Ferroglobe Plc · NASDAQ:GSM
Ferroglobe — Q2 2018 Earnings Presentation
29 slides from Ferroglobe's earnings presentation, Aug 21, 2018
Slide 1: Q2 2018 results summary and CEO/CFO commentary
* Excludes by-products and other "This was a solid quarter for Ferroglobe, culminating a first half of the year which confirms the improved fundamentals of our business and validates the positive momentum in the markets we are serving," said Pedro Larrea, CEO of Ferroglobe. "In the year to date we h
Slide 2: Advancing Materials Innovation Second Quarter 2018
Advancing Materials Innovation NASDAQ: GSM Second 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 Q2 2018 OverviewSelected Financial HighlightsPositioned for Growth
Slide 5: Opening remarks: Q2 confirms the positive evolution of our business
Q2 confirms the positive evolution of our business Strong demand fundamentals with potential volatility in prices and input costs Commitment to strong balance sheet and free cash flow generation to support shareholder value Opening remarks Share buyback program being implemented
Slide 6: Q2 2018 Overview
I. Q2 2018 Overview Pedro Larrea, Chief Executive Officer
Slide 7: Volumes balanced with portfolio optimization
Volumes balanced with portfolio optimization (Volume change vs Q1 2018)Si Metal -6.2%Si alloys +2.5%Mn alloys +51.0% * (ASP change vs Q1 2018)Si Metal 0.4%Si alloys -2.4%Mn alloys -5.2% Revenue +4.0% vs Q1 2018 Adjusted EBITDA $86.3million-3.7% vs Q1 2018 Adjusted EBITDA margin declineof 120 bps to
Slide 8: Q2 confirms the strong performance of Ferroglobe in 2018
Quarterly Adjusted EBITDA ($m) Half Year Adjusted EBITDA ($m) Q2 confirms the strong performance of Ferroglobe in 2018 Q2 2018 +97% from Q2 2017 H1 2018 +135% from H1 2017
Slide 9: Quarterly trend – revenue contribution per family of products
Quarterly trend – revenue contribution per family of products ($m) 397 426 452 468 561 583 Continued revenue growth in Q2 for Ferroglobe, with different product categories showing continued sales growth Quarter over Quarter revenues growth of 4.0%, supported by a diversified product portfolio
Slide 10: Top line growth offset by raw materials costs and extraordinary maintenance
Top line growth in the quarter offset by increase in raw materials costs and extraordinary maintenance Q2 2018 adjusted EBITDA stable vs previous Quarter Extraordinary costs for $(4.0)m:$(2.8)m Extraordinary maintenance$(1.1)m OverhaulsImpact of continuing input cost increases:$(2.6)m Mn Ore prices$
Slide 11: Silicon Metal snapshot
Volume Trends Sequential Quarterly Product EBITDA Contribution ($m) Commentary Marginal decline in index pricing over the quarter. Price decline in Europe linked to seasonal low activity.End markets for silicon metal remain strong, particularly silicones producers running at full capacity and postin
Slide 12: Silicon-Based Alloys snapshot
Volume Trends Commentary Ferrosilicon prices starting to see some pressure, albeit remaining at near historical levelsMargins for FeSi remain attractive, hence contemplating some further switchover of capacity from silicon metal to ferrosiliconIncreasing input costs adversely impacted contribution i
Slide 13: Manganese-Based Alloys snapshot
Commentary Volume Trends Pricing Trends ($/mt) Sequential Quarterly Product EBITDA Contribution ($m) Transaction for newly acquired plants closed Feb. 1stQ2 is first quarter reflecting full revenue and cost contribution of new assetsProduct margin affected by increasing Manganese ore prices and high
Slide 14: Selected Financial Highlights
Selected Financial Highlights Phillip Murnane, Chief Financial Officer
Slide 15: Q2 2018 key performance indicators: Income Statement
Q2 2018 key performance indicators: Income Statement Key Performance Indicators Q2 2018 Q1 2018 Diff, % H1 2018 H1 2017 Diff, % Sales volumes (tons) 271,584 239,119 13.6% 510,703 433,036 17.9% Revenue ($m) 583.0 560.7 4.0% 1,143.7 821.8 39.2% Operating Profit ($m) 100.6 65.5 53.6% 166.1 14.1 1078.0%
Slide 16: Q2 2018 key performance indicators: Balance Sheet
Notes:Financial results are unauditedNet Debt includes finance lease obligations Capital is calculated as book equity plus net debtFree cash-flow defined as “Net cash provided by operating activities “minus “payments for property, plant & equipment Key Performance Indicators 30 Jun 2018 31 Mar 2018
Slide 17: Working capital build reflects investment in newly acquired plants
Working capital build reflects investment in newly acquired manganese alloys plants Working Capital Working Capital evolution ($m)
Slide 18: Working Capital
Working Capital ($m) 30 Jun 2018 31 Mar 2018 Inventories 97.8 101.6 Accounts Receivable 27.7 27.8 Accounts Payable (35.4) (73.9) Total Working Capital 90.0 55.5 Acquisition closed on February 1, 2018Q1 2018: no sales revenue or financial contributions were made by these assets. Further, no gain or l
Slide 19: Net debt evolution excluding new assets working capital
385 Net debt evolution excluding new assets working capital Gross and Net Debt evolution ($m) Increase in Net Debt primarily attributable to Working Capital build in new assets
Slide 20: H1 2018 Free-cash flow evolution
H1 2018 Free-cash flow evolution Cash-flow impacts Increased A/R securitization program will provide additional liquidity: $35mReduction in Mn ore inventory levels, after having ramped-up the new facilities: $20m Increasing rotation of finished product inventories in key products and adapting produc
Slide 21: Remain Focused on Delivering Value
Quarterly dividend payment — $0.06 per shareBalanced approach to capital allocationConfidence in maintaining this stable levelReturning value to shareholdersShare repurchase programConfidence in outlook for the businessConservative capital structure — company positioned to pursue growth opportunitie
Slide 22: Positioned for Growth
Positioned for Growth Pedro Larrea, Chief Executive Officer
Slide 23: Pricing outlook for H2
Pricing outlook for H2 Order Book for H2 Fixed price contracts set at a premium to current levels in both the North America and EuropeSpecific index based contracts are trailing; so incremental benefit yet to be realized in the coming quarters Silicon Metal Booked fixed price Booked indexed Spot Boo
Slide 24: Recent trends by end market
Recent Trends:NAFTA and Europe seen as demand leaders owing to strong machinery and construction sectors; U.S. capacity restarts China is expected to benefit from real estate related demand and ongoing robust machinery and auto demand, offsetting in part slowdown in infrastructureMonitoring trade wa
Slide 25: Solar-grade silicon plant on-track
Construction Phase (as of July 17, 2018) Commercial test Completed successful technical and commercial test, audited and certified by prestigious independent institutionWafers tested with un-blended Ferroglobe´s solar grade-silicon have obtained certified performance equivalent to polysilicon “Off-t
Slide 26: Exploring new commercial opportunities
Exploring new comercial opportunities Project Development stage Product and process commercially and technically provenFirst phase plant under constructionCommercial negotiations underway 2019-2020 2021-2022 First production 1,400 tpy$20m annualized revenuePotential unit margin affected by scale Lau
Slide 27: Closing remarks
Q2 confirms the positive evolution of our business Strong demand fundamentals with potential volatility in prices and input costs Commitment to strong balance sheet and free cash flow generation to support shareholder value Closing remarks
Slide 28: Q&A
Q&A
Slide 29: Advancing Materials Innovation Second Quarter 2018
Advancing Materials Innovation NASDAQ: GSM Second Quarter 2018