Good day, ladies and gentlemen, and welcome to the Ferroglobe’s Fourth 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 be given at that time. [Operator Instructions] As a reminder, this conference call maybe recorded. I would now like to turn the conference to the CFO, Joe Ragan. You may begin.

Good morning and thank you for joining the Ferroglobe fourth 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-IFRS measures. Reconciliations of these non-IFRS 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. 2017 was an exceptional turnaround year for Ferroglobe and we are thrilled that the business has performed according to our expectations through Q4. Ferroglobe is strongest it has ever been both operationally and financially. The road to this point has not been an easy one because of the market conditions we encountered after the Company was formed, but our disciplined approach has paid off. The Company returned to profitability and to a sound financial situation through a strong and consistent execution of a world throughout sort out actual plan. From our solid and diversified platform, the acceleration of our cash flow generation will take us from the recovery phase in 2017 to further growth in 2018. Now let’s move forward and go into more details. Next slide please. Q4 performed as expected, finishing a consistent performance all along 2017. With results that continue to improve and confirm the recovery from 2016. We posted a quarterly net profit on an adjusted basis and delivered a significant increase in earnings for Q4. In Q4, we delivered a 3.7 increase in revenues versus Q3, 2.1% decrease in adjusted EBITDA versus Q3. Net profit of $32.1 million with an adjusted net profit of $11.1 million compared to $9.2 million for Q3. Volume recovery coupled with increases in average selling prices across most core products and short performance for Q4 was as expected. EBITDA margin was slightly lower by 70 basis points at 11.7% for the fourth quarter compared to 12.4% for the third quarter of 2017, due to some seasonal and one-off cost increases. We believe that this recovery trend is a result of well sort out approach to respond to the market dynamics by on the one hand and strength…

Thank you, Pedro. Turning to next slide, the Slide 16, it is important to note that the financial results presented are unaudited and maybe adjusted for certain items including contemplated non-core asset sales. These items will be properly reflected in the 20-F, Annual Report that we will be filing in April. With that said, sales volumes was 226,558 metric tons for the fourth quarter, up 1.2% from the third quarter and net sales were $458.2 million, a 3.7% increase compared to the third quarter. Average selling price across all products was $0.85 per pound up on average from $0.82 per pound in the third quarter or 3.7%. For Q4, we posted a net profit of $32.1 million or $0.19 per share on a fully diluted basis. On an adjusted basis our net profit was $11 million or $0.06 per share on a fully diluted basis. For the year, volume was 883,024 metric tons, down 2.9% from 2016 and net sales were 1.7 billion versus 1.6 billion, up 10.5% year-over-year. Additionally for 2017, we posted the net profit of $20 million or $0.15 per share on a fully diluted basis. On an adjusted basis, our net profit was 21.5 million or $0.13 per share on a fully diluted basis. We reported EBITDA of $48.9 million for the fourth quarter down from $54.3 million in the prior quarter. On an adjusted basis, EBITDA was $54.9 million down slightly at 2.1% from the third quarter of 2017. For 2017, we reported EBITDA of $170.9 million up from a negative EBITDA of $247.4 million in 2016. On an adjusted basis, EBITDA was $185.8 million an increase of 163.9% compared to $70.4 million adjusted EBITDA in the prior year. During the quarter, we continued to adhere to our strategy of optimizing our product mix offset…

Thank you, Joe. Over the past few quarters, we have been receiving a lot of questions around pricing given the recovery; however, it is equally important to highlight the supported trends across our end markets. Fundamentally, in aluminum and steel, we are seeing similar trends which support the pull-through demand we are currently experiencing. When we look at the capacity side of the equation in these end markets, both industry are operating at healthy utilization rates in the 70% to 80% rate in line with historical averages. This discipline in the market generally results in a favorable pricing environment for a period of time. The Chinese crackdown on financial non-competitive and environmentally non-compliance aluminum and steel capacity across industrial space has also benefited investment product in other regions, and we expect this trend to continue. Our steel and aluminum customers are well positioned to benefit from changes in regulation. Another interesting data point in our view is inventory levels trend for the aluminum and steel in sectors. Global aluminum stocks are near nine year low while global steel stocks are near five year low, with a relatively strong global economic backdrop and rationalize production we expect that there will be a continued pull through of demand as producers and the signatures look to build up stocks back to historical levels. On chemicals and silicon, we are seeing strong North American market. In Europe, we expect the chemical sector to slightly outpace GDP which the World Bank forecast at 2.1% growth in 2018. Lastly, turning to polysilicon and despite the going new trade barriers imposed by both China and the U.S., the fundamentals remain strong on a global basis. The overall photovoltaic installations projected for 2018 is over 100 gig watts. We are seeing a pickup in activity in emerging markets…

