UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)
x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2021

or

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to __________

Commission File Number 1-584

FERRO CORPORATION

(Exact name of registrant as specified in its charter)

OH (State or other jurisdiction of incorporation or organization)	34-0217820 (I.R.S. Employer Identification No.)
6060 Parkland Boulevard Suite 250 Mayfield Heights, OH (Address of principal executive offices)	44124 (Zip Code)
216-875-5600 (Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES x NO o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). YES x NO o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer	x	Accelerated Filer	o
Non-accelerated Filer	o	Smaller Reporting Company	o
		Emerging Growth Company	o

If an emerging growth company, indicate by checkmark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). YES o NO x

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $1.00	FOE	NYSE

At March 31, 2021, there were 82,624,463 shares of Ferro Common Stock, par value $1.00, outstanding.

TABLE OF CONTENTS

		Page
PART I
Item 1. Financial Statements (Unaudited)	3
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3. Quantitative and Qualitative Disclosures about Market Risk	31
Item 4. Controls and Procedures	32
PART II
Item 1. Legal Proceedings	33
Item 1A. Risk Factors	33
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	33
Item 3. Defaults Upon Senior Securities	33
Item 4. Mine Safety Disclosures	33
Item 5. Other Information	34
Item 6. Exhibits	34
Exhibit 31.1
Exhibit 31.2
Exhibit 32.1
Exhibit 32.2

2

PART I — FINANCIAL INFORMATION

Item 1.  Financial Statements (Unaudited)

Ferro Corporation and Subsidiaries

Condensed Consolidated Statements of Operations

	Three Months Ended
	March 31,
(Dollars in thousands, except per share amounts)	2021		2020
Net sales	$	288,358	$	252,326
Cost of sales		193,255		171,588
Gross profit		95,103		80,738
Selling, general and administrative expenses		53,838		56,046
Restructuring and impairment charges		5,184		1,165
Other expense (income):
Interest expense		9,437		5,530
Interest earned		(597)		(254)
Foreign currency losses (gains), net		1,158		(1,315)
Loss on extinguishment of debt		1,981		—
Miscellaneous income, net		(2,100)		(1,463)
Income before income taxes		26,202		21,029
Income tax expense		7,644		5,117
Income from continuing operations		18,558		15,912
Income from discontinued operations, net of income taxes		89,842		221
Net income		108,400		16,133
Less: Net income attributable to noncontrolling interests		437		10
Net income attributable to Ferro Corporation common shareholders	$	107,963	$	16,123
Earnings per share attributable to Ferro Corporation common shareholders:
Basic earnings:
Continuing operations	$	0.22	$	0.19
Discontinued operations		1.09		—
	$	1.31	$	0.19
Diluted earnings:
Continuing operations	$	0.22	$	0.19
Discontinued operations		1.08		—
	$	1.30	$	0.19

See accompanying notes to condensed consolidated financial statements.

3

Ferro Corporation and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income (Loss)

	Three Months Ended
	March 31,
(Dollars in thousands)	2021		2020
Net income	$	108,400	$	16,133
Other comprehensive income (loss), net of income tax:
Foreign currency translation loss		(61,101)		(18,366)
Cash flow hedging instruments, unrealized income (loss)		6,786		(9,040)
Postretirement benefit liabilities income		130		—
Other comprehensive loss, net of income tax		(54,185)		(27,406)
Total comprehensive income (loss)		54,215		(11,273)
Less: Comprehensive income (loss) attributable to noncontrolling interests		363		(84)
Comprehensive income (loss) attributable to Ferro Corporation	$	53,852	$	(11,189)

See accompanying notes to condensed consolidated financial statements.

