Ferroglobe PLC

Good morning, everyone, and thank you for joining Ferroglobe's first quarter 2024 earnings conference call. Joining me today are Marco Levy, our chief executive officer, and Beatriz Garcia-Cost, our 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 exhibits to those filings, which are available on our website at ferroglobe.com. In addition, this discussion includes reference 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. Before I turn the call over to Marco Levy, our Chief Executive Officer, excuse me, I want to announce that we'll be participating in B. Reilly's 24th Annual Investor Conference in Los Angeles on May 22nd and May 23rd. We hope to see you there. Marco.

Thank you, Alex, and good morning, good day, and good evening to everyone. Thanks for joining us on the call today. We appreciate your interest in Fairblood. Let me start from operations. On April 1st, we successfully restarted operations in France with all services running efficiently. In addition to France, we are currently running all three silicon metal furnaces in Savon, and an additional manganese furnace in Bo, due to competitive energy prices in Spain, resulting from strong renewable energy generation. As you recall, last October, we acquired a high quality quartz mine in South Carolina to secure reliable supply source, of course, to support our expected increased production of high quality silicon metal in the U.S. We are on track to begin mining in the third quarter. This was a strategic purchase that will provide a competitive advantage as demand begins to materialize. To further support our growth plans, We are in the process of applying for a permit to expand our silicon metal production in North America. The additional capacity will be a brownfield expansion requiring a significantly smaller investment versus a greenfield and faster to develop. This investment will allow us to meet the significant growth opportunity ahead of us in solar and EV batteries. Strategically, we continue to position the company to take advantage of big secular trends occurring in the market. Solar and batteries for electric vehicles are large markets that will drive strong growth for the foreseeable future. As the leading producer of high-quality silicon metal in the West, Ferroglobe is well-positioned to be a significant beneficiary In March, we announced the signing of an MOU with Corsair, a US-based advanced battery solution company focused on driving battery transformation in the electric vehicle market. This relationship will enable us to advance the industrial integration of battery anodes from graphite to silicone metal, producing various benefits, including lower cost, longer range, and faster charging time. For the past several months, we have been testing at our lab core shell nanocoating technology using silicone-rich anodes with very promising results. As a result of this early success, and to further solidify our commitment to this effort, we recently made a strategic investment in core shell. Improving the characteristics of battery performance in EVs is an important endeavor, and it will accelerate EV adoption, and we want to be at the forefront of this technological innovation. Turning to markets, The indexes across all our businesses are up from the lows, with demand trends beginning to diverge between Europe and the US. We are encouraged by the sustained increase in silicon metal prices, especially in North America. Some of the factors contributing to the recent price trend are the results of supply-related factors. We're also seeing signs of incremental improvement in U.S. demand, while demand in the European market remains stagnant. European price increases have lagged behind the U.S. market, which has seen an improvement in demand, especially . I'm also pleased to announce that on May 10, the U.S. International Trade Commission voted in our favor in the trade case against ferro-silicon imports from Russia, Kazakhstan, Malaysia and Brazil. The Commission preliminarily determined that these ferro-silicon imports are causing material injury to the U.S. industry. Here is some background on this trade action. On May 28, together with CC Metals and Alloys, we filed a petition with the U.S. Department of Commerce and the International Trade Commission, asking them to investigate unfairly traded imports of ferro-silicon from Russia, Kazakhstan, Malaysia, and Brazil. These imports are receiving significant subsidies from their government, resulting in predatory pricing practices, which have forced American ferro-silicon producers to idle some of their operations negatively impacting American domestic production and employment. The Commerce Department will continue its investigation to decide whether further action is needed. It is expected that the preliminary countervailing duty determination could take place in June and the undeniable determination in September. We expect a positive outcome. At the same time, we continue to work with both houses of Congress to pass the bipartisan bill increasing American Ferro-Silicon Production Act, which was introduced in September of last year. If passed, this bill would enact a 35% tariff on imports of Russian and Belarusian Ferro-Silicon. As mentioned in our previous call related to Q4, We redeemed the reminder of the senior secure notes in February and ended the quarter with a stronger financial position in the company's history. For the first time ever, FerroGlobe is net cash positive. Last quarter, we initiated our first dividend in the amount of 1.43 cents per share, which was paid on March 28. we are declaring our second quarterly dividend of 1.3 cents per share payable on June 27th. In an effort to continue developing our capital allocation policy, our Board of Directors has approved a share-by-back program, which will be included in the notice of the June Annual General Meeting. Once approved by the shareholders as required, we will begin to execute opportunistic buyback. The authorization request is to repurchase up to $200 million of shares over a five years period using both discretionary and non-discretionary methods. While we're still cautious about end market demand, we are adjusting our guidance to reflect a stronger pricing environment. Accordingly, We are rising the low end of our guidance from $100 to $130 million, while maintaining the high end at $170 million. Next slide, please. Let's start from Silicon Meta. Revenue in Q1 was $168 million, flat versus the fourth quarter. Adjusted EBITDA declined $6 million to $16 million, a 28% decline over the previous quarter. The decline in EBITDA was primarily driven by lower realized prices, which were down 6% in the quarter. Our average realized price for silicon metal increased by 2% in Europe and decreased 12% in the Americas compared to the previous quarter. During the first quarter, index prices increased approximately 17%. The difference between the index and the realized price was the result of the three-month lag on price realization for contracted volumes. We expect to benefit in the second quarter from the higher index price in Q1. Volume shifts were up 7% driven by Europe, which was up 30% from the fourth quarter. The silicon metal outlook is quite different in North America compared to Europe, where demand remains quite weak, with prices being impacted by incremental imports from China and easing supply tightness. The US markets continue to be firm with prices increasing into the second quarter. Asian demand for our products remains solid as we are shipping traceable high-quality silicon metal to the solar segments in China and Korea. Next slide, please. In our silicon-based alloy segment, Adjusted EBITDA for Q1 was $40 million, down from $35 million in the fourth quarter. This was mainly due to higher costs, driven primarily by lower energy compensation in France, relative to the pre-year quarter. Overall average ALS prices were down 5% versus the pre-year quarter, due to weakness in the Americas, which continued to deliver, I think, of imports from Russia, Kazakhstan, Malaysia, and Brazil. As was the case in silicon metals, the difference between the index and the realized price was the result of the two-month lag on price realization for contracted volumes. Again, the U.S. market is showing more strength with prices increasing, while industrial activity in Europe is more muted. In its latest April short-range outlook, the Workfield Association cuts its EU steel production forecast growth by half to 2.9%, with the Americas remaining essentially flat with their October forecast at 1.4%. We expect Europe to be more challenging, while the US market is expected to benefit from potential anti-dumping actions and stronger economic outlook. Next slide, please. Turning now to manganese-based alloys. Revenue increased 10% to $66 million in Q1, driven by increased prices and volumes, up 8.2% respectively over the prior quarter. Volumes in North America increased by 426%. However, these volumes are off a low base and therefore not meaningful. While prices in Europe are up 13% since year end, they have stagnated over the past three months due to weak steel production. The shutdown in late March of South 32's Gemco manganese ore mine in Australia has tied supply, resulting in a meaningful increase in ore prices. As a result, the manganese alloy indices have also increased. Given the weak steel production in Europe, European indices have not improved as much as the U.S. We anticipate that the demand will improve in the second half of this year. I would now like to turn the call over to Beatriz Garcia-Cost, our Chief Financial Officer. We'll review the financial results in a little bit.

Thank you, Marco.