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 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. 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 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. 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 these 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 chains. This will only become more valuable over the coming years as suppliers and customers think strategies with their own ESG 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 proves to be extremely valuable. As we look at what's happening around us from an economic, environmental, and geopolitical standpoint, one key element of our value creation plan has been footprint optimization. The decision to right size the footprint and subsequently remaining disciplined in not restarting capacity too quickly has also contributed significantly to this turnaround. That said, we do see some positive signs to consider additional capacity restarts and are assessing this now in the area of silicon metal. There are also positive developments regarding the financial restructuring, which I'll come back to momentarily. In addition to our operating assets, we're benefiting immensely from our vertical integration into critical raw materials. This has provided us security of supply in areas like electrodes and has helped us mitigate inflationary pressures in other areas, such as coal and coke. During the first quarter, our revenues increased 26% to $750 million. We achieved an adjusted EBITDA of $241 million, an increase of 182% over the prior quarter. Our adjusted EBITDA margin more than doubled to 34% in Q1, and our earnings per share on a fully diluted basis was positive $0.80, a significant increase over $0.27 per diluted share we delivered last quarter. Overall, our business continues to perform well across the entire product portfolio, and we expect this momentum to continue. Moving ahead to Slide 5 please. Our Silicon Metal business had a drastic change this quarter. As the materially lower fixed price contracts expired at the end of 2021, we realized a 108% increase in the average selling price in our shipments, excluding the joint ventures. The index in the U.S. was basically flat in Q1 as a result of the pre-buying at year end, so there hasn’t been a lot of liquidity in new sales. In Europe, the index pricing did come down right at the beginning of the year, following an extremely robust Q4. Since mid-Q1, we have seen some recovery in the index into Q2. Keep in mind that the majority of our contracts this year are index-based and get reset quarterly based on an average price of the per year quarter index. Hence our other flat Q1 at these attractive pricing levels is actually positive for us in Q2. While our shipments during the quarter dropped, I want to be very clear that this is not the result of demand destruction in any of our end markets. The drop in volumes is actually attributable to the collective results of starting the year with very low stocks after a strong Q4, our decision to curtail production in Spain given the energy pricing, a transportation strike in Spain this March, which has been leading to some spillover of volumes into Q2, and the delay in the restart of the first furnace itself. We continue to see steady demand on the chemical side. Many global customers are considering plans for capacity additions. At the moment, the energy-intensive aluminum sector is feeling the direct impact of higher energy prices, particularly in Europe. As a result, there have been some temporary curtailments. Photovoltaic is increasingly getting more focused these days. Many of our customers are thinking about their strategy, but we have not seen a big pickup this year just yet. Overall, we saw a significant improvement in the contribution from silicon metal with quarterly adjusted EBITDA increasing to $150.4 million. There will always be some month-to-month fluctuations driven by trade flows and demand-side issues, but the fundamentals remain solid. Looking ahead, we see the supply-demand tension holding supporting favorable pricing levels. In light of the situation, we have commenced our assessment around the restart of our 55,000 ton silicon facility in Polokwane, South Africa. A formal decision around the potential restart is targeted for September. Another exciting development is with our silicon metal powders project for batteries and other advanced applications. Given the positive responses from our customers, who have been testing our high purity silicon powders over the past year, we are scaling up production to meet growing demand for our products. We'll be providing more details around these developments shortly. As our customers' needs continue to evolve, we feel this product and the perfect innovation behind it will be an important part of the Ferroglobe story in the future. Slide 6, please. The silicon-based alloys product category also contributed handsomely during the quarter, with adjusted EBITDA increasing by 53% to $77.4 million. This slight drop in sales volumes was in Europe and is linked to lower production in Spain due to the energy-related curtailment, a production issue in South Africa which has since been addressed, and logistical issues in South Africa limiting our ability to procure containers and more foundry products. We expect to recover some of these volumes in the coming quarters. More meaningful is the gap left by the conflict between Russia and Ukraine. Given Russia's reliance on the export market, we see upward volume potential in the near term as a result of this. While pricing increases commenced in late February there is a threat, so we will see the full pricing benefit in Q2. It is true that global steel demand was down in Q1; however, the current situation in the CIS region, coupled with other logistical issues elsewhere, is supporting market tightness for ferrosilicon. This builds on the strong momentum we saw here in this product. We expect this part of the business to contribute more in the near term as a result of these factors. At the moment, the price appreciation is more than offsetting any cost pressure driving margin expansion. Moving to Slide 7, please. Turning now to manganese-based alloys, this part of our portfolio is also impacted by the war. Since the beginning of the war, the prices of our manganese alloys have increased. Similar to ferrosilicon, the price lag in our context means we realize these benefits in Q2. In terms of volumes, our 75,000 tons of shipments was in line with our expectations given the situation in Spain. As a reminder, 97,000 tons shipped the previous quarter was the result of some inventory build and catch-up volumes at year-end. On the cost side, we have seen a direct impact of inflationary pressures on manganese ore, coke, and other reductions. Given the evolving situation in Russia and Ukraine, we see some near-term opportunities in this part of our portfolio. Next slide please. As we look at the year-end, there are a few key areas of focus. 2022 will be the second year of the execution phase of our value creation plan. Building on last year's success, we have identified a new pipeline of initiatives, which are expected to deliver an additional $65 million of in-year EBITDA. This cost savings target is spread across footprint optimization, centralized procurement, continuous plan improvements, and the benefits stemming from commercial excellence. On the point around footprint optimization, we recently announced an agreement with the French Works Council on March 30 relating to the process which started one year ago. The scope of the project was amended back in November to reflect the continuation of operations at our link-level facility. Collectively, this agreement results in 195 potential job terminations and 35 employee transfers to other facilities. The project received validation from the French Labor Administration on May 4. I want to thank all the various government agencies for their deep involvement and productive discussions over the past year in arriving at this structure. Overall, we are well ahead of schedule in delivering the $180 million of EBITDA uplift from cost cutting and commercial excellence which was initially targeted by the end of 2024. This year, we will also focus on looking beyond the financial targets. Overall, there is tremendous opportunity for improvement by focusing on the core or bolstering our capabilities and ensuring we have the right support system in place to drive change, in order to create an edge and minimize value. We have plans across our functions aimed at driving higher productivity, enhancing our operational efficiency, improving our customer experience, and driving sustainable results. Another area where we have been spending a lot of time around is ESG strategy. At the moment, we're still towards the beginning of this journey. But I am proud to announce that Ferroglobe will be publishing its first ESG report during the first half of 2022. Needless to say, ESG is a critical pillar for all our stakeholders, and we are invested in ensuring that this becomes a part of our company's culture. In due course, we would be releasing details around the key areas of focus and the targets we're setting. Overall, I hope this call leaves you excited as we are about where we are going. Since I joined in January 2020, we have been driving change throughout the organization, which has supported our financial trajectory. That said, we continuously broaden the scope of our plan and execute on our new initiatives to unlock additional value. I would now like to turn the call over to Beatriz García-Cos, our Chief Financial Officer to review the financial results in more detail. Beatriz?

