REC Silicon ASA

Good morning and welcome to the REC Silicon first quarter 2025 presentation. I'm Curt Levins, CEO of REC Silicon. Today, we're going to talk about some highlights and updates, both from Q1 and then subsequent events. Our normal financial review We'll touch on strategic direction issues based upon activities as we described during the last quarterly presentation, as well as a trade policy update given all of the activity that has been over the past two months, and then provide with a summary. So our major restructuring activities have been accomplished and ongoing are a number of other restructuring activities. This will be a process that we will be continuing throughout the remainder of the year. We had an EBITDA loss of 4.6 million from continuing operations. Hanwha and its affiliates LAUNCHED A VOLUNTARY SHARE PURCHASE OFFER. WE ARE STILL WORKING ON THE FURTHER FINANCING OPTIONS FOR RESTRUCTURING, AND WE HAVE A LITTLE MORE DISCUSSION ABOUT THOSE ON A COUPLE SLIDES. LET'S SAY THAT RIGHT NOW IT IS A VERY CHALLENGING ENVIRONMENT FOR SALES REVENUES, A RESULT OF A NUMBER OF ISSUES COMING TOGETHER. trade actions, both new and existing, channel inventories in some segments that are a little bit weaker or where there's imbalances between the demand in the regions, and market softness with regards to the pull on the demand end all continue to impact our sales revenues and therefore our cash flow. So even though North America and Korea were our largest regions in this past quarter, they definitely remain weaker than previous high run rates due to specific semi-segments and channel inventory for some high margin gases and OLED producers. Still, Southeast Asia And China shipments remain limited. And if some of you recall, China shipments for us, for Silane, was something that we were able to take advantage of, given our brand and quality, when we had capacity that was available in terms of our module fleet. That is much more limited now as a result of trade actions, and we can talk about that later. There was a slight increase in total sales volume, as you know. However, mix effect was not as favorable. Our SG&A is coming down. However, we are going to continue to reduce and optimize what we can. so that as we exit the year, we should be at a, our target is to be at an even lower number than what we run now, plus minus. Again, the primary challenge with our butte operations are sales related. Our revenue and EBITDA were affected. by product mix driven by a 12% decrease in our higher margin gases versus Q4 shipments. In terms of tariff mitigation, we have significant portion of our key input materials fixed already. And in fact, some were already on hand. before the tariff, the latest tariff rounds had started. What that means is that we feel for direct input materials that we should be less exposed this year. However, there is still some unknown on indirect impacts due to our supplier's and various equipment and other materials as well are still unknown at this point. But we think that the effects will not be as great as they would have been had it been affecting our raw materials more. I want to note that we expect that our capex peaked in Q1 as we finished out projects. And the remainder of that is due to maintenance capital and projects that we're finishing up in our butte operations. Our interest paid will represent an ongoing challenge until we have fully bottomed on restructuring costs and our butte revenue profile gets back on track. We will need additional financing during this period. As previously announced, we received a $40 million loan from Hanwha International in the quarter. The current effort is to extend the standard charter $50 million loan that matures in June for another year. We are currently exploring the sale of property adjacent to our facilities as well in order to help with our long-term financing efforts. Q1 revealed a number of project delays in all of our targeted markets, particularly in April and in the United States as well. In some cases, we're tracking delays of at least a year. The reshoring play is an important part of our strategy. We will continue to monitor and meet with stakeholders and be flexible and reactive and in some cases anticipate as needed. Reasons cited for these delays include construction, TECHNOLOGY CHALLENGES OR CHANGE IN TECHNOLOGY, POLICY UNCERTAINTY AND TRADE ACTIONS. THE ADJUSTMENTS WE HAVE MADE AND ARE MAKING ARE MUCH MORE ASTEER THAN THE 2019 TIME PERIOD AND HAVE CUT ACROSS MANY MORE FUNCTIONS WITHIN THE COMPANY. WE ARE VERY FOCUSED ON OUR PUTTING THE COMPANY IN A POSITION where we can be sustainable. We have provided some targets and we will endeavor to improve and refine as much as possible on the Moses Lake target and SGA target. So we exit the year closer to a terminal run rate while in this mode. For revenues, we are targeting 580 metric tons of gas sales. Given recent events and associated uncertainty, we do not want to guide beyond the quarter. However, discussions and public statements from various companies indicate that a better second half may be possible, pending resolution of the current trade and market overhangs. On this slide, there's excerpts from the release. We encourage everyone to please read the release. This is a very thorough and detailed document in order to get information regarding the voluntary cash offered. I want to note that it is a structured process that follows regulatory steps and guidelines and our function IS TO MAKE SURE THAT WE ARE THERE TO SUPPORT THE BOARD AND ANY OTHER ENTITY IN TERMS FROM A LOGISTIC STANDPOINT OF PROVIDING THE INFORMATION THAT'S REQUIRED. YES, TARIFS HAVE AFFECTED US. both the existing tariffs as well as the new Liberation Day tariffs. They did result in some order cancellations and pushouts. However, we've been working on mitigating those. Fortunately, they're not affecting us in our top two largest siloing-consuming countries. However, China, as I had indicated, is very limited at this time. Right now, the biggest impact seems to be a lack of clarity from our customers and end users standpoint with potential for further slowing of some projects and decision-making and hopefully some acceleration of other projects. So in summary, We'll continue to move quickly and aggressively to get us to a steady state on Moses Lake and support costs for our current envisioned operating mode. We are strengthening our sales efforts to anticipate and move quickly in this market in order to defend share where necessary and increase it in our targeted areas. Our strategy remains the right one, and the opportunity is still visible. However, the time span uncertainty and ongoing funding need make for a more difficult and risky approach. We are still working on available avenues to finance, and we will continue to do that. And as we have more information, we will RELEASE IT. THANK YOU. AND WE'LL TAKE SOME QUESTIONS.

OKAY. GETTING INTO THE QUESTIONS SUBMITTED, CAN YOU GET INTO MORE DETAIL ON THE SALING SALES TO THE SILICON ANODE MARKET IN THE PRESENTATION? IT STATED THAT THERE HAVE BEEN DELAYS, BUT IT also makes it sound like the second half of the year, there will be some increased sales.

Yeah, I mean, right now, from Silicon Anode manufacturers, it's across the board. It goes from those that are projecting delays, those that now we know are being delayed because we should have been supplying them by now to those that have also recently a smaller one who closed down their facility here in Moses Lake. So it's kind of a mixture. And we are hopeful based upon discussions that we will start supplying in the second half of the year.