[Operator Instructions] Our first question comes from the line of Martin Englert of Jefferies.

So you've detailed about 5.4 million of one-off cost but also called out some other costs incremental to that such as electricity and ore. What do you think the total one-off costs were for the quarter including those items too?

Just the total of those items is around 10 million but consider that in Q1 some of that will remain, so like manganese ore prices are still high and seasonally energy prices in Q1 in Europe are also high. So when you think of Q1 compared to Q4, those may remain at those levels. So, all in all if you compare Q4 to Q3, you can talk about one-off’s that are -- for those two items at around 10 million, but that doesn’t mean those necessarily all of them go away in Q1. Certainly, the 5.4 one-offs do go in Q1, thus not all of them necessary.

And when I think about the full year moving though 2018 and any kind of sustained cost step ups, can you provide some detail on any anticipated step ups versus 2017 for items like electricity. electrode, coal and FX?

Well. I think we have talked a lot of electrodes. I think electrodes when and comparing to 2018 to 2017 is going to be several 10s of millions of dollars comparing 2018 to 2017. Then electricity prices because in Europe they are seasonal and volatile. We still don’t know but there is going to be some impact of power prices in Europe, which could more or less replicate what we have had in Q4 at the end of this year. But again, it depends a lot on a number of factors affecting European power markets. So that is a volatile number. And in terms of ore, we see ore -- manganese ore I mean manganese ore levels are going to stay at pretty much we believe where they are today. But we also are very confident that this is going to push manganese alloys prices up. So in terms of margin we expect a recovery of margins as we go through 2018.

And if looking at the Company’s footprint now, if you were to mark-to-market annual EBITDA run rate on today’s spot prices, looking at U.S. silicon rate about €44 per pound, 122 ferrosilicon is pretty high at around $0.80 to over $0.90 per pound. Any idea of the range of EBITDA on a mark-to-market each generate with the current footprint in assets?

So, Martin, I think you can run those numbers and as you know we don’t provide guidance. We are very confident we are optimistic about the trend of the business in Q1. We know what is going on into the markets as we were saying demand is strong. There is rationalization in our end markets. We see just a way of good trends both in terms of volumes and prices in our materials in our markets. And we remain very confident that the trend is very, very positive for Q1 and going forward.

Our next question comes from the line of Ian Zaffino of Oppenheimer.

Joe, I think you mentioned a lot of M&A maybe with use of cash. Where does maybe buybacks or maybe a resumption of the dividend fit in you are thinking?

We certainly -- that the board is considering all of the capital allocation alternatives. We haven't done really a significant cash usage from M&A. So we've done very smart M&A transactions that have been very low in cash levels. So, the board is considering the dividend policy and we'll let us know.

And then when you think about buybacks maybe give us a comment on that? And then as far as M&A, what do you looking to achieve through M&A? Is it different alloys? Is it -- what do you want to kind of do on the M&A front?

I'll take that buyback question and Pedro can take the M&A. We are looking at buybacks and the total context of capital allocation. So, as we talk about dividends which we like dividends, we've been a dividend payer in the past and we've done stock buybacks in the past as well. So we are looking at all of those options. So we'll let you know as soon as the decision. I'll Pedro do the M&A.

