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REC Silicon
Quarterly Report • May 10, 2024
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Quarterly Report
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First quarter 2024
ARTBOX REPORT TEMPLATE ALL RIGHTS RESERVED © ARTBOX AS
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Advancing Materials, Advancing Technology
REC Silicon is a global leader in silane-based, high-purity silicon materials.
With two U.S.-based manufacturing facilities and sales support offices in both Asia and the United States, REC Silicon is leading energy and technology providers worldwide in shaping the future with advanced silicon materials.
ARTBOX REPORT TEMPLATE ALL RIGHTS RESERVED © ARTBOX AS
CONTENTS
| First quarter highlights | 4 |
|---|---|
| REC Silicon Group | 5 |
| Segment information | 8 |
| Risks and uncertainties | 10 |
| Market development | 11 |
| Market outlook | 12 |
| Forward looking statements | 13 |
| Consolidated financial statements | 14 |
| Consolidated statement of financial position | 15 |
| Consolidated statement of income | 16 |
| Consolidated statement of comprehensive income | 17 |
| Consolidated statement of changes in equity | 18 |
| Consolidated statement of cash flows | 20 |
| Notes | 21 | |
|---|---|---|
| Note 01 | General | 21 |
| Note 02 | Segment information | 22 |
| Note 03 | Fixed assets | 24 |
| Note 04 | Leases | 25 |
| Note 05 | Investments | 26 |
| Note 06 | Inventories | 26 |
| Note 07 | Borrowings and guarantees | 27 |
| Note 08 | Commitments | 28 |
| Note 09 | Provisions | 28 |
| Note 10 | Claims, disputes, and risks | 29 |
| Note 11 | Receivables and prepayments | 29 |
| Note 12 | Transactions with related parties | 30 |
| Definition of alternative performance measures | 31 |
First quarter highlights
Revenues 42.1 EBITDA
-31.5
USDm
USDm
-
Revenues of \$42.1M driven by increased silane gas sales
-
EBITDA loss of \$31.5M due to startup costs at Moses Lake
-
March 31, 2024, cash balance of \$101.1M
- Cash decrease of \$69.8M due to Moses Lake restart
-
Moses Lake high-purity granular achieved five of six key targeted parameters
- > Butte Polysilicon exit on schedule
| USD IN MILLION | Q1 2024 | Q1 2023 | Year 2023 | Q4 2023 |
|---|---|---|---|---|
| Revenues | 42.1 | 29.1 | 141.1 | 40.5 |
| EBITDA | -31.5 | -23.0 | -80.5 | -31.2 |
| EBITDA margin | -74.7% | -79.2% | -57.0% | -77.0% |
| EBIT excluding impairment charges | -36.8 | -26.7 | -94.9 | -34.9 |
| Impairment charges | 0.0 | 0.0 | -8.1 | -7.7 |
| EBIT | -36.8 | -26.7 | -102.9 | -42.6 |
| EBIT margin | -87.3% | -91.6% | -72.9% | -105.2% |
| Profit/loss before tax | -40.5 | -34.4 | 30.5 | 104.4 |
| Profit/loss | -40.5 | -34.4 | 30.5 | 104.4 |
| Earnings per share, basic and diluted (USD) | -0.10 | -0.08 | 0.07 | 0.25 |
| Polysilicon production in MT (Granular) | 460 | NA | NA | NA |
| Polysilicon production in MT (Siemens) | 256 | 244 | 1,103 | 276 |
| Polysilicon sales in MT (Siemens) | 181 | 183 | 749 | 182 |
| Silicon gas sales in MT | 850 | 640 | 3,075 | 832 |
REC Silicon Group
REC Silicon is a leading producer of silane-based high purity silicon materials that is shaping the future with advanced materials. REC Silicon operates US based manufacturing facilities in Moses Lake Washington and Butte Montana.
The core product for REC Silicon's activities is silane gas. Silane gas is used as a stand-alone product for use in semiconductors, flat panel displays, solar panels and as material for silicon anode batteries. It is also processed into solar and electronic grade polysilicon and refined into specialty gases for advanced uses in the semiconductor and solar industries.
Secular growth trends within digitalization, renewable energy, and the energy storage transition have placed REC Silicon in a position to seize upon market opportunities for the company's signature silane based operations.
Supported by key US legislative initiatives, the company has positioned itself with low carbon products in value chains targeting energy transition megatrends.
During the fourth quarter of 2023, the Moses Lake facility was restarted for production of granular polysilicon for the solar industry. Through a gradual ramp-up, the company aims for 100 percent production by the end of 2024.
In February 2024, REC Silicon announced the decision to discontinue production of electronic grade polysilicon in Butte. The decision is due to the regional structural imbalance in supply and demand for electricity and is part of REC Silicon's strategy to ensure long-term profitable operations. As part of this decision, the company recognized USD 2 million of restructuring cost in Q1 2024.
REC Silicon will continue to focus on high grading its product portfolio, focusing on silane and specialty gases. The shutdown of electronic grade polysilicon will allow REC Silicon to capitalize on future silicon gas growth opportunities, including anode material for energy storage.
Profit & Loss
Revenues for the first quarter of 2024 were USD 42.1 million compared to USD 40.5 million for the fourth quarter of 2023. Polysilicon production volume for the first quarter was 721MT compared to 276MT during the fourth quarter of 2023. EBITDA for the first quarter of 2024 was a loss of USD 31.5 million compared to a loss of USD 31.2 million during the fourth quarter of 2023.
Financial Position
Shareholders' equity decreased to USD 35.8 million (7.2 percent equity ratio) on March 31, 2024, compared to USD 76.4 million (13.8 percent equity ratio) on December 31, 2023. This decrease was the result of the loss from total operations of USD 40.5 million during the first quarter of 2024.
Net debt is the carrying value of interest-bearing debt instruments (including financing leases) less cash and cash equivalents. On March 31, 2024, net debt was USD 251.6 million, which consisted of USD 283.9 million total carrying value of the Company's debt (from note 7) plus USD 68.9 million current and non-current lease liabilities (from the balance sheet) less USD 101.1 million in cash and cash equivalents.
Nominal net debt is the contractual repayment values of interest-bearing debt instruments (including financing leases) less cash and cash equivalents. On December 31, 2023, nominal net debt was USD 251.9 million.
See note 17 to the consolidated financial statements for 2023 and note 7 to this report for further information on interest bearing liabilities.
Cash Flow
During the first quarter of 2024 cash balances decreased by USD 69.8 million to USD 101.1 million on March 31, 2024.
Net cash outflows from operating activities were USD 33.2 million during the quarter. Depreciation amortization and impairment were USD 5.3 million. Trade receivables and customer prepayments decreased by USD 6.3 million and Inventories decreased by USD 3.4 million. Changes in payables, accrued expenses decreased by USD 14.2 million. Accrued property taxes increased by 6.1 million. Cash outflows included interest payments on leases of USD 2.1 million and interest on debt of USD 3.1 million.
Cash outflows from investing activities were USD 34.7 million and were a result of capital expenditures.
Cash outflows from financing activities were USD 1.8 million and were the result of a decrease in lease liabilities. (see note 4).
Capital Expenditures
Capital expenditures were USD 34.7 million during the first quarter of 2024 compared to USD 40.2 million during the fourth quarter of 2023. Capital spending was primarily associated with FBR modifications which enabled the restart of Moses Lake and will allow the ramp to full production.
