Ferroglobe PLC Aktie

Good morning, ladies and gentlemen, and welcome to Ferroglobe's Third Quarter 2026 Earnings Call. [Operator Instructions] As a reminder, this conference call may be recorded.

I would now like to turn the call over to Alex Rotonen, Ferroglobe's Vice President of Investor Relations. You may begin.

Good morning, everyone, and thank you for joining Ferroglobe's third quarter 2026 conference call. Joining me today are Marco Levi, our Chief Executive Officer; and Beatriz Garcia-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 those forward-looking statements can be found in Ferroglobe's most recent SEC filings and the exhibits to those filings, which are available at ferroglobe.com.

In addition, this discussion includes references to EBITDA, adjusted EBITDA, adjusted gross debt, adjusted net debt and adjusted diluted earnings per share, among other non-IFRS measures. Reconciliations of non-IFRS measures may be found in our most recent SEC filings.

We'll be participating in the Stephens Annual Investment Conference in Nashville on November 17. We hope to see you there.

With that, I'll turn the call over to Marco.

Thank you, Alex, and thank you all for joining us today. We appreciate your continued interest in Ferroglobe.

Our third quarter results continued to reflect challenges in our silicon metal and silicon-based alloy segments as a result of predatory import prices and external factors affecting costs. Despite these adverse conditions, we generated positive free cash flow.

Total shipments declined 3% quarter-over-quarter to 183,000 tons as silicon metal and silicon-based alloys volumes declined 6%, partially offset by a 1% increase in manganese-based alloys. As a result, revenue declined 2% from the second quarter to $370 million.

Adjusted EBITDA was negative $2 million compared with positive $13 million in the second quarter. The decline was due to extraordinary energy costs, mainly in Spain, associated with the Middle East conflict and to a lesser degree, regulatory pricing in the ferrosilicon segment. Excluding the $18.5 million impact from high energy prices, the adjusted EBITDA would have been approximately $16 million in the third quarter. Beatriz will provide more detailed comments in her section.

Next slide, please. Since the last call, we have made tangible progress on the following strategic priorities: lowering and rightsizing our cost structure, expanding our critical materials platform, pursuing the restart of Venezuela, and strengthening our core business through trade protection.

Let me start with rightsizing our footprint and cost structure. Last month, we initiated an aggressive cost reduction program to increase our capacity utilization, enhance our operating efficiency and strengthen our competitive position. Once fully implemented, we expect the cost reduction program to enhance our annual EBITDA by approximately $100 million, plus or minus 15%.

Our plans to tackle the difficult business environment and increase profitability include the following. First, we are consolidating our operations to our most cost competitive plants, enabled by our flexible footprint. Our goal is to boost capacity utilization to 80%, up from less than 60% today.

To accomplish this, we plan to close 5 plants around the globe with minimal impact on our sales volumes or our ability to expand into critical materials. We will work through these changes together with our employee representatives as required. Some of these operations might be switched to critical materials.

At the same time, we are restarting Selma to produce ferroalloys. As for the nonstrategic plans, we are exploring the best way to monetize them, whether through outright divestitures or alternative use as data centers.

Second, we plan to reduce our corporate overhead primarily through headcount reductions. Overall, we expect to reduce our corporate and operations workforce by approximately 20% once the process is complete, subject to consultation with employee representatives where required.

These are difficult decisions, but necessary steps to align our cost structure with the current market conditions and position the business for improved profitability. These actions will lower Ferroglobe's fixed cost per ton, target working capital reduction of $30 million, $40 million, and decrease future CapEx, creating more streamlined organization positioned to generate stronger cash flow and EBITDA.

We have already begun this process by announcing the mothballing of our South African plants in Emalahleni and Polokwane due to lack of demand. The upfront cost of implementing this transformation plan is expected to be in the range of $40 million to $60 million, net of targeted working capital reduction over an 18-month period.

Moving to critical materials. Our expansion is progressing ahead of schedule. During the third quarter, we began shipment of ferromolybdenum to commercial customers, well ahead of our original year-end target. This demonstrates our ability to produce critical ferroalloys in Monzon, Spain with minimal capital investment. We expect additional ferromolybdenum shipments in the fourth quarter as well as our first commercial shipments of other critical ferroalloys such as ferrovanadium and ferrochromium.

As part of the critical material expansion, we continue our discussion with the U.S. Department of War. These discussions to build the domestic supply of certain critical materials continue to progress on schedule. Our September 16 summary proposal included magnesium and manganese and 7 additional critical materials, and we expect to present our final proposal this month in November. The negotiations should begin in early 2027 and conclude before the end of the first quarter.

As for Venezuela, we continue to pursue the license from the Office of Foreign Assets Control, or OFAC, required to finalize any agreements. Concurrently, we have begun initial discussions in Venezuela to prepare for an expedited restart of our operations.

On our effort to protect the business, trade measures continue to gain momentum. On September 1, the European Commission initiated an interim antidumping review into imports of Chinese silicon metal and October 23, the Commission announced the registration of all Chinese silicon metal imports. This simply means that each import will be recorded and monitored in detail for future review.

This decision is important because it indicates how seriously the European Commission takes the matter and allows potential duties to be applied retroactively. The market has already responded with the European Silicon metal index rising 7% since the announcement of this review.

In the United States, the ITC's final determination in the silicon metal case against Australia and Norway was announced on August 3. Subsequently, the U.S. index rose 10% following the announcement.

Finally, Coreshell has made strong progress in the third quarter. They received a $50 million award from the U.S. Department of Energy to build the first U.S. gigafactory dedicated to 100% graphite-free silicon anode batteries. This award comes at a great moment in Coreshell's growth as they have now signed multiple military customers in the drone and autonomous vehicle space. Coreshell continues to work with multiple OEMs to further validate the silicon anode technology on a greater scale.

Next slide, please. I'll update on our segments, starting with silicon metal on Slide 5. We are seeing improvement in the silicon metal segment with index prices up 10% in U.S. and 6% in Europe in the third quarter, reflecting a positive response to trade actions on both sides of the Atlantic. Our realized prices improved 3% over the second quarter.

Our silicon metal volumes declined 6% to 38,000 tons with U.S. sales down 8% and new sales down 3%. The decline was driven mainly by seasonality with volumes up 14% over Q3 2025. Importantly, we are seeing increased customer interest, an encouraging sign as we continue our 2027 contract negotiations.

Next slide, please. Silicon-based alloy volumes remained significantly above last year's level, although they declined 6% in the third quarter compared to the second quarter to 59,000 tons. Index prices were down 2% in Europe and 1% in the U.S., while our realized prices were essentially flat.

Our European volumes declined substantially, reflecting our disciplined decision not to pursue incremental volumes at unprofitable prices. Excess inventory and elevated import volumes continue to weigh on price recovery, particularly in the European market where the ferrosilicon index is down 16% year-to-date. The main culprits are Malaysia, Bhutan, Azerbaijan, India and Angola. European Commission's annual review of the ferroalloy safeguards scheduled for later this month can potentially bring meaningful improvement to the alloys market in 2027.

Next slide, please. Manganese-based alloys remain our most consistent segment. Volumes remained strong, increasing 1% to 86,000 tons. While index prices were down approximately 1% in the quarter, our realized prices increased 5%. The market outlook remains positive, supported by firm pricing and healthy volumes.

Looking ahead, both the silicon-based alloys and manganese-based alloy segments are expected to benefit from improving steel demand. In its October short-range outlook, the World Steel Association forecast 2027 finished steel demand growth of 3% in Europe and 2% in North America. Manufacturing activity supports this view with September PMI reaching 52.9 in the Eurozone, a 52-month high, and 55.9 in the U.S. Aluminum production is expected to grow by 2% in the U.S. and 3% in Europe.

I would now like to turn the call over to Beatriz Garcia-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 third quarter income statement. Total third quarter sales declined 2% from the prior quarter to $370 million, driven by a 3% decline in total volumes. Lower volumes in silicon metal and silicon-based alloys were partially offset by higher realized prices in silicon metal and manganese-based alloys. Compared with the third quarter of 2025, sales increased 19%.

Adjusted EBITDA was negative $2 million compared with a positive $13 million in the prior quarter. As a reminder, second quarter adjusted EBITDA includes a $5 million benefit from litigation in Spain. Higher energy costs reduced adjusted EBITDA by nearly $19 million in the quarter. Excluding these items, the adjusted EBITDA would have been $16 million. Adjusted EBITDA margin was negative 0.6% compared with a positive 3.5% in the second quarter.

Next slide, please. Silicon metal revenue was $102 million in the third quarter, a 6% decline in volume, was partially offset by a 3% increase in average selling price to approximately $2,669 per ton, up from $2,592 per ton in the second quarter. Cost per ton increased by 3% due to higher energy and electrode prices in North America.

Adjusted EBITDA was negative $2 million, a slight improvement compared with negative $3 million in the prior quarter. Silicon-based alloys revenue declined to $117 million, driven by a 6% sequential decline in volumes to 59,000 tons. Realized prices were essentially flat at $1,973 per ton.

Adjusted EBITDA for the segment was negative $2 million, down from positive $15 million in the second quarter, which includes the $5 million litigation benefit in Spain. Volume and price declines explained approximately $2 million of the decline, with the remaining EBITDA decline reflecting higher energy costs and lower fixed cost absorption in Europe.

Next slide, please. Manganese-based alloys revenue increased to $114 million as volume increased 1% to 86,000 tons, and average selling price improved 5% to $1,330 per ton. Higher energy costs primarily in Spain were the main driver of increased cost per ton. Overall, energy accounts for 85% of the cost increase. Adjusted EBITDA was $11 million compared with $13 million in the prior quarter.

Next slide, please. For the third quarter, cash flow from operations was $26 million, driven by a $32 million release of working capital. This is well ahead of the approximately $50 million release we target for the second half of the year on our last call. We don't expect material changes in working capital in the fourth quarter.

For those less familiar, the PPA mark-to-market of $77 million is related to our energy contracts, which are excluded from adjusted EBITDA due to the volatility and noncash impact. CapEx was $20 million, up from $17 million in the second quarter due to the timing of the actual payments for our charcoal plant in Spain. We expect CapEx to decline significantly in the fourth quarter.

Free cash flow was positive $6 million compared with $20 million in the prior quarter.

Next slide, please. We paid our quarterly dividend of $0.015 per share on September 29. Our next dividend of $0.015 per share is scheduled for December 30, payable to shareholders on record as of December 22.

We ended the quarter with approximately $93 million in cash, unchanged from the second quarter. Adjusted gross debt was $135 million and net debt increased slightly to $42 million. We continue to maintain a solid balance sheet, which gives us the flexibility to execute the cost reduction program and support our critical materials expansion.

At this time, I'll turn the call back to Marco.

Thank you, Beatriz. Before opening the call for Q&A, I'd like to share the key takeaways from today's presentation on Slide 15. While our third quarter earnings results are disappointing, we are taking decisive action to improve profitability. The cost reduction program will consolidate production at our most competitive plant, increase capacity utilization to approximately 80%, and streamline the organization. Once fully implemented, we expect to add $100 million to our annual EBITDA, plus or minus 15%.

While we expect the fourth quarter to remain challenging due to energy costs and weak ferrosilicon market in Europe, these actions are within our control and can deliver long-term benefits regardless of market conditions. At the same time, the fundamentals of our core markets are improving. Steel demand is forecast to grow next year, which supports our ferroalloy businesses.

Trade protection is working. Silicon metal index prices rose 10% in the U.S. and 6% in Europe in the third quarter. And the European investigation into Chinese silicon metal is now underway.

Our strategic direction is very clear: build a leading Western critical materials platform. We completed our first shipments in the third quarter and additional shipments are expected in the fourth quarter. We have demonstrated that our existing furnaces can produce these critical materials quickly and with minimal capital investment.

Our discussions on critical materials with the U.S. government continue to advance and Coreshell's $50 million Department of Energy award gives us further confidence in our investment in silicon battery technology.

Operator, we are ready for questions.

[Operator Instructions] We will now take our first question from the line of Nick Giles from B. Riley Securities.

This is Henry Hearle on for Nick. I first wanted to ask, are the 5 plant closures view that European demand does not fully recover? Or do they more assume that Venezuela backfills those tons?

Well, we -- as you know, we have quite a broad asset footprint, and we are looking at different combinations to increase our asset utilization at -- to 80% from an average of 60%. We forecast demand growing better at higher rate in U.S. in the next few years. And as a consequence, we are talking about restarting Venezuela and restarting Selma in the United States.

We have disclosed in my speech the decision on South African plants. We are not going to disclose anything else about the additional assets as we need to engage other stakeholders and employee representatives before disclosing our plan in a more [indiscernible].

Got it. Understood, Marco. And then also, at this time, are you able to provide any more details on the status of the Venezuela permit?

Yes. We should get the license anytime soon. At the same time, we have started our discussions in Venezuela to restart the plant. The main topic is electricity supply and reliable electricity supply. As you know, we can easily ramp up and down our furnaces. We have this flexibility running electrical furnaces, but we need electricity reliability. The license is required to close any kind of negotiation.

Understood. And then looking at the critical materials business, how do you expect shipments to ramp from 3Q to 4Q? And how many other materials might be involved in those shipments?

