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"This was a solid quarter for Ferroglobe, culminating a first half of the year which confirms the improved fundamentals of our business and validates the positive momentum in the markets we are serving," said Pedro Larrea, CEO of Ferroglobe. "In the year to date we have significantly increased volumes and selling prices and our EBITDA has more than doubled compared with the same period last year. The steel industries in North America and Europe - the main end markets for most of our alloys - are experiencing strong demand and high capacity utilizations in the wake of recent trade protection measures. Prices of our products have remained broadly stable overall, and current supply/demand dynamics in our industry should support continued healthy pricing."

Cash flow generation impacted by acquisition related working capital

During the second quarter, cash flows used for operations was $4.6 million, the main driver being a working capital increase of $70.0 million during Q2 2018. Approximately half of that increase is from the recently acquired manganese-alloy plants that have built their operating working capital, with a further increase from seasonally high raw materials and finished products inventories in the rest of our operations.

Ferroglobe's net debt was $475.3 million as of June 30, 2018, up from $449.3 million as of March 31, 2018. The increase in net debt is mainly due to the $70 million working capital increase noted above. Excluding the acquisition impact of the manganese-alloy plants, net debt has decreased by $1.6 million as compared with December 31, 2017.

"We continue to be focused on cash generation and deleveraging the balance sheet," said Phillip Murnane, Ferroglobe's CFO. "Although the first half of the year has required meaningful cash investment in working capital for the new manganese assets, we have a rigorous cash generation initiative in place that will provide significant cash flow release in the second half of the year."

 

 

The Company has declared an interim dividend

Ferroglobe's Board of Directors has declared an interim dividend of $0.06 per share, further reflecting its confidence in the underlying strength of Ferroglobe's business and long-term outlook.  The dividend will have a record date of September 5, 2018 and a payment date of September 20, 2018.

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Conference Call

Ferroglobe management will review the second quarter results of 2018 during a conference call at 9 a.m. Eastern Time on Wednesday, August 22, 2018.

The dial-in number for participants in the United States is 877‑293‑5491 (conference ID 6293829). International callers should dial +1 914‑495‑8526 (conference ID 6293829). Please dial in at least five minutes prior to the call to register. The call may also be accessed via an audio webcast available at https://edge.media-server.com/m6/p/5bqj5wmw

About Ferroglobe

Ferroglobe is one of the world's leading suppliers of silicon metal, silicon-based specialty alloys, and ferroalloys serving a customer base across the globe in dynamic and fast-growing end markets, such as solar, automotive, consumer products, construction and energy. The Company is based in London. For more information, visit http://investor.ferroglobe.com.

Forward-Looking Statements

This release contains "forward-looking statements" within the meaning of U.S. securities laws. Forward-looking statements are not historical facts but are based on certain assumptions of management and describe the Company's future plans, strategies and expectations. Forward-looking statements often use forward-looking terminology, including words such as "anticipate", "believe", "could", "estimate", "expect", "forecast", "guidance", "intends", "likely", "may", "plan", "potential", "predicts", "seek", "will" and  words of similar meaning or the negative thereof.

Forward-looking statements contained in this press release are based on information currently available to the Company and assumptions that management believe to be reasonable, but are inherently uncertain. As a result, Ferroglobe's actual results, performance or achievements may differ materially from those expressed or implied by these forward-looking statements, which are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors that are, in some cases, beyond the Company's control.

Forward-looking financial information and other metrics presented herein represent the Company's goals and are not intended as guidance or projections for the periods referenced herein or any future periods.

All information in this press release is as of the date of its release. Ferroglobe does not undertake any obligation to update publicly any of the forward-looking statements contained herein to reflect new information, events or circumstances arising after the date of this press release. You should not place undue reliance on any forward-looking statements, which are made only as of the date of this press release.

Non-IFRS Measures

EBITDA, adjusted EBITDA, adjusted diluted profit (loss) per ordinary share and adjusted profit (loss) are non-IFRS financial metrics that, we believe, are pertinent measures of Ferroglobe's success.

Ferroglobe has included these financial metrics to provide supplemental measures of its performance. The Company believes these metrics are important because they eliminate items that have less bearing on the Company's current and future operating performance and highlight trends in its core business that may not otherwise be apparent when relying solely on IFRS financial measures.