Capital expenditures also include cost savings and improvement initiatives, routine replacement of production equipment, and capital necessary to maintain safe and reliable operations.
Financial Items
| USD in million | Q1 2024 | Q1 2023 | Year 2023 | Q4 2023 |
|---|---|---|---|---|
| Financial income | 1.8 | 0.5 | 3.6 | 1.2 |
| Interest expenses on borrowings | -5.2 | -3.3 | -14.9 | -4.8 |
| Interest expense on leases | -2.1 | -2.1 | -8.5 | -2.2 |
| Capitalized borrowing cost | 3.0 | 1.7 | 8.4 | 2.7 |
| Expensing of up-front fees and costs | -0.8 | -0.1 | -1.8 | -0.8 |
| Other financial expenses | -0.4 | -0.3 | -1.5 | -0.5 |
| Net financial expenses | -5.5 | -4.2 | -18.3 | -5.6 |
| Net currency gains/losses | -0.0 | -4.0 | 12.7 | 15.9 |
| Gain from sale of Yulin JV | 0.0 | 0.0 | 135.5 | 135.5 |
| Net financial items | -3.7 | -7.7 | 133.5 | 147.0 |
Income Tax
The loss from total operations of USD 40.5 million during the first quarter of 2024 resulted in no effective tax impact due to REC Silicon's unrecognized deferred tax asset. The losses will continue to be available to offset taxable income during future periods subject to certain limitations.
See note 18 to the consolidated financial statements for 2023 for additional information on income taxes.
During the first quarter of 2024, the Company recognized interest expense on borrowings of USD 5.2 million, including USD 5.1 million associated with term loans, and USD 0.1 million associated with a note with Grant County, Washington, and expense of up-front fees and costs of USD 0.8 million. See note 7 for more information on borrowings and note 12 for more information on related parties.
The Company recognized an interest expense of USD 2.1 million on imputed liabilities for leased assets during the first quarter. See note 4 for additional information on leases.
Up-front fees and costs are related to the guarantee fees charged by Hanwha associated with term loans. See note 7 for more information on borrowings and note 12 for more information on related parties.
Segment information
Summary of results by segment
| Q1 2024 | Q1 2023 | Year 2023 | Q4 2023 | |||||
|---|---|---|---|---|---|---|---|---|
| USD in million | Revenues | EBITDA | Revenues | EBITDA | Revenues | EBITDA | Revenues | EBITDA |
| Semiconductor Materials | 42.0 | 2.8 | 29.0 | -3.4 | 140.6 | 14.0 | 40.3 | 1.1 |
| Solar Materials | 0.2 | -26.8 | 0.1 | -11.7 | 0.4 | -64.8 | 0.1 | -25.8 |
| Other | 0.0 | -7.5 | 0.1 | -8.0 | 0.2 | -29.7 | 0.0 | -6.5 |
| Total | 42.1 | -31.5 | 29.1 | -23.0 | 141.1 | -80.5 | 40.5 | -31.2 |
Semiconductor Materials
| USD in million | Q1 2024 | Q1 2023 | Year 2023 | Q4 2023 |
|---|---|---|---|---|
| Revenues | 42.0 | 29.0 | 140.6 | 40.3 |
| EBITDA contribution | 2.8 | -3.4 | 14.0 | 1.1 |
| Contribution margin | 6.7% | -11.7% | 9.9% | 2.7% |
| Polysilicon production in MT (Siemens) | 256 | 243 | 1,101 | 276 |
| Polysilicon sales in MT (Siemens) | 181 | 183 | 745 | 182 |
| Silicon gas sales in MT | 850 | 640 | 3,075 | 832 |
The Butte Montana facility has an annual silane gas production capacity of 7,400MT. Parts of this volume is sold as pure silane gas, while some is used in production of high-purity specialty gases and ultra-pure electronic grade polysilicon. In recent years the company has invested in additional capacity for specialty gases, including dichlorosilane (DCS), monochlorosilane (MCS) and disilane.
Semiconductor segment revenues were USD 42.0 million during the first quarter of 2024 compared to USD 40.3 million during the fourth quarter of 2023.
Total polysilicon sales volumes, including by-products, were 181MT in the first quarter of 2024 compared to 182MT during the fourth quarter of 2023. Semiconductor grade polysilicon sales volumes decreased by 11MT to 134MT. Other grade polysilicon sales volumes increased by 10MT to 47MT.
Average polysilicon prices for the first quarter increased by 1.2 percent compared to the prior quarter. Average prices realized for semiconductor grade polysilicon increased by 9.5 percent compared to the prior quarter.
Total silicon gas sales volumes increased by 17MT to 850MT during the first quarter of 2024. Sales prices realized by REC Silicon for silicon gas increased by 2.1 percent from the previous quarter.
Total polysilicon production volume, including by-products, was 256MT for the first quarter compared to 276MT for the fourth quarter of 2023.
The Semiconductor Materials segment contributed USD 2.8 million to the Company's EBITDA during the first quarter of 2024 compared to USD 1.1 million during the fourth quarter of 2023.
Reducing exposure to an unbalanced energy market in the Montana region, REC Silicon announced in February that the company will be shutting down its polysilicon production capacity at its Butte facility. To fulfill existing supply obligation, the polysilicon business will continue to produce for approximately six months. After the supply obligations are satisfied, the company expects that the workforce in Butte will be reduced accordingly. As part of this decision, the company recognized USD 2 million of restructuring cost in Q1 2024.
Solar Materials
| USD in million | Q1 2024 | Q1 2023 | Year 2023 | Q4 2023 |
|---|---|---|---|---|
| Revenues | 0.2 | 0.1 | 0.4 | 0.1 |
| EBITDA contribution | -26.8 | -11.7 | -64.8 | -25.8 |
| Polysilicon production in MT (Granular) | 464 | NA | NA | NA |
REC Silicon restarted the manufacturing of granular polysilicon for the solar energy markets from its facility in Moses Lake, Washington during the fourth quarter of 2023. This facility uses best-in-class proprietary Fluidized Bed Reactor (FBR) technology to produce low-cost high purity polysilicon for the solar industry. The Moses Lake facility has an annual capacity of 24,000MT of silane gas. The majority of the capacity will be used for production of approximately 16,000MT of monograde PV polysilicon. The company is targeting a ramp to 100 percent operation during Q4 2024.
The Solar Materials segment contributed an EBITDA loss of USD 26.8 million during the first quarter compared to an EBITDA loss of USD 25.8 million during the fourth quarter of 2023.
Expenditures in the Solar Materials segment included expenditures related to startup and initial operating losses as the plant increases capacity.
Other and Eliminations
| USD in million | Q1 2024 | Q1 2023 | Year 2023 | Q4 2023 |
|---|---|---|---|---|
| Revenues | 0.0 | 0.1 | 0.2 | 0.0 |
| EBITDA contribution | -7.5 | -8.0 | -29.7 | -6.5 |
The segment Other includes general administrative and sales activities in support of the manufacturing facilities in the United States and the Company's headquarters in Norway. It also includes costs associated with the Company's representative offices Asia.
