Ferroglobe PLC Price & Performance (GSM)

Reconciliations of these non IFRS measures may be found in our most recent SEC filings.

Want to announce that we'll be participating in the BMO Global Market Metals, Mining and Critical Minerals Conference in Florida on February 24, and '25. We hope to see you there. Marco, Thank you, Alex. Thanks for joining us on the call today. We appreciate your interest in Ferroglobe. Before I provide a recap of our 2024 accomplishment, I want to thank all Ferroglobe employees for a successful year. We posted the revenue of $1,600,000,000 and adjusted EBITDA of $154,000,000 and free cash flow of $164,000,000 We used our strong cash flow generation to repay the remaining senior secured notes. Eliminating these notes saves us $32,000,000 in annual interest. And in the first quarter of twenty twenty four, we became net cash positive for the first time in Ferrogroup's and maintain our strong balance sheet throughout the year. The strong balance sheet enables us to initiate a capital return program consisting of quarterly dividends and share buybacks. We paid Our initial dividend in the first quarter of twenty twenty four and are increasing it by approx 8% in the first quarter of twenty twenty five. In addition, we began our share repurchase which we will continue to execute selectively in 2025.

We also intend to continue in complementing our discretionary repurchases with a 10b5-one plan. While our share buybacks have been modest, we intend to get more aggressive as we gain visibility and see improvement in our end markets. Maintaining a strong balance sheet to ensure that we have the ability to navigate any downturn is our top priority. One of the most important developments taking place is changing global trade, including potential antidumping and countervailing duties tariffs and safeguards. This creates uncertainty until they become better defined. It is clear that governments are taking these measures seriously. And this item focus is likely is likely to make tariffs and safeguards more prevalent going forward. Some actions have already taken place. And some are under consideration. These trade measures enacted by governments are expected to benefit domestic producers as the trade flows are altered across the globe. As the largest Western producer with significant local operations, which are back integrated in North America and Europe. We have historically been significantly impacted by an uneven playing field. Equally importantly, we serve customers who buy mostly local.

With the recent government announcements in North America and in [indiscernible] within the European community, We are optimistic that these actions will positively impact our market in the coming quarters. Providing a tailwind for our business and driving future growth. [indiscernible] While the trade uncertainty is difficult to handicap, we believe these trade measures are imperative and will transform our industry for the better. In The U. S, the International Trade Commission determined that Russia Malaysia, Kazakhstan and Brazil unfairly priced Ferroglobe adversely impacting local producer. As a result, combined anti dumping and counterbailing duties of more than 1000% were placed on Russia. Final antidumping and countervailing duties against Malaysia, Kazakhstan and Brazil will be announced by the Department of Commerce on March 21. Combined, this four countries in 02/2023 imported approximately 140,000 tons of ferrocyte into The U. S, accounting for approximately 65% of the market share. Overall, these measures are expected to benefit us significantly going forward. European market has also been damaged by low priced imports. Particularly from Eastern countries. In December 2024, European Commission initiated a safeguarding silicon based alloys and manganese alloy imports. While the potential magnitude of these measures is yet to be determined, We expect the provisional decision in Q2 with the final determination anticipated in Q4.

To put things into perspective, EU's total consumption of silicon metals silicon alloys and manganese alloys declined approximately 12% or 300,000 tons between 2019 and 2024. Combined, we have an estimated seven percent point increase in the market share of imports from Eastern countries, This has had a material impact on European markets, which has reflect in price. Total imports have increased by 70,000 tons since 2019, accounting for 40% market share.

