Good day ladies and gentlemen, and welcome to the Ferroglobe’s First Quarter 2017 Earnings Investor Conference Call. At this time, all participants are in a listen-only-mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to introduce your host for today’s conference, Mr. Joe Ragan, Chief Financial Officer. Sir, you may begin.

Good morning. And thank you for joining the Ferroglobe first quarter of calendar year 2017 conference call. I’m going to read a brief statement and then hand the call over to Pedro Larrea. Statements made by management during this conference call that are forward-looking statements are based on current expectations. Risk 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 webpage, www.ferroglobe.com. In addition, this discussion includes EBITDA, adjusted EBITDA and adjusted diluted earnings per share, which are non-GAAP measures. Reconciliations of these non-GAAP measures may be found in our most recent SEC filings. Now, I will turn the call over to Pedro Larrea, our CEO.

Good morning, everyone. And thank you for joining us on the call today. Before we go into the details of the quarter, let me provide some context into the current environment and our strategy for 2017. So, in next slide, we can see that Ferroglobe experienced an improved start to the year with the significant increase in both our EBITDA and margin performance. Our EBITDA is up 257% quarter-over-quarter, and our EBITDA margin improved by approximately 500 basis points at 6.8% for the first quarter of 2017 compared to 1.9% for the fourth quarter of 2016. We maintained our financial discipline that has allowed us to keep strong balance sheet through the downturn and has enabled us to continue reducing working capital in the beginning of the recovery. We have always been and continue to be confident in the actions we have been taking during the market downturn in the past few quarters. We moved aggressively to manage our cost structure and actively identified markets and products that were experiencing an improved supply demand environment. This combined with our strong diversified portfolio enabled us to capture the benefits of improving trends. We implemented a commercial strategy aimed at enhancing our profitability, which included changes to our contract structures, the removal of all discounts for silicon metal and delivering contracts above index. This strategy has been performing well for us and has allowed for the weighted average of our realized price to be up 12% compared to the fourth quarter of 2016. Manganese alloy prices improved by 46% and spreads improved 25%. Similarly, the average selling price for silicon-based alloys increased 10%. Average selling price for silicon metal remained largely flat from the fourth quarter. I will be analyzing the details of this price evolution product by product in a few…

Thank you, Pedro. Now on the slide 15, sales volume was 214,839 metric tons for the first quarter, down 10% from the fourth quarter. And net sales were $388.2 million, flat from $386.8 million in the first quarter. Average selling price across all products was $0.74 per pound, up an average from $0.66 per pound in the fourth quarter. We posted a net loss of $8.1 million or a loss of $0.04 per share on a fully diluted basis. We reported EBITDA of $26.6 million for the first quarter; this represents 257% increase compared to adjusted EBITDA of $7.5 million in the fourth quarter of 2016. It’s again important to note that there were no adjustments to EBITDA this quarter. However, if the non-core energy division were included, our adjusted EBITDA would have been $30.9 million for Q1. During the quarter, we adhered to our strategy of realizing prices above the index, which coupled with synergy attainment and cost savings resulted in a 6.8% EBITDA margin compared to 1.9% for the fourth quarter of 2016. Working capital was $350.5 million and free cash flow was negative $11.2 million; this included the one time severance payment of $24 million. Excluding this payment, we would have generated over $12 million of free cash flow during the quarter. Slide 16? We ended the first quarter with net debt of $407 million, relatively flat compared to $405 million in the fourth quarter of 2016. This was also impacted by the severance payment I mentioned a moment ago. Slide 17? On this slide, you see our debt evolution over time. On a quarterly basis, our growth to net debt is relatively flat from the prior quarter and currently stands at $407 million net and $600 gross for the first quarter of 2017. We remain committed to reducing our nominal debt balance as well as improving our leverage on a go forward basis. Slide 18? As Pedro mentioned, we’ve reduced our working capital by more than $200 million, since our merger. We remain committed to ensuring strict control on our operations, and this financial discipline has allowed us to continue improving working capital in the beginning of this recovery period. As you can see, we ended the first quarter with working capital of $350.5 million. Slide 19? Our liquidity remains strong and has improved since the trough of Q3 2016. We expect liquidity to continue to improve going forward. Now, I’ll turn the call back to Pedro for some closing remarks.

Thanks, Joe. In closing, Ferroglobe is capitalizing on its strong market position as we progress along our growth trajectory. Having taken decisive actions since becoming a combined company to aggressively mange our cost structure and actively identify markets and products that were experiencing an improved supply demand environment, we’re now in a solid position to benefit from our diversified portfolio and take advantage of the improving market trends. We’re still in a recovery period from the bottom of the cycle but are confident that we’ve passed the inflection point and are optimistic about the remainder of 2017 and beyond. With that, I’d like to open the call up for questions.

