Ferroglobe PLC

Good morning ladies and gentlemen and welcome to FerroGlobe's first quarter 2023 earnings call. At this time all participants are in listen-only mode. Later we will conduct a question and answer session and instructions will be given at that time. As a reminder this conference call may be recorded. I would now like to turn the call over to Anis Baradawalla, FerroGlobe's Vice President of Investor Relations and Corporate Strategy. You may begin.

Thank you. Good morning, everyone, and thank you for joining Ferroglobe's first quarter 2023 conference call. Joining me today are Marco Levy, a chief executive officer, and Beatrice Garcia-Coss, a chief financial officer. Before we get started with some prepared remarks, I'm going to read a brief statement. Please turn to slide two at this time. Statements made by management during this conference call that are forward-looking are based on current expectations. Factors that could cause actual results to differ materially from these forward-looking statements can be found in Ferroglobe's most recent SEC filings and the exhibit to those filings, which are available on our webpage, ferroglobe.com. In addition, these discussions include references to EBITDA, adjusted EBITDA, adjusted gross debt, net debt, and adjusted diluted earnings per share, among other non-IFRS measures. Reconciliation of non-IFRS measures may be found in our most recent SEC filings. At this time, I would now like to turn the call over To Marco Levi, our Chief Executive Officer.

Thank you, Anish, and good morning or good afternoon, everyone. The first quarter has been very productive, and we have achieved significant milestones that demonstrate our commitment to deliver value to our shareholders. During the quarter, we continued to make progress in leveraging our balance sheet by paying down debt. We are focused on managing our operations and have successfully released working capital. On the operational front, we continue to start operations as we expand our capacity and are finalizing agreements to provide long-term renewable energy to our Spanish plants. Our company is at a pivotal moment in its history, ready to seize substantial growth opportunity as the largest western producer of silicon metal, a critical component of many industrial and consumer goods, and in particular, a key material supporting the green energy transition. The global trends toward renewable energy are driving strong growth in the solar and electric vehicle battery markets. The growth outside of China is being amplified by an increased focus toward onshore. These on-shoring trends are being enhanced by incentives such as the Inflation Reduction Act in U.S. and its equivalent in Europe, the Green Deal plan for net zero age, which are focused on local production and reducing reliance on China. As the Western market leading silicon metal producer, Ferroglobe is in a unique position to capitalize on these trends. providing an opportunity that will drive strong growth for years to come. As we review Q1 results, it is important to recognize the resilience and the adaptability of our business model. Our commitment to operational excellence, innovation, and cost efficiency has allowed us to maintain a positive and stable financial and operational performance during this challenging market environment. In Q1 2023, we have achieved an adjusted EBITDA of $45 million. Our free cash flow reached $117 million, underlining our ability to generate strong cash flow. At the close of the quarter, we maintain a robust cash position of $344 million, and net debt of $55 million. During this quarter, we made significant progress in strengthening our financial position by reducing our debt by $50 million. Given our strong cash flow and the excess of cash on our balance sheet, we are actively studying options to reduce our overall gross debt, optimize our capital structure, and will position the company to return value to shareholders. We will provide more detailed insights in the next few months. As you may recall, we previously made a commitment to release working capital. We have delivered on that commitment with a significant release of $131 million of working capital during the quarter, in addition to what we released in the fourth quarter. This is a direct result of the targeted actions that we have implemented, and we continue to focus on optimizing our working capital. Our positive adjusted EBITDA generation, combined with these improvements, positions us well to achieve our goal of turning net cash positive in the next couple of quarters. Now, I'm pleased to provide an update on the progress of our operations worldwide. In Europe, we have successfully resumed our French operations since April 1, 2023. These significant milestones will have a positive impact on our financial performance in the coming quarters, as we leverage our production capacity in France and capitalize on market opportunities with our best-in-class cost positions. We are in the final stages of finalizing long-term power purchase agreements in Spain, which will provide us with competitive energy prices. Securing these contracts is a critical step in our plan to restart and secure the long-term competitiveness of our Spanish facilities. I will provide further details on this in my upcoming corporate section. After restarting two furnaces at our Polokwane South African facility, we are ready to restart the third furnace. These three furnaces will provide 55,000 tons of additional capacity. This expansion demonstrates our ability to rapidly add