As the largest domestic European producer of these measures, if enacted, are expected to positively impact the quality of the business and provide Ferroglobe with a great opportunity to increase our market share. Moving to current market conditions. It has been a challenging environment in Europe and North America in the recent months. While we expect market conditions to persist, through the first half of twenty twenty five, we are beginning to see signs of market bottom as indexes have stabilized and prices for phase three silicon in Europe and manganese alloys are trending higher. One key factor contributing to our more optimistic outlook is the consistent growth of European steel production over the past several months. The World Steel Association ForEx has continued growth of 3.5% in 2025, with North American steel production expected to grow at a rate of 1.6% in 2025. In addition, the used steel safe burn measure of 2019 is currently under radio and the aluminum industry has a request requested a safeguard investigation into imports. A positive decision would encourage more steel and aluminum production in The U further ramping demand for all our products. Another encouraging sign is the improved manufacturing PMIs. In January, global PMI posted its highest level in seven months with The U. S. Increasing to 51.2%, representing solid growth.

Boosted by a thirty four month high in the expected production outlook. In addition, Europe's current contraction is expected to show improved [indiscernible] I will discuss the outlook for 2025. On our last call, I mentioned sales in [indiscernible] as another tool to drive incremental improvement across all facets of Ferroglobe. We are in the early innings of this implementation, but there already seen benefits. We've reduced working capital in the fourth quarter. Once implemented, across all our businesses, we we expect to see material operation efficiency with improved cash flow lower working capital and cost benefits. For a brief update on Core Shell, we continue to see promising test results from this partnership. And as a result, we recently increased our investment. We look forward to continued collaboration as we drive innovation with this exciting technology. We are bullish about Silicom Metal Orol as a disrupt breakthrough in EV batteries and as a leader in silicon metal, we are well positioned to capitalize on industry shift from graphite to silicon rich anodes in EV batteries. This will significantly enhance the performance of EVs, including lower cost longer ranges shorter charging times. Next, I will provide a brief update on 2025 guidance.

We are initiating adjusted EBITDA guide The wider range of guidance is a result of uncertainty related to market conditions, Timing of trade cases potential tariffs and geopolitical issues. Beatrice will walk you through on our main assumptions related to guidance. Next slide, please. Our fourth quarter revenue due to lower volumes across all three segments. Adjusted EBITDA was $10,000,000 down from $60,000,000 We impacted by lower prices, higher costs. Operating cash flow improved by $21,000,000 reaching $32,000,000 in the fourth quarter. Free cash flow increased to $14,000,000 an improvement of $24,000,000 over the prior year quarter. Next slide, please. Let's talk about silicon metal. Silicone metal revenue declined 17% in Q4 to $161,000,000 down from $194,000,000 in the third quarter.

Adjusted EBITDA declined to $17,000,000 in the fourth quarter due to higher costs, lower prices and reduced volumes. [indiscernible] Realized prices declined 5% over the previous quarter. During the fourth quarter, index prices decreased approximately 16% in The U. S, while the European index was a changed. Overall, volumes were down 12% with all regions reporting lower shipments. European and U. S. Shipments declined thirteen percent and three respectively. The outlook for silicon metal continues to be soft. The aluminum sector in Europe and U. S. Is expected to remain flat in the short term. A high level of imports is impacting the North American and our European regions. In addition, uncertainties related to potential U. S. Tariffs have resulted in some of our solar customers postponing purchasing decisions. Despite these short term issues, we anticipate that the silicon market will improve once the destocking cycle is completed. Which we expect to take a few months. As a result, we are optimistic that demand will pick up in the second half. Of 2025. Next slide please. Our silicon based alloys segment adjusted EBITDA improved slightly to $3,000,000 in Q4, primarily driven by cost improvement. Average realized prices declined by 3% over Volumes were pressured by low demand and aggressively priced in especially in Europe.

Where shipments declined by 25% in the fourth quarter.

The European Free Standard Index was down 7% while The U. S. Index was down 6%. Looking ahead, we are encouraged by the recent 5% increase in European index price Combined with the various trade measures and forecasted growth in steel production, We expect demand and prices to improve in both Europe and U. S. As they year Turning now to manganese alloys, Next slide, please. Revenue declined 13% to $78,000,000 in Q3 driven by a 17% decrease in prices partially offset by a 5% increase in shipment. Adjusted EBITDA decreased $9,000,000 primarily driven by tighter spreads and the impact of working through higher cost manganese ore inventory. The recent tightening of manganese ore supplies, boosting prices which have risen four months high. We are optimistic about the manganese segment outlook for 2025, supported by improvements in pricing and higher spreads. The recent uptick in demand is encouraging. And we expect the trend to continue in the coming quarters. I would now like to turn the call over to Beatrice Garcia, of course. Our CFO, to review the financial results and guidance in more detail. Beatrice?

