Today, GSM announced results for the second quarter of 2020. For the full press release including the financial tables, please visit http://investor.ferroglobe.com.

LONDON, Aug. 31, 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 second quarter of 2020.

Q2 2020 Earnings Highlights

In Q2 2020, Ferroglobe posted a net loss of $(14.0) million, or $(0.07) per share on a fully diluted basis. On an adjusted basis, the Q2 2020 net loss was $(11.1) million, or $(0.07) per share on a fully diluted basis.

Q2 2020 reported EBITDA was $22.1 million, up from $(20.2) million in the prior quarter. On an adjusted basis, Q2 2020 EBITDA was $22.4 million, up from Q1 2020 adjusted EBITDA of $(17.6) million. The Company reported an adjusted EBITDA margin of 9.0% for Q2 2020, compared to an adjusted EBITDA margin of -5.7% for Q1 2020. The improvement in margins is attributable to operational and financial management, resulting in significant cost improvement.

Marco Levi, Ferroglobe’s Chief Executive Officer, commented, “Given the unprecedented operating environment created by COVID-19, the business has endured a number of challenges during the quarter. However, our ability to react quickly and leverage our assets to drive down costs, resulted in continued improvement in our financials during the quarter.” Dr. Levi added, “With the looming uncertainties ahead of us, we will continue to take the actions necessary to navigate these times. Simultaneously, we are committed to executing our new strategic plan and have commenced with a number of initatives in the near term. This three year plan is expected to contribute $150 million of incremental EBITDA and improve cash by $70 million.”

Cash Flow and Balance Sheet

Cash generated from operations during Q2 2020 was $38.1 million, with an improvement in working capital positively impacted by a decrease in trade receivables, offset by a decrease in payables and an increase in inventories. Working capital decreased by $27 million, from $348 million as of March 31, 2020 to $321 million at June 30, 2020.

Gross debt was $451 million as of June 30, 2020, up from $443 million as of March 31, 2020, primarily as a result of the $11 million interest accrued on the group’s senior unsecured notes (the “Notes”), due to be paid on August 31, 2020.

Beatriz García-Cos, Ferroglobe’s Chief Financial Officer, commented, “A slowdown across all of our core product categories resulted in a decline in our second quarter sales by 20% compared to the prior quarter, reflecting the impact of COVID-19 on the business. By continuing to make operational changes and focusing on cost reduction, however, we managed to return the business to positive EBITDA. Furthermore, our diligent management of the business led to further working capital reduction and an improvement in our cash balance.” Ms. García-Cos added, “The new strategic plan provides us a roadmap to drive profitability through the cycle and continued improvement in our cash generation.”

COVID-19

Since January 2020, the COVID-19 pandemic has spread to various jurisdictions where the Company does business. The Company has been monitoring the evolving situation, and consequent emerging risk. Among other steps, the Company has implemented a coronavirus crisis management team, which has been meeting regularly to ensure the Company and its subsidiaries take appropriate action to protect all employees and ensure business continuity.

While it is difficult to forecast all the impacts of the COVID-19 pandemic, at the present time the Company’s day-to-day operations continue without being materially affected and the pandemic is not causing disruption in our business and supply chains. As they evolve, however, such impacts could have a material adverse effect on our business, results of operations and financial condition. 

During the second quarter demand for our products was adversely impacted by COVID-19. 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. The key assumption underlying this assessment is a forecast recovery in trading activity in the latter part of 2020.

Additionally, the Indenture governing the Notes includes provisions which, in the event of a change of control, would require the Company to offer to redeem the outstanding senior Notes at a cash purchase price equal to 101% of the principal amount of the 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 events

The Company sold CO₂ emission rights during July and August. This resulted in proceeds of approximately $33 million. The Company is closely monitoring demand levels to determine appropriate production levels and gauge the quantum of CO₂ emission rights that will need to be reacquired in the latter part of 2020 and/or in 2021.

Discussion of Second Quarter 2020 Results

The Company notes that the financial results presented for the second quarter and year to date as of June 30, 2020 are unaudited and may be subsequently adjusted for items including impairment of goodwill and long-lived assets. Management is continually assessing the potential impacts of COVID-19 and the Company’s pending new strategy, and will make such adjustments as and when required.

Sales

Sales for Q2 2020 were $250.0 million, a decrease of 19.7% compared to $311.2 million in Q1 2020. For Q2 2020, total shipments were down 24.1% and the average selling price was up 7.0% compared with Q1 2020.

Sales Prices & Volumes By Product

During Q2 2020, total product average selling prices increased by 7.0% versus Q1 2020. Q2 average selling prices of silicon metal increased 0.1%, silicon-based alloys prices increased 4.3%, and manganese-based alloys prices increased 11.8%.

Sales volumes in Q2 declined by 24.1% versus the prior quarter. Q2 sales volumes of silicon metal decreased 10.2%, silicon-based alloys decreased 35.2%, and manganese-based alloys decreased 25.0% versus Q1 2020.

Cost of Sales

Cost of sales was $153.3 million in Q2 2020, a decrease from $243.4 million in the prior quarter. Cost of sales as a percentage of sales decreased to 61.3% in Q2 2020 versus 78.2% for Q1 2020, an improvement mainly due to to lower energy prices in Europe, lower raw material costs including manganese ore, and optimizing economics by allocating production curtailments to the least cost-competitive plants.

Other Operating Expenses

Other operating expenses amounted to $35.9 million in Q2 2020, a decrease from $40.1 million in the prior quarter. This decrease is primarily attributable to a decrease in commercial expenses resulting from lower sales volume.

Net Loss Attributable to the Parent

In Q2 2020, net loss attributable to the Parent was $12.1 million, or $(0.07) per diluted share, compared to a net loss attributable to the Parent of $47.9 million, or $(0.28) per diluted share in Q1 2020.

Adjusted EBITDA

In Q2 2020, adjusted EBITDA was $22.4 million, or 9.0% of sales, compared to adjusted EBITDA of $(17.6) million, or -5.7% of sales in Q1 2020, primarily due to higher pricing and lower costs incurred in Q2 2020.

Conference Call

Ferroglobe management will review the second quarter during a conference call at 9:00 a.m. Eastern Time on September 1, 2020.

The dial-in number for participants in the United States is 877‑293‑5491 (conference ID 3128367). International callers should dial +1 914‑495‑8526 (conference ID 3128367). 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/a4i7n7ab.

About Ferroglobe

Ferroglobe 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 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”, “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 Measures

Adjusted 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.

Thank you for your interest. If you have any questions, please contact Brett Maas at brett@haydenir.com or 646-536-7331. 

email: brett@haydenir.com

Please review our disclaimer at: http://www.haydenir.com/index.php?/static/disclaimer