Ferroglobe PLC
Ferroglobe PLC (Form: 6-K, Received: 03/17/2017 07:36:04)

 
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 March, 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 March 16, 2017 announcing results for the quarter and year ended December 31, 2016
▪  Fourth quarter and year-end earnings call presentation
 
2

 
Ferroglobe Reports Results for Fourth Quarter and Full Year 2016

·
Q4 2016 revenue of $394.4 million, up from $364.7 million in Q3 2016; FY 2016 revenue of $1,580.5 million, down from $2,039.6 million in FY 2015
·
Q4 2016 net loss of $(44.4) million, or $(0.23) on a fully diluted per share basis; FY 2016 net loss of $(156.7) million, or $(0.79) on a fully diluted per share basis
·
Q4 2016 adjusted net loss of $(16.9) million, or $(0.09) on a fully diluted per share basis; FY 2016 adjusted net loss of $(40.6) million, or $(0.24) on a fully diluted per share basis
·
Q4 2016 reported EBITDA loss of $(23.3) million, which includes executive severance expense of $24.4 million and impairment losses of $7.9 million; FY 2016 reported EBITDA loss of $(51.9) million, which includes impairment losses of $79.9 million and executive severance expense of $24.4 million
·
Q4 2016 adjusted EBITDA of $9.1 million, down from $12.8 million in the previous quarter; FY 2016 adjusted EBITDA of $72.9 million, down from $294.8 million year-over-year
·
Q4 2016 operating cash flow generation of $38.1 million and free cash flow generation of $20.3 million; FY 2016 operating cash flow generation of $114.4 million and free cash flow generation of $75.9 million
·
Exceeded working capital synergies target of $100 million by reducing working capital by $192.0 million in FY 2016
·
Captured $57 million in synergies for FY 2016, and reached a level of $72 million in run-rate synergies in Q4 2016; on track to achieve $85 million of total annual synergies in 2017

LONDON , March 16, 2017 – Ferroglobe PLC (NASDAQ: GSM), the world’s leading producer of silicon metal, and a leading silicon- and manganese-based specialty alloys producer, announced today results for the fourth quarter and fiscal year of 2016.

In the fourth quarter of 2016, Ferroglobe posted a net loss of $(44.4) million, or $(0.23) per share on a fully diluted basis. In the fiscal year of 2016, Ferroglobe posted a net loss of $(156.7) million, or $(0.79) per share on a fully diluted basis. Excluding impairment losses, executive severance expense and other non-recurring items on an after tax basis, the company posted an adjusted net loss of $(16.9) million, or $(0.09) per share on a fully diluted basis for the quarter, and an adjusted net loss of $(40.6) million, of $(0.24) per share on a fully diluted basis for the year.

Ferroglobe reported an EBITDA loss of $(23.3) million for the fourth quarter of 2016 after charging executive severance expense of $24.4 million and impairment losses of $7.9 million. Excluding these charges, adjusted EBITDA for the fourth quarter of 2016 was $9.1 million. For full year of 2016, Ferroglobe reported an EBITDA loss of $(51.9) million due to impairment losses of $79.9 million and executive severance expense of $24.4 million. Excluding these charges, adjusted EBITDA for the full year of 2016 was $72.9 million.

Net sales in the fourth quarter of 2016 totaled $394.4 million, up from $364.7 million in the third quarter of 2016. Net sales in the full year of 2016 totaled $1,580.5 million, down from $2,039.6 million year-over-year. Over the course of the fourth quarter of 2016, spot prices for Ferroglobe’s key products in the United States and Europe increased substantially as compared to the third quarter of 2016. However, this increase has not been reflected in Ferroglobe´s selling prices due to time lags in certain contracts and the existence of fixed priced contracts:
·
In the fourth quarter of 2016, the average selling price for silicon metal was relatively flat from the previous quarter.
·
During the fourth quarter, the average selling price for silicon-based alloys decreased 3.2% from the third quarter of 2016 and the average selling price for manganese alloys increased 3.1% from the third quarter of 2016.
·
During the full year of 2016, the average selling price for silicon metal declined 18.9%, the average selling price for silicon-based alloys decreased 15.8% and the average selling price for manganese alloys decreased 15.6%, each as compared to the average selling price for the full year of 2015.
 