Thank you, Marco.

Please turn to Slide 10. For a review of the income statement. Sales decreased 18% sequentially. In the fourth quarter to $368,000,000 driven by a 13% decrease in volume for both silicon metal and silicon alloys. And lower prices in all segments. Ranging from 4% for silicon alone to 17% for manganese alloys. Magdalena's Loews volumes grew 5% quarter over quarter. For the full year, sales were flat versus 2013 with growth in the manganese alloy segment. Offsetting declines in ferrosilicon sales. Silica metal sales were up slightly for the full year.

In the fourth quarter, raw material and energy consumption for production increased to 69% of sales. Versus 58% in the prior quarter. Primarily driven by lower production. Higher energy costs and increased manganese ore prices. Raw material and energy increased nine percentage points to 62%. Of sales due to lower prices higher energy cost difference. Adjusted EBITDA the fourth quarter was $10,000,000 down from $60,000,000 in the prior quarter.

Full year 2024 adjusted EBITDA was $154,000,000 compared to $315,000,000 in 2023. Attributable mainly to higher energy costs in in France and lower realized prices. Next slide please. Approximately 60% of the EBITDA decline is attributable to lower pricing, realized prices down by 5%, 317% in silica silicon metal. Silicone based alloys and manganese alloys respectively. Lower index prices in the third quarter adversely impact the fourth quarter sales prices. Due to a two to three month lag between indexes and realized prices. Cost increases primarily due to higher energy costs [indiscernible] and elevated manganese ore cost. Reduced our EBITDA by approximately $11,000,000,000 Lower volumes impacted our adjusted EBITDA by $3,000,000 mainly due to soft demand across silicon metal and silicon based with experience volume declines of 1213% respectively. Was partially offset by a 5% increase in volumes in the Mangarisaloy segment. Head office and non core business reduced 4% adjusted EBITDA by $6,000,000 Slide 12 please. Adjusted EBITDA for the full year was $154,000,000 versus $315,000,000 in 2023 and EBITDA margin was 9% down from 19% in 2023. While stronger volumes contributed $29,000,000 to adjusted EBITDA average selling prices had the biggest impact on our 2024 adjusted EBITDA. Reducing it by approximately $128,000,000 Higher cost impacted EBITDA for the year by $83,000,000 mostly related to higher energy expenses in Europe.

Head office and non core business contributed to 2024 adjusted EBITDA driven by lower head office related costs and improved mining operations. Next slide please.

During the fourth quarter, we recognized $61,000,000 non cash impairment and goodwill write off related to our operations. Our operating cash flow was $32,000,000 benefiting from a $23,000,000 release of working capital. Our decision to item our French operations earlier combined with effective energy management resulted in an energy rebate of $21,000,000 in the fourth quarter. The remaining $34,000,000 was collected in January 2025. CapEx in the fourth quarter was $18,000,000 down from $21,000,000 in the third quarter. For the full year, we generated $243,000,000 of operating cash flow, and spent $79,000,000 in CapEx. Resulting in $164,000,000 of free cash flow. We used $150,000,000 of this cash flow to redeem the remaining senior secured notes. We paid $2,400,000 or a $0.013 per share dividend on December 27 and we are declaring the first quarter twenty twenty five dividend. Of $0.014 per share representing an 8% increase. The dividend will be paid on February 26. For shareholders on record on February 20. Next slide please. We ended the fourth quarter with a cash balance of $133,000,000 up from $131,000,000 at the end of the third quarter. Our positive net cash position improved to $39,000,000 sorry, up from $32,000,000 in the prior quarter.

