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Operator: Good morning, ladies and gentlemen, and welcome to Ferroglobe’s Fourth Quarter and Full Year 2022 Earnings Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will be given at that time. As a reminder, this conference call maybe recorded. I would now like to turn the call over to Anis Barodawalla, Ferroglobe’s Vice President of Investor Relations and Corporate Strategy. You may begin.

Anis Barodawalla: Thank you. Good morning, everyone, and thank you for joining Ferroglobe’s fourth quarter and full year 2022 conference call. Joining me today are Marco Levi, our Chief Executive Officer; and Beatriz García-Cos, our Chief Financial Officer. Before we get started with 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 on our webpage, ferroglobe.com.

In addition, this discussion includes references to EBITDA, adjusted EBITDA, adjusted gross debt, net debt and adjusted diluted earnings per share, among other non-IFRS measures. Reconciliation of non-IFRS measures may be found in our most recent SEC filings. At this time, I would now like to turn the call over to Marco Levi, our Chief Executive Officer. Next slide, please.

Marco Levi: Thank you, Anis, and good morning and good afternoon to everyone. Before turning to our 2022 results, I would like to recognize our people. It is through their hard work and commitment that we were able to achieve the best performance in our 100-year history. Despite the global volatility and its impact on many industries, we have been resilient and continue to deliver strong results. This is a testament to the strength of our business model. It is also a clear indication of the confidence that our customers have in our ability to navigate through these challenging times. Through a combination of favorable prices, operational agility, commercial excellence and cost discipline, Ferroglobe generated strong results in 2022 with revenue, EBITDA and free cash flow, all setting record eyes for the company.

Our business fundamentals are solid and the value creation plan that was initiated a couple of years ago has made the company stronger and more competitive. The market opportunity for us is driven by the growing trend towards onshoring and the transition to greener energy sources. As a leading producer of silicon metal, we are well-positioned to capitalize on high demand and markets such as solar and battery. The onshoring movement driven by initiatives like the inflation Reduction Act in the US and similar initiatives in Europe are having a significant impact on the criticality of silicon metal in the solar value chain. This solidifies our position in the market. This is a clear indicator of the growing demand for renewable energy and the increased focus on local sourcing and production.

It presents a unique opportunity for a company like ours. We are well positioned to take advantage of these trends and deliver strong results. We are committed to driving a competitive advantage in the solar industry through our state-of-the-art silicon metal technology. Our focus on efficient furnace design, maximizing energy efficiency and providing assets to advanced technologies not only improves our operations but also reduces project risk for our customers. In addition to solar, we also see substantial growth opportunities in the coming years, driven primarily from batteries used in electric vehicles. In the battery market silicon metal provides significant advantages over graphite, the current standard used in the battery anodes, including a dramatic increase in battery capacity and the reduction in charging time.

As this technology improves, the industry is expected to see rapid adoption, driving strong growth in silicon metal for the foreseeable future. Over the past two years, we are focused on improving our business efficiency through cost reductions and increased capital efficiency, positioning us well for future growth. The value creation plan that we launched in 2020 as a transformational effect on our company, not just in terms of how we operate but also in our ability to generate strong EBITDA. As of December 31, 2022, the value creation plan has generated approximately $150 million in cost savings and an additionally $40 million in commercial excellence on a run rate basis. By the end of 2023, we expect to reach our increased target of $225 million.

By continually improving our balance sheet and optimizing our capital structure, we are ensuring that we have the resources and the flexibility we need to capitalize on opportunities and navigate any challenges that may arise. We are progressing with our commitment to release working capital. We released $55 million in the fourth quarter and we anticipate additional working capital release over the next two quarters. These release combined with EBITDA generation should lead us to become net cash positive during 2023. While there is some uncertainty in the short-term, our long-term story is robust. We are confident in our ability to navigate these challenges and remain focused on delivering strong results for our investors. In the fourth quarter, demand for our products decreased due to closures in European steel and aluminum sectors as a result of higher energy prices, which caused our customers to lower their inventory levels.

