Q4 2020 Ferroglobe PLC Earnings Call
Good morning, ladies and gentlemen, and welcome to federal group's fourth quarter and full year 2020 earnings call.
At this time for all participants are in a listen only mode.
We will conduct a question and answer session and instructions will be given at that time.
As a reminder, this conference call maybe recorded.
I'd like to turn the call over to Pierre to discuss here.
Of course she.
<unk> Financial Officer, you may begin.
Good morning, everyone and thank you for joining set of notes fourth quarter NIM for 2020 consensus for it.
Joining me today on Marco Levi, our Chief Executive Officer would have made them on what's actually based on directors and EVP of strategy and Investor Relations and corporate 11 group controller.
Before we get to started which on prepared remarks I'm going to read a brief statement. Please turn to slide two I'd be site you.
Statements made by management. During this conference call that are forward looking are based on current expectations based on factors that could cause actual results to differ materially from these forward looking statements can be found in federal globes. Most recent S. T SEC filings index to those filings we tried.
Available on our webpage Ww adult federal flow Dot com.
In addition, this is Christian acres for finished her every day on Augusta Debbie D. On gross debt net debt and adjusted diluted earnings per share, which I've known I used for this measures because foundations of diesel and idea for this measure maybe found in our most recent S. T SEC filings.
On slide please.
During today's call. We will first review the highlights for the fourth quarter and full year 2020, as well on our business and operating and vital on it then I will provide some additional detail on our financial performance and key drivers behind our results and finally, we'll provide an update on.
What that survey surplus at this time I would like I would now like to turn the call over to Marco Levi our chief executive for fishing lakes is likely.
Okay.
Thank you Brad for you.
Good morning, or good afternoon to everyone.
Although net 'twenty was a defining year for for globe.
And next day ordinary one in many ways on.
On the one in the world fighting for the challenges, resulting from the global Bank.
These are required.
They're not typically youll senior management team will make drastic decisions and changing our processes to support Swift decision, making it changed the way, we operate our assets and it forced us towards and a salary salary it for.
On the cost cutting side.
On the other Ryan we have to clear and critical initiative, which was to design a strategy for turning around the company and to push for this agenda, while navigating an unprecedented operating environment.
In many ways. The challenges we were encountering particularly during the early days of the per day to make I liked that GAAP.
In our business and the opportunity is one line the team to drive change.
What do you know on.
All of our financial performance was not what we would have liked to de lever.
But we do view 2020 is excessive and menu on Aries.
We made changes in management debt various methods and start designing parts of the organization to drive zone, and then for that size accountability.
<unk> 30 per cent declining sales versus 2019, we returned to positive adjusted EBITDA and took those on 'twenty.
D. C is debt that's them until now our ability to operate this business and reinforces the potential of the asset base for.
For the more we continue adulterating the business, while managing our cash.
He said, it's been a focus area for the company and we've made significant strides to operate without any disruptions doing day to Brian.
Period.
We successfully refinanced our for your accounts receivable securitization program.
Each of at least some previously trapped cash, but also lower our financing costs.
And lastly, we now have a robust multi year strategy and well defined roadmap for turning around this company.
We have discussed on our turnaround plan on <unk>.
Recent goals and they have recently published objections, we provide further details well now we're going to create value.
As we look at two.
That was on 'twenty, one will be the people who come here.
Not only has the operating environment improve steadily over the past few months, but the way it also making substantial progress on critical priorities.
Yes internally, starting the new year on a positive note.
If you're a weeks back we informed the market on our progress related to our proposed financing, which addresses the maturity of our senior unsecured notes and addresses the injection of new capital into the company.
In reaching this milestone.
I don't think process, we are taking steps toward ensuring that we have the resources to execute our turnaround plan.
Furthermore.
It is a validation that the strategy underlying our business plan illustrates a linear path towards daily recovery that is recognized by financing partners.
On the turnaround plan itself, we completed most of the preparation work in 2020.
At this time, we are India for Houston Phase that calls all day do creation area.
I would get more into this later in today's presentation moving ahead to slide six please.
Okay.
For the full year sales were one.
On $14 billion, which is 30% lower than 162 billion of sales generated in two.
2019.
This is primarily attributable to an unforeseen impact of COVID-19 on volume and pricing.
