Ferroglobe Plc · NASDAQ:GSM
Ferroglobe — Q2 2020 Earnings Presentation
26 slides from Ferroglobe's earnings presentation, Aug 31, 2020
Slide 1: Advancing Materials Innovation Second Quarter 2020
Advancing Materials Innovation NASDAQ: GSM Second Quarter 2020
Slide 2: 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 3: Table of Contents
Table of Contents Q2 2020 Business review Q2 2020 Financial review Update on strategic plan Appendix — supplemental information
Slide 4: Opening Remarks
Opening Remarks Despite a challenging operating backdrop, Q2 results reflect successful financial and operational adjustments and sound execution Operational flexibility and continuous cost cutting measures critical to offset decline in sales due to COVID-19 3-year strategic plan finalized — first s
Slide 5: I. Q2 2020 Business Review
I. Q2 2020 Business Review
Slide 6: Key highlights
Key highlights Q2-2020 results: Sales of $250 million, compared to $311.2 million in Q1-2020 and $409.5 million in Q2-2019 Adjusted EBITDA of $22.4 million, compared to $(17.6) million in Q1-2020 and $5.0 million in Q2-2019 Cash generation of $8.7 million driven by a positive operating cashflow of $
Slide 7: Product category snapshot: Silicon metal
Sequential quarters EBITDA evolution ($m) Commentary Product category snapshot ─ silicon metal Average realized price of $2,215/t in Q2-20, stable vs $2,212/t in Q1-20 Index pricing up 4% in Europe, stable in the United States Volumes declined by 10% vs Q1-20: Demand continued to deteriorate across
Slide 8: Product category snapshot: Silicon-based alloys
Product category snapshot: Silicon-based alloys Average realized price of $1,537/t in Q2-20, up 4% from Q1-20, primarily driven by ferrosilicon Overall, weaker demand from steel mills adversely pressuring index prices Volume drop of 35% vs Q1-20; steel production significantly lower in Europe, and h
Slide 9: Product category snapshot: Manganese-based alloys
Product category snapshot: Manganese-based alloys Average realized price of $1,088/t in Q2-20, up 12% from Q1-20. Mn-alloys index down 4% for FeMn and down 6% for SiMn due to weak steel industry demand; very low re-start post COVID-19 stoppages. Volume down 25% vs Q1-20 due to low prices and weak de
Slide 10: II. Q2 2020 Financial Review
II. Q2 2020 Financial Review
Slide 11: Income Statement ($'000): Q2-20 vs Q1-20
Income Statement ($’000): Q2-20 vs Q1-20 Lower demand affected by COVID-19 resulting in turnover reduction Cost of sales reduction as a consequence of lower demand, lower energy costs and continued decline in raw materials costs Staff cost decreased due to the reversal of the 2019 incentive compensa
Slide 12: Adjusted EBITDA bridge: Q1-20 to Q2-20
* Adjusted EBITDA bridge: Q1-20 to Q2-20 ($m) Head office expense reduction is mainly driven by lower staff cost and the reversal of the accrual of the 2019 incentive compensation. Atypical includes reduced sub-activity costs by $3.3 million, indirect cost capitalized in inventories for $3.3 million
Slide 13: Balance sheet summary
Balance sheet summary Notes: Financial results are unaudited Gross debt excludes bank borrowings arising from consolidation of the A/R securitization at June 30, 2019, Mar. 31, 2020, and Jun. 30, 2020 Capital is calculated as book equity plus net debt Cash and restricted cash includes the following
Slide 14: Quarterly cash flow statement
Quarterly cash flow statement ($’000) Free cash flow is defined as ‘Cash Flow From Operating Activities’ less ‘Payments for Capital Expenditure’ Simplified Cash Flows $’000 Q2-19 Q3-19 Q4-19 Q1-20 Q2-20 EBITDA (7,199) (183,120) (48,482) (20,205) 22,093 Adjustments to reconcile EBITDA 2,786 179,224 2
Slide 15: Working capital and cash trends
Consolidation of AR securitization Working capital evolution ($m) Working capital trends ($m) Main driver for the reduction of working capital is the reduction in Accounts receivable While production was adjusted to match the latest trends in demand, inventory levels suffered from this sharp drop Ca
Slide 16: Debt Evolution
Debt Evolution ($m) Gross and net debt evolution ($m) The increase in Q2-2020 gross debt is due to the coupon accrual 666 556 481 442 451 478 377 358 299 298 Q2-19 Q3-19 Q4-19 Q1-20 Q2-20 Gross Debt Net Debt
Slide 17: Financing update
Financing update COVID-19 related government funding French government (BPI) granted Ferroglobe France €4.3 million as COVID-19 related financial assistance. Refinancing of existing A/R program progressing More favourable terms and lower cost Release of cash to Ferroglobe at closing Targeted closing
Slide 18: III. Update on strategic plan
III. Update on strategic plan
Slide 19: Ferroglobe's new three-year strategic plan
Ferroglobe’s new three-year strategic plan Strategic Objective Accelerate the return to profitability and making the business more resilient through the cycle Fundamentally change Ferroglobe to become more financially and operationally competitive in a global environment which as changed since the c
Slide 20: Strategic levers to drive results
$45 million EBITDA contribution from commercial strategy $105 million EBITDA contribution from cost measures $70 million cash improvement from working capital improvement Strategic levers to drive results Operating model re-design Commercial strategy Footprint and product optimization Working capita
Slide 21: Q&A
Q&A
Slide 22: Appendix — Supplemental Information
III. Appendix — Supplemental Information
Slide 23: Quarterly trend – revenue and adjusted EBITDA
Quarterly trend – revenue contribution per family of products ($m) Quarterly trend – adjusted EBITDA ($m) Quarter sales and adjusted EBITDA ($m) Note: The amounts for prior periods have been restated to show the results of the Company’s Spanish hydroelectric plants within (Loss) profit for the perio
Slide 24: Adjusted EBITDA reconciliation
Adjusted EBITDA reconciliation ($m) ($m) Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 Q2-20 Silicon metal 43.5 41.5 32.3 20.6 8.3 8.1 5.6 (2.6) 3.5 11.9 Silicon-based alloys 35.0 31.9 26.2 21.2 7.8 11.4 4.1 0.6 2.3 7.9 Manganese-based alloys 11.4 7.2 (8.6) (8.6) 0.9 1.9 1.7 (2.3) (2.5) 7.0
Slide 25: Gross debt at June 30, 2020
('$000) Current Non-current Total balance sheet Less operating leases Less AR securitization debt Gross debt ($’000) Gross debt Bank borrowings 245 92,552 92,797 - (58,131) 34,666 Bank borrowings: 34,665 Lease liabilities 8,592 13,512 22,104 (21,327) - 777 Asset-Based RCF (3) 34,420 Debt instruments
Slide 26: Advancing Materials Innovation Second Quarter 2020
Advancing Materials Innovation NASDAQ: GSM Second Quarter 2020