Earnings call transcript: REC Silicon faces financial hurdles in Q3 2025

REC Silicon ASA reported its third-quarter earnings for 2025, revealing significant financial challenges. The company experienced a negative EBITDA of $7.2 million, with a cash balance of $10 million at the quarter’s end. The stock price fell by 0.74% to $1.205, reflecting investor concerns over the company’s financial health and future prospects. REC Silicon is grappling with a substantial debt burden, including $420 million in term loans maturing in 2026.

Key Takeaways

• REC Silicon reported negative EBITDA of $7.2 million in Q3 2025.
• The company’s stock price decreased by 0.74% following the earnings announcement.
• Significant debt challenges are looming, with $420 million in loans maturing in 2026.
• Workforce reduction and cost-cutting measures are planned for Q4 2025.
• The company is exploring financing options and potential restructuring of term loans.

Company Performance

REC Silicon’s performance in Q3 2025 highlights ongoing financial difficulties. The negative EBITDA underscores the company’s struggle to generate positive cash flow, primarily due to high operational costs and competitive pressures. Despite efforts to stabilize costs at its Moses Lake facility and reduce expenses in Butte, the company continues to face challenges in the broader photovoltaic (PV) market, particularly outside China, where demand remains weak.

Financial Highlights

• Revenue: Not specified in the earnings call, but the forecast was $101.9 million.
• Earnings per share: Not specified in the earnings call.
• Cash balance: $10 million at the end of Q3 2025.
• Debt: $420 million in term loans maturing in 2026.

Outlook & Guidance

REC Silicon expects Q4 2025 to be similar to Q3, with potential marginal improvements. The company is urgently seeking additional financing and is in discussions with Hanwha International for potential support. A comprehensive restructuring of term loans is being considered, along with potential land sales and asset monetization, to address the looming debt maturities.

Executive Commentary

CEO Kurt Levens highlighted the company’s precarious financial situation, stating, "We do not have sufficient cash to meet our debt service and other operating cash flow requirements for the coming year." He emphasized the urgent need for short to midterm funding solutions. Levens also acknowledged the challenging market conditions, noting, "Our reality is that we’re in a very challenging situation."

Risks and Challenges

• Debt Maturity: With $420 million in loans maturing in 2026, REC Silicon faces a significant refinancing risk.
• Market Weakness: The PV market outside China remains weak, impacting demand for REC Silicon’s products.
• Competitive Pressure: Aggressive competition, particularly from Chinese suppliers, poses a threat to market share.
• Operational Costs: Despite efforts to stabilize costs, high operational expenses continue to strain financial performance.
• Financing Needs: The urgent need for additional funding to sustain operations and manage debt obligations.

Q&A

During the earnings call, analysts inquired about the company’s plans to address its financial challenges. REC Silicon confirmed that it is exploring potential power and land use agreements and is open to monetizing patents and non-core assets. The company reiterated its commitment to not selling core operating assets, despite the financial pressures.

The earnings call highlighted REC Silicon’s ongoing efforts to navigate a challenging financial landscape, with a focus on securing necessary funding and exploring strategic options to address its substantial debt obligations.

Full transcript - REC Silicon ASA (RECSI) Q3 2025:

Kurt Levens, CEO, REC Silicon: 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 Yoon, 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 Aker ASA 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’s 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 planned shutdown activities. Increase in silicon gas price is attributable to product mix, more higher value products relative to previous quarter and as a % of our mix. As I said before, in addition 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 proceed.

I think the important thing to note here is the amount of debt maturing in 2026. 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 Aker ASA. 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 a reality needs to still remain in how do we get from where we are now to the future state in small interval increments, maybe, meaning what do we do this month, what do we do next month, what do we do in the next quarter for us to be able to get to that other side? You know, 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. 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. You know, here’s the, we’ve said it in a number of different disclosures and a number of different times and I want to, 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. This is a very serious situation for us and it is one that we are, along with the previous slide where I show the actions that we are taking, that we are very focused on. As I mentioned in the overview.

Moderator/Question Asker, REC Silicon: The.

Kurt Levens, CEO, REC Silicon: Completion of the mandatory offer was done settled on 29th August 2025 with Aker 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. 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 non core assets, and how do we continue to look at additional financing as well as more comprehensive restructuring. Thank you. That concludes the presentation part of our results and I will take some questions.

Moderator/Question Asker, REC Silicon: Okay, moving on to questions that are being submitted. What non core assets have been sold and what future non core assets are you looking to sell and is there an approximate value associated with this?

Kurt Levens, CEO, REC Silicon: The non core assets that we have sold are mainly minor property items that are no longer going to be needed for or excessive inventory that are no longer be needed for operations, equipment, various other things. However, the majority of it is coming in our contemplated land disposal. We’re not currently, we’re involved in private discussions and we’re not currently disclosing what the value may be of any contemplated transaction.