All our products.
The net loss for the full year 2020 is whatnot that $94 million.
Including any payment charge of $36 8 million.
Related to the Niagara plant.
Fear to net losses of 200 day $96 million during the full year 2019, which includes a goodwill impairment charge of one on the $34 billion.
And lastly, we returned to a positive adjusted EBITDA.
For the year, we had $32 $7 million of adjusted EBITDA, which compares to negative $29 2 billion of adjusted EBITDA during 2019.
Once again these buy in cellulite drastic changes, we've made progress on well costs.
Likewise for the full year 2020, we returned to positive operating cash flow generated 150 for mediums throughout the year.
During the fourth quarter the company generated sales of 322 million.
An increase of 22 per cent compared to $263 million some sales the sales.
Quarter.
The net loss for the third quarter was $84 1 million.
Which compares to a net loss of 46 million doing that for a quarter.
Adjusted EBITDA for the fourth quarter was positive five seven media.
For use of $22 2 billion.
We reported for the third quarter.
Overall Q4 market by higher sales volumes and slightly higher prices, coupled with significantly higher costs, some of which are not recurring there's all day.
And margin erosion during the quarter.
Yeah, I S shaped volume levels for the fourth quarter, reflecting improving end market demand for it.
Good day.
That part of the quarter.
We also continued our efforts to reduce inventory levels.
The gross debt increased by $31 million during the quarter, primarily due to the ball coupon on accrual.
We ended the year with gross debt for them.
The $73 million and net debt total yeah.
On the $41 million.
The cash balance was one on debt $32 billion adherent with the refund now singles hour per year securitization program. There was a cash release from the previously trapped cash in the SPV structure.
So what is the total cash balance is down quarter over quarter, the strength that cash available actually increased following their trend on improving.
Improving from $78 million in Q3 to one on that until you millions of dollars per.
Next slide please.
On the next three slides, we will discuss pricing and volume trends, earning contributions and market observations for each of our key products.
Turning first to silicon metal on slide seven.
So on globe's realized average selling price for silicon metal was $2060 per metric tons in Q4.
Let people really flat from 2000 and 248 per day.
Your score card.
The index pricing in the U S gradually increase by approximately two six per send you the quarter weighted European index increased seven 5% during the same period.
Much of the pricing on our core values will see late in the quarter as low inventories all along the value chain, coupled with strong demand will do you on.
I said Europe supported pricing, we have some upward pressure.
The volume trend.
Chart on the top of slide seven shows a 7% increase in silicon metal shipments over the previous quarter.
Net proceeds after the 55000 tons.
We saw deterioration in our EBITDA from the silicon metal business quarter over quarter, which was driven primarily by an increase in costs.
Oh I see nickel production was that they've actually impacted by winter Tonicity unit cost trends as well as greater specific consumption of energy in a few locations.
Surely the planned production curtailments.
Go lower fixed cost absorption.
And finally.
We had some one off power related penalties on adult size I don't think from a reduction in production due to COVID-19.
Relative to our energy commitments that anticipated and tier production profile.
Although the market tension idea adult 2020 is carried over into the beginning of 2021 with the U S and European Index is showing steady improvement.
I'll start here and rather weak demand picture for most of 2000 and blend to doing it by Covid, there's been a pickup in activity across the industrial sector.
We are seeing debt trying to get our sales into the chemical and aluminum end markets in both U S and Europe.
Buffy improvement comes at a time when inventory levels are low for a while the value chain.
Logistical barriers and increase domestic consumption and limited Asia imports into our markets.
As a reminder, there is a legs for the moment the day.
Fixed when we realize the benefit although the momentum at the beginning of the year.
<unk> to our business.
I got to our ongoing Silicon trade case on February 23rd the U S Department of Commerce imposed final duties.
Of up to 160 per cent on non silicon metal imports from Bosnia Islam day cutbacks for them.
Next day International Trade Commission would vote, whether to affirm the per liter.
Now the decision that these inputs I've enjoyed.
Good day.
Yeah, I do see vote is scheduled for March 24th.
I got in Malaysia.
Specification is proceeding so they called my self imposed preliminary duties of 721% at the end of January these rates may increase in the final determination, which is scheduled for announcement on June 17.
Next slide please.
