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Ferroglobe Reports Results for Fourth Quarter and Calendar Year 2017

•  Q4 2017 results:

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

•  Calendar Year 2017 results:

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

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

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

Q4 Summary:

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

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

Net sales in Q4 2017 totaled $468.2 million, up 3.7% from $451.6 million in Q3 2017. Selling prices for Ferroglobe's key products continued to improve over the course of the quarter across both the U.S. and Europe:

  • The average selling price for silicon metal increased by 4.7% to $2,440/MT in Q4 2017, as compared to $2,330/MT in Q3 2017
  • The average selling price for silicon-based alloys increased by 5.8% to $1,741/MT in Q4 2017, as compared to $1,645/MT in Q3 2017; and
  • The average selling price for manganese-based alloys decreased by 0.2% to $1,346/MT in Q4 2017, as compared to $1,349/MT in Q3 2017

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

Calendar Year 2017 Summary:

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

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

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

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


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

Strong cash flow generation continues to support liquidity

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

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

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

Adjusted EBITDA:

                             
    Quarter Ended 
December 31, 2017
    Quarter Ended 
September 30, 2017
    Quarter Ended 
December 31, 2016
    Year Ended 
December 31, 2017
    Year Ended
December 31, 2016
Profit (loss) attributable to the parent $   32,210         (3,347 )       (241,967 )       25,168         (338,427 )
Loss attributable to non-controlling interest      (84 )       (1,640 )       (4,350 )       (5,144 )       (20,186 )
Income tax (benefit) expense     (22,120 )       14,364         (8,276 )       (10,919 )       (46,695 )
Net finance expense     16,567         14,528         7,499         58,612         28,715  
Financial derivatives loss     956         1,823         -          6,850         -   
Exchange differences     (2,491 )       1,529         633         (8,205 )       3,513  
Depreciation and amortization charges, operating allowances and write-downs     23,830         27,076         27,705         104,529         125,677  
EBITDA     48,868         54,333         (218,756 )       170,891         (247,403 )
Non-controlling interest settlement     -          -          -          1,751         -   
Power credit     -          -          -          (3,696 )       -   
Long lived asset charge due to reclassification of discontinued operations to continuing operations     -          -          -          2,608         -   
Accrual of contingent liabilities     6,044         -          -          12,444         -   
Impairment loss     -          -          199,834         -          267,449  
Transaction and due diligence expenses     -          -          -          -          7,979  
Business interruption     -          (1,980 )       -          (1,980 )       2,532  
Inventory impairment     -          -          1,080         -          5,410  
Executive severance     -          -          24,430         -          24,430  
Step-up valuation adjustment     -          3,757         -          3,757         -   
Globe purchase price allocation adjustments     -          -          -          -          10,022  
Adjusted EBITDA $   54,912         56,110         6,588         185,775         70,419  
                             

Adjusted net profit (loss) attributable to Ferroglobe:

                               
      Quarter Ended 
December 31, 2017
    Quarter Ended 
September 30, 2017
    Quarter Ended 
December 31, 2016
    Year Ended 
December 31, 2017
    Year Ended
December 31, 2016
                               
Profit (loss) attributable to the parent  $   32,210         (3,347 )       (241,967 )       25,168         (338,427 )
  Tax rate adjustment     (25,322 )       11,363         73,195         (13,833 )       83,004  
  Non-controlling interest settlement     -          -          -          1,191         -   
  Power credit     -          -          -          (2,513 )       -   
  Long lived asset charge due to reclassification of discontinued operations to continuing operations     -          -          -          1,773         -   
  Accrual of contingent liabilities     4,110         -          -          8,462         -   
  Impairment loss     -          -          135,887         -          181,865  
  Transaction and due diligence expenses     -          -          -          -          5,426  
  Business interruption     -          (1,346 )       -          (1,346 )       1,722  
  Inventory impairment     -          -          735         -          3,679  
  Executive severance     -          -          16,612         -          16,612  
  Step-up valuation adjustment     -          2,555         -          2,555         -   
  Globe purchase price allocation adjustments     -          -          -          -          6,815  
Adjusted profit (loss) attributable to the parent  $   10,998         9,225         (15,538 )       21,457         (39,304 )
                               