capacity at very low capital intensity. It also significantly improves our geographic footprint by serving markets in Asia and in the Middle East and provides us with a considerable competitive advantage. As a testimony of these advantages and our reputation as a high-quality producer, we signed a new long-term contract to supply silicon metal to a leading Asian polysilicon producer. This further solidifies our position in the solar value chain and demonstrating our ability to forge strong partnership with key industry players. In line with our strategy of furthering our vertical integration, we recently signed an LOI to acquire a new quartz mine while also expanding our existing Cerabal quartz mine in Spain. Furthermore, Our board has approved additional growth topics to expand operations at Alden, our mining operation in Kentucky, to maintain our competitive advantage. These design-visive actions strengthen our leadership position in the silicon metal industry and enhance our global presence by managing complex vertical integration into quartz mining and strategic sourcing of essential raw materials. In the electric vehicle battery market, we see exceptional growth opportunity, driven by silicon metals' considerable advantages over graphite. The current are not standard. These benefits include an increase in battery capacity and enable significantly faster charging times, providing important improvements to EV technology. We are working with partners to innovate towards increasing the content of high-purity silicon metals in the anodes of batteries. While the current market environment presents short-term uncertainty, we are focused on things that we can control and drive long-term shareholder value. We are enthusiastic about the long-term prospects of our company and remain confident in our ability to navigate these challenges and deliver strong results for our valued investors. We are reiterating our 2023 adjusted EBITDA guidance, targeting a range of $270 million to $300 million. Next slide, please. Let's focus on silicon metal. Silicon metal revenue was $161 million in Q1, down from $184 million in Q4, a decline of 12%. Adjusted EBITDA for this segment was $31 million in Q1, down 65%, making $89 million in Q4. Our silicon metal business was down due to a challenging market environment impacting both price and volume. Volume declined 6.4% sequentially in Q1 to approximately 37,000 metric tons as a result of a shutdown in France due to our French energy agreement. We expect volumes to increase significantly in the second quarter, as we have secured long-term contracts with new customers in Asia and the Middle East, and are bringing our French operations back online. Our average realized price for silicon metal sales decreased by 6.5% compared to the previous quarter, driven by lower index pricing in the US and Europe. This price decline negatively impacted adjusted EBITDA by $17 million. Our total cost had a negative impact of $25 million to adjusted EBITDA versus the prior quarter. We continued to benefit from energy compensation agreements in France and CO2 compensation in the first quarter. However, compared to the previous quarter, we experienced less favorable impacts, negatively impacting our cost by $7 million compared to the prior quarter. Additionally, we incurred increasing idling cost of $17 million. The chemicals market are facing challenges driven by a weak microeconomic environment and oversupply in China with low-priced exports driving weak sales in silicone. As a result, our outlook is cautious. Next slide, please. Silicon-based alloys The revenue was $135 million in Q1, up 7% over the previous quarter. Adjusted EBITDA for Q1 was $22 million, down 41% from the previous quarter. Sales volumes increased 23% over the previous quarter, positively impacting adjusted EBITDA by $9 million. Average realized pricing was down 13% over the same period, and the result of low-cost exports from Brazil, China, Kazakhstan, and Azerbaijan, negatively impacting adjusted EBITDA by $18 million. Relative to the prior quarter, silicon alloys also received a lower benefit from the energy compensation agreements in France and CO2 compensation. This had a negative impact of $14 million, which was partially offset by favorable impacts due to year-end one-offs of $8 million, resulting in a net negative impact to cost of $6 million. Moving to slide seven, please. Turning now to manganese alloys. Manganese-based alloys revenue was $62 million in Q1, down 32% over the prior quarter. Adjusted EBITDA for Q1 was $2 million, down 90% from the prior quarter. Sales volumes were down over the prior quarter, negatively impacting adjusted EBITDA by $6 million, while average realized pricing was down 10% over the same period. This resulted in a negative impact to adjusted EBITDA of $3 million. The steel market continues to face challenges due to weak fundamentals in construction. While the current low spread between manganese alloy and ore is concerning, we expect demand to recover in the second quarter, which will help improve our margins. In Q1 2023, our costs were negatively impacted by $8 million due to various factors. In the fourth quarter, we recognized a gain from an adjustment to an earn-out provision that was not repeated in the first quarter. Costs were also negatively impacted by CO2 and the French energy compensation agreement relative to the four-year quarter. These were partially offset by improvements in raw material costs. I will now turn the call over to Beatriz, our CFO, to renew the financials.