While our adjusted gross debt increased slightly. Ending the quarter at $94,000,000 as of December 31. I want to provide some more insights related to our 2025 outlook.

We are targeting a working capital improvement of $50,000,000 in 2025, as we continue the implementation of the SNOP process. We expect our 2025 CapEx to be in the range of $60,000,000 $65,000,000 and cash tax rate to be around 24%. Our standing Spanish loan or CEPI loan with a principal balance of $36,000,000 is due in '20 The first principal payment of $90,000,000 is due in March. With the remaining $17,000,000 due in June. As Marco mentioned earlier, anticipate our 2025 adjusted EBITDA to range between $100,000,000 and $170,000,000 For the first quarter, we expect our adjusted EBITDA to be negative due to the impact of low prices weak demand and idling operations in France. This is consistent with our budget. Our 2025 outlook reflects a partial benefit from trade measures an unexpected improvement in market conditions during the second half of the year. [indiscernible] Next slide, please. At this time, I will turn the call back to Marco.

Thank you, Beatriz. Moving to the key takeaways on Slide six. Theraglobe had a successful 2024 despite unfavorable market conditions, we posted solid adjusted EBITDA which strengthened our balance sheet significantly. Initiated quarterly dividends and a share buyback program while focusing on innovation in advanced silicon metal as critical material for the energy transition. As evidence of the changing global trade environment, the U. S. Trade Commission and European Commission initiated broad trade measures to level the playing field against predatory trade practices. We expect to capitalize from these measures in the second half of this year. There are early signs the demand environment might be bottoming. Manganese and Fezi price in Europe has ticked up in recent weeks. We foresee broader improvement in the second half of twenty twenty five. Ferglow has positioned the company for long term success by making strides in developing advanced uses for silicon. Including a partnership with Core Shell and implementing the SNOP tools to increase efficiency and lower working capital. Operator, we are ready for questions.

We will now take our first question. Please stand by. And the first question comes from Nick Giles from B. Riley Securities. Please go ahead. Your line is now open.

Thank you very much, operator, and good morning or good afternoon, everyone. I wanted to start with your annual guidance. This is a wider range. So I was hoping you could give us a sense for what's baked into the lower end versus the higher end, specifically as it relates to pricing and volume? And then how much of the high end could be determined by implications of trade measures versus improved demand. Yes.

Thank you, Nik.

Let me start answering this question. By coincidence, we give the same guidance of last year, but The point is that we are facing an even more volatile environment Not only in terms of demand, but in terms of uncertainty on the trade measures that are going to be set by the authorities both in U. S. And in Europe. So let's say that first quarter like Beoufitz mentioned is going to be particularly tough because we start from very low prices, extremely low volumes, and the usual opportunity issue of having our French plants down in the first quarter, right? And then as of the second quarter, we see the environment improvement with some decisions that should be taken in U. S. And the third quarter, I think both geographic areas are going to be impacted by these decisions. So if you look at the loss side of the guidance, it's a sort of conservative forecast based on today's situation. The higher end is based on, like we said, on a partial success of the government to impose duties. And we have estimated prices and volumes that drive toward the range that we have mentioned, €100,000,000 €170,000,000 Thank you very much, Marco.

That's helpful. Maybe just a follow-up on that. Would there be any sort of sensitivity that you may be able to provide in terms of Volumes or pricing and maybe anchoring near the midpoint?

Yes. Hi, Nick. This is Vitus speaking.

Maybe I'm going to be sharing a data point that I think you have already but let me go through. So for every 1% of variance in pricing, More or less, this hits positively our EBITDA by $14,000,000 This is the number that you have to to keep in your mind. If this makes sense.

Got it. No, that's very helpful. Beatriz, I really appreciate Maybe my next question Marco, I was wondering if you could speak to some of the key growth markets in silicon metal In the context of your desire for further expansion, solar markets do appear somewhat softer. So curious if this changes your appetite for expansion or or potential timing. And alongside this, if you'd have any updates as it relates to the Brownfield expansion?