Yes, I think we've been very-very clear in the past we are a company that has traditionally grown through acquisitions. We will continue to do that. We are actively pursuing opportunities all the time. We have -- we're looking at different alternatives I would say on a daily basis. We are in principle restricting ourselves to the industries in which we are already. We are not looking at diversifying into other industries so that is our focus. But we think our industries, we are looking at geographical expansion and also in some cases we may be contemplating vertical integration.

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

Just a quick point of clarification. Did I hear correctly that you audited year-end results, you may see some assets move to health for sales status and if which assets with those potentially be?

Yes, we are looking at some of our small non-core assets. They are just not -- they're not manufacturing facilities. So it's a small number. I -- we haven't disclosed that those transactions. So I just want let you know that we could move some, but it won't be a very big number.

And then when you look at your 2018 European silicon metal book, how much of your 2018 capacity right now is available through the U.S. market, if economics warranted? And on kind of a go forward basis, how much of your European silicon metal capacity would you consider to be dedicated to that market due to ongoing customer relationships or minimum market share that you want to maintain? And how much could conceivably be redirected elsewhere?

Well, I mean we are off-course now expecting very shortly in the coming first phase and then we are final determination on rate cases in North America. And a lot of what are the original movements may depend on that. So I would prefer not to give our views today and so we know all the plan of determinations. So at the end of the day, we see strong demand across our businesses and specifically on silicon metal. I think there is going to be good news in terms of the pull through of strong demand in our end market. And we have visibility which nobody else in our industry has of allocating our production capacity depending on where are the best opportunities. We will do that and we will be running at full capacity. Now, where those terms go we will see as the market and the rate cases are prioritized.

And if I could ask one more given maybe a little bit more detail on M&A, would you consider an acquisition in the UMG or polysilicon arena, if the technology was competitive with what you are developing in house? And then switching gears, you mentioned at your Investor Day that China remains a strategic area of interest for acquisition. Are you currently seeing opportunities to develop there as a result of this particularly disrupting winter in terms of assets available for sale? Or is there still too much uncertainty around the precise implementation environmental controls to be active in China right now?

Well, that's a lot of questions so I'll try to -- I mean, we. At time, we'll say we are looking into different opportunities both of expansion geographically in our own businesses on vertical integration. Would we look at polysilicon production? It’s certainly one of our priorities but it is true that we are developing our own polysilicon technology in our polysilicon production. So very soon that will be part of our business. And of course we will need to be attentive to opportunities in that arena. It’s certainly not the priority for us but it is something that we would be ready to analyze. In terms of China I think the what is very interesting going forward in China is whether there is a rationalization of the industry as a whole, as its happening in other industries, we believe that will happen and we are analyzing the dynamics there. Right now we are looking at nothing specific in China. But we remain again just very attentive on what are dynamics and how that is evolving in the coming years. And if the time is right we may be looking at specific opportunities. As I said nothing at this point in China that is specifically in opportunity we would be looking at.

[Operator Instructions] Our next question comes from the line of Sarkis Sherbetchyan of B. Riley. Your line is now open.

So first, just wanted to go back to the Slide 8, on the silicon metals snapshot pricing trends, it looks like the index is for both the U.S. and EU that you've displayed for 4Q were above your average realized price. Can you maybe give us a sense for, if the prices that you are booking into 1Q are above those benchmark rates or not?

So I think we have described in the past, there is two effects that have -- that drives our average spending price being below the index. One is the fact that of course we booked some fixed price volumes at the beginning of the year. The other is that some of the index contracts are index on previous month. So, you would always see a bit of a lag, a time lag in the price recovery. As we go into Q1, we see that correcting. So, we will be having average selling price that is much more in line with the index system sales, as we could say we rebased our pricing to actual pricing. There would be still a bit of a time lag with some index contract, but all in all we will be much more in line with the index.

And then I think on the last quarter's call, you disclosed securing volume I think it was 60% of your expected sales that we negotiated above run rates. Can you maybe give us the sense for what that book of business stands? Is it 60% plus contracted? Or are you kind of retaining the balance for flexibility in your view of the market?