Net operating costs in Other and Eliminations were USD 7.5 million during the first quarter of 2024 compared to net operating costs of USD 6.5 million during the fourth quarter of 2023.
Risks and uncertainties
Please refer to the annual report for 2023, specifically note 31 to the consolidated financial statements and the risk factors section of the Board of Directors' Report.
Ramp of Moses Lake production facility
The company is targeting a ramp to 100 percent operation during Q4 2024.
Successful execution of the Company's plan to fully ramp up production at the Moses Lake facility could require reversal of previous impairment.
Additional impairments and provisions would likely be required if the Moses Lake facility is not successfully ramped to full capacity.
Market development
In the first quarter of 2024, the demand for Czochralski-grade semiconductor polysilicon remained low. Although wafer inventories decreased, there was an increase in new wafer facility starts. Influencing the reduction of inventory levels was the increased demand for memory device products. The demand for servers, particularly those driven by artificial intelligence (AI) technologies like facial recognition, is anticipated to remain high. AI servers require 2-3 times more memory than regular servers, with memory needs potentially increasing up to 6 times for servers involved in AI training processes.
Sales increased for specialty silicon gases as demand for memory chips increased in the first quarter. The market has adjusted for various impacting issues like COVID lockdowns, Russian invasion of Ukraine, geopolitical issues, and rising interest rates. Analysts now seem to be able to better forecast a path forward. Inventory builds of 2022 and early 2023 caused a reduction in production as factories adjusted their inventories, and inventories continued to decrease in the first quarter causing an increase in production demand. Silane gas demand held steady as the overall silane market held strong with continued demand in PV and increased demand in the Flat Panel Display segment. The demand for silane gas in the semiconductor industry saw ongoing logistics improvements from the fourth quarter of 2023 to the first quarter of 2024. Despite the improvements, logistics remains a concern for both suppliers and end users.
Global PV demand for 2023 was approximately 460GW. China finished the year with a very strong December in efforts to push their installations to over 210GW. For the year 2023, module imports into the Unites States were approximately 50GW, while installations approximately 30GW. The difference between imports and installations was primarily driven by the longer grid-connection timeline of utility scale projects and lower demand as prices declined for residential and commercial projects. Most imported modules in 2023 and the first quarter of 2024 came from Southeast Asia. During the first quarter a combination of price declines and the ending of the anti-circumvention exemption period this June led to a decline in imports from Southeast Asia. US Customs also increased their review of imported modules and appeared to have widened the scope of importers they have under review. Questionnaires from US Customs regarding imports and production are being sent to several companies and are being reported by market analysts. India's PV market witnessed strong demand in 2023 with over 16GW installed, and first quarter 2024 saw a large influx of imports ahead of restrictions that went into effect second quarter 2024.
Polysilicon production capacity continued to increase as China continued with expansion and over capacity. Global polysilicon capacity reached approximately 900GW at the end of the first quarter. Wafer capacity is not much further behind polysilicon coming in at approximately 840GW annually. Wafer utilization rates remained high in the first quarter as manufacturers continued to try and maintain market shares. The transition to n-type wafers continues, with approximately 75 percent of the wafer market currently dominated by n-type wafers. Inventories of polysilicon and wafers in China grew during the first quarter.
Solar grade polysilicon prices, both inside and outside China, continued to decline during the first quarter. Prices inside China declined from USD 8.0/kg at the end of the fourth quarter to USD 7.16/kg at the end of the first quarter. Wafer factories worked to maintain utilization rates to maintain market share but in doing so, built inventory. Installations in China had a strong first quarter, but inventory and the decreasing modules prices slowed down purchases and installations in other regions. Prices for polysilicon produced outside China saw a slight decline and bifurcation of material between P-type and N-type polysilicon continued. N-type polysilicon started the quarter at USD 24.3/kg and finished the quarter at USD 22.8/kg.
Market outlook
The global economy is expected to grow around two percent in 2024 driven by consumer goods spending which remains strong despite inflationary concerns and higher prices. Forecasts anticipate a decrease in interest rates but not to the record low levels we have seen. As we have stated, this gives us greater confidence that the bottom of the cycle has been reached and growth is projected going forward. There are still concerns that slower population growth and geopolitical issues will cause some slowdown in the future projections. Overall, the second half of 2024 is expected to be stronger than the first half while 2025 is expected to be a strong growth year as the consumer replacement cycle and new purchase drivers return to their normal patterns.
We have seen increased silicon gas demand in the first quarter and analysts project continued strength throughout the remainder of 2024. Wafer pricing is starting to increase as inventory corrections are having effects. PV market demand is expected to continue to grow and cell production is also expected to be stronger as the year progresses. Specialty
gases orders have increased as demand from end users is picking up. DRAM and Nand memory sales prices are coming back after a two-year decline showing positive signs for 2024. Server growth along with supply reductions have helped fuel a quick return in early 2024. After normal second quarter seasonality, albeit still stronger than 2023, expectations are for wafer production growth for the remainder of 2024. Micro components and automobiles will help drive demand, but it will be mostly driven by memory for the IC market. The United States continues to push its support for the semiconductor industry with several announcements planned the second half of this year. Semiconductor polysilicon demand remains weak but with the increase of specialty gas purchases, it is expected that will change as the year progresses. The decline in wafer inventory will help to pull from polysilicon inventory but the overall balance is not expected until the second half of 2024.
The PV forecast for 2024 has increased and is now expected to exceed 500GW driving towards another record year. China demand is expected to maintain at fifty percent of that estimation with installations around 250GW. Global inventories will continue to pressure pricing at all levels of the manufacturing supply chain. Polysilicon production in China continues to create a larger gap in supply and demand and expected to continue to drive prices to record lows. Some polysilicon plants in China have delayed commissioning and in one rare instance, a manufacturer announced a cancellation of their project. While these are all positive signals for their market conditions, China prices are still expected to remain depressed for 2024. Prices for polysilicon outside of China, while declining some, are still increasing the gap in price difference to China prices. The United States will continue with strengthening support for PV as IRA tax directives are expected to be defined and allow manufacturers to plan for long term growth and support. US Customs will continue to pursue compliance to UFLPA and anti-circumvention efforts, while the Biden Administration and Congress seek additional means to defend the growing domestic manufacturing base.
Forward looking statements
This report contains statements regarding the future in connection with the Group's growth initiatives, profit figures, outlook, strategies, and objectives. In particular, the section "Market outlook" contains forward-looking statements regarding the Group's expectations. All statements regarding the future are subject to inherent risks and uncertainties, and many factors can lead to actual results and developments deviating substantially from what has been expressed or implied in such statements. These factors include the risk factors relating to the Group's activities described in the section "Risks and Uncertainties" above and in REC Silicon's Annual Report for 2023, including the section Risk Factors in the Board of Directors' Report.
