Good morning, ladies and gentlemen, and welcome to Ferroglobe's Third Quarter 2021 Earnings Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference call may be recorded. I would now like to turn the call over to Beatriz García-Cos, Ferroglobe's Chief Financial Officer. You may begin. Beatriz García-Cos: Good morning, everyone, and thank you for joining Ferroglobe's Third Quarter 2021 earnings conference call. Joining me today are Marco Levi, our Chief Executive Officer; Benoit Olivier, Ferroglobe's Chief Operating Officer and Deputy Chief Executive Officer; Gaurav Mehta, our Transformation Director and EVP of Strategy and Investor Relations; and Jorge Lavin, Group Controller. Before we get started with some prepared remarks, I am going to read a brief statement. Please now turn to Slide 2. The statements raised 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 exhibits to those filings, which are available on our webpage www.ferroglobe.com. In addition, this discussion includes reference to EBITDA, adjusted EBITDA, gross debt, net debt and adjusted diluted earnings per share, which are non-IFRS measures. Reconciliation of these non-IFRS measures may be found in our most recent SEC filings. Next slide please. During today's call, we will first review the highlights for the third quarter as well as our business and operating environment. Then I will provide some additional details on our financial performance and key drivers behind our results. And finally, we will provide an update on the execution of our strategic plan. At this time, I would now like to turn the call over to Marco Levi, our Chief Executive Officer. Next slide, please.

Thank you, Beatriz, and welcome to our third quarter 2021 earnings call. I hope that my voice supports me during this call. Otherwise, I will hand over part of my presentation to Mr. Mehta. This is certainly a unique time for our company and for the broader industry. The sharp and unexpected recovery in demand across our end markets, we started in the fourth quarter 2020 continued throughout this year. In fact, global demand is a base supply driving the index to unprecedented levels in products such as silicon metal and reached multi-year high levels across our alloys. For example, the latest index pricing for European silicon metal has been at all-time high at €8,100 per ton last week, up from around €1,700 per ton years, just one year ago, an increase of 375% approximately. I am pleased to report that we are seeing fundamentals remain extremely favorable for a sustained pricing environment throughout 2022. On the demand side, our customers across the chemical, aluminum and steel sectors are signaling healthy demand into next year. On the supply side, we expect the tightness particularly in silicon metal to continue. The trend on lower net exports out of China continues to benefit Western producers. As a result, we announced at start of our Selma, Alabama facility in the United States, which is strategically located to benefit from the growth in the region. Current market dynamics set the stage for a significant improvement in our earnings. At the beginning of 2022, however, our Q3 performance remained constraint due to the position of our order book, which is heavily weighted towards fixed price contracts. Nonetheless, the limited price increase realized across the portfolio compared to the movement in the index was enough to offset drastically higher energy in Spain, higher input costs, operational…

Thank you, Beatriz. Now turning to Slide 17 please. One of the broader market sentiment and pricing environment tends to be a major focus these days. I want to start the importance of our execution of the strategic plan. This is the foundation on which we would turn around the Company and position it to deliver strong result for the cycle. We're pushing forward on initiatives touching a very fact of the Company, challenging the norm, and seeking to adopt the best practices. This contract business as underpinning the importance of the changes we're driving with the Company. For our commercial excellence initiatives, we're better prepared to add constructive engagement with our customers. We continue to incorporate the new products into the pipeline enter our centralized procurement structure including global coordination and negotiation of our energy contracts. On the operational side, our efforts and a new culture excellence on the plant floor are driving improved efficiency and helping offset some inflationary pressure. We had an important development during the quarter in the footprint optimization. On Monday, we signed agreements with the French government relating to the restructuring process. Under the agreement, Ferroglobe at the support from the government and project to strengthen its competitiveness across the five manufacturing sites that would continue to operate in France, specifically, Ferroglobe facility would remain operational with a clear plan to modernize the facilities and improve its cost position. This facility would also benefit from a new commercial agreement with a long standing customer. As planning the initial project proposing March 2021, the Chateau-Feuillet facility would stop production and the custom silicone production capability would be transferred to next level. We are encouraged by this outcome as it would minimize the social impact, while ensuring a stronger operational footprint in France. Overall, during the third quarter, we have achieved 58% of our cost savings targets for 2021. And lastly, on working capital, we have achieved our third cash lease of $49 million. Please keep in mind that this initiative is tracking on a rolling 12 months basis to adjust for seasonal swings. Furthermore, we're tracking working capital as a percentage of sales to access the relative improvement as the business ramps up. Given the development in France, the scope of our footprint optimization works payment exchange. Despite these change, we remained confident to deliver $55 million of EBITDA target for 2021. At this time, I will ask the operator to please open the line for questions.

Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] And your first question is from the line of David Rosen from Rubric Capital. Please go ahead.

Hey, guys. Can I have a few questions? So, the first one is on this ATM usage. So, you mentioned that you were looking to raise $10 million, but you've actually found that capital. So do you intend on accessing this ATM?

Thank you for the question, David. Let me give you a little bit of color around that. First of all, the Board and the management team of Ferroglobe put this equity program in places as a flexible option and to be prudent in light of the difficult stretch that the Company has recently gone through on the financial side. For sure, we did not intend to use this tool right away, but during the quarter, we had a number of positive developments, following discussions with our customers, who were looking for product in Q4 and in 2022, and I would say, even after 2022. As a result, we decided to invest in working capital. We restarted one furnace in Mo I Rana for manganese alloy. We decided to restart some in U.S., which clearly require cash, and we have restarted the furnace that we had shut down in Sabón like I mentioned during my speech, on the back of the new profitable contract. So, we're convinced that we have to capitalize on this opportunity and found the working capital to restart Selma. And we wanted to make sure that, we had a comfortable level of cash to run our company. Our intent, when we made the decision David was to raise about $10 million, but we were successful in freeing up cash in the business through pass-through of cost to customers and by some collaborations always these customers to share some of the startup costs. As a result of these measures, we have minimized the ATM impact to 1.4 million. Just to be clear and answer your question at the moment, we do not intend to use the equity program of ATM, given our current view on the cash flows of the Company.

Okay, well, I'm going to make a statement. So, we are very big believers in the Company and we actually are very big believers in the strategic change and the fundamental change in the markets that you operate in. And we have -- we're big investors in the Company, and we'd be happy to provide capital when you need it, $10 million you just give us a call, and we'll provide the capital. So, you should have no fear of not having access. And I agree with you, you should not be using this ATM. So next time you need $10 million, give me a call.

I appreciate that. The problem is that we are in a situation where we couldn't wait, and we decided to act fast, but what do you say, I hear you and I highly appreciate it. Thank you.

Okay. The second thing I want to talk through Spain and some of the mitigation. And so, can you just walk us through the mitigating items? I know you now have a contract with Sabón, which sounds like it's a very -- it sounds like a good contract for the incremental furnace. Can you walk us through kind of that process to actually get to get pass-throughs and kind of where you think you're going to go from maybe this quarter to where you should be in the first quarter of '22?

Yes, let me take it from this point. Energy in Spain has gone up much quicker than expected and it has reached unprecedented levels, right? Prices have been going up far above €200 per megawatt, €300 megawatt, today to €225 per megawatt. This means four or five times the price level of the first quarter of this year. And this year, we had quite a lot of contracts committed with customers where we could have most surprised. And as a consequence, we did two things. One, we try to reallocate production outside those things to supply the same customers. Two, we enter the negotiation with customers to implement some price - temporary price others in order to share the pain with these customers. And in some cases, we have been successful. In other cases, we have not. But for sure, we have fostered these uncertainties for the new agreements in 2022. So, overall, in Q4, based on the elements that I have, the assets in Spain are going to be profitable, while in Q3 that will not profitable. So our measures at least have corrected the profitability of the Spanish footprint.

Got it. I just want to be clear. So you said you're going to be profitable in Q4 in Spain versus not profitable in Q4.

Yes, slightly profitable. I mean, I'm not - at least compared to the negative result of Q3 is I think a significant change.

Can you - how much - and what kind of losses did you generate in Spain in the third quarter?

Well, we not prepared to share this number.

Okay. But it was a meaningful number?

It is a meaningful number. And the key correcting factor for Q4 is the new contract with the new customers in Sabón for silicon. This is the key factor because energy impacts much more silicon production than the alloys production.

Got it.

And…

I’m sorry, go ahead.

