Ferroglobe Reports Solid Fourth Quarter and Full Year 2023 Financial Results

LONDON, Feb. 21, 2024 (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 financial results for the fourth quarter and full year 2023.

Introducing 2024 adjusted EBITDA guidance of $100 million to $170 million

FINANCIAL HIGHLIGHTS

2023 revenue of $1.7 billion, down 36% Y/Y
2023 adjusted EBITDA of $315 million, down 63% Y/Y
Q4 adjusted EBITDA declined to $60 million, down 42% from Q3 and down 54% from Q4-22
Q4 adjusted EBITDA margins were at 16% versus 25% in the prior quarter and 29% in Q4-22
Q4 adjusted EPS was $0.09 versus $0.27 in Q3 and $0.39 in Q4-22
Net debt increased to $101 million, up from $71 million in Q3 and down from $127 million in Q4-22
Total cash decreased to $138 million, down from $166 million in Q3 and $323 million in Q4-22

BUSINESS HIGHLIGHTS        

Posted solid financial and operational performance for the quarter and the full year despite softening demand and weak pricing
Adjusted gross debt remained flat in Q4; declining to less than $100 million in February as a result of a $148 million redemption on February 16, 2024
Initiated a quarterly cash dividend of $0.013 per share, payable on March 28, 2024, to shareholders of record as of the close of business on March 22, 2024
Expecting to request the board of directors and shareholders to approve a share repurchase program
Optimized French energy contract to drive strong results in 2023, received majority of related cash in 2024
Signed a term sheet for a partnership with a leading battery materials company in Europe and a memorandum of understanding with an advanced silicon-rich EV battery technology company in the US

Dr. Marco Levi, Ferroglobe’s Chief Executive Officer, commented, “2023 was a successful year for Ferroglobe with strong financial, operating and strategic performance as we significantly reduced our debt, acquired a strategic quartz mine and entered into two EV battery agreements while operating our plants at high efficiency levels. This strong performance enabled us to announce a capital return policy today, with the board declaring a quarterly dividend of $0.013 per share and we expect to announce a share repurchase program in the coming months.

“Despite the current softness in our end markets, we are very bullish about the company’s long-term prospects as we expect strong secular growth in the solar and EV battery markets to boost the demand for silicon metal in the coming years. We have positioned Ferroglobe to fully participate in these growth opportunities as the leading western producer of silicon metal.

“We are introducing 2024 adjusted EBITDA guidance of $100 million to $170 million. Demand remains soft in early 2024, and while the recent increases in index prices are positive, we believe they have been partially driven by supply chain disruptions. We anticipate an improving demand picture in the second half of the year,” concluded Dr. Levi.

Fourth Quarter and Full Year 2023 Financial Highlights

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
Quarter Ended
 
Quarter Ended
 
Quarter Ended
 
%
 
%
 
 
Twelve Months Ended
 
Twelve Months Ended
 
%

$,000 (unaudited)
 
December 31, 2023
 
September 30, 2023
 
December 31, 2022
 
Q/Q
 
Y/Y
 
 
December 31, 2023
 
December 31, 2022
 
Y/Y

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Sales
 
$
375,951
 
 
$
416,810
 
 
$
448,625
 
 
 
(10%)
 
 
(16%)
 
 
$
1,650,034
 
 
$
2,597,916
 
 
(36%)

Raw materials and energy consumption for production
 
$
(199,911
)
 
$
(195,600
)
 
$
(289,572
)
 
 
2%
 
 
(31%)
 
 
$
(879,625
)
 
$
(1,285,086
)
 
(32%)

Energy consumption for production (PPA impact)
 
 
339
 
 
 
—
 
 
 
—
 
 
 
 
 
 
 
 
 
 
339
 
 
 
—
 
 
 

Operating profit (loss)
 
$
14,224
 
 
$
75,419
 
 
$
29,696
 
 
 
(81%)
 
 
(52%)
 
 
$
196,940
 
 
$
660,547
 
 
(70%)

Operating margin
 
 
3.8%
 
 
 
18.1%
 
 
 
6.6%
 
 
 
 
 
 
 
 
 
 
11.9%
 
 
 
25.4%
 
 
 

Adjusted net income
attributable to the parent
 
$
16,300
 
 
$
53,722
 
 
$
75,896
 
 
 
(70%)
 
 
(79%)
 
 
$
134,943
 
 
$
572,630
 
 
(76%)

Adjusted diluted EPS
 
$
0.09
 
 
$
0.27
 
 
$
0.39
 
 
 
 
 
 
 
 
 
$
0.71
 
 
$
3.04
 
 
 

Adjusted EBITDA
 
$
60,262
 
 
$
104,496
 
 
$
130,442
 
 
 
(42%)
 
 
(54%)
 
 
$
315,198
 
 
$
860,006
 
 
(63%)

Adjusted EBITDA margin
 
 
16.0%
 
 
 
25.1%
 
 
 
29.1%
 
 
 
 
 
 
 
 
 
 
19.1%
 
 
 
33.1%
 
 
 

Operating cash flow
 
$
25,139
 
 
$
(8,727
)
 
$
114,111
 
 
 