 
3

 
In terms of sales volumes, in the fourth quarter of 2016, silicon metal experienced a 3.53% increase quarter-over-quarter, silicon alloys experienced a 13.17% increase quarter-over-quarter, and manganese alloys experienced a 31.26% increase quarter-over-quarter, reflecting recovery in the market.
 
                         
   
Year Ended December 31, 2016
   
Quarter Ended December 31, 2016
   
Quarter Ended September 30, 2016
   
Pro forma for the Year Ended December 31, 2015 **
 
Shipments in metric tons:
                       
Silicon Metal
   
342,966
     
83,950
     
81,091
     
373,355
 
Silicon Alloys
   
296,969
     
78,698
     
69,539
     
323,761
 
Manganese Alloys
   
271,912
     
77,927
     
59,368
     
264,022
 
Total shipments*
   
911,847
     
240,575
     
209,998
     
961,138
 
 
 
   
Year Ended December 31, 2016
   
Quarter Ended December 31, 2016
   
Quarter Ended September 30, 2016
   
Pro forma for the Year Ended December 31, 2015 **
 
Average selling price ($/MT):
                               
Silicon Metal
 
$
2,200
   
$
2,075
   
$
2,090
   
$
2,713
 
Silicon Alloys
 
$
1,403
   
$
1,340
   
$
1,391
   
$
1,668
 
Manganese Alloys
 
$
827
   
$
892
   
$
865
   
$
986
 
Total*
 
$
1,531
   
$
1,451
   
$
1,512
   
$
1,887
 
 
 
   
Year Ended December 31, 2016
   
Quarter Ended December 31, 2016
   
Quarter Ended September 30, 2016
   
Pro forma for the Year Ended December 31, 2015 **
 
Average selling price ($/lb.):
                               
Silicon Metal
 
$
1.00
   
$
0.94
   
$
0.95
   
$
1.23
 
Silicon Alloys
 
$
0.64
   
$
0.61
   
$
0.63
   
$
0.76
 
Manganese Alloys
 
$
0.38
   
$
0.40
   
$
0.39
   
$
0.45
 
Total*
 
$
0.69
   
$
0.66
   
$
0.69
   
$
0.86
 
 
* Excludes by-products and other.
** Represents combined Globe and FerroAtlantica results on a pro forma basis.
 
 
“Our fourth quarter earnings are in line with the guidance provided at our recent trading update. Stabilized pricing along with strong demand resulted in a more than 8% revenue increase from the prior quarter,” said CEO Pedro Larrea. “Overall, market trends continue to move in our favor with gradual price improvements in silicon metal and silicon alloys and a dramatic increase in manganese alloys margins. We continue to see strong demand in our end markets and have entered into sales contracts for 2017 that are 15-20% above fourth quarter spot prices, partially offset in the short term by the roll-off of high-priced legacy contracts. After one year as a combined company, we have successfully integrated the organization, captured enhanced synergies, strengthened our commercial strategy and restructured our balance sheet, setting us up for a healthy improvement of our financials in the wake of the market recovery.”

Mr. Larrea concluded, “We recently filed a petition with the U.S. Department of Commerce and the U.S. International Trade Commission, as well as a separate complaint with the Canada Border Services Agency, seeking relief from unfairly traded, low-priced imports in North America. Favorable decisions in these proceedings will positively impact our profitability.”
 
Recent developments

On February 1, 2017, Ferroglobe announced the pricing of $350,000,000 aggregate principal amount of Senior Notes due 2022. The Notes, co-issued with Globe and guaranteed by certain of Ferroglobe’s other subsidiaries, bear interest at an annual rate of 9.375% and were issued at 100% of their nominal value. The proceeds from the offering of the Notes were used primarily to repay certain existing indebtedness.
 
4


On February 1, 2017, Ferroglobe announced that it has entered into a definitive agreement to sell the hydro-electric operations of its non-core Energy segment in Spain for estimated gross cash proceeds of €255 million (approximately $270 million). The company continues to work with the relevant governmental authorities in order to obtain the necessary regulatory approvals.

On February 20, 2017, the Canada Border Services Agency announced that is launching an investigation into whether or not certain silicon metal originating in or exported from Brazil, Kazakhstan, Malaysia, Norway and Thailand is being sold at unfair prices in Canada. It will also investigate whether or not subsidies are being applied to certain silicon metal originating in or exported from these five countries.

