Good morning everyone and welcome to Ferroglobe's Fourth Quarter and Full Year 2023 Earnings Call. I would now like to turn the call over to Alex Rotonen, Ferroglobe's Vice President of Investor Relations. You may begin.

Thank you, Heidi. Good morning, everyone and thank you for joining Ferroglobe's fourth quarter and full year 2023 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 our 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 exhibits to those filings which are available on our web page at ferroglobe.com. In addition, this discussion includes reference 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 like to turn the call over to Marco Levi, our Chief Executive Officer.

Thank you, Alex and good morning, good day, and good evening to everyone. Thanks for joining us on the call today. We appreciate your interest in Ferroglobe. We are very pleased with our strong execution in 2023, where we improved our operations, strengthened our balance sheet, and posted solid financial results of $315 million of adjusted EBITDA. While our end markets were extremely challenging in 2023, we focused on things that were within our control to position the company for long-term success. I'll discuss a couple of the highlights of our execution and strategy. Then Beatriz will discuss the great strides we have made in improving our balance sheet a little later. Overall, operations performed at a high level in 2023. Our European plants set a new historical record for opening efficiency as measured by kilowatt hours per ton, improving by more than 3%. In the third quarter, we completed a strategic acquisition of a high-quality quartz mine located in South Carolina which will ensure access to quartz needed to produce high-quality silicon metal in our U.S.-based silicon metal production plants. Aligned with our strategy to grow our advanced silicon metal business, we signed a term sheet for a global joint venture with a leading battery material company in Europe to develop advanced EV battery materials using silicon in the anode. We also signed an MOU with a U.S.-based advanced battery solutions company to pursue the next generation of silicon-rich battery technology. As part of this venture we are currently testing a promising nano-layer coating technology which not only increases the performance and the range of EV battery but also lowers the cost of battery manufacturing. The silicon-based EV battery market is expected to go to 150,000 tons globally by 2030. We provide additional updates in the near term. In 2023, we also took action to protect our markets. Working with U.S. legislators, we had to introduce a bipartisan bill in Congress that assesses a 35% tariff on ferrosilicon imports from Russia and Belarus. If passed, this legislation is expected to have a positive impact on pricing as Russia is the largest importer of ferrosilicon to the U.S. We signed our first PPA in Spain during the year and have since added additional PPAs which now comprise roughly 20% of our needs for 2024 and beyond to enhance our ability to increase production in Spain which has suffered from uncompetitive energy prices over the past couple of years, increasing resilience and flexibility of our global footprint. In response to the spike in energy prices in 2022, we executed a multiyear energy agreement with a French energy company that enabled us to generate an incremental $186 million in EBITDA in 2023. This rebate was in exchange for optimizing our production in France to minimize our power consumption during the winter months. While the market in 2023 was very challenging, we are seeing subtle signs that provide us optimism for 2024. There is still a lot of uncertainty in the market, but we are seeing some improvements in pricing. U.S. silicon metal prices appear to have bottomed in December and have actually increased in late January. U.S. silicon metal price index increased from its recent low in early December of $140 per pound to $149 in early February, or up approximately 6%. European price movements were even more pronounced, increasing from the low of $2,049 per ton in late September to approximately $2,360 per ton in November to $2,909 in early February, an increase of 23% in 3 months. We believe that the European prices increased in part due to supply constraints as a result of a fire at a major silicon plant in Norway and shipping disruptions in the Red Sea. Looking at market pricing and associated production costs during those trough periods, it appears that the industry was operating at breakeven at best which is unsustainable. We believe marginal producers were operating at a loss, leading them to reduce capacity, thus improving the supply-demand dynamics ultimately driving higher prices; there are signs of a cycle trough. As it relates to solar, we continue to position the