[Operator Instructions] Our first question comes from the line of Ian Zaffino with Oppenheimer. Your line is open.

Hi, great. Thank you very much. You guys mentioned portfolio optimization I think in one of your comments. Is that related to non-core or is that also related to core assets? I think the comment was as it relates to cost savings or margin improvement.

Yes. Ian, good morning. When we referred to portfolio optimization, I would say, in our language it refers more to our ability to move production from one plant to another to optimize cost and logistics and working capital. It does not generally refer when we use that language to asset transactions of any kind. So, it really refers to the ability to improve our cost position through moving production to the most optimal plant.

Okay, great. And clearly, pricing is going up, I think you guys have 13% since the beginning of the year. Can you remind us how long it’s going to take maybe flow through the numbers? I know you have some fixed contracts and quarterly contracts. Just kind of give us an idea of -- price is up 13%, how does that flow through throughout the year?

Well, we are already experiencing, in Q2 price increases, and you’re referring of course to silicon metal. We are seeing price increases in Q2 already. And the contracts we are closing for Q2, Q3 and Q4 are even high or above. So, we are now seeing index in North America that is close to $1.10 and we are closing contracts, at least at those levels and some of them higher than that.

So, if you are locking in contracts throughout the year and you look at maybe call it a forward curve, if there really isn’t one, but if you kind of look at your forward curve, is that forward curve flat, so you’re pricing fourth quarter with the way you priced second quarter, is there an upward slope to that? How do you think about that, you negotiate?

There is an upward slope and we are clearly holding to that conviction. So, as we progress through the year, we are demanding higher prices and we are generally getting higher prices little by little. So, if you look at the market price, indexes, whatever you want to call it, silicon metal has not seen such a spectacular move as other, like manganese alloys or even ferrosilicon. But, it continues to move upwards. So, it is a sustained -- in our view, it is a sustained trend upwards.

Okay. And then, just one final question, I’ll let someone else hop on. Joe, maybe this is a question for you. If you look at kind of where prices were for silicon metal before the merger actually closed and you look at the optimization you’ve done, I think there’s a $600 million EBITDA number out there. Is that sill achievable, if you return to those pricing? Is it actually higher just given all the optimization you’ve done? Maybe just comment on that.

Sure, Ian. The $600 million EBITDA number was based on an approximately $1.45 per pound silicon metal price. So, I think that is still possible, just based on what the average sales prices are. However, the $85 million of synergies is real and it’s really reading through. So, I would say the $600 million is actually higher on that same basis. Of course, that is silicon metal, and as you saw today, we’ve really been presenting the business differently, highlighting the manganese alloy business as well as ferrosilicon, which are both performing very well also.

Okay, great. Thank you very much. Good quarter and look forward to more of them to come.

Thank you.

Thank you. Our next question comes from the line of Vincent Anderson with Stifel. Your line is open.

Hi, good morning, good afternoon. So, if I’m interpreting the annual filings correctly, it looks like you’re moving forward with the development of your UMG technology. But, the ownership structure is a bit confusing, so I was hoping you could break it down for us as to just what is the bottom line economic interest attributable to GSM shareholders, what is the economic interest held directly by Mr. Madrid? And then, just give us the sense of the timing of the capital spending around that project?

Well, we are now in the -- how I would say, in the stage of -- as I have explained before, on the drawing board. So, we do have now a design for the factory to produce UMG, as you mentioned. And we know we have the process in place; we know we are able to produce the product that is required by the market and that that product performs comparable to any other polysilicon or any other solar silicon in the market. So, all of that is done, and we are really only waiting for us to have the necessary resources and the leverage to be able to make the necessary investment in the project. And we in terms of the shareholder -- and total investment for that project would be around $118 million. We have already got a soft loan with very favorable conditions from the Spanish government for a total of €72 million to finance that project. And it is done in a joint venture in which Ferroglobe has 75% and we are partnering with an engineering firm with long expertise in the solar world, in which Mr. Madrid [ph] happens to have a participation that it is disclosed I think it’s 33%, but I’m not entirely sure.

Great, thank you. And so, just kind of in the context of the firm’s history of buying versus building, how should we interpret the decisions to allocate this capital, especially with the recovery in silicon metal sort of taking little bit longer than in the past? And then, just as an aside, did this investment require and receive unanimous approval from the Board?