On March 8, 2017, Globe Specialty Metals, Inc. (“Globe”) a subsidiary of Ferroglobe, filed a petition with the U.S. Department of Commerce and the U.S. International Trade Commission to stop and provide relief from unfairly traded silicon metal imports from Brazil, Kazakhstan, Norway and Australia. Globe’s petitions outlined deliberate practices by producers from these four countries to sell silicon metal at artificially low prices in the U.S.

In another development, Ferroglobe’s Executive Chairman Javier López Madrid has advised the company that a ruling was issued by the Spanish High Court (Audiencia Nacional) on February 23, 2017, pursuant to which he has been convicted, together with 64 other former directors or executives of Bankia, S.A. and/or Caja Madrid, of certain charges as an accessory (not as an author) in connection with the alleged misuse of corporate credit cards for €34,807.81 in expenditures between 2010 and 2012 while he was a non-executive director of Bankia, S.A. and Caja Madrid (this proceeding has previously been disclosed by Ferroglobe in its regulatory filings). The directors and executives of the bank over a period of 25 years were granted corporate credit cards as part of their remuneration, an arrangement that has been deemed unlawful pursuant to the ruling. All these events took place prior to Mr. López Madrid joining Ferroglobe. Mr. López Madrid has advised the company that he has filed an appeal with the Spanish Supreme Court (Tribunal Supremo) in response to the ruling and will continue to defend himself vigorously in this matter. The Ferroglobe Board of Directors has reviewed the developments in this legal proceeding, agreed that Mr. López Madrid remain as a director and continues to support him in his role as Executive Chairman.

Focus on cost management, cash-flow generation and synergy attainment

Ferroglobe reported an EBITDA loss of $(23.3) million for the fourth quarter of 2016. Excluding charges related to asset and inventory impairments, and executive severance expense, adjusted EBITDA for the fourth quarter of 2016 was $9.1 million.

Ferroglobe maintains its expectations for synergy attainment to $85 million on an annual basis, up from $65 million previously. The company has achieved a total of $57 million of savings from synergies for the full year of 2016, implying a run-rate of $72 million in the fourth quarter of 2016. Production costs were reduced by 13% for the full year of 2016.

Ferroglobe generated operating cash flows of $38.1 million in the fourth quarter of 2016, and $114.4 million for the full year of 2016. Part of the operating cash flows comes from working capital improvements of $54.7 million during the fourth quarter of 2016, bringing improvements for the full year of 2016 to $191.2 million. The company generated $75.9 million of free cash flow in the fiscal year of 2016, of which $20.3 million was generated during the fourth quarter of 2016. 1 Ferroglobe’s net debt was $404.6 million at the end of the fourth quarter of 2016, compared to $430 million at the end of third quarter of 2016.



1 Free cash-flow defined as “Net cash provided by operating activities” minus “Payments for property, plant and equipment.”
 
 
5

 
   
Year Ended
December 31, 2016
   
Quarter Ended
December 31, 2016  
 
Quarter Ended
September 30, 2016 
Loss attributable to the parent
 
$
(136,552
)
   
(40,092
)
   
(28,523
)
Loss attributable to non-controlling interest
   
(20,186
)
   
(4,350
)
   
(2,545
)
Income tax benefit
   
(57,556
)
   
(19,137
)
   
(10,158
)
Net finance expense
   
28,715
     
7,499
     
6,693
 
Exchange differences
   
3,507
     
627
     
876
 
Depreciation and amortization charges, operating allowances and write-downs
   
130,172
     
32,200
     
30,440
 
EBITDA
   
(51,900
)
   
(23,253
)
   
(3,217
)
Transaction and due diligence expenses
   
7,979
     
-
     
111
 
Impairment loss
   
74,465
     
6,834
     
9,043
 
Globe purchase price allocation adjustments
   
10,022
     
-
     
-
 
Business interruption
   
2,532
     
-
     
2,532
 
Inventory impairment
   
5,410
     
1,080
     
4,330
 
Executive severance
   
24,430
     
24,430
     
-
 
Adjusted EBITDA, excluding above items
 
$
72,938
     
9,091
     
12,799
 
 
 
 
   
Year Ended December 31,
2016
   
Quarter Ended December 31,
2016
   
Quarter Ended September 30,
2016
 
Diluted loss per ordinary share
   
(0.79
)
   
(0.23
)
   
