Ferroglobe Reports Results for the Third Quarter 2021

Sales of $429.2 million, Adjusted EBITDA of $37.6 million

• Q3 2021 sales of $429.2 million, up 2.5% compared to $418.5 million in Q2 2021, and up 63.4% compared to $262.7 million in Q3 2020
• Adjusted EBITDA of $37.6 million, up 10.3% compared to $34.1 million in Q2 2021, and up 69.1% compared to $22.2 million in Q3 2020
• Net loss of ($97.6) million, compared to net profit of $0.7 million in Q2 2021, and net loss of ($46.8) million in Q3 2020 Net loss includes a one-time charge of $90.8 million related to the debt extinguishment from the refinancing
• Negative operating cash flow of ($34.7) million driven by an investment in working capital
• Pricing environment remains strong across all products; 2022 order book well positioned to capitalize on upside

LONDON, Nov. 16, 2021 (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 third quarter 2021.

Q3 2021 Earnings Highlights

In the third quarter of 2021, Ferroglobe reported net sales of $429.2 million, up 2.5% from the prior quarter and up 63.4% from the year-ago period.

Ferroglobe reported a net loss of ($97.6) million, or ($0.54) per share on a fully diluted basis in the third quarter 2021. The net loss includes a $90.8 million one-time charge relating to debt extinguishment. On an adjusted basis, the Q3 2021 net loss was ($64.2) million, or ($0.36) per share on a fully diluted basis.

At the completion of the comprehensive refinancing, we recognized a charge of $90.8 million. This relates to all the advisory fees and expenses, including equity granted to the noteholders and underwriters, incurred during the refinancing of the prior 9.375% Senior Notes due 2022, which were deemed to be extinguished at closing and replaced with new 9.375% million Senior Notes due 2025. This $90.8 million charge is deemed to be one-time, but adversely impacted our P&L during the quarter, resulting in a net loss of $97.6 million.        The Company´s reported Q3 EBITDA of $35.2 million, is up 10.3% from $31.9 million in the prior quarter. On an adjusted basis, Q3 2021 EBITDA was $37.6 million, up 10.3% from the prior quarter adjusted EBITDA of $34.1 million. The Company reported an adjusted EBITDA margin of 8.8% for Q3 2021, up from 8.1% for Q2 2021.

Ferroglobe’s Chief Executive Officer, Marco Levi Ph.D, commented, “During the third quarter, we experienced stronger pricing across each of our segments as the market dynamics reflected very strong demand. Somewhat offsetting the strong pricing environment was higher costs, primarily energy as well as lower volumes in our silicon metal and silicon-based alloys segments driven by operational issues at certain facilities and delayed deliveries requested by some customers given the seasonal slowdown during the summer.” Dr. Levi added, “The end markets for each of our segments remain robust into the fourth quarter, resulting in strong momentum as we negotiate contracts for 2022. We expect to end the year on a favorable note, and are taking measures to ensure a step-change in our financial performance next year.”        "Throughout the third quarter, we continued to execute on our strategic plan, finalizing the refinancing and focusing on improving Ferroglobe’s efficiencies company-wide. We have made significant progress, but there is more work to be done as we focus on growing our business and increasing our profitability,” concluded Dr. Levi.

Cash Flow and Balance Sheet

Cash used from operations during Q3 2021 was $34.7 million, primarily driven by investments in working capital given the ramp-up in demand we are expecting.

Working capital increased by $61.6 million, from $334.3 million as of June 30, 2021 to $395.9 million as of September 30, 2021. The increase in working capital was driven by a $45 million increase in inventory and a $22 million increase in accounts receivable as a result of increased activity.

Net debt was $404 million as of September 30, 2021, up from $358 million as of June 30, 2021. This is primarily attributable to the issuance of the second tranche of the Super Senior notes amounting $20 million of an aggregate $60 million on July 29, 2021.

COVID-19COVID-19 has been and continues to be a complex and evolving situation, with governments, public institutions and other organizations imposing or recommending, and businesses and individuals implementing, at various times and to varying degrees, restrictions on various activities or other actions to combat its spread, such as restrictions and bans on travel or transportation; limitations on the size of in-person gatherings, restrictions on freight transportations, closures of, or occupancy or other operating limitations on work facilities, and quarantines and lock-downs.

As a result of this pandemic and the strict confinement and other public health measures taken around the world, the demand for our products in the second and third quarters of 2020 was reduced significantly compared with the first and fourth quarters of the year. During the fourth quarter of 2020, demand level for our products increased to levels similar to those prior to the outbreak. In first, second and third quarter of 2021, demand for our products has increased even further than in the fourth quarter of 2020. However, COVID-19 has negatively impacted, and will in the future negatively impact to an extent we are unable to predict, our revenues.

Subsequent events

On October 6, 2021, the Company has entered into an equity distribution agreement (the “Equity Distribution Agreement”) with B. Riley Securities, Inc. and Cantor Fitzgerald & Co. relating to an at-the market offering of the ordinary shares, par value $0.01 per share, of Ferroglobe PLC, under which the Company may offer and sell ordinary shares having an aggregate offering price of up to $100,000,000 from time to time through B. Riley Securities, Inc. and Cantor Fitzgerald & Co. as our sales agents. The program expires upon expiry of the Form F-3 on June 15, 2024.To date, the Company has sold 186,053 ordinary shares with a net proceeds of $1.4 million.

