Ferroglobe Plc · NASDAQ:GSM
Ferroglobe — FY2018 Earnings Presentation
30 slides from Ferroglobe's earnings presentation, Feb 26, 2019
Slide 1: Advancing Materials Innovation: Fourth Quarter and Full Year 2018
Advancing Materials Innovation NASDAQ: GSM Fourth Quarter and Full Year 2018
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 Q4 2018 and Full Year 2018 Overview Selected Financial Highlights Near-Term Outlook
Slide 4: Q4 2018 and Full Year 2018 Overview
I. Q4 2018 and Full Year 2018 Overview
Slide 5: Q4 2018 highlights: strong volumes offset by weaker pricing
* Adjusted net profit attributable to parent Volumes strong across the portfolio, compensating for Q3 weakness (Volume change vs Q3 2018) Si Metal +14.3% Si alloys +6.9% Mn alloys +50.0% (ASP change vs Q3 2018) Si Metal -7.9% Si alloys -4.6% Mn alloys -4.4% Revenue +14.6% vs Q3 2018 Adjusted EBITDA
Slide 6: Cash-flow generation delivered H2 2018 commitments
Focus on cash-flow generation has allowed delivery of commitments made for H2 2018 Successful amendment of RCF covenants provides additional flexibility for next 12 months Net debt evolution in H2 2018 H2 2018 free cash-flow* $+68M Working capital evolution in H2 2018 Delivery on H2 commitments Incr
Slide 7: Quarterly and Full Year Adjusted EBITDA
Quarterly Adjusted EBITDA ($m) Full year Adjusted EBITDA ($m) Quarter-over-quarter Adjusted EBITDA decreased 28.7% Adjusted EBITDA increased 37.1% year-over-year Despite stronger volumes, a weaker pricing environment impacted quarterly adjusted EBITDA 70.4 184.5 253.1 Full Year 2016 Full Year 2017 F
Slide 8: Quarterly Revenue Trend by Product
Quarterly Revenue Trend – Contribution Per Product ($m) 396 426 452 468 561 583 Quarter-0ver-quarter revenues increased by 14.6% Revenues increased by 30.6% year-over-year 527 604 158 183 194 204 253 238 215 227 111 112 110 123 149 149 137 140 83 84 99 97 98 140 119 171 44 47 49 44 61 56 56 66 Q1 20
Slide 9: Adjusted EBITDA bridge Q4 2018 vs Q3 2018
Adjusted EBITDA bridge — Q4 2018 vs. Q3 2018 ($m) Includes $3.3m of Mn ore price improvement Includes: $3.9m of insurance claims $4.7m of sale of excess CO2 emission rights $(2.7)m of audit fees Weaker pricing environment is the main driver of the quarter performance, only partially offset by improv
Slide 10: Silicon metal snapshot
Silicon metal snapshot Volume Trends (mt) Sequential Quarter Product EBITDA Contribution ($m) Commentary Pricing Trends ($/mt) Volumes returned to strong levels in Q4 Pricing in the US this quarter was impacted by higher imports in Q2/Q3 and increased availability of silicon-rich aluminium scrap, wi
Slide 11: Silicon-based alloys snapshot
Silicon-based alloys snapshot Volume Trends (mt) Commentary Sequential Quarter Product EBITDA Contribution ($m) Pricing Trends ($/mt) Ferrosilicon continued to enjoy stable demand Pricing pressure in Europe, still from high levels, as a result of increased imports from Malaysia and other countries U
Slide 12: Manganese-based alloys snapshot
Manganese-based alloys snapshot Commentary Volume Trends (mt) Pricing Trends ($/mt) Sequential Quarter Product EBITDA Contribution ($m) Volumes strong, compensating for weaker shipments in Q3, on the back of a strong steel demand Ore prices have remained at high levels for an extended period of time
Slide 13: EBITDA reconciliation
EBITDA reconciliation ($m) Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 Q3-18 Q4-18 Silicon metal 7.3 17.7 20.9 24.3 43.5 41.5 32.3 20.6 Silicon-based alloys 14.9 19.8 18.9 21.6 35.0 31.9 26.2 21.2 Manganese-based alloys 17.8 21.0 24.7 18.5 11.4 7.2 (8.6) (8.6) Other metals 5.6 4.2 2.0 6.5 7.6 8.5 7.0 8.0 Mi
Slide 14: Full Year 2018 highlights
*Adjusted net profit attributable to parent Volumes up across the portfolio (Volume change vs 2017) Si Metal +8.2% Si alloys +10.1% Mn alloys +54.8% (ASP change vs 2017) Si Metal +16.6% Si alloys +14.7% Mn alloys -6.3% Revenue +30.6% vs Full Year 2017 Adjusted EBITDA $253.1 million +37.1% vs Full Ye
Slide 15: Adjusted EBITDA bridge full year 2018 vs 2017
Significant improvement year-over-year, driven by price and volume, partially offset by cost pressure Adjusted EBITDA bridge full year 2018 vs. 2017 ($m) Includes: $(42.3)m energy $(28.0)m electrodes $(18.2)m met coke $(5.0)m paste $(2.7)m coal 70.4 184.5 253.1 166.4 38.9 - 147.9 - 23.3 - 9.5 25.4 1
Slide 16: Selected Financial Highlights
Selected Financial Highlights
Slide 17: Key Performance Indicators: income statement
Key Performance Indicators Q4 2018 Q3 2018 Diff, % Full Year 2018 Full Year 2017 Diff, % Shipments (000, mt) 322.0 255.9 25.8% 1,088.6 883.0 23.3% Revenue ($m) 603.5 526.8 14.6% 2,274.0 1,741.7 30.6% Operating (Loss) Profit ($m) (3.0) 14.3 (121.0%) 177.4 39.7 346.9% Net (Loss) Income ($m) (15.2) (2.