(0.17
)
Tax rate adjustment
   
0.06
     
0.01
     
0.01
 
Transaction and due diligence expenses
   
0.03
     
-
     
-
 
Impairment loss
   
0.29
     
0.03
     
0.04
 
Globe purchase price allocation adjustments
   
0.04
     
-
     
-
 
Business interruption
   
0.01
     
-
     
0.01
 
Inventory impairment
   
0.02
     
-
     
0.02
 
Executive severance
   
0.10
     
0.10
     
-
 
Adjusted diluted loss per ordinary share
   
(0.24
)
   
(0.09
)
   
(0.09
)
 
 
 
   
Year Ended December 31,
2016
   
Quarter Ended December 31,
2016
   
Quarter Ended September 30,
2016
 
Loss attributable to the parent
 
$
(136,552
)
   
(40,092
)
   
(28,523
)
Tax rate adjustment
   
11,018
     
1,208
     
3,035
 
Transaction and due diligence expenses
   
5,426
     
-
     
75
 
Impairment loss
   
50,636
     
4,648
     
6,149
 
Globe purchase price allocation adjustments
   
6,815
     
-
     
-
 
Business interruption
   
1,722
     
-
     
1,722
 
Inventory impairment
   
3,679
     
735
     
2,944
 
Executive severance
   
16,612
     
16,612
     
-
 
Adjusted loss attributable to the parent
 
$
(40,644
)
   
(16,889
)
   
(14,598
)
 
 
6

 
Conference Call

Ferroglobe will review the results for the fourth quarter of 2016 results during a conference call at 9:00 a.m. Eastern Time on March 17, 2017. The dial-in number for the call for participants in the United States is 877-293-5491 (conference ID 88145142). International callers should dial +1 914-495-8526 (conference ID 88145142). 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/qfukfe99 .

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 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 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 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) 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 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. 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.
 
7


All information in this press release is as of the date of its release. We do 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 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 press release.

Non-GAAP Measures

EBITDA, adjusted EBITDA, adjusted loss attributable to the parent and adjusted diluted loss per ordinary share are pertinent non-GAAP 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 U.S. GAAP financial measures. Reconciliations of these measures to the comparable U.S. GAAP financial measures are provided above and in the attached financial statements.


*              *              *

INVESTOR CONTACT:
Ferroglobe PLC
Joe Ragan, US:  001-786-509-6925, UK:  +44 (0) 7827 227 688
Chief Financial Officer
Email: jragan@ferroglobe.com
 
 
8

 
Ferroglobe PLC and Subsidiaries
Unaudited Condensed Consolidated Income Statement
(in thousands of U.S. dollars, except per share amounts)
 
   
Year Ended December 31,
2016 
 
Quarter Ended December 31,
2016 
 
Quarter Ended September 30,
2016 
 
Year Ended December 31,
2015* 
Sales
 
$
1,580,524
   
$
394,365
   
$
364,727
   
$
2,039,608
 
Cost of sales
   
(1,049,994
)
   
(278,756
)
   
(236,631
)
   
(1,225,313
)
Other operating income
   
29,339
     
18,326
     
4,963
     
20,455
 
Staff costs
   
(294,629
)
   
(87,810
)
   
(67,586
)
   
(330,382
)
Other operating expense
   
(243,594
)
   
(63,789
)
   
(60,490
)
   
(351,929
)
Depreciation and amortization charges, operating allowances and write-downs
   
(130,172
)
   
(32,200
)
   
(30,440
)
   
(141,097
)
Impairment losses
   
(75,089
)
   
(7,458
)
   
(9,044
)
   
(52,042
)
Other gain (loss)
   
1,543
     
1,869
     
844
     
(3,473
)
Operating loss
   
(182,072
)
   
(55,453
)
   
(33,657
)
   
(44,173
)
Finance income
   
1,554
     
321
     
548
     
1,343
 
Finance expense
   
(30,269
)
   
(7,820
)
   
(7,241
)
   
(34,521
)
Exchange differences
   
(3,507
)
   
(627
)
   
(876
)
   
29,993
 
Loss before tax
   
(214,294
)
   
(63,579
)
   
(41,226
)
   
(47,358
)
Income tax benefit (expense)
   
57,556
     
19,137
     
10,158
     
(62,546
)
Loss for the period
   
(156,738
)
   
(44,442
)
   
(31,068
)
   
(109,904
)
Loss attributable to non-controlling interest
   
20,186
     
4,350
     
2,545
     
13,308
 
Loss attributable to the parent
 
$
(136,552
)
 
