Good morning, ladies and gentlemen, and welcome to Ferroglobe's Fourth Quarter and Full Year 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 maybe recorded. I would now like to turn the call over to Anis Barodawalla, Ferroglobe's Vice President of Investor Relations and Corporate Strategy. You may begin.

Thank you. Good morning, everyone, and thank you for joining Ferroglobe's fourth quarter and full year 2022 conference call. Joining me today are Marco Levi, our Chief Executive Officer; and Beatriz García-Cos, our Chief Financial Officer. Before we get started with some prepared remarks, I'm going to read a brief statement. 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. 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, ferroglobe.com. In addition, this discussion includes references to EBITDA, adjusted EBITDA, adjusted gross debt, net debt and adjusted diluted earnings per share, among other non-IFRS measures. Reconciliation of 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 Chief Executive Officer. Next slide, please.

Thank you, Anis, and good morning and good afternoon to everyone. Before turning to our 2022 results, I would like to recognize our people. It is through their hard work and commitment that we were able to achieve the best performance in our 100-year history. Despite the global volatility and its impact on many industries, we have been resilient and continue to deliver strong results. This is a testament to the strength of our business model. It is also a clear indication of the confidence that our customers have in our ability to navigate through these challenging times. Through a combination of favorable prices, operational agility, commercial excellence and cost discipline, Ferroglobe generated strong results in 2022 with revenue, EBITDA and free cash flow, all setting record eyes for the company. Our business fundamentals are solid and the value creation plan that was initiated a couple of years ago has made the company stronger and more competitive. The market opportunity for us is driven by the growing trend towards onshoring and the transition to greener energy sources. As a leading producer of silicon metal, we are well-positioned to capitalize on high demand and markets such as solar and battery. The onshoring movement driven by initiatives like the inflation Reduction Act in the US and similar initiatives in Europe are having a significant impact on the criticality of silicon metal in the solar value chain. This solidifies our position in the market. This is a clear indicator of the growing demand for renewable energy and the increased focus on local sourcing and production. It presents a unique opportunity for a company like ours. We are well positioned to take advantage of these trends and deliver strong results. We are committed to driving a competitive advantage in the solar industry through our…

Thank you, Beatriz. Referring now to the corporate update on Slide 16. Our ability to develop high purity silicon metal provides numerous opportunities that will drive growth for the company in the coming years. The solar market is a large and growing market that is comprised primarily of high purity silicon, which is the most common semiconductor material used in solar cells, representing approximately 95% of the solar modules. High purity silicon also plays an important part in the advancement of battery technology for electric vehicles, replacing graphite with silicon in the anode of batteries provide significant advantages that will drive rapid adoption as the technology is perfected. Current technology enables 5% to 10% of the graphite to be replaced by silicon. This mix is expected to increase dramatically over the next five years. We are partnering with battery developers to refine this technology and have made significant progress. We have started production and we are in the early stages of commercialization. We expect to be a leading provider. as this technology is adopted. We are excited about this opportunity as we expect it to generate high margins and strong growth for the foreseeable future. On shoring trends provide an additional driver for growth, with increasing demand for critical materials to be produced closer to home. Our global footprint puts us in a unique position to benefit from this trend. We are capitalizing on the growing demand for silicon metal by expanding our capacity and enhancing our global footprint with minimal capital investment. In 2022, we successfully added 22,000 tons of capacity at our Selma, Alabama Plant. We are currently in the process of adding an additional 55,000 tons at our plant in Polokwane South Africa. We successfully restarted the first furnace in Polokwane in November, and completed the restart…

Thank you. [Operator Instructions] We will now take the first question it comes from the line of Martin Englert from Seaport Research Partners.

Hello, good afternoon, everyone. A – Marco Levi: Good afternoon, Martin

For the EBITDA guidance, the annual EBITDA guide of $270 million to $300 million. Could you discuss maybe some of the price or average price assumption volume assumption and costs that are underlying that? A – Marco Levi: Yes, Martin, these are the indications that I can give you. I mean, we expect weaker volumes in 2023, about 6% lower volumes mainly related to the fact that we are not running our plants in France, in the first quarter. In terms of pricing, we see silicon rather stable across the year. As you know, the level of silicon price in this graph, is much higher than in the previous quarter -- in the previous years -- in the previous cycle, sorry. While for alloys we see already some price recovery, as we speak. So we assume that there will be some appreciation of our alloy pricing, during the year linked to the demand recovery in particular in Europe. Concerning costs, most of the raw materials are becoming more affordable with some exceptions. Manganese ore, as I mentioned in my pitch, is going up mainly to -- related to the event in Gabon. Coal, is extremely volatile at least, the wash coal, that we buy for our furnaces. So, we don't see short term a significant reduction in coal price. And energy picture varies, depending on the country. But as you know, we are contracted everywhere at the fordable cost, except for Spain. But in Spain now, energy price is more affordable and we have restarted production at some of our furnaces.

