Ferroglobe PLC

Good morning, ladies and gentlemen, and welcome to Ferroglobe's second quarter 2025 earnings call. At this time, all participants are in a 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 hand the call over to Alex Rotterner, Ferroglobe's Vice President of Investor Relations, You may begin.

Good morning, everyone, and thank you for joining FerroGlobe's second quarter 2025 conference call. Joining me today are Marco Levy, our chief executive officer, and Beatriz Garcia-Coss, 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 exhibits to those filings, which are available on our website at ferroglobe.com. In addition, this discussion includes references to EBITDA, adjusted EBITDA, adjusted gross debt, adjusted 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 files. Before I turn the call over to Marco Levy, our Chief Executive Officer, I want to announce that we'll be participating in the Seaport Virtual Conference on August 19th and 20th, and the IDEAS Midwest Conference in Chicago on August 27th. We hope to see you there. Marco.

Thank you, Alex. And thank you all for joining us today. We appreciate your continued interest in Fairblock. There is a rapidly evolving market environment, particularly on the trade front, resulting in elevated uncertainty and limited visibility around global trade policy and regulatory development. This was particularly evident as it relates to global tariffs, safeguards, and trade measures, both in Europe and in the U.S., adding complexity to an already challenging market environment. Despite these headwinds, we are pleased with the recent progress as evidenced by the newly agreed trade framework between the U.S. and the EU, signaling a shift toward greater clarity and cooperation. This development is expected to reduce disruptions and provide improved visibility across global markets. As these measures take effect, we are optimistic that the uncertainties will be resolved in the near term, creating a stronger and more stable market environment heading into 2026. Given the current uncertainty and limited visibility of market dynamics, trade measures, and tariff structures, we believe that it is prudent to withdraw our 2025 guidance at this time. We will revisit it once we have greater clarity on the schema. I now work through several key developments and uncertainties, many of which we believe will ultimately support a strong outlook for our industry. As discussed previously, the European Commission launched a safeguard investigation last December into silicon metal, silicon-based alloys, and manganese alloys, a significant and necessary step to address unfair trade practices. The preliminary decision, which was initially expected in May, has not been officially announced. At this time, we don't know what measures will be adopted or what the timing will be. As a result of delays, we believe that FerroGlobe will benefit from these measures in 2026. As chairman of AeroAliage, I am actively engaged with its industry participants, EU member states, and other stakeholders to advocate for a positive outcome to ensure necessary protections for our industry. Our products play an essential role in many key industries, such as aluminum, chemicals, steel, solar, microchips, and most critically, defense. With a final EU decision due by the end of November, we are optimistic that the strategic importance of our industry will result in a favorable outcome. The final implementation of safeguards requires approval from at least 15 of the 27 EU member states, and by states representing at least 65% of the population. Adding to the uncertainty are trade tensions involving the United States. While a preliminary trade deal was reached with the EU, many others remain undecided. One of the key US trade negotiations is with Canada, which is an important supplier of aluminum and steel to the United States. There is a lack of clarity regarding how and when these trade policies will be finalized, which affects our business and overall global trade. In addition, we are waiting for the outcome of the U.S. Silicon Metal trade case, which was filed in April with the preliminary countervailing duties decision expected in late September and anti-dumping decision expected two months later in late November. The countries investigated are Angola, Australia, Laos, Norway, and Thailand. One of the key developments this quarter was a notable decline in European silicon metal prices, which was driven by a substantial increase in imports from China. These aggressively low-priced imports have placed considerable pressure on the market, where EU27 producers' market share has dropped from 40% just a few years ago to approximately 15% today. This surge in imports is not only undermining local producers, but also destabilizing pricing across the region. As a result, silicon metal indexes in Europe have declined by approximately 20% in just the past month. This sharp drop has created a considerable market disruption, making visibility into future supply and pricing very difficult. While macro conditions remain challenging and unpredictable, we continue to focus on things that we can control and manage the business with discipline, maintaining operational efficiency and a strong focus on discretionary cost control. Our actions combined with our operational excellence enabled us to deliver positive adjusted EBITDA in the second quarter. At the same time, we remain committed to returning capital to shareholders. In the second quarter, we purchased 600,000 shares for $2 million and paid $2.6 million in dividends. Looking ahead to 2026, we see several positive developments on the horizon that are expected to significantly enhance our performance. First, we are beginning to see tangible benefits in the US market from the