$
(40,092
)
 
$
(28,523
)
 
$
(96,596
)
                                 
                                 
EBITDA
   
(51,900
)
   
(23,253
)
   
(3,217
)
   
96,924
 
Adjusted EBITDA
   
72,938
     
9,091
     
12,799
     
294,799
 
                                 
Weighted average shares outstanding
                               
Basic
   
171,838
     
171,838
     
171,838
         
Diluted
   
171,838
     
171,838
     
171,838
         
                                 
Loss per ordinary share
                               
Basic
   
(0.79
)
   
(0.23
)
   
(0.17
)
       
Diluted
   
(0.79
)
   
(0.23
)
   
(0.17
)
       
 
* Represents combined Globe and FerroAtlantica results on a pro forma basis.
 
 
9

Ferroglobe PLC and Subsidiaries
Unaudited Condensed Consolidated Statement of Financial Position
(in thousands of U.S. dollars)
 
   
December 31,
   
September 30,
   
December 31,
 
   
2016
   
2016
   
2015
 
ASSETS
                 
Non-current assets
                 
Goodwill
 
$
402,491
     
402,491
     
403,929
 
Other intangible assets
   
62,838
     
70,130
     
71,619
 
Property, plant and equipment
   
900,199
     
929,217
     
1,012,367
 
Non-current financial assets
   
15,668
     
10,541
     
9,672
 
Deferred tax assets
   
49,242
     
55,228
     
36,098
 
Non-current receivables from related parties
   
2,108
     
2,233
     
-
 
Other non-current assets
   
20,828
     
21,302
     
20,615
 
Total non-current assets
   
1,453,374
     
1,491,142
     
1,554,300
 
Current assets
                       
Inventories
   
312,800
     
369,996
     
425,372
 
Trade and other receivables
   
213,427
     
197,817
     
275,254
 
Current receivables from related parties
   
14,763
     
10,312
     
10,950
 
Current income tax assets
   
43,264
     
30,826
     
9,273
 
Current financial assets
   
4,049
     
14,204
     
4,112
 
Other current assets
   
24,521
     
13,236
     
10,134
 
Cash and cash equivalents
   
196,982
     
119,166
     
116,666
 
Total current assets
   
809,806
     
755,557
     
851,761
 
Total assets
 
$
2,263,180
     
2,246,699
     
2,406,061
 
EQUITY AND LIABILITIES
                       
Equity
 
$
1,093,353
     
1,170,774
     
1,294,973
 
Non-current liabilities
                       
Deferred income
   
3,949
     
5,259
     
4,389
 
Provisions
   
81,836
     
85,846
     
81,853
 
Bank borrowings
   
179,879
     
96,870
     
223,676
 
Obligations under finance leases
   
74,261
     
79,780
     
89,768
 
Other financial liabilities
   
92,043
     
7,748
     
7,549
 
Other non-current liabilities
   
5,737
     
4,295
     
4,517
 
Deferred tax liabilities
   
159,142
     
178,577
     
206,648
 
Total non-current liabilities
   
596,847
     
458,375
     
618,400
 
Current liabilities
                       
Provisions
   
16,868
     
17,688
     
9,010
 
Bank borrowings
   
241,412
     
357,004
     
182,554
 
Obligations under finance leases
   
12,359
     
15,118
     
13,429
 
Other financial liabilities
   
1,592
       -        -  
Payables to related parties
   
8,320
     
6,220
     
7,827
 
Trade and other payables
   
163,832
     
150,733
     
147,073
 
Current income tax liabilities
   
5,300
     
4,987
     
10,887
 
Other current liabilities
   
123,297
     
65,800
     
121,908
 
Total current liabilities
   
572,980
     
617,550
     
492,688
 
Total equity and liabilities
 
$
2,263,180
     
2,246,699
     
2,406,061
 
 
10

 
Ferroglobe PLC and Subsidiaries
Unaudited Condensed Consolidated Statement of Cash Flows
(in thousands of U.S. dollars)
 
   
Year Ended December 31,
2016
   
Quarter Ended December 31,
2016
   
Quarter Ended September 30,
2016
 
CASH FLOWS FROM OPERATING ACTIVITIES:
                 
Loss for the period
 
$
(156,738
)
 
$
(44,442
)
 
$
(31,068
)
Adjustments to reconcile net loss to net cash provided by operating activities:
                       
Income tax benefit
   
(57,556
)
   