Turning to silicon based alloys on slide eight.
During the quarter the average selling price decreased marginally by <unk> four per cent.
1005 on the $28 per metric ton.
For 1005 on the $34 per metric ton in the third quarter of two times on price.
Despite this decline found lots of events that realized price for silicon based alloys are they buying above the U S and European index sees this.
Due to the way to go on higher margin specialty ferroalloy products.
Which accounted for approximately half of the shipments in the fourth quarter.
During the quarter, we realized a 35 per cent decrease in sales volumes sales.
So silicon based alloys were approximately 57000 tonnes in Q4 about 50000 tons higher than that for you.
On the quarter.
This improvement is primarily attributable to sales for ferrosilicon, which has benefited from the start of these capacities, especially blast furnaces in Europe for it.
More on probably sales wholesale pulled on the back of gradual recovery income.
The global automotive end market.
EBITDA for our Silicon based alloys business was positively impacted by price as volumes and cost you on the quarter.
We realize that cost improvement of $8 million due to the improved fixed cost absorption.
And I think the what was the realized both in France and Spain.
Which will you be able to be suffering for more production following the slowdown on steel demand in Europe in the second the third quarters of 2020.
Collectively these factors resolve.
Any new broke 19 EBITDA contribution from this segment two seven per $1 million in Q4 up from negative one $9 million in the third quarter.
As you can see in the pricing try and screw ups.
Price U S on Europe steadily rebound debt into second half of two times on 'twenty overall.
All fallacy to comprising is benefiting from great deal of inventory along the value chain as well as a recovery in steel demand.
Next slide please.
Turning now to manganese based alloys. During the court then the average selling price increased by two 2% total.
$1031 per metric ton.
From $1009 per metric ton in the third quarter of 2020.
During the quarter the federal buttons on these business added four four percentage crazy on realized prices well.
Realized silicon manganese surprising was one 7%.
Shipments during the in the fourth quarter were up two eight per cent an increase of approximately 24600 tons over the previous quarter.
As with some of the other part of the value chain for manganese alloys also reflect that low levels of inventory at the time when the mountain West speaking up.
Definitely for a bush on from this business was negative.
But he was.
Millions of dollars per metric golfs in Q4. This is positive for $13 $1 million in the third quarter.
Volumes and pricing positively impacted the quarterly results by $3, one millions and.
1.2 on.
One 5 billion respectively.
On the cost side, there was an adverse net impact for the quarter of $17 $8 million.
This amount approximately $12 million is attributable to the port.
Potential earn out payment.
<unk> per hour bundling these alloys guns in Norway and France.
Additionally, we faced adversity impacted by lower plant efficiency.
And I have fixed cost absorption cost.
Yeah.
I would now like to turn the call over to Bethany wherever you the financial results in more details.
Thank you Michael.
Beginning with slide 11.
Sales of our take on the 21 million, though on that.
Sure.
With 22% higher than the 2016 8 million net of say.
They pay you quoted.
This increase can say was driven by a 29% interest in shipments was for.
For more than offset net cheap 0.5 decrease in average realized selling price across our portfolio.
During the quarter, our cost of sales increased by 36 per cent.
This is primarily attributable to the viable cost directly related to the increase in shipments during the course debt.
Additionally, he does he did on that towards mainly on touch for the basketball Kid of the earn out liability for the manganese assets.
The increase in other operating expenses of approximately 75 per cent for approximately $30 million. This can be explained by three key factors.
Jessie we'd realized $5 million benefit, especially on things on my line and they probably get two times.
That impact was one time, so we have not kept interest had benefited this quarter.
Additionally, we had 6 million net accrual on for the potential implications here too it makes sense right based on current pricing.
Finally, the remaining balance is mainly attributable to higher transportation and logistics cost pressure from higher volume activity, but also higher freight rates as our broader industrial activity has picked up.
The net impact of higher sales was partially offset by higher costs, which led to an improvement in our operating loss for the quarterly for the government to net would be $56.2 million compared to a net at the $38 8 million during the prior quarter.
Adjusted EBITDA was positive $5 7 million dollar.
Line from $22.2 million in the third quarter.
It should be noted that the results presented on Oh not eat it on.
November 16 2020 net.
So Barry on the holistic afghanis here.
