Ferroglobe(US:GSM)2024-08-06 16:25Financial Data and Key Metrics Changes - In Q2 2024, total sales increased by 15% from the prior quarter to $451 million, and adjusted EBITDA reached $58 million, up from $26 million, driven by strong pricing and sales volumes [9][16][21] - Adjusted EBITDA margin increased from 7% in Q1 to 13% in Q2, primarily due to increased pricing and volumes [17] - Operating cash flow was $2 million, while freight cash flow was negative $20 million due to inventory bills [10] Business Line Data and Key Metrics Changes - Silicon metal revenue in Q2 was $204 million, up 22% from the prior quarter, with shipments increasing by 18.2% to almost 63,000 tons [10] - Silicon-based alloys revenue was $105 million, down 6% from the prior quarter, with shipments down 8% [12] - Manganese-based alloys revenue was $98 million, up 48% from the prior quarter, with shipments increasing by 31% [14] Market Data and Key Metrics Changes - The U.S. Department of Commerce announced preliminary anti-dumping and countervailing duties of 283% and 748% respectively on Russian ferrosilicon imports, which represented approximately 35% of all ferrosilicon imports into the U.S. in 2023 [5] - European index prices for silicon metal were negatively impacted by lower-priced Chinese exports, while North American prices remained strong due to supply constraints [11] Company Strategy and Development Direction - The company signed an MOU with Coreshell to develop silicon-rich anodes for EV batteries, with testing showing significant improvements in battery performance [6][7] - The company is focusing on capital return policies, including a quarterly dividend of $0.13 per share and a share buyback program approved in June [8][19] Management Comments on Operating Environment and Future Outlook - Management expressed caution regarding the fourth quarter due to weak demand in the aluminum, foundry, and steel sectors, despite a strong Q2 performance [8][9] - The company anticipates a positive impact on business in 2025 from the ongoing investigations into ferrosilicon imports from Russia, Kazakhstan, Malaysia, and Brazil [5][9] Other Important Information - The company ended Q2 with a cash balance of $144 million, down from $160 million in Q1, primarily due to inventory build-up [19][20] - The company remains committed to maintaining a conservative balance sheet with gross debt remaining flat at $81 million [20] Q&A Session Summary Question: Outlook for Q4 and pricing dynamics - Management noted that Q4 is expected to be the weakest period due to weak demand in various segments, with pricing expected to weaken [24][25] Question: Results from Coreshell investment - Management highlighted unprecedented results in battery testing, with samples achieving almost 1,000 cycles of charging and discharging [27] Question: Stockpiling of manganese ore and cash flow - Management expects to see a release of working capital in Q4, with a conservative approach to cash and liquidity in the meantime [29][30] Question: Price weakness in silicon metal - Management attributed price weakness to increased low-priced imports from China and a slowdown in solar demand due to U.S. investigations [33][34] Question: Ferrosilicon trade case and future supply - Management confirmed expectations of muted volumes in U.S. ferrosilicon for the remainder of the year but anticipates an uptick in 2025 due to reduced imports from affected countries [35][36]