4

Ferro Corporation and Subsidiaries

Condensed Consolidated Balance Sheets

	March 31,		December 31,
(Dollars in thousands)	2021		2020
ASSETS
Current assets
Cash and cash equivalents	$	128,428	$	174,077
Accounts receivable, net		158,991		137,008
Inventories		251,366		260,332
Other receivables		56,733		72,272
Other current assets		22,127		18,261
Current assets held-for-sale		—		307,854
Total current assets		617,645		969,804
Other assets
Property, plant and equipment, net		328,403		330,045
Goodwill		173,493		175,351
Intangible assets, net		115,052		119,500
Deferred income taxes		112,771		115,962
Operating leased assets		14,694		15,446
Other non-current assets		26,921		80,618
Non-current assets held-for-sale		—		154,207
Total assets	$	1,388,979	$	1,960,933
LIABILITIES AND EQUITY
Current liabilities
Loans payable and current portion of long-term debt	$	13,393	$	8,839
Accounts payable		125,163		135,296
Accrued payrolls		24,670		27,166
Accrued expenses and other current liabilities		146,285		124,770
Current liabilities held-for-sale		—		107,545
Total current liabilities		309,511		403,616
Other liabilities
Long-term debt, less current portion		356,547		791,509
Postretirement and pension liabilities		167,783		181,610
Operating leased non-current liabilities		9,131		10,064
Other non-current liabilities		53,735		62,050
Non-current liabilities held-for-sale		—		71,149
Total liabilities		896,707		1,519,998
Equity
Ferro Corporation shareholders’ equity:
Common stock, par value $1 per share; 300.0 million shares authorized; 93.4 million shares issued; 82.6 million and 82.4 million shares outstanding at March 31, 2021, and December 31, 2020, respectively		93,436		93,436
Paid-in capital		288,538		293,682
Retained earnings		412,778		304,815
Accumulated other comprehensive loss		(143,821)		(89,710)
Common shares in treasury, at cost		(167,102)		(172,256)
Total Ferro Corporation shareholders’ equity		483,829		429,967
Noncontrolling interests		8,443		10,968
Total equity		492,272		440,935
Total liabilities and equity	$	1,388,979	$	1,960,933

See accompanying notes to condensed consolidated financial statements.

5

Ferro Corporation and Subsidiaries

Condensed Consolidated Statements of Equity

	Ferro Corporation Shareholders
	Common Shares									Accumulated
	in Treasury									Other		Non-
				Common		Paid-in		Retained		Comprehensive		controlling		Total
(In thousands)	Shares	Amount		Stock		Capital		Earnings		Loss		Interests		Equity
Balances at December 31, 2020	11,065	$	(172,256)	$	93,436	$	293,682	$	304,815	$	(89,710)	$	10,968	$	440,935
Net income	—		—		—		—		107,963		—		437		108,400
Other comprehensive loss	—		—		—		—		—		(54,111)		(74)		(54,185)
Change in ownership interest	—		—		—		(2,530)		—		—		(2,888)		(5,418)
Stock-based compensation transactions	(255)		5,154		—		(2,614)		—		—		—		2,540
Balances at March 31, 2021	10,810	$	(167,102)	$	93,436	$	288,538	$	412,778	$	(143,821)	$	8,443	$	492,272

	Ferro Corporation Shareholders
	Common Shares									Accumulated
	in Treasury									Other		Non-
				Common		Paid-in		Retained		Comprehensive		controlling		Total
(In thousands)	Shares	Amount		Stock		Capital		Earnings		Loss		Interests		Equity
Balances at December 31, 2019	11,431	$	(180,243)	$	93,436	$	294,543	$	262,016	$	(109,376)	$	9,826	$	370,202
Net income	—		—		—		—		16,123		—		10		16,133
Other comprehensive income	—		—		—		—		—		(27,312)		(94)		(27,406)
Stock-based compensation transactions	(238)		5,332		—		(2,723)		—		—		—		2,609
Balances at March 31, 2020	11,193	$	(174,911)	$	93,436	$	291,820	$	278,139	$	(136,688)	$	9,742	$	361,538

See accompanying notes to condensed consolidated financial statements.

6

Ferro Corporation and Subsidiaries

Condensed Consolidated Statements of Cash Flows

	Three Months Ended
	March 31,
(Dollars in thousands)	2021		2020
Cash flows from operating activities
Net cash used in operating activities	$	(45,463)	$	(71,535)
Cash flows from investing activities
Capital expenditures for property, plant and equipment and other long-lived assets		(10,877)		(8,316)
Collections of financing receivables		27,776		28,827
Proceeds from sale of businesses, net		415,230		—
Business acquisitions, net of cash acquired		(2,200)		—
Other investing activities		2