Thank you for that. It's, helpful. And I apologiz,e the dial-in call is breaking up a little bit, and I missed some of your comments about the -- I think it was a net $50 million benefit in France, because of some energy credits or rebates. Could you quickly recap that and what impact 4Q? A – Marco Levi: Yes. The benefit in France is related to the way, the contract works between us and the energy supplier. So we were in the position to consume less energy in France, in quarter four. And as a consequence, we got compensated, based on the contract terms.

Okay. And is that the -- I guess on a forward-looking basis is at the end of that? I know you're planning on not running the assets in France in 1Q, but is there anything else there or any other benefit, or either 1Q or any other point, anticipated or potentially available in 2023?

We expect to be competitive out of our assets in France in terms of cost position during Q2, Q3 the rest of 2023. We haven't changed our plan to restart our plants in France at the beginning of the second season.

Okay. If I could, one final one here. Working cap relative to sales, I believe, it was 39% this quarter. I understand the intention to work that down during the first half of 2023 but any other detail that you can share on that metric as we move through 1Q and 2Q?

Yes. What I can tell you is that, we have a pretty solid target reduction of $55 million in Q4, but we expect a reduction between $90 million and $120 million due to working capital in the first quarter. And then, we will proceed with further reduction in Q2, basically getting back to more affordable levels of working capital to run our business.

Okay. And again the target is 21%, or maybe a little bit because of some of the manganese or maybe just a couple points above that in the back half of the year?

Well, you're right. I mean, of course, the 21% was related to ideal inventory levels with high level of sales and high prices. What we expect to do is run the silicon and the silicon alloy business in the range of 21%, 23% working capital. While manganese alloys we have seen that, due to the length of the cycle and the lack of our back integration, will probably require an additional 2, 3 points of working capital. We are fine-tuned -- we're sharpening our pencils to get to the right level, is a moving target, but this is where we are going.

Okay. Thank you for all the detail and congratulations on results.

Thank you, Martin.

Thank you. We will now take the next question. It comes from the line of Lucas Pipes from B. Riley Securities. Please go ahead. Your line is open.

Thank you very much, operator, and good morning, everyone. A great, great job on the quarter. My first question is on the additional savings and commercial excellent opportunities. You outlined $225 million at the end of this year. And I wondered if you could maybe expand a bit on where you're seeing the additional opportunities from the previously identified savings. Thank you, very much.

Yes. As you know, we started this program in 2020. And while you implement the initiatives, you do not capture the full value during every year. So there is a certain trend. And we are -- basically we have implemented all the initiatives. And so, while we have been able to capitalize in 2022 on the part of them, we expect to be able to implement the full program by 2023. And in particular to give you a little bit more granularity, we are factoring $75 million throughout footprint optimization. We stopped production in Château Feuillet, we stop of our production in Monzón. We shut down Niagara Falls. All of this has given $75 million to the bottom line. $70 million comes from continuous plant improvements. I mentioned several times, our KPN program, which is about implementing technologies at each one of our furnaces to improve the yield and the raw material usage of each furnace. So this is another $70 million, $30 million have come until now, but I think we will be able to do much better from purchasing centralization. As you know, Lucas, we have centralized most of our purchasing activities strategic raw materials services, spare parts basically energy. So everything is centralized. We get $30 million out of that. And we have calculated about $50 million coming from commercial excellence. And all these initiatives if you sum up the numbers bring you to $225 million.

That is very helpful. I really appreciate that detail. And going back to the annual 2023 EBITDA guidance range of $270 million to $300 million, I believe you offered a sensitivity of $8 million for a 1% change in volume. Would you be able to offer similar sensitivity on the pricing side?

Well, we -- you put your finger in the right spot. I mean, we think that for 2023 -- the key question is demand coming back like we expect. And as a consequence, we are focused the sensitivity on our EBITDA more on volumes. This is the reason why we have given this comment combined with the guidance. Of course, price 1% on prices, probably gives an impact, which is bigger than the one in volumes. On the other side, based on my comments on pricing, we feel pretty comfortable about our pricing scenarios for 2023.

That is very helpful. I appreciate your confidence on that front. That's really good to hear. I'll try to squeeze one last one and I'll go back into the queue. On the Silicon Metals segment in Q4, volumes declined, margins expanded. I assume that's related mostly to the energy compensation you received, but anything else you would add to that dynamic. It's typically unusual to see in the sector. So I appreciate any distant color on that?