14 CONTENTS
Consolidated financial statements
Consolidated statement of financial position
| USD in million | Notes | Mar 31, 2024 | Mar 31, 2023 | Dec 31, 2023 |
|---|---|---|---|---|
| ASSETS | ||||
| Non-current assets | ||||
| Intangible assets | 3 | 0.8 | 0.9 | 0.8 |
| Land and buildings | 3 | 33.2 | 30.6 | 33.6 |
| Machinery and production equipment | 3 | 39.2 | 23.0 | 40.2 |
| Other tangible assets | 3 | 4.2 | 2.6 | 4.0 |
| Assets under construction | 3 | 203.5 | 83.1 | 180.9 |
| Property, plant and equipment | 3 | 280.1 | 139.4 | 258.7 |
| Right of use assets | 4 | 32.0 | 30.3 | 32.2 |
| Other non-current receivables | 0.3 | 0.4 | 0.4 | |
| Financial assets and prepayments | 0.3 | 0.4 | 0.4 | |
| Total non-current assets | 313.2 | 171.1 | 292.2 | |
| Current assets | ||||
| Inventories | 6 | 55.2 | 42.8 | 58.5 |
| Trade and other receivables | 11 | 15.6 | 15.0 | 21.9 |
| Prepaid costs | 11 | 11.1 | 8.0 | 8.7 |
| Restricted bank accounts | 0.6 | 0.8 | 0.6 | |
| Cash and cash equivalents | 101.1 | 49.1 | 170.9 | |
| Total current assets | 183.6 | 115.7 | 260.7 | |
| Total assets | 496.8 | 286.8 | 552.9 |
| USD in million | Notes | Mar 31, 2024 | Mar 31, 2023 | Dec 31, 2023 |
|---|---|---|---|---|
| EQUITY AND LIABILITIES | ||||
| Shareholders' equity | ||||
| Paid-in capital | 3,027.7 | 3,027.7 | 3,027.7 | |
| Other equity and retained earnings | -2,991.8 | -2,994.7 | -2,951.3 | |
| Total shareholders' equity | 35.8 | 33.0 | 76.4 | |
| Non-current liabilities | ||||
| Retirement benefit obligations | 6.6 | 8.3 | 7.0 | |
| Non-current provision, interest calculation | 9 | 24.1 | 19.5 | 23.8 |
| Non-current financial liabilities, interest bearing | 7 | 253.0 | 4.2 | 253.0 |
| Non-current lease liabilities | 4 | 61.0 | 64.5 | 62.4 |
| Non-current prepayments | 24.9 | 0.0 | 24.9 | |
| Other non-current liabilities, not interest bearing | 0.3 | 1.3 | 0.7 | |
| Total non-current liabilities | 369.9 | 97.8 | 371.7 | |
| Current liabilities | ||||
| Trade payables and other liabilities | 46.3 | 39.8 | 60.7 | |
| Current tax liabilities | 11 | 0.0 | 0.0 | 0.0 |
| Current financial liabilities, interest bearing | 7 | 30.9 | 111.1 | 30.9 |
| Current lease liabilities | 4 | 7.9 | 4.1 | 7.5 |
| Current prepayments | 6.1 | 1.1 | 5.7 | |
| Total current liabilities | 91.1 | 156.0 | 104.8 | |
| Total liabilities | 461.0 | 253.8 | 476.5 | |
| Total equity and liabilities | 496.8 | 286.8 | 552.9 |
Consolidated statement of income
| USD in million | Notes | Q1 2024 | Q1 2023 | Year 2023 |
|---|---|---|---|---|
| Revenues | 42.1 | 29.1 | 141.1 | |
| Cost of materials | -12.8 | -5.3 | -30.5 | |
| Changes in inventories | 6 | 2.2 | 2.5 | 12.5 |
| Employee benefit expenses | -21.2 | -14.5 | -69.6 | |
| Other operating expenses | -39.8 | -34.8 | -142.9 | |
| Other income and expenses1 | -2.0 | 0.0 | 9.0 | |
| EBITDA | -31.5 | -23.0 | -80.5 | |
| Depreciation | 3 | -4.3 | -2.8 | -10.9 |
| Amortization | 3 | 0.0 | 0.0 | 0.0 |
| Depreciation of right of use assets | 4 | -1.0 | -0.8 | -3.4 |
| Impairment | 3, 4 |
0.0 | 0.0 | -8.1 |
| Total depreciation, amortization and impairment | -5.3 | -3.6 | -22.4 | |
| EBIT | -36.8 | -26.7 | -102.9 | |
| Financial income | 1.8 | 0.5 | 3.6 | |
| Net financial expenses | -5.5 | -4.2 | -18.3 | |
| Net currency gains/losses | 0.0 | -4.0 | 12.7 | |
| Gain from sale of Yulin JV | 0.0 | 0.0 | 135.5 | |
| Net financial items2 | -3.7 | -7.7 | 133.5 | |
| USD in million | Notes | Q1 2024 | Q1 2023 | Year 2023 |
|---|---|---|---|---|
| Profit/loss from total operations | -40.5 | -34.4 | 30.5 | |
| Attributable to: | ||||
| Owners of REC Silicon ASA | -40.5 | -34.4 | 30.5 | |
| Earnings per share (In USD) | ||||
| -basic | -0.10 | -0.08 | 0.07 | |
| -diluted | -0.10 | -0.08 | 0.07 |
1 Amounts reported for 2024 are related to employee termination benefits 2 See financial items table in part 1 of this report
Consolidated statement of comprehensive income
| USD in million | Q1 2024 | Q1 2023 | Year 2023 |
|---|---|---|---|
| Profit/loss from total operations | -40.5 | -34.4 | -86.8 |
| Other comprehensive income, net of tax: | |||
| Items that will not be reclassified to profit or loss: | |||
| Remeasurement of defined benefit plans | 0.0 | 0.0 | 3.5 |
| Currency translation effects | 0.0 | 0.1 | 0.0 |
| Sum items that will not be reclassified to profit or loss | 0.0 | 0.1 | 3.5 |
| Items that may be reclassified subsequently to profit or loss: | |||
| Currency translation differences | |||
| - taken to equity | 0.0 | 6.8 | 0.9 |
| Sum items that may be reclassified subsequently to profit or loss | 0.0 | 6.8 | 0.9 |
| Total other comprehensive income | 0.0 | 6.9 | 4.4 |
| Total comprehensive income | -40.5 | -27.4 | -82.4 |
| Total comprehensive income attributable to: | |||
| Owners of REC Silicon ASA | -40.5 | -27.4 | -82.4 |
| Attributable to equity holders of REC Silicon ASA | ||||||||
|---|---|---|---|---|---|---|---|---|
| USD in million | Notes | Share capital |
Share premium |
Other paid-in capital |
Total paid-in capital |
Other equity |
Comprehensive income |
Total equity |
| March 31, 2023 | ||||||||
| On January 1, 2023 | 59.2 | 2,926.7 | 41.8 | 3,027.7 | 539.0 | -3,506.3 | 60.4 | |
| Total comprehensive income | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | -27.4 | -27.4 | |
| On March 31, 2023 | 59.2 | 2,926.7 | 41.8 | 3,027.7 | 539.0 | -3,533.8 | 32.9 | |
| Year 2023 | ||||||||
| On January 1, 2023 | 59.2 | 2,926.7 | 41.8 | 3,027.7 | 539.0 | -3,506.3 | 60.4 | |
| Total comprehensive income | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 16.0 | 16.0 | |
| On December 31, 2023 | 59.2 | 2,926.7 | 41.8 | 3,027.7 | 539.0 | -3,490.3 | 76.4 | |
| March 31, 2024 | ||||||||
| On January 1, 2024 | 59.2 | 2,926.7 | 41.8 | 3,027.7 | 539.0 | -3,490.4 | 76.3 | |
| Total comprehensive income | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | -40.5 | -40.5 | |
| On March 31, 2024 | 59.2 | 2,926.7 | 41.8 | 3,027.7 | 539.0 | -3,530.9 | 35.8 |
