Ferroglobe Plc · NASDAQ:GSM
Ferroglobe — Q1 2018 Earnings Presentation
32 slides from Ferroglobe's earnings presentation, May 22, 2018
Slide 1: Q1 2018 results commentary and Adjusted EBITDA
* Excludes by-products and other "First quarter results reflect the strong fundamentals of our Company and of the markets we are serving. We have significantly increased volumes in most of our products and the newly acquired assets will start to contribute to our shipment volumes and financials in Q
Slide 2: Advancing Materials Innovation First Quarter 2018
Advancing Materials Innovation NASDAQ: GSM First Quarter 2018
Slide 3: Forward-Looking Statements and non-IFRS Financial Metrics
Forward-Looking Statements and non-IFRS Financial Metrics This presentation contains forward-looking statements within the meaning of Section 27A of the United States Securities Act of 1933, as amended, and Section 21E of the United States Securities Exchange Act of 1934, as amended. Forward-looking
Slide 4: Table of Contents
Table of Contents Q1 2018 OverviewSelected Financial HighlightsPositioned for Growth
Slide 5: Opening Remarks
Opening Remarks Q1 confirms the positive fundamentals of our business Higher volumes and stable pricing expected in Q2, with continued volatility in input costs Generation of free cash flow supports return of value to shareholders and strengthening of balance sheet
Slide 6: Q1 2018 Overview
I. Q1 2018 Overview Pedro Larrea, Chief Executive Officer
Slide 7: Q1 2018 Confirms The Positive Fundamentals Of Our Business
Q1 2018 Confirms The Positive Fundamentals Of Our Business Strong ‘pull-through’ of volumes balanced with portfolio optimization (Volume change vs Q4 2017)Si Metal +9.4%Si alloys +8.4%Mn alloys -1.7% Disciplined execution of commercial strategy (ASP change vs Q4 2017)Si Metal +13.2%Si alloys +12.3%M
Slide 8: Diversified Portfolio Uniquely Positions Us To Benefit From Market Fluctuations
Diversified Portfolio Uniquely Positions Us To Benefit From Market Fluctuations Qtr / Qtr Revenue Growth by Product Other Strong sales performance in Silicon Metal and Silicon-based alloys more than offset weaker performance in Manganese-based alloys Revenue Contribution by Product and Market (LTM E
Slide 9: Q1 2018 Revenue Up ~20% vs Previous Quarter
Q1 2018 Revenue Up ~20% vs Previous Quarter Stronger volumes and higher prices in Silicon Metal and Silicon-Based Alloys Contributed to a significant increase in revenue 1 1Q-2018 results do not include any contribution from the newly acquired manganese alloys facilities 1
Slide 10: Q1 2018 Adjusted EBITDA Up 67% vs Previous Quarter
Q1 2018 Adjusted EBITDA Up 67% vs Previous Quarter Including:($2.4m) Mn ore costs($2.1m) Electrodes;($2.8m) Coal & Coke prices($0.5m) Energy prices;($1.2m) Ramping up of production at South Africa;($1.3m) Annual overhaul (US and EU) Stronger volumes and higher prices in the quarter offset by raw mat
Slide 11: Silicon Metal Snapshot
Silicon Metal Snapshot Volume Trends Sequential Quarter Product EBITDA Contribution ($m) Commentary Price recovery in N.A., Europe and Chinese markets in 2017 — limited price movement in N.A. following ITC decision — recent slide in Chinese prices reflects short-term seasonal impact of rainy season;
Slide 12: All Trade Cases Involving Silicon Metal Have Been Concluded
All Trade Cases Involving Silicon Metal Have Been Concluded Status of SiMeTrade Cases Involving Ferroglobe Illustrative 2018 Shipment Volumes (t) Global~400 kt E.U. / RoW~225 kt North America~175 kt Canada:~40 kt U.S.:~135 kt J.V.:~35,000 t Fixed price:~40,000 t Subject to Spot:~60,000 t Silicon Met
Slide 13: Silicon-Based Alloys Snapshot
Silicon-Based Alloys Snapshot Volume Trends Commentary Ferrosilicon prices remain near historical levels starting to see some pressure recentlyStrong demand worldwide tightened the supply-demand balance in all markets.Increased costs reflect annual overhaul costs, and higher energy costs in EuropeHi
Slide 14: Manganese-Based Alloys Snapshot
Manganese-Based Alloys Snapshot Commentary Transaction for newly acquired plants closed Feb 2nd — incremental volumes not reflected in Q1Manganese-based alloy volumes lower due overhaul downtime Product margin affected by increasing manganese ore prices and higher energy costsSome recent improvement
Slide 15: Recent Decrease In Mn Ore Prices Likely To Continue
Recent Decrease In Mn Ore Prices Likely To Continue —Expansion In Spreads During The Coming Quarters Mn Ore Prices ($/dmtu) Mn ore prices have been increasing very significantly since Q1 2017, with alloys prices remaining relatively stableAs a consequence, spreads have been contracting in the past f
