Q3 2020 Ferroglobe PLC Earnings Call
And there's talk of participants on the list of all the mode. Later, we'll conduct the question and answer session and instructions will be given the.
As a reminder, this conference call may be reported.
I would now like to turn the call over to be interest Garcia of coal.
Fair go spend that's true Chief Financial Officer, you may begin.
Thank you and good morning, everyone and thank you would do any sort of know say sort of what the two stuff and 10 people for its called the.
Joining me today on my quality of our chief executive of each other to go that make up HBP. Okay. So I think any investor relations and.
Okay Levine for good of controller before.
Before we get the socket mix on pick up the Mark I'm going to read the break the statement. Please turn to slide one of this type.
The statements late night and management Greenpeace gold price quotes are forward looking.
Based on current expectations.
Factors that could cause actual results to the said my P. Diddy compete for one looking assays and can be found the pit of knows most of you said, it's easy fighting and.
The previous to those filings, we kind of available on our website. The what do the you set up the income. In addition, the this is Christian and it goes up and it would be deal I guess a day with Ya.
Adjusted net sales and adjusted diluted earnings per share, which had no and I guess what measures because he gave kind of the thought about your place and I suppose maybe call and you know and most of the recent issue two filings and exercise sleep.
The two they scored well the first review the highlights for Q3.
Wonder if I wanted because celebration and vitamin.
And with the why some of the cannot be paid for and the ones that I took the for months and key drivers behind our results and finally, we would go back on update on beef strategic plan.
I would now like to the other close over to Mike Willoughby of what keep except for the focus it next is likely.
[music].
Thank you Beth and good morning, and evening went very well and I.
I hope that my voice reaches the you loud and clear.
For we get the into the specifics for the quarter.
Do you want to express my gratitude to all of noble employee Blaze and thank them for the continued hard work and the indication doing these trying times.
That's right on called the Nike continues the feature of our and leave and we are thinking and very good measure of possible to ensure a safe work and on.
Even though the surgeons and cases globally yeah.
The focus is on the potential the impact across different parts of the business and the potential the input locally and regionally and globally and.
The areas, where we operate.
How are the DBT consisting of 49 movie game called the 19, so far as being the result.
The airports and gives the accretion of on what crisis management deal with.
There's been able to adopt the beast and this and the oldest mostly in the wake of albeit the non make situation.
Despite the unpredictable so first on sees this quarter we have.
And not to increase the revenue.
Each of the three even by either by higher volume and commercial discipline and.
And then is the cheese slight average price signals and much better.
Like the the Delta pressures the Chen on for shouldn't be impacted the disease.
On the new debt what caused the reduction that force.
Which has enabled us the Debbie here on the TBB, though and.
And I think it's sustainable level of cash.
Well I'm aware of not particularly thrilled the.
These results the other confirmation of the good actually and should we uptick.
This exports would be on going there and we continue to adopt the piece and there's too much on the lingering on certain piece, because oh and they do true.
And the more.
We have started on what transformation journey and I've been pushing for work on all of the various value creations and libraries and correctly did you get the themes across the organization focused on the street the cost comes from Mitch.
I wouldn't be discussing where we are and the transformation plan later in the presentation.
And finally.
And I know that many of you on today's call will be anticipating the and updates we weren't guides to our intended for refinancing and the upcoming on secured bonds mature.
And this time we.
We are limited in what we can share that.
We highlight the the company continues to move into right direction.
We remain confident that the we would be able to obtain the necessary and couldn't make of copy kind of and to the that bus to execute our turnaround plan and.
For like the flexibility to continue to navigate these unprecedented times.
It's on peak update with the provided to the market and the appropriate time and then the stage we plan and we on the.
And these questions and he said deal the comp and using that better position to respond.
At this time I laid the on what business and poor and compare I think the bar.
Moving on it's just like for like please.
This quarter sales were $263 million up 5% from the for you for <unk>.
Thank you and by higher volumes, which increased 3.5 for saying while average selling prices remained flat.
During the quarter and we experienced a slight rebound in the mom and more robust the call Mary has been delayed due to the pending.