We are seeing early signs of improvement particularly in the automotive and construction sectors and we expect inventory levels to normalize in the near future driving demand for our products. I would like to take a moment to highlight the exceptional work of our management team in successfully optimizing our energy costs. Through proactive communication with governments, regulators, energy providers and customers, we have been able to take advantage of opportunities in France to generate revenues through a compensation agreement with an energy provider in Q4. In addition, we have secured an extremely favorable energy contract, providing low-cost energy for our assets in France for the coming years. We have a management team that is not only focused on delivering strong results, but also on finding innovative ways to improve our operations and remain ahead of the curve.

Next slide, please. Let’s focus on silicon metal. Revenue was $184 million down from $264 million in Q3, a decline of 30%. Adjusted EBITDA for this segment declined from $130 million in Q3 to $89 million in Q4, down 21%. We have successfully achieved strong margins of over 30%, despite declining prices and production and notable improvement compared to historical levels. This demonstrates our ability to control costs and respond to market demand while preserving margins. Our silicon metal business was down due to a challenging market environment impacting both price and volume. Volume declined 22% and sequentially in Q4 to approximately 39,500 metric tons. Our average realized price for silicon metal sales decreased 11% compared to the previous quarter, resulting in a negative impact on EBITDA of $16 million.

Costs improved by $23 million relative to the prior year quarter primarily due to the energy compensation agreement in France and CO2 compensation. However, this was partially offset by the increase in energy costs and raw materials. During the fourth quarter, various aluminum manufacturers in Europe shut down due to high energy prices, resulting in decreased demand for silicon metal. However, we are seeing some encouraging signs of demand for aluminum from the automotive sector. Concerns around the economic outlook in Q4 led to low demand for customers in the chemical sector. We expect this weakness to persist until the late Q1 or early Q2. However, we anticipate a rebound for silicon metal due to increased demand for silicones in electronics medical, cosmetics and consumer goods.

Slide 6, please. Moving to silicon-based alloys. Revenue was $127 million down 29% over the previous quarter. Adjusted EBITDA for Q4 was $37 million, down 38% from the third quarter. Sales volumes declined 19% over the prior quarter, negatively impacting EBITDA by $9 million, while average realized pricing was down 13% over the same period negatively impacting EBITDA by $22 million. Cost was favorable relative to the prior quarter, mainly due to energy compensation in France of $8 million and CO2 compensation of $2 million, which was partially offset by higher coal price in Europe, which amounted to $2 million. The demand for our Silicon-based alloys has decreased due to ongoing weakness in the markets, particularly, steel used in construction.

Additionally, the rise in energy prices in Europe has resulted in continued shutdowns of capacity among steel producers. Europe has a significant change in the supply of ferrosilicon due to Slovakia being down and Russia being out of the market. We see a lot of material coming from Kazakhstan and China negatively impacting the price of non-specialty grades. Our strategy to focus on higher margin specialty and foundry products has enabled us to improve margins compared to commodity grade silicon alloys. Moving to slide 7, let’s move to manganese alloys. Manganese-based alloys revenue was $91 million in Q4 down 7% over the previous quarter. Adjusted EBITDA for Q4 was $20 million up 34% from the third quarter. Adjusted EBITDA and margins showed the improvement in the fourth quarter indicating positive momentum after adjusting from earn-out provisions.

Sales volumes were up slightly over the prior quarter having a negligible impact on adjusted EBITDA, while average realized pricing was down 7% over the same period, which negatively impacted EBITDA by $11 million. The cost impact was positively influenced by the energy compensation agreement in France, which amounted to $11 million and the CO2 compensation of $2 million. The demand outlook remains cautious as a result of weakness in steel. The ongoing conflict between Russia and Ukraine had placed upward pressure on energy costs and caused partial disruption to 1.1 million tons of Ukrainian source materials, but the market has since made up for these losses leading to a decrease in prices. The current spread between alloy and ore is around $700 per metric tons above historical average of $550 per metric ton.

