REC Silicon ASA

Good morning, everyone, and welcome to the second quarter live webcast with RSC Silicon, hosted by Arctic Securities. My name is Daniel Stenslet. I work as an equity analyst here at Arctic, and I will moderate this session. With me today, I have CEO Tore Torvund and CFO James May, who soon will take you through the highlights from second quarter. After their presentation is concluded, we will move into Q&A, and I urge you all to use the chat function on the right-hand side to send me questions along the way so that we can wrap up with a Q&A session towards the end. And with that, I think we're ready to begin the presentation, and I will leave the word to Tore and James.

Good morning, and welcome to the Q2 presentation for RAC Silicon. It will be James, May, our CFO, and myself who will take you through the numbers today. On the screen, you will now see the highlights. We increased the revenues during this quarter to $31 million compared to 24.7 in the last quarter. Also, the EBITDA became then 2.9. versus one in Q1 of this year. Also, the cash balance went up by 1.3 million. So we have 31.6 in cash in the bank for the moment. And the main reason for these positive numbers is that we sold more silicon gas in the last quarter. We came in at 831 metric tons. Also, we sold more polysilicon, semiconductor polysilicon, which came in at 203 metric ton during this quarter. Due to the COVID-19, there is nothing new concerning the divestment of Butte. We have still several interested parties, but they have not been able to travel to Butte due to the coronavirus. And that's why we are still pending on the divestment of the Butte plant. Concerning the COVID-19, we have had no cases within our Mosul State plant, nor on our Butte plant. And we have strict restrictions to keep it that way. And hopefully we will not have any cases. But as you know, in the US, the number of cases are still growing. And it is definitely necessary with strict restrictions also in the coming months. You will see that we have an impairment of $23 million. James will explain you the details behind this. But the reason is that we have then extended the lease for industrial gas in Moses Lake. The main reason for this was that we have then renegotiated the contract and in case we are going to restart, we are going to extend the contract of the industrial gas. On the other hand, there is a reduced charge from the industrial gas during the period in a short period of time and that this is done to reduce the cost when most legs are at the present state. Next. The key metrics we sold 385 metric ton of polysilicon and the inventory decreased by 151 metric ton. Production came in approximately according to what we had last quarter. Semiconductor production came in a little bit less. The main reason for this is that we prioritized making float zone, which is the high end, but it takes somewhat more capacity to produce this quality. and the very positive thing is that in fact we sold 13.8 percent more silicon gas than we did in the prior quarter. When we look into the overall market for semiconductor If you look to the right-hand side, which is basically the forecast for IC or the microchips in the industry. This is from a report, as you see reported there. In January, the industry thought it should be about $380 billion. in revenue or in turnover within this area. If you come back to, if you go to April, you see that the forecast was then lower, but in June, the optimism still are increasing. And it is basically now assumed that 2019 will be somewhat like 20, or 2020 will be somewhat like 2019. It is basically due to the fact that the price of chips has increased while the volume comes down. It shows that there is somewhat lower supply and the demand is somewhat higher. But more or less, the market is supposed to be flat compared to 19 and 20. But still, there is a lot of uncertainty as from our side. We have, as you saw, a relatively strong Q2. And so far in Q3, it seems that the trend is approximately the same. We see that we don't report the volume, but particularly the gas asylum is strong, but the strongest part of it is what we call specialty gases. where we are in some of those qualities, we are not able to deliver as much as the demand out in the marketplace.

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