Good morning, ladies and gentlemen, and welcome to Ferroglobe's first quarter 2022 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 is being recorded. I would now like to turn the call over to Gaurav Mehta, Ferroglobe's Transformation Director and Executive Vice President of Corporate Strategy, Technology, and Investor Relations. You may begin.

Good morning, everyone, and thank you for joining Ferroglobe's first quarter 2022 conference call. Joining me today are Marco Levi, our Chief Executive Officer; Beatriz García-Cos, our Chief Financial Officer; and Benoist Ollivier, our Chief Operating Officer and Deputy CEO. Before we get started with some prepared remarks, I'm going to read a brief payment. Please turn to Slide 2 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 web page, www.ferroglobe.com. In addition, this discussion today includes references to EBITDA, adjusted EBITDA, adjusted gross debt, net debt, 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. At this time, I would now like to turn the call over to Marco Levi, our CEO.

Thank you, Gaurav. Good morning, or good afternoon, everyone. I'm really excited to present our results, which set a new record in terms of our quarterly revenues, adjusted EBITDA, margins, net profit, and earnings per share. Since the formation of Ferroglobe. Our organization has worked very hard over the past few years, and reporting these stellar results is the validation of the earnings potential of this business. And we look forward to building on this positive trajectory. The improvements in our go-to-market strategy, our quick reaction time to market changes, the focus on continuous improvement, amongst many other things, all contributed to these results, and the new Ferroglobe we are creating. The operating environment around us continues to evolve. Whether it is changes in our customer needs and preferences coming out of the pandemic, or our need to quickly find new suppliers in the wake of the terrible Russia Ukraine war. We are going through a very unique period. Ironically enough, it is in the midst of this drastic changes and uncertainties that Ferroglobe is capitalizing on the full potential of its unique global asset footprint, more so than ever before. Our ability to service global customers locally is proven to be a great competitive advantage, particularly as customers put a premium on security of supply and seek shorter supply chain. This will only become more valuable over the coming years as suppliers and customers or I think strategies with their own ES&G targets in mind. In the face of an energy crisis, particularly in Europe, we have been able to leverage our operational flexibility, scaling back production in Spain, and servicing customers from facilities in Norway and France. Our diverse geographic footprint sets us apart from our competitors and is proving to be extremely valuable. As we look at…

Thank you. [Operator Instructions]. Your first question today comes from the line of Martin Englert from Seaport Research. Please go ahead, your line is open.

Hi, good afternoon everyone.

Hello, Martin.

So last quarter, you noted an estimated EBITDA for January around $74 million. Can you just talk a little bit about how things progress through the balance of the quarter here to kind of bridge to the $241 million quarterly results?

Yes, Martin. Basically what happened is volumes going up in February and March versus January. January is always not a full month and then there has been the usual price creep positive creep, mainly due to the alloys pricing dynamics.

So is it fair to say that you've participated maybe a bit more on the alloy side in the stock market to capture some of those high prices?

No, I would say no, no, it's mainly not too much spot is normal creep, because as you know the price of alloys gets adjusted either monthly or bimonthly or on a quarterly basis. So you have -- is natural to have when the price goes up -- is natural to have some positive price creep.

Okay, thanks for that. Kind of coming back to the commentary in the release in the prepared remarks. You spoke about the financial momentum continuing. You gave some color on the segments. I think on silicon-based alloys, you talked about margin expansion. And but maybe there was margin expansion anticipated on silicon metal. But is there any more detail that you can provide, as we think about 2Q here, maybe across the business segments, where we're seeing margin expansion versus steady and contraction?

Well, I meant I gave a few items during my reading my script, but in a nutshell, the way we see it in Q2 is pricing stronger than cost increase across our main -- all across our main product line.

Okay, so it's fair. Talk…

The margin expansion.

Okay, margin expansion across all the business segments.

Yes.

And then anything on the cost side of things when we think about like the cost per ton across the business segment. I mean, there was a notable step down and good cost management, quarter-over-quarter here. But how we think about that in 2Q versus 1Q?

Well, the way we see it at this stage, there is the most of financial cost increases on silicon metals between 4% and 5%. We see as light reduction about 2% points in silicon alloys and a rather flat cost picture for manganese alloys.

Thanks, that's helpful. And if I could one last one here, and you touched on this, reviewing the financials and capital allocation. But thoughts around when you may be able to explore potential refinancing of the debt looking beyond the super seniors, given the lighting nature of the ratings agencies when that window might open for you? Beatriz García-Cos Muntañola: Yes, Martin, this is a Beatriz speaking. We are working at the moment on that. So as soon as we have a news, we'll be commenting on that.

Okay. Right. Thank you for all the detail and congratulations on navigating a fairly challenging market.

Thank you, Martin. Beatriz García-Cos Muntañola: Thank you.

Thank you. Your next question comes from the line of Brian DiRubbio. Please go ahead. Your line is open.

Good afternoon. Marco and Beatriz. Just a couple of questions for you. Just with the change in the contracts this year that you're experiencing, which is helping with results from fixed price to index base. How many of those contracts expire at the end of the year and how many of those contracts are multi-year agreements?

Well, if you talk about what we're referring to is silicon metal. This comment was related to the contracts of silicon metal. And we moved from excluding joint ventures from contracts, which were covering about 70% of our traded volume in silicon metal with fixed yearly price to less than 10% of our volume on fixed yearly price. So basically, we have moved all our contracts to index.