The Gabon landslide has led to a rise in manganese ore prices, which potentially could cause alloy prices to increase. Now I would like to turn the call over to Beatriz García-Cos, our Chief Financial Officer to review the financial results in more detail.

Beatriz García-Cos: Thank you, Marco. I will begin by reviewing the income statement on slide 9. I’m pleased to announce a historic year for Ferroglobe. The strong market combined with the structural improvements from our value creation plan enabled us to generate the strongest annual result in the company’s history with record revenue of $2.6 billion and record adjusted EBITDA of $860 million for the year. Revenue for the fourth quarter was $449 million down 24% from the third quarter. The sequential decline in the fourth quarter was driven by lower volumes and pricing across the portfolio. During Q4, raw materials and energy consumption remained flat from the third quarter resulting in raw materials and energy consumption as a percentage of sales increasing to 63% up from 48% in the third quarter.

We saw a significant increase in energy costs during the fourth quarter. To effectively manage this, we use our flexible asset footprint to shift production to lower energy cost regions and temporarily hold operations in France. We will receive energy compensation and, therefore, optimizing our profitability. In the fourth quarter, we recognized an impairment charge of $44 million, which was related to our tolling agreement governing Cee-Dumbría plants and our two manganese plants in Spain. This chart was a result of high energy prices. This impairment for fiscal year 2022 but was recognized in Q4. Adjusted EBITDA margins remained strong at 29%, down slightly from 31% in Q3, despite weak market conditions. On a full year basis, the cost of raw material and energy consumption as a percentage of sales improved to 49%, compared to 67% in 2021.

The improvement — this improvement was due to strong pricing and operational leverage from our flexible asset base. Net profit for the full year was an extraordinary $462 million compared to a net loss in the prior year of $150 million. For the fourth quarter, net profit was $28 million compared to $99 million in the third quarter. Our adjusted diluted profit per share decreased to $0.42 in quarter four versus $0.64 in quarter three. Next slide, please. Our adjusted EBITDA in the fourth quarter was $130 million, down from $185 million in the prior quarter, representing a decline of 30%. Adjusted EBITDA margins during the period remained solid at 29%, roughly in line with the Q3. Average selling price across our portfolio declined by 11%, resulting in a negative price impact of $50 million.

Overall, volumes declined by 60% over the prior quarter, which had a negative impact to adjusted EBITDA of $41 million. Cost had a positive impact of $46 million. This was due to the energy compensation received in France. Slide 11, please. Adjusted EBITDA for the full year was $860 million versus $179 million in 2021. Adjusted EBITDA margins improved to 30% versus 10% in 2021. Average selling price had the biggest impact on our 2022 adjusted EBITDA, driven by an increase of 59% among the portfolio in 2022 resulting in a benefit of approximately $1 billion. Higher costs adversely impact adjusted EBITDA for the year by $324 million, driven by higher energy prices in Spain and higher raw material prices, partially offset by energy compensation in France of $50 million.

Next slide, please. We ended Q4 with a cash balance of $323 million up from $237 million in the prior quarter, an increase of $86 million driven by working capital release and EBITDA generation. Net debt declined from $194 million in the third quarter to $137 million at year-end, the lowest level in the company’s history. Our reduction in net debt was primarily the result of cash generated during the quarter, underpinned by the working capital release. We are focused on continuing to reduce our leverage and expect to be net cash positive during 2023. Next slide please. During 2022, we generated record operating cash flow of $405 million and free cash flow of $343 million. This represents a significant improvement over 2021 where operating cash flows was negative $1 million and free cash flow was negative $25 million.