388%
 
 
(78%)
 
 
$
174,768
 
 
$
410,016
 
 
(57%)

Free cash flow1
 
$
1,888
 
 
$
(27,357
)
 
$
99,559
 
 
 
107%
 
 
(98%)
 
 
$
92,962
 
 
$
358,242
 
 
(74%)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Working Capital
 
$
510,709
 
 
$
510,064
 
 
$
700,898
 
 
 
0%
 
 
(27%)
 
 
$
510,709
 
 
$
700,898
 
 
(27%)

Cash and Restricted Cash
 
$
137,649
 
 
$
165,973
 
 
$
322,943
 
 
 
(17%)
 
 
(57%)
 
 
$
137,649
 
 
$
322,943
 
 
(57%)

Adjusted Gross Debt2
 
$
238,506
 
 
$
237,056
 
 
$
449,711
 
 
 
1%
 
 
(47%)
 
 
$
238,506
 
 
$
449,711
 
 
(47%)

Equity
 
$
876,180
 
 
$
859,723
 
 
$
756,813
 
 
 
2%
 
 
16%
 
 
$
876,180
 
 
$
756,813
 
 
16%

(1)  Free cash flow is calculated as operating cash flow plus investing cash flow
(2)  Adjusted gross debt excludes bank borrowings on factoring program and impact of leasing standard IFRS16 at December 31, 2023 September 30, 2023 & December 31, 2022

Sales

In the fourth quarter of 2023, Ferroglobe reported net sales of $376 million, a decrease of 10% over the prior quarter and a decrease of 16% over the year-ago period. For the full year 2023, sales were $1.7 billion versus $2.6 billion in the prior year, a decrease of 36%. The decrease in our fourth quarter results is primarily attributable to lower volumes across our product portfolio and lower pricing of our main products. The $41 million decrease in sales over the prior quarter was primarily driven by silicon metal, which accounted for $31 million of the decrease, and silicon-based alloys, which accounted for $8 million. These decreases were partially offset by manganese-based alloys, which increased by $1 million. The decrease in sales for the full year 2023 was mainly driven by a significant decrease in prices and volumes across all the products.

Raw materials and energy consumption for production

Raw materials and energy consumption for production was $200 million in the fourth quarter of 2023 versus $196 million in the prior quarter, an increase of 2%. As a percentage of sales, raw materials and energy consumption for production was 53% in the fourth quarter of 2023 versus 47% in the prior quarter. This variance was mainly due to lower energy compensation in France. For the full-year 2023, raw materials and energy consumption for production were $879 million, or 53% of sales, versus $1,285 million, or 49% of sales in 2022. The increase in these costs as a percent of sales was driven by lower pricing.

Net Income (Loss) Attributable to the Parent

In the fourth quarter of 2023, net loss attributable to the parent was $6 million, or ($0.03) per diluted share, compared to a net profit attributable to the parent of $41 million, or $0.21 per diluted share in the third quarter. For the full year 2023, net profit attributable to the parent was $87 million, or $0.46 per diluted share, compared to $440 million, or $2.32 per diluted share.

Adjusted EBITDA

In the fourth quarter of 2023, adjusted EBITDA was $60 million, or 16% of sales, a decrease of 42% compared to adjusted EBITDA of $104 million, or 25% of sales in the third quarter of 2023. The decrease in the fourth quarter of 2023 adjusted EBITDA as a percentage of sales is primarily attributable to a decrease in sales volumes and prices.

For the full year 2023, adjusted EBITDA was $315 million, or 19% of sales, compared to adjusted EBITDA of $860 million, or 33% of sales, for the full year 2022.

Total Cash

The total cash balance was $138 million as of December 31, 2023, down $28 million from $166 million as of September 30, 2023. During the year, the total cash balance declined by $185 million, mainly due to the partial redemption of senior secured notes in July 2023.

During the fourth quarter of 2023, we generated positive operating cash flow of $25 million, had negative cash flow from investing activities of $23 million, and $30 million in negative cash flow from financing activities. For the full year 2023, we generated positive operating cash flow of $175 million, had negative cash flow from investing activities of $82 million and $279 million in negative cash flow from financing activities.

Total Working Capital

Total working capital was $511 million as of December 31, 2023, a slight increase from $510 million on September 30, 2023. The increase in working capital during the quarter was primarily due to an increase in trade and other receivables of $17 million and an increase in inventories by $1 million, partially offset by a $17 million increase in trade and other payables.

Beatriz García-Cos, Ferroglobe’s Chief Financial Officer, commented, “After reducing our working capital by $154 million in 2023, achieving a positive net cash position at the end of January this year was a significant milestone for Ferroglobe. Our strong cash generation allowed us to redeem the remaining Senior Secured Notes last week, enabling us to initiate a capital return policy. Our hybrid program includes a declaration of a quarterly dividend of $0.013 per share, while we expect to initiate a discretionary share repurchase plan in the coming months.

“After generating $93 million of free cash flow in 2023, we anticipate generating positive free cash in 2024, despite the soft demand we are currently facing. Our balance sheet is the strongest it has been in the Company’s history, and we have right-sized our capital structure systematically over the past year and a half,” concluded Mrs. García-Cos.        
        