And that the losses for the third quarter was 46.8 million compared with net.
The loss of 14 billion in the previous quarter.
The quarterly and that the losses was the even by impairment charges and tile you're gonna proceed get into United States, which impacted the sounds like took the pool and premium.
And lastly, our adjusted EBITDA of most positive 22 point give me jumped on this and the third quarter.
Right. That's just the Pea of quarter. This most are even buying more of these typically commercial approach.
Continued benefit the from T. technique of May 30 can you share tips and other cost cutting initiatives that were implemented and.
The plans and part part of <unk>.
During the quarter. We also had the benefit on the are there some of some previously recorded the crew lumps and like.
The bdcs.
Thanks, we provide these details shortly.
Well the on our Q3 results the.
Reflecting the headwinds, we anticipate the going into the quarter and.
At the and hope or anything like that and we are right now and you can.
And with the situation and the need to cost of the montney toward the mom and balance our production plans accordingly.
And.
He is also critical that we remain disciplined on the commercial side and the voice chasing volume that piece not economically attractive debt.
This the Sip team as the of the positive results for us during the quarter.
And this back though we are acting quickly on the operational and financial problems, where the the store and continue to work the percentage of our cash position the.
This has been done in park for the number of actions, including the sales. So see on two credits, which we have discussed previously as the subsequent event on our Q2 call.
Oh and working copies of increased by 33 mediums.
And did the quarter and 350 for me the.
This was due to the reduction in accounts payable as well as the FX impact on our <unk> Yeah you.
The increase that we're doing so on the stronger for you.
[laughter] during the quarter gross debt decreased by 9 million to 442.
And on the us the.
The net debt balance the bid by $20 million for balance.
Balance on the $1.90 $5 million as of September 30, and.
And finally.
Our cash balance decreased $5.8 million and big the good quarter.
We've won on the $47 million and took on cash down from one of the 53 medians.
And the per year of course.
This includes our cash and cash equivalents for state the cash and consolidation of the complexity of the securitization program.
Next slide please.
On the next day slides, we will discuss pricing and volume and trains on.
Jordan and contributions and market the observations for each of our key products.
Turning first to see legal and made the launch like six.
Oh, no EPS to realize the average selling price for Citycon made some of those 2002 on the $48 per month them up.
The 1.5% from 2015, the for you and quicker.
The index prices and new wise well split why.
Yeah, I mean, the mix decreased 14% during quarter three.
You bet on the pricing environment was negatively impacted by rather leave me the sensible true.
The more some of this book of business, we so what was that the historically low levels.
Well, we are dealing with the walk away.
During Q3, we had benefits from some price the BD team, well I and exposure to the Kid and killed embark on which is fixed price contracts.
We have continued to see our customers buying bother us changing with small quantities and frequent borders which distort the dicks the.
The volume trend chart, the on top of right of slide six shows the 7% increase and see the company because she wins over you water cool approximately 51 GAAP.
On top.
Yes.
During the quarter, we did see some changing of Pvp pattern on say across our key markets for CECO.
Aluminum and related the mom to show some signs of recovery in both of the U.S. and Europe.
Largely tied to the pickup in activity and cost due to most of the district.
And he says being partially offset by the slow down and chemical and DVD [laughter].
The larger customers on purchasing see the kind of cautiously.
The mom for Silicom for default of that type of market continues to be the week of parts of the setback.
See the called my thought EBITDA improved from $11.8 million imports of $2 million to $14.2 million in quarter three.
The then bye.
Pricing and volume improvement.
On the price inside the main could do to side of your prices for can you kind of grade we took on in Europe.
The called the Bush of coming from volume the is attributable to increased sales Modine Europe for.
Clearly the second day aluminium mark.
The cost the impact remain flat for the quarter as the <unk> energy costs in Spain was offset by continued benefit on values keep technique and may take initiatives, along with better fixed cost absorption.
Even the sleazy feel of the situation we were.
And I'll be making any comment relating to our core took for and 2022 on order book and the Stein.
Next slide please.
Turning to Silicom based a lot of is on slide seven.