company to take advantage of onshoring trends that are becoming a bigger focus of governments in the U.S. and Europe. Ferroglobe, as a leading worldwide producer of silicon metal, is set up to be a significant beneficiary of these trends. As an example of our market leadership, we recently signed a long-term supply agreement with LONGi, the world leader in the solar value chain, to supply them with traceable silicon metal that can be sold in the U.S. to its growing solar market within the confines of the Uyghur Forced Labor Prevention Act that affects Chinese access to the U.S. The main region of silicon metal and polysilicon production in China is Xinjiang, where many of the Uyghur people reside. According to CRU estimates, the Xinjiang area accounts for approximately 40% of Chinese silicon metal production. Our significant advantage is that we can provide traceable non-Xinjiang silicon metal to China and Asia which can then be imported into the U.S. as a verified product under the U.S. LPA. While we are cautious about 2024, we are very bullish about 2025 and beyond due to secular trends in the solar and EV battery markets, where we believe we have significant long-term growth opportunities. To give you a sense of the scale of these growth markets, according to CRU the worldwide demand for silicon metal for the solar and electronics segment is forecast to grow by approximately 70% to 3 million tons between 2023 and 2028. Within our primary markets, the U.S. and Europe, the demand for silicon metal is expected to grow by roughly 40% to 947,000 tons during the same period, representing a huge upsurge for us as the larger Western producer of silicon metal. We are introducing 2024 guidance, recognizing the exceptionally uncertain and volatile times in our end markets, elevated geopolitical risks, wide-ranging elections around the globe, and elevated interest rates among other factors. Given the unpredictable environment, we are initiating our 2024 guidance with a range of $100 million to $170 million of EBITDA. The decline in our 2024 guidance relative to 2023 results is primarily driven by our French energy agreement which we expect to decrease materially in 2024. The 2024 guidance is also impacted by substantial price declines over the past several quarters. Indexes for most of our products declined by 30.5% from December 2022 to December 2023, with demand continuing to be soft in the early part of 2024. It is important to note how sensitive our results are to price fluctuations; for example, a 5% change in annual price for silicon metal has a $35 million impact on expected EBITDA, all else being equal. We expect the weak pricing to be partially offset by strong volume growth, particularly in Asia. To counteract the weak demand and lackluster pricing, we remain vigilant in managing costs and looking for incremental productivity gains across all areas of the company. As discussed previously, we are introducing our capital return program with an initial quarterly dividend of $1.3 cents per share and plan to request our board of directors and shareholders as required to approve a share buyback program to be executed at the discretion of the management team. The capital return program is part of our overall capital allocation strategy. Our priority is ensuring that our plants are well capitalized to run optimally as we seek to maximize our return on invested capital. Beatriz will provide more details on that. Next slide, please. Silicon metal revenue in Q4 was $168 million, a decrease of 16% from the third quarter. Adjusted EBITDA was $22 million, a decline of 73% over the prior quarter. Our average realized price for silicon metal decreased by 3% in Europe and 6% in the Americas compared to the previous quarter. Index prices increased 26% in Europe and decreased 8% in the U.S. during the fourth quarter. There is typically a lag with realized prices trailing indexes by approximately 3 months for the portion of our contract that expect to an index. Silicon metal prices have shown strength since year-end, with prices increasing 13% in Europe and 6% in the Americas. As for silicon metal outlook, it appears that the market is showing incremental improvement with U.S. prices bottoming in December and increasing since mid-January. European prices, after a strong increase in the fourth quarter, continued their strength in 2024 and up 38% increase from the bottom at the end of Q3. The improvement in prices benefited from supply disruptions, production curtailments by some of our competitors, and restocking. While we remain cautious about the demand environment, these improvements provide some optimism for 2024. Next slide, please. Adjusted EBITDA for Q4 for silicon-based alloys was $35 million, up 38% over the prior quarter. Relative to the third quarter, overall average realized