Yes. Well, in this quarter, we are producing again ferromolybdenum. We re-run productions of ferrovanadium and ferrochrome low carbon. We seem to be able also to run trials on ferroboron.

So for these 4 products, we need validation at industrial scale production, meaning we have produced ferromolybdenum industrially, but not the other 3 products that I mentioned. So it is rather premature to talk about volumes for the quarter and 2027. Our objective is to validate our production capabilities this quarter, and then we will plan for market introduction.

Got it. And then last one for me. It looks like that the EU could possibly make the antidumping duties on China retroactive. Could you provide any more color on that or what you're hearing?

Yes. I mean we have put a lot of pressure because this has been a never-ending saga. I want to remind you that we asked for safeguards on silicon metal and the fact that safeguards were not applied to silicon metal has caused a disaster in terms of results of safeguards for ferrosilicon.

Now we have changed our approach. We are going for antidumping review against China. That interim review was officially started on September 1. And on October 23, EU had announced monitoring of imports. What it means is that the Union is monitoring the imports of silicon metal outside of China via all the 27 EU countries.

And monitoring the import has a couple of effects. One, you prevent stockpiling materials -- exported materials from China before the European Union decide on the new measures. And second, the registration basically allows the commission to eventually decide to apply measures retroactively. So this is a good result. But again, we are not where we want to be.

[Operator Instructions] There are no further questions at this time. I would like to hand back over to Marco Levi for closing remarks.

Thank you, Sandra, and thank you all. In a nutshell, we are executing on what we can control, and we look forward to updating you on our progress during the next call. Thank you again for your participation, and have a great day.

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

Good morning, ladies and gentlemen, and welcome to Ferroglobe's Second Quarter 2026 Earnings Call. [Operator Instructions]. As a reminder, this conference call may be recorded.

I would now like to turn the call over to Alex Rotonen, Ferroglobe's Vice President of Investor Relations. You may begin.

Good morning, everyone, and thank you for joining Ferroglobe's Second Quarter 2026 Conference Call. Joining me today are Marco Levi, our Chief Executive Officer; and Beatriz Garcia-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 at ferroglobe.com. In addition, this discussion includes references to EBITDA, adjusted EBITDA, adjusted gross debt, adjusted 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. We'll be participating in the Seaport Annual Summer Conference on August 18 and 19 and the IDEAS Conference in Chicago on August 26. We hope to see you there.

With that, I'll turn the call over to Marco.

Thank you, Alex, and thank you all for joining us today. We appreciate your continued interest in Ferroglobe. Our second quarter results reflect solid execution despite a challenging market environment. Our total shipments increased 7% quarter-over-quarter to 188,000 tons, mainly due to a 34% increase in silicon metal. This resulted in a 9% increase in quarterly revenue to $379 million. Our adjusted EBITDA increased $10 million to $13 million and free cash flow improved by $37 million to $20 million. Beatriz will provide more detailed comments in her section. Next slide, please.

Now I would like to turn your attention to how we see Ferroglobe evolving and how we strive to create value for shareholders. As we look at Ferroglobe today, there are 4 key areas that we believe will drive shareholder value going forward. First, growing our critical materials platform; second, lowering the overall cost structure by optimizing our industrial footprint and implementing cost-cutting measures. Third, planning a restart of low-cost operations in Venezuela with advantaged access to the U.S. market; and fourth, strengthening the core business through trade protection while leveraging the onshoring and supply chain realignment taking place across the U.S. and Europe.

Few Western companies possess the combination of furnace infrastructure, metallurgical expertise, vertically integrated raw material sourcing and strong customer relationships that Ferroglobe has built over many years. We believe those capabilities position us with a substantial competitive advantage as government, customers and industries increasingly prioritize supply security and domestic processing capacity over simply sourcing the lowest cost material. As the leading Western producer of silicon and manganese alloys, Ferroglobe continues to build the Western critical materials platform.

We are actively exploring the expansion of our production capabilities across a broader portfolio of strategic critical materials, including magnesium, antimony, silver, gallium and critical ferro alloys based on molybdenum, vanadium and chromium. Importantly, this is not a collection of unrelated pilot projects. It is a coordinated expansion of our industrial platform around the assets and technology we already own and operate. Unlike many critical material initiatives that require large greenfield investments, most of our opportunities can be pushed using existing furnace infrastructure, leveraging decades of metallurgical processing expertise while minimizing capital investments and accelerating time to market.

Since launching our expansion plan for critical materials, we have successfully completed industrial scale test production of ferromolybdenum in one of our existing furnaces, demonstrating the capability to produce this high-value alloy using our current infrastructure. We estimate annual North American demand of ferromolybdenum at approximately 8,000 tons. At current market prices of approximately $42,000 per ton, this represents a market opportunity exceeding $300 million per annum.

We have also successfully demonstrated our ability to produce magnesium at our existing facilities, marking an important milestone toward restoring our production capabilities. North American magnesium demand is approximately 60,000 tons annually. At current market price of $7,500 per ton, this represents a market opportunity of approximately $450 million per year. Magnesium is a strategically important critical material as Western markets remain heavily dependent on imports from China. U.S. magnesium production would require a new facility. We estimate the cost of a 20,000 tonne facilities to be approximately between $180 million and $200 million before government subsidies. Given our expertise and the fact that this product is protected by the U.S. government, we expect favorable economics.

Beyond ferromolybdenum, we believe our existing furnaces can also produce other high-value critical materials, including ferrovanadium and ferrochromium with minimal incremental capital investment. We will continue evaluating additional critical materials opportunities and expect to conduct industrial scale test production of other critical alloys later this year as we further expand our platform. Our view is simple. The West doesn't have a resource problem. It has a processing problem. While much of the world's critical mineral processing capacity resides in China, governments and industrial customers increasingly recognize the need for trusted Western supply chains. Ferroglobe's core competency has always been processing advanced materials at an industrial scale, which is why we believe our existing asset base provides a natural foundation for critical material expansion.

We are actively engaged in discussions with governments and strategic stakeholders to accelerate domestic critical material capacity and strengthen resilient Western supply chains. These discussions remain constructive and continue to advance. We are making steady progress and continue to target initial commercial activity before year-end. At the same time, we are taking decisive actions to improve our profitability through aggressive cost reduction initiatives and footprint optimization. Our goal is to improve fixed cost absorption through higher capacity utilization by concentrating production at our most competitive operating sites. In addition, we are evaluating opportunities that will maximize the value of other industrial assets within our portfolio. Our objective is to ensure that every asset contributes to stakeholder value, whether through core materials production or alternative industrial application that can leverage existing power infrastructure, land availability and grid connectivity.

The Venezuelan opportunity enables us to optimize our footprint by allowing U.S. furnaces to produce higher value-added critical materials to meet domestic demand. In late June, we applied for a U.S. permit to begin communication with the Venezuela government and anticipate a decision before the end of the third quarter. As a reminder, our 4 low-cost furnaces in Venezuela have a combined annual capacity of 120,000 tons. These furnaces have the flexibility to produce silicon metal, ferrosilicon and manganese alloys. Protecting the core business is imperative in order to position the company for long-term growth.

In recent years, our markets have been negatively impacted by unfair trade practices from China and other regions, which have distorted market pricing and placed significant pressure on Western producers. Our industry has worked constructively with policymakers in both Europe and the United States to establish a level playing field. In addition to past successes against multiple countries, the most recent success is the ITC's final decision on August 3 to impose combined antidumping and anticircumvention duties of 38.7% and 19.7% on Australian and Norwegian imports into the U.S., respectively. To date, these trade actions on both sides of the Atlantic are aiming to restore rational market condition and support domestic production capacity. We are already seeing evidence that these measures are benefiting demand for Western producer materials. One remaining measure we expect to be initiated is an investigation into the dumping of silicon metal by China and Angola into the EU.

The next step is the announcement of the European community investigation. Ultimately, our strategy is straightforward, leverage our existing asset base to build one of the few scalable Western critical material platforms preserve and strengthen our leadership position in silicon and ferro alloys, improve our profitability and maintain visible strategic optionality through assets such as Venezuela. We believe Ferroglobe is uniquely positioned at the intersection of critical materials, supply chain security, onshoring and industrial policy, creating multiple avenues for shareholder value creation in the years ahead. Next slide, please.

I will update on our segments, starting with silicon metal on Slide 5. The second quarter shipments of silicon metal grew to 41,000 tons as markets are beginning to show signs of stabilizing. Keep in mind that even the second quarter shipments are still below 2024 earthen levels. Beginning in early 2025, the impact of predatory imports from China and Angola is evident. Strong growth in silicon metal was driven by a 70% increase in Europe and 80% increase in North America, resulting in a 34% or 10,000 tons overall increase in volume.

The index prices improved in both U.S. and Europe in the second quarter. The U.S. was up 5% for the quarter and European index was up 6% for the same period. Year-to-date, both indexes improved by 2%. We are turning cautiously optimistic about the silicon metal market. The increased European aluminum production is helping demand as is the improving polysilicon market. At the same time, excess supply continues to affect prices. With the U.S. silicon case finalized, we expect to begin seeing improved prices and demand in the second half. The European Trade Commission antidumping investigation against China and Angola timeline will likely dictate the supply environment in Europe. Next slide, please.

Silicon-based alloys volumes reached their highest level in 5 years, with total shipment increasing 4% to 63,000 tons, driven by 31% growth in EU, partially offset by 11% volume decline in North America, which was driven by increased imports from Angola, Azerbaijan and Bhutan. Indexes tell a more accurate story. For the quarter, U.S. and EU indexes declined 2% and 6%, respectively. For the year, the U.S. is down 1%, while European index is down 14% despite the safeguards.

It is clear that the European safeguards are not having their desired impact on the ferrosilicon market. This is mostly due to the dumping of silicon, which is then substituted for ferrosilicon. The good news is that the European Commission will conduct an annual review of the effectiveness of its safeguards in November this year. Despite solid steel production, the U.S. index prices are hurt by increased imports, as mentioned. We are closely monitoring the increased imports from Angola and other emerging countries. We expect the European market to be challenged until improved trade measures are implemented. Next slide, please.

Manganese remains the most positive and consistent segment with total shipments remaining in the mid-80,000 tons range in the second quarter. Manganese safeguards are effective as indicated by an approximately 10% increase in second quarter index prices. After a strong increase following the implementation of the safeguards in November, manganese alloy index prices are up approximately 25%. We expect stable volumes for the balance of the year with potential upside from enhanced steel safeguards that took effect on July 1.

I would now like to turn the call over to Beatriz Garcia-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 second quarter income statement. Total second quarter sales increased 9% over the prior quarter to $379 million, driven by a 7% increase in total volumes. Strong sequential volume growth in silicon metal positively impacted overall volumes and revenues but was partially offset by weak pricing in silicon and silicon-based alloys. Overall, adjusted EBITDA improved by approximately $10 million as a result of a stronger performance in silicon and manganese-based alloys, which experienced an increase of $8 million and $3 million, respectively. Overall, adjusted EBITDA margins increased to 3.5% versus 1% in the prior quarter. The most significant drivers of improved profitability during the quarter was solid operational execution and higher fixed cost absorption. The adjusted EBITDA includes a $5 million benefit from litigation in Spain.

Turning to next slide, please. Silicon metal revenue increased 26% in the second quarter to $106 million as a result of strong volume growth, offset by weak pricing, resulting in an adjusted EBITDA loss of $2.7 million versus a loss of $2.3 million in the prior quarter. Average selling price in Q2 declined 6% to $2,592 per tonne, down from $2,754 in Q1, mainly due to pressure from low-priced Chinese and Angolan imports. Volume and pricing combined negatively impacted adjusted EBITDA by $6 million, while cost provided a benefit of $5 million due to high fixed cost absorption related to our operations in Europe.

Slide 11. Silicon-based alloys revenue increased 2% over Q1 to $125 million, driven by a 4% sequential increase in volumes to 63,000 tonnes. Realized prices declined by 1.5% sequentially to $1,986 per tonne. Adjusted EBITDA for this segment was strong in Q2, increasing to $15 million, up from $7 million in the prior quarter. The improvement in profitability was driven by high fixed cost absorption and a $5 million litigation benefit in Spain. This was partially offset by a $2 million impact of lower pricing. Next slide, please.

Manganese base alloys revenue was unchanged in the second quarter at $108 million. Volume in the second quarter was marginally down, offset by a 2% increase in average selling price. However, profitability improved with adjusted EBITDA increasing to $13 million, up from $10 million in the prior quarter and adjusted EBITDA margins improving to 12%, up from 9% in Q1. Costs were down 1% due to improved costs in Spain, which was partially offset by higher manganese ore prices. Next slide, please.

For the second quarter, our cash flow from operations was $37 million, driven by a $28 million working capital release and improved operating performance. This compares with a cash flow from operations of negative $6 million in the prior quarter. Tax and others includes a $60 million mark-to-market adjustment on our power purchase agreement, primarily in France. CapEx increased by $6 million to $17 million in the second quarter, mainly due to a charcoal plant investment in Spain. Despite increased CapEx, our free cash flow improved substantially from negative $16 million to positive $20 million. Next slide, please.