And those contracts, those still expiring at the end of this year, or those index based pricing contracts for multiple years.

We have variable duration of our contracts in silicon metal. There are contracts which have longer tenure, three years, two years, one year, different quarters.

Okay. And just trying to think about how your customers are -- our viewing security supply, is that going to be able, you're going to be able to get more customers to engage into longer term contracts even if they're index based?

Yes, this is what we were looking for. And supply security really popped up last year in all the discussions, but is still pretty valid due to all the complexity that we -- everybody has been leaving in supply chain. So there is a natural trend to cover supply security with more local supply. And for the geographies that we cover, of course, having our asset footprint spread properly is an advantage. Having, like I said, our back integration in cokes and partial back integration in coal are definitely an advantage for us in satisfying this customer demand or supply security.

Okay, and then Beatriz, given -- I mean the results are strong this quarter, but the company's business over the long term is volatile. How are you thinking about the optimal capital structure? Is there a certain amount of gross debt that you're -- that you'd like to hold? Is it midcycle leverage target. I'd just love to get a sense of how you're thinking about the future capital structure of the company? Beatriz García-Cos Muntañola: Yes, thank you, Brian, let me put it like this. So I think today, we have recognized that the cost of debt does not reflect the credit profile of the company. So what we're doing at the moment is we have the window to refinance our super -- so the first step for us to start is to refinance our super senior that goes without the cost till October 2022. And then, as we said, we plan to use our cash generation to cover two objectives. Number one is to continue to further reduce down debt and number two, to continue to invest in our assets with $75 million of CapEx in 2022 and we expect this level of CapEx to continue going forward.

So if you're looking to reduce debt, what's the optimal amount of debt you think that you should be holding on the balance sheet? Beatriz García-Cos Muntañola: Well, that's something that we are working at the moment. So we're not able to get that figured out there. But for short, as soon as we work on that, they will be communicating on that. But basically, as I said, they said to, they pass my test.

Understood, appreciate the color. Thank you. Beatriz García-Cos Muntañola: Thank you.

Thank you. Your next question comes from the line of Neill Morgan from BlueBay. Please go ahead, your line is open.

Thanks very much, and congratulations for the very strong quarter. I appreciate the comments on margin expansion into Q2. Do you have, I appreciate there's a lot going on in the market, not least Ukraine, Russia energy prices, et cetera. Are you able to, does your visibility extend into H2 currently or you really just able to see things quarter-by-quarter that is still there?

Thank you for the question. Well, I can tell you what we see right now, we see our chemical business which is silicon metal related being pretty strong. Like I said, customers are planning for increased production, always related to silicon metal, we see the aluminum market is slowing down due to tremendous pressure related to energy costs. When you move to the steel business, they're quite different dynamics because, of course, the ore has an impact. The overall global production is down, but there are geographies where the production is all being due to the gap of the output in Eastern Europe. So overall, we don't see at this stage any drastic change in the demand profile.

Okay, thank you. That's very helpful. And then just when you were talking about impacts on demand for your products from customers as a result of Russia, Ukraine, did I get the right takeaway, and that's mainly relates to the alloys, both silicon based alloys and manganese based alloys, rather than the silicon metal business, is that the right takeaway?

It is the right takeaway. I mean, the Ukraine historically has been extremely large producer of manganese alloys, probably the biggest producer in Europe, and I think number three producer in the world. So of course, the war has a big impact on that. Russia is the big exporter of ferrosilicon and depending on the measures taken by the various countries, and the possibilities to pay material for sure, there is an impact overall on ferrosilicon demand related to the war.

Okay, thank you. And my last question, perhaps just maybe trying to think about Brian's question about the capital structure, but in a slightly different way. Is it an objective or a desire of the company to actually not have any leverage on the business, but actually to have debt facilities, which are purely there for working capital funding, but actually just fund the structure through cash, RCF and working capital facilities and equity to get rid of any leverage against the earnings of the company? Beatriz García-Cos Muntañola: Yes, thank you for the question, Neill. I think our primary objective as we mentioned for this year in 2022, is with the cash that we are going to be generating increasingly from Q2 is to accomplish two objectives. One is to deliver that as much as we can be the company, we are working on that at the moment and second to invest in our CapEx program. What we are doing, as I think we already commented on that, we increase our factoring or working capital facilities, mainly on what we call factoring. We increase our facility for an additional $30 million. And this is bringing liquidity into the business. And the second thing that we are doing is to work with an ABL program in the U.S. that will add working capital flexibility into our business and other corporate users.

Just a follow-up on the ABL in the U.S., what kind of size or what kind of range of size would the company think or is the company looking for? Beatriz García-Cos Muntañola: We're working at the moment on that. So let me revert as soon as we have something there. We have, I believe our borrowing base, it's at least of $100 million, and then we can we will decide what is the size of our -- the size of the ABL that we have.

Okay, thanks very much. Appreciate the answers. Thank you.

Thank you. Beatriz García-Cos Muntañola: Thank you.

Thank you. There are currently no further questions. I will hand the call back to Marco for closing remarks.

Thank you. That concludes our first quarter earnings call. Once again, we're super excited about the quarterly results we have reported today and with the prospects for the company. We look forward to building on this momentum and continue to work relentlessly to deliver stronger results and create value for our stakeholders. Thanks again for your participation. Have a great day.

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.