Yeah. I must say the main factor is that what we told investors in terms of trends of silicon metal pricing was right. I mean, we said due to the structure in the market pricing is not going to go back to the levels of the trough of the previous cycles and this is a key element. The other element is the energy compensation. And then there were, like, we said in the presentation also a certain level of CO2 compensation impacting favorably the silicon metal results. In terms of cost -- input costs we are still I likely commented before mainly coal.

I appreciate all the color, continued best of luck. Thank you.

Thank you, Lucas.

Thank you. We will now take the next question. It comes from the line of Logan Gilmartin [ph] from Marina Capital. Please go ahead. Your line is open.

Hey guys, congrats on the quarter. Your guidance to positive net cash position this year, how should we think about the outlook for returning capital to shareholders in terms of buybacks or dividends? Can you give any color on timing? Thanks. Beatriz García-Cos: Hey, Logan, this Beatriz speaking. As you know our current indenture, we don't have the ability to pay dividends. But as we are executing on the reduction of the debt with the senior notes, we expect to have the ability to pay dividends ability. And then the company needs to define the right policy to be able to pay these dividends and shares buyback if this answers your question.

Thank you.

Thank you. We will now take the next question. It comes from the line of Michael Lam from Jemekk. Please go ahead. Your line is open.

Yes, good morning. Two questions. The first one is I've been reading recent news from South Africa about widespread blackouts and lots of electricity shortages. Is that -- is it a case where your plants are you're in an island so to speak where your electricity grid is good, whereas, the electricity grid outside of where you're sourcing is where all the problems are?

Yeah. Thank you for the question. For sure we are monitoring the situation in South Africa very closely, it's also true that until today we have not been suffering any significant issue in terms of energy that, of course, when we had to make the decision to restart Polokwane, we covered ourselves properly with the energy providers. So at this stage, of course, the situation is particularly intense in South Africa. But at this stage, we are in full production both in [indiscernible]

Okay. Does it -- are you continuing with the ramp-up, or because of the electric situation you might slow down the ramp up for now?

No. The -- we continue with the ramp-up. We are ramping up Polokwane third furnace in April. We have already contracted the volumes also for the third furnace. So Polokwane at this stage is expected to run at full capacity starting sometime in the second quarter.

Okay. All right. The second -- actually I have two more quickly. But the second question is when I look at your sales volumes in not just Q4, but Q3. Clearly, there's less demand. Clearly, there's been de-stocking and also increased imports from like you mentioned China and Kazakhstan. But when I look at volumes down so substantially and I look at the users of metals, they won't be down anywhere close. I mean, auto production is up in Europe. And steel production is on the rise. So what's your best guess, as to the percentage of the volume decline that's simply from de-stocking because that will come back?

Right. Right. And this is why we are -- we have -- you have a perfect read of the situation. By the way my comment about Kazakhstan and China was related to ferrosilicon not to silicon metal. Just to be clear, but this is a detail. In terms of outlook still the supply chain is pretty healthy. And if you combine an employee supply chain we've given a moderate start of demand the effect should be that we should count on solid sales volumes in Q2 and Q3 this year.

Okay. And sorry a last question a follow-up to an earlier question about dividends, but not so much related to dividend itself but you're sitting on a lot of cash. Now granted today, you're earning a decent return on cash with interest rates where they are. But I was looking at the bonds, maybe not very recently but it was trading at below the buyout rate for the next anniversary. Given your cash is so large why not just get ahead of the bonds and just going to market and just start buying some of it back because -- and then you save money because one thing I noticed is your interest expense is quite high in Q4 relative to your net debt. Now that's obviously because your debt is 9%. And you're earning 3% on cash, right? So you have a mismatch of interest rate differential…

Yeah.

… why not try and close that a little bit more by taking some of cash and repaying debt.

You and I are aligned. We are executing exactly along these lines, we will update the investors as soon as we have made other significant progress. But we are implementing this initiative as we speak.

All right. Sounds good. Thank you. Beatriz García-Cos: Thank you.

Thank you. We will now take the next question. It comes from the line of Brian DiRubbio from Baird. Please go ahead. Your line is open.

Good afternoon, Marco and Beatriz.

Hi.

A couple of quick questions for you. Marco, as you look at 2023 and sort of all the various puts and takes, do you view that as more of a mid-cycle result that you think the company going to generate, or is this more trough results in your opinion?

Well I mentioned that we see Q1 being a weak quarter and then we expect the demand at least in Europe cautiously ramping up. So this is the way we see it. Our guidance on EBITDA gives you I think a good indicator of what we have been doing to secure profitability of this company also during the trough of the cycle.