In the fourth quarter, we generated operating cash flow of $118 million, up from $55 million in Q3. Free cash flow in Q4 was $94 million versus $40 million in the third quarter with a $55 million release of working capital. Cash flow from investing activities or CapEx in 2022 was negative $62 million versus negative $24 million in 2021. The increase in cash flow from investing activities is attributable to higher CapEx spend which was driven by increased investment in our plan. We achieved our CapEx plan in 2022 and plan to expand our CapEx program beyond maintenance and invest in growth for our core business and ESG. And lastly, cash flow from financing activities for 2022 was negative $130 million. This includes the repayment of our super senior debt and coupon payment.

In the fourth quarter, cash flow from financing activities was negative $8 million versus negative $109 million in the prior quarter. Next slide please. As part of our overall strategy to reduce debt, we repaid $80 million from one of our Spanish government loans in February 2022. We are actively exploring different options related to our senior secured notes with the overall objective to optimize our capital structure. At this time I’ll turn the call back over to Marco.

Marco Levi: Thank you, Beatriz. Referring now to the corporate update on Slide 16. Our ability to develop high purity silicon metal provides numerous opportunities that will drive growth for the company in the coming years. The solar market is a large and growing market that is comprised primarily of high purity silicon, which is the most common semiconductor material used in solar cells, representing approximately 95% of the solar modules. High purity silicon also plays an important part in the advancement of battery technology for electric vehicles, replacing graphite with silicon in the anode of batteries provide significant advantages that will drive rapid adoption as the technology is perfected. Current technology enables 5% to 10% of the graphite to be replaced by silicon.

This mix is expected to increase dramatically over the next five years. We are partnering with battery developers to refine this technology and have made significant progress. We have started production and we are in the early stages of commercialization. We expect to be a leading provider. as this technology is adopted. We are excited about this opportunity as we expect it to generate high margins and strong growth for the foreseeable future. On shoring trends provide an additional driver for growth, with increasing demand for critical materials to be produced closer to home. Our global footprint puts us in a unique position to benefit from this trend. We are capitalizing on the growing demand for silicon metal by expanding our capacity and enhancing our global footprint with minimal capital investment.

In 2022, we successfully added 22,000 tons of capacity at our Selma, Alabama Plant. We are currently in the process of adding an additional 55,000 tons at our plant in Polokwane South Africa. We successfully restarted the first furnace in Polokwane in November, and completed the restart of the second furnace in January. These efforts demonstrate our commitment to meeting the increased demand for silicon metal in a sustainable and low-cost matter. These facilities are strategically located and are an important part of our global asset footprint. Their low-cost plants and are serving customers locally in Europe, the United States, the Middle East and Asia. They enable us to shift production to address volatility in the energy markets as we have experienced in Europe.

In 2022, we published our first global ESG report achieving a significant milestone that demonstrates our commitment to improving our environmental performance and contributing to the green transition. Our plan includes several key initiatives. We are focused on improving our operational efficacy to reduce our carbon footprint, reduce waste, and increase our energy efficiency. We are also focused on increasing our usage of renewable energy and we work to transition to clean energy, which we believe is essential to create a sustainable future. For the first time, we are providing annual guidance to give investors additional insight into our business performance. We project to generate adjusted EBITDA of approximately $270 million to $300 million in 2023.

Given the current order activity from our customers and overall end markets, we expect the first quarter to be down from Q4 and represent’s the bottom of the current cycle. We anticipate an acceleration beginning in the second quarter. Projections show flat to slightly lower volume in 2023 with a 1% change in volume affecting EBITDA by approximately $8 million. With that, update I will turn the call over to the operator and open the line for questions.

Operator: Thank you. We will now take the first question it comes from the line of Martin Englert from Seaport Research Partners.

Martin Englert: Hello, good afternoon, everyone.

A €“ Marco Levi: Good afternoon, Martin

Martin Englert: For the EBITDA guidance, the annual EBITDA guide of $270 million to $300 million. Could you discuss maybe some of the price or average price assumption volume assumption and costs that are underlying that?