anti-dumping and countervailing duties imposed last year on ferro-silicon imports from Russia, Kazakhstan, Brazil, and Malaysia. Additionally, newly announced tariffs targeting major Asian ferro-silicon importers to the US, like Vietnam and Malaysia, plus India, will be imposed with minimum tariffs ranging from 20 to 40%, along with any applicable anti-dumping duties. But these ferro-silicon producers, by comparison, face 50% tariffs, plus both anti-dumping and countervailing duties. These tariffs should further improve the market dynamics in the U.S. In fact, during the second quarter, we recorded the highest volume of ferrocyticon sales in the past eight quarters, a clear indication of how the U.S. trade actions are supporting domestic producers. We expect this trend to continue in the coming quarters. Another reason for the positive outlook for 2026 is the expected benefit from EU safeguard measures, as previously mentioned. Besides these trade-related events, there are additional encouraging macro developments anticipated to benefit Ferroglobe. Production containments of silicon metal are taking place in China, Europe, and Brazil, indicating that the current price level is unsustainable. We are optimistic that these actions will help stabilize the market and reverse the recent price trend. Another important factor for the coming months is that NATO is committed to increasing defense-related spending substantially, which is expected to boost the steel and aluminum industries. Importantly, the NATO countries are in our key markets, Europe and North America. In addition, Germany has committed to investing more than $500 billion in its infrastructure. More specific to ferroglobes, our operational flexibility to optimize production enables us to better match the market needs. Recently, we switched two silicon metal furnaces to ferro-silicon, one in the U.S. and one in Europe, due to better economics. This allows us to increase ferro-acidic production by approximately 35,000-40,000 tons annually. To reiterate our strategic advantage, being a local company with a vertical supply chain integration positions us well to take advantage of any tariffs or trade restrictions in U.S. or Europe. Ferroglobe reached an important milestone on June 30th by joining the Russell 2000 and 3000 indexes. This increases our visibility among institutional investors and improves trading liquidity, delivering sustainable value to our shareholders. Next slide, please. As we anticipated on our last earning call, the second quarter showed substantial improvement in our performance. with a 27% increase in volumes and a 26% increase in revenue. Our adjusted EBITDA rebounded to a positive $22 million from a loss in the first quarter, while remaining net cash positive. Next slide, please. Moving to our segment update. I'll start with silicon metal on slide five. While shipments increased substantially over the first quarter, Q2 volumes were still impacted by weak demand and low price silicon metal imports from China into the EU. Overall volumes improved 23% over the previous quarter, mainly as a result of our contract structure due to the restart of our French operation at the beginning of April. The main driver of this predatory import was the collapse of the polycythical market in Asia, which continues into the third quarter. Polycythical prices have recovered from their lows, but remain well below earlier levels. Until the Asian polycythical market recovers further, or relevant safeguards become effective, silicon metal imports from China to the EU are likely to continue. The chemical sector weakness persists as aggressive siloxane imports have resulted in oversupply in the U.S. and Europe. Our increased focus on the aluminum segment is yielding positive results on volumes. The impact of Chinese imports was pronounced in Europe, with index prices declining 33 percent from 2,450 euros to 1,000 650 euros in the second quarter. At the same time, the U.S. index increased by 3%. Next slide, please. The silicon-based alloys market also showed a volume increase in the second quarter. We were at 24% jump in overall volumes. The main reason for the increase was the restart of our French operations, followed by improved demand in the U.S. which was held by the favorite trade decision against Russia, Kazakhstan, Malaysia, and Brazil. The second quarter was the strongest shipment quarter in three years with the U.N.U.S. improving volumes by 43 and 6% respectively over the first quarter. While shipments were up across our footprint, the pricing was a tale of two markets. In the U.S., the demand was driven by higher street production and ferro-sidicum trade decision, which bolstered the index price by 10% to $1.26 per pound. In contrast, the European prices declined by 8%, primarily due to weakness in the regional steel production. We expect EU market to begin improving in 2026 for both volumes and prices, as the safeguards decision becomes effective. Next slide, please. Our manganese segment was our strongest segment with volume increasing 31% over the first quarter. This was our highest shipment volume quarter in three years. Part of the improvement over Q1 was the restart of French operations and delayed shipments carried over from Q1. due to low manganese ore inventories. Manganese alloy index prices declined in the second quarter by 6 and 11 percent, respectively, for ferromanganese and silicon manganese. The outlook for manganese demand remains strong, and we expect robust performance from this segment in the coming quarters, further supported by potential savers. which could serve as a catalyst for accelerated growth. Now, I would like to turn the call over to Beatriz Garcia-Cost, our Chief Financial Officer, to review the financial results in more detail. Beatriz.