We paid our quarterly dividend of $2.8 million or $0.05 per share on June 29. Our next dividend of $0.015 per share is scheduled for September 29, payable to shareholders of record as of September 22. As mentioned, CapEx in the second quarter increased to $17 million, and we expect the second quarter to be the high point of CapEx for the year. Overall, we improved our financial position with net debt and adjusted gross debt declining by $17 million and $20 million, respectively.

At this time, I will turn the call back to Marco.

Thank you, Beatriz. Before opening the call to Q&A, I'd like to provide key takeaways from today's presentation on Slide 15. We are pleased with the direction of our second quarter performance with solid improvement in volumes and financial metrics. However, we still have strong headwinds to navigate. The silicon metal market is improving, but price and volume levels in Europe remain unacceptable as Chinese and Angolan imports continue to exert significant pricing pressure. We expect the European Commission to begin an investigation into imports of Chinese and Angolan silicon soon.

Our strategic direction is very clear, build a leading Western critical material platform by expanding our product offering. We have the footprint, know-how, experience and customer relationships to make this a reality in a relatively short time frame. Improving our competitiveness is essential. We are executing aggressive cost reduction initiatives and enhancing our cost position through higher capacity utilization at our most competitive assets. Part of this strategy is to restart Venezuelan operations to complement and add flexibility to our broad footprint. With 120,000 tonnes of capacity in Venezuela, we have a significant low-cost opportunity to capture incremental volume in the U.S. and greater optional flexibility. Another significant part of our strategy and the one we have been diligently working for the past few years is to protect our core market. We have succeeded in protecting the U.S. market and most of the EU market, except against China and Angola in the EU.

Operator, we are ready for questions.

[Operator Instructions] We will take our first question and the question comes from the line of Nick Giles from B. Riley Securities.

I wanted to start just on the critical materials side. There's been some excitement in the space this week. There's an event this Friday at the White House. So can you just touch on where your conversations stand with the relevant agencies and how quickly you feel that you could scale domestic production of adjacent critical materials?

Yes. The discussions are progressing very fast, particularly in the United States. There are 2 departments that are particularly active, Department of Energy and Department of War. We are following the process that they have suggested to us. I have to underline that we have been engaged with the Department of Energy for the last 2 years and Department of War since February of this year. And we have got regular interaction. Recently, we prepared our initial proposal for them, particularly the Department of War. We announced a day after the presentation live and then we have been asked to proceed filing our proposal as suggested by the process. The next step is going to be based on providing a more detailed proposal, including our asks to make it happen in the areas that the departments feel are their priority and then we expect to progress with our investments.

That's very helpful. Maybe just as a follow-up, when would you be prepared to share with the market kind of more details around which products you would be targeting kind of the potential economics you see around producing those products and ultimately, any of that government support?

Yes. Well, first of all, I mentioned the products in my speech, right? I mentioned magnesium, I mentioned silver, I mentioned gallium, I mentioned 2 ferro alloys. So in my speech before, I have been very specific on the products. Now if you look at the ferro alloys part, these ferro alloys can be produced with no minimal CapEx investment in our current furnaces. And we are -- as mentioned in my speech, we have started making some industrial tests. We have been producing tonnes of ferromolybdenum in spec. And now we are trying to understand -- better understand our cost position in order to be able to share our estimates. We will proceed with the other ferro alloys tests before year-end because in the meantime, of course, we have studied the market. We are acquiring knowledge, but we want to understand what is our cost position relative to others.

I must say that we have technology on the shelf. And we plan to produce these products with an alternative technology that we expect will provide some cost advantages versus current competition. The magnesium game is a game that we have played in the past. Ferroglobe has been playing, producing magnesium in France in the past until Ferroglobe at the time was I think FerroAtlantica has been kicked out from the market by China. And today, there is no production of magnesium either in Europe or in the U.S. And in U.S. alone, there is a demand -- estimated demand of 60,000 tonnes of magnesium.

So of course, there are a lot of people who are working at starting up production of magnesium, but we have been producing magnesium. So we -- our proposal is to start investing in a plant of 20,000 tonnes of magnesium investment will be between $180 million and $200 million. We are ready to implement recycling technologies to produce silver and gallium with minor CapEx investment. So timing by the end of the year, we expect to have a pretty clear competitive position on our ferroalloy production, and we expect to be in the market with some of the alloys for the other products, we need to follow the process with the American authorities.

If I could, there were some headlines around the White House setting price floors on polysilicon and derivative products for solar. And so I was curious if you could walk us through how GSM stands to benefit. What do you think this could mean for volumes in the U.S.

Yes. I think this is a pretty wide initiative from the American government is related to Section 232. There are only 2 polysilicon players or significant polysilicon player left in the United States, Hemlock and Wacker and their cost position is absolutely disadvantage versus China, which owns 95% of the polysilicon global capacity. Many disadvantaged not from a technology point of view, but simply from an energy cost point of view. So I think the floor price is one of the options to protect the local players. And if set at the right level, probably will allow these people also to improve capacity, which is driven by solar and microchips demand. So the consequence is going to be more demand of silicon metal in the United States.

[Operator Instructions] We will take our next question, and the question comes from Martin Englert from Seaport Research Partners.

I wanted to start with the Euro area, given the change in trade policy on the downstream steel side. What are you seeing with capacity restarts from some of the customer base now moving through second half here? What are they conveying regarding their alloy needs in the back half of the year? And then any read on the inventory situation in the channel as well?

If we talk about customers, I mean, the main factor in Europe is that the impact on aluminum production as a consequence of the almost crisis, right? And the fact that the export outside of the Middle East to Europe has been largely impaired has impacted the production of aluminum in Western Europe. And as a consequence, that amount of silicon metal.

Concerning steel, as all of you know, there are new measures that have been implemented as of July 1 with a further cut of the safeguard fee for imports by 50% and a fee increase of 50% it is too early to mention the effect on demand for our products. But it is true that some steelmakers have announced the restart of some of their blast furnaces in Europe and some others have announced capacity expansion. So the environment sounds pretty good for aluminum and steel at this stage. Concerning chemicals is a different kind of situation due to the fact that the issue of energy cost in Europe has not been fully addressed to restore the competitive position of the European players.

I appreciate that. And then silicon metal volumes, which you touched on earlier, quite a bit of a sequential improvement in 2Q here. Just trying to understand incremental demand opportunities that drove and contributed to that, if there was any one-off items as far as like the channel restock or anything like that, that came in to drive the volumes?

Yes. Well, if we talk about the silicon metal volume improvement, and again, the volumes are far below our run rate of 2024, right, rather than 60,000, 70,000 tonnes per quarter this quarter, we have improved from 30,000 to 40,000, which is mainly related to the nature of our contracts and the restart of demand in Middle East, Asia of silicon metal. The overall situation of silicon metal in Europe has not changed, as you can see from the pricing situation.

And I must say that it has even more problematic due to the continuous increase of export outside of China and Angola. Even the statistics of this year, while last year, this was China and Angola more than double the export. This growth keeps on happening and is linked not to the demand of silicon metal in the traditional segment, but to the partial replacement of ferrosilicon with silicon metal at Chinese or Angolan price. So we have concluded our incredible effort to provide data to the commission. Now they have 5 years of data. They should be almost ready to proceed to the next step, which is publicly announced an investigation. And then hopefully, we can help them to speed up on the final decision on putting some additional measures.

Okay. One last one. You had discussed cost reductions, efficiency gains targeted. Anything you can put around the scope of those efforts as far as dollar amounts that you may be targeting here in these programs?

Marketing is premature. What we have decided to do really revisit our asset footprint. The assets are extremely competitive in the top quartile in terms of cost performance, and this is where we are going to concentrate on our production. Other assets are going to be repurposed for the production of new critical raw materials, mainly the ferro alloys that I mentioned we make and of course, having energy contracts, we have also other opportunities. It goes without saying that with this kind of exercise, we will need to address the remaining cost, I mean, overhead cost that we need to support this new activity. So we are in transformation. We will communicate more precise numbers later in the year.

Your next question comes from the line of Nick Giles from B. Riley Securities.

I just wanted to ask a question for Beatriz. Working capital improved in the quarter. So I was curious kind of what working capital could look like in the second half, whether you would expect a build if volumes were to increase? And just kind of what this means in terms of your appetite for shareholder returns? Would you look at kind of resuming the buyback just given where the stock is today?

Yes. Thank you for the question. So let me take one step back in Q1, we consumed working capital in Q2, we released $28 million. And then we see Q -- the second half of the year, let me put it like that. As the release of working capital and I think this is a way, we plan to continue with the operations ramping up some of them are idle. So it's kind of a mix ramp that we have in our operations for the second half of the year for the reasons that you know. But my best estimation at the moment is that we're going to be still releasing working capital for the second half of the year around, I would say, $15 million, 1-5, yes, 1-5, not 5-0. And then of course, with the current market and why we are taking the decisions on the critical material our choice is not to resume the share buyback program for obvious reasons. But we continue to assess this, I would say, on a weekly basis to your point, yes. So as soon as we see that we have the opportunity to go with it.

Great. I appreciate that. Maybe just one more operational question. Heavy volumes have been much stronger year-to-date. And so I was curious just if we could see further upside in that number, where it would come from? Or if we should really just be modeling kind of more of the same, somewhere around this 60,000 tonne per quarter level?

Yes. If you talk about ferrosilicon in Europe, the safeguards have played in our favor in terms of volumes due to the quotas of the importers. And now we have reached the volume level that is -- that we expect that we're going to sustain in the second half of the year. In the U.S. I would say is a different comment because we didn't have safeguards. We had strong wins on antidumping and basically, there are no imports anymore from Russia, almost 0 from Kazakhstan and almost 0 from Brazil.

But this -- like I mentioned in my speech, these imports have been replaced by Elkem from different locations, but the disturbing factor has come from the overcapacities in Middle East and Asia and Africa. I mentioned Angola and Uzbekistan and Bhutan. So I think in terms of demand in U.S., we have opportunities to grow ferrosilicon. And this is linked to the fact that steel product utilization rate has increased now has been going down recently a little bit, but we're still at 80% versus 74% last year. So there is demand but pricing is not optimal. So we will need to balance out between volume and price decisions.

This concludes today's question-and-answer session. I'll now hand the call back to Marco Levi for closing remarks.

Thank you. Very shortly, in a nutshell, we have excellent opportunities to grow our business as we continue to execute our strategy refresh, and we are excited to keep you informed about our progress. Thank you again for your participation. We look forward to updating you on the next call in November. Have a great day.

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

Good morning, ladies and gentlemen. Welcome to Ferroglobe's First Quarter 2026 Earnings Call. [Operator Instructions] As a reminder, this conference call may be recorded.

I would now like to turn the call over to Alex Rotonen, Ferroglobe's Vice President of Investor Relations. You may begin.

Good morning, everyone, and thank you for joining Ferroglobe's First Quarter 2026 Conference Call. Joining me today are Marco Levi, our Chief Executive Officer; and Beatriz Garcia-Cos, our Chief Financial Officer.

Before we get started with 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 at ferroglobe.com.

In addition, this discussion includes references to EBITDA, adjusted EBITDA, adjusted gross debt, adjusted net debt and adjusted diluted earnings per share, among other non-IFRS measures. Reconciliations of non-IFRS measures may be found in our most recent SEC filings. We'll be participating in the B. Riley Annual Investor Conference in Los Angeles on May 20. We hope to see you there.

With that, I'll turn the call over to Marco.

Thank you, Alex, and thank you all for joining us today. We appreciate your continued interest in Ferroglobe. Overall, market conditions for ferroalloys have become more favorable, highlighted by our first quarter silicon-based alloys volumes, which grew 18% sequentially to the highest level in nearly 5 years. This segment was driven by growth in ferrosilicon in both Europe and North America. Our manganese-based segment was also strong with volumes increasing 6%.

The improvement in Europe was helped by recently implemented safeguards. Antidumping and countervailing duties, tariffs and rising steel production have all strengthened demand for ferrosilicon in the U.S. This creates a more supportive silicon-based alloys market environment across our core regions. While the silicon metal market in Europe remains under continuous attack from China and its proxy Angola, we are encouraged by recent comments. European Trade Commissioner, Maros Sefcovic, has reaffirmed the commitment to protecting the silicon metal industry and is actively evaluating measures addressing imports from China and Angola.

In the U.S., the silicon metal cases covering Angola and Laos are now final with antidumping and anti-circumvention duties of 78.5% and 173.5%, respectively, including the general tariff of 10%. The Department of Commerce is expected to set the final rates for Australia and Norway in late June with the U.S. ITC expected to announce its final decision in late July. These measures are critical to ensuring a level playing field and supporting the long-term health of our industry.

Given recent events in Venezuela, we see a compelling opportunity to reopen our operations there. These assets offer strategic proximity to the U.S. market, along with access to low-cost energy raw materials and attractive logistics. We are actively pursuing a potential restart of our operation in Venezuela to take advantage of its geographic proximity to the U.S. At the same time, we are evaluating CapEx requirements, energy availability and cost structure to determine the viability of restarting.

As a reminder, we have 3 large ferrosilicon furnaces with a combined capacity of 90,000 tons and the flexibility to convert them to silicon metal when market conditions dictate. In addition, there is also a 30,000 ton manganese alloy furnace originally built as a silicon metal furnace. We are strategically positioning Ferroglobe to scale our platform to increase our capacity utilization.