Yeah. No, I was mentioning just to stress for 2022, first, we are exploring the opportunities to enter in long-term contracts for energy supply. Second, we are discussing with customers within the new contract negotiations about energy cost pass-through or at least having some hardship clauses in our contract that basically allow us to get back to the negotiating table to the customer and decide if we continue to supply and negotiate that conditions or pull out of these agreements.

So, when you talk -- and that is going to be my third question. So when you talk about protections, the protections will be around your input costs, but it is also just -- would you think about putting floors into your contracts? Like, maybe you can talk about -- when in a strong marketplace where there is less Chinese competition, I presume, there should be some amount of flexibility that should benefit you. And I'm just wondering, kind of what other things you're doing.

You are right, David. Customers are looking mainly for supply security particularly in silicon. As a consequence, we have -- we are negotiating different contract firms where we move away from fixed yearly pricing and we link the price more to the index. At the same time, we make sure that we are protected in case the market turned, which is something that we don't foresee in the next few months, but due to the cyclicality lower basement one day when I go back to certain levels. So we are using these favorable moment of demand to change our compact structure. And just to give you an idea, while they see here, we had about 70% of our silicon volumes at the fixed yearly price, next year, the amount of volume at fixed price as different level by the way will be only 25% to 50%.

Your next question is from the line of Brian DiRubbio from Baird. Please go ahead.

Good afternoon, Marco and Beatriz. Just help me understand with all the work that you're doing with Selma, what your CapEx budget would be is looking like for 2022?

What we are doing? Sorry, if I was not clear with my coughing. We start Selma in December. By the end of December, we start the first furnace and we start the second furnace by March 2022. The cost to restart Selma when you consider CapEx and working capital is around $50 million.

Okay. And that's for both furnaces starting back up, correct?

For both furnaces, yes.

Okay. And just for total CapEx spending in 2022, have you put a budget on the round that yet?

Yes, we are discussing that. Like I mentioned in my speech, we need more CapEx than the amount of CapEx that we have spent for sure in the last two years. I don't have a fix figure in mind what we might see. But I think that is not going to be different from what we mentioned in the past. So, we need around $75 million per year of CapEx.

Understood. You mentioned in your scripted remarks that you are looking to enter into longer-term contracts with customers. Do you anticipate those to be more index based versus fixed price?

Definitely. Well, the key changes for silicon metal because for alloys we have already index priced in our contract. And then depending on the products, prices get adjusted either monthly or quarterly or every two months. But in silicon, we have moved more toward market prices, yes. And there is pricing interest from a lot of customers to move to two to three year's contract.

Okay, great. I guess just the final question is that, as I think about your global footprint, how is the current freight and logistics situation impacting your ability to move production from one plant into a different market, that becoming more challenging? And are you getting paid for that?

You ask a very good question. And this has been -- this question has been keeping us very busy in the first quarter. I mentioned to you the fact that, we slow down production in Spain. We've slowed down production in Spain at all our facilities in quarter three, whereas this quarter two we have ramped up our assets in France and in Norway. By the way, we have six plants in France, not five like I said in this speech, plus one where we have production. And at the end, for us, the energy costs rise in Spain is being the critical determining factor to decide on relocating volumes to the other facilities in France and Norway, and we have successfully in it to do that? When you look at South Africa, we mentioned the difficulties that we had in supply chain and moving our materials that had negative impact on our ferroalloy sales and was also a big gap on our sales in Europe and in Asia too. In the U.S., the situation is much more -- in the America, I would say the situation is much more stable for us from these points of view.

Got it, I appreciate the additional color. Thank you.

[Operator Instruction] And your next question is from [indiscernible]. Please go ahead.

Hi. Thanks for taking the question. Marco, can you give us a breakdown of the silicon metal production by region in the third quarter? Like how much of production is from Spain and how much is from say North America?

Yes, I can give you. Let me look for the numbers. Give me some time. I have it somewhere. Thank you. So if you look at the -- are you asking me for capacity or production?

The production silicon metal.

Yes. Silicon metal stain was about 10% of total volume.

Okay, just 10%. So if the Spanish power price given what just happened with Nordstrom with our Algeria pipeline, et cetera, et cetera, if the Spanish power price stays at this elevated levels for 2022, when you run top the Selma, would you be willing to shut the production down in Spain? Or do you have to maintain certain level of activity there?

