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01/11 04:43
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call reveals declining revenues across key product segments due to weak demand and market disruptions. The withdrawal of 2025 guidance and uncertainty around trade actions add to the negative sentiment. Despite increased operating cash flow, the net debt position has worsened. The Q&A highlighted management's lack of clarity on trade actions and potential cost implications of idling assets. While there is some optimism for 2026, the immediate outlook remains uncertain. Given the market cap, the stock is likely to experience a negative reaction in the range of -2% to -8%.
Revenue Third quarter sales declined 19% year-over-year to $312 million. The decline was driven by lower volumes across the three product categories: silicon metal, silicon-based alloys, and manganese-based alloys.
Raw Material Costs Raw material costs declined 29% year-over-year, reducing raw materials as a percentage of sales from 65% to 58%. This was mainly due to lower energy costs in Europe.
Adjusted EBITDA Adjusted EBITDA decreased 15% from the prior quarter to $18 million, with an adjusted EBITDA margin of 5.9%. The decline was driven by lower volumes, but partially offset by cost improvements in the silicon metal and silicon-based alloy segments.
Silicon Metal Revenue Silicon metal revenue declined 24% sequentially to $99 million, driven by a 25% decrease in shipments to 34,000 tons. However, average selling prices increased by 1.2% to $2,950 per ton. The decline in revenue was due to weak demand and dumping of Chinese silicon metal in Europe.
Silicon-Based Alloys Revenue Silicon-based alloys revenue declined 17% sequentially to $92 million, driven by a 19% decrease in volumes to 43,000 tons. Average selling prices increased by 2% to $2,149 per ton. The decline in revenue was due to soft demand.
Manganese-Based Alloys Revenue Manganese-based alloys revenue declined 21% sequentially to $84 million, driven by a 21% reduction in volumes to 70,000 tons. Average selling prices increased by 1% to $1,214 per ton. The decline in revenue was due to lower fixed cost absorption and higher raw material costs.
Operating Cash Flow Operating cash flow increased 33% over the prior quarter to $21 million. The improvement was due to a $7 million reduction in working capital and an increase in energy rebates from $7 million in Q2 to $16 million in Q3.
Capital Expenditures Capital expenditures totaled $19 million in Q3, up from $15 million in Q2. Year-to-date CapEx was $48 million.
Net Debt Net debt position was $5 million at the end of Q3, compared to a positive net cash position of $10 million in Q2. Adjusted gross debt increased marginally from $125 million in Q2 to $127 million in Q3, while total cash declined from $136 million in Q2 to $122 million in Q3.
Silicon anode technology for EV batteries: Coreshell began shipping commercial scale 60 ampere EV pilot batteries to leading automotive OEMs for testing. Production ramp remains on schedule with high yield and quality. Coreshell expects commercial deployment of advanced battery systems for robotics and defense applications in early 2026.
Trade measures in the U.S. and EU: The U.S. Department of Commerce issued preliminary countervailing and antidumping duties on silicon metal imports from several countries. The European Commission launched a safeguard investigation on silicon metal and alloys, with a final decision expected by November 18, 2025.
Energy agreement in France: Signed a new multiyear energy agreement effective January 1, 2026, guaranteeing competitive energy prices and operational flexibility for up to 12 months a year.
Operational efficiencies: Despite a 19% revenue decline, generated $80 million in adjusted EBITDA and improved free cash flow. Lower energy costs in Europe contributed to margin improvements in silicon metal and silicon-based alloys.
Collaboration with Coreshell: Finalized a joint development agreement and expect to establish a long-term supply agreement for high-quality silicon metal, positioning Ferroglobe in the advanced battery materials market as EV adoption accelerates.
Unfair Trade Practices: Significant challenges from unfair trade practices in the U.S. and EU, including predatory imports of silicon metal from countries like China, Angola, and others, leading to market imbalances and idling of production plants in Europe.
Regulatory Delays: Delays in the announcement of antidumping measures in the U.S. due to government shutdown, creating uncertainty in market dynamics.
Market Demand and Pricing: Soft demand and aggressive imports have led to declining volumes and revenues, with a 21% drop in main segment volumes and a 19% revenue decline in Q3. Silicon metal shipments in the EU declined by 51% due to weak demand and dumping.