Adjusted diluted profit (loss) per share:

                               
      Quarter Ended 
December 31, 2017
    Quarter Ended 
September 30, 2017
    Quarter Ended 
December 31, 2016
    Year Ended 
December 31, 2017
    Year Ended
December 31, 2016
Diluted profit (loss) per ordinary share  $   0.19         (0.02 )       (1.41 )       0.15         (1.97 )
  Tax rate adjustment     (0.15 )       0.07         0.43         (0.08 )       0.48  
  Non-controlling interest settlement     -          -          -          0.01         -   
  Power credit     -          -          -          (0.01 )       -   
  Long lived asset charge due to reclassification of discontinued operations to continuing operations     -          -          -          0.01         -   
  Accrual of contingent liabilities     0.02         -          -          0.05         -   
  Impairment loss     -          -          0.79         -          1.06  
  Transaction and due diligence expenses     -          -          -          -          0.03  
  Business interruption     -          (0.01 )       -          (0.01 )       0.01  
  Inventory impairment     -          -          -          -          0.02  
  Executive severance     -          -          0.10         -          0.10  
  Step-up valuation adjustment     -          0.01         -          0.01         -   
  Globe purchase price allocation adjustments     -          -          -          -          0.04  
Adjusted diluted profit (loss) per ordinary share  $   0.06         0.05         (0.09 )       0.13         (0.23 )
                               

Conference Call

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

The dial-in number for the call for participants in the United States is 877-293-5491 (conference ID 5384356).  International callers should dial +1 914-495-8526 (conference ID 5384356).  Please dial in at least five minutes prior to the call to register. The call may also be accessed via an audio webcast available at https://edge.media-server.com/m6/p/ekx96f53  

About Ferroglobe

Ferroglobe PLC is one of the world's leading suppliers of silicon metal, silicon-based specialty alloys, and ferroalloys serving a customer base across the globe in dynamic and fast-growing end markets, such as solar, automotive, consumer products, construction and energy. The company is based in London. For more information, visit http://investor.ferroglobe.com.

Forward-Looking Statements

This release contains "forward-looking statements" within the meaning of U.S. securities laws. Forward-looking statements are not historical facts but are based on certain assumptions of management and describe the Company's future plans, strategies and expectations. Forward-looking statements often use forward-looking terminology, including words such as "anticipate", "believe", "could", "estimate", "expect", "forecast", "guidance", "intends", "likely", "may", "plan", "potential", "predicts", "seek", "will" and  words of similar meaning or the negative thereof.

Forward-looking statements contained in this press release are based on information currently available to the Company and assumptions that management believe to be reasonable, but are inherently uncertain. As a result, Ferroglobe's actual results, performance or achievements may differ materially from those expressed or implied by these forward-looking statements, which are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors that are, in some cases, beyond the Company's control.

Forward-looking financial information and other metrics presented herein represent the Company's goals and are not intended as guidance or projections for the periods presented herein or any future periods.

All information in this press release is as of the date of its release. Ferroglobe does not undertake any obligation to update publicly any of the forward-looking statements contained herein to reflect new information, events or circumstances arising after the date of this press release. You should not place undue reliance on any forward-looking statements, which are made only as of the date of this press release.

Non-IFRS Measures

EBITDA, adjusted EBITDA, adjusted diluted profit (loss) per ordinary share and adjusted profit (loss) attributable to the parent are, we believe, pertinent non-IFRS financial metrics that Ferroglobe utilizes to measure its success.

Ferroglobe has included these financial metrics to provide supplemental measures of its performance. The Company believes these metrics are important because they eliminate items that have less bearing on the Company's current and future operating performance and highlight trends in its core business that may not otherwise be apparent when relying solely on IFRS financial measures.

INVESTOR CONTACT: 
Ferroglobe PLC
Joe Ragan, US: +1 917 2098581, UK: +44 (0) 7827 227 688
Chief Financial Officer
Email: jragan@ferroglobe.com

 

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

 

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

 

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

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