Understood. That's helpful. And then Beatriz just as we think about longer term two questions sort of about the debt structure. First if you do conduct a refinancing are you looking to have some prepayable debt or you want something more fixed in place? And how should we think about what your target leverage is over a cycle? Beatriz García-Cos: Yes. Thank you for the questions. So let me take one step back. So we said that we want to reach gross debt level of $200 million. At the moment, the majority of our debt is made of the senior notes, right? It's a fixed 81% of our debt in total fixed interest rates right? The main part is the senior notes at 9.75. And as Marco was saying, if you were listening, so we are at the moment executing on the senior notes. Going forward, we need to see what is the best option for Ferroglobe. We want to run the company with an approximate level of $200 million. And then the type of debt instrument will depend on how the debt market evolves on the next quarter, right? We need to see if the interest rates are bottoming or what is going on.

Fair enough. Appreciate the thoughts. Thank you so much.

Thank you. We will now take the next question. It comes from line Andrew Cohen from Brennan [ph]. Please go ahead. Your line is open.

Hi, thanks for taking my question. I was just going back to the presentation from February of 2021, where the estimates of the $470 million of EBITDA for 2023 remain decently lower silicon metal prices at least environment and a lower cost savings expectations. I was just wondering if you guys could bridge that delta between the guidance for 2023 and the updated guidance for 2023 and the updated pension 2023 and where you were in the presentation? And also is there a cadence for inventory coming down in the first quarter given that we're decently above 21% of sales in total working capital right now? Thanks.

Yes. Andrew let me start from the second question, because I already answered the same question to Martin from Seaport. We have reduced working capital $55 million in quarter four. We are expecting a more significant reduction in Q1. I gave a range in the area of $80 million, $100 million and in Q1 and we further go down during quarter two. We expect to move towards 21%, 23% working capital on revenue for silicon and silicon base alloys in a couple of more points on manganese due to the long cycle that we have in manganese. Regarding the bridge versus the cleansing presentation, I think, I don't have it with me. But there -- the key elements are; one, we have over delivered on our value creation plan, because at the beginning of the value creation plan, we expected the creation of a buffer of $180 million EBITDA, while we are creating more than that $225 million. And what we couldn't foresee at the time was the price evolution in the market, which was related to getting out of the covered period. There was products were in demand customers who are looking for supply security and pricing has been evolving at a higher level than what we could forecast.

Yes. And I guess that's sort of my point is it seems like both the cost savings and the pricing are in your favor and you have the EBITDA guide is lower than what that guide was. So maybe I'm missing something but I was just trying to reconcile that.

Well, the EBITDA guidance takes into account the effect of the value creation plan the fact that we have lower volumes in the first quarter and our assumption on pricing.

Thank you. We will now take the next question. It comes from the line of Thomas Murphy from Odeon Capital Group. Please go ahead. Your line is open.

Hi. Good morning. Just two quick questions. The first is, what is the CapEx outlook for 2023? And the second has to do with the 9 [ph] senior notes, which a lot of people have referenced. But as it relates to the 9 [ph] senior notes features and I should know this off hand I apologize I don't. But do they restrict dividends? Does the notes restrict dividend out to the equity? Beatriz García-Cos: Yes, you are right. So with the current intent, we can't pay dividends. And as I was saying before, we are executing on our senior notes. And this will allow us to have the ability to pay dividends. Of course, then the company needs to define what is the financial policy in terms of dividends and buyback. If this answer your question?

Referring to CapEx, we plan in 2023 the same moment of CapEx for maintenance and EH&S at the level of $75 million same amount of CapEx that we have spent last year. As previously communicated, we have been starting our assets of CapEx. And so we are bringing them up to the level that we want with a reinvestment program of $75 million for two years. On top I mentioned, the growth opportunities that we have. So we are going to invest more CapEx this year in a very judicious way meaning that any kind of growth CapEx is going to be analyzed and presented to the Board for approval. So we are stage gating some growth CapEx to in 2023.

Thank you. The rest of my questions have already been asked. So thank you and have a great day. Beatriz García-Cos: Thanks Thomas.

Thanks Thomas.

Thank you. I would now like to hand back over to the speakers for final remarks.

Thank you. That concludes our fourth quarter and full year 2022 earnings call. I am proud of our performance and results in 2022. We have demonstrated that Ferroglobe is able to perform while transforming. I truly believe there is significant value to be unlocked making Ferroglobe a compelling investor proposition. Thank you again, for your participation. We look forward to hearing from you on the next call. Have a great day.

That does conclude our conference for today. Thank you for participating. You may all disconnect.