Federer Atlantic as claim of provision to separate the metallurgical plan to say on demand for the related either electric power plants. The accounting impact of this decision has been considered indices for thresholds. These accounting impact it had a discussion with our external auditors income.
Thanks.
Next is likely.
Quarter over quarter, we did have a decline you know what adjusted EBITDA from.
$22.2 million, you'll see two 5.7 million, though that in Q4.
There are a few key elements behind it and I will specifically address a few items, which are nonrecurring in nature and should be considered when you look at our normalized EBITDA cash flow.
During the quarter, we benefited from some volume pick up 19 day, yet and we also benefit for me pill pricing across the portfolio.
Furthermore, the Watson adverse impact of a $9 4 million also take what they want to energy costs. This specifically relates to a $5 million penalty incurred in France, where we consume less energy than contracted due to the unplanned production of course 10 months in Europe.
On the other hand, we benefit from a 3 million compensation for NTT last quarter.
As a result of NTT provide us being unable to secure minimum energy level off takes.
For the previous quarter.
Do you think on Mark to market assessment relating to a potential liability type.
Tied to somebody that he has hit.
On the P&L impact less positive seven 5 million, though on that EQT and that day 2.2 million, though on that in Q4, hence.
Slide a quarter over quarter of audience of approximately $10 million.
Even the fluidity over the underlying market for manganese alloys, and these liabilities could move back on fourth quarter to quarter and that's created some noise, hence why must factor this into debt assessment when evaluating the quarterly performance.
Similarly, we've got the 5 million dollar benefit on DNA.
I mean, they sound like you are a little tighter on and then be projecting front.
The brick wake up one day that this impact of these one off benefits realized last quarter and lastly, we continue to make progress on head office cost reduction during the quarter. These countries its $5 million slide 15. Please.
Yeah.
For the full year adjusted the media improve from day that is a $29 2 million to on that in 2019 to positive $32 7 million interest house and frankly, the most significant factor impacting just seeing less cost resulting from improved credit.
And of course first and foremost we continue to drive initiatives.
Am I forgetting the raw material mix to generate savings.
Compromising on quality of our finished goods. Furthermore, Michael filling capacity and running our most competitive competitive assets.
Liberalization, we gained share for the benefit you know what all of it on production costs and lastly, due to the slowing industrial activity, we benefit from lower pricing for raw materials, and all that could take on inputs.
If we can price declines across all our core products, especially impact us year over year.
And as mentioned on the play on a slide with have been extremely focused on our corporate expenses for.
And on both discretionary and non discretionary expense. The net result was a benefit of $13 5 million adult line in 2020 net.
Next slide please.
Turning now to slide 14, I will review our balance sheet for greater D day.
We have made improvements to our total available cash on working capital debt with a challenging market environment. This improvement are critical for our business.
Cash and restricted cash totaled approximately $132 million at the end of 2020 compared to $147 million that they play on court them. While there is a decrease in the total got him on what is critical to the company is the available cash balance.
Can be access without any restrictions.
For the quarter on what.
Available unrestricted cash increased by $25 million.
77 billion at the end of the third quarter two one walk on that Oc mainly on at the end of 2020.
EBIT financing they play your account receivable securitization facility in Utah.
Special purpose vehicles took the supporting their financial turn away once the facility.
Refinancing.
This release so.
On some previously restricted cash gross.
Gross debt increased by approximately.
$31 million over the quarter, which is primarily relate to the accrual for the semiannual bond coupon payment net debt increased by $46 million over the same period. This increase is driven by a lower not counting cash I E. S. P V trapped cash is no longer consolidate debt as mentioned.
Yeah.
Total assets were approximately $1 4 billion dollar I E N.
2020, a slight decrease of $34 million over the prior balance at the end of Q3.
Total blocks working capital improved by 15.3 million Donuts in there for quarter.
As a result of our emphasis on lowering raw materials and finished goods inventories across the portfolio makes it slightly.
Well I would have provide on the quarterly detail for 2020 on this slide let me first making bring your attention to the queue for 2020 for yet.
Cash flow from operating activities for the quarter for seaborne 5 million dollar day negative <unk> 6 million Donuts reported EBITDA was offset by a working capital Air Force with net.
Net cash inflows of $13.5 million.
