Ferroglobe PLC Q1 FY2025 earnings call

Market Conditions

• Market conditions remained challenging in Q1 2025, with realized prices declining and weak demand across key segments. Silicon metal saw a 27% volume drop and negative adjusted EBITDA of $27 million.

Trade Measures

• In the US, anti-dumping and countervailing duty investigations on imports from several countries were announced, with substantial duties imposed. In Europe, a safeguard investigation on silicon metal, silicon based alloys, and manganese alloys is nearing a final recommendation. There's also a new petition in the US on unfairly priced silicon imports from other countries.

Operational Initiatives

• Sales and Operational Planning (S&OP) initiative to improve demand forecasting and supply planning accuracy, aiming to be fully implemented by end of 2025.
• Strengthening commercial execution capabilities to make the sales organization more agile and effective, optimizing customer coverage.
• Generated positive free cash flow in Q1 by managing working capital efficiently, used to pay dividend and repurchase shares.

Silicon metal, the largest segment, experienced a 27% drop in volume. Its revenue declined by 35%. Silicon based alloys had a 7% increase in revenue. Manganese based alloys revenue declined by 5%. Silicon metal's revenue contribution was significantly impacted by the 27% volume drop and lower prices. Silicon based alloys were a bright spot with a 7% revenue increase, while manganese based alloys were affected by lower prices and delays in receiving manganese ore.

Guidance

• Maintaining full year 2025 guidance of adjusted EBITDA between $100 million and $170 million.
• Anticipate strong adjusted EBITDA in Q2, followed by continued momentum in Q3, expecting positive adjusted EBITDA in Q2.
• Believe trade measures will stabilize the market and create a more constructive environment in the quarters ahead.

Risks

• Uncertainty in various markets around the world due to different tariff policies being contemplated, which poses a burden on exporters and importers.
• Continued weakness in demand and soft prices in key segments could impact future performance.

Q: Could you elaborate on the cadence of improvement in 2Q, 3Q, 4Q of 2025, including volumes, costs, and prices?

A: Negative results were expected and in line with budget. Trade cases will bring more balance to the market and favor local producers. Evidence of positive reaction in index pricing and volumes with strong measures applied. Awaiting confirmation of safeguards in Europe and clarity on the new anti-dumping case. These factors lead us to be confident in improvement in the rest of the year.

Q: Can you provide an update on the outlook for the Asian polysilicon market?

A: Measures on imports from Southeast Asian countries are in place. Some other countries like Indonesia or India are seeing increased business. Demand in steel is rather flat with India having positive steel production increase while Europe and US don't have major changes. In aluminum, expect improved demand in US due to incentives and Europe has aluminum price increase with producers looking for safeguards.

Q: What would be needed to step up magnitude in shareholder returns?

A: Expect to generate more cash in coming quarters and continue opportunistic share repurchase policy. Priority is to have enough cash around the company. Have been repurchasing shares and will assess cash position and market forecast to determine share repurchase amounts. Our goal is to maximize long-term shareholder value.