ferroglobe reviewing the CITT statement of reasons to evaluate next steps On October 5, 2017 the U.S. Department of Commerce DOC announced its affirmative preliminary determinations in the antidumping duty investigations of imports of silicon metal from Australia, Brazil, and Norway  On October 26, 2017 shareholders approved changes to the Articles of Association of the Company Pierre Vareille was appointed as a Non-Executive Director  Governance  Investor Relations  On October 17, 2017 Ferroglobe hosted its inaugural investor dayPart of an on-going effort focused on increasing our communication with investors Deep dive on the company, business environment, corporate strategy, and outlook for 2018  Solar Project  On November 21, 2017 Ferroglobe signed definitive agreement for the acquisition of manganese plants in France and Norway from GlencoreMore than doubles capacity in manganese based alloysAgent arrangements with Glencore  Acquisition of Manganese Alloys Facilities  Launched the first phase (1,400 tpa) of the solar project in Puertollano (Spain)The project is the first step to achieve a cost efficient entry in a high technology product line 
 

 Diversified portfolio provides exposure to improved pricing across key products  Qtr / Qtr Revenue Growth by Product  Other  Source: Company information  Business benefits from a diversified portfolio, now generating balanced earnings from the three main product segments   Revenue Contribution by Product and Market (9 months 2017) 
 

 Q3 2017 revenues up 6.1% vs previous quarter  Silicon metal prices and Mn alloys volumes improvements were the key drivers in the quarter 
 

 Silicon metal snapshot   Volume Trends  Sequential Quarter Product EBITDA Contribution ($m)  Commentary  Silicon prices remain robust — North American pricing showing steady increases on the back of trade related determinations; — European prices benefited from higher Chinese pricing in the quarter — Favorable impact of appreciation of EUR against USDThe costs were affected by appreciation of EUR against USD at EU plants and increased cost of power and coal at North American plants.Steady growth in sales volumes  Pricing Trends 
 

 Silicon-based alloys snapshot   Volume Trends  Commentary  Prices for Silicon-based alloys continue to remain at historically strong levels. Prices and costs were affected by appreciation of EUR against USD.   Sequential Quarter Product EBITDA Contribution ($m)  Pricing Trends 
 

 Manganese-based alloys snapshot  Commentary  Mn-based alloys provided the biggest contribution improvement with stronger pricing and volumes, offsetting the higher ore costsVolumes improved 14.3% over Q2-17. Steady increases in volumes back to 2015 levelsPrices continue to remain healthy supported by strong demand dynamics  Volume Trends  Pricing Trends  Sequential Quarter Product EBITDA Contribution ($m) 
 

 Pricing momentum continues to drive performance   Ferroglobe Actions Leading to Results  Commercial strategy proves to be right capturing the continued 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 $54.3 million, +47.6 % vs reported EBITDA of $36.8 million in Q2 2017. Adjusted EBITDA of $56.1 million for the quarter.Net loss of -5.0 million, or $-0.02 per share on a fully diluted basis. Adjusted net profit attributable to the parent of $9.2 million, or $0.05 per share on a fully diluted basis.Working capital reduced by $11.7 million during the quarter, primarily due to the securitization program.Operating cash flow of $67.4 million and free cash flow of $52.7 millionBalance sheet strength maintained:Net debt of $394.3 million at end of Q3, down by 9.3% compared to $434.6 at the 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&AOperational strategy beginning to take shape leveraging to upside expected next year - Si Metal capacity increased Business 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   Q3 2017 Performance  Remain Focused on Delivering Long-Term Value 
 

    Selected Financial Highlights  Joe Ragan, Chief Financial Officer 
 

 Q3 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 information2 Does not include securitization program $120 m  Key performance indicators  Q3 2017  Q2 2017  FY 2016  Revenue ($m)  451.6  425.8  1,555.7  Operating Profit ($m)  27.3  10.4  -375.6  Profit Attributable to the Parent ($m)  -3.3  2.9  -338.4  Adjusted EBITDA ($m)  56.1  43.9  70.4  Adjusted EBITDA Margin  12.4%  10.3%  4.5%  Working Capital ($m)  377.02  388.7  368.4  Free Cash Flow1 ($m)  52.7  5.8  43.4  Notes 
 

 Balance sheet summary  ($mm)  Q3 20171  Q2 20171  12/31/2016  Total Assets  2,162.9  2,046.4  2,019.3  Net Debt2  394.33  434.6  405.0  Book Equity   915.8  906.5  892.0          Net Debt2 / Total Assets  18.2%  21.2%  20.1%  Net Debt2 / Capital4   30.1%  32.4%  31.2%  Financial results are unauditedNet Debt includes finance lease obligationsDoes not include $120m of securitization programCapital is calculated as book equity plus net debt  Notes 
 

 Debt evolution ($m)  Quarterly debt evolution1  Debt does not include $120m of securitization program  Notes 
 

 Working capital evolution ($m)  Working capital does not include $120m of securitization program  Notes  1 
 

   Concluding remarks   Improved Market Environment  Contracting Season Well Underway  Strong 2018 Expected 
 

    Q&A  
 

 Advancing Materials Innovation  NASDAQ: GSM      Third 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
 
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