Consolidated statement of changes in equity
This table presents details of comprehensive income
| Translation differences that |
||||
|---|---|---|---|---|
| can be transferred | Retained | |||
| USD in million | to profit and loss | Acquisition | earnings | Total |
| March 31, 2023 | ||||
| Accumulated on January 1, 2023 | 28.8 | 20.9 | -3,556.0 | -3,506.3 |
| Profit/loss from total operations | 0.0 | 0.0 | -34.4 | -34.4 |
| Other comprehensive income: | ||||
| Items that will not be reclassified to profit or loss: | ||||
| Currency translation effects | 0.0 | 0.0 | 0.1 | 0.1 |
| Sum items that will not be reclassified to profit or loss | 0.0 | 0.0 | 0.1 | 0.1 |
| Items that may be reclassified to profit or loss: | ||||
| Currency translation differences taken to equity | 6.8 | 0.0 | 0.0 | 6.8 |
| Sum items that may be reclassified to profit or loss | 6.8 | 0.0 | 0.0 | 6.8 |
| Total other comprehensive income for the period | 6.8 | 0.0 | 0.1 | 6.9 |
| Total comprehensive income for the period | 6.8 | 0.0 | -34.3 | -27.4 |
| Accumulated on March 31, 2023 | 35.6 | 20.9 | -3,590.3 | -3,533.8 |
| Year 2023 | ||||
| Accumulated on January 1, 2023 | 28.8 | 20.9 | -3,556.0 | -3,506.3 |
| Profit/loss | 0.0 | 0.0 | 30.5 | 30.5 |
| Other comprehensive income: | ||||
| Items that will not be reclassified to profit or loss: | ||||
| Remeasurement of defined benefit plans | 0.0 | 0.0 | 0.9 | 0.9 |
| Sum items that will not be reclassified to profit or loss | 0.0 | 0.0 | 0.9 | 0.9 |
| Items that may be reclassified to profit or loss: | ||||
| Currency translation differences taken to equity | -15.4 | 0.0 | 0.0 | -15.4 |
| Sum items that may be reclassified to profit or loss | -15.4 | 0.0 | 0.0 | -15.4 |
| Total other comprehensive income for the period | -15.4 | 0.0 | 0.9 | -14.5 |
| Total comprehensive income for the period | -15.4 | 0.0 | 31.4 | 16.0 |
| Accumulated on December 31, 2023 | 13.4 | 20.9 | -3,524.6 | -3,490.3 |
| USD in million | Translation differences that can be transferred to profit and loss |
Acquisition | Retained earnings |
Total |
|---|---|---|---|---|
| March 31, 2024 | ||||
| Accumulated on January 1, 2024 | 13.4 | 20.9 | -3,524.6 | -3,490.3 |
| Profit/loss from total operations | 0.0 | 0.0 | -40.5 | -40.5 |
| Other comprehensive income: | ||||
| Items that will not be reclassified to profit or loss: | ||||
| Currency translation effects | 0.0 | 0.0 | 0.0 | 0.0 |
| Sum items that will not be reclassified to profit or loss | 0.0 | 0.0 | 0.0 | 0.0 |
| Items that may be reclassified to profit or loss: | ||||
| Currency translation differences taken to equity | 0.0 | 0.0 | 0.0 | 0.0 |
| Sum items that may be reclassified to profit or loss | 0.0 | 0.0 | 0.0 | 0.0 |
| Total other comprehensive income for the period | 0.0 | 0.0 | 0.0 | 0.0 |
| Total comprehensive income for the period | 0.0 | 0.0 | -40.5 | -40.5 |
| Accumulated on March 31, 2024 | 13.4 | 20.9 | -3,565.1 | -3,530.9 |
Consolidated statement of cash flows
| USD in million | Notes | Q1 2024 | Q1 2023 | Year 2023 |
|---|---|---|---|---|
| Cash flows from operating activities | ||||
| Profit/loss before tax | -40.5 | -34.4 | 30.5 | |
| Proceeds from sale of Yulin JV | 0.0 | 0.0 | -136.1 | |
| Depreciation, amortization and impairment | 3, 4 |
5.3 | 3.6 | 22.4 |
| Changes in receivables, prepayments from customers etc. | 11 | 6.3 | 2.7 | 25.1 |
| Changes in inventories | 6 | 3.4 | -4.5 | -20.3 |
| Changes in payables, accrued and prepaid expenses | -14.2 | -4.5 | 3.0 | |
| Changes in VAT and other public taxes and duties | 6.1 | 4.1 | 1.3 | |
| Currency effects not cash flow or not related to operating activities | 0.0 | 4.0 | -12.3 | |
| Other items | 0.4 | -0.1 | 0.2 | |
| Net cash flow from operating activities | -33.2 | -28.9 | -86.0 | |
| Cash flows from investing activities | ||||
| Proceeds from sale of Yulin JV | 0.0 | 0.0 | 136.1 | |
| Proceeds/Payments finance receivables and restricted cash | 0.0 | 0.0 | 0.2 | |
| Proceeds from sale of property, plant and equipment and intangible assets | 0.0 | 0.0 | 0.7 | |
| Payments for property, plant and equipment and intangible assets | 3 | -34.7 | -22.5 | -145.7 |
| Net cash flow from investing activities | -34.7 | -22.5 | -8.7 | |
| Cash flows from financing activities | ||||
| Payments of lease liabilities | 4 | -1.8 | -0.8 | -3.9 |
| Payments of borrowings | 7 | 0.0 | 0.0 | -111.1 |
| Proceeds from borrowings | 7 | 0.0 | 0.0 | 280.0 |
| Net cash flow from financing activities | -1.8 | -0.8 | 165.0 | |
| Effect on cash and cash equivalents of changes in foreign exchange rates | 0.0 | -4.0 | -4.6 | |
| Net increase/decrease in cash and cash equivalents | -69.8 | -56.2 | 65.7 | |
| Cash and cash equivalents at the beginning of the period | 170.9 | 105.3 | 105.3 | |
| Cash and cash equivalents at the end of the period | 101.1 | 49.1 | 170.9 |
Notes
Note 01 General
The Group
REC Silicon ASA (the Company) and its subsidiaries (together REC Silicon Group, REC Silicon, or the Group) are a leading producer of advanced silicon materials, delivering high-purity polysilicon and silicon gases to the solar and electronics industries worldwide.
REC Silicon ASA is headquartered in Lysaker, Norway and operates manufacturing facilities in Moses Lake, Washington and Butte, Montana in the USA. REC Silicon's subsidiaries include REC Silicon Inc., REC Solar Grade Silicon LLC, and REC Advanced Silicon Materials LLC in the US. REC Silicon's marketing activities for sales of solar grade polysilicon, semiconductor grade silicon and silicon gases are carried out in Japan, Taiwan, Korea, Singapore, China, and the United States.
Basis of preparation
The financial statements are presented in USD, rounded to the nearest tenth of million, unless otherwise stated. As a result, of rounding adjustments, the figures in one or more rows or columns included in the financial statements and notes may not add up to the total of that row or column.