Okay. So just to try to stay focused, we We firmly believe in silicon penetrating much more substantially the battery business. [indiscernible] there are existing technologies, but also new technologies under development. That move the the graphite replacement from a 5% to even 100%. [indiscernible] to the anode And And we are working with several companies, of course, we have announced our cooperation with Cor Shell, but we work with a number of of players, particularly in U. S. And I think that there are the level of progress is amazing. This is that it takes time before a new technology is adopted. In batteries. We firmly believe in that and we're totally committed to that. When you talk about the solar business, well, the current business, existing business is mainly impacted by big structural overcapacity of polysilicon in China.

And for our business is impacted by the current investigation on the imports on solar sales and modules in U. S. Is expected to be concluded sometime in April based on what we know. And this should reopen our sales opportunity in Asia. But talking in bigger terms, terms, clearly, the overcapacity of polysilicon has caused a crash of the price of polysilicon, I think mostly below cost for most of the players And this has been slowing down some of the Polysilicon projects new Polysilicon projects outside of China. So there is a time factor. I think that At least Europe is still quite interested in setting a solar supply chain the same for other countries in The Middle East. In U. S, for sure, there is going to be more protection on sales and modules So we expect the overall demand of silicon metal benefit to benefit out of these trends. Talking about The U. S. Expansion, we are working And so it's a question of few months. And then we expect to get the permit in a timeframe of one year and up since we started the process. And then it will take about a couple of years to build the new plant in U. S. But the project is going is going on as aggressively as we can.

We're going to make it.

Marco, I really One more if I could. It's good to see some initial share repurchases. Obviously, you're waiting for more certainty in the market. But how should we think about magnitude of potential buybacks if markets were to turn. Is there a minimum cash balance in mind that would implied potential cash that could be set aside for capital returns. I know Beatrice, you mentioned working capital release of $50,000,000 if I heard you correctly.

Thank you for the question, Nick. This is Ebijou speaking.

So just for to recap. So we bought in 2024 almost 600 hundred thousand shares and up to to now, we have been continuing on Q1. To buy some shares, right? I think we could we continue we plan to continue the opportunistic approach to the share buyback. And as we have been commenting on the previous [indiscernible] We don't plan to take additional depth to support the share buyback program, right? So and on the other side, you know more or less what is our liquidity needs for the company. So we will always go through an opportunistic approach to the share buyback. So hopefully, this year as we release working capital, etcetera, as you said, we can do a little bit more.

Hey, Theresa. I really appreciate that. To you and the team continue best of luck. Keep up the good work.

Thank you. Thank you so much.

Thank you.

We will now go to our next question. Please stand by. And the next question comes from Martin Englert from Seaport Research Partners. Please go ahead. Your line is now open.

Hello. Good day, everyone. Just circling back to the annual guidance spot prices for silicon and alloys remain unchanged Do you still achieve the $100,000,000 low end of the guidance range?

We do expect that because it's also there is also a question, Martin, of mix. The first quarter is particularly impacted not only [indiscernible] demand and low pricing, but also by the fact that all our French plants are down. And the other factor is that we expect to to recover some business in the second half of the year, which is not there today, which is our business in Asia. So it's a question of mix. So but anyway, even keeping the current conditions, we we expect to achieve at least the bottom of of the range that I have mentioned. And I would add that the volume is also a factor. What is fat in as far as volumes or a range with for the full year with $100,000,000 $170,000,000 across your business units?

Well, we are talking about volumes a lot pretty much aligned to 2024. Can you walk me through the [indiscernible] of the quarterly Energy credit for 2024 just going through one through 4Q, I believe you said earlier it was $21,000,000 for 4Q and what's targeted for 2025?

Yes. Hi, Martin. This is Beatrice speaking. So you know, we have from 2023 to 2024, the compensation has been a little bit lower. So total for the year is 60,000,000 or 61,000,000 the Q4, the impact, the P and L impact is [indiscernible] From a cash perspective, we've got already in 2024 €32,000,000 out of the €60,000,000 and the rest from in January 2025.