 

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   Advancing Materials Innovation  NASDAQ: GSM    Second Quarter 2018 

 Forward-Looking Statements and non-IFRS Financial Metrics  This presentation contains forward-looking statements within the meaning of Section 27A of the United States Securities Act of 1933, as amended, and Section 21E of the United States Securities Exchange Act of 1934, as amended. Forward-looking statements are not historical facts but are based on certain assumptions of management and describe our future plans, strategies and expectations. Forward-looking statements can generally be identified by the use of forward-looking terminology, including, but not limited to, "may," “could,” “seek,” “guidance,” “predict,” “potential,” “likely,” "believe," "will," "expect," "anticipate," "estimate," "plan," "intend," "forecast," or variations of these terms and similar expressions, or the negative of these terms or similar expressions. Forward-looking statements contained in this presentation are based on information presently available to Ferroglobe PLC (“we,” “us,” “Ferroglobe,” the “Company” or the “Parent”) and assumptions that we believe to be reasonable, but are inherently uncertain. As a result, our actual results, performance or achievements may differ materially from those expressed or implied by these forward-looking statements, which are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors that are, in some cases, beyond our control. You are cautioned that all such statements involve risks and uncertainties, including without limitation, risks that Ferroglobe will not successfully integrate the businesses of Globe Specialty Metals, Inc. and Grupo FerroAtlántica SAU, that we will not realize estimated cost savings, value of certain tax assets, synergies and growth, and/or that such benefits may take longer to realize than expected. Important factors that may cause actual results to differ include, but are limited to: (i) risks relating to unanticipated costs of integration, including operating costs, customer loss and business disruption being greater than expected; (ii) our organizational and governance structure; (iii) the ability to hire and retain key personnel; (iv) regional, national or global political, economic, business, competitive, market and regulatory conditions including, among others, changes in metals prices; (v) increases in the cost of raw materials or energy; (vi) competition in the metals and foundry industries; (vii) environmental and regulatory risks; (viii) ability to identify liabilities associated with acquired properties prior to their acquisition; (ix) ability to manage price and operational risks including industrial accidents and natural disasters; (x) ability to manage foreign operations; (xi) changes in technology; (xii) ability to acquire or renew permits and approvals; (xiii) changes in legislation or governmental regulations affecting Ferroglobe; (xiv) conditions in the credit markets; (xv) risks associated with assumptions made in connection with critical accounting estimates and legal proceedings; (xvi) Ferroglobe's international operations, which are subject to the risks of currency fluctuations and foreign exchange controls; and (xvii) the potential of international unrest, economic downturn or effects of currencies, tax assessments, tax adjustments, anticipated tax rates, raw material costs or availability or other regulatory compliance costs. The foregoing list is not exhaustive. You should carefully consider the foregoing factors and the other risks and uncertainties that affect our business, including those described in the “Risk Factors” section of our Registration Statement on Form F-1, Annual Reports on Form 20-F, Current Reports on Form 6-K and other documents we file from time to time with the United States Securities and Exchange Commission. We do not give any assurance (1) that we will achieve our expectations or (2) concerning any result or the timing thereof, in each case, with respect to any regulatory action, administrative proceedings, government investigations, litigation, warning letters, consent decree, cost reductions, business strategies, earnings or revenue trends or future financial results. Forward- looking financial information and other metrics presented herein represent our key goals and are not intended as guidance or projections for the periods presented herein or any future periods. We do not undertake or assume any obligation to update publicly any of the forward-looking statements in this presentation to reflect actual results, new information or future events, changes in assumptions or changes in other factors affecting forward-looking statements. If we update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements. We caution you not to place undue reliance on any forward-looking statements, which are made only as of the date of this presentation.EBITDA, adjusted EBITDA, adjusted diluted profit (loss) per ordinary share and adjusted profit (loss) attributable to Ferroglobe are, we believe, pertinent non-IFRS financial metrics that Ferroglobe utilizes to measure its success. The Company has included these financial metrics to provide supplemental measures of its performance. We believe these metrics are important because they eliminate items that have less bearing on the Company’s current and future operating performance and highlight trends in its core business that may not otherwise be apparent when relying solely on IFRS financial measures. For additional information, including a reconciliation of the differences between such non-IFRS financial measures and the comparable IFRS financial measures, refer to the press release dated August 22, 2018 accompanying this presentation, which is incorporated by reference herein. 

