Good morning ladies and gentlemen and welcome to the Ferroglobe second quarter 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 turn the call over to Pedro Larrea, Ferroglobe’s Chief Executive Officer. You may begin.

Good morning everyone and thank you for joining the Ferroglobe second quarter 2019 conference call. Joining me on the call are José Maria Calvo-Sotelo, Deputy CFO and EVP Corporate Development; and Gaurav Mehta, EVP of Investor Relations and Corporate Strategy. Before we get started with some prepared remarks, I am going to read a brief statement. Please turn to Slide 1 at this time. Statements made by management during this conference call that are forward looking 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.ferrogloble.com. In addition, this discussion includes references to EBITDA, adjusted EBITDA, and adjusted diluted earnings per share, which are non-IFRS measures. Reconciliation of these non-IFRS measures may be found in our most recent SEC filings. Next slide, please. We will first review the Q2 results across our core products. Next, we will update you on the corporate initiatives we are undertaking and particularly the divestiture of the hydro assets and one ferroalloy plant belonging to FerroAtlantica in Spain, and lastly we will provide an update on the market outlook for the remainder of 2019. Next slide, please. As you have seen in our earnings press release, the second quarter results clearly reflect a continued weakening in end market demand across all of our core products and an erosion in realized pricing across most of our products. That said, adjusted EBITDA showed an improvement quarter over quarter as actions taken by the industry more broadly and also actions we took in respect of our own operations are beginning to have a positive impact on our costs. While we were expecting the cyclical downturn to continue…

Thank you Pedro. Moving onto Slide 8, Ferroglobe’s realized average selling price for silicon metals declined by 1.6% to $2,320 per metric ton as compared to $2,358 per metric ton in the prior quarter. The U.S. index pricing started flat at Q1 levels but eventually declined during the quarter. Similarly, the European index showed the same trend during the quarter with both indices extending their gradual declines year to date as the demand side of the equation has eroded faster than the supply side cutbacks. Based on recent history, industry experts believe current pricing levels are unsustainable for many foreign producers and feel that the current market prices should result in a further shutdown of unprofitable production capacity. As a result, analysts now expect stabilization of prices, where we’re beginning to see early signs of in the European and Chinese indices. We continue to have a decent order book with fixed price contracts as well as with floor limits in some of our index price contracts. These types of contracts allow us to realize average prices that do not decline as much as the underlying index. The bar chart on the top right hand of the slide shows a sequential decline in volumes to levels we have not seen in recent history. Volumes during the quarter were once again negatively impacted by a slowdown across the aluminum, chemical and solar end markets. The net impact of the trade war and corresponding tariffs, further destocking along the value chain, and a general slowdown in markets such as the automotive industry all contributed to a sharp decline in sales volume this year. There are commercial opportunities where we consciously turn business away because of the underlying economics. In these instances, we may be losing share but feel that many transactions are being…

Thank you Gaurav. If we turn now to Slide 15, on our prior calls we have outlined a number of initiatives aimed at cash generation, cost cutting, and the overall strengthening of our balance sheet. I’ll now take a few minutes to provide updates on the four distinct areas outlined on this slide. Turning now to Slide 16, yesterday we announced the successful sale of FerroAtlantica, which closed on August 30. The sale, which involved a number of complex elements, was expeditiously finalized within three months since we first announced the deal, as we got all the approvals to meet the various conditions to closing. The transaction yields an attractive valuation multiple of 12.7 times based on cyclical average EBITDA. While we launched a number of targeted non-core asset sales, this transaction was the centerpiece of our cash generation plan. The total transaction value was €170 million or approximately $188 million. The uses of these funds and pro forma impact are detailed on the following slide. As part of the transaction, we have entered into a tolling agreement with FerroAtlantica under which we will become the exclusive off-taker of finished goods from ferroalloys facility. In return for this exclusivity, Ferroglobe commits to supplying FerroAtlantica with key raw materials over the long term. Next slide. On Slide 17, we show an illustration summarizing the sources and uses of cash from the sale and the pro forma impact on the balance sheet. Of the $188 million of gross proceeds, $15 million was deducted to account for closing adjustments, leaving net proceeds of $173 million. $60.3 million of the $173 million was immediately used to repay certain leases and other loan obligations and $2.5 million would be paid to advisors, leaving a balance of $110 million as cash on our balance sheet. The…

[Operator instructions] Our first question comes from Vincent Anderson with Stifel. Your line is now open.

Yes, thanks. Just starting with manganese alloy spreads, what are you seeing that gives you the confidence that this improvement can be maintained, given the Chinese market is just so fragmented and their capacity seems very ready and willing to come back to the market the moment spreads have increased?

Thank you Vincent. So far, if you look at the evolution of manganese alloy prices, mainly in Europe, which is our main market, they have been stable really for the past 12 months with small ups and downs. We believe that has to do partly with our action in terms of cutting back production capacity, and in general with just, I think, overall players being rational with their production capacity. So, we see that outside China, the supply-demand balance is now balanced, and we don’t see like new supply driven shocks in the market outside China. As you know, China has enough capacity to serve its own market, but given transport costs and other factors, they have not been an exporter to the rest of the world, so we don’t see that as being a threat in the near term.

That’s very fair and a good point. I would say that the risk seems to be that they come in and buy any available ore in the global markets, so maybe if you could comment on how you’re seeing ore availability kind of shape up over the course of the year.