Moderator/Question Asker, REC Silicon: Are there any players that are currently delivering commercial quantities of silane for silicon anode battery?

Kurt Levens, CEO, REC Silicon: At this time outside of China? There is nobody who’s delivering commercial quantities. All of the capacity outside of China is still being delivered to either started up, being in the process of being started up, or being delivered to the pilot plants.

Moderator/Question Asker, REC Silicon: Are you working with creating value from unused power access that you have in Moses Lake and Butte as an example by entering into an agreement with stakeholders with the silicon anode industry or data center industry?

Kurt Levens, CEO, REC Silicon: I’ll just make it without going into specifics. I’ll make a general comment that we are looking to leverage again both our land as well as access to any rights we might have or capacities we may have for any of our, whether that’s power or natural gas, rice, whatever it may be. If we have it, we are naturally open to discussions, particularly with companies that would potentially want to be an off taker of any of our materials.

Moderator/Question Asker, REC Silicon: If data centers open near the Butte facility, how do you anticipate that that will affect the electricity pricing in Butte?

Kurt Levens, CEO, REC Silicon: Is it the Moses Lake facility? Did I hear that correct?

Moderator/Question Asker, REC Silicon: No. This question is stating there’s data centers are considering building in.

Kurt Levens, CEO, REC Silicon: In the Butte area, yeah, I would imagine that we can expect that there could be some pressure on electricity prices, but we do not know that. What we have seen in general is that electricity prices in that particular region have been much more stable over the past year, particularly once we took off a large load. I think that our impression would be the market signal is such that eased some of the pressure in the supply-demand picture there. It is a market, so I do not know. I can only say that if there is going to be more consumers and there is no more production assets, then something is going to give at some point. Fortunately, I want to point out that on silane, electricity is a very small part of our cost stack.

Moderator/Question Asker, REC Silicon: Is there any plan to sell either Butte facility or the Moses Lake facility or enter into any kind of mergers or joint venture agreements?

Kurt Levens, CEO, REC Silicon: At this time? We’re not contemplating sale of any of our core operating assets or assets that we have set up in order to maintain optionality. As far as joint ventures or potential other agreements, there is nothing. Obviously if we had something that we were in the middle of, we wouldn’t necessarily disclose that until it was done. All I will say is that we are obviously open to any ideas which have the potential to create value for all of our shareholders. An idea and a discussion is one thing. Actualizing is a. Is an entirely different thing.

Moderator/Question Asker, REC Silicon: Can you give an update on ongoing supply negotiations with battery anode manufacturers?

Kurt Levens, CEO, REC Silicon: All I can say is that we continue to have discussions with battery manufacturers. Say that to date, I would characterize it as the fact that they have some delays on their ends regarding their own challenges in market space or their technologies or whatever it may be. Those are taking obviously longer, but outside of that I’m not going to comment on specific negotiations with specific animal producers.

Moderator/Question Asker, REC Silicon: There’s been a large parcel of land in Moses Lake that’s been on the market for a number of months. Is this area likely to be sold before the end of the year?

Kurt Levens, CEO, REC Silicon: A large parcel of land on the market for. Is this specific to REC Silicon or.

Moderator/Question Asker, REC Silicon: It says you have a large.

Kurt Levens, CEO, REC Silicon: Okay, we have.

Moderator/Question Asker, REC Silicon: Yeah.

Kurt Levens, CEO, REC Silicon: As we stated on the non core assets that we’re looking to dispose of is some land that we had procured for future expansion. We are involved in discussions. I think that when we have more information as to that coming to fruition, we will disclose that.

Moderator/Question Asker, REC Silicon: Have you or do you plan to sell the FBR reactors in Moses Lake?

Kurt Levens, CEO, REC Silicon: At this time we have no plan to sell the FBR reactors in Moses Lake. I will say that if and when there’s ever opportunities to somehow monetize on that something with that then we would probably discuss it and then that would be another opportunity but nothing as of now.

Moderator/Question Asker, REC Silicon: Do you have any plans to hold future presentations in Oslo?

Kurt Levens, CEO, REC Silicon: At this time? The next presentation that’s contemplated is in February of 2026 and I’ve not made any decisions as to whether that will be in person or whether we will do it via the web.

Moderator/Question Asker, REC Silicon: Oh, there’s one more question yet you answered concerning FBR reactors themselves. How about the patents related to the FBR reactors?

Kurt Levens, CEO, REC Silicon: Yeah, I think we’ve, we have stated that if there’s opportunities to monetize then of course we are open to discussing that.

Moderator/Question Asker, REC Silicon: That covers all the questions that have been submitted.

Kurt Levens, CEO, REC Silicon: Okay. All right. Thank you for your participation and questions and we will see you next February.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.