And what are you factoring into the guidance for the credit for 2020? [indiscernible] Well, this year is going to be lower than in 2024.

I think the good news here is that we are negotiating already the contract for 2020 starting 01/01/2026. And we expect to get a very good contract.

All right. Thank you very much. Good luck.

Thank you, Martin.

Thank you.

Will now go to our next question. Please stand by.

The next question comes from Kyle Mowery from Grizzly Rock Capital. Please go ahead. Your line is now open.

Good day. Thank you for taking my question. So if the European quota system is finalized as proposed. Your European production volume should increase. The question is, as the utilization level increases, how would this impact cost per tonne of your European production?

You mean you asked for price per tonne? Impact? Is this your question?

The question is production cost per tonne in Europe.

Okay. Well, Let me say that we don't know which measures is going to adopt and if they get approved by the 27 countries. Right? So we are in the process. We are still answering a lot of questions that come from suppliers, countries, states, that have seen the document. We are in this phase. So I cannot anticipate what the EU is going to propose. But they mentioned safeguards. In their announcement on December 2019. And Safeguard usually mean quotas for countries and specific producers in countries, Back to a certain year, [indiscernible] And as a consequence, the demand is going to be freed up for the European suppliers.

I remind you that it is the EU has already decided that for critical and strategic raw materials like the ones that we have in our They want to have a back integration of 40%. And today, the market share of the EU producers is far below this level. It is 14%, 15%. Probably worse in first quarter. So that there is going to be a big impact on volume and capacity utilization. Now Factoring at this stage how fast this demand is going to is going to come to us is very is very difficult. And also because in the meantime, it's not clear if they're going to be some retroactive measures to the different importers outside of the EU. I'm sorry for not being precise, but you have to assume that our capacity utilization in the second half of the year in Europe will go up. And we'll go up favoring a much better cost absorption at all our plants. [indiscernible] That makes sense. Thank you for the response.

In terms of denied States with the ferrosilicon rulings, have you started to see the reduced imports flowing through now? And then how should we think about this cadence of pricing through '25? Yes. Well, first of all, it's you look at the import statistics of 2024, There is the expected dramatic reduction of imports from Russia. On the other side, there was a lot of inventory in U. S. Of Russia material based on our knowledge. And understanding which has impacted the overall pricing of Phase I and the reduction of Phase I price. Decisions on Kazakhstan, Malaysia, [indiscernible] March. And when you put these the imports of these three countries together in 2023, they equalized to one third of the market. So there is uncertainty on these volumes. What is clear looking at the statistics is that in the last in September, the volumes of Kazakhstan in particular as in Malaysia as well. Have gone down almost to zero. So this is why we think that if you combine that with the weak steel production in the last months of the year in U. S. We think that inventories are getting depleted pretty quickly. So we should see an impact on ferrocirreic on demand.

Our demand for federal civil in U. S. Talking about federal law is going up We have signed two new contracts. We received customers who were not used to buy for our CVCON from us. So this is another another good sign.

Good to hear. Last question for me, just since it came up on the potential new United States facility What sort of Rate of return would you want to see to go forward with that investment? What sort is it a per ton type of an approach on pricing? I know you had talked about longer term volume contracts, but what sort of returns should shareholders expect, should you choose to go forward with that investment?

Yes. We would expect a much higher return than any previous investment that we have made in silicon metal. And the reason is that we think that we have the capabilities to build the most powerful in terms of performance, not in terms of energy consumption. The most powerful firmness that you can build in terms of output versus size versus energy consumption. But for sure, we're going to expect a return which is higher than our than our cost of capital.

Okay. Thank you very much.

Thank you. I want to emphasize Ferroglobe to resilience in being able to navigate success while at the same time strengthening our balance sheet and positioning the company for growth. Thank you for participation. We look forward to hearing from you on our next call. Have a great day.

Ladies and gentlemen, this concludes today's conference [indiscernible]