 Table of Contents  Q2 2018 OverviewSelected Financial HighlightsPositioned for Growth 

   Q2 confirms the positive evolution of our business  Strong demand fundamentals with potential volatility in prices and input costs  Commitment to strong balance sheet and free cash flow generation to support shareholder value  Opening remarks  Share buyback program being implemented 

 I. Q2 2018 Overview     Pedro Larrea, Chief Executive Officer 

   Volumes balanced with portfolio optimization  (Volume change vs Q1 2018)Si Metal -6.2%Si alloys +2.5%Mn alloys +51.0% *    (ASP change vs Q1 2018)Si Metal 0.4%Si alloys -2.4%Mn alloys -5.2%      Revenue +4.0% vs Q1 2018  Adjusted EBITDA $86.3million-3.7% vs Q1 2018  Adjusted EBITDA margin declineof 120 bps to 14.8%  Adjusted Q2 net profit $25.7million     Platform optionalityoffsetting some cost pressures  Optionality from global platform: Geography Foreign exchange Product mixProvides some offset to cost headwindsContinue to analyze production shifts amongst facilities to maximize margins  *Attributable to recent acquisitions of new plants  Disciplined execution of commercial strategy  Q2 confirms the positive evolution of our Business in 2018 

   Quarterly Adjusted EBITDA ($m)  Half Year Adjusted EBITDA ($m)  Q2 confirms the strong performance of Ferroglobe in 2018  Q2 2018 +97% from Q2 2017  H1 2018 +135% from H1 2017 

   Quarterly trend – revenue contribution per family of products ($m)  397  426  452  468  561  583  Continued revenue growth in Q2 for Ferroglobe, with different product categories showing continued sales growth  Quarter over Quarter revenues growth of 4.0%, supported by a diversified product portfolio 

 Top line growth in the quarter offset by increase in raw materials costs and extraordinary maintenance  Q2 2018 adjusted EBITDA stable vs previous Quarter    Extraordinary costs for $(4.0)m:$(2.8)m Extraordinary maintenance$(1.1)m OverhaulsImpact of continuing input cost increases:$(2.6)m Mn Ore prices$(2.6)m Energy prices$(2.3)m Electrodes pricesImprovement $2.5m in SG&A and fixed costs 

 Volume Trends  Sequential Quarterly Product EBITDA Contribution ($m)  Commentary  Marginal decline in index pricing over the quarter. Price decline in Europe linked to seasonal low activity.End markets for silicon metal remain strong, particularly silicones producers running at full capacity and posting healthy resultsVolumes in Q2 were lower than expected, as customers built up stock in advance of the trade case outcomeCosts from extraordinary maintenance for almost $(3.0)m in Selma, Polokwane and Montricher plantsIncrease in energy and electrode costs  Pricing Trends ($/mt)  Silicon Metal snapshot  *Q1’18 EBITDA updated to reflect allocation of product related income / costs  * 

 Volume Trends  Commentary  Ferrosilicon prices starting to see some pressure, albeit remaining at near historical levelsMargins for FeSi remain attractive, hence contemplating some further switchover of capacity from silicon metal to ferrosiliconIncreasing input costs adversely impacted contribution in Q2. Overhaul cost in Bridgeport accounted for $(1.0)m of these costs  Sequential Quarterly Product EBITDA Contribution ($m)  Pricing Trends ($/mt)  Silicon-Based Alloys snapshot   *  *Q1’18 EBITDA updated to reflect allocation of product related income / costs 

 Commentary  Volume Trends  Pricing Trends ($/mt)  Sequential Quarterly Product EBITDA Contribution ($m)  Transaction for newly acquired plants closed Feb. 1stQ2 is first quarter reflecting full revenue and cost contribution of new assetsProduct margin affected by increasing Manganese ore prices and higher energy costsManganese-alloys prices have not reflected the increase in input costs, adversely impacting the spread  Manganese-Based Alloys snapshot  *Q1’18 EBITDA updated to reflect allocation of product related income / costs  * 

    Selected Financial Highlights  Phillip Murnane, Chief Financial Officer 

 Q2 2018 key performance indicators: Income Statement  Key Performance Indicators  Q2 2018  Q1 2018  Diff, %  H1 2018  H1 2017  Diff, %  Sales volumes (tons)  271,584  239,119  13.6%  510,703  433,036  17.9%  Revenue ($m)  583.0  560.7  4.0%  1,143.7  821.8  39.2%  Operating Profit ($m)  100.6  65.5  53.6%  166.1  14.1  1078.0%  Net Income ($m)  66.0  35.6  85.4%  101.6  -7.1  1528.6%  Adjusted Net Income ($m)  25.7  33.3  -22.8%  59.0  1.2  4816.7%  Reported EBITDA ($m)  130.9  93.5  40.0%  224.4  67.7  231.5%  Adjusted EBITDA ($m)  86.3  89.6  -3.7%  175.9  74.8  135.2%  Adjusted EBITDA Margin  14.8%  16.0%  -7.5%  15.4%  9.1%  69.2% 