Our core capabilities, large-scale electric furnace operations, advantage access to raw materials and decades of proprietary process expertise are directly applicable to a broader range of critical materials and alloys. This is why we are actively pursuing expansion beyond our traditional portfolio. We are building on a proven base not starting from scratch. Our history of producing materials such as magnesium and ferrochrome, combined with deep expertise in high temperature reduction and related processes, give us a strong technical and operational foundation. This is a natural evolution of our business. The same industrial platform that supports our leadership in silicon metal and ferroalloys can be redeployed to address growing supply gaps in other strategically important materials.

As demand accelerates and supply chains realign, this optionality materially extends Ferroglobe growth runway. Our Western asset footprint is a clear competitive advantage. It places us at the center of rising demand fueled by higher defense spending, AI adoption, the energy transition and the need for secure domestically anchored supply chains. Recent U.S. EU agreements on critical materials reinforce a clear message, trust that local production is now a requirement, not a preference.

Given that, it is crucial to understand what happened to critical materials production in the West and how it lost its advantage. It was not that access to mines and critical minerals was lost. Rather, China became the dominant processor of these materials into critical materials. And the market structure shifted to favor price over all other factors, rendering Western production unprofitable. All that is changing now to favor the reliability of a trusted supply chain. Taken together, this positions Ferroglobe to play a larger role in the next phase of industrial and geopolitical realignment, leveraging assets we already own, capabilities we already have and markets that are moving decisively in our favor.

Moving to Coreshell. We continue to develop our partnership to advance the use of silicon in lightweight, high-capacity and fast charging batteries for EVs and drones. In March, we co-led a series bid round with a $7 million investment, increasing our total to $17 million and representing an ownership stake of approximately 10%. Coreshell has started production from its current 60 amp pilot plant, marking an important milestone and has already begun selling batteries to robotics and defense customers.

In addition, Coreshell has signed multiyear sampling and qualification agreements with automotive OEM customers, positioning it to participate in the emerging growth area in critical materials. In March, we signed a binding term sheet for a multiyear silicon metal supply agreement with Coreshell. Overall, we are operating in an improving environment for ferroalloys, executing on our strategic priorities and positioning the company for sustainable growth across both our core and emerging businesses.

Next slide, please. Strong ferro alloy volume growth in the first quarter drove shipments up 7% to 177,000 tons, primarily due to an 18% increase in silicon-based alloys. This resulted in a 6% increase in quarterly revenue to $348 million. Adjusted EBITDA declined to $3 million and free cash flow was a negative $16 million. Beatriz will provide more detailed comments in her section.

Next slide, please. I will start updating our segments from silicon metal. The silicon metals market remains under pressure due to continued aggressive pricing by imports, mainly from China and Angola. These dynamics primarily impacted Europe as silicon metal was excluded from recent safer protections. As a result, total volumes declined 6% from the fourth quarter, and we decided not to participate at uneconomic prices. We partially mitigated this by converting 3 silicon metal furnaces to ferrosilicon, allowing us to capitalize on better market conditions in this segment.

Two of the furnaces were in Europe and 1 in the U.S. was converted last year. This strategic shift underscores the value of Ferroglobe's flexible operating model and our ability to respond dynamically to evolving market conditions. Silicon metal volumes declined 2,000 tons to approximately 31,000 tons in the first quarter. North American volumes grew a solid 15%, while EU volumes continue to face predatory import competition, resulting in a 23% decline.

In addition to China and Angola, low-priced imports in Q1 came from Malaysia, Kazakhstan and Laos. Norway is the largest importer of silicon metal to the EU, accounting for more than 50% of total imports. The polysilicon market remains weak with silicon prices reflecting soft demand and oversupply. The Aluminum segment, on the other hand, is showing initial signs of improvement as some Middle Eastern production is offline due to the Iran conflict.

The chemical sector remains soft due to Chinese imports of siloxanes and silicones into Europe and in the U.S. U.S. index prices declined 3% in the first quarter compared to the fourth quarter, while EU prices declined by 6%. Although we remain cautious about the pace of recovery in Europe, pending more decisive trade actions from the European Trade Commission, recent comments from the Trade Commissioner regarding protecting the EU market are encouraging.

In the U.S., we expect the market conditions to improve in the second half of 2026, bolstered by antidumping and countervailing measures. In the medium term, there is a significant growth opportunity for silicon metal in the U.S. as Tesla aims to build a large vertically integrated supply chain to produce 100 gigawatts of solar capacity by the end of 2028.

Next slide, please. Silicon based alloys volumes reached their highest level since the second quarter of 2021, with total shipments increasing 18% to 61,000 tons driven by 21% growth in Europe despite a contraction in steel production in the first quarter. The North American growth was equally strong at 20%. After a 22% price jump from late October to early December following the safeguard announcement, EU ferrosilicon index prices declined 9% in the first quarter.

The reason for the recent price decline is twofold. First, import volumes were high prior to November safeguards, leading to elevated inventory levels. Second, the reuse of low-priced silicon metal by steel producers to replace ferrosilicon is disrupting ferrosilicon market dynamics. Yet they are still up 9% since the pre-safeguard announcement, and we expect pricing to be positively impacted in the second half due to safeguards as excess inventory is depleted. The U.S. ferrosilicon index was flat in the first quarter.

As I mentioned earlier, we converted 1 silicon furnace in U.S. and 2 additional furnaces in Europe to ferrosilicon to take advantage of shifting demand. Overall, we're optimistic that 2026 will be a strong year for silicon-based alloy volumes for Ferroglobe. An additional catalyst for the second half of the year is anticipated from enhanced EU steel sectors, which are expected to increase EU steel production by 12 million to 15 million tons annually, representing approximately 10% growth. These measures are expected to take effect on July 1, 2026.

Next slide, please. Our Q1 manganese shipments posted a strong quarter with a 6% volume increase to 86,000 tons, up from 81,000 tons in the prior quarter, helped by safeguards. Europe accounts for the majority of the manganese sales. Manganese alloy index price surge after safeguards were announced in November and are up 18% since pre-safeguards with year-to-date levels roughly flat. We are constructive about the 2026 manganese outlook and expect to report strong volumes for the remainder of the year. Strengthened steel safeguards are another catalyst as they are expected to be implemented in July and improve EU demand.

I would now like to turn the call over to Beatriz Garcia-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 first quarter income statement. Total Q1 sales increased by 6% to $348 million, driven by a 7% increase in total volumes, with ferroalloys being the primary driver. More specifically, silicon and manganese-based alloys volumes increased 18% and 6%, respectively, while silicon metal shipments declined as we prioritize price discipline in Europe.

Raw material and energy costs after adjusting for the $5.5 million impact from power purchase agreement declined to 66% of sales, down from 67% in the fourth quarter. As a reminder, the PP&As are mark-to-market using fair value, and we exclude them to better reflect comparable quarter-over-quarter performance. Despite strong volume growth, adjusted EBITDA declined to $3 million. Higher energy, transportation cost and raw material inflation began to impact costs in March as a result of the conflict in Iran.

Next slide, please. Silicon metal revenue declined 13% to $84 million due to a 6% reduction in volumes and a 7% fall in prices to $2,754 per ton. Adjusted EBITDA declined $3 million in the first quarter to an EBITDA loss of $2 million, resulting in a negative margin of 3%. The margin contraction was driven by lower realized prices, partially offset by improved cost in Canada and the result of progresses in Spain and France.

Next slide, please. Silicon-based alloys revenue posted another strong quarter with an 18% increase to $122 million, driven by an 18% sequential increase in volumes to 61,000 tons. Realized prices were essentially flat with fourth quarter at $2,016 per ton. Adjusted EBITDA decreased by $9 million to $6 million sequentially due to higher production cost in Spain, energy and raw material cost in Spain and the U.S. Margins declined [ 9 percent points ] to 6%.

Next slide, please. Manganese based alloys revenue increased 16% to $107 million from $93 million in the prior quarter. The improvement was due to a 9% increase in realized prices to $1,250 per ton and a 6% increase in volumes to 86,000 tons. Adjusted EBITDA in the first quarter was $10 million, up from $9 million in the fourth quarter. Adjusted EBITDA margins remained solid at 9%. Inflation in manganese ore, combined with higher transportation and energy costs offset most of the price gains. While the Iran conflict continues to affect near-term logistics and raw material costs, we expect these costs to be temporary.

Next slide, please. For the first quarter, our cash flow from operations was negative $6 million due to a $13 million investment in working capital as we built inventory and increased accounts receivable balance to support higher volumes. We reduced our CapEx by $3 million to $11 million in the fourth quarter. For the first quarter, our free cash flow was negative $16 million.

Next slide, please. As announced previously, we increased Q1 dividend payout by 7% to $3 million, which was paid on March 30. Our next dividend of $0.015 per share, in line with the previous quarter is scheduled for June 29, payable to shareholders on record as of June 22. We fund strategic investments such as Coreshell to support near-term operating needs and long-term growth opportunities and repurchased a modest 5,000 shares in the first quarter. Although our net debt position increased to $55 million in the first quarter, we remain in a solid financial position to support our growth objectives.

At this time, I will turn the call back to Marco.

Thank you, Beatriz. Before opening the call to Q&A, I'd like to provide key takeaways from today's presentation on Slide 15. We began to see the benefits of various trade measures in the first quarter as evidenced by stronger volumes of silicon-based alloys and manganese alloys. Unfortunately, the prices still reflect an imbalanced market environment. We believe that the pricing will strengthen in the second half of the year, as we have said before.

Ferroglobe is uniquely positioned to lead the next era of critical materials supply with the asset platform footprint and expertise to serve Western markets where trusted local production has become a global imperative. While geopolitical disruptions continue to create near-term volatility and pressure logistics and raw material costs, we believe these impacts are temporary. The structural improvements underway in our markets, such as strengthened steel safeguards, CBAM and onshoring underpin our confidence in a stronger second half and longer-term value creation.

Operator, we are ready for questions.

[Operator Instructions] We would take our first question, and the question comes from Martin Englert from Seaport Research Partners.

Have you had discussions with the U.S. and/or EU governments regarding potential grant opportunities for growth when it comes to critical materials. And then if you could just touch on what specific metals or alloys you're most strongly considering maybe pursuing here?

Yes. I mean there are different departments -- government departments in U.S. we have been talking to and the recent agreement between U.S. and Europe on planning this critical material partnership confirm the intent of governments to increase the independence from China on critical materials. We have been -- today, we produce coal, silicon metal and manganese alloys, which are critical. But in the past, we have been producing other materials in our furnaces, in particular, ferrosilicon chrome and ferrochrome. And a long time ago, FerroAtlántica was producing magnesium in Europe.

But on top of that, we have technologies that can be applied to our furnaces to produce other critical materials for Europe, critical minerals for U.S. At this stage, I cannot be disclosing which materials we're going to produce. But I can tell you that we went through a serious process where we started from more than 100 options, and now we are down to new 10 critical materials, that we can produce either by -- in the current furnaces that we have or in slightly modified furnaces with minimum CapEx. And in some cases, like magnesium, we will need to invest in a new plant.

What we are doing right now, we are validating the market attractiveness of these 10 new materials. And we plan to drive our conclusions in the next few weeks when we present to the Board how we intend to start this critical minerals diversification at Ferroglobe.

And you touched on this, but the -- maybe goalposts for associated CapEx and correct me if I misheard you, but it sounds like several of the options for materials that you're considering might be very minimal where the furnaces wouldn't need much. Others sound like they're fairly nominal investments with some furnace upgrades, but then I believe you said magnesium would require more substantial investment. And I believe you said a new plant. So just goalposts on if you would decide to go forward, is this something in the single-digit millions of dollars at the low end to tens of millions? And then what would it look like on the high end with CapEx?

We are consolidating the numbers right now to go to the Board with some NPV estimates to select the most attractive opportunities. You got it right. Some of these materials really don't need further investment. Probably they need some new permits because we have not been producing these products for a while. We need to assess the reliability of raw material -- new raw material sources.

And you are correct. For some of these materials, we don't need any additional CapEx. For other materials, we need a little bit of CapEx in the single-digit million dollars. Of course, due to the pressure that we have from governments to start the production of these products. We will give priority to be easier and more profitable to produce critical materials or minerals.

Okay. Would be curious to learn more over the coming weeks or months as you have more to share. When it comes to the increased logistical expenses, are you implementing surcharges across your product offering to cover both the inbound and outbound inflation associated with this?

Yes. We are implementing surcharges both in Europe and in the U.S. We are implementing a surcharge of EUR 30 per ton in Europe and $40 per ton in the U.S. with different level of acceptance. There are businesses like chemicals who are doing that. They are more used to this practice. Other businesses like steel, which are much more resistant to that. I think that anyway in the next few weeks, we are going to be forced to increase prices across our product mix as well because the prices that we see today, particularly in Europe, particularly on silicon metal and ferrosilicon are simply unacceptable for everybody.

So I think the market should move -- and there is a lot of cost pressure coming from freight, gas is influencing, the energy cost and all the critical raw materials of our supply chain have gone up. So we need to try to pass these increases through the supply chain.

When it comes to the pricing dynamic, I mean, within the silicon-based alloys business, there's been fairly favorable trade measures across your asset footprint. Underlying demand seems like it's pretty favorable or moving in a better -- quite a bit better direction. What do you think is the inhibiting factor that hasn't allowed you to raise prices thus far in the EU and U.S. market for products like ferrosilicon?

