Good day, ladies and gentlemen, and welcome to the Ferroglobe's First Quarter 2018 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 follow at that time. [Operator Instructions] As a reminder, this conference call maybe recorded. I would now like to introduce your host for today's conference, Mr. Joe Ragan, CFO. You may begin.

Thank you. Good morning, and thank you for joining the Ferroglobe first quarter 2018 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 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 references to 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. Next slide. On the call today, we will review the Q1 results across our core products followed by some consolidated financial highlights. Lastly, we'll provide an update on the operating environment and explain why we are convinced that Ferroglobe is well positioned to continue improving it's financial position, realized value for shareholders and achieve long-term growth. Now, I will turn the call over to Pedro Larrea, our CEO.

Thank you, Joe. Good morning, everyone and thank you for joining us on today's call. The first quarter of 2018 builds on the momentum achieved in 2017 and we are pleased that the business has continued to perform according to our expectations. Ferroglobe is the strongest it has ever been both, operationally and financially. The fundamentals are solid supported by firm GDP growth across developed and emerging economies, favorable supply demand dynamics and continued reform in China which is positively impacting our products, as well as positively impacting our customers. Looking at our current operating environment, we are confident in the performance of our Company in Q2. We are seeing strength in volumes and a sustained pricing environment hampered by continued volatility and input costs. The inflationary environment however is a reflection of the strength of the industrial activity across the world, particularly in areas related to advance materials and that in turn, is the best evidence of the strength of our business in the long run. As the Company's cash generation increases, we are focused on returning value to our shareholders by continuing to strengthening our balance sheet. It is important that we strike the right balance when thinking about the near, medium and long-term goals of the Company. With this in mind, I'm happy to announce that the Board of Ferroglobe has decided to declare an interim dividend of $0.06 per share reflecting the confidence in the underlying strength of the business and the Company's long-term outlook. Next slide, please. In Q1, Ferroglobe performed as expected building on the momentum from last year and confirming the positive fundamentals of the business. On an adjusted basis, we posted a quarterly net profit of $33.3 million, the highest since the creation of Ferroglobe and delivered significant increases in both, earnings…

Thanks, Pedro. Slide 15, please. As Pedro has mentioned, we delivered strong sequential growth in revenue and profitability. Adjusted EBITDA margins increased 4.5% compared to the fourth quarter of 2017, working capital increased to allow for the necessary build of raw materials and finished goods inventories in our newly acquired manganese alloys facilities which had a corresponding impact to free cash flow for the quarter. We expect some of this working capital to be released during the second half of 2018. Slide 16, please. Although net debt increased slightly in Q1 due to the acquisition of our new facilities; our balance sheet metrics remains very strong allowing for significant flexibility to fund future acquisitions and dividends going forward. We remain focused on tightly managing our leverage while allocating capital properly in the future. Slide 17; as we mentioned earlier, the increase in net debt was due to the acquisition of assets during the quarter. We anticipate net debt will decline going forward as we focus on conservative balance sheet management for the rest of the year. Some of the increase due to initial working capital investments we'll release during the next three quarters. Slide 18; while the majority of the net debt increase was based on the newly acquired assets there were other items during the quarter that increased net debt temporarily. The large increase in revenues created accounts receivables that will be securitized during the current quarter which is Q2. We also had one-time tax payments that were made during the quarter that utilized some available cash. We expect additional cash generation throughout the year that will decrease net debt significantly by year end. Slide 19; as we continue to grow our revenues, the accounts receivable facility will drive the conversion of cash flow through the growth cycle of the business. We still have a significant amount of availability in the facility which will be utilized throughout the year. Slide 20; as we deliver Ferroglobe's strongest quarter ever, we continue our commitment to proper balance sheet management and capital allocation. With the reinstatement of our dividend, we will deliver value to our shareholders having fully recovered from the downturn we experienced with a strong and flexible balance sheet prepared to execute our growth strategy to drive shareholder value going forward. Now I would like to turn the call over to Pedro who will comment on end market dynamics and provide an update on other growth drivers.

