REC Silicon ASA (RNWEY) Q3 2025 Earnings Call Transcript

2025-11-06 07:26:08 ET

REC Silicon ASA (RNWEY) Q3 2025 Earnings Call November 6, 2025 2:00 AM EST

Company Participants

Kurt Levens - President & CEO

Presentation

Kurt Levens
President & CEO ...

Good morning, and welcome to the REC Silicon Third Quarter 2025 Results Presentation. My name is Kurt Levens. I'm the CEO; and with me is Jack Yun, our CFO. Today, we're going to give our usual highlights and updates as well as a financial review and then spend a few slides on our strategic direction as well as summarizing where we're at right now.

Our restructuring efforts continue, and we will have an approximate 10% reduction in force in Q4 of this year. Our Moses Lake optionality costs are starting to stabilize near a lower run rate level. There are some incremental reductions that will continue, and we expect it to continue to lower quarter-over-quarter for the foreseeable future. There are still more opportunities in Butte for reduction in terms of our cost structure, and we are continuing to identify and actualize on those projects.

Our markets are mixed right now, aggressive China supply in some segments and delays across new end user capacity continue. We finalized additional loans from Hanwha International and continue discussions on further short- and long-term financing options. Trade actions are still creating uncertainty as well as shifts in some of our silane gas markets. And in the quarter, the mandatory offer for shares was completed with Anchor AS assuming 60.2% ownership in REC Silicon. We're still operating in the range that we had indicated last time, and we expect Q4 to be similar from a volume perspective to potentially marginally better.

There is some pickup in our non-silane silicon gases, primarily driven by our DCS, MCS offerings and the markets that they serve. PV outside of China continues to remain weak. PV cell production outside of China continues to remain weak. And utilization is low and new projects are being pushed out. Our EBITDA was negative $7.2 million. This is primarily driven by weak sales.

In our Butte segment, our costs were mainly improved over the prior quarter as a result of the activities in the prior quarter being dominated by shutdown -- planned shutdown activities. Increase in silicon gas price is attributable to product mix, more higher value products relative to previous quarter and as a percent of our mix. And as I said before, in additional to the planned maintenance items, our input costs were also stable to declining for our Butte facility. Our cash balance at the end of the quarter was $10 million. Our cash flow increase was entirely driven by our borrowing proceeds.

I think the important thing to note here is the amount of debt maturing in '26. We have begun discussions with entities regarding this, and we'll have more information as we go forward. Additionally, subsequent to the end of the quarter or since towards the end of the quarter, we secured a $7 million short-term loan with Anchor AS.

So I think over the past year, we've had a large amount of challenges as a company. And I think that I've tried to keep us focused on the here and the now. We've talked a lot about opportunities, but I think our reality needs to still remain in how do we get from where we are now to the future state in small interval increments. Meaning what do we do this month? What do we do next month? What do we do the next quarter, for us to be able to get to that other side.

Our reality is that we're in a very challenging situation. We have market softness, delays in key projects that we've been waiting on. We have aggressive competition, and we have policy turbulence. None of these things are things that we can control. But what we can control is how we respond and the amount of time we take to respond to these changing situations. We will continue to look for the correct way to respond to the changing situations while focusing on preserving our positions, increasing market share where we can and being there when these projects come into place and begin to operate.

We've been working constantly towards a sustainable financial platform. Here's the -- we've said it in a number of different disclosures and a number of different times. And I want to say it again. We do not have sufficient cash to meet our debt service and other operating cash flow requirements for the coming year, even with the aggressive moves we've made in cost control and also increasing our focus on sales.

We are going to continue to require additional financing beyond our existing facilities from Hanwha or from other sources of capital. We continue to discuss additional financing with Hanwha as well as evaluating a more comprehensive restructuring of our $420 million of term loans that mature next year. So this is a very serious situation for us, and it's one that we are -- along with the previous slide where I show the actions that we're taking that we're very focused on.

As I mentioned in the overview, the completion of the mandatory offer was done and settled on 29 August 2025, with Anchor AS receiving a total shareholding of 60.2% in REC Silicon. During the quarter, the request for investigation process was dismissed by Norwegian District Court. And in the U.S., REC Silicon is complying with the court process for the subpoena. I want to reiterate again that in the U.S., what we are doing is responding to a subpoena for information.

So in summary, we have markets that are affected by aggressive competition. We have trade policy uncertainties. We have demand that's being pushed out and delays in some of our key growth drivers. We've been very focused on cost discipline as well as trying to restructure our organization to make decision-making and actions more streamlined.

In Q4, we think that we will once again be in somewhere in the same range as we have been here for the past few quarters, potentially slightly better. Our priority continues to look at how do we secure short- to midterm funding for our operations, how do we monetize noncore assets? And how do we continue to look at additional financing as well as more comprehensive restructuring.

Thank you. And that concludes the presentation part of our results, and I'll take some questions.

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