Thank you, Marco. Please turn to the income statement on Slide 10. During the quarter, our top line grew by 26% to $750 million over the fourth quarter, primarily as a result of pricing in our silicon and silicon alloy product categories given the continued strength in selling prices across our product portfolio, combined with some expected recovery in volumes. There is further upside in top line growth into Q2. During the quarter, we faced inflationary impact in key inputs. While we didn't encounter any operational disruptions, sourcing from alternative suppliers for inputs previously purchased from Russia came at the highest costs. Despite these incremental costs, our margins in the first quarter improved due to a combination of higher pricing as well as improvements we have made to our overall business in optimizing our costs and improving the efficiency of our operations. Cost of sales as a percentage of sales was 48%, down from 65% the prior quarter. Our adjusted EBITDA margin hit a record 34%, more than doubling over the prior quarter. Our net profit had a significant jump yielding earnings per share of $0.80 on a fully diluted basis. This is a 196% increase over the $0.37 per share earned last quarter. Please note that disregarding our Q4 figures, there have been some restatements specifically related to the accrual of interest for the Reindus loan for $6.1 million and an update on the earn-out provision of $7.3 million related to selected manganese assets. Please refer to our 6-K filing for the details around these statements. Next slide please. The key driver for the quarter-over-quarter adjusted EBITDA growth is realized pricing, primarily the result of the resetting silicon prices. These more than offset some shipment issues we've had during the quarter and the increase in our costs. Specifically, on the cost side, the impact of higher raw material prices accounted for nearly half of the cost impact. Energy prices adversely impacted us by another $14.5 million, while we've had some seasonal impacts with the tariffs in France, the main country of focus remains Spain. The impact of Spanish energy during Q1 was $4.1 million. There have been some positive developments in Spain with the government recently announcing plans to cut the price of natural gas, which ultimately impacts the market price of energy. The timing of the final cut prices has not yet been finalized, but we think it can have a positive impact for us in the second half of the year. We continue to monitor this closely as we adjust our operational plans and strategies as we get more clarity around this scheme. Slide 12 please, our cash balance improved by $60 million, ending the quarter with $176 million. This lowers our net debt to $342 million at quarter-end. Despite the strong growth during the quarter, we maintained a flat level of working capital, thanks to the discipline and financial controls we introduced in operating our business over the past year. Following the decrease in account receivables, we have expanded our factoring facilities, which will help accelerate our cash duration going forward. Our working capital also includes some one-offs, like settlement of some overdue payables and the cash payment for CO2 to address our 2021 deficit. With the improvement in our financial performance, we continue to enhance liquidity and enhance our overall carrier profile. Next slide please. Q1 represented the second consecutive quarter of positive operating cash flow with $66 million, up $44 million over Q4 driven by a strong quarter. Increases in account receivables and inventories yielded a working capital increase during the quarter; the actual cash impact of our CapEx expense was $9.1 million, and the net impact of cash flow from financing activities was $2.6 million. As we highlighted on our prior calls, we were expecting a slower ramp-up in free cash flow generation versus EBITDA growth in Q1, given items such as the double coupon payment paid during the quarter, CO2 credit, and increase in working capital. We now expect an acceleration in cash flow generation going forward. Slide 14 please, looking at the year ahead, our priorities for cash. We expect to generate two key areas. The key priority is to reduce the amount of our debt. Through the past few years, our debt balance has increased, and we are committed to significantly reducing the debt. The logical place for us to start are the 9% super senior notes, which we can pay back at par through October 2022. When it comes to the capital structure, our first objective is to add an asset-based loan to fund working capital that would generate for general corporate purposes. We have been working on this over the past few months and are targeting to close a transaction by the end of Q2 with a goal of deleveraging. We are currently evaluating options for our capital structure that offers a cost of debt in line with our current credit profile, sufficient flexibility to operate our business, and also enables debt prepayment in a cost-effective way. We will be providing an update on these once we have decided on our path forward. After several years of scaling back on CapEx spending, the other priority is to increase our capital spend to $75 million, which we deemed to be a good level going forward. All in all, a lot of exciting prospects on the horizon as our financial results continue to improve. At this time, I will ask the operator to please open the line for questions.