With cash release from inventory being the biggest contributor.
Cash flow from investing activities wasn't it at day $14 2 million dollar actually had a pickup in capital expenditure during the winter months doing some plant outages mainly in Europe.
Lastly, cash flow from financing activities was negative.
For $7 million for the quarter during the quarter, where they find on our prior year accounts receivable securitization facility and replace it with a new factoring facility in Europe. This interest approximately $19 7 million.
Net of cash release at closing addition.
Finally on the cash movements related with the refinancing I think could see the ASP on borrowings and payments in the cash flow Shelley.
In aggregate, we had free cash flow of negative $10 7 million during Q4 for the full year, our cash from operations was positive $8 9 million Donuts and free cash flow was positive $122 million.
Next slide please.
Now turning to slide 16.
But it is working capital by <unk> 15 billion during the fourth quarter.
The share west driven by $65 million.
Walk down in inventory and an increase in accounts receivable.
$63 million.
And is offset by a $30 million increase in accounts payable.
The positive impacts on inventory was partially offset by the effect of the strengthening euro relative to the U S on that Tim.
Moving to the chart on the right and as I mentioned, our cash balance at the N plus $132 million compared.
Compared to 147 million in the play of course it.
On slide 17 please.
During the quarter, both our gross debt and net debt interest the gross debt increase is attributed to the echo one of the semi annual coupon payments under the existing senior notes.
The decline in total costs adversely impacted by the quarter over quarter movement in net debt.
Next is likely.
In regard to our prior year accounts receivable securitization program in Europe, we close on a new facility in October for the new facility is a slightly different than the prior securitization program.
So structured our factoring facility.
This helps with improved advance rates and illuminate C. S. P. B S took them we'd previously hot.
As a result, we were able to release $19.7 million of cash at closing.
Which was previously for stick this weekend B S. P. B S choked up.
Finally, the proposed financing discussions with referred to in our previous allows one on February 1st are continuing and we hope to be able to make further announcements about those soon.
At this time I would like to turn the call over to Michael who will provide an update for this debt.
Basic line.
Thank you Beth now turning to slide 20.
At this time I would like to take a few minutes to provide an update on our strategic plan.
At this stage, we are formally transitioned on the planning and preparation phase for the strategic plan into the execution phase across all value creation there.
The bottom up on that because as we conducted during the preparation phase was greatly calling validating our assumptions and financial targets as we get deeper into the execution phase. We're also going deeper into our conversation.
Tony we are moving more of our work force throughout the organization. We're also training and empowering them to drive the change are required to make improvements in their respective areas.
Equally the company is undertaking detailed mental effort well done.
Gobs seem to business such as intend on communication.
Centers of engagement with our workforce to ensure that the full organization.
So understanding what we are aiming to achieve for the 10, they're on plan and now we keep expense.
Now I will quickly update on where we are across the various value creation.
On footprint optimization, our goal is to make adjustments to our installed capacity across the world.
We need to get access and uncompetitive capacity.
To date, we have completed the restructuring going on our more year round for CVT, Norway and that guy on a for CVT can be United States.
We bought it on a specifically on this.
And Theres been too I don't one of the two for disease.
By doing so we have taken action to correct the cost structure, particularly the fixed costs. So that we can effectively consider tcs is longer for CVT, the near term, while preserving the optionality of tourists.
This our comfort.
Oh and they have gone for CVT.
I don't since the end of 2019.
Given our broader focus on share that you're still capacity and focusing on the most competitive plans.
I have decided to permanently close the site.
Several options for what do we do with the property are currently up and Arabia.
For 2021, we have some sort of actions to take and we'll provide updates as we begin the execution.
Yes.
The continuous plant efficiency value creation area is an extension of our key technical metrics program.
As part of the strategic plan, we have a long backlog on specific initiatives focusing on raw materials general efficiency improvement and a reduction in net net to consumption.
On could be nation on these initiatives would be implemented they don't work for us. He did this globally this year.
Most recently, we completed our first pilot project of before since we became friends.
This was a successful two week on site pilot to test to learn it.
On the global rollout.
What makes the program different from the way we have done on KPN in the past is the preparation of blending leading up to be on the institution.