I think to the last question, the fact is the investment itself, so the CapEx itself has not yet been approved by the Board. So, again, what was unanimously approved by the Board is creating the joint venture and going ahead with the project itself, breaking ground and starting building something that is not specifically and formally being approved by the Board. So that would require additional approvals going forward. The fact is we have been doing a lot of R&D work and a lot of R&D investments in the past 10 years and we’re at a point in which, as I was describing, we know we have the product, we know we have the process, we know the product works. I mean, it’s the only thing that is left. And we have simulated in many ways that it is competitive from a cost point of view, from an energy consumption point of view. The only thing that is left is to test it and to see that it works industrially as we think it does. So, it’s really just a natural evolution of something that has been on for many years.

Thanks. That’s very, very helpful. If I could ask just one more, going back to silicon metal. How do you see the European discount relative to North American prices developing kind of over the balance of this year versus its historical spread? And then, if you get the anti-dumping duties in North America, have you begun to think about your commercialization strategy in Europe, and assuming that the likes of Brazil, Norway, Australia, maybe look into the European market to make up those volumes?

The first is that in terms of the spreads between Europe and North America, those have moved -- I would say they haven’t moved all that much because again prices in both sides of the Atlantic have been moving very gradually. So, I don’t think we can say there is anything out of the norm or out of normal in terms of the spreads between the two sides of the Atlantic. And with regard to what would happen with -- in case North America does establish antidumping duties and whether of volumes from those countries would divert to Europe, we will see when it gets there. Our view is that some of those countries and specifically Brazil are becoming increasingly non-competitive anyhow in the world market for silicon metal. So, we’re confident that they shouldn’t be having a dramatic impact on the market in Europe.

Thank you. Our next question comes from the line of Michael Gambardella with JPMorgan. Your line is open.

Just a question, when you exited the first calendar quarter, how much of your total business was booked in terms of a fixed price for the rest of the year?

Well, as I -- again, as I was describing in other instances, I would say that if you look at manganese alloys and silicon-based alloys, most of the contracts we have there are in one way or another linked to the movements of market price. So, either because they are quarterly contracts or because they are directly indexed, I would say that you would expect our selling price of those products to move in line with where the market moves. And again, you can see that they are generally above the index but they move pretty much in line with certain time lag. In terms of silicon metal, as we move from Q1 onto the rest of the year right now, somewhere around two-thirds of our total contracts are again in one way or another fixed price and the rest is index.

[Technical difficulty]

I’m having hard time hearing you, Mike.

Did you say two-thirds, it’s fixed price or two-thirds fixed price and linked to a contract at close?

No, no. I would say that right now as we speak for the rest of the year around two-thirds is a fixed price. And of course it is fixed price that in some cases our Q3 and Q4 prices and those prices are of course above current market prices and others are for Q2 which are more in line with current market prices and then we have around one-third that is in one way or another indexed.

And then, last question. You mentioned in the U.S. that your cost went down in the quarter. I was wondering how you did that with a major customer being strained [technical difficulty].

Well, there’s been an improvement. Despite the decrease in volume, we were able to better allocate our production to specific furnaces. So, we have furnaces running in Q1 at more full capacity than in Q4 and that allowed for just better cost. And then, in some of the plans, particularly in Becancour in Canada, there were just improvements also in terms of technical performance, energy efficiency and so that delivered improved costs. So, one of them is just I would say dilution of fixed cost because of a better allocation of production and the other is just better technical performance.

Our next question comes from the line of Martin Englert with Jefferies. Your line is open.

Hi, good morning. Based on what you’re seeing through the course of 2Q thus far, what are you kind of expecting for the ASP delta quarter on quarter for the metal sales and gross margins?

That’s a great question. It sounds like guidance.

It’s helpful.

We’re seeing improvements. I would say that the way I would put it is that -- let me put it this way. I think when you look at manganese alloys and silicon alloys in terms of prices or margins, we think they should remain where they are where they have been up to now. But we are seeing very significant volume improvement. So, on those two families of products, I think the good news in Q2 could come from volumes. In silicon metal, I have been describing the fact that prices are going up and we are very confident that they will continue to do so. And also, I described that there was a one-off volume reduction that is over. So that I think also portrays a good outlook for silicon metal.

Do you think your silicon metal ASPs will improve quarter-on-quarter?

Yes, it will.

Okay. And then, just looking at -- what are you seeing as far as import participation from Brazil into the U.S. and European markets and how has that changed over the past couple of weeks and months here?