A €“ Marco Levi: Yes, Martin, these are the indications that I can give you. I mean, we expect weaker volumes in 2023, about 6% lower volumes mainly related to the fact that we are not running our plants in France, in the first quarter. In terms of pricing, we see silicon rather stable across the year. As you know, the level of silicon price in this graph, is much higher than in the previous quarter — in the previous years — in the previous cycle, sorry. While for alloys we see already some price recovery, as we speak. So we assume that there will be some appreciation of our alloy pricing, during the year linked to the demand recovery in particular in Europe. Concerning costs, most of the raw materials are becoming more affordable with some exceptions.

Manganese ore, as I mentioned in my pitch, is going up mainly to — related to the event in Gabon. Coal, is extremely volatile at least, the wash coal, that we buy for our furnaces. So, we don’t see short term a significant reduction in coal price. And energy picture varies, depending on the country. But as you know, we are contracted everywhere at the fordable cost, except for Spain. But in Spain now, energy price is more affordable and we have restarted production at some of our furnaces.

Martin Englert: Thank you for that. It’s, helpful. And I apologiz,e the dial-in call is breaking up a little bit, and I missed some of your comments about the — I think it was a net $50 million benefit in France, because of some energy credits or rebates. Could you quickly recap that and what impact 4Q?

A €“ Marco Levi: Yes. The benefit in France is related to the way, the contract works between us and the energy supplier. So we were in the position to consume less energy in France, in quarter four. And as a consequence, we got compensated, based on the contract terms.

Martin Englert: Okay. And is that the — I guess on a forward-looking basis is at the end of that? I know you’re planning on not running the assets in France in 1Q, but is there anything else there or any other benefit, or either 1Q or any other point, anticipated or potentially available in 2023?

Marco Levi: We expect to be competitive out of our assets in France in terms of cost position during Q2, Q3 the rest of 2023. We haven’t changed our plan to restart our plants in France at the beginning of the second season.

Martin Englert: Okay. If I could, one final one here. Working cap relative to sales, I believe, it was 39% this quarter. I understand the intention to work that down during the first half of 2023 but any other detail that you can share on that metric as we move through 1Q and 2Q?

Marco Levi: Yes. What I can tell you is that, we have a pretty solid target reduction of $55 million in Q4, but we expect a reduction between $90 million and $120 million due to working capital in the first quarter. And then, we will proceed with further reduction in Q2, basically getting back to more affordable levels of working capital to run our business.

Martin Englert: Okay. And again the target is 21%, or maybe a little bit because of some of the manganese or maybe just a couple points above that in the back half of the year?

Marco Levi: Well, you’re right. I mean, of course, the 21% was related to ideal inventory levels with high level of sales and high prices. What we expect to do is run the silicon and the silicon alloy business in the range of 21%, 23% working capital. While manganese alloys we have seen that, due to the length of the cycle and the lack of our back integration, will probably require an additional 2, 3 points of working capital. We are fine-tuned — we’re sharpening our pencils to get to the right level, is a moving target, but this is where we are going.

Martin Englert: Okay. Thank you for all the detail and congratulations on results.

Marco Levi: Thank you, Martin.

Operator: Thank you. We will now take the next question. It comes from the line of Lucas Pipes from B. Riley Securities. Please go ahead. Your line is open.

Lucas Pipes: Thank you very much, operator, and good morning, everyone. A great, great job on the quarter. My first question is on the additional savings and commercial excellent opportunities. You outlined $225 million at the end of this year. And I wondered if you could maybe expand a bit on where you’re seeing the additional opportunities from the previously identified savings. Thank you, very much.

Marco Levi: Yes. As you know, we started this program in 2020. And while you implement the initiatives, you do not capture the full value during every year. So there is a certain trend. And we are — basically we have implemented all the initiatives. And so, while we have been able to capitalize in 2022 on the part of them, we expect to be able to implement the full program by 2023. And in particular to give you a little bit more granularity, we are factoring $75 million throughout footprint optimization. We stopped production in Château Feuillet, we stop of our production in Monzón. We shut down Niagara Falls. All of this has given $75 million to the bottom line. $70 million comes from continuous plant improvements.