Financial statements
These consolidated interim financial statements, combined with other relevant financial information in this report, have been prepared in
accordance with IAS 34. They have not been audited or subject to a review by the auditor. They do not include all the information required for full annual financial statements of the Group and should be read in conjunction with the consolidated financial statements for 2023. The consolidated financial statements for 2023 are available upon request from the Company's registered office in Lysaker, Norway or at www.recsilicon.com.
The Board of Directors has prepared these interim financial statements under the assumption that the Company is a going concern and is of the opinion that this assumption was realistic at the date of the accounts.
Accounting policies
The consolidated financial statements for 2023 were prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and the Norwegian Accounting Act. The accounting policies adopted by the Company are consistent with those of the previous fiscal year. See note 2.24 to the consolidated financial statements for 2023.
Segment information
REC Silicon produces silicon gas and polysilicon for the semiconductor industries at its manufacturing facility in Butte, Montana. The Company also has the capability to produce polysilicon for the photovoltaic industry at its manufacturing facility in Moses Lake, Washington.
The Company restarted FBR production in Q4 of 2023. The company is targeting a ramp to 100 percent operation during Q4 2024. (see note 10 below). Accordingly, there are two operating segments: Solar Materials and Semiconductor Materials. The operating segments include revenues less cost of manufacturing excluding depreciation for products sold. Other includes general, administrative, and selling expenses which support both operating segments in addition to administrative costs for the Company's headquarters in Lysaker, Norway. Eliminations include the reversal of the impact of transactions between group members and affiliates. The results of the operating segments plus Other and Eliminations taken together reconcile to total EBITDA for the Group.
Group Management is headed by the Chief Executive Officer (CEO), and the CEO makes decisions regarding the allocation of resources and performance assessment for all segments. Accordingly, the CEO is regarded as the Chief Operating Decision Maker (CODM).
An operating segment is a distinguishable component of the Group that is engaged in providing products that are subject to similar risks and returns and corresponds to management reporting.
Foreign currency translation
Items included in the financial statements for each of the Group's entities are measured using the currency of the primary economic environment in which the entity operates ("the functional currency"). REC Silicon AS and REC Solar AS have a functional currency of NOK. The Company and its remaining subsidiaries have a functional currency of USD. The Group's reporting currency is USD. See note 2.4 to the consolidated financial statements for 2023.
Estimates and judgments
Preparation of financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Group's accounting policies. Areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in note 4 to the consolidated financial statements for 2023.
Note 02 Segment information
See notes 2.3 and 5 to the consolidated financial statements for 2023 and note 1 to these financial statements for further information on segments.
The following table summarizes key financial results by segment:
| USD in million | Q1 2024 | Q1 2023 | Year 2023 |
|---|---|---|---|
| Revenues | |||
| Semiconductor Materials | 42.0 | 29.0 | 140.6 |
| Solar Materials | 0.2 | 0.1 | 0.4 |
| Other | 0.0 | 0.1 | 0.2 |
| Total | 42.1 | 29.1 | 141.1 |
| EBITDA | |||
| Semiconductor Materials | 2.8 | -3.4 | 14.0 |
| Solar Materials | -26.8 | -11.7 | -64.8 |
| Other | -7.5 | -8.0 | -29.7 |
| Total | -31.5 | -23.0 | -80.5 |
| EBIT | |||
| Semiconductor Materials | 0.0 | -6.6 | -5.4 |
| Solar Materials | -29.1 | -12.0 | -67.4 |
| Other | -7.6 | -8.1 | -30.2 |
| Total | -36.8 | -26.7 | -102.9 |
The following tables reflect the financial results of each operating segment:
Semiconductor Materials - Segment
| USD in million | Q1 2024 | Q1 2023 | Year 2023 |
|---|---|---|---|
| Revenues | 42.0 | 29.0 | 140.6 |
| Cost of materials | -7.4 | -5.1 | -26.8 |
| Change in inventories | 0.4 | 2.3 | 7.2 |
| Employee benefit expense | -7.8 | -6.9 | -30.1 |
| Other operating expenses | -22.7 | -22.7 | -81.3 |
| Other income and expenses | -1.8 | 0.0 | 4.4 |
| Total current costs | -39.2 | -32.4 | -126.6 |
| EBITDA contribution | 2.8 | -3.4 | 14.0 |
| Depreciation of fixed assets | -2.2 | -2.5 | -9.8 |
| Depreciation of leased assets | -0.7 | -0.6 | -2.6 |
| Impairment | 0.0 | 0.0 | -7.0 |
| Total depreciation, amortization, and impairment | -2.8 | -3.2 | -19.3 |
| EBIT contribution | 0.0 | -6.6 | -5.4 |
Solar Materials - Segment
| USD in million | Q1 2024 | Q1 2023 | Year 2023 |
|---|---|---|---|
| Revenues | 0.2 | 0.1 | 0.4 |
| Cost of materials | -5.4 | -0.2 | -3.6 |
| Change in inventories | 1.8 | 0.2 | 5.4 |
| Employee benefit expense | -9.9 | -3.9 | -26.2 |
| Other operating expenses | -13.3 | -7.8 | -45.0 |
| Other income and expenses | -0.2 | 0.0 | 4.2 |
| Total current costs | -27.0 | -11.7 | -65.1 |
| EBITDA contribution | -26.8 | -11.7 | -64.8 |
| Depreciation of fixed assets | -2.0 | -0.2 | -0.7 |
| Amortization | 0.0 | 0.0 | 0.0 |
| Depreciation of leased assets | -0.4 | -0.1 | -0.8 |
| Impairment | 0.0 | 0.0 | -1.1 |
| Total depreciation, amortization, and impairment | -2.3 | -0.3 | -2.6 |
| EBIT contribution | -29.1 | -12.0 | -67.4 |
The following table disaggregates revenues by contract type and reconciles to total revenues.
| USD in million | Q1 2024 | Q1 2023 | Year 2023 |
|---|---|---|---|
| Spot Contract Revenue | 15.9 | 16.5 | 74.1 |
| Structured (Regional/Volume pricing) | 23.6 | 10.1 | 57.9 |
| Tiered (Volume pricing) | 2.6 | 2.5 | 9.2 |
| Total | 42.1 | 29.1 | 141.1 |
Note 03 Fixed assets
See note 6 to the consolidated financial statements for 2023.
Property, plant and equipment and intangible assets
| Machinery and | Total property, | ||||||
|---|---|---|---|---|---|---|---|
| Land and | production | Other tangible | Assets under | plant and | Total intangible | ||
| USD in million | buildings | equipment | fixed assets | construction | equipment | assets | Total |
| Carrying value on January 1, 2024 | 33.6 | 40.2 | 4.0 | 180.9 | 258.7 | 0.8 | 259.6 |
| Net additions1 | 0.1 | 2.5 | 0.4 | 22.5 | 25.6 | 0.0 | 25.6 |
| Disposals | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| Depreciation and amortization | -0.6 | -3.5 | -0.2 | 0.0 | -4.3 | 0.0 | -4.3 |
| Impairment | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| Carrying value on March 31, 2024 | 33.2 | 39.2 | 4.2 | 203.5 | 280.1 | 0.8 | 280.9 |
| On March 31, 2024 | |||||||
| Historical cost | 145.5 | 2,182.1 | 72.5 | 252.6 | 2,652.6 | 68.7 | 2,721.3 |
| Accumulated depreciation/amortization/impairment | -112.3 | -2,142.8 | -68.4 | -49.1 | -2,372.6 | -67.9 | -2,440.4 |
| Carrying value on March 31, 2024 | 33.2 | 39.2 | 4.2 | 203.5 | 280.1 | 0.8 | 280.9 |
1 Net additions include transfers from assets under construction. Differences between additions and cash payments for PPE is the result of timing of cash payments and accruals..