I would say it changes a lot from one product to another. Silicon metal in 2017 was 43% of our sales. In 2018, it's going to be with acquisition of the new manganese assets. It's going to be more around 35% or so. So bearing that in mind, if we talk about silicon metal, we have vote or secured a volume that is somewhere around 65% of our total expectation. Now, just new ones is that because some of those bookings are let say for instance quarterly bookings. If we assume that those quarterly bookings would be renewed in the coming quarters, which is I would say a reasonable assumption to some extent then our bookings would be more around 80% which we think is a reasonable number. And we leave some space for additional bookings and for increased price as we go forward. In rest of the products are both for a silicon and manganese-alloys they work much more on a quarterly basis and prices and bookings are more done on a I would say more on a real time basis than on a on annual basis.

And as you've discussed the 5.4 million in incremental kind of one-off costs here for the overhaul of the production plants and restart et cetera. Do you anticipate on some carryover spillover of these costs for 1Q or 2Q anything that we should expect on that front?

No nothing on that specific front.

And then I think you mentioned your expectation for a little bit of compassion for us on the manganese-business as ore. This is rising in the I suppose you expected some price recovery there so then help you on the margins. Is that something we should expect maybe for the second half of fiscal 2018 or earlier?

I mean we are seeing interestingly we are seeing dynamics that are very similar to what was happening little more than a year-ago where all started going up significantly and then manganese-alloys followed. And then manganese-ore actually went down and manganese-alloys stayed up there. We think it is likely that the dynamic similar to those once maybe happening in this year. So, I would see again as you mentioned I think you are right we would see some margin compression in Q1 and Q2, and we expect a recovery in the second half of this year.

Understood. And finally on the U.S. trade case. Any comments here as the hearings have been underway and obviously there is some public data that’s been filed for those hearings. So, just any comments that you can share on either expectations or just what you are seeing real time?

Well, we have always said this. We -- it is in our view and in our opinion that is why we acquired the cases. We think there was unfairly trade of material coming in, in 2016. We believe that data are strong in that respect. It is also clear that that injured the local industry. We are also very strong and very confident that the argument is solid. And we now just need to expect PLC to come with department of commerce with final determination we think tomorrow and then the international trade commission in the coming few weeks. But we are of course confident that our arguments are strong.

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

Just a few follow-up questions here. Can you remind us of the U.S. and Europes silicon metal fixed contract exposure and any detail that you could provide on how contracts were settling on those in 2018 versus 2017?

Yes, we are -- and again talking about silicon metals around 60% of our sales for 2018, are on fixed pricing. Now when you look at average pricing for 2017 at 2200 and something slightly less than $2,300 per ton, and you look at where the indexes are today in silicon metals, I mean as I was saying, you could be expecting 2018 sales to be pretty much in line with current indexes all in all taking all the different countries index prices and time lag et cetera. So the increase 2018 to 2017 is very significant.

And then a couple items on modeling and run rates, expected the tax rate through 2018 CapEx depreciation amortization. And then how your interest expense may look with the new facility here on the current debt load?

Yes, 31% on the rate for 2018 going to 29% in 2019. We will update CapEx of 80 million to 100 million per year and that’s all maintenance CapEx. Depreciation should stay around 100 million to 120 million. It depends on the step up value of the acquired manganese assets. So, we don’t have that exact number yet for depreciation. And interest will stay similar where we weren't drawn on the revolver, so the new revolver is slightly lower, but we don’t think we have very high drawn variances. So, that will make big impact for the year.

So similar interest expense run rate as to what we have been seeing in some recent quarters more or less, correct?

That’s correct, slightly lower but similar.

And then, anywhere we should be thinking about allocated to non-controlling half of the earnings in 2018?

Not sure I understood that, Englert

Earnings allocated to non-controlling interest?

Similar to production JVs, we'll have similar allocations in 2017.

Thank you. And I'm showing no further questions at this time. I'd like to hand the call back to Pedro Larrea for any closing remarks.

Well, thank you very much everybody for listening to us today, as I was saying again, we think we are opening a new very exciting period for Ferroglobe, and we look forward to returning value to our shareholders and to all our stakeholders. Thank you very much again.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude today's program. You may all disconnect. Everyone have a great day.