(19,137
)
   
(10,158
)
Depreciation and amortization charges, operating allowances and write-downs
   
130,172
     
32,200
     
30,440
 
Finance income
   
(1,554
)
   
(321
)
   
(548
)
Finance expense
   
30,269
     
7,820
     
7,241
 
Exchange differences
   
3,507
     
627
     
876
 
Impairment losses
   
75,089
     
7,458
     
9,044
 
Loss on disposals of non-current and financial assets
   
308
     
(100
)
   
217
 
Other adjustments
   
(1,851
)
   
(6,099
)
   
3,269
 
Changes in operating assets and liabilities
                       
Decrease in inventories
   
103,243
     
43,412
     
2,135
 
Decrease in trade receivables
   
36,888
     
(34,895
)
   
17,547
 
Increase in trade payables
   
30,662
     
29,569
     
9,834
 
Other*
   
(27,651
)
   
31,853
     
(603
)
Income taxes (paid) received
   
(23,437
)
   
(3,249
)
   
(8,911
)
Interest paid
   
(26,925
)
   
(6,619
)
   
(6,837
)
Net cash provided by operating activities
   
114,426
     
38,077
     
22,478
 
CASH FLOWS FROM INVESTING ACTIVITIES:
                       
Payments due to investments:
                       
Other intangible assets
   
(4,184
)
   
(1,641
)
   
(2,020
)
Property, plant and equipment
   
(71,037
)
   
(17,748
)
   
(10,805
)
Non-current financial assets
   
(7,659
)
   
(6,975
)
   
(411
)
Current financial assets
   
(6
)
   
9,924
     
3,988
 
Disposals:
                       
Intangible assets
   
-
     
-
     
-
 
Property, plant and equipment
   
-
     
-
     
-
 
Current financial assets
   
-
     
-
     
(99
)
Interest received
   
1,825
     
(212
)
   
1,328
 
Net cash used by investing activities
   
(81,061
)
   
(16,652
)
   
(8,019
)
CASH FLOWS FROM FINANCING ACTIVITIES:
                       
Dividends paid
   
(54,988
)
   
(13,745
)
   
(27,496
)
Increase/(decrease) in bank borrowings:
                       
Borrowings
   
200,182
     
94,851
     
22,362
 
Payments
   
(81,237
)
   
(23,539
)
   
(19,623
)
Other amounts paid due to financing activities
   
(14,040
)
   
(5,727
)
   
(3,750
)
Net cash provided (used) by financing activities
   
49,917
     
51,840
     
(28,507
)
TOTAL NET CASH FLOWS FOR THE PERIOD
   
83,282
     
73,265
     
(14,048
)
Beginning balance of cash and cash equivalents
   
116,666
     
119,166
     
135,774
 
Exchange differences on cash and cash equivalents in foreign currencies
   
(2,966
)
   
4,551
     
(2,560
)
Ending balance of cash and cash equivalents
 
$
196,982
   
$
196,982
   
$
119,166
 
 
* Includes the cash outflow impact of the $32.5M shareholder settlement during the quarter ended March 31, 2016.
 

11

 
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: March 16, 2017  
  FERROGLOBE PLC  
       
 
By:
/s/ Nick Deeming  
    Name:  Nick Deeming  
    Title:    Corporate Secretary  
       
 
 
12

 
 
 
  Advancing Materials Innovation  NASDAQ: GSM      Fourth Quarter 2016 
 

 
 