Impairment reviews
See note 8 to the consolidated financial statements for 2023.
Management has determined that the Group consists of two cash generating units (CGUs). The Company's CGUs are derived from the reported segments for Solar Materials and Semiconductor Materials. Financial attributes associated with Other and Eliminations have been allocated to the individual CGUs based upon estimated activity, volume, and revenue factors.
The Company conducted a review of impairment indicators on March 31, 2024 and did not identify any indicators which might give rise to a change in impairment compared to December 31, 2023.
Note 04 Leases
See note 7 to the consolidated financial statements for 2023.
Right of use assets
| Land and | Other leased | |||||
|---|---|---|---|---|---|---|
| USD in million | buildings | Machinery | Gas plants | assets | Total | |
| Balance on January 1, 2024 | 0.0 | 0.4 | 31.7 | 0.1 | 32.3 | |
| Depreciation | 0.0 | 0.0 | -1.0 | 0.0 | -1.0 | |
| Additions | 0.0 | 0.0 | 0.1 | 0.0 | 0.1 | |
| Modification of existing leases | 0.1 | 0.0 | 0.8 | 0.0 | 0.9 | |
| Balance on March 31, 2024 | 0.1 | 0.4 | 31.7 | 0.1 | 32.3 |
Lease liabilities
| USD in million | Maturity analysis - contractual payments to be made | ||||||
|---|---|---|---|---|---|---|---|
| Total future lease payments |
2024 | 2025 | 2026 | 2027 | 2028 | After 2028 | |
| Lease liabilities on March 31, 20241 | 105.7 | 11.9 | 15.8 | 15.8 | 15.7 | 15.7 | 30.7 |
1 Amounts listed are undiscounted
The weighted average incremental borrowing rate applied to lease liabilities on March 31, 2024 is 13.2 percent.
Amounts recognized in profit or loss
| Q1 2024 | Q1 2023 | Year 2023 |
|---|---|---|
| 8.5 | ||
| 3.4 | ||
| 0.0 | 0.0 | 0.1 |
| 0.0 | ||
| 2.1 1.0 |
2.1 0.8 0.0 0.0 |
Right-of-use assets associated with contracts with a low value or terms of less than 12 months, at the time of initiation, are expensed in accordance with the low-value assets and short-term lease exemptions.
Amounts recognized in the statement of cash flow
| USD in million | Q1 2024 | Q1 2023 | Year 2023 |
|---|---|---|---|
| Total cash outflow for leases | 4.0 | 2.9 | 12.4 |
Note 05 Investments
Note 06 Inventories
See note 9 to the consolidated financial statements for 2023.
See note 13 to the consolidated financial statements for 2023.
Inventories at end of period
| Mar 31, 2024 | Dec 31, 2023 | ||||||
|---|---|---|---|---|---|---|---|
| USD in million | Before writedowns |
Writedowns | After writedowns |
Before writedowns |
Writedowns | After writedowns |
|
| Stock of raw materials | 12.7 | 0.0 | 12.7 | 18.1 | 0.0 | 18.1 | |
| Spare parts | 44.2 | -33.1 | 11.1 | 44.3 | -33.1 | 11.2 | |
| Work in progress | 14.0 | -2.9 | 11.1 | 12.8 | -2.3 | 10.5 | |
| Finished goods | 41.1 | -20.8 | 20.3 | 25.1 | -6.4 | 18.7 | |
| Total | 112.0 | -56.8 | 55.2 | 100.4 | -41.8 | 58.5 | |
Note 07 Borrowings and guarantees
See notes 17, 29, and 30 to the consolidated financial statements for 2023.
Carrying amounts of interest-bearing liabilities on March 31, 2024 and contractual repayments (excluding interest payments) are specified in the table below.
| Contractual repayments, excluding interest | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| USD in million | Borrower | Maturity | Interest rate | Carrying amount |
Total | 2024 | 2025 | 2026 | After 2026 |
| Captialized Borrowing Cost, current (USD)1 | -0.3 | ||||||||
| Bank Loan - KEB Hana Bank | REC Silicon ASA | 2026 | 3 mon SOFR+1.8% | 110.0 | 110.0 | 110.0 | |||
| Bank Loan - KEB Hana Bank | REC Silicon Inc | 2026 | 3 mon SOFR+1.5% | 100.0 | 100.0 | 100.0 | |||
| Bank Loan - Standard Chartered | REC Silicon Inc | 2024 | 1 mon SOFR+2.2% | 30.0 | 30.0 | 30.0 | |||
| Bank Loan - NongHyup | REC Silicon Inc | 2026 | 3 mon SOFR+2.0% | 40.0 | 40.0 | 40.0 | |||
| Grant County WA tax settlement | REC Solar Grade Silicon LLC | 2026 | 11.5% | 4.2 | 4.2 | 1.2 | 1.4 | 1.6 | |
| Total | 283.9 | 284.2 | 31.2 | 1.4 | 251.6 | 0.0 |
1 Amortized as part of effective interest
Guarantees
See note 29 to the consolidated financial statements for 2023.
The Group provided parent company guarantees for the REC Solar Group related to the performance of solar panels and systems and the sale of REC ScanModule AB. The Group has been provided with offsetting guarantees by REC Solar Holdings AS. The guarantees are valid for relevant warranty periods and are limited by warranties provided on solar panels and systems. Parent company guarantees for REC Solar were USD 28.1 million on March 31, 2024 and December 31, 2023. The guarantees will decrease from 2024 to 2039 when they will expire in their entirety.
Note 08 Commitments
Contractual purchase obligations and minimum operating lease payments on March 31, 2024
| USD in million | Total future payments |
Remaining 2024 |
2025 | 2026 | 2027 | 2028 | After 2028 |
|---|---|---|---|---|---|---|---|
| Purchase of goods and services | 73.6 | 66.2 | 7.4 | 0.0 | 0.0 | 0.0 | 0.0 |
| Minimum operating lease payments | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| Total purchase obligations and minimum lease payments |
73.6 | 66.2 | 7.4 | 0.0 | 0.0 | 0.0 | 0.0 |
Commitments primarily represent costs necessary for the purchase of raw materials.
Note 09 Provisions
| USD in million | Q1 2024 | 2023 |
|---|---|---|
| Carrying value at beginning of period | 23.8 | 19.3 |
| Change in estimate to asset retirement obligation | 0.0 | 3.5 |
| Net periodic interest on asset retirement obligation | 0.3 | 1.0 |
| Carrying value at end of period | 24.1 | 23.8 |
See note 20 to the consolidated financial statements for 2023.
The asset retirement obligations (AROs) represent the present value of estimated future costs discounted between 5.0 to 5.4 percent and between 5 and 36.5 years. The change in estimate recorded in the fourth quarter was due to a change in estimated future inflation as well as changes to the estimated discount rate.