pricing was down 7%, with prices in Europe declining 10% and Americas declining 2%. The silicon alloy segment was adversely affected by weak demand, primarily in construction and automotive. While the environment continues to be challenging, we expect improvement in the second half of this year. Regarding the outlook for silicon-based alloys, prices have strengthened since year-end with index prices increasing 7% in Europe and the Americas. While demand remains sluggish, we are encouraged by the recent price improvements, but there remains a lot of uncertainty in the market. Moving to Slide 7, please. Turning now to manganese-based alloys. Manganese-based alloys revenues was $60 million in Q4, up 3% over the previous quarter. In Europe, index price appeared to bottom in late September and have increased approximately 13% since year-end, adding to the 6% gain in the fourth quarter. The end market primarily still remains under pressure; we expect incremental improvement throughout 2024. 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 Slide 9 for a review of the income statement. Sales declined 10% in the fourth quarter to $376 million from $417 million in the prior quarter, with annual sales declining 36% to $1.7 billion, mainly due to lower pricing and secondarily, lower volumes. Raw materials and energy consumption increased as a percentage of sales from 47% to 53% in Q4 and from 49% to 53% for the year. Despite declining prices, we posted solid EBITDA in the fourth quarter of $60 million for the year. For the year, our EBITDA was $350 million compared with our guidance range of $270 million to $300 million. Excluding the impact of the French energy contract, good capital result in 2023 EBITDA of approximately $129 million versus our 2024 guidance of $100 million to $170 million. In the fourth quarter, we recognized an impairment of $24 million that was primarily related to our operations in the U.S. Net finance expenses for the year declined 50% to $29 million due to the partial redemption of the senior secured notes in July, true-up of accrued interest, and extension of government loan maturity. Next slide, please. Our adjusted EBITDA in the fourth quarter was $60 million versus $104 million in the third quarter. Adjusted EBITDA margin declined from 25% in the prior quarter to 16% in the fourth quarter. Reduced shipments and lower realized prices contributed roughly equally to lower EBITDA. Prices in the fourth quarter were weak across the board with the overall average realized price declining 9%. Weakened markets with pricing pressure across our 3 segments resulted in a negative impact of $22 million on our adjusted EBITDA. While volume had a negative impact of approximately $19 million on the Q4 EBITDA, cost had a negligible impact on EBITDA. Slide 11, please. Adjusted EBITDA for the full year was $315 million versus $350 million in 2022. EBITDA margin for 2023 was 19%, down from 33% in 2022. Average selling prices which declined 29% on average from historical highs in 2022 had the biggest impact on our 2023 adjusted EBITDA, reducing it by approximately $722 million. Cost positively impacted EBITDA for the year by $244 million, driven by the French energy agreement and CO2 compensation in France, with the energy agreement helping by $186 million. Next slide, please. We ended the fourth quarter with a cash balance of $138 million, down from $166 million in the third quarter. Net debt increased by $30 million to $101 million, while our gross debt remained flat with the prior quarter. Post-redemption of the senior secured notes, our pro forma gross debt is approximately $91 million. Next slide, please. During the fourth quarter, cash provided by operations was $25 million. CapEx outflows in the fourth quarter were $24 million versus $19 million in the prior quarter and $84 million for the year. We anticipate our 2024 CapEx to be similar to 2023 levels. As of January 31, our cash balance was nearly $600 million, including the full receipt of approximately $210 million from the energy French compensation, of which $56 million was received in December 2023 with the remaining $154 million received in January 2024. This cash balance excludes the redemption of our remaining senior secured notes of $152 million, including the coal premium and accrued interest. These notes were redeemed on February 16. This is a significant achievement and a dramatic improvement from 2018 where we had net debt of $430 million. Our solid cash position combined with our ability to generate strong cash flows enabled us to declare a dividend. We plan to ask our board and shareholders to approve a share repurchase program which requires shareholder approval as we are a NASDAQ-listed company domiciled in the U.K. Next slide, please. At this time, I will turn the call back over to Marco.

