Ferroglobe Reports Results for the Third Quarter of 2020

Sales of $262.7 million; Net loss of $(46.8) million; Adjusted EBITDA of $22.2 million
Q3 sales of $262.7 million compared to $250.0 million in Q2 2020, and $381.7 million in Q3 2019Adjusted EBITDA of $22.2 million compared to $22.4 million in Q2 2020 and $(7.2) million in Q3 2019Q3 net loss of $(46.8) million compared to $(14.0) million in Q2 2020, and $(140.1) million in Q3 2019. Q3 net loss includes a property, plant and equipment impairment charge of $34.3 millionGross debt of $442 million at the end of Q3 2020, compared to $451 million at the end of Q2 2020Positive operating cash flow of $23.0 million, partially offset by the senior unsecured notes coupon payment of $(16.4) million and partial ABL paydown of $(7.8) millionSuccessful refinancing of the prior accounts receivable securitization program on October 2, 2020 with the signing of a new factoring program, providing an improvement in financial terms and cash release at closing
LONDON, Nov. 23, 2020 (GLOBE NEWSWIRE) — Ferroglobe PLC (NASDAQ: GSM) (“Ferroglobe”, the “Company”, or the “Parent”), a leading producer globally of silicon metal, silicon-based and manganese-based specialty alloys, today announced results for the third quarter of 2020.Q3 2020 Earnings HighlightsIn Q3 2020, Ferroglobe posted a net loss of $(46.8) million, or $(0.28) per share on a fully diluted basis. On an adjusted basis, the Q3 2020 net loss was $(9.3) million, or $(0.14) per share on a fully diluted basis.Q3 2020 reported EBITDA was $(12.2) million, down from $22.1 million in the prior quarter. On an adjusted basis, Q3 2020 EBITDA was $22.2 million, down slightly from Q2 2020 adjusted EBITDA of $22.4 million. The Company reported an adjusted EBITDA margin of 8.5% for Q3 2020, compared to an adjusted EBITDA margin of 9.0% for Q2 2020.Marco Levi, Ferroglobe’s Chief Executive Officer, commented, “The third quarter results are a confirmation of the swift actions we have been taking throughout the year to address the unpredictable circumstances created by COVID-19.  By aligning our cost structure with changes in market conditions this quarter’s financial performance remained stable.”  Dr. Levi added, “We continue to seek ways to bolster our agility in the face of the pandemic to ensure the company is well capitalized and positioned for a market recovery.  Our new strategic plan focuses on elements within our control and aims to improve our overall competitiveness.  During the quarter we made significant progress setting the foundation throughout the organization and have started on the execution of specific initiatives across various functional areas.”Cash Flow and Balance SheetCash generated from operations during Q3 2020 was $23.0 million, including $33 million in respect the sale of CO2 emission rights.Working capital increased by $33 million, from $321 million as of June 30, 2020 to $354 million at September 30, 2020. The increase is mainly driven by a reduction in accounts payable and strengthening of the Euro relative to the US Dollar.Gross debt was $442 million as of September 30, 2020, down from $451 million as of June 30, 2020, primarily as a result of the senior unsecured notes coupon payment and partial ABL paydown, partially offset by COVID-19 funding supported by local governments in France and Canada.Beatriz García-Cos, Ferroglobe’s Chief Financial Officer, commented, “Given the challenging market backdrop and lingering uncertainty we remain focused on cash generation and preservation.   We are making adjustments throughout the business to ensure a sustainable level of cash to support our operations and have managed this through a number of initiatives, including a successful refinancing of the prior accounts receivables securitization program.  At the same time we continued to reduce our debt balance during the quarter.”  Ms. García-Cos added, “The new strategic plan supports our focus on further cost reduction and improvement in cash conversion, while accelerating the Company’s return to profitability.”During the third quarter demand for our products was adversely impacted by COVID-19. It is difficult to forecast all the impacts of the COVID-19 pandemic, and such impacts might have a material adverse effect on our business, results of operations and financial condition. The Company is continuously evaluating how evolving customer demand and sales price evolution stand to affect the Company’s business and results in the next twelve months.In connection with the preparation of our consolidated financial statements, we conducted an evaluation as to whether there were conditions and events, considered in the aggregate, which raise substantial doubt as to the Company’s ability to continue as a going concern in the one year period after the date of the issuance of these interim financial statements. For this interim financial statement, the evaluation was updated. Given the speed and frequency of continuously evolving developments with respect to this pandemic and the uncertainties this may bring for the Company and the demand for its products, it is difficult to forecast the level of trading activity and hence cash flow in the next twelve months. Developing a reliable estimate of the potential impact on the results of operations and cash flow at this time is difficult as markets and industries react to the pandemic and the measures implemented in response to it, but our downside scenario analysis supports an expectation that the Company will have cash headroom to continue to operate throughout the next twelve months.Additionally, the indenture governing the senior unsecured notes includes provisions which, in the event of a change of control, would require the Company to offer to redeem the outstanding senior unsecured notes at a cash purchase price equal to 101% of the principal amount of the senior unsecured notes, plus any accrued and unpaid interest. Based on the provisions cited above, a change of control as defined in the indenture is unlikely to occur, but the matter it is not within the