Yes. As I said that we have to consider different dynamics here. In Europe, before safeguards were announced, a lot of ferrosilicon has been moved by the usual countries and inventories were pretty high. The second point is that Angola has been switching furnaces to ferrosilicon, dumping ferrosilicon in Europe. Angola is not subject to any kind of safeguard. The third element due to the low price of silicon metal in Europe, we have seen significant ferrosilicon volumes being converted by the steelmakers to silicon metal. And we have seen imports in the first quarter from Malaysia and Kazakhstan going up.

So these are the main factors that have prevented the consolidation of the price increase that happened immediately after the safeguard on ferrosilicon. In the U.S. I think now it is really a matter of time with the recovery of the steel consumption in U.S. the first quarter numbers show growth in U.S. in steel. So we expect pricing to become more robust on ferrosilicon in U.S. near-term.

[Operator Instructions] We will take our next question, and the question comes from the line of Nick Giles from B. Riley Securities.

I appreciate you updated this morning. I guess just following up on some of Martin's questions. When we think about you pursuing new critical minerals, was something like a price floor or government-related offtake or stockpiling efforts, would that be a part of the decision matrix? Or is it really more a factor of kind of CapEx requirements and something more on the grant side? Just appreciate any color there.

Well, we are trying to be as fast as possible here. And clearly, we count on government support. But like I mentioned when I replied to Martin, Nick, we are looking at what we can control now. And what we can control is which technologies are available to us, which technologies can be then implemented with minimum investment or 0 investment and market -- current market attractiveness for these products.

Clearly, we -- I think pretty soon, deals like the critical material partnership between U.S. and Europe will have tremendous weight on our decisions and strategy implementation because when you look at this kind of deal, yes, you talk about potential decision on price floors for these critical minerals in U.S. and Europe. They are talking about joint mapping, meaning identifying new resource deposits in our geographies. We talk about defense. So prioritizing NATO on the rest.

We talk about very interesting about harmonized ESG, especially when you talk about E, this can be an harmonization of the environmental measures can be extremely interesting, especially for Europeans and focus on recycling is another key element of the deal. So we have to see how this kind of agreement gets translated into measures, being it either price levels or environmental limits or whatever else refers to what I just mentioned. But for me, there is a fact that certain products that we can produce either in Europe or in U.S. are not -- either not produced at all like magnesium.

There is no active production of magnesium in the West at this stage. There are a few start-ups, but there is nothing or the current amount of products that are produced today are a minimal part of the demand. So being the intention of Europe and U.S. to be more back integrated on these materials, I think, will provide us a tremendous opportunity to position Ferroglobe like one of the key suppliers of critical minerals in the West.

I really appreciate your perspective. Maybe switching gears, just you mentioned in your prepared remarks, Coreshell did another raise and you obviously participated and attached to that or alongside that, there is a multiyear silicon metal supply agreement. So can you just touch on maybe the overall progress for Coreshell, kind of -- what kind of customers are they signing? And how you anticipate volumes within that supply agreement to ramp and what the margins look like there? I know that was a lot, but I think you get where I'm going.

Yes. I mean the volumes are not going to be significant until OEMs qualify the 60 amp pilot batteries that we estimate happening between the end of 2027 and '28. And then we expect to develop business by 2030, '31 to a level of about 70,000 tons of silicon metal for batteries just related to Coreshell. The volumes are already flowing now, but there are minimal volumes for their sales to batteries and drones. I think I can share the budget of the sales for Coreshell next year is north of $60 million, so it's significant.

So the technology is validated. Now we need -- the Series B, like I mentioned in the past, is related to building a bigger pilot plant that is going to be used to sample 60 amp pilot batteries for qualifications by the automotive OEMs who have shown interest in this technology.

Understood. I appreciate that. Maybe just turning back to FeSi. I mean volumes did improve pretty meaningfully in the first quarter. Can you just talk about what your volume expectations are in 2Q? And then what should we expect for manganese-based alloys as well?

Well, we mentioned in -- when we communicated in the previous quarter about our expectation for 2026 that we are related to a significant growth in alloys, driven by safeguards in Europe, by the new safeguard measures on steel are kicking in as of July 1, 2026, and steel recovery in U.S. So this is happening. Clearly, on manganese, when you talk about safeguard, there is only one producer. I would say, of manganese alloys in EU27 territory, which is Ferroglobe. One of our competitor has a small plant in France, but we are the guys that from a volume point of view, benefit the most out of safeguards of manganese.

On ferrosilicon, I've already described in detail to Martin what happened in Europe and in U.S. I hope you were in the call, so I think I answered this question.

No, understood. That's helpful. Maybe just one more, if I could. Just on the ferrosilicon costs, you kind of went through, you're looking to pass through some of the elevated costs within each segment. But if we were to kind of isolate those cost pressures and just look at quarter-over-quarter, what kind of cost improvement would we expect to see in ferrosilicon specifically?

Maybe it's a point to notice, Nick, this is Beatriz speaking. In Q4 versus Q1, we have a huge one-off in Q4, a positive. And of course, in Q1, we don't have any longer this nonrecurrent. So this is why you noticed an increase in cost in Q1 2026 versus Q4 2025. So what I'm saying is that not a like-to-like when you compare the 2 quarters. Going forward, I can confirm that, of course, we are improving our cost. The challenge could be more on the logistics side and transportation costs, as you know, due to the Iran war. We expect these cost to potentially increase a little bit more in Q2 and then pave the way on the second half of the year.

Just to clarify, so costs in silicon-based alloys would actually rise in 2Q before kind of declining in 3Q and 4Q?

Yes. You're right.

Thank you. That concludes today's question-and-answer session. I'll now hand back for closing remarks.

Thank you. We are excited about the medium-term potential to grow and diversify our business through a broader mix of critical materials and an expanded geographic presence. Thank you again for your participation. We look forward to updating you on the next call in August. Have a great day.

Good morning, ladies and gentlemen, and welcome to Ferroglobe's Fourth Quarter and Full Year 2025 Earnings Call. [Operator Instructions] As a reminder, this conference call may be recorded. I would now like to turn the call over to Alex Rotonen, Ferroglobe's Vice President of Investor Relations. You may begin.

Good morning, everyone, and thank you for joining Ferroglobe's Fourth Quarter and Full Year 2025 Conference Call. Joining me today are Marco Levi, our Chief Executive Officer; and Beatriz Garcia-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 on Ferroglobe's most recent SEC filings and the exhibits to those filings, which are available on our website at ferroglob.com. .

In addition, this discussion includes references to EBITDA, adjusted EBITDA, adjusted gross debt, adjusted net debt and adjusted diluted earnings per share, among other non-IFRS measures. Reconciliations of those non-IFRS measures may be found in our most recent SEC filings. We'll be participating in the BMO Metals, Mining and Critical Materials Conference in Hollywood, Florida, on February '23 and '24. We hope to see you there.

With that, I'll turn the call over to Marco.

Thank you, Alex, and thank you all for joining us today. We appreciate your continued interest in Ferroglobe. While 2025 presented significant external challenges, including muted demand, tariff uncertainty, delayed trade measures and elevated levels of predatory imports. It was a year in which Ferroglobe made important strategic progress and substantially strengthen its position for future growth. .

Most importantly, we achieved significant and impactful trade measures in both the European Union and the United States. In Europe, the European Commission voted to protect the Ferroglobe industry by implementing safeguards targeting a 25% reduction in imports relative to the baseline of average imports by country and product from 2022 through 2024.

During those years, on imports of ferrosilicon averaged approximately 450,000 tons and manganese [indiscernible] averaged approximately 900,000 tons. These [indiscernible] create substantial opportunity for domestic producers, including Ferroglobe to gain market share under a more balanced competitive framework while ensuring security of EU supply chains for critical and strategic materials.

We are encouraged by the European Commission's advocacy to support and strengthen the long-term sustainability of local industry. To further enhance the new manufacturing base and drive economic growth, the main Europe pledge was signed by more than 1,000 business leaders. This is similar to the Bay American plunge, encouraging increased use of products with domestic content. In the United States, the International Trade Commission rolled in favor of imposing antidumping and countervailing duties on federal silicon imports from Brazil, Kazakhstan and Malaysia after having rolled similarly against Russia in 2024.

These decisions meaningfully improve the long-term outlook for the U.S. ferrosilicon market. To capitalize on improving pheroceuticaleconomics, we have converted 3 furnaces from silicon metal to ferrosilicon. one in the U.S. and two in Europe. This highlights the benefits of our diversified global footprint, which enables us to optimize production in response to market dynamics and geopolitical factors.

With respect to silicon metal in the U.S. The case was delayed due to the government shutdown. Prior to the shutdown, the preliminary decision in September indicate strong measures against Angola, Australia, Laos, Norway and Thailand. The preliminary combined antidumping and countervailing duties range from 21% for Norway to 334% for [indiscernible]. We now expect the final decision on ongoing as in Thailand later today with Australia and Norway anticipated in June.

Operationally, we executed with discipline and focus. Through proactive cost onto measures, including a hiring freeze and reduced discretionary and CapEx spending, we successfully navigated through weaker demand and lower pricing while maintaining a solid balance sheet. After the Safeguard announcement on November 18, [indiscernible] index prices for ferrosilicon and manganese alloys in Europe jumped approximately 20%.

While paraceuticals has retreated some in recent weeks. Is still up more than 10% since the safeguard announcement. Our outlook for silicon metal remains more measured due to its exclusion from new safeguards and continued aggressive imports from China and increasingly from Angola. In the U.S., the silicon market is expected to grow modestly according to CRU.

We are actively starting longer-term opportunities associated with our idled operations in Venezuela. This site includes 3 large pheroceuticalfurnaces and manganese alloy furnace, originally design into produced silicon metal, which can be converted back to [indiscernible]. In addition, the facility includes a Soderberg based plant that could be used to produce electrodes.

While it is too early to determine the timing and conditions of the infrastructure and operations, the asset base represents a potential opportunity for the future. given Venezuela's proximity to the U.S. market, this opportunity could become strategically meaningful over time. We also took important steps to enhance our long-term cost structure and operating flexibility signing a new competitive 10-year French energy agreement effective January 1, 2026.

In addition to competitive energy prices, this agreement provides greater flexibility, enabling us to produce up to 12 months a year in France. Combined with implementation of safeguards, this flexibility meaningfully improves the earnings potential of our [indiscernible] business by allowing higher volumes to leverage our fixed operating costs. Beyond our core operations, we continued to invest in long-term opportunities increasing our total investment in [indiscernible] to $10 million in 2025, reflecting strong technological progress in the development of advanced silicon reach EV batteries.

In addition to ongoing collaboration with automotive OEMs, Corcel is expected to begin initial shipments to defense and robotics customers in the first quarter of this year. Furthermore, we are in the process of finalizing the multiyear supply agreement with [indiscernible]. For those who are new to the [indiscernible] story, silicon rechannels offer lower-cost batteries with increased capacity, longer driving range, faster charging and maybe most importantly, reduce reliance on graphite of which more than 90% is produced in China.

We believe this technology has the potential to become increasingly strategic over time. Alongside these trade developments and operational enhancements, we continue to execute on shareholder-friendly capital allocation. We increased our first quarter 2025 dividend by 8% to [indiscernible] per share. and we are increasing it again by 7% to $0.015 per share starting in the first quarter of 2026. In addition, during the early part of 2025, we selectively executed discretional share repurchases, acquiring 1.2 million shares at an average price of $3.55 per share.

Looking forward to 2026. Ferroglobe is well positioned to benefit from the cumulative impact of the trade actions. We expect most of our segments to post considerable growth in 2026 and we anticipate revenues improving to a range of $1.5 billion to $1.7 billion, an increase of 20% at the midpoint over 2025. This expectation is driven primarily by strong volume growth in the [indiscernible] based and manganese-based alloys segment.

The implementation of EU [indiscernible] Safeguard in the U.S. ferrosilicon antidumping and anticircumvention rulings give us increased confidence in this outlook. Next slide, please. Our shipments increased by 13% to 165,000 tons on the strength of silicon-based and manganese-based alloys resulting in a 6% increase in quarterly revenue to $329 million. Our adjusted EBITDA declined slightly to $15 million while our free cash flow was negative $19 million.

Beatriz will provide more detailed comments in your section. Next slide, please. I'll update on our segments, starting with silicon metal on Slide 5. This may sound like a repeat of last quarter, but the situation remains essentially unchanged. The demand is still weak across our regions. And Europe is still plugged by unabated predatory imports from China, which roughly doubled in 2025. As well as by rising imports from Angola up nearly fourfold, driving prices to unsustainable levels. As a critical and strategic material, the European Commission should ensure sufficient production to meet basic demand.

Overall, volumes and revenues declined by approximately 3% due to an 8% decline in U.S. shipments, partially offset by a 5% increase in shipments in the year. It is important to note that the [indiscernible] shipments in the fourth quarter were up from a very weak third quarter. We idled our EU silicon metal plans in the fourth quarter to the extremely low unprofitable prices. Within the silicon metal segment, the [indiscernible] sector is performing better in relative terms, as highlighted by the recent recovery in aluminum prices compared to the weak polysilicon sector.