Furthermore, we have launched a process aimed at employee training and engagement to create a culture centered on operation with Simmons and navigate work force that constantly seeks ways to move forward to remain competitive.
While this level of engagement is being rolled out in all the areas on this.
Did you plan it has been quite noticeable plant efficiency, particularly seats at the gross direct participation of our workers in different cities.
Collaboration between teams from different plans or on demand.
The SG&A cost reduction plans.
He is essentially an extension on the lower corporate overhead reduction initiatives beyond it.
To date, we have.
Good citizens setting up to be turned on interest bearing checking on processes to set specific targets interact on us.
Broke on feed discretionary spending is one specific area.
We are realizing the benefit on.
I'm wondering if worse and are taking measures to ensure there is a cost creep up over time.
In creating a centralized procurement group, we have disrupted the historical approach of operating <unk>.
As you are making with the aim of driving cost savings and increased efficiencies.
This points to the new centralized procurement organization is fully up and running at.
At most bureaus field, we recognize that this is a very different way of working and every invested time and resources in training our people to work on debt is Nielsen roster gave.
Given the vast opportunities to capture cost savings across those and so raw materials consumables and logistics expenses linker weird too.
Systematic and methodical in our approach to identify the key areas of focus and have set priorities for their current tier.
We already see this new organization is simple.
People results following the first round of tenders, Lounged, India, a freight and logistics.
We feel confident that this on your organization that will drive significant value going forward and we'd seek to potentially expand the role over time.
And finally.
We are working on achieving commercial excellence for a number of initiatives across the portfolio and debt.
Improving our strategic alignment with key customers.
Maximizing the potential of our commercially.
This would be done by proving our planning between commercial and production leveraging data and analytics and bolstering our market intelligence capabilities to capitalize on market movements.
At the moment.
On the process of revamping existing processes and developing new processes to support this initiative.
On the market environment like the one we are experiencing now with growing demand being more systematic and organized on this side of the business is critical to maximizing our potential.
Beyond they'd be the drivers we have a slip on it to work stream dedicated to catch on a lease to working capital improvement to date. We have created three these teams focusing on inventory management of accounts receivable and accounts payable.
It's highlighted we are seeing some of that benefit coming through on the inventory side overall.
Cloud organization that worked at all levels, we embarked on this journey last year in the missed on the global pandemic and against a very challenging backdrop.
Why don't we have good momentum lounge initiatives does it push on fees. We realize it is very early day here and there so very difficult tasks.
We are proud of our achievements for 2020 to advance the company operationally strategically and financially.
And we are excited to execute on the new target for this year.
So it doesn't even look for it to keeping our stakeholders updated on this journey over the coming quarters. At this time I will ask the operator to please open the line for questions.
Thank you, ladies and gentlemen, if you wish to ask a question. Please press star one on your telephone and wait for a name to be announced if you wish to come to that request. Please press the hash key so once again, it's a star on drawn on your telephone ladies and gentlemen, if you wish to ask a question today.
And your first question today comes from the line of Mickey on more suite of Stifel. Please ask your question.
Hi, good morning, Thanks for taking the questions.
First one is that with the recent price strength in silicon metal and for Silicon. How can we think about when that improved pricing is going to flow through the income statement.
Thank you for the question Michael speaking.
When you can see there mm silicon metal.
Where we have price.
The agreements which are indexed.
There is a quarter lag.
Closer through debt a large part of our business is on on fixed.
Yearly pricing so it would be.
The net effect of.
Index price rise doesn't cover all our CD comp sales.
Our largest businesses.
Still a far more indexed.
And the day lag is between two to three months.
Right.
Yeah.
With the silicon metal, what's the mix between index and the annual contract.
Well approximately.
70% is on.
Total contract, but then.
Not total to 70% fixed price for a day.
Yeah.
And then can you.
You talk about how the contracting environment was on a year over year basis for your was your pricing up or down was it flat.
On the steel environment is obviously very different at this time of year than it was a year ago. So you can just talk about how the debt environment is.
Yeah.
Well hi.
As you know I have a short tenure with the company about one year.
But in this year.
Quite a lot of volatility on.
On pricing.
Let me start from from Sealy corners.
The firms.
Silicon price last fears started.
At good levels and then.
Due to the lack of demand on second and third quarter.
The index price has gone.