Well, ore availability has been, I would say, more than plenty. Manganese ore inventories have actually been going up, in general, and it is, I think, clear now that manganese ore suppliers have been unable to keep prices up and the trend is solid of those prices going down. The last comments I’ve seen from analysts in the market as recently as today are talking about concerns in the ore market about additional volumes coming from Ghana, for instance, so we see that market as well supplied and we don’t see reasons why today the manganese ore market would rebound. The opposite - we do see in general, and I think most analysts would agree that the trend is for manganese ore prices to still go down.

That’s helpful, thank you. Could you just quickly clarify your current silicon metal capacity? When I was doing the math, I came up with a little over 220,000 tons excluding the joint venture. Is your other Sabon furnace also producing silicon metal at this time?

Yes, we have now two Sabon furnaces producing silicon metal now.

Okay, all right. Perfect, thank you. Then just a clarification on the decision to switch the South African plant off and restart in Spain. I know Spanish electricity costs have come down, but that between currency and, I assume, that was the plant that had the Eskom power agreement that would seem very cost effective. Was the working capital build just to that extreme or was it driven more by your current focus on liquidity and when those issues get resolved, that would be a potential place that you would start bringing capacity back online?

It’s a combination of two factors. One is again optimizing costs and where we have the greater ability to eliminate not only variable but also fixed costs. And so, as I was saying during the presentation, we are optimizing overall total costs for producing a given amount of silicon metal, so it’s really about optimizing total costs including, by the way of course, our logistics costs. The second is certainly also a focus on cash generation and the fact that South Africa structurally is just a higher working capital operation because of their distance to end markets. So, the two factors have weighed into the decision.

Great, thank you. Just one last one and I’ll turn it over. Now that you fully own the UMG silicon joint venture, what is the plan for handling the government-issued project debt, and can you remind us if there are any minimum capital outlays required to prevent--you know, if there’s any acceleration of repayment that could be tied to that debt if the project is idled?

There is no additional capital requirement, so there’s going to be no additional capital invested in that project. We have to go through tests run by the government in terms of whether we meet all the requirements of the loan, and as we go through those tests, we will see whether there is a requirement to pay back part or all of that loan.

When would those tests be completed?

Along the rest of this year.

Okay, thank you.

Thank you. Our next question comes from Sarkis Sherbetchyan with B. Riley FBR. Your line is now open.

Thanks for taking my question here. Pedro, can you help me understand the level of inventory you’re carrying on the balance sheet? Maybe help me understand which segments comprise the inventory, and I have a follow-up.

Well, the increase in inventories, as we have said, is mostly linked to declined volumes, and mostly declined volumes in silicon metal, so there’s been a significant increase of inventories on the silicon metal finished products. Total finished product inventories are somewhere around half of the total inventory numbers, and all the increase between Q1 and Q2 in terms of inventory has come from finished products. Of the other half, like 60% is raw materials inventory, those are more or less stable. The trend from the beginning of the year is of a reduction on those ones, but you always have ups and downs on the raw materials linked to bulk shipments, so manganese ore shipments come in 40,000 ton vessels, so of course when you have one of those cargoes, your inventory just naturally goes up, but the trend in raw materials is for those to go down. The rest of inventories are spare parts and work in progress. Again, those are staying stable in the past months, so again we have--we know where the inventory increase has been. There’s also been a bit of inventory increase in manganese alloys. That again has a lot to do with specific shipments which go in thousands of tons from some of our plants, coming out at the end of the quarter or the beginning of the quarter, so there is some thousand tons of manganese alloy inventory increase in Q2 versus Q1 but again that is just normal, I would say, cyclical--short term cyclical evolution. All in all, that is why our focus now is concentrated on reducing finished product inventories and mainly on silicon metal.

Understood. If I think back to the comments on the volume trends for silicon metal, for example, do you think that--you know, if you look at the balance of the year, the volume trends you’re seeing for your order book here in the second half, would you be able to convert the inventory to cash or do you anticipate a further build-up? Help us understand that.

No, we hope--I mean, we are working and that is already happening as we speak in the past weeks, a reduction in silicon metal inventory, and that is what we’re working on, is a reduction there. Sales volume and, I would say, demand out there in the silicon metal industry as a whole is stabilizing, and our view is that at the end of the year, demand should come back and we could have potentially even an increase on silicon metal sales, but that’s still to be seen. We are working under the assumption, I would say, that our silicon metal volumes would not increase in the rest of the year.

Got it, understood. I think you mentioned in your prepared comments some producers potentially switching over to ferrosilicon. Can you help us understand what you’ve been seeing out in the industry? Has that been happening and is that what’s pressuring prices, or is it more so a demand issue? Help us understand that.

We haven’t seen for a while, I would say, any silicon metal producer or significant silicon metal producer switching to silicon alloys. Frankly, given where ferrosilicon prices are right now, we don’t see the point of that happening. It could. We haven’t seen a significant volume of that happening, and the comment was more, I would say, potential rather than factual, but there hasn’t been a lot. Today, the economics of producing ferrosilicon versus silicon metal is not necessarily favorable.

Got it. Just switching gears to the divestiture of the hydro assets, that’s closed. When do you get the cash on your balance sheet?

It is already there, as of last Friday.

Got it, and with regards to, call it the $60 million or so in capital lease repayment, that’s already been satisfied as well?

Yes, so all the moves that you see there on Slide--what number of slide is it, 18? Sources and uses of funds, those are already--those were done on Friday. There is, I think, some final adjustments on working capital potentially, but those would be very minor by nature.

Thank you, that’s all for me.

Thank you. This does conclude today’s question and answer session. I would now like to turn the call back over to Pedro Larrea for closing remarks.

Well, that concludes our second quarter earnings call, and thanks again for your participation. We look forward to hearing from you, and all have a great day.

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