Ferroglobe Q1 Earnings Call Highlights

Key Points

• Volume-driven growth but weak profitability: Shipments rose 7% to 177,000 tons and sales increased 6% to $348 million, yet adjusted EBITDA fell to $3 million and free cash flow was negative (company cited working capital and cost inflation from energy, transport and raw materials tied partly to the Iran conflict).
• Silicon metal hit by low‑priced imports while alloys benefit from safeguards: Silicon metal volumes and prices declined amid aggressive imports, prompting conversion of furnaces to ferrosilicon, while silicon‑based shipments jumped 18% and manganese volumes rose 6% but margins were compressed by higher input and energy costs; the company is implementing logistics surcharges and expects pricing to strengthen in H2.
• Strategic diversification and battery push: Ferroglobe narrowed a roadmap to 10 "critical materials," is evaluating reopening Venezuelan assets, and has invested about $70 million for ~10% of battery maker Coreshell with a multi‑year silicon metal supply agreement and projected battery‑related silicon demand of roughly 70,000 tons by 2030–31.

Ferroglobe NASDAQ: GSM reported higher shipment volumes in its fiscal first quarter of 2026 as trade actions and safeguards supported demand for its alloy products, even as pricing and cost pressures weighed on profitability. Management also discussed efforts to broaden the company’s addressable market through additional “critical materials” opportunities and an expanded relationship with battery company Coreshell.

Quarter highlights: volume-driven revenue growth, but weaker profitability

Chief Executive Officer Marco Levi said ferroalloy market conditions “have become more favorable,” pointing to sequential volume growth in both silicon-based and manganese-based alloys. Total shipments rose 7% to 177,000 tons, driven primarily by an 18% increase in silicon-based alloy shipments, while manganese-based alloy volumes increased 6%.

Chief Financial Officer Beatriz García-Cos said first-quarter sales increased 6% to $348 million, “driven by a 7% increase in total volumes, with ferroalloys being the primary driver.” Despite the higher volumes, adjusted EBITDA fell to $3 million, which García-Cos attributed in part to higher energy, transportation, and raw material inflation that began to impact costs in March “as a result of the conflict in Iran.”

García-Cos also discussed cash flow, stating that cash flow from operations was negative $6 million due to a $13 million working capital investment tied to higher inventories and accounts receivable to support increased volumes. She said free cash flow was negative $16 million in the quarter. (Levi separately characterized free cash flow as negative $60 million in his prepared remarks.)

Silicon metal pressured by import pricing; furnaces shifted to ferrosilicon

Levi said the silicon metal market, particularly in Europe, remained under pressure from “continued aggressive pricing by imports, mainly from China and Angola.” He said silicon metal was excluded from recent safeguard protections, and the company chose not to sell into “uneconomic prices.”

As a result, the company reduced silicon metal volumes, with Levi reporting that shipments declined about 2,000 tons to roughly 31,000 tons in the quarter. He said North American silicon metal volumes rose 15%, while European volumes fell 23% amid what he described as “predatory import competition.” Levi cited low-priced imports in the quarter from Malaysia, Kazakhstan, and Laos in addition to China and Angola, and said Norway accounts for more than 60% of EU silicon metal imports.

To mitigate pressure in silicon metal, Levi said Ferroglobe converted three silicon metal furnaces to ferrosilicon—two in Europe and one in the U.S. (converted last year)—to take advantage of stronger alloy market conditions.

García-Cos said silicon metal revenue fell 13% to $84 million due to a 6% reduction in volume and a 7% decline in prices to $2,754 per ton. Adjusted EBITDA for silicon metal declined by $3 million sequentially to an EBITDA loss of $2 million, resulting in a negative margin of 3%. She said the margin contraction was driven by lower realized prices, partially offset by cost improvements in Canada and the restart of furnaces in Spain and France.

Alloys supported by safeguards, though pricing dynamics remained mixed

Levi said silicon-based alloy shipments increased 18% to 61,000 tons, the highest level since the second quarter of 2021. Growth was driven by 21% higher volumes in Europe and a 20% increase in North America. He noted that EU ferrosilicon index prices declined 9% in the first quarter after a prior 22% jump from late October to early December following the safeguard announcement. Levi attributed the price decline to elevated inventories built ahead of safeguards and to steel producers substituting low-priced silicon metal for ferrosilicon.

García-Cos reported silicon-based alloy revenue rose 18% to $122 million as volumes increased 18% sequentially. Realized prices were “essentially flat” at $2,016 per ton. However, adjusted EBITDA for the segment decreased by $9 million to $6 million due to higher production costs in Spain and higher energy and raw material costs in Spain and the U.S., with margins falling 9 percentage points to 6%.