Thanks, Joe. If we turn to Slide 22; on prior calls we discussed how demand across our product categories was benefiting from strong growth fundamentals. This was suddenly reinforced during the first quarter, globally we are benefiting from the healthy economic development being exhibited by advanced and developing countries and sustain robust demand across our end markets. The robustness in aluminum is apparent as our end customers are running at strong utilization rates, and a few global producers have recently announced their expectation that there will a deficit of aluminum on a global basis for the year. According to Alumni [ph] warehouse data, aluminum stocks remain near five-year lows as aluminum producers restock to historical levels, we anticipate a further pull-through in demand for the remainder of 2018. Similarly, the momentum in the global steel market continues to drive prices higher. World steel utilization rates actually reached a multi-year high of 74.5% at the end of first quarter and global steel production was at the highest level on record in the quarter. The outlook for steel and stainless steel remains solid for the year. With regard to chemicals and silicones, producers have ramped up production as a result of the pricing environment resulting in steady demand for silicon. We recently heard several industry participants comment that the tightening [ph] in these markets is expected to continue in the near-term. As planned, supply increases will take time to come online. The current reforms in China are certainly helping us, the decreases in Chinese production of silicon metal for silicon and commodities more broadly, coupled with strong demand within the countries resulting in lower Chinese exports. Similarly, our customers across the aluminum, steel, and chemicals industries are seeing higher prices in their respective markets. While it is difficult to predict, how long…

[Operator Instructions] And our first question comes from Martin Englert with Jefferies. Your line is open.

So post the ITC decision, what impact have you seen on the U.S. and European trade flows, import trends into the respective regions there? And have you seen any implications for channel inventories or any potential destocking in the respective markets?

As we have been saying during the presentation, we haven't seen significant impact yet. Doesn't mean they may -- there may be impacts in the coming weeks but so far prices have remained tight in North America and trade flows haven't changed significantly yet. So in that regard, I would say that the situation is not very different from where it was before the ITC decision.

Just based on some of the index prices for silicon metal, it seems like there has been some retracement, maybe just a few pennies a pound in the North America market, maybe a little bit more within the European market; would you anticipate any incremental downside from here?

Yes, in North America there has been a very slight decline, whether there is anything else going forward; I'm not sure about that, we haven't seen that as I was saying happen yet. Again, the fundamentals in terms of demand and supply all over the world are strong and there is also cost pressure in the industry as a whole, so we don't see reasons for a downward trend. Now in Europe, and we mentioned that before, there has been -- again, a slight decline following Chinese prices. Now this is something that happens every year, it is short-term, it happens because of the rainy season but it is very important to realize that this year it is happening at the level that is $500 per ton above last year. So when the rainy season is over, prices will revert to where they are and we don't see this as being a trend, it is just a short-term move.

And lastly there, just to clarify on the Glencore assets. You expect full contribution in 2Q and the remaining quarters of the year? And any goal post as far as the EBITDA contribution on a quarterly run rate on today's spot prices?

Yes, they are contributing -- they are fully contributing as of Q2. There were very few -- I would say tons of sales already in Q1 but absolutely not material, so as a matter of fact I would say as of April 1 they are fully contributing. And I think you can get a good sense of what is the contribution by realizing that they are pretty much doubling our size of the manganese business, so if you look at what is the contribution of our previously existing manganese business, I think you get a sense of that.

And on the manganese ore margin pressure, you expect some of that to persist into 2Q, correct?

Yes, meaning that because -- of course in Q2 we are selling a product that was produced during Q1 or is being produced during Q2 with ore that was bought during Q1, so there is some -- of course, time lag in the decreasing ore prices to impact our financials. So how we see it is that Q2 is going to continue to have some margin pressure in manganese alloys but given the current very dramatic downward trend of ore, our margins should be expanding again in Q3.

Our next question comes from Vincent Anderson with Stifel. Your line is open.

So just looking at the average silicon metal selling price in the quarter, it came in a little bit late versus spot prices would have indicated. Was there anything specific causing that and can we expect it to revert closer to the prevailing market rates in the second quarter and onward?

There is always a mix of a different contracts and contract types we have so that our average selling price does not necessarily mimic our market prices immediately. We have a significant customer in North America with an index price that is reflecting previous periods, so we will have that escalating quarter-over-quarter. Now I think that given the stability or a slight decline in silicon metal prices in Q2 versus Q1, our expectations is that average selling price in Q2 should not be very different from Q1, again, quarter-over-quarter. We also need to realize that in Q2 we are having a stronger dollar, so our euro sales will have some negative foreign exchange impact in our financials.

And given where energy and electrode prices are today, and you look back to where the market kind of put a floor on silicon metal in the last trough, and I understand you can't do this in exact terms; where would you have estimate the floor would be on current pricing compared to where we last bottomed?