The chemical sector remains weak, also due to imported siloxane and silicones from China into Europe and the U.S. The U.S. index prices rose a modest 2% in the fourth quarter over the third quarter. EU prices declined by 7%, primarily due to imports. For the year, European prices are down by 1/3, while U.S. index is up less than 2%. In the U.S., we expect the volumes to improve in the second half of 2026 as the antidumping and anti-silconvention measures are expected to be finalized in February and June.

Next slide, please. The story is quite different in our other product segments. Globally, silicon base allows had a very strong fourth quarter Total volumes increased by 19% to 51,000 tonnes with EU and North America increasing 25% and 14%, respectively. Pricing trends were mixed in the fourth quarter. The EU ferrosilicon index rebounded strongly in the quarter, rising 22% to EUR 1,495 from Q3. driven by the implementation of secrets in November. In the U.S., the ferrosilicon index retreated a modest 4% during the quarter.

For the full year, the European index gained 12%. The U.S. index is down less than 2% for the year. Overall, we are optimistic than 2026 will be a stronger year for total silicon base alloy sales for Ferroglobe. We have already booked incremental business for 2026 in Europe and in U.S. An additional catalyst for the second half of the year is expected from enhanced EU steel safeguards with a proposal to reduce import quarters by 50% and double tariffs to 50% for exceeding the quarter.

It is anticipated that domestic production will be ramped up as a result. These measures are expected to take place on July 1, 2026. Next slide, please. Our manganese segment reported another strong quarter with a 16% volume increase to 81,000 tonnes, up from 70,000 tons in the third quarter. We benefit from a larger customer base as well as safeguards. EU sales, which accounts for more than 90% of our manganese volumes grew 18%. Manganese alloy index prices improved substantially in the fourth quarter with ferromanganese and silicomanganese increasing 16% and 21%, respectively.

The combination of solid demand from our European steel customers, whose business is expected to grow by 3% in 2026 in and EU and [indiscernible] should propel a robust volume increase in 2026. Accordingly, we are optimistic about the European market opportunity for manganese this year.

I would now like to turn the call over to Beatriz Garcia-Cos, our Chief Financial Officer, to review the financial results in more detail. Deric?

Thank you, Marco. Please turn to Slide 9 for a review of the fourth quarter income statement. Fourth quarter sales grew 6% over the prior quarter to $329 million. while raw material costs increased 23%, excluding the $40 million impact of [indiscernible] for all power purchase agreements. Fourth quarter raw materials and energy as a percentage of sales increased from 58% to 67%, primarily due to temporary hiding in France, again, excluding PP&A, or purchase price agreements.

These PPAs are mark-to-market using fair value, given the long-term nature of our EDF contract which accounts for the majority of the PPA impact. We will continue to strip out PP&A mark-to-market volatility to provide a clearer view of our underlying operational performance. A strong silicon-based alloys and manganese-based alloys volumes drove the increased sales with quarter-over-quarter volumes increasing 19% and 16%, respectively.

Silicon metal volumes declined by 3%. Volume improvements were partially offset by a 6% decline in average selling price of silicon-based alloys and Manganese Vazalore, with silicon metal prices essentially flat. Adjusted EBITDA declined 20% from the prior quarter to $15 million versus $18 million. Adjusted EBITDA margin declined to 4% driven by lower prices and elevated costs as result of AI in France. Next slide, please. Moving to Product segment adjusted EBITDA bridges Silicon metal revenue declined 3% sequentially to $96 million in Q4, driven by a 3% decrease in shipments to 33,000 tons.

The average selling price was essentially flat at $2,157 per ton. Volumes remain constrained due to soft markets in the U.S. by Chinese and Angolan dumping of silicon metal in the European Union. Silicon metal adjusted EBITDA declined from $12 million to $1 million in Q4. with margins decreasing to 1%. The margin compression was primarily due to Island in France, slightly offset by improved cost in North America. Next slide, please. Silicon-based alloys revenue grew 12% to $104 million, driven by a 19% sequential increase in volumes to 51,000 tons, partially offset by a 6% decline in average selling prices to 2020 per ton.

Adjusted EBITDA increased to $60 million in the fourth quarter from $12 million in the third quarter. Margins expanded by 160 basis points to 15%. The improvement in adjusted EBITDA and margins result from lower cost in the Spain partially offset by early aiming in France. Next slide, please. Manganese base alloys revenue increased 10% and to $93 million from $84 million in the prior quarter. Improvement was primarily due to a 16% increase in volumes to 81,000 tons. Fourth quarter average selling price declined 6% to 1,147 mainly due to a lag versus index prices.

Adjusted EBITDA in the fourth quarter doubled to $9 million, while adjusted EBITDA margins increased from 5% to 9%. This margin expansion was primarily driven by improved performance in Norway and higher overall volumes. Next slide, please. Adjusted EBITDA for the full year was $28 million, down from $154 million in 2024, and the adjusted EBITDA margin declined to 2%. The price decline driven by weak demand and increased imports to Europe had a significant impact on adjusted EBITDA,; accounting for more than 80% or $104 million of the decline.

Reduced volumes account for another 16% of the EBITDA decline. Cost impact on adjusted EBITDA was negligible, while head office and noncore business detract less than $3 million from adjusted EBITDA. Next slide, please. There are lots of details on this slide. So I will just highlight a few of the most important items. For the full year, we generated $51 million in cash from operations, driven by a $48 million improvement in net working capital. We curtailed CapEx by $60 million to $63 million in 2025.

For the year, our free cash flow was negative $12 million. During the fourth quarter, we consumed $4 million in operating cash flow due to weak EBITDA and an increase in net working capital of $8 million. For the year, we reduced our net working capital by $48 million, in line with our target of $50 million. Energy rebate was $7 million for the fourth quarter. As we operate under the new contract in France in 2026, we don't expect energy rebates going forward. which will help align our adjusted EBITDA generation more closely with our cash flow.

Fourth quarter capital expenditures totaled $14 million representing a $5 million reduction versus the third quarter. Next slide, please. Despite the headwinds in 2025, our balance sheet remains strong. In total, we paid $10.5 million in dividends during the year, and we are again increasing our dividend starting in the first quarter of 2026, our quarterly dividend will increase 7% to $0.15 per share. It will be paid on March 30 to shareholders of record on March 23.

While we did not repurchase any shares in the second half, we bought back 1.3 million shares for the first half. Our discretionary share repurchase plan remains in place. Our net debt position increased to 30 million in 2025, and we remain in a solid financial position to support growth in 2026. We reduced our 2025 CapEx by 20% to $63 million. At this time, I will turn the call back to Marco.

Thank you, Beatriz. Before opening the call to Q&A, I'd like to provide key takeaways from today's presentation on Slide 15. 2025 was a year of important progress for Ferroglobe. The trade measures secured in Europe and in the United States represent a clear positive shift in our markets, particularly in Ferroglobe. Europe safeguards and U.S. antidumping and counter-billing duty rulings significantly improved competitive conditions. Support pricing and give us increased confidence in a much stronger market environment in 2026.

At the same time, we continue to execute a disciplined shareholder-friendly capital allocation strategy. Despite the challenging macro backdrop, we increased our dividend during 2025, completed selected share repurchases and have announced another dividend increase beginning in the first quarter of 2026. These actions underscore our confidence in the business and our focus on delivering consistent shareholder returns. We have also taken important steps to enhance the economics and flexibility of our operations. The new long-term energy agreement in France, combined with our ability to ship production from silicon metal to ferrosilicon allow us to optimize volumes, better leverage fixed costs and respond efficiently to changing market conditions across our global footprint.

At the same time, we managed through a difficult demand and pricing environment in 2025 with discipline and focus. Proactive cost control, strong execution and a solid balance sheet allowed us to navigate near-term headwinds while strengthening the foundation for future growth. Overall, we believe Ferroglobe is exceptionally well positioned for 2026 and beyond. With improving market fundamentals, increased confidence driven by trade actions and more flexible, efficient operating platform, we see a clear path to stronger performance and long-term value creation for our shareholders.

Operator, we are ready for questions.

[Operator Instructions] Our first question and the question comes from the line of Martin Englert from Seaport Research Partners.

Hello. Good day, everyone. Wanted to touch on volume expectations across the 3 businesses for 2026. And -- and then also the plan for the EU silicon assets. I know you provided some detail about furnaces converting over to ferrosilicon but what remains vital there? And is it to remain idle for the foreseeable future, but any type of goalpost for volumes on silicon metal in 2026. Silicon-based alloys and manganese-based alloys would be helpful.

Yes. Thank you, Martin. Let me try to address your first question on volumes and then I move to the asset. Starting from Europe, the safeguard, basically on [indiscernible] silicon and paraceutical kind of products free up 25% of imports that were 450,000 tons in 2025. So 25%, about 100,000, 110,000 tons of these products are mainly available for EU '27 producers. Well, [indiscernible], the imports were under [indiscernible] ton. So when you calculate 25% of you end up to 250,000 tons available for EU 27 producers. And of course, all these pie to be shared among the local producers. .

Assuming that safeguards are controlled and put in place in a proper way. When you go to the U.S., I think that we are at the end of the period where inventories mainly of Russian products, but also other products have been waiting on volumes and also price recovery. So we expect some gains in Ferro silicon, and we see that already from our customer portfolio in U.S. in the first quarter 2026. On top, talking about trends, still will improve -- is expected to improve in Europe by about 3% across the year, mainly in the second part of the year when the new safeguard measures imposed by would be applied with a further reduction of imports of 50%, an increase of tariffs to 50% for excess of products.

Aluminum is expected to grow in Europe by a solid 3% next year. In U.S., aluminum is expected to grow between 8% and 9%. And while steel is expected to start recovering. And actually, we have seen asset utilization in U.S. recovering already in quarter 4 2025. These are the major indicators for volumes in ferroalloys, [indiscernible] in Europe. Going to your second question, yes, we have converted 1 furnace in Beverly to federal silicon or [indiscernible] 2025. We converted as of January 2 furnaces in Europe, 1 in Salon and 1 in Loudon from silicon metal to ferrosilicon.

And concerning the utilization of the other silicon metal furnaces in U.S. and Canada were fully utilized well in Europe, we are selectively restarting furnaces based on contracted demand. So some furnaces will stay idle in the first quarter, while some others have been really started to supply on track at volumes already in January. [indiscernible] .

Thank you. I appreciate all the detail and context there. I wanted to inquire about the component of minimum prices with EU safeguards for ferroalloys, do you ultimately expect that domestic prices will gravitate to these levels? Or is there a dynamic within the EU footprint where there's sufficient capacity out there and that there isn't necessarily maybe the case that we see clarity with the minimum price levels embedded in the safeguards.

Yes. Well, the key question is the month which is not until now has not been great or [indiscernible] in Europe and in U.S. So the key question is how much demand is going to ramp up. or the different products. There is definitely enough capacity in the U to cover the safeguards for all products. If you look at what happened until now in Europe in ferrosilicon prices have jumped up by 22% on ferrosilicon immediately after safeguards have been announced. But then due to stocks at traders and others and the price index price has been going back and today is only 10% higher than previous safeguard announcement.

Different trend for manganese Manganese, products have jumped up around 20% on average in terms of index price. The price is holding is not improving, but is holding this level. This is why I say that demand is critical. And again, I expect a major improvement of steel demand in Europe in the second half of 2026.

Do you know if you cranes manganese alloys facilities are still producing and supplying just the coming to the region overall?

Yes. they are, but a very small at a very small rate.

For reasons that are related to supply chain, but also conditions of the assets. Of course, I do not have too many the insights about the status of the assets, but considering a number of years of work, the location of the assets, I think that even when we signed the favor gets signed, it will take a while before they ramp up to the previous rate.

Understand. Are you able to explain a little bit and provide some context about how the EU carbon credits function, what's covered with your allocated carbon credits for 2026 volumes. And maybe discuss if you have to go back to the carbon credit market. for incremental volume output that you may gain from market shares due to safeguards?

So this is a question that requires about 1 day of explanations, but let me try to be sure. First of all, at the moment, on C-band, we are impacted only for Carbon ferromanganese, not for the other products. And the way that the [indiscernible] works basically looks at the imported products looked at the content of actually the emissions of CO2 per ton required to produce these products, and they apply to this amount, the cost of CO2 in Europe per ton, deducting whatever the supplier has paid in his own country for its CO2 emissions.

So the overall game is to tax CO2 exporters to Europe to favor RPL producers who are at lower producing with lower CO2 emissions. Now all of this will be beautiful -- was beautiful. If 1, there was a proper calculation of the CO2 emissions for every kind of producer in the sporting countries. All of these will be beautiful if Yes. If Europe was not anxious to reduce our CO2 credit because trying to implement these measures when you don't have all the data, you end up potentially penalizing more European producers than the exporters.

So the -- of course, the commission is aware of that. They are doing their best. So steel is early involved in that. we will see how the situation develops. But again, we are -- our impact at the moment is minor due to the fact that [indiscernible] is applied on this Ticarbonfero manganese.

Okay. I appreciate all the color and detail and good job on the cost performance, given the fundamental volume headwinds. .

Thank you, Martin.

The question comes from Nicholas Giles from B. Riley Securities.