Thank you, Beatriz. Let's move to the corporate update on Slide 15. We made great strides in 2023 and as promised, have initiated a new capital allocation policy that we return capital to our shareholders. We initiated a quarterly dividend of $1.3 cents and are currently working to implement a share repurchase program. Given the current uncertainty in the market, we are starting with a conservative dividend with the intention of increasing it as the environment improves. We ended the year with the strongest balance sheet in the history of Ferroglobe and achieved a net positive cash position in January. This is a dramatic improvement over the highly-leveraged balance sheet we had just a year ago. The partnerships we discussed earlier are an excellent way for us to take advantage of the tremendous opportunities in the advanced silicon EV battery market which is expected to grow to 150,000 tons by 2030. This, combined with the second secular trend in the solar market that we are now serving globally, is expected to drive long-term growth for Ferroglobe.

Operator, we're ready for questions.

We will take our first question. Your first question comes from the line of Lucas Pipes from B. Riley.

Thank you very much, operator. Good morning, everyone. Marco and team, great to see that unlevered balance sheet and the commencement of a dividend. My first question is on the 2024 guidance for EBITDA, $100 million to $170 million. And Marco, if I heard you right, a 5% change in pricing is about $35 million EBITDA sensitivity, so should we kind of think of the guidance as in the current price environment? You had $135 and then you maybe put like a 5% sensitivity to the upside and to the downside to articulate that range, or are there more dynamics at work? Would appreciate how you think about that.

Thank you, Lucas and thank you for the question. I think it's probably the most important question of today. First of all, the 5%, $35 million is related to silicon metal; you have different sensitivities for the rest of the product mix but I think it's a good indicator, the 5%. We have decided on this guidance coming out of the fourth quarter, where demand was extremely low, and we only started seeing somewhere some price recovery. So when we decided about the guidance it was pretty much coming from our bottom-up result of our budget. Since then, prices have shown some substantial improvement; they will materialize with the usual lag 2 months for alloys, in particular, manganese alloys, and 3 months for silicon. Sustainability of this price level is a question because on one side, we don't see any structure of change in terms of demand, on the other side, like I mentioned in my pitch, a lot of capacities are being curtailed. There are difficulties in the supply chain and at the end, customers need to start filling their inventories. So we feel slightly optimistic, more optimistic than a couple of months ago. I think the guidance is still valid. I would say that based on the recent price moves, I would be optimistic on the high side of this guidance. The other comment that I can add on that, I mentioned that we drastically improved the performance of our operations by 3% in Europe this year, and we started a new program to make sure that we were going to add additional EBITDA out of new initiatives that we plan to implement as we speak at the operational level, initiatives that are going to be totally under our control.

That's very helpful, Marco. Just to confirm, you have a bottom-up budget that you created some time ago, which established a range of $100 million to $170 million. Since then, the market has improved, but that improvement isn't yet reflected in that range. Is that correct?

Correct.

Okay, that's very helpful. And then you mentioned in the release that you expect to be free cash flow positive. The way I read that comment, it sounded to me like at any point in your range, that statement would be true. But I wondered if you could maybe elaborate on that, if that's the right conclusion and what sort of cash items we should be mindful of from sustaining capital to working capital, taxes, etc.? I would appreciate the additional color.

This is Beatriz speaking. In terms of cash flow for 2024, I want to highlight a few key points. First, we anticipate the release of working capital this year. Second, our gross debt is below $100 billion. Third, in Q1, we are already proforma net cash positive at $91 million, as shown on the slide. We expect a very strong year regarding net cash flow. While Marco has focused on EBITDA, from a cash perspective, I believe this will be a very significant year for us. Additionally, we have $32 million in interest savings, which is a noteworthy item. Regarding CapEx, we plan to maintain the health of our operations and expect to invest similarly to 2024. We also decided to proceed with a capital allocation policy that includes a dividend payment of $1.3 cents per share. This will be a modest dividend, reflecting our company's performance over the past year, and we aim to increase it over time. As for the share buyback program, we plan to approach it opportunistically. However, we need our shareholders' approval at the AGM in June since we are a British company listed on NASDAQ.

Thank you. And Beatriz I heard it right, that approval would come at the earliest in June?

Right.

So the Board could make an approval sometime before then but then it still takes the shareholder meeting in June to kind of get shaped?

Of course. Yes.