Energy Costs and Agreements: While a new energy agreement in France offers future benefits, current energy costs and operational constraints have impacted production flexibility and cost management.
Silicon Metal and Alloys Market Challenges: Predatory imports from China have doubled in the first 8 months of the year, forcing the idling of all silicon metal plants in Europe. Weak demand and oversupply of imported siloxane have negatively affected the chemical sector.
Manganese-Based Alloys: Increased shipments into Europe from India, Malaysia, and Georgia have constrained the manganese segment, with a 21% volume decline and softened index prices.
Financial Performance: Declines in sales (19%), adjusted EBITDA (15%), and adjusted EBITDA margins due to lower volumes and pricing pressures across all product categories.
Trade Measures Impact: The company expects trade measures in the U.S. and EU to significantly improve the business environment in 2026. Preliminary determinations in the U.S. ferrosilicon case and tariffs on silicon metal are encouraging, positioning the company well in North America. EU safeguards are expected to be announced later this month, with optimism for a similar positive impact in Europe.
Coreshell Partnership: Coreshell has begun shipping commercial-scale 60 ampere EV pilot batteries to leading automotive OEMs for testing. Commercial deployment of advanced battery systems for robotics and defense applications is expected in early 2026. The company plans to establish a long-term supply agreement for high-quality silicon metal, positioning itself in the growing market for advanced battery materials as EV adoption accelerates.
Energy Agreement in France: A new multiyear energy agreement in France, effective January 1, 2026, guarantees competitive energy prices and operational flexibility to run plants for up to 12 months a year. This is expected to simplify S&OP processes, improve inventory management, and enhance working capital and cost efficiency.
Silicon Metal Market Outlook: Preliminary U.S. antidumping and countervailing duties are expected to improve U.S. market dynamics in 2026. However, chemical demand is anticipated to remain challenging due to siloxane imports in the EU and U.S.
Silicon-Based Alloys Market Outlook: Steel production in Europe is forecasted to grow by 3.2% in 2026, supported by expected safeguards, setting the stage for stronger market conditions. North American steel production is projected to grow by 2.2%, with similar positive trends expected for silicon-based alloy sales.
Manganese-Based Alloys Market Outlook: Manganese demand is anticipated to recover in 2026, driven by a 3.2% growth in European steel production and the announcement of safeguards later this month.
Dividend Declaration: Ferroglobe declared a fourth quarter dividend of $0.04 per share, consistent with the previous quarter. The dividend will be paid on December 29 to shareholders of record on December 22.
The earnings call reveals declining revenues across key product segments due to weak demand and market disruptions. The withdrawal of 2025 guidance and uncertainty around trade actions add to the negative sentiment. Despite increased operating cash flow, the net debt position has worsened. The Q&A highlighted management's lack of clarity on trade actions and potential cost implications of idling assets. While there is some optimism for 2026, the immediate outlook remains uncertain. Given the market cap, the stock is likely to experience a negative reaction in the range of -2% to -8%.
While the earnings call highlighted positive developments like increased revenue from manganese-based alloys and a strong net cash position, the Q&A revealed significant uncertainties. The withdrawal of annual EBITDA guidance and inability to project future metrics due to global trade issues are concerning. Despite operational improvements, the lack of clear forward-looking guidance and potential risks from trade measures overshadow the positives, suggesting a negative sentiment for the stock price in the short term. Given the company's small market cap, this uncertainty could lead to a notable price decline.
The earnings call reveals a challenging financial performance with a 16% revenue decline and negative EBITDA, despite optimistic guidance. Regulatory measures may stabilize the market, but immediate impacts are uncertain. The Q&A section indicates management's vague responses and lack of specific guidance, adding to investor concerns. Shareholder returns are positive, with increased dividends and buybacks, but competitive pressures and import surges pose risks. Given the company's small market cap, these factors suggest a negative stock price movement of -2% to -8% over the next two weeks.
The earnings call presents mixed signals: financial performance shows a slight EBITDA improvement but revenue decline, and muted demand pressures. Positive elements include a dividend and share buyback plan, but these are modest. The Q&A suggests uncertainty in capacity expansion and market protection, with management avoiding specifics. The narrowed EBITDA guidance and weak market outlook offset positive aspects, keeping the sentiment neutral. Given a market cap of $1 billion, the stock is likely to remain stable, with a neutral prediction of -2% to 2% over the next two weeks.
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