In manganese-based alloys, Levi said first-quarter shipments rose 6% to 86,000 tons, with Europe accounting for the majority of sales. He described the quarter as strong and said the segment benefited from safeguards. García-Cos said manganese-based alloy revenue increased 16% to $107 million, reflecting a 9% increase in realized prices to $1,250 per ton along with higher volumes. Adjusted EBITDA was $10 million, up from $9 million in the fourth quarter, while margins remained 9%. She added that inflation in manganese ore and higher transportation and energy costs “offset most of the price gains,” though she said the Iran conflict’s impact on logistics and raw material costs was expected to be temporary.

Trade actions, pricing surcharges, and second-half expectations

Levi highlighted multiple trade developments affecting the company’s markets. In the U.S., he said cases covering Angola and Laos were final, with anti-dumping and anti-circumvention duties of 78.5% and 173.5%, respectively, including a general 10% tariff. He said final rates for Australia and Norway were expected from the Department of Commerce in late June, with a final U.S. International Trade Commission decision expected in late July.

In Europe, Levi said the silicon metal market remained “under continuous attack” from China and Angola, but he cited comments from European Trade Commissioner Maroš Šefčovič reaffirming a commitment to protecting the silicon metal industry and evaluating measures addressing imports from China and Angola.

During Q&A, Levi said the company was implementing logistics surcharges in response to freight and other cost inflation: “a surcharge of EUR 30 per ton in Europe and $40 per ton in the U.S.” He said acceptance varied by end market, with chemicals customers more accustomed to surcharges than steel customers. Levi added that the company may be “forced to increase prices across our product mix” due to cost pressures and current price levels, particularly in Europe.

Looking ahead, Levi said he expected pricing to strengthen in the second half of the year, citing strengthened steel safeguards, CBAM, and onshoring trends. García-Cos told analysts that logistics and transportation costs could increase further in the second quarter before “fade away on the second half of the year,” and confirmed that costs in silicon-based alloys were expected to rise in the second quarter before declining later in the year.

Levi also pointed to upcoming EU steel safeguard enhancements expected to take effect July 1, 2026, which he said could increase EU steel production by 12.5 million tons annually, or roughly 10% growth—an outcome he described as a catalyst for ferrosilicon and manganese demand.

Strategic initiatives: Venezuela evaluation, critical materials roadmap, and Coreshell

Levi said Ferroglobe sees “a compelling opportunity to reopen our operations” in Venezuela and is evaluating capex requirements, energy availability, and cost structure. He said the assets include three large ferrosilicon furnaces with combined capacity of 90,000 tons that can be converted to silicon metal, as well as a 30,000-ton manganese alloy furnace originally built as a silicon metal furnace.

On diversification, Levi told analysts that Ferroglobe has narrowed a list of more than 100 potential opportunities down to 10 critical materials the company believes it could produce either in existing furnaces or with “slightly modified furnaces with minimum CapEx.” He said some options may require no additional capex but could require new permits and raw material supply assessments. He also cited magnesium as an example that could require a new plant, noting that “there is no active production of magnesium in the West at this stage.”

Levi said the company was also progressing with battery materials partner Coreshell. He said Ferroglobe co-led a Series B round in March with a $7 million investment, bringing Ferroglobe’s total investment to $70 million and representing an ownership stake of about 10%. Levi said Coreshell began production from its current 60 ampere plant and had begun selling batteries to robotics and defense customers, and he said the company signed multi-year sampling and qualification agreements with automotive OEMs.

Levi added that Ferroglobe signed a binding term sheet for a multi-year silicon metal supply agreement with Coreshell. However, he said volumes under that agreement are not expected to become significant until OEMs qualify Coreshell’s 16 ampere-hour batteries, which he estimated could happen between the end of 2027 and 2028. Levi said Ferroglobe expects silicon metal demand for batteries related to Coreshell to reach “about 70,000 tons” by 2030-2031, and he said Coreshell’s budget for sales next year is “north of $60 million.”

García-Cos also addressed capital allocation, saying the company increased its first-quarter dividend payout by 7% to $3 million, paid March 30, and declared a next dividend of $0.015 per share scheduled for June 29, payable to shareholders of record June 22. She said the company repurchased a “modest” 5,000 shares in the quarter and ended the period with net debt of $55 million, which she characterized as a solid position to support growth objectives.

About Ferroglobe NASDAQ: GSM

Ferroglobe PLC is a leading producer of specialty metals and alloys, serving a diverse range of industrial customers worldwide. The company's core operations focus on the manufacture of silicon metal, silicon-based alloys, manganese-based alloys and rare earth alloys, which are essential inputs for the aluminum, steel, chemical and electronics industries. Ferroglobe's product portfolio includes high-purity silicon, ferrosilicon, silicon manganese, manganese alloys and various recarburizers used to enhance metal strength, durability and conductivity.

With production facilities located across North America, Europe, South America and Africa, Ferroglobe maintains a global footprint that allows it to supply customers on multiple continents.

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