Slide 16: Selected Financial Highlights
Selected Financial Highlights Joe Ragan, Chief Financial Officer
Slide 17: Q1 2018 Key Performance Indicators And Overview
Q1 2018 Key Performance Indicators And Overview 1 Free cash flow defined as “Net cash provided by operating activities” minus “Payments for property, plant and equipment.”Source: Company information Notes Key Performance Indicators Q1 2018 Q4 2017 CY 2017 CY 2016 Revenue ($m) 560.7 468.2 1,741.7 1,5
Slide 18: Balance Sheet Summary
Balance Sheet Summary Financial results are unauditedNet Debt includes finance lease obligations Capital is calculated as book equity plus net debt Notes ($mm) 03/31/20181 12/31/2017 12/31/2016 Total Assets 2,301.1 2,000.3 2,019.3 Net Debt2 449.3 386.93 405.0 Book Equity 979.5 937.8 892.0 Net Debt2
Slide 19: Increase in Net Debt Primarily Attributable to Acquisition Related Costs
Increase in Net Debt Primarily Attributable to Acquisition Related Costs Net Debt ($m)
Slide 20: Q1 2018 net debt bridge vs Previous Quarter
Q1 2018 net debt bridge vs Previous Quarter Cash flow associated with acquisition of Mn alloys plants One-off non-recurrent effects
Slide 21: Increase in Working Capital Primarily Attributable to Acquired Plants
Increase in Working Capital Primarily Attributable Two Acquired Plants Reduced WC significantly while sales have increased by 41.6% over 2017 Working Capital ($m) $55.5 million from acquired Mn alloys facilities
Slide 22: Delivering Value for Shareholders and Positioning For The Long Term
Reinstatement of dividend — $0.06 per sharebalanced approach to capital allocationconfidence in maintaining this stable levelreturning value to shareholdersConservative capital structure — company positioned to pursue growth opportunitiesFocus on deleveraging the balance sheetAchieved leverage targe
Slide 23: Positioned for Growth
Positioned for Growth Pedro Larrea, Chief Executive Officer
Slide 24: End Market Dynamics: Solid Fundamentals
End Market Dynamics: Solid Fundamentals Recent Trends:Global steel production hit the highest level on record in 1Q-18World steel capacity utilization remains at healthy and stable levelsInventory levels remain near multi-year lowsGrowth in North America stands to benefit from an new infrastructure
Slide 25: Commercial Outlook Across Our Portfolio For the Remainder of 2018
Si-Based Alloy Order Book Commercial Outlook Across Our Portfolio For the Remainder of 2018 Silicon Metal Order Book Mn-Based Alloy Order Book Healthy global economies Positive supply/demand dynamics — tightness in end market expected through the yearIncreased raw material costs for producers global
Slide 26: New Plants Expand the Breadth and Depth of Manganese-Alloys Operations
New Plants Expand the Breadth and Depthof Manganese-Alloys Operations Ferroglobe and Glencore Europe production in 2017 (kt). Mo I Rana 134 96 Cee 0 Monzón SiMn FeMn 55 83 Boo 132 Dunkirk Acquired facilities Existing facilities Over 1 million tonnes of manganese ore will be consumed annually by the
Slide 27: Acquisition Of New Manganese-Alloys Plants Highlights Disciplined M&A Approach
7 Acquisition Of New Manganese-Alloys Plants Highlights Disciplined M&A Approach Closed the acquisition on February 1, 2018 Transaction was immediately accretiveCash disbursements of $55.5 million made during Q1-2018,No sales revenue or financial contributions were made by these assets in Q1Future p
Slide 28: New UMG Solar Silicon Plant Is On-Track
New UMG Solar Silicon Plant Is On-Track Construction Phase (as of May 9, 2018) Plant Update Location: Puertollano, SpainInitial phase UMG capacity: 1,400 mt/yConstruction to be completed by year-end 2018Total capital expenditure in-line with previous estimate of €72 million:Spent in 2015 – 2017: €22
Slide 29: Ferroglobe Is Well Positioned For 2018 And Beyond
Ferroglobe Is Well Positioned For 2018 And Beyond Ferroglobe is stronger than ever… …and well positioned to capitalize on strong market fundamentals Strong balance sheet presents flexibility and the ability to pursue growth initiativesBest practices drive cost management and continuous improvementSu
Slide 30: Closing Remarks
Closing Remarks Q1 confirms the positive fundamentals of our business Higher volumes and stable pricing expected in Q2, with continued volatility in input costs Generation of free cash flow supports return of value to shareholders and strengthening of balance sheet
Slide 31: Q&A
Q&A
Slide 32: Advancing Materials Innovation First Quarter 2018
Advancing Materials Innovation NASDAQ: GSM First Quarter 2018