As I was saying, I think probably that the floor is worldwide in a ways set by Chinese prices, they are the swing capacity, they are ones that can drive overall prices. And as I was saying Chinese prices today are around $500 above where they were a year ago, so that floor has risen very very dramatically in the past year or year and a half.

And just lastly, and I can jump back in the queue. Can you talk about your exposure to the power supply issues in South Africa? And just how important is that capacity to your silicon metal commercialization strategy and overall market share goals? And kind of following on the heels of that, how quickly can you shift Spanish ferrosilicon capacity back to silicon metal if South Africa really becomes an issue?

Right now South Africa in terms of supply levels is not -- is much better than where it used to be some years ago, so in terms of supply, I would say reliability, it is -- we are not having an issue at all today. On the other hand, we have actually closed a new contract with Eskom [ph] by which we are getting a very favorable price for power in the coming two years for the production of silicon metal. So we -- on the contrary, we see right now South Africa is being competitive for producing silicon metal for the coming future. Now just a different question and I'll touch upon one of your comments; we did turn one of our furnaces in Spain into ferrosilicon. We are continuously monitoring the relative profitability of producing silicon metal and ferrosilicon and right now we're actually considering and analyzing the possibility of some changes in that respect and maybe further increase our production of ferrosilicon in Europe versus the production of silicon metal, just because it's being right now more profitable but that is something that we are analyzing as we speak.

And our next question comes from Ian Zaffino with Oppenheimer. Your line is open.

Congratulations on reinstating that dividend. Are we now complete with the capital returns now that the dividend is reestablished or is there upside or move for additional capital returns -- I think you have a shareholder meeting coming up where you can maybe devote [ph] additional capital returns. But what are your thoughts on that part of the cash flow equation? Thanks.

We're very satisfied with the opportunity of reinstating the dividend, as we say it shows our confidence in the long-term outlook of the business. At the same time of course after acquiring very significant assets, debt has gone slightly up and we have also been stressing that we want to take care of our capital structure and reduce leverage, so I would say that those two elements plus of course, potentially -- immediately accretive M&A opportunities, so those three I would say take care of our capital allocation. And again, after the cash outflow in the first quarter and the increase in debt, we are more prudent, more cautious about other ways of returning -- immediately returning capital to shareholders.

And now just turning over to UMG plant, what type of returns are you expecting on that business? And Joe, as far as CapEx, does that then mean CapEx is going to fall by $50 million next year and that all goes to the free cash flow line? Thanks.

Yes Ian, that's correct on your CapEx question. So it's higher this year as we invested in that. I'll let Pedro talk about the returns.

Returns on solid silicon going forward and if we are successful in this plant are going to be suddenly higher than in the average of our business. Now this is a pilot plant, it is sub-optimal in terms of it's size, so the main purpose of this investment is really to test that we master the process and that we master the cost of the process. Once we test that and we are confident on the result, then we would go to industrial size production and there the type of margins with the costs we are expecting, the types of margins we would be getting are significantly higher than our average margins.

So just one last question would be -- to industrial or commercialize the plant how much additional capital does that take?

That's something that we are still analyzing. What would be -- I mean that would be a very very significant step for the Company; if the test is successful, we would need to take -- to make an investment on let's say 20,000 tons kind of plant and that of course would mean hundreds of millions of dollars. Our view of that is that we will need to analyze the structure of such investment whether we want to partner with strategic investors, financial investors. But again, if the test is successful, we think that the financing and the funds for it will not be a problem because it will be really a very very good business.

Our next question comes from Sarkis Sherbetchyan with B.Riley. Your line is open.

So just want to revisit the production optimization. Pedro, I think you mentioned you're monitoring the relative profitability and producing silicon metal versus ferrosilicon. Can you maybe dive a little bit deeper into that thought process and maybe help us understand what you're also looking at in terms of production cost across those plants?