  Forward-Looking Statement  This presentation contains forward-looking statements within the meaning of Section 27A of the United States Securities Act of 1933, as amended, and Section 21E of the United States Securities Exchange Act of 1934, as amended. Forward-looking statements are not historical facts but are based on certain assumptions of management and describe our future plans, strategies and expectations. Forward-looking statements can generally be identified by the use of forward-looking terminology, including, but not limited to, "may," “could,” “seek,” “guidance,” “predict,” “potential,” “likely,” "believe," "will," "expect," "anticipate," "estimate," "plan," "intend," "forecast," or variations of these terms and similar expressions, or the negative of these terms or similar expressions. Forward-looking statements contained in this presentation are based on information presently available to us and assumptions that we believe to be reasonable, but are inherently uncertain. As a result, our actual results, performance or achievements may differ materially from those expressed or implied by these forward-looking statements, which are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors that are, in some cases, beyond our control. You are cautioned that all such statements involve risks and uncertainties, including without limitation, risks that the businesses of Globe Specialty Metals Inc. and Grupo FerroAtlántica (together, “we,” “us,” “Ferroglobe,” the “Company”) will not be integrated successfully or that we will not realize estimated cost savings, value of certain tax assets, synergies and growth, or that such benefits may take longer to realize than expected. Important factors that may cause actual results to differ include, but are limited to: (i) risks relating to unanticipated costs of integration, including operating costs, customer loss and business disruption being greater than expected; (ii) our organizational and governance structure; (iii) the ability to hire and retain key personnel; (iv) regional, national or global political, economic, business, competitive, market and regulatory conditions including, among others, changes in metals prices; (v) increases in the cost of raw materials or energy; (vi) competition in the metals and foundry industries; (vii) environmental and regulatory risks; (viii) ability to identify liabilities associated with acquired properties prior to their acquisition; (ix) ability to manage price and operational risks including industrial accidents and natural disasters; (x) ability to manage foreign operations; (xi) changes in technology; (xii) ability to acquire or renew permits and approvals; (xiii) changes in legislation or governmental regulations affecting Ferroglobe; (xiv) conditions in the credit markets; (xv) risks associated with assumptions made in connection with critical accounting estimates and legal proceedings; (xvi) Ferroglobe's international operations, which are subject to the risks of currency fluctuations and foreign exchange controls; and (xvii) the potential of international unrest, economic downturn or effects of currencies, tax assessments, tax adjustments, anticipated tax rates, raw material costs or availability or other regulatory compliance costs. The foregoing list is not exhaustive. You should carefully consider the foregoing factors and the other risks and uncertainties that affect our business, including those described in the “Risk Factors” section of our Registration Statement on Form F-1, Annual Reports on Form 20-F, Current Reports on Form 6-K and other documents we file from time to time with the United States Securities and Exchange Commission. We do not give any assurance (1) that we will achieve our expectations or (2) concerning any result or the timing thereof, in each case, with respect to any regulatory action, administrative proceedings, government investigations, litigation, warning letters, consent decree, cost reductions, business strategies, earnings or revenue trends or future financial results. Forward- looking financial information and other metrics presented herein represent our key goals and are not intended as guidance or projections for the periods presented herein or any future periods. We do not undertake or assume any obligation to update publicly any of the forward- looking statements in this presentation to reflect actual results, new information or future events, changes in assumptions or changes in other factors affecting forward-looking statements. If we update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements. We caution you not to place undue reliance on any forward-looking statements, which are made only as of the date of this presentation.   
 

 
 
  Table of contents  Q4 overviewSelected financial highlights 
 

 
 
  Q4 overview    
 

 
 
 
  Source: Company information  Silicon metal price of $0.94 per pound, down 0.7%   Silicon-based alloys price of $0.61 per pound, down 3.3%   Manganese alloys price of $0.40 per pound, up 3.1%  Silicon metal (35% of sales): meaningful stabilization of prices  Silicon alloy (33% of sales): Sales mix of lower-priced products impacted Q4  Manganese alloy (32% of sales): pricing continues to strengthen into 2017   Spot prices for key products stabilized in Q4   
 

 
       Recovery of spot prices for our key commodities in the U.S. and Europe   Overall, market trends continue to move in our favorBulk ferroalloys (FeSi and Mn alloys) prices above levels one year agoMn alloy margins improved; more than doubled since September 2016 FeSi prices slightly increased in Europe and realized meaningful improvements in North America  Ferroglobe’s market position and strategy designed to capture pricing improvements Gradual and continued improvement of pricing in U.S. and EuropeIncreased production costs and exchange rates in some producing countries Chinese domestic prices increased; reduced exports to Europe  
 

 
 
 
  Positive market outlook for 2017  Signs of meaningful improvements, with spot prices for key products in U.S. and Europe gaining momentum, driven by:Market starting to adjust to increased production costs in importing countries due to increased energy costs and to exchange ratesTight supply conditions in most of our products and geographiesContinued strong demand from our key end-markets due to global trends:For silicon metal: light-weighting of auto vehicles and increased demand for solar energyFor other products: infrastructure development and increased industrial activity  Market trends  Actions Ferroglobe is taking: our strategy  Taking legal action to address unfairly priced silicon metal importsPrices well above reported indexesAchieved prices 10% above indexEntered into sales contracts for 2017 that are 15-20% above Q4 spot pricesSimilar trends across all geographies Removing all discounts to index in contract structure for silicon metalCapitalizing on supply shortage Favoring fixed prices, with shorter term if necessary  Observing gradual price improvements in silicon metal and silicon alloys and a dramatic increase in manganese alloys margins 
 