Company’s control. If a change of control were to occur, the Company may not have sufficient financial resources available to satisfy all of its obligations. Management is pursuing additional sources of financing to increase liquidity to fund operations.Subsequent eventsOn October 2, 2020, the Company signed a factoring agreement, replacing the prior accounts receivables securitization program. At closing, there was cash release of $19.7 million from restricted cash relating to a special purpose vehicle under prior securitization program.On November 1, 2020, the Company announced the appointment of Thomas Wiesner as Chief Legal Officer. Subsequently, Mr. Wiesner was also appointed as the Secretary to the Board of Directors.On November 16, 2020, the Tribunal Superior de Justicia of Galicia dismissed FerroAtlántica’s claim of petition to separate the metallurgical plants of Cee and Dumbria from the related hydroelectric power plants. According to applicable law, this judgment can be appealed before the Spanish Supreme Court.Discussion of Third Quarter 2020 ResultsThe Company has concluded that there are indications for potential impairment of goodwill property, plant and equipment and deferred tax assets. During the third quarter, the Company registered an impairment relating to the Niagara Falls facility as there are no plans to restart production. The Company is conducting, the rest of its impairment analysis and as such further material impairment relating to goodwill and/or the remaining property, plant and equipment and deferred tax assets could be identified and recorded subsequently.  The financial results presented for the third quarter and year to date as of September 30, 2020 are unaudited and may be subsequently adjusted for items including impairment of goodwill and/or property, plant and equipment.SalesSales for Q3 2020 were $262.7 million, an increase of 5.1% compared to $250.0 million in Q2 2020. For Q3 2020, total shipments were up 3.5% and the average selling price was down 0.1% compared with Q2 2020.* Excludes by-products and otherSales Prices & Volumes By ProductDuring Q3 2020, total product average selling prices decreased by 0.1% versus Q2 2020. Q3 average selling prices of silicon metal increased 1.5%, silicon-based alloys prices decreased 0.2%, and manganese-based alloys prices decreased 7.2%.Sales volumes in Q3 declined by 3.5% versus the prior quarter. Q3 sales volumes of silicon metal increased 7.0%, silicon-based alloys increased 7.5%, and manganese-based alloys decreased 2.4% versus Q2 2020.Cost of SalesCost of sales was $166.2 million in Q3 2020, an increase from $153.3 million in the prior quarter. Cost of sales as a percentage of sales increased to 63.3% in Q3 2020 versus 61.3% for Q2 2020, the increase is mainly due to higher sales volume, lower sales prices, higher energy prices in Europe, lower fixed cost absorption due to decreased production levels and the negative impact of a planned plant shutdown in Spain.Other Operating ExpensesOther operating expenses amounted to $26.9 million in Q3 2020, a decrease from $36.0 million in the prior quarter. This decrease is primarily attributable to a reduction in consultant fees and removal of the financial liabilities registered in Photosil by $5 million.Net Loss Attributable to the ParentIn Q3 2020, net loss attributable to the Parent was $47.3 million, or $(0.28) per diluted share, compared to a net loss attributable to the Parent of $12.1 million, or $(0.07) per diluted share in Q2 2020.Adjusted EBITDAIn Q3 2020, adjusted EBITDA was $22.2 million, or 8.5% of sales, compared to adjusted EBITDA of $22.4 million, or 9.0% of sales in Q2 2020, primarily due to price stability and higher costs incurred in Q3 2020.Conference CallFerroglobe management will review the third quarter during a conference call at 9:00 a.m. Eastern Time on November 24, 2020.The dial-in number for participants in the United States is 8772935491 (conference ID 9939707). International callers should dial +1 9144958526 (conference ID 9939707). 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/mmc/p/itnuz76fAbout FerroglobeFerroglobe is one of the world’s leading suppliers of silicon metal, silicon-based and manganese-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 StatementsThis 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”, “target”, “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 referenced 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 MeasuresAdjusted EBITDA, adjusted EBITDA margin, adjusted net profit, adjusted profit per share, working capital and net debt, are non-IFRS financial metrics that, we believe, are pertinent measures of Ferroglobe’s 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:Gaurav Mehta
EVP – Investor Relations 
Email:   investor.relations@ferroglobe.comFerroglobe PLC and Subsidiaries
Unaudited Condensed Consolidated Income Statement
(in thousands of U.S. dollars, except per share amounts)Ferroglobe PLC and Subsidiaries
Unaudited Condensed Consolidated Statement of Financial Position
(in thousands of U.S. dollars)*Cash and cash equivalents at September 30, 2020 includes the cash balance of the group’s European A/R securitization program of $41,016 ($38,961 and $38,778 at June 30, 2020 and December 31, 2019, respectively)Ferroglobe PLC and Subsidiaries
Unaudited Condensed Consolidated Statement of Cash Flows
(in thousands of U.S. dollars)
* While in previous periods Ferroglobe presented interest paid as cash flows from operating activities, management deems interest paid as among activities that alter the borrowing structure of the Company and therefore most appropriately presented as among financing activities. This change allows for a more fair presentation of cash flow to users of the financial statements. Previous periods have been restated in order to show interest paid as net cash used in financing activities.Adjusted EBITDA ($,000):Adjusted profit attributable to Ferroglobe ($,000):Adjusted diluted profit per share:SIGNATURESPursuant 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.