Thanks, operator. Good morning, guys. -- my first question was maybe just back to silicon metals exclusion from EU safeguards and -- just wanted to get your perspective on what the use appetite might be to revisit an inclusion of silicon metal in those safeguards -- and maybe any background you can provide on kind of what prevented them from being included in the first place.

Yes. Well, the -- as you know, we asked for safeguards for silica metal in Europe. The reasons why the official reasons why Europe did not support us on this request are related to the fact that silicon metal is -- has a much stronger energy footprint, meaning it requires much more energy to be produced versus the other products. The other key element from a [indiscernible] perspective, is related to the fact that imports did not increase in absolute terms. They have increased in relative terms for the period considered because the imports gain an 85% market share in EU 27 territory. But in absolute terms, they did not. .

These were the main 2 reasons. The third reason was about our point is related to all the silicon metal and ferrosilicon are interchangeable, which is or to dispute because we can convert our furnaces to position metal and pheroceuticalvice versa. And our customers in steel can move from ferrosilicon to civic metal. So -- the fact that they called for no changeability was quite a surprise due to the time and the number of meetings that we spent to explain our business.

The top reason was a stronger position of the chemical industry to protect silicon metal and a stronger position of Germany to trade measures. And so there is a combination of -- there was a combination of technical, if you want, and political and legal aspects that excluded silicon metal from the safeguards. This situation doesn't make any sense for 2 reasons. One is that without protecting silicon metal, you basically don't protect pheroceuticals and because is quite easy for [indiscernible] users to replace pheroceuticalth silicon metal when the price difference is not there. silicon metal should be much more expensive because of the energy, which is required to produce it.

So alluding safes were pheroceuticaland not protecting silicon metal is like shooting in your food. and this shouldn't be a surprise for the European community. Going to the first part of your question, yes, we are working on new measures for silicon metal in Europe. Actually, the commission has asked us to submit our data. So we have submitted mid-December relative to the last year in Europe. And we are waiting for their reactions to this document. The expectation is that we will go for anti-dumping to against the major dumpers in Europe. China is #1. And then we are still to see how do we address Angola, which is a sort of subsidiary of China with the same pricing policy.

The combined volume of the 2 countries, if you calculate also Vietnam, which is pure circumvention of silicon metal from China basically shows that the last year, the volume coming from China or China subsidies doubled. And in a market that has been going down, of course, with pure liquidity, they have been determining price based on the index. And the -- like I reported in the last quarter, the go-to-market with prices 25%, 30% before -- below the cash cost of European producers. So it's clear dumping.

The case is clear the difficulty is not the case. It is the fact that, as you know, Europe and the industry in Europe is finally reacting to these situations. And so the commission is the admission table is gene with cases asking for protection for every kind of products. And this causes some delays. So at the moment, the game is all about as politically pushing to get our case of the pile of cases of Therapan Commission.

I really appreciate all that background and your perspective on the situation. I guess my follow-up question to that is ultimately there's plenty of reason for optimism in aero silicon when you look at that segment in a vacuum, but -- do you think that these dynamics within silicon metal could ultimately weigh on pricing volume expectations in Fei?

All depend on -- yes, it all depends on demand and appetite marketing reformulating with critical metals knowing that medium term, it doesn't make sense to have silicon metal at the price of erosion in Europe. At this stage, our order portfolio has started going up already in quarter 4 on peracetic both in U.S. and in Europe. .

Understood. My next question would just be over the past couple of years and especially with the change in the administration in the U.S. I think end market exposure has shifted and then you kind of layer on the conversion of some of your silicon metal capacity to Fez is that kind of rerate things more towards the steel market. So I was just hoping you could kind of zoom out and provide us a high-level breakdown of your ultimate end market exposure. I think about solar as an area that comes to mind that might be less relevant today than it was in the past. So appreciate any color you can provide there.

Well, today, when you look at our total business, I would say that the 70%, 80% of the business is protected and only 20% is not -- which is basically silicone in Europe. So the other high-level thing is not a surprise that the United States, apart from government shutdown are plenty favorable to protect critical and strategy -- critical and strategic minerals and this is why we are going for antidumping done to your convention and things are going fast, but it's also true that things are changing in Europe, maybe not at the speed that we would like. But in terms of political support I have to assure you that our case is at the top of the agenda of all the states that are involving in federal lays and silicon metal.

So the drop has decided to protect industry has decided to protect our industry like the chemical industry or other industries. The problem is that Europe is not united like United States. So there is quite a change of continuous exchange of responsibilities between the center, the commission in the single states. The last case was last week, what Bandel basically told the states were complaining about [indiscernible] in deciding basically pushing back the decision to the states. And this dedicated situation in the ones causing [indiscernible] lower.

On the other side, when I talk to politicians in Spain, in Norway and in France, they are pretty aware of what we need to do, which is a combination of protection right, energy price for the industry and make sure that when they think about products, they think about supply chains and about single products.

Very good. Maybe just 1 quick one, if I could, for Beatrice. I want to commend you on really managing the cash balance during this -- during the trough here. I mean you still have a pretty healthy net cash position. So can you just touch on -- anything we should be focused on from a working capital perspective, CapEx was down year-on-year, should we kind of expect CapEx to be more flat this year? Anything on miles out just from a cash flow or capital allocation perspective.

Yes. Thank you. Thank you for the question, Nick. As you have been seen on the date. So the cash position at the end of the year -- it's -- we've been in the year with a strengthened with a strong cash position. Nevertheless, I have to say that this difficult year, the cash is coming mainly from the release of the working capital. So we have been releasing at the end, 48 million of working capital and therefore, a total positive operating cash flow for the year, right? Looking into 2026, I think 1 of the things that we are working and we have already seen the results is the -- will the additional release of the working capital even if the business we are planning to produce more volumes and sell a higher number of tons that this is typically creates consumption of working capital because we have this [indiscernible] in place.

We plan to continue to release additional working capital. And as referred to the targets that we put out there, I think, in 2024 when we said that we want to run the company, we have 20% less of working capital, if you remember, Now we are close to the 400 million, and we expect to continue to go down into the release of working capital. So that's 1 angle. On the other side, we are having a net debt position at the end of the year. And we expect to improve slightly, maybe as well this debt position as we go through the year. and, of course, supported by the lease of the working capital and cost reductions as Marco as you mentioned.

And then just CapEx, you would expect CapEx to be pretty similar to 2025 levels?

Yes. So this year, we went to 6 million for CapEx that is already at 20% less versus 2024. And in 2026, we expect a similar or slightly lower levels of CapEx, of course, This is always talking about maintenance CapEx base of the company or sustaining CapEx Yes, maybe around the same date. .

Got it. Got it. Understood. Well, guys, I appreciate the update as always and continued best of luck.

This concludes today's question-and-answer session. I'll now hand back for closing remarks. .

Thank you, Heidi. We are encouraged by our accomplishments and positioning the company for a more robust market environment and much stronger financial performance in 2026. Thank you again for your participation. We look forward to updating you on the next call in May. Have a great day. .

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

Good morning, ladies and gentlemen, and welcome to Ferroglobe's Third Quarter 2025 Earnings Call. [Operator Instructions] As a reminder, this conference call may be recorded.

I would now like to turn the call over to Alex Rotonen, Ferroglobe's Vice President of Investor Relations. You may begin.

Good morning, everyone, and thank you for joining Ferroglobe's third quarter 2025 conference call. Joining me today are Marco Levi, our Chief Executive Officer; and Beatriz Garcia-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 those forward-looking statements can be found in Ferroglobe's most recent SEC filings and the exhibits to those filings, which are available on our website at ferroglobe.com. In addition, this discussion includes references to EBITDA, adjusted EBITDA, adjusted gross debt, adjusted 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. Marco?

Thank you, Alex, and thank you for joining us today. We appreciate your continued interest in Ferroglobe. As we have discussed in previous quarter, 2025 has been marked by significant challenges stemming from unfair trade practices in both the U.S. and EU. After taking proactive measures to create a more level-playing field, we are now beginning to see meaningful progress. Regulators are taking actions, and we are confident these measures will improve the balance in our markets and position Ferroglobe for a much stronger performance in 2026.

Starting with the U.S. On April 24th, we filed a trade case in the U.S. regarding unfairly priced imports of silicon metal against Angola, Australia, Laos, Norway and Thailand. On September 23rd, the U.S. Department of Commerce issued preliminary countervailing duties against 4 of those countries that subsidize silicon metal production with the following assessments: Australia, 41.3%; Laos, 240%; Norway, 16.9%; and Thailand, 31.3%. Furthermore, on September 26, the U.S. Department of Commerce issued preliminary antidumping duties on Angola and Laos of 68.5% and 94.4%, respectively. Additional preliminary antidumping determinations are expected by the end of the year for Australia and Norway.

Initially, these antidumping measures were scheduled to be announced on November 21st, but due to the U.S. government shutdown, they are likely to be delayed. In parallel with U.S. action, the European Commission launched a safeguard investigation on December of last year, covering silicon metal, silicon-based alloys and manganese alloys. The final decision is expected by November 18. A favorable outcome would represent a significant step forward for the industry and for Ferroglobe, and it would secure the EU's sustainable access to critical and strategic materials, which are required for infrastructure and defense industries. We remain optimistic about the results of this investigation. From a process perspective, the final implementation of safeguards requires approval from at least 15 of the 27 EU member states and by states representing at least 65% of the population. It is important to note that it is unclear at this time which of our products would be included in the safeguards and how these will be implemented.

Next, I will provide an update on our partnership with Coreshell. They continue to make great strides in the development of silicon anode technology for next-generation batteries for EVs and other applications. Recently, Coreshell began shipping commercial scale 60 ampere EV pilot batteries to leading automotive OEMs for testing, a major step towards commercialization. The production ramp remains on schedule with consistently high yield and quality, underscoring the scalability of their process. Another advantage is that Coreshell's silicon-rich anode technology removes the reliance on graphite, of which over 90% is produced in China, paving the way for a fully domestic supply chain for EV batteries.

Coreshell also expects to achieve commercial deployment of advanced battery systems used in robotics and defense applications in early 2026, a significant milestone that validates the potential of silicon anodes in high-performance battery. I also want to congratulate Jonathan Tan and his team at Coreshell for winning the start-up World Cup in October, a global competition featuring over 100 regional events across more than 20 countries. This recognition highlights the impressive progress the company has made in advancing cutting-edge battery materials. Finally, as we continue to expand our collaboration with Coreshell, we have finalized a joint development agreement and expect to establish a long-term supply agreement for high-quality silicon metal in the near future, positioning Ferroglobe to play a key role in the growing market for advanced battery materials as EV adoption accelerates.

On the operational side, I am pleased to announce that we recently signed a new multiyear energy agreement in France effective January 1, 2026, guaranteeing us a very competitive energy price. In addition to low energy costs, the contract provides us the flexibility to operate our plants for up to 12 months a year, a significant benefit compared to our current agreement. This will simplify our S&OP process, inventory management and improve working capital as well as costs through higher fixed cost absorption.

Next slide, please. The combination of soft demand and aggressive imports into the EU resulted in declining volumes and revenues in the third quarter. Overall, volumes in our main segments were down 21% from the prior year quarter. However, despite a 19% decline in revenues, we generated $80 million in adjusted EBITDA, only slightly below the second quarter and improved free cash flow.

Next slide, please. Moving to our segment update, I'll start with silicon metal on Slide 5. The silicon metal market remains extremely challenging in Europe with significant predatory imports from China, roughly doubling in the first 8 months of this year. The EU should not allow imports of silicon metal designated as a critical and strategic material by the EU to have unfettered access to the European market. Because of these dynamics, we were forced to idle all our silicon metal plants in Europe starting at the end of September. As a result of these imports and weak demand, our third quarter shipments in EU declined by 51% compared to the second quarter. North American volumes remained stable despite soft demand.

Within the silicon metal segment, the chemical sector continues to be negatively affected by the oversupply of imported siloxane from China into Europe and the U.S. Siloxane is used in the production of silicones. Index prices saw an uptick from the second quarter in both the U.S. and EU. However, the year-to-date index in Europe is down by 28%, while the U.S. index is flat. Looking forward, we believe the preliminary U.S. antidumping and countervailing duties are a positive indicator of what the final measures we have assembled and are expected to markedly improve the U.S. market dynamics in 2026. The chemical demand is still expected to remain challenging due to siloxane imports in EU and to the lesser extent in the U.S.

Next slide, please. After a strong second quarter, silicon-based alloys volumes declined across all regions with Europe decreasing by 15%, followed by the U.S. being down 10%. Overall, the volumes decreased by 19% due to soft demand. This was particularly noticeable in Europe, whereas low restart of post-holiday steel production resulted in a nearly 5% decline in the third quarter compared to the same period of the last year. The pricing environment deteriorated in the third quarter with the U.S. and European indexes declining by 5% and 6%, respectively.

For the year-to-date period, the weakness in European steel production continued to weigh on the index, which is down 10%. The U.S. index is flat year-to-date. Steel production is forecasted to increase by 3.2% in 2026 in Europe. Combined with expected safeguards, this sets the stage for much stronger market conditions next year. We expect similar trends in North America based on conversation with our customers and a steady 2.2% projected growth in North American steel production. Overall, we are optimistic that 2026 will be a strong year for total silicon-based alloy sales for Ferroglobe.