Note 10 Claims, disputes, and risks
Please refer to the annual report for 2023, specifically, note 31 to the consolidated financial statements and the risk factors section of the Board of Directors' Report.
Ramp of Moses Lake production facility
The Company restarted FBR production in Q4 of 2023. The company is targeting a ramp to 100 percent operation during Q4 2024.
Successful execution of the Company's plan to fully ramp up production at the Moses Lake facility could require reversal of previous impairment.
Additional impairments and provisions would likely be required if the Moses Lake facility is not successfully ramped to full capacity.
Note 11 Receivables and prepayments
See notes 12 and 30 to the consolidated financial statements for 2023.
Aging of receivables on March 31, 2024
| Aging of receivables that are not impaired | |||||||
|---|---|---|---|---|---|---|---|
| USD in million | Total Carrying amount |
Not due | < 30 Days | >30<90 Days |
>90<365 Days |
>365 Days | Impaired |
| Trade receivables and accrued | |||||||
| revenues | 18.4 | 12.0 | 4.0 | 0.3 | 0.0 | 0.0 | 2.1 |
| Provision for loss on trade recivables | -2.7 | 0.0 | -0.4 | -0.3 | 0.0 | 0.0 | -2.1 |
| Other current receivables | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| Total receivables | 15.6 | 12.0 | 3.7 | 0.0 | 0.0 | 0.0 | 0.0 |
| Prepaid Costs | 11.1 | ||||||
| Total receivables and prepayments | 26.7 |
There was no bad debt expense recorded during the first quarter of 2024.
Note 12 Transactions with related parties
See notes 5, 10 and 16 to the consolidated financial statements for 2023.
In the first quarter of 2024, REC Silicon Inc. received services from Hanwha and Hanwha subsidiaries, in the amount of USD 0.3 million.
In the first quarter of 2024, REC Silicon paid Hanwha Solutions USD 0.7 million for guarantee and letter of credit fees related to bank loans. See note 7.
Definition of alternative performance measures
An Alternative Performance Measure (APM) is a measure of historic or future financial performance, financial position, or cash flows other than a financial measure defined or specified in the applicable financial reporting framework.
The Company has identified the following APMs used in reporting:
| EBIT | EBIT is an acronym for Earnings Before Tax and represents profit/loss from total operations excluding income tax expense/benefit, net financial items, and share of profit/loss from investments in associates. |
EBITDA | EBITDA is an acronym for Earnings Before Tax, Depreciation, and Amortization. EBITDA is EBIT excluding depreciation, amortization, and impairment. EBITDA is reflected on the consolidated statement of income on the line titled EBITDA. An |
|---|---|---|---|
| EBIT is reflected on the consolidated statement of income on the line titled EBIT. EBIT has been reported as a loss of USD 36.8 million for the first quarter of 2024. |
EBITDA loss of USD 31.5 million has been reported for the first quarter of 2024. | ||
| EBITDA | EBITDA margin is calculated by dividing EBITDA by revenues. EBITDA and revenues are | ||
| EBIT Margin |
EBIT margin is calculated by dividing EBIT by revenues. EBIT and revenues are reflected on the Company's statement of income, in note 2 segments, and in the financial highlight tables in this report in lines titled similarly. |
Margin | reflected on the Company's statement of income, in note 2 segments, and in the financial highlight tables in this report in lines similarly titled. |
| EBITDA margin has been calculated and is reported in the financial highlight tables for REC | |||
| EBIT margin has been calculated and is reported in the financial highlight tables for REC Silicon Group. |
Silicon Group, in the key financials table for each operating segment, and in note 2 segments. | ||
| EBITA | EBITDA contribution is used to describe the contribution of each of the operating segments, | ||
| EBIT | EBIT contribution is used to describe the contribution of each of the operating segments, other, | Contribution | other, and eliminations to the Company's total EBITDA. For the operating segments, EBITDA |
| Contribution | and eliminations to the Company's total EBIT. For the operating segments, EBIT contributions | contributions represent revenues less cost of manufacturing excluding depreciation and | |
| represent revenues less cost of manufacturing including depreciation and amortization. For other, EBIT contribution represents primarily operating costs. |
amortization. For other, EBITDA contribution represents primarily operating costs. | ||
| A table reconciling the EBITDA contribution of each operating segment along with other and | |||
| A table reconciling the EBIT contribution of each operating segment along with other and eliminations to the Company's total EBIT can be found in note 2 segments. |
eliminations to the Company's total EBITDA can be found in note 2 segments. |
| EBIT Contribution |
EBIT contribution is used to describe the contribution of each of the operating segments, other, and eliminations to the Company's total EBIT. For the operating segments, EBIT contributions represent revenues less cost of manufacturing including depreciation and amortization. For other, EBIT contribution represents primarily operating costs. |
Nominal Net Debt |
|---|---|---|
| A table reconciling the EBIT contribution of each operating segment along with other and eliminations to the Company's total EBIT can be found in note 2 segments. |
||
| Equity Ratio | The equity ratio is calculated by dividing total shareholders' equity by total assets. Total shareholders' equity and total assets are reflected on lines similarly titled on the Company's statement of financial position. |
|
| On March 31, 2024, the equity ratio is 7.2 percent and is calculated by dividing USD 35.8 million total shareholders' equity by USD 496.8 million in total assets. |
||
| Net Debt | Net debt is the carrying value of interest-bearing debt instruments (including financing leases) less cash and cash equivalents. |
|
| The carrying value of debt can be found in note 7 borrowing in the table under the caption carrying amount, the amounts of lease liabilities are reflected on the balance sheet, and cash can be found in the statement of financial position on the line titled cash and cash equivalents. |
||
| On March 31, 2024, net debt was USD 251.6 million or USD 283.9 million total carrying value of the Company's debt (from note 7) plus USD 68.9 million current and non-current lease liabilities (from the balance sheet) less USD 101.1 million in cash and cash equivalents. |
| Nominal net debt is the contractual repayment values of interest-bearing debt instruments |
|---|
| (including financing leases) less cash and cash equivalents. |
| The contractual repayment values of debt can be found in note 7 borrowing in the table under |
the caption contractual repayments excluding interest, the amounts of lease liabilities are reflected on the balance sheet, and cash can be found in the statement of financial position on the line titled cash and cash equivalents.
On March 31, 2024, nominal net debt was USD 251.9 million or USD 284.2 million contractual repayment values of the Company's debt (from note 7) plus USD 69.8 million current and non-current lease liabilities (from the balance sheet) less USD 101.1 million in cash and cash equivalents.
REC Silicon ASA
Lysaker Torg 5, 3 etg. PO Box 63 1324 Lysaker Norway
About REC Silicon
REC Silicon is a global leader in silane based high purity silicon materials. We combine 40 years experience and best-in-class proprietary technology to deliver on customer expectations. Our two U.S. based plants have a combined production capacity of more than 30,000 MT of high purity silane gas. Our Signature Silane® based products are used in everyday quality of life technologies, emerging technologies, cutting edge power and memory devices, high-voltage transmission, as well as renewables. REC Silicon is headquartered in Lysaker, Norway and listed on the Oslo stock exchange under the ticker: RECSI.
Phone +47 407 24 086
For more information, go to: www.recsilicon.com
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