Product Category Highlights

Silicon Metal

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
Quarter Ended
 
Quarter Ended
 
 
 
Quarter Ended
 
 
 
Twelve Months Ended
 
Twelve Months Ended
 

 
 
December 31,2023
 
September 30,2023
 
% Q/Q
 
December 31, 2022
 
% Y/Y
 
December 31, 2023
 
December 31, 2022
 
% Y/Y

Shipments in metric tons:
 
 
49,761
 
 
 
57,031
 
 
(12.7
)%
 
 
39,459
 
 
26.1
%
 
 
194,385
 
 
 
209,342
 
 
(7.1
)%

Average selling price ($/MT):
 
 
3,371
 
 
 
3,481
 
 
(3.2
)%
 
 
4,655
 
 
(27.6
)%
 
 
3,715
 
 
 
5,332
 
 
(30.3
)%

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Silicon Metal Revenue ($,000)
 
 
167,744
 
 
 
198,525
 
 
(15.5
)%
 
 
183,682
 
 
(8.7
)%
 
 
722,140
 
 
 
1,116,212
 
 
(35.3
)%

Silicon Metal Adj.EBITDA ($,000)
 
 
22,188
 
 
 
80,823
 
 
(72.5
)%
 
 
89,064
 
 
(75.1
)%
 
 
216,534
 
 
 
529,355
 
 
(59.1
)%

Silicon Metal Adj.EBITDA Mgns
 
 
13.2%
 
 
 
40.7%
 
 
 
 
 
48.5%
 
 
 
 
 
30.0%
 
 
 
47.4%
 
 
 

Silicon metal revenue in the fourth quarter was $168 million, a decrease of 15.5% over the prior quarter. The average realized selling price decreased by 3.2% in the fourth quarter as prices remained under pressure. Total shipments decreased due to weak demand in chemicals and aluminum in Europe. Adjusted EBITDA for silicon metal decreased to $22 million during the fourth quarter compared to $81 million in the prior quarter. Adjusted EBITDA margin in the quarter decreased mainly due to lower energy compensation in France.

Silicon-Based Alloys

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
    
Quarter Ended
    
Quarter Ended
 
 
    
Quarter Ended
 
 
 
Twelve Months Ended
 
Twelve Months Ended
 

 
 
December 31,2023
 
September 30,2023
 
% Q/Q
 
December 31, 2022
 
% Y/Y
 
December 31, 2023
 
December 31, 2022
 
% Y/Y

Shipments in metric tons:
 
 
46,446
 
 
 
46,427
 
 
0.0
%
 
 
39,847
 
 
16.6
%
 
 
191,431
 
 
 
204,076
 
 
(6.2
)%

Average selling price ($/MT):
 
 
2,300
 
 
 
2,475
 
 
(7.1
)%
 
 
3,182
 
 
(27.7
)%
 
 
2,562
 
 
 
3,694
 
 
(30.6
)%

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Silicon-based Alloys Revenue ($,000)
 
 
106,826
 
 
 
114,907
 
 
(7.0
)%
 
 
126,793
 
 
(15.7
)%
 
 
490,446
 
 
 
753,857
 
 
(34.9
)%

Silicon-based Alloys Adj.EBITDA ($,000)
 
 
34,973
 
 
 
25,402
 
 
37.7
%
 
 
37,102
 
 
(5.7
)%
 
 
114,111
 
 
 
257,144
 
 
(55.6
)%

Silicon-based Alloys Adj.EBITDA Mgns
 
 
32.7%
 
 
 
22.1%
 
 
 
 
 
29.3%
 
 
 
 
 
23.3%
 
 
 
34.1%
 
 
 

Silicon-based alloy revenue in the fourth quarter was $107 million, a decrease of 7.0% over the prior quarter. The average realized selling price decreased by 7.1%, due to lower demand for ferrosilicon linked to general industry declines in the steel sector. Total shipments of silicon-based alloys were flat relative to the prior quarter. Adjusted EBITDA for the silicon-based alloys portfolio increased to $35 million in the fourth quarter of 2023 compared to $25 million for the prior quarter. Adjusted EBITDA margin increased in the quarter mainly due to improved costs.

Manganese-Based Alloys

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
Quarter Ended
 
Quarter Ended
 
 
 
Quarter Ended
 
 
 
Twelve Months Ended
 
Twelve Months Ended
 

 
 
December 31,2023
 
September 30,2023
 
% Q/Q
 
December 31, 2022
 
% Y/Y
 
December 31, 2023
 
December 31, 2022
 
% Y/Y

Shipments in metric tons:
 
 
61,404
 
 
 
56,399
 
 
8.9
%
 
 
61,917
 
 
(0.8
)%
 
 
227,243
 
 
 
295,589
 
 
(23.1
)%

Average selling price ($/MT):
 
 
985
 
 
 
1,046
 
 
(5.8
)%
 
 
1,466
 
 
(32.8
)%
 
 
1,141
 
 
 
1,778
 
 
(35.8
)%

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Manganese-based Alloys Revenue ($,000)