You mentioned being opportunistic with the buyback, which I appreciate. What do you think the allocation would be between buybacks and dividends at a high level? Is that how you're considering it right now? I've noticed some companies in the industry allocate a certain percentage for buybacks, so I'm curious if you think about it that way or if it’s too early to discuss.

Yes. I think, Lucas, this is the first year since 2018 that we are sort of lobbies paying dividends. So our intention is to return capital to the shareholders through the payment of dividends. When it comes to the share buyback, as I mentioned, we feel that our share is completely undervalued after the repayment of the senior notes, etc. So if the share price continues to be undervalued, we're going to be taking the opportunity for sure to do solid share buybacks.

Look, we want to maintain a certain flexibility. Overall, we have started a discussion with our Board; we hope to conclude the discussion in June. But like I said in my pitch, we want to make sure that we keep on also financing our operations and keep our assets running at the proper rate.

That's all very helpful. And I'll try to squeeze one quick one in. On the EV battery side, you mentioned a term sheet and another initiative, what is your contribution high level to these ventures?

Thank you, Lucas. Well, we mentioned these 2 agreements because they are exactly aligned to our strategy of attacking the opportunity in the growth of silicon metal for batteries in 2 ways. The joint venture that I mentioned is about silicon-modified products that will partially replace graphite in the anode. We are targeting 30%. Today, it's around 10%, 12% with other products, but this is the market that we are targeting. The second alliance and partnership with an American company is related to our ambition to supply silicon metal for a full silicon-made anode. And these 2 kinds of alliances really confirm the validity of our strategy.

Marco, thank you very much for all the color and to you and the team, best of luck.

The question comes from the line of Martin Englert from Seaport Research Partners.

Just to pivot back to the guidance and follow up on some of Lucas' questions in the context. It seemed like at the time you budgeted for the guide, the market was comparatively worse, namely price demand. Since then there's been price improvement. And your comment about kind of taking into account market prices today would imply something towards the upper end of the EBITDA guidance range. So maybe if I look at spot market prices for silicon metal and alloys today and flatline that for the rest of the year, would you anticipate approximating the $170 million in EBITDA?

Or even better, Martin. We have the question, and I mentioned it when I answered Lucas. These increases are mainly due to restocking and some production curtailments. In Europe, the crisis in the Red Sea adds another factor, and we need to see if this price level will be maintained. This is my first comment. The other point I want to make is that alongside the pricing recovery, we have decided to aggressively improve our operational costs this year. So today, I can say I'm quite optimistic that we will reach or possibly exceed the upper end of our guidance.

Last year, there were no revisions to the EBITDA guidance, but the situation gradually worsened fundamentally, yet we still surpassed the upper limit of our full-year guidance. If we are looking at a potential improvement in fundamentals with price or demand, we might consider increasing our guidance as the year goes on, provided that prices remain at current levels or improve.

Well, to be in line with what I mentioned after the third quarter, in 2024, we had a big favorable impact from the energy pricing front. And like I explained, this impact was related mainly to the difference between the energy market price in France and the price that we have negotiated. This year, this difference is much lower, much lower, and this is why Beatriz during our pitch has mentioned the $186 million benefit on our EBITDA of $315 million that basically brings the performance of 2023 to $129 million, as mentioned by Beatriz. Now starting from there we have created a guidance of $100 million, $170 million. Now in 2024, we are not going to have the same impact from energy in France. We are still going to be very competitive with our energy cost in France, but a few things have to fall into place: recovery of demand, more sustainable pricing, and our aggressive operational cost reduction program.

Within the annual EBITDA guidance range for this year, what is the assumption regarding the contribution from energy credits? I would like to understand that better.

Yes. I mean when we look at the estimated energy price in France during this year at market and the way we plan to run our assets in France, we expect to get a benefit which is going to be lower than $40 million versus the $186 million that we had in 2023.

What is the spot French electricity price that's baked into that assumption in dollars per megawatt hour?

Sorry, can you repeat your question?

Sure. I understand that the credits work essentially when spot prices for energy in France are at a higher level based on the mechanism versus your contracted rate, you'll get a bigger energy credit, that's what led to the $186 million for last year. This year you're expecting $40 million and my question is, embedded in that $40 million, what is the dollars per megawatt hour in France?