 Notes:Financial results are unauditedNet Debt includes finance lease obligations Capital is calculated as book equity plus net debtFree cash-flow defined as “Net cash provided by operating activities “minus “payments for property, plant & equipment   Key Performance Indicators  30 Jun 2018  31 Mar 2018  31 Mar 2018  31 Dec 2017  30 Sep 2017  30 Jun 2017  31 Mar 2017  Total Working Capital ($m)  407.3  337.3  337.3  279.8  375.5  388.7  353.3  Total Assets ($m)  2,225.7  2,301.1  2,301.1  2,000.3  2,162.9  2,046.4  2,011.6  Net Debt2 ($m)   475.3  449.3  449.3  386.9  394.4  434.6  406.6  Book Equity ($m)  1,004.1  979.5  979.5  937.8  915.8  906.5  902.9                  Net Debt2 / Adjusted EBITDA  1.83x  1.85x    2.10x  2.87x  4.62x  6.03x  Net Debt2 / Total Assets  21.4%  19.5%    19.3%  18.2%  21.2%  20.2%  Net Debt2 / Capital3  32.1%  31.4%    29.2%  30.1%  32.4%  31.0%  Free cash-flow4  -34.3   -43.0    17.2  52.7  5.8  0.0  Q2 2018 key performance indicators: Balance Sheet 

 Working capital build reflects investment in newly acquired manganese alloys plants  Working Capital  Working Capital evolution ($m) 

 Working Capital ($m)  30 Jun 2018  31 Mar 2018  Inventories  97.8  101.6  Accounts Receivable   27.7  27.8  Accounts Payable  (35.4)  (73.9)  Total Working Capital  90.0  55.5  Acquisition closed on February 1, 2018Q1 2018: no sales revenue or financial contributions were made by these assets. Further, no gain or loss was recognized on the purchaseThe start-up of the newly acquired assets has required investment in working capital:$43m in Raw Materials Inventories$55m in Finished Product Inventories$27.7m in Accounts Receivable $35.4m in Accounts PayableWorking Capital increase of $34.5m in Q2 2018, primarily due to normalization of payment terms on manganese oreQ2 2018: non-cash gain recognized on purchase of $46m, representing the fair value of net assets from the acquisition less consideration.  Working Capital Release during Q3/Q4:Inventory levels for the two plants remained high through the end of Q2 with working capital in these assets representing 155 DO, vs. an average of 64 DO for the rest of the Company.Allowing for additional logistic complexity, recurring WC in these assets should stand at $60m, including $20m reduction in raw material inventory levels expected by year end.  Highlights  Working Capital Impacts  P&L and Working Capital impacts of newly acquired manganese plants 

 385    Net debt evolution excluding new assets working capital   Gross and Net Debt evolution ($m)  Increase in Net Debt primarily attributable to Working Capital build in new assets 

 H1 2018 Free-cash flow evolution  Cash-flow impacts  Increased A/R securitization program will provide additional liquidity: $35mReduction in Mn ore inventory levels, after having ramped-up the new facilities: $20m Increasing rotation of finished product inventories in key products and adapting production capacity to commercial commitments: $20mCompletion of non-core assets divestitures: $20m  Committed to Cash Flow generation  Note:Free cash-flow defined as “Net cash provided by operating activities “minus “payments for property, plant & equipment   Changes in Operating Assets/Liabilities ($158.4)M: including Working Capital increase linked to newly acquired plants, and increase in AR securitization program Interest Paid ($20.2M): Refinancing of the “9.375% 2022 Senior Notes” is actively being considered, and we expect any new debt to reduce interest expense Payments due to Investments ($52.3): normalized recurrent capital expenditure should be below H1 2018 levels   Cash Generating Initiatives being implemented in H2 2018   $m   H1 2018  Profit for the period  101.6  Adjustments for non-cash items  76.2  Profit adjusted for non-cash items  177.8  Changes in Operating Assets/Liabilities  (158.4)  Interest Paid  (20.2)  Income taxes paid  (24.2)  Net cash used by operating activities  (25.0)  Payments due to investments  (52.3)  Free cash-flow1  (77.3) 

