Ferroglobe PLC (GSM)

Seaport Research:
We come away from GSM’s mid-July investor day encouraged regarding its prospects and revise our EBITDA estimates higher into 2Q22 earnings. In our view, management provided a clear path and deleveraging targets that will allow GSM to pivot toward shareholder returns. It increased targeted turnaround savings to $225MM from $180MM previously. Based on management’s throughcycle EBITDA margin target of 20%, we estimate this implies ~$452MM of EBITDA at the mid-point. Lastly, we continue to see value in GSM shares, raising our 2022E EBITDA to $809MM (+$39MM) while reiterating our Buy & $14 PT.

For future years' earnings, our PT implies ~3-5x on what we would characterize as more normalized
earnings.

Looks like we had a bunch of short-term traders expecting a pop off Investor Day. Itis what it is. GSM will have a great Q2 - Things will take care of itself. Europe silicon metal prices down (as with most metals as steel production down - largely due to increased imports from China due to their drop in consumption from recent lockdowns). But even with lower 2H EPs they should still be very good - driven by strong U.S. markets. But lower europe prices will mean less W/C so GSM headed to be debt free around end of year whether profits stay up at Q2 or somewhat lower given W/C releases. Still looking for first dividend when they announce Q4.

Yeah @Joseph I heard a lot of positives. Slide 104 indicates they want to establish a dividend if they can meet their debt reduction goals which was set at $200M gross. They will have reduced their debt by $79M by the end of July and Marco said he doesn’t “see any risks to their current plan” and that they are “crushing” their goals. Slide 106 shows this debt target and their EBITDA target of 20% which is way above the historical averages. Remember the stock was at $16 in 2018 for a lot less… Anyway, I’m also disappointed by the lack it SP movement but I don’t fault management or their positioning.