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 n