During the quarter, the average selling price will remain or other flat the around $1554 per gallon.
The U.S. and new European price indices, each declined by 14% during the quarter.
The the sharp decline and the beginning of the quarter, partially offset by a rebound for the end of the of course.
So the opposite Shoebridge realized price for sequel based on the noise and positively impacted by its part of the mix, especially at the fair on all these products accounted for approximately 60% and the quarter of the shipments doing what the tree.
Silicom based on the lead volumes increased 7.5% the court to tweet.
The approximately 42000 for on the towards the third quarter increase is primarily attributable to the called the foundry them on the.
I think the last the new and stuff.
And what the PDP became began to pick up.
One of the steel sector is from T. neutral on the at the low utilization rates formally significance the payments for the most of the year.
Yes on positive signs of leased assets, which from the continued commodity.
[noise] EBITDA from our silica based on noise segment dropped from $6 million the Q2 net.
I got the $1.9 million for <unk>.
Increased cost and the largest impact on on the quarter over quarter of decline and you'd be.
Our philosophy on production cost increase due of two Atlanta curtailment in Europe.
Each of the impact of approximately $5 million and.
And the more we had some technical difficulties of the leading to a production ramp up on where bleach for propensity to use.
That's on their silly impacted the the results by $2.8 million.
We realized the 2.6 million improvement from volumes, which is a true, but the won't get growth the mix and our ability to be more selective on the commercial piece.
To date the important for one of your P.S.U.S. index pricing is trending toward the sees that the that the loans to stop and production costs and pharmaceutical across the industry top on to the pickup in steel demand.
Next slide please.
Turning now to one got the U.S based the noise.
During the third quarter average selling prices decreased by approximately 7.2% to $1009 per metric ton on Dol from 1088 at the dawn.
The second quarter.
Do you have the index for federal among the knees the claim by 14%.
One of the index for Silicon among that makes the claim by 20% and during the quarter.
Volumes declined by 2.4% of the second quarter were approximately 54000 tones.
And to continue to slowdown across the steel sector.
The London is based on noise EBITDA increased during the quarter by <unk> to $13.1 million from seven per se.
And the previous quarter.
Pricing and the bare seen.
On a 4.1 medians on EBITDA due to the time lag and realized prices and let the move to the <unk> the deep.
Oh I see.
Offsetting the price of <unk>, but the walls and improvement the coast specifically the production cost of Oh My goodness.
EBITDA for the TV book for what the $2 million and longer even ambition of zero for $9 million coming from the sales well suited to credit.
And finally he.
And he's a positive impact of 7.5 media and.
Well the big from there so the previous accruals.
Hi.
The potential earn out payment related to the two manganese gods of quiet the 2018.
We realized for the savings from the technical improvement.
It should enable us to use before and total my PV and grades and sometimes.
And this time.
Turning the call over to Beth will review the financial highlights.
Thank you Michael and.
Beginning with the slide 10.
Thanks, Oh, the $253 million, the and QC were 5% higher than the $250 million total sales in the dry of quota.
Reaching peak and see what's really and by a 3.5 per cent increasing sales volumes of how I would add to the realized selling price across all the products remain flat.
In the quarter, our cost of sales increased by 8% initial opinion that gross margin, excluding the any of 57%.
So the 59% and if they of course.
The cost of sales increased eight you'll see less but let me ask the veto attributable to higher energy costs, particularly in the spring. That's all of the thing that the flow with fixed cost absorption for sure being some for the cutbacks and production.
Our staff cost increase.
For the person over the cycle of what how.
But please keep in mind that Q2 included the revenge of the 2019 compensate for the accrual which totaled $6 million due to the cancellation of any bonus payment.
Well some of it up expenses.
Related to continue headcount reduction.
Well that operating expense decreased by approximately 9 million dollar and the result of the yellow.
Hi, good for reduction of Spike of how what initiatives for 2000 to.
No work on my total expenses the event.
By dropping volumes and the removal of liabilities relating to the I made on the plug it pizza and for.
We had the C a golden and Glenn.