Thank you. Your first question today comes from 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 progressed 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, bimonthly, or on a quarterly basis. So it's 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. 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 mentioned a few items during my reading of my script, but in a nutshell, the way we see it in Q2 is pricing stronger than cost increases across all our main product lines.

Okay, so it's fair to say...

Yes, margin expansion.

And then anything on the cost side of things when we think about the cost per ton across the business segment? I mean, there was a notable step down in 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 the financial cost increases on silicon metals between 4% and 5%. We see a 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?

Yes, Martin, this is Beatriz speaking. We are working at the moment on that. So as soon as we have 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.

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, it is silicon metal. This comment was related to the contracts of silicon metal. We moved from excluding joint ventures from contracts that 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, are those still expiring at the end of this year, or are those index-based pricing contracts for multiple years?

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

Okay. And just trying to think about how your customers are 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. Supply security really popped up last year in all the discussions, but is still very valid due to all the complexity that we—everybody has been having in supply chains. 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 is definitely an advantage for us in satisfying this customer demand for 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'd like to hold? Is it mid-cycle leverage target? I'd just love to get a sense of how you're thinking about the future capital structure of the company?

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. The first step for us to start is to refinance our super senior that goes without the cost till October 2022. Then, as we said, we plan to use our cash generation to cover two objectives: number one is to continue to reduce 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?

Well, that's something that we are working at the moment. So we're not able to configure that there. But for short, as soon as we work on that, we will be communicating on that. But basically, as I said, there is no pass my test.

Understood, appreciate the color. Thank you.

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 on 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, etc. Are you able to, does your visibility extend into H2 currently or are 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. Overall, global production is down, but there are geographies where the production is being affected due to the gap of output in Eastern Europe. So overall, we don't see any drastic change in the demand profile at this stage.

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, Ukraine historically has been an 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 a 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 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?

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 on reducing as much as we can our debt. We are working on that at the moment and the second to invest in our CapEx program. What we are doing, as I think we already commented on, is to increase our factoring or working capital facilities, mainly on what we call factoring. We increase our facility for an additional $30 million. This is bringing liquidity into the business. The second thing 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?

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 is at least $100 million, and then we can decide what is the size of our ABL that we have.

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

Thank you.

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.