Well, I don't think that Selma is a good option to supply our customer mix in Europe. Selma is pretty much going to be pretty much devoted to satisfy the additional demand in the U.S. Clearly, we are watching the situation by the day because the energy pricing is being extremely fluid. The outlook that we have about energies that is the energy pricing in Spain would be on the high side, let's say, about of €200 per megawatt in the rest of Q4 and Q1, but then the futures shows energy price around €110, €120 per megawatt in Spain. And at this level, the business that's we're booked for next year is covering us. The other option that we can always exploit particularly for silicon metal is to repeat what I have done already in quarter three, slow down production of silicon in Sabón and produce more other silicon plants that we have. The situation is less stressed for alloys but due to our footprint in Dunkirk and Mo I Rana represented a very good alternative to the asset in Spain. So, we evaluate this personally three times per week, my team every day. And we need to be pretty flexible in switching our production sites.

And then talk about the 2022 contracting and the 25% to 35% fixed volume, is that a -- did you guys strategically take that level? Or is that because the spot market is so high that there's maybe customers are willing to accept this kind of a spot price? And therefore everybody's just like let's go index?

The volume at fixed price has to be either at pretty high price level. I mean, let's say index price or today or should be limited in time. We have a lot of -- we're going to have a lot of fixed prices in silicone just for the first quarter. My key message is that we are -- again, we move way from yearly fixed price.

Right, I'm looking at on Bloomberg €6,300 for silicon and a $1.95 per pound for the U.S. price. If you were to go to customers and sign a fixed price contract, would you be able to do at a spot level or do you have to give a backward dated discount?

Well, the spot level is an indication then it depends on the purchasing power of the customer and it depends on our all strategic this customer use for us a lot of considerations, but the index become a solid reference in a period of a lack of supply of silicon. And I've just add, we also find that the Bloomberg index isn't necessarily as accurate as what the industry uses. So just as a reference, we get the question a lot, and it's a good indication, the relative movement, but it's certainly not as precise as your.

Is that index higher or lower than the actual?

If I look at the numbers that you have mentioned is lower.

It's lower. Okay, got you. And on this power, could you guys try to manage the power price? What is the threshold for you to say, all right, customer you need to help us absorb this power price, is that the €120 Spanish power price?

Well, there are too many moving parts here. It depends on the price that we can get from the customer. And so, the evaluation is running on the specific customer project combination. And then, in a broader way, we look at the customer makes by furnace and then we make our call. But it's a moving target because if you refer to Spain, there are big swings within the same week on energy prize and same is happening on the margin price of silicon.

Right, right. Yes, so, final question on silicon. So, are you guys making progress in terms of improving product mix to sell more into the higher end of the solar industry or perhaps even with Tesla making the use of 4,680 batteries to sell into the battery market?

Well, on the -- as you know the polysilicon business in the long time may go to Asia. On the short-term due to the reduced availability of silicon from China, we have seen some opportunities, interesting opportunities in Asia to supply polysilicon players. The other trend is that particularly in the U.S. is a lot of pressure to bring back some polysilicon for solar production in the United States, outside of China. This is the plan that we are watching. And I'm talking about batteries we are working on this project. I do not foresee significant sales before two years from now.

Okay, got you. Well, thank you very much. Beatriz García-Cos: Yes, again this is Beatriz. Let me make just a remark on the point regarding Spain. So, we expect the closure to breakeven in Q4 because of the new contract that Macro mentioned. But I don't want to give the impression that there is a drastic change overnight and return to profitability in Spain providing the current electricity cycle to caveat to that point.

There are no further questions at this time. Please continue.

Thank you for joining today's third quarter call. As you will see shortly, we are hosting an Investor Day in New York on November 30. Sorry, given the growing interest amongst the investment community and others the quarter around the Ferroglobe story, we wanted to conduct this event to provide a more comprehensive overview of the Company. The changes were driving to turn this company around our views on the market amongst other important topics. Investors who are new to the Ferroglobe story will particularly benefit from the overview, but I encourage everyone, who can come out two hours to join us on November 30. Please just keep an eye out for a press release and register for the event in advance. Thank you again for joining today and have a great day. Thank you.

That concludes the presentation for today. Thank you for participating. You may disconnect.