As I was saying, at the end of the day what we are seeing in our different product families is, where -- it's really two or three things; was there more ability to increase our sales and to exercise a good market discipline. And we're seeing that ferrosilicon this year is being very strong, and not only ferrosilicon, I mentioned foundry products -- foundry products, right now we are at record level sales. So we are seeing -- our initial thought is that there is scope for further increasing sales in that area. In silicon metal we posted record high sales in Q1 and we want to make sure we are very disciplined about our approach to that market and I'm making sure that we only sell at the right price. So we have to balance both things; one is -- I would say what is the strength of demand and second one is our view of our own supply position in the market. And then of course, again, the relative cost of producing one product or another and I -- of course, I don't think I can be much more specific than that. The thought right now, again is that we will most probably be increasing in Europe our production of ferrosilicon slightly and decreasing our production of silicon metal that will keep -- get some pressure out, mainly of our South African production which otherwise may have been forced to sell into low priced markets. So that is the overall part. Again, we need to balance demand strength, prices in different markets and our production costs in different locations and that is our great advantage, we have mentioned this a lot of times and I think we can prove it, we can -- and you can test it, almost on a quarterly basis we are active and we are monitoring all the time the relative profitability of different products and markets.

I think in the comments you mentioned that you likely see higher volumes in 2Q; is that relative to a year-over-year basis or relative to 1Q?

Relative to 1Q and of course, the main contributor to that volume increase is going to come from the manganese alloys and the new -- of course, the newly acquired asset. So that is -- I think the main contributor and the rest of products and silicon metal and silicon-based alloys -- we're probably seeing a more stable volume evolution from Q1 to Q2.

And then with regards to the comments on the end market strength and demand; you don't see anything necessarily changing here in the near-term, is that the right way to think about it from a volume delivery perspective?

That is the right way of thinking about it, and of course, again, there is so much trade politics going on that you never know but like in the last few days you've seen positive sentiment about overall industrial activity and trade in the coming months.

And I think the last one for me is; you know, you did mention the more diversified portfolio with regards to the different product sets that you offer -- if we were to kind of pro forma the acquired manganese plants, what were the distribution of EBITDA generation be between silicon metal, ferrosilicon and the manganese alloy businesses?

As I was saying, and let me just grab that graphic in; if we are on Slide 6 where you have that breakdown and you see that manganese based alloy is in the past 12 months, or have been somewhere around 20%, you -- this 20% would transform into probably something around 30% to 40% depending of course on the relative strength of prices in the different product categories. So we would be changing to again, manganese-based alloys in average being somewhere around let's say 35%. And of course, silicon metal and silicon-based alloys would decrease proportionally, so you would have silicon metal going below 45% to something like 42% or 40%, and silicon-based alloys probably staying at around 25%. So it's just a rebasing; if you think that the newly acquired assets would be adding 15% to 20% to our revenue base.

Our next question comes from Rich Thompson with Verdi [ph]. Your line is open.

Just a quick question on how you guys were thinking about the capital structure. So I was making progress on the leverage side and I feel that one times target leverage by year end, just curious how you think about the bond longer term given pretty high cost of capital, given where the business has rebounded too. So just any thoughts around how you think about that longer term?

I think we have a lot of choices. First call is February 2019, so we have several options, one to refinance the bond at that point or to take that with the term loan fee as another alternative but we will be focused on driving down the overall net debt to EBITDA leverage ratio.

And we have a follow-up from Vincent Anderson with Stifel. Your line is open.

I just wanted to get some clarification on the UMG facility comments. So this pilot plant is being dealt with quite a bit of government funding and I believe you stated a Phase 2 on that particular location, well it could get you to 3,000 tons per year. So two questions; can you earn an adequate return with 3,000 tons per year? And if not, is there an expectation by the government bodies that direct this funding to their project that this technology is going to be commercialized and create jobs and your internal return targets are maybe secondary in their view?

I think there is a number of questions but the overall perspective is that -- this pilot plant, both Phase 1 and -- and if we go for it, which is something I'll touch upon in a minute; if we go for Phase 2, what I'm saying, they are not going to get to the kind of returns we are used to, it doesn't mean it will -- it won't pay for itself, so our current expectation is that even with this "pilot size" it is going to be able to pay for itself and not demand -- I would say capital from the Company and not generate losses. That is our expectations, so I would say is self-funded and that is our perspective; now whether we will go into the 3,000 tons phase or we will directly jump to industrial size is going to depend a lot on the success of the 1,400 tons size.

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

Thank you, thank you everybody for attending this conference call. As I've said, the first quarter sets 2018 off to a solid start and confirms the positive fundamental of our business and -- well, as we continue to generate improved cash flow, we are -- as I have said, committed to ensuring a sound balance sheet to evaluate any opportunities to build the business and of course to return value to our shareholders. Again, thank you very much and have a great day.

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