 
 
 
 Recent business updates   Antidumping and countervailing duty actions filed in the U.S. and Canada against Australia, Brazil, Kazakhstan, Malaysia, Norway and ThailandPetitions outlines deliberate practices by producers from these countries to sell silicon metal at artificially low prices in North AmericaFavorable decisions will positively impact our profitabilitySale of Spanish hydro-electric assets for ~$270m in gross proceedsContinuing to work diligently to obtain approvals and progress toward closing 
 

 
 
 Reported EBITDA loss of $(23.3) million for the quarter1 Adjusted EBITDA of $9.1 million for the quarterGenerated $20.3 million of free cash flow2 in Q4 2016 and $75.9 million for FY 2016Generated $191 million in working capital synergies for FY 2016, well ahead of original three-year projection of $100 million$54.7 million improvement in working capital in Q4 2016 Maintained strong balance sheetNet debt of $404.6 million at end of Q4; flat versus end of 2015   1 Reported EBITDA, which includes executive severance expense of $24.4 million and impairment losses of $7.9 million2 Free cash flow defined as “Net cash provided by operating activities” minus “Payments for property, plant and equipment.” Source: Company information  Financial discipline combined with approach to sales delivering results  
 

 
 
  Maintained run-rate synergy attainment: ~$85 million33% above initial estimation of $65 MFast implementation:Achieved $57m for 2016, surpassing expectations, with a run rate of $72m in Q4Continued application of these synergy initiatives in 2017 will result in $28m of incremental savings versus 2016 performance levelsSynergies captured through a variety of initiatives in the technical, purchasing and SG&A areasMore than 20 synergy workstreams, with top 5 representing ~50% value captured  On Track to Achieve Run-Rate Synergies of $85m  Purchasing  SG&A  2016 Value Captured  Technical  YTD Captured 2016  Expected 2017 run rate  2016 Total operational synergies captured(M$)  9 
 

 
 
  Opportunities for long-term value creation  Strong balance sheet gives company ability to grow organically and inorganically   Generating cash flow, even in down cycle and identifying non-core asset divestitures  Strong market position and multiple levers to pull given diversified products, end markets & geographies  Tight cost control puts the company in the optimal position for a price recovery 
 

 
 
     Selected financial highlights 
 

 
 
  Q4 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  FY 2016  Q4 2016  Q3 2016  Pro Forma CY 2015  Sales ($m)  1,580.5  394.4  364.7  2,039.6  Operating Profit ($m)  -182.1  -55.5  -33.7  -44.2  Profit Attributable to the Parent ($m)  -136.6  -40.1  -28.5  -96.6  Adjusted EBITDA ($m)  72.9  9.1  12.8  294.8  Adjusted EBITDA Margin  4.6%  2.3%  3.5%  14.5%  Working capital ($m)  191.2  54.7  417.1  553.6  Free Cash Flow1 ($m)  75.9  20.3  11.7  113.3  
 

 
 
 
  Silicon metal sales (ton)  FeSi sales (ton)  Other Silicon Alloys* sales (ton)  Manganese Alloys sales (ton)  Quarterly sales volumes (tons) (CY 2016)  *Includes CaSi, MgFeSi and Foundry .  
 

 
 
  Refinancing Update   Issued senior notes due 2022 bearing 9.375% interest rate$350m aggregate principal amount Issued at 100% nominal value Amendment to GSM’s existing revolving credit facility $200 million aggregate principal amount Expiring in 2018  
 

 
 
  Balance sheet summary  ($mm)  12/31/20161  Q3 20161  12/31/2015  Total Assets  2,263  2,247  2,406  Net Debt2  405  430  393  Book Equity   1,093  1,171  1,295          Net Debt2 / Total Assets  17.9%  19.5%  16.3%  Net Debt2 / Capital3  27.0%  27.2%  23.3%  Financial results are unauditedNet Debt includes finance lease obligationsCapital is calculated as book equity plus net debt 
 

 
 
      Q&A  
 

 
 
  Advancing Materials Innovation  NASDAQ: GSM      Fourth Quarter 2016