The 1.2 million dollar for the game you have to look of on to the gain on sales here too and he says right.
The QC operating losses before the attachment was $5.7 million a degree.
Cycle on seismic outdoor lighting the play acquired the.
The difference between EBITDA and adjusted EBITDA.
Relates to the the Baltic.
Because of.
$54.3 million I mentioned earlier.
On slide 11 for me.
Adjusted EBITDA remained flat at 22 million dollar for the quarter.
As you can see all of the ADESA debit the average.
It was on positive factors of safe by some day not the fight and.
The increased volumes, specifically and silicone and foundry products contribute to CBD and so net net benefit.
The second beefing up the and.
That's in that well.
For the year dollar of people to work through and Nick.
Pricing and vitamin well.
Okay, Great and telecom and found the brothers at the positive contribution from pricing is what's more the kind of said back and made up of two and.
Of course, manganese alloys and set of silica.
The Wassa net cost peoples month of TV, the thing seem eager and all that good and the quarter.
Yeah, and I of course, the improvement in federal manganese and the benefit of the steel to create these sales by $1.2 million.
Offset by the highest said of the silica because of show of course.
And the U.S. and you.
Glenn said don't cost by force.
Okay and billion dollar.
We looked into the said it'll be the upland.
And $2.8 million due to the breach of the bridge for the two plant ramp up.
Finally, the what type of TPP and Buck of $7.5 million refocusing some of reversal of the previous how cool and.
And to a potential and other payments related to the two manganese blends of quite yet in 2018.
Given the current market the vitamin the potential liabilities relating to any phs and other payment has decreased.
Lastly, the work and then I think the impact of $2 million.
The lifting to separate out of it I think.
And then earlier the and the second core day West the site that bill bonus would be and pay for 2019.
I was hoping that the that's kind of the year, a cool and and compensation expenses that type of basis to dialing for billion dollar of.
I think piece of what the elimination of of 5 million that you have anything.
And to be and I'd be pleased if the offense.
Next is likely.
Turning now to the slate to it I wouldn't leave the our balance sheet and with every day for Villa.
And we saw a slight decline and our total cash balance well and.
Moving both the gross and net debt.
Gosh of restricted cash degrees is likely to work on this and the well have what kind of 47.4 million.
At the end of Q3 down for what kind of 53.2 million in the prior quarter.
Gross debt increased by approximately nine per $1 million and QC to focus on that.
42 million dollar, while net debt increased marginally relative to the prior quarter ending at the crime to $95 million as of September the yeah.
The benefits would approximately the one point for TC billion dollar down from 1.42 billion in the prior quarter.
The increase mainly of people to work 20, but and one of our NIAD.
Before we move on.
Subsequent event to highlight the.
Security sales from Florida for the European accounts receivable and having successfully refinance when the price of October we.
We kind of beach and that release of cash of $90.7 billion in but that's not show up you know what you'll see the balance sheet.
Exactly.
We generated 40 people play think I still owe 23 and billion dollar in Q3.
Compared to $58 million into the quarter and opening operating cash flow is really by the $33 million out of the cash release with the here too and missions rifle.
On the $20 million on redemption of the accounts payable.
Cash flow from investing activities.
Now that the 8.4 million dollar price.
The only attributable to higher payments for the topics relative to the prior quarter and.
And lastly, cash flow from financing activities was negative $20 million for the quarter down from $54.5 million into the to the.
He said that the deal to the senior notes and coupon payment.
And the Avi and debt reduction of say.
And $1.8 million in aggregate, we attack free cash flow of.
14.3 million dollar Billy and Q2 net for flights.
Now turning to a site for team.
The didn't get so caught the I will walk you got the debt increased by 53 million below net debt is primarily attributable to a reduction in accounts payable taught them on the west have fallen over the influx of.
Oh popped up to about 7 million don't let on even 30 day.
So think some ethics I think you'd always thinking.
Turning to the tuck on the right our cash balance at the end of Q3 was $147 million compared to what kind of $53 million and the prior quarter.
The QC balance includes unrestricted cash of $78 million and non current let's take the cash and cash equivalents of.
$28.6 million.