Yes, you need to consider that it changes every week. You should look at the published energy market price in France as a reference point, which is fluctuating weekly this year. It’s generally between $70 and $80 per megawatt. Additionally, you must take into account how we will manage our operations and our total energy consumption in France. These two factors will help provide a final estimate. Therefore, I can't provide a precise figure, but I can say that it's going to be less than $40 million compared to the $186 million from 2023.

Yes. So it's up to $40 million.

It's up to $40 million.

Okay, up to $40 million. And is there a sensitivity that you can provide on that? I mean I see year-to-date it's like right in that range, it's like $76 a megawatt hour in the spot.

Yes, like I said, between $70 and $80, yes. Well, it's very difficult because like we explained in previous calls there are other factors that influence the final price, like interruptibility, like which time slots of the day we use to run our assets. So it's something where it's very difficult to give you further guidance.

Okay. And when you say up to a $40 million credit, would that be based on that $70 to $80 range or not necessarily?

Yes.

Good. Question on cost savings that were previously undertaken. I think there was an initial program of targeting $180 million EBITDA improvement and stepped up, I think, on your Investor Day to $225 million or maybe just before that, if you can remind me of the base year for that and then you spoke about seeking out some incremental improvements, and I just wanted to try to square that away with the EBITDA guide for this year as well.

Yes. I mean, with the value creation program we mentioned that we approximately achieved $225 million. But there are many moving pieces as we are a very different organization versus 2020. What makes their reconciliation very hard is that there have been a tremendous change in certain critical inputs. For example, and I mentioned just a couple of things, coal input cost has increased more than 100% between 2019 and 2023 because it has increased to $472 per ton. And we used approximately 0.5 million tons of coal; this number is for 2023. In the past, we even used 600,000 tons of coal per year. The rough increase of $240 per ton in coal means a negative impact to our bottom line of $150 million in terms of incremental cost. If you make the same comparison on energy, if you exclude France and you consider our energy cost for the rest of our asset footprint when you compare 2019 to today, we have more than $35 million incremental costs. So when you just look at these 2 categories, these 2 categories impact negatively the bottom line by $150 million, and the price of coal or the price of energy are things that are not under our control. Now this is just to give you the feeling of how difficult it is to reconcile our performance versus expectations. But like in every industrial company, there is always room for improvement and the room for improvement in our case is in the area of integrated supply chain, and this is where we are focused this year to reduce our overall operating cost.

Sorry, go ahead.

No, Martin, I want to add one more point to what Marco said. We produced about one-third fewer tons, which affects our cost absorption, specifically fixed cost absorption. This has also been a factor that worked against our value creation plan.

Of the 500,000 tons in 2023, that was your external purchases or consumption?

Correct. External purchases of coal. The rate of our integrated coal from Alden.

Could you provide any framework regarding not metallurgical silicon market prices but your average selling price for silicon metal, which continues to perform well? I'm also curious if you could give a historical range of spot market prices for the higher-value silicon metal used in battery applications, even though I understand that sales into chemicals and battery markets likely don't significantly affect spot prices.

Well, first of all, if you talk about silicon for batteries, we are still relatively small volumes in our product mix, but we are talking depending on the customers between $10 and $15 per kilo, so a completely different price range. And in premium applications, the price of silicon metal is decoupled from the index. So today, we have volumes in silicon metal that are sold at between $4,000 and $4,500 per metric ton decoupled from the current market price.

Okay. Excellent. I appreciate all the detail, very helpful.

Thank you, Martin.

There seems to be no further questions. I would like to hand back for closing remarks.

Thank you, Heidi. Despite the near-term headwinds, Ferroglobe is well positioned for the economic upturn and the long-term outlook remains intact, proving our resilience. We started 2024 as a more robust company as we are setting ourselves up towards our long-term goal. That concludes our fourth quarter and full year 2023 earnings call. 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 now disconnect.