Beatriz García-Cos, Ferroglobe’s Chief Financial Officer, commented, “Ferroglobe is at an interesting inflection point where we see attractive opportunities to position the business for growth going into 2022, on the heels of a strong operating environment. At the same time a number of headwinds, primarily energy prices in Spain and some inflationary pressures in key inputs, is consuming greater than expected cash. As such, this program offers a flexible way to raise capital if/when needed to pursue growth opportunities, but with no obligation to use the program.”

On November 15, 2021 Ferroglobe reached an agreement with the French Government relating to its restructuring process. Under the agreement, Ferroglobe has the support from the government and projects to strengthen its competitiveness across the five manufacturing sites that would continue to operate in France. Specifically, Les Clavaux facility would remain operational with a clear plan to modernize the facility and improve its cost position. This facility would also benefit from a new commercial agreement with a long-standing customer. As planned in the initial project proposed in March 2021, the Château-Feuillet facility would stop production and the calcium silicon production capability would be transferred to Les Clavaux.

Marco Levi, Ferroglobe’s Chief Executive Officer commented, "I would like to acknowledge and thank all the efforts made by the various stakeholders, which have helped reduce the potential social impact in France. This includes the contributions and diligent work of the French government and in particular the Minister of Industry, the Minister of Labor and their respective teams at the national and local levels, the Interministerial Delegate for Restructuring, the Prefects and elected officials, and all Ferroglobe France (FerroPem) employees and social partners. We are collectively encouraged by this outcome and feel confident that the new environment and developments through the process should enable us to strengthen our competitiveness in France.”

Discussion of Third Quarter 2021 Results

The financial results presented for the third quarter are unaudited.

Sales

Sales for Q3 2021 were $429.2 million, an increase of 2.5% compared to $418.5 million in Q2 2021.

_________________* Excludes by-products and other

Sales Prices & Volumes By Product

During Q3 2021, the average selling prices across our product portfolio increased by 6.3% versus Q2 2021. During the quarter, the average selling prices of silicon metal increased 5.1%, silicon-based alloys prices increased 8.9%, and manganese-based alloys prices increased 11.3%.

Overall sales volumes in Q3 2021 decreased by 3.4% versus the prior quarter. Silicon metal volume in the third quarter was 61,713 tons, down 8.3% from the prior quarter. The decline in Q3 was a result of curtailments at Sabon (Spain) and Alloy, West Virginia (United States). Silicon-based alloys shipments during the third quarter were 55,863 tons, down 14.3% from the prior quarter, driven primarily by a combination of operational disturbances, as well as some seasonality in demand. Manganese-based alloys shipments of 76,787 were up 11.9% in Q3 versus Q2 2021. The strong volume trends in manganese-based alloys were a result of some shipment delays in the second quarter which show up in the third quarter figures.

Cost of Sales

Cost of sales was $295.3 million in Q3 2021, an increase from $267.9 million in the prior quarter. Cost of sales as a percentage of sales increased to 68.8% in Q3 2021 versus 64.0% for Q2 2021. The increase in the percentage of cost of sales in Q3 was mainly driven by higher energy cost in Spain.

Other Operating Expenses

Other operating expenses in Q3 2021 were $79.8 million, down from $93.2 million in Q3 2021. The decrease in other operating expenses was mainly due to the higher impact of the European free CO2 rights in Q2 2021.        Net Loss Attributable to the Parent

In Q3 2021, net loss attributable to the Parent was ($96.6) million, or ($0.54) per diluted share, compared to a net profit attributable to the Parent of $1.9 million , or $0.01 per diluted share in Q2 2021. The net loss in Q3 included a non-cash charge of ($90.8) million related to the debt extinguishment of the senior notes as part of the refinancing.

Adjusted EBITDA

In Q3 2021, adjusted EBITDA was $37.6 million, or 8.8% of sales, up 10.3% compared to adjusted EBITDA of $34.1 million, or 8.1% of sales in Q2 2021. The increase in the Q3 2021 Adjusted EBITDA is primarily driven by the improvement in average realized prices across the product portfolio.

Net finance expenses

Net finance expense amounted to $103.4 million in Q3 2021, an increase from $11.2 million in the prior quarter. The increase is due to the accounting charge relating to Senior Notes refinancing, amounting $90.8 million.

For accounting purposes the refinancing of the Senior Notes have been considered a debt extinguishment. As a consequence;

The transaction fees incurred in the issuance of the Super Senior has been capitalized as required by the accounting rules.

Conference Call

Ferroglobe management will review the third quarter during a conference call at 08:30 a.m. U.S Eastern Standard Time on November 17, 2021.

The dial-in number for participants in the United States is + 1 877-870-9135 (conference ID: 3867903). International callers should dial + 44 (0)-2071-928338 (conference ID: 3867903). 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/8ep3x3fm

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.

INVESTOR CONTACT:

Gaurav MehtaExecutive Vice President – Investor Relations Email: [email protected]

MEDIA CONTACT:

Cristina Feliu RoigExecutive Director – Communications & Public AffairsEmail: [email protected]