Next slide, please. Moving to manganese-based alloys. Following the multiyear high shipments in the second quarter, our manganese segment remained solid in the third quarter, despite a volume decline of 21%. This is more a result of an exceptional second quarter, which benefited from delayed shipments carried over from the first quarter and our cost competitive position. Another factor continuing to constrain the manganese segment is the increased shipments into Europe from India, Malaysia and Georgia. Manganese alloys index prices softened in the second quarter by 7% and 3%, respectively, for ferromanganese and silicon manganese. We anticipate manganese demand recovering in 2026 with expected 3.2% steel production growth in Europe and the announcement of safeguards later this month.

I would now like to turn the call over to Beatriz Garcia-Cos, our CFO, to review the financial results in more detail. Beatriz?

Thank you, Marco. Please turn to Slide 9 for a review of the income statement. Third quarter sales declined 19% sequentially to $312 million, while raw material costs declined 29%. As a result, raw materials as a percentage of sales declined from 65% to 58%, mainly due to lower energy cost in Europe. The quarter-over-quarter sales decline was driven by lower volumes across the 3 product categories with silicon metal, silicon-based alloys and manganese-based alloys declining 25%, 19% and 21%, respectively.

Volume declines were partially offset by higher average selling prices, which increased by 1%, 2% and 1% for silicon metal, silicon-based alloys and manganese-based alloys, respectively. Adjusted EBITDA decreased 15% from the prior quarter to $18 million versus $22 million in Q2. Adjusted EBITDA margin improved slightly to 5.9%, driven by cost improvement in the silicon metal and silicon-based alloy segment. This was partially offset by the manganese segment.

Next slide, please. Moving to product segment bridges. Silicon metal revenue declined 24% sequentially to $99 million in Q3, driven by a 25% decrease in shipments to 34,000 tons, partially offset by a 1.2% increase in average selling prices to $2,950. Volume decline was driven by weak demand and dumping of Chinese silicon metal in the European region, as Marco mentioned earlier. Silicon metal adjusted EBITDA increased 81% to $12 million compared to $7 million in Q2 with margins increasing to 12%, up from 5% in the prior quarter. The margin improvement was driven primarily by lower energy cost in Spain and lower overall cost in North America.

Next slide, please. Silicon-based alloys revenue declined 17% to $92 million, driven by a 19% sequentially decrease in volumes to 43,000 tons, partially offset by a 2% increase in average selling prices to $2,149 per ton. Adjusted EBITDA increased significantly to $12 million in the third quarter, up to 73% from $7 million in the second quarter. Margins expanded to 13% compared to 6% in the prior quarter. The improvement in adjusted EBITDA and margins was a result of lower energy costs in Spain and cost improvement in France. This was partially offset by higher production costs in the U.S. and South Africa.

Next slide, please. Manganese-based alloys revenue declined 21% to $84 million versus $106 million in the prior quarter. The decline was primarily due to a 21% reduction in volumes to 70,000 tons, partially offset by a 1% increase in average selling prices to $1,214. Adjusted EBITDA in the third quarter was $4 million versus $17 million in the prior quarter, a decrease of 74%. Adjusted EBITDA margins declined to 5% versus 16% in the prior quarter. This margin contraction was primarily driven by lower fixed cost absorption in Spain and higher raw material costs in France and Norway.

Next slide, please. During the third quarter, we generated $21 million in operating cash flow, a 33% increase over the prior quarter. The improvement reflected a $7 million reduction in working capital on a cash flow basis. Energy rebate improved to $16 million from $7 million in the second quarter. while the change in taxes and others was largely due to profit sharing agreements based on 2024 results. Capital expenditures totaled $19 million versus $15 million in Q2. Despite the challenging market conditions, we generated positive free cash flow in the third quarter. We expect a substantial release of working capital in the fourth quarter due to our focus on inventory management and early idling of production in France.

Next slide, please. During the third quarter, we maintained a strong balance sheet while continuing our dividend program. We are declaring a fourth quarter dividend of $0.04 per share, in line with the previous quarter. It will be paid on December 29 to shareholders of record on December 22. We ended the quarter with a slight net debt position of $5 million compared to a positive net cash position of $10 million in Q2. Adjusted gross debt increased marginally from $125 million in the second quarter to $127 million in the third quarter, while total cash declined from $136 million in Q2 to $122 million in Q3. Our year-to-date CapEx was $48 million.

At this time, I will turn the call back to Marco.

Thank you, Beatriz. Before opening the call to Q&A, I'd like to provide key takeaways from today's presentation. We expect trade measures in the U.S. and EU to improve the business environment significantly in 2026. The U.S. ferrosilicon case, combined with tariffs and the silicon metal cases, preliminary determinations are encouraging, positioning us well in North America. The EU safeguards are expected to be announced later this month, and we are optimistic they will have a similar impact in Europe.

Coreshell is making significant advancements with its silicon anode battery technology and has begun shipments from the pilot battery plant and expects to begin commercial deliveries to robotic and defense-related applications in early 2026. The pilot plant battery production is progressing well with high yields and consistent quality. We continue to focus on cash flow generation and maintaining a solid balance sheet. We expect to deliver meaningful working capital improvements in the fourth quarter as we continue to see benefits from our S&OP process. We signed a very competitive multiyear energy agreement in France, which provides us the flexibility to produce throughout the year.

Operator, we are ready for questions.

[Operator Instructions] Your first question comes from the line of Nick Giles from B. Riley Securities.

Appreciate the update this morning. The market obviously remains challenging, but it seems like action to-date is offering some support and there could be more coming. Can you just speak to the demand signals you're seeing today and really how you're thinking about 2026 just from a volume perspective across each product category and region? Would be great to get your thoughts.

Yes. Nick. Let me start talking about Europe. I think that the demand in Europe will be stimulated by protection of the supply chains that the EU has decided to protect. Decisions have been made on steel very recently, where they have further safeguarded European production and pending decisions, of course, are related to our products and to aluminum. So for me, the secret of establishing demand in Europe is linked first to protection and clarity on all these points. But we expect, like I mentioned in my speech, demand in steel still going up. And this will drive, in our opinion, quite significant additional demand of manganese alloys and ferrosilicon.

Talking about silicon metal in Europe, I think that the major news is related to the intention of Germany to apply as of January 1, a new tariff on energy that is really going to boost the productivity of chemicals, steel and aluminum players, and this will drive some recovery in silicon metal on top of the other elements that I have mentioned. Talking about North America, we are, on one side, puzzled by the fact that utilization rate of steel mills in U.S. has gone up only 1%, sorry, in spite of the measures -- the protective measures of Mr. Trump. The expectations from statistics is that demand for steel is going to go up next year. And we see that our order portfolio is getting much more robust in ferrosilicon in 2026. We already have this evidence.

Talking about silicon metal, I think that the decisions that have been made on the case until now will help mainly some price restoration. Volumes related to the 5 countries involved is about -- is less than 10% of the actual demand. The other key element that is going to drive demand of silicon metal in U.S. is going to be related to whatever action the government is going to take on imports of siloxane from China. So overall, Nick, the scenario seems to be favorable, but there are a lot of decisions that can influence either/or demand for next year.

I really appreciate all that detail. My next question was just about operations and specifically costs. I think you've been really successful in past years of improving productivity and that flowing to the bottom line. It seems like there were some operational efficiencies targeted already. But I guess my question is, how much more could be made and what would be the impact to EBITDA and cash flow?

Yes. Of course, under the current conditions since the beginning of the year, we have been focusing on cash. As you know, last quarter of last year, we started implementing global S&OP. The target was improving in the first year, our working capital to operate the company by at least $50 million. We have already reached $55 million by the end of the third quarter, and we expect to continue this effort to improve the way we operate our company. On cash, as you heard from Beatriz, -- we have reduced the amount of CapEx that we spend. We expect to be close to EUR 60 million this year versus the EUR 80 million, EUR 85 million of the previous years. Of course, we never sacrifice on EH&S. But of course, we need to watch and be selective on how we spend CapEx, especially considering that some of our plants are not operating at this stage.

On cost, there are 2 main initiatives. We have been implementing hiring freeze since the beginning of the year for new positions, and we've been extremely selective in replacing positions that got vacant in the company. And the other -- so every new hiring is approved by me, either a secretary or an executive. So this is a fact. And the other fact is that we -- of course, we are on continuous control on discretionary spending and these are the main areas where we are focused on.

Got it. Maybe just one more, if I could. If we're to try and look further down the road when market conditions may have improved, how are you thinking about capital allocation? Could we see increased shareholder returns? You've talked about growth in the past, but obviously, there's been -- we've been kind of in a cyclical trough for maybe longer than anticipated. So just would be great to get an updated view on both of those fronts.

Nick, this is Beatriz speaking. I think the answer is yes, we're going to be considering share buybacks. I think we have been showing a prudent approach to take debt. We reiterate that it's not our intention at the moment to take debt to do any shareholder buyback. But as we progress in our EBITDA results, as you mentioned, when market conditions are different, of course, we're going to be resuming our share buyback program and always focus on this opportunistic approach. We continue to believe that our share price is as evaluated. So of course, we're going to continue with our program at the right time.

[Operator Instructions] Your next question comes from the line of Martin Englert from Seaport Research Partners.

I wanted to touch on the weakness in CMS, which was called out in the press release and you discussed a bit on the call. But I'm curious for silicon metal volumes into the chem's market, what did you see across the U.S. and EU kind of year-on-year in 3Q? And what has that been trending like year-to-date?

I missed one word of the question. Silicon metal into chemical sector?

Yes, silicon metal into the chemical sector, what's been going on year-on-year and year-to-date within the U.S. and then the EU.

Yes. If you talk about Europe, the key thing is related to the decision of one of the major players to switch from producing their own products starting from silicon metal in Europe to buy siloxane from China. And this is one of the major players. So silicon metal demand has gone down. The other key factor is the impact of the polysilicon industry in Asia and the collapse of the industry there has caused significant losses of volume of the European player who is supplying polysilicon to Asia. And as a consequence, lower volumes are purchased in Europe. The third element, of course, is demand that is not improving. And the fourth element is the massive increase of imports of silicon metal in Europe coming from China and Angola on top of the robust imports from Norway. So this is a quick snapshot of Europe.

Talking about the United States, we understand that excluding Dow, most of the other chemical players have suffered in terms of demand. And like I said, massive imports of siloxane from China. When you look at the volumes of silicon metal, you will see a significant increase of imports of silicon metal into the U.S. from Brazil. And based on our understanding, these imports are mainly due to a significant improvement of the productivity of the assets of Dow Chemical. So Dow Chemical has increased the captive use of silicon metal. So these are the main factors in the chemical business that I can report today.

Okay. I appreciate the detailed update there. That's helpful. And I'm sorry, I missed this in the prior remarks, but are you anticipating trade actions within the U.S. and/or EU on siloxane?

Well, it's not up to me to decide but I think there is a [ burning ] platform, both in U.S. and Europe to consider taking some actions on siloxane. The problem is that as much as I know is that you have a number of grades of siloxane and this doesn't make the antidumping initiative so easy but I cannot talk more as we are not talking about our products. Overall, for me, if you take the United States, it makes sense to block China on silicon metal, but then if you don't block them on siloxane or silicones, well, the overall measure on silicon metal doesn't make too much sense.

Okay. All right. I appreciate the detail there. And on the EU safeguards, whatever the outcome is, if you feel if it's not sufficient to deal with the market dynamics and the lost market share with imports, I guess I'm curious what are the next steps? And is it something that could be -- what are your next steps as a company then? And then is it something that can be revisited with the European Commission? And how would that timing look if that's even a possibility?

Well, everything can be revisited with the European Commission, but we don't have time for that. We don't have time for that and I'm very confident that some decisions are going to be made by November 18. Now if your question is what if measures are not announced or they are not sufficient, I appreciate your language. The plan is we are ready to announce severe [indiscernible] supported strong antidumping actions, which in case would be specific on China for silicon metal, on India, on all the manganese product mix and Kazakhstan on ferrosilicon. We have not launched the antidumping cases in Europe because we have been dancing since May this year under the expectations that safeguards were going to announce in Europe. But our reaction is going to be immediate if we don't see measures announced. And then it depends on what gets announced, and then we will have to consider what to do with our asset footprint, but this is the second step.

In a scenario where the safeguards would not be sufficient over the near term and additional action would be taken to potentially temporarily idle assets. I know there are many for silicon metal that are currently idled. But I guess, cash costs potentially associated with that? And then anything to think about like ongoing recurring just fixed costs that would continue on a quarterly basis?

Yes. I mean I answered before the question of Nick. At this stage, our cost actions are focused on hiring freeze and discretionary spending. We have partial unemployment measures applied in France. As you know, as of the end of September, we are not producing silicon metal in France. So these are the measures on cost that we have -- we are implementing right now.

Okay. I appreciate all the detail and thought considering the low volumes of cost performance was actually rather good for the quarter. So congratulations on that front.

Thank you.

Thank you, Martin.

This concludes today's question-and-answer session. I'll now hand the call back to Marco Levi for closing remarks.

Thank you. We are optimistic that 2026 will bring a more robust market environment as the trade measures are implemented and trade uncertainties diminish. Thank you again for your participation. We look forward to updating you on the next call in February. Have a great day.

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