The next is likely.
During the quarter of all of those debt decreased by $9 million.
For the full.
Both on the $42 million.
While our net debt declined $3 million for 295 million, but the.
The gross debt decreasing QC is due to the 16 point for media Golda Semiannual bond coupon paid during the quarter, along with a $7.8 million adoption in the aviate balance.
He said the expense were partially offset by 8.2 league of goal that ball and either the cool and then the crucial five they can go and out of that people don't want to call. The two related on why didn't it by different GAAP and Mike.
For the flow somebody of our gross debt at September 30 day.
Please refer to the slide 21, and the appendix mix is likely.
On the financing side and are a few highlights to share which have been exploring options to tapping to call. The two lifted the financing plan school and so by local governments in the countries, where we operate today.
During the quarter with the Chief I said and begun on cannot handle and I know some of the kinetic government to support that when they kind of cool facility think these people at the time, specifically to find some capex projects at the time basis and need to the loan we have more authority on payments for three years and Rick.
That's why what price of accounts receivable and security Tichepco them in Europe, we close on a new facility other till the first the.
The new facilities and slightly different than the play you, particularly the stage of go with him and he just took the that's affecting facility because.
We are in two of us on space and eliminate the S.P. the except the we previously had as a result, we would able to really 19.7 million build up of got hit Cushing, which was previously the stick that we see in the it's Pete and.
Additionally, the overall cost of the new facility, it's exactly the same.
He can lead the way and the price program.
And lastly, [laughter].
We see lots of and you've got the deadly think central recede. However, we will not be providing any of these kind of come and feels like classical note at the beginning of today's call we'd debt I turn it back to the two Michael who will provide an update on that west of the plant.
Thank you batteries now turning to slide the 18 please.
And on the I want to provide an update on our strategic plan things, we introduced the plan and for national the targets of passport there, we have been making significant strides and.
And continue the strong momentum across the old and to value creation and worse.
One of the first and most critical steps as being around customer male and processes.
You don't get the dry successful execution.
We need to ensure that the proper backbone and foundation the within the company out there.
During the initial assessment fees, we had the president.
But the EPS from there usually is and you're going to say shun involved in the diligence, but no we have formalized beans.
For each and you try that again.
Beginning with the senior executive who asked for ownership for their respective.
And to go.
And as we began to dissect the value creation into smaller specific and measure on both actual dams, we have incorporated the appropriate people on to execute.
Good day.
Over the the teams sprayed girls the work working on various initiatives.
We have also moved some people around where it was important to have 40 dedicated resources.
A lot of time and planning just go on to this process, but the key is critical for its execution and the accountability to the.
The use approach.
[noise] beyond the question now we have been focused on processors.
These processes and gross.
Are we implement change tracks savings.
Communicate for a lot of people can see show and.
The rig you the current way of doing things.
The transformation plan goes beyond you think the surface on set of targets.
We are using this opportunity to fundamentally change and improve the way we operate.
In order to bolster the overall thank the team now has all of our plants and our ability to service our customers.
This is what will drive increased profitability and the future.
We have a solid foundation and please you started to execute as.
As expected some work streams of progressing faster than others.
All in we remain confident and India between some of our financial targets for these transformation.
Let me give you one specific example of the work we have been doing.
In the case of work and copy come we have set the kind of gets of $17 billion cash.
Cash and leaves on what the next two years.
We have now lapped the Bentley reduction opportunity on the plant by plant basis.
And the allocated the source most immediate the two specific individuals.
Concurrently.
We are setting targets and introducing reporting tools and capabilities. So that we can truck and the theme and.
At the level of inventory and the avoid build up which has been the problem historically.
This is one example of the work being done across all of the verticals to announce decision, making improving the operating efficiency and cost reduction on.
And with the aim of the improving the quality of our collaboration with customers.
As we continue to get through the down into the plan would provide periodic updates and benchmark of on where saving.
On the piece to the target.
I'm more convinced the neighbor that these transformation plan would be a sense.
And the success of the plan is critical to drive to be the recovery.
The.
There is a lot of work ahead of us, but we are striking and Bob.