Down to extremely low level.
We've seen market price is even below the 15 on the viewers per metric ton in Europe, just to give you.
Current trends.
And of course this is impacted.
All the negotiation.
Negotiations for the for the new year because.
The price.
Starter for my level of 2000 euros win.
215 on the at least nine.
For the indexes.
And then didn't recover in Q3 and the recovery, we're seeing recovery on into Q4 for the <unk>.
The point is being <unk>.
Negotiate.
Contracts with lower volumes committed volumes for 2021.
Enterprises that were equally on lower.
2020.
Or.
Allocate more business too.
Metallurgical silicon on which is by nature a spot.
So the dynamics of beam.
Trying to negotiate.
The best possible price for the year.
Rental and not to compete.
Yeah.
For the full volume.
Okay.
It's a question for you on the European Seo to credits.
What portion of your 2021 projected C O. Two emissions do you have covered and then.
What dollar amount of credits or are you going to have to expense. So that you are covered on your C. O two emissions for 2021.
Yeah. Thank you.
Nick for the question did you say vitry share speaking.
As of today, we have a part of the share too.
Allocation that we need to already in our balance sheet.
Your question is to get to two per cases and amount of share too right.
Awesome.
And what we are trying to do what they are planning to do to try to offset that to my chest weekend the new allocation.
We the new purchases that we need to accomplish.
Time wise this looks a challenging at the moment that this is what we're planning and we're striving for.
So of your 2021 emissions how much do you have credits for.
And how much are you going to have to spend so that you can get all of your European production debt.
Yeah, so on us.
Make sure we have part of it then already in our balance sheet in English and debt.
Basis, that's maybe something that they can disclose not no team for a lot and not in dollar value.
And again, the Danish about the timing because we will not be getting the new on location in June 2021, and we need to replace.
The share to buy AR, AP and <unk> side.
Hum.
For let's say I can say debt as of today, we have on part of heat on getting our balance sheet, but it's true that we need to replicate today.
Additional amount.
How about those in terms of the $30 million that you monetized I believe it was at the end of the second quarter beginning of the third.
What.
What percentage of your 121 emissions did that account for.
Well, it's a store a day.
Relation between the two crushers cash, but let me put it like D D.
The ones that we are.
And in 2020 right.
But it was related to the consumption in 2020, right. The wassa who's gonna be allocated into cash in 'twenty, one would be based on on the future day allocation on that on the future realization of our fans. So I don't think you can connect day.
To 2000 per day, we say 2021, if I'm answering to your question.
Okay, but there was a disclosure that you accounted for a C O two accrual of $6 million. So the accrual of $6 million for the fact that they're more expensive now.
However, youre going to be spending $6 million more than you would have in addition to some additional amount. So you could be spending if you sold 10 million last year now is that value of the studio to credit now $16 million is that how we should think about it.
Well you need to see I think the best way to to answer. Your question is to look through the evolution of this year to prices on the last 12 months. So it is true that the price, especially now increasing from I would take 27 and this has been going up to even up to 40 as of today, we had a third.
<unk> 36, a year to us and that equals a right.
But this is a volatile day.
Market and what's happening in the last day two months a day has been a lot of appetite of investors into this market and that's why I did the prices.
Cash we'd increase now it looks that passing so sitting back in I know what a price levels. So we are monitoring and planning on my strategy to repurchase debt remaining Glenn to watching carefully the on the evolution of the market.
On a day, if I'm allowed to.
The amount that we need to repurchase this year.
It depends also on our operating footprint.
And the newer location for a credit of 2021. So these are two moving.
Moving parts right.
Yes.
And then a question on the asset closures when you're exiting the Niagara facility are there any environmental remediation liabilities that are triggered and then do you have any sense for what the cash exit costs are going to be.
Yes.
In case, we had to shut down.
Uh huh.
We have already made.
On a couple of million dollars nothing more.
But we do know on it at this stage, we do not expect.
To completely shut down the facility we have some alternative options that we're considering.
Yes.
And then a final question on the production costs are you seeing any cash.
Inflationary cost pressures across the manganese silicon metal and for Silicon side, and if you could talk about the ability to pass this for.
Well the.
For.
Sure we can see.
Some of their on materials.
Moving on my manganese.