I mentioned several times, our KPN program, which is about implementing technologies at each one of our furnaces to improve the yield and the raw material usage of each furnace. So this is another $70 million, $30 million have come until now, but I think we will be able to do much better from purchasing centralization. As you know, Lucas, we have centralized most of our purchasing activities strategic raw materials services, spare parts basically energy. So everything is centralized. We get $30 million out of that. And we have calculated about $50 million coming from commercial excellence. And all these initiatives if you sum up the numbers bring you to $225 million.

Lucas Pipes: That is very helpful. I really appreciate that detail. And going back to the annual 2023 EBITDA guidance range of $270 million to $300 million, I believe you offered a sensitivity of $8 million for a 1% change in volume. Would you be able to offer similar sensitivity on the pricing side?

Marco Levi: Well, we — you put your finger in the right spot. I mean, we think that for 2023 — the key question is demand coming back like we expect. And as a consequence, we are focused the sensitivity on our EBITDA more on volumes. This is the reason why we have given this comment combined with the guidance. Of course, price 1% on prices, probably gives an impact, which is bigger than the one in volumes. On the other side, based on my comments on pricing, we feel pretty comfortable about our pricing scenarios for 2023.

Lucas Pipes: That is very helpful. I appreciate your confidence on that front. That’s really good to hear. I’ll try to squeeze one last one and I’ll go back into the queue. On the Silicon Metals segment in Q4, volumes declined, margins expanded. I assume that’s related mostly to the energy compensation you received, but anything else you would add to that dynamic. It’s typically unusual to see in the sector. So I appreciate any distant color on that?

Marco Levi: Yeah. I must say the main factor is that what we told investors in terms of trends of silicon metal pricing was right. I mean, we said due to the structure in the market pricing is not going to go back to the levels of the trough of the previous cycles and this is a key element. The other element is the energy compensation. And then there were, like, we said in the presentation also a certain level of CO2 compensation impacting favorably the silicon metal results. In terms of cost — input costs we are still I likely commented before mainly coal.

Lucas Pipes: I appreciate all the color, continued best of luck. Thank you.

Marco Levi: Thank you, Lucas.

Operator: Thank you. We will now take the next question. It comes from the line of Logan Gilmartin from Marina Capital. Please go ahead. Your line is open.

Unidentified Analyst: Hey guys, congrats on the quarter. Your guidance to positive net cash position this year, how should we think about the outlook for returning capital to shareholders in terms of buybacks or dividends? Can you give any color on timing? Thanks.

Beatriz García-Cos: Hey, Logan, this Beatriz speaking. As you know our current indenture, we don’t have the ability to pay dividends. But as we are executing on the reduction of the debt with the senior notes, we expect to have the ability to pay dividends ability. And then the company needs to define the right policy to be able to pay these dividends and shares buyback if this answers your question.

Unidentified Analyst: Thank you.

Operator: Thank you. We will now take the next question. It comes from the line of Michael Lam from Jemekk. Please go ahead. Your line is open.

Michael Lam: Yes, good morning. Two questions. The first one is I’ve been reading recent news from South Africa about widespread blackouts and lots of electricity shortages. Is that — is it a case where your plants are you’re in an island so to speak where your electricity grid is good, whereas, the electricity grid outside of where you’re sourcing is where all the problems are?

Marco Levi: Yeah. Thank you for the question. For sure we are monitoring the situation in South Africa very closely, it’s also true that until today we have not been suffering any significant issue in terms of energy that, of course, when we had to make the decision to restart Polokwane, we covered ourselves properly with the energy providers. So at this stage, of course, the situation is particularly intense in South Africa. But at this stage, we are in full production both in

Michael Lam: Okay. Does it — are you continuing with the ramp-up, or because of the electric situation you might slow down the ramp up for now?