Well, Brazil and the U.S., we still need to see whether there is a trend or there isn’t. So, I wouldn’t dare to give -- to draw conclusions. Because there have been some months in which volumes have gone up, some other months that have been weaker. So, I wouldn’t risk to make a -- how would I say -- to take a view in terms of a trend from limited data. We do know that Brazil power prices have gone up and that the exchange rate when compared to one year ago has also gone against them. But, I wouldn’t draw a lot of conclusions about their activity in the market so far.

Okay. Lastly, if you could just touch on the dividend plans going forward?

Well, right now in Q1, we are restricted to the payment of dividends because of our debt arrangements. So, we have not announced the dividend payment this quarter. And going forward, no decision has been made so far.

Thank you. [Operator Instructions] Our next question comes from the line of [indiscernible] with B. Riley. Your line is open.

So, you did mention changes to the contracting structure. Are you looking to go with more short-term contracts during 2017? Can you maybe talk a little bit about that?

Yes. Thank you. I think that is really what we started doing in the second half of last year again in certain products and specifically silicon metal because we were seeing the price trend; we biased ourselves more to shorter term contracts, to quarterly contracts in the confidence that prices -- we would be able to extract better prices with shorter term negotiation. And that has been confirmed with reality. And yes, we are now generally closing more contracts on a quarterly basis in the silicon metal area. Is that a long-term strategy? I think we are -- we have demonstrated to be flexible and very active in the way we manage our marketing strategy. And going forward, we will take a view at each time as of what is more optimal. So, it is not a how would I say a definitive policy, it will depend on how we see the market move.

That’s helpful. Thanks for that. You also mentioned you converted a furnace in Spain from silicon to ferrosilicon during that quarter. And as I understand, it’s pretty difficult to switch back from ferrosilicon to silicon. Can you may be talk a little bit about the strategy as to doing that and perhaps what that quantity was?

Yes. This is one furnace and the only silicon metal production plant in Spain, which is Sabón. Sabón has three furnaces that are in round numbers around 20 megawatts per furnace. So, these are the furnaces that on a yearly basis should be producing somewhere around 13,000 tons of silicon and it can produce 20,000 tons of ferrosilicon. The rational has really been looking at what was the environment of ferrosilicon being really tight in Europe with prices going up very significantly and with -- even with difficulties to serve our customers. So, we thought it just was a great idea to increase production in a market that was proving to be very profitable. And we also looked at our market for silicon metal and we were able to allocate our entire demand in the rest of our plants, increasing production and increasing running hours. So, it was really -- at the end of the day, it’s just been way of running all our ferrosilicon and silicon metal furnaces in Europe at a 100% of capacity and optimizing in which furnaces we produce each product. Turning back from ferrosilicon to silicon metal is not difficult at all. That is something we’ve done before; it just takes more time than the opposite. So, it means that whilst turning a silicon metal furnace into ferrosilicon is a question of a few days, turning the opposite direction is more of couple of weeks or more to get a ferrosilicon furnace back to producing silicon metal and that of course is because of the iron contamination in the furnace itself.

Got it. And do you think there is any different with regards to just kind of the cost structure of operating the furnace or do you think it’s fairly similar?

The cost structure of course of ferrosilicon is different than the cost structure of silicon consumes, let’s say just to use the conventional wisdom, 12,000 kilowatt hours per ton of power; and ferrosilicon produces -- sorry, consumes some were around 8,500. So, the cost structure is different. But I would say that turning the question in another way is that the silicon metal furnish that is now producing ferrosilicon -- it’s ferrosilicon as competitively as a “normal ferrosilicon furnace”, it is.

Thank you. And we have a follow-up from the line of Martin Englert with Jefferies. Your line is open.

Do you have any early expectation on when you may complete the hydro sale?

Well, as we have described, now we have gone through all the process. So, during Q1, we were able to add a lot of momentum and consensus around support to our project from unions and other stakeholders in the region. So that was good. And we felt with that support it was the time to proceed with the administrative process and we filed all the formal requests -- what was that, a week ago -- two weeks ago now. And we’re now just waiting for the governmental authorities to come up with a response. They have said it should take weeks. Now, what weeks mean is to interpret but I would say that there is no reason why it should take more than a few weeks unless they come back with the requirements of additional information. Again, our view is it should take a few weeks rather than -- more than that.

Okay. And same net proceeds as you anticipated before, correct?

Yes.

Thank you. And I’m showing no further questions at this time, I’d like to turn the call back to Mr. Larrea for closing remarks.

Thank you.