And Brian and go on business more efficiently and more profitable each day, while pushing for on the broader transformation.
We set of.
For the two updating you on our progress and expect that the it would be evident in our future of financials.
This concludes.
And we're already view of our true quarterly zone and this time I will ask the operator to please open the line for questions.
Thank you ladies and gentlemen, if you have a question at this time you need the press star one of your telephone for Joe Your question for of course, the pound key please.
Please stand by was and how the Q and a roster.
Our first question comes from the line of Nick Jarmoszuk with Stephens. Your line is now.
Good morning, good afternoon.
A question for you on the CEO to credit was.
Was there and associated expense with them or was it a 100% margin sales.
Yeah.
[noise] and make a battery say speaking on.
Let me guide you through the balance of the answer so on the cash I'm on the west at the 2 million and.
We helped the margin showed that the sales, but the on the p. on it that you'll see that the is one point and lenient and you can see that on the cops and on the P. on and that coal on the game.
And those.
So if I understand correctly previously you paid about 30 million for them and and your book that roughly $2 million or what was the 1.2 you booked some gain but you did pay roughly 30 million for that was on the right way to think about it.
Yeah, one for sure.
The lighting is 1.2.
Okay, No 2 million yeah. Okay. So you received roughly 33, you paid close to 32 for that.
Correct, Okay alright.
Question for you on Capex, the LTM figure looks like it's about 25 million previously you've stated Capex is 70 to 75 million.
The or the facilities being fully maintained the they're going to be a massive capex ketchup figure going forward any comment there.
I can take this one then why you want to.
Go to the to the and why you are welcome.
Okay, and when I spoke on line.
Yep.
And I leave and make a correction on my previously I think the two nikkei just a clarification on.
Because the Mcginness hills on these one point of millions, but the need to the mine is that the babies likes it granted we'd be say like right. So this is something that you get funded the took the called the unless the would be the peak and we put the navy yeah.
Okay.
So in terms of how should we think about the in the back of the C of O two credits the.
The impact of to EBITDA. It didn't have the benefit of the 1.2 or.
Do they have the benefit of the 33.
Well as well and one thing is the cash they index at the as you said the D.C. says that the C. lenient and the other one is the best on the European and that these the beef it is between and the value I believe to use the G.
And your balance sheet and the value add weight and you dispose of defend bucket volume.
The issue right.
Okay.
All right.
She is totally Michael.
No.
Moving to you on topic question like.
Like we look we Oh and you say.
This year, we have been well cost the on spending on topics on thing.
Oh, and our unique okay thing.
Without taking any kind of go on but it shouldn't ask problem.
And so we're investing.
Investing and its funding capacity or particularly on the new devices.
We are.
The line the Weve on our plan and the maybe pitching the police and the spending the little bit more income.
And so you've got since the previous quarters of two we are in that ballpark of 25 media and spending Capex this year.
Okay.
And then the last one can you just provide any commentary on the contracting environment.
What you're seeing for your buyers.
[noise] where on the.
The yeah, we seize the contracting the contracting season.
All I can say is that the.
Everybody tries to.
So be it.
Reasonably optimistic and contemplate the sort of you will recall of very closely during the effect of the now our segments Q2, and Q2, we have been pretty much flat.
He's doing the bottom of the the bomb debt.
Customers are Rob.
The other portion.
Oh sure the I would say cautiously optimistic about.
Seeing the are you doing.
During 2021 this is the key Colm and can provide.
Yes.
First of all I had thank you. Thanks.
Thank you.
And this does conclude today's question and answer session and I'm not showing any questions. At this time I would now like to turn the call back over to Marc Olin.
For any closing remarks.
Thank you. This concludes our court for 2020 earnings call and.
I mentioned on the beginning of the call. This quarter's performance is the good confirmation of the actions we are taking.
However, we have more work to do to the turning the company to profitability as well as we weren't guides to execution of our new the teacher.
Thanks again for your participation today, please stay safe and the good day.
[noise], ladies and gentlemen. This concludes today's conference call. Thank you for participating you may now.
[music].