Slide 18: Key Performance Indicators: balance sheet and cash flow
Notes: Financial results are unaudited Net Debt includes finance lease obligations Capital is calculated as book equity plus net debt Free cash-flow defined as “Net cash provided by operating activities” minus “payments for property, plant & equipment” Key Performance Indicators 31/12/20181 30/09/20
Slide 19: Working capital evolution
Significant improvement in working capital primarily driven by inventory management Working Capital Evolution ($m) Finished Inventory reduction in both existing and new plants drove improved working capital 389 376 280 282 317 348 389 55 90 95 Q4 2018 -$84M 353 389 376 280 282 317 348 292 55 90 95 6
Slide 20: Gross debt and net debt evolution
Gross Debt Decrease in net debt primarily attributable to continued cash generating initiatives Historical Debt Evolution ($m) 600 618 584 571 647 631 643 645 407 435 394 387 449 475 511 429 Mar '17 Jun '17 Sep '17 Dec '17 Mar '18 Jun '18 Sept '18 Dec '18 Net Debt
Slide 21: Full Year 2018 Free Cash-flow Evolution
Full Year 2018 Free Cash-flow Evolution Cash-flow Impacts Increased A/R securitization program to provide additional liquidity ($35m commitment): COMPLETED, $37m achieved Reduction in Mn ore inventory levels, after having ramped-up the new facilities ($20m commitment ): COMPLETED, with a total $25m
Slide 22: Successful renegotiation of RCF
Successful renegotiation of RCF provides additional flexibility and allows us to focus on balance sheet structure RCF downsized by $50m to $200m Covenants will be effective March 31, 2019 – March 31, 2020 Replaced existing Net Leverage covenant with a new Secured Net Leverage ratio Added a new minim
Slide 23: Near-Term Outlook
Near-Term Outlook
Slide 24: Recent trends in end markets
Recent Trends: Ferroglobe’s largest steel customers forecasting another year of growth, but noting 2019 is not without uncertainties US continues to benefit from trade actions, while EU challenged by lower volumes and greater imports Chinese steel demand expected to contract for the first time since
Slide 25: Outlook for 2019
Outlook for 2019 Lingering impact of aluminum scrap in North America and auto emissions issue in Europe continues to influence demand Continued erosion of index prices affecting selling prices into Q1 2019 Maintaining disciplined commercial approach will have a negative near-term impact on volumes T
Slide 26: Manganese-based alloys: market price spreads starting to recover
Manganese-based alloys profitability: market price spreads starting to recover XX% Illustrative Spread Evolution for Mn Alloys1 Source: CRU, Ferroglobe. Note: 1 Illustration based on published index prices for SiMn and Mn-Ore (44%) (‘000 t) Spreads (based on published market prices) started to recov
Slide 27: Recovering value for shareholders and positioning for long-term success
Recovering value for shareholders and positioning Ferroglobe for long-term success De-risking the balance sheet Cost reduction and improved competitiveness Continued focus on deleveraging the balance sheet: Net leverage target: 1.5x Net debt target: $200m New cash flow generation initiatives ($60 m
Slide 28: Closing remarks
Headwinds faced in H2 2018 likely to continue in the near-term Strong liquidity and balance sheet, and renewed cost cutting and cash flow generating initatives Fundamental asset value based on strong market position and platform diversification Closing remarks
Slide 29: Q&A
Q&A
Slide 30: Advancing Materials Innovation: Fourth Quarter and Full Year 2018
Advancing Materials Innovation NASDAQ: GSM Fourth Quarter and Full Year 2018 SIGNATURES Pursuant 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. Date: February 25, 2019 FE