Marco Levi: No. The — we continue with the ramp-up. We are ramping up Polokwane third furnace in April. We have already contracted the volumes also for the third furnace. So Polokwane at this stage is expected to run at full capacity starting sometime in the second quarter.

Michael Lam: Okay. All right. The second — actually I have two more quickly. But the second question is when I look at your sales volumes in not just Q4, but Q3. Clearly, there’s less demand. Clearly, there’s been de-stocking and also increased imports from like you mentioned China and Kazakhstan. But when I look at volumes down so substantially and I look at the users of metals, they won’t be down anywhere close. I mean, auto production is up in Europe. And steel production is on the rise. So what’s your best guess, as to the percentage of the volume decline that’s simply from de-stocking because that will come back?

Marco Levi: Right. Right. And this is why we are — we have — you have a perfect read of the situation. By the way my comment about Kazakhstan and China was related to ferrosilicon not to silicon metal. Just to be clear, but this is a detail. In terms of outlook still the supply chain is pretty healthy. And if you combine an employee supply chain we’ve given a moderate start of demand the effect should be that we should count on solid sales volumes in Q2 and Q3 this year.

Michael Lam: Okay. And sorry a last question a follow-up to an earlier question about dividends, but not so much related to dividend itself but you’re sitting on a lot of cash. Now granted today, you’re earning a decent return on cash with interest rates where they are. But I was looking at the bonds, maybe not very recently but it was trading at below the buyout rate for the next anniversary. Given your cash is so large why not just get ahead of the bonds and just going to market and just start buying some of it back because — and then you save money because one thing I noticed is your interest expense is quite high in Q4 relative to your net debt. Now that’s obviously because your debt is 9%. And you’re earning 3% on cash, right? So you have a mismatch of interest rate differential

Marco Levi: Yeah.

Michael Lam: why not try and close that a little bit more by taking some of cash and repaying debt.

Marco Levi: You and I are aligned. We are executing exactly along these lines, we will update the investors as soon as we have made other significant progress. But we are implementing this initiative as we speak.

Michael Lam: All right. Sounds good. Thank you.

Beatriz García-Cos: Thank you.

Operator: Thank you. We will now take the next question. It comes from the line of Brian DiRubbio from Baird. Please go ahead. Your line is open.

Brian DiRubbio: Good afternoon, Marco and Beatriz.

Marco Levi: Hi.

Brian DiRubbio: A couple of quick questions for you. Marco, as you look at 2023 and sort of all the various puts and takes, do you view that as more of a mid-cycle result that you think the company going to generate, or is this more trough results in your opinion?

Marco Levi: Well I mentioned that we see Q1 being a weak quarter and then we expect the demand at least in Europe cautiously ramping up. So this is the way we see it. Our guidance on EBITDA gives you I think a good indicator of what we have been doing to secure profitability of this company also during the trough of the cycle.

Brian DiRubbio: Understood. That’s helpful. And then Beatriz just as we think about longer term two questions sort of about the debt structure. First if you do conduct a refinancing are you looking to have some prepayable debt or you want something more fixed in place? And how should we think about what your target leverage is over a cycle?

Beatriz García-Cos: Yes. Thank you for the questions. So let me take one step back. So we said that we want to reach gross debt level of $200 million. At the moment, the majority of our debt is made of the senior notes, right? It’s a fixed 81% of our debt in total fixed interest rates right? The main part is the senior notes at 9.75. And as Marco was saying, if you were listening, so we are at the moment executing on the senior notes. Going forward, we need to see what is the best option for Ferroglobe. We want to run the company with an approximate level of $200 million. And then the type of debt instrument will depend on how the debt market evolves on the next quarter, right? We need to see if the interest rates are bottoming or what is going on.

Brian DiRubbio: Fair enough. Appreciate the thoughts. Thank you so much.