Or is he is moving has moved up a little bit market wise.
During Q1.
Thank you for last year.
Coal is moving up slightly up versus quarter four last year.
Two main ones for the top of my.
My mind batteries, yeah, I agree nothing to us.
Okay. That's all I had thank you.
Thank you. Thank you. Thank you.
Your next question today comes from the line of Brian <unk>. Please ask a question on line is now open.
Good afternoon.
Maybe just starting with our capital expenditures how much do you intend to spend in 2021.
Okay.
In hi, good morning in 2021 day, our Capex level.
We'll go on Op income day, we see 2020.
But we don't provide day.
He is but they can I can tell you that we're gonna be increasing our capex expenditures are actually our business and expansion in 2021 in.
In 2020 with happiness spending.
T 30 million per se of Capex.
And we're gonna be going up on D. C. It into fashion day, I would say well above D. C. Any discussion on 'twenty one.
Okay. If I can ask that maybe just another way how much is $30 million your maintenance level of capital expenditures, where did you under spend on that I'm just trying to gauge.
What's the magnitude of the big.
For two years to see narrow we have spent around <unk>.
33 $34 million of Capex.
And the.
This number is the number that allows us to operate.
Our current asset footprint.
<unk>.
Wei.
And this capex there is almost nothing related to.
Two gross or nothing to process improvement.
On a related to the KTM initiative that I mentioned.
During mikes.
My speech, we would need to spend some on some capex to implement new technologies, especially for classes.
Okay.
It's helpful.
Then on.
Inflation or just cost inflation can you just give us a sense of what headwinds you're seeing on freight and actually may even on shipping, but shipping availability I'm hearing there is some log jams with yes.
Well as you know we.
We have.
Ltd.
Based on this.
In Asia.
Yeah, we see some inflation due to some.
Ancillary.
Materials that we need to buy mainly for our.
Foundry business.
We buy from Asia.
This is the main inflationary costs that we see so we.
I refer this to be smoothed.
Magnesium.
Purchase, but he is not something.
Really massive at this stage or.
Really significant.
Okay.
And then with the centralized procurement groups that you.
Created.
When should we start seeing the.
The real benefits.
From those this year.
Yes.
Yeah, So we're gonna be more I have.
It's going to be.
As Laura on Papa because more.
Most of the.
Our supply agreements, we negotiated the Q3 Q4 last year for this year, but.
So we focus first on the on our centralized in the organization, but now now we're working on.
On.
Capturing some failures for example on the purchase of <unk>.
On services or the purchases of spare parts for the plans.
So.
We will start seeing benefits of D C or buffet aspect.
As significant.
Impacting 2022.
Okay, and then final for me just as we think about I know you said prices are moving up on the index isn't there's going to be a little bit of a lag.
When should we start seeing a more meaningful rebound in volumes will that start occurring in the first quarter for.
Sure.
Is that maybe on <unk> seen a rebound in volume operating quarter for right. If you look at the <unk>.
<unk>.
<unk>.
And the volume side, where our commercial part in Q for the volumes were substantially Ayers.
Higher than in Q3 for all the three major value centers.
We have not been out Destocking, we have kept the price at the same level or.
Pretty close to the same level so.
And.
This trend is confirmed.
In Q1.
<unk>.
Just to set the expectations there.
The point is that we are running.
Our operation at a certain rate.
And we have.
Coke by surprising quarter for so the demand has went up and but our inventory.
Down substantially so we started the year.
<unk>.
Certainly lower inventories.
And now that the demand keeps on being robust.
<unk>.
We struggled to keep up with demand because we started with low inventories.
That's helpful.
Thank you so much thank.
Thank you thank you for.
<unk> no further questions at this time please continue.
Yeah.
So if there are no other questions Martin.
That concludes our fourth quarter and full year 2020 earnings call.
As I mentioned at the beginning of the call we see some positive developments in meaningful market trends to monitor.
This first tier three sales have not what we set out to achieve but despite the unforeseen impact of the pandemic.
We made significant progress in returning back to a positive EBITDA and beginning to address a number of critical gaps to turn this company around and return us to profitability.
Thanks for again for your participation we look forward to hearing from you on the next call have a great day.
That does conclude our conference for today. Thank you all for participating.
You may now disconnect.
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