Operator: Thank you. We will now take the next question. It comes from line Andrew Cohen from Brennan . Please go ahead. Your line is open.

Unidentified Analyst: Hi, thanks for taking my question. I was just going back to the presentation from February of 2021, where the estimates of the $470 million of EBITDA for 2023 remain decently lower silicon metal prices at least environment and a lower cost savings expectations. I was just wondering if you guys could bridge that delta between the guidance for 2023 and the updated guidance for 2023 and the updated pension 2023 and where you were in the presentation? And also is there a cadence for inventory coming down in the first quarter given that we’re decently above 21% of sales in total working capital right now? Thanks.

Marco Levi: Yes. Andrew let me start from the second question, because I already answered the same question to Martin from Seaport. We have reduced working capital $55 million in quarter four. We are expecting a more significant reduction in Q1. I gave a range in the area of $80 million, $100 million and in Q1 and we further go down during quarter two. We expect to move towards 21%, 23% working capital on revenue for silicon and silicon base alloys in a couple of more points on manganese due to the long cycle that we have in manganese. Regarding the bridge versus the cleansing presentation, I think, I don’t have it with me. But there — the key elements are; one, we have over delivered on our value creation plan, because at the beginning of the value creation plan, we expected the creation of a buffer of $180 million EBITDA, while we are creating more than that $225 million.

And what we couldn’t foresee at the time was the price evolution in the market, which was related to getting out of the covered period. There was products were in demand customers who are looking for supply security and pricing has been evolving at a higher level than what we could forecast.

Unidentified Analyst: Yes. And I guess that’s sort of my point is it seems like both the cost savings and the pricing are in your favor and you have the EBITDA guide is lower than what that guide was. So maybe I’m missing something but I was just trying to reconcile that.

Marco Levi: Well, the EBITDA guidance takes into account the effect of the value creation plan the fact that we have lower volumes in the first quarter and our assumption on pricing.

Operator: Thank you. We will now take the next question. It comes from the line of Thomas Murphy from Odeon Capital Group. Please go ahead. Your line is open.

Thomas Murphy : Hi. Good morning. Just two quick questions. The first is, what is the CapEx outlook for 2023? And the second has to do with the 9 senior notes, which a lot of people have referenced. But as it relates to the 9 senior notes features and I should know this off hand I apologize I don’t. But do they restrict dividends? Does the notes restrict dividend out to the equity?

Beatriz García-Cos: Yes, you are right. So with the current intent, we can’t pay dividends. And as I was saying before, we are executing on our senior notes. And this will allow us to have the ability to pay dividends. Of course, then the company needs to define what is the financial policy in terms of dividends and buyback. If this answer your question?

Marco Levi: Referring to CapEx, we plan in 2023 the same moment of CapEx for maintenance and EH&S at the level of $75 million same amount of CapEx that we have spent last year. As previously communicated, we have been starting our assets of CapEx. And so we are bringing them up to the level that we want with a reinvestment program of $75 million for two years. On top I mentioned, the growth opportunities that we have. So we are going to invest more CapEx this year in a very judicious way meaning that any kind of growth CapEx is going to be analyzed and presented to the Board for approval. So we are stage gating some growth CapEx to in 2023.

Thomas Murphy: Thank you. The rest of my questions have already been asked. So thank you and have a great day.

Beatriz García-Cos: Thanks Thomas.

Marco Levi: Thanks Thomas.

Operator: Thank you. I would now like to hand back over to the speakers for final remarks.

Marco Levi: Thank you. That concludes our fourth quarter and full year 2022 earnings call. I am proud of our performance and results in 2022. We have demonstrated that Ferroglobe is able to perform while transforming. I truly believe there is significant value to be unlocked making Ferroglobe a compelling investor proposition. Thank you again, for your participation. We look forward to hearing from you on the next call. Have a great day.

Operator: That does conclude our conference for today. Thank you for participating. You may all disconnect.