 Quarterly dividend payment — $0.06 per shareBalanced approach to capital allocationConfidence in maintaining this stable levelReturning value to shareholdersShare repurchase programConfidence in outlook for the businessConservative capital structure — company positioned to pursue growth opportunitiesFocus on deleveraging the balance sheetReduction in net leverage, leverage below target of 2x in Q1 2018 and Q2 2018Continued commitment to further lowering leverage by year endRefinancing of the “9.375% 2022 Senior Notes” is actively being considered to capitalize on market conditions and lower our interest expense    Q2 2018 Performance  Remain Focused on Delivering Value  Reported EBITDA of $130.9m, +40% vs reported EBITDA of $93.5m in Q1 2018Adjusted EBITDA of $86.3m for the quarter, -4% vs Adjusted EBITDA of $89.6m in Q1 2018Net Profit of $66.0m for the quarter and Adjusted Net Profit of $25.7m for the quarter, or $0.14 on a fully diluted per share basisWorking capital increased to $407.3 million during the quarter, including new Mn plants and other inventory buildOperating cash flow of $-4.6m and free cash flow of $-34.3m for the quarterNet debt of $475.3 million at end of Q2 2018, up from $449.3 million at the end of Q1 2018 — largely attributable to the working capital buildNet Debt to LTM EBITDA metrics have improved  Delivering value for shareholders and positioning Ferroglobe for the long-term 

    Positioned for Growth  Pedro Larrea, Chief Executive Officer 

 Pricing outlook for H2  Order Book for H2  Fixed price contracts set at a premium to current levels in both the North America and EuropeSpecific index based contracts are trailing; so incremental benefit yet to be realized in the coming quarters  Silicon Metal  Booked fixed price  Booked indexed  Spot  Booked business for ferrosilicon at prices above current index levels in the U.S. and EuropeFerrosilicon markets continue to show tightnessRest of silicon-based alloys prices remain broadly stable vs Q2 levels   Booked fixed price  Booked indexed  Spot  High proportion of indexed pricing driven by long term contracts with larger steel producersPrices stable in Europe since May. First signs (futures market) of price recovery in ChinaSteady manganese ore price decline should provide margin expansion in Q4  Booked fixed price  Booked indexed  Spot  Silicon-Based Alloys  Mn-Based Alloys  Short term ― commercial outlook across our portfolio for the remainder of 2018 

   Recent Trends:NAFTA and Europe seen as demand leaders owing to strong machinery and construction sectors; U.S. capacity restarts China is expected to benefit from real estate related demand and ongoing robust machinery and auto demand, offsetting in part slowdown in infrastructureMonitoring trade war impacts   Polysilicon / Electronics  Recent Trends:Global PV installations for 2018 now expected at 85 GW, down from earlier estimates due to Chinese capsGlobal PV installations demand will continue to grow again beginning 2019, driven by strong demand (ex China)PV market in Europe expected to grow by 35% in 2018 , which will support polysilicon industry  Recent Trends:Analysts now projecting alumina and aluminum deficit to remain through 2019Considerable uncertainty remains in the global supply chain due to multiple trade actions, potential sanctions and supply disruptionsIncremental benefits from Chinese capacity shutdowns – evolving situation   Aluminum / Auto  Recent Trends:Silicone deficit remains into 2019 supporting high utilization rates and additional restarts Leading indicators from manufacturing output, unemployment and consumer spending remain largely positive, reflecting increased economic activityChemical sector will follow GDP growth projected at 2.0+% in Eurozone for 2018   Chemicals / Silicones  XX%  XX%  Steel and Specialty Metal        Medium term ― solid fundamentals supporting end market growth 

    Construction Phase (as of July 17, 2018)  Commercial test  Completed successful technical and commercial test, audited and certified by prestigious independent institutionWafers tested with un-blended Ferroglobe´s solar grade-silicon have obtained certified performance equivalent to polysilicon “Off-take” agreements currently being negotiated with multiple wafer producers  Plant Update  Location: Puertollano, SpainInitial phase capacity: 1,400 mt/yConstruction on-track to be completed by year-end 2018 Total capital expenditure in-line with previous estimate of €72 million:Spent in 2015 – 2017: €22mSpent in Q1+Q2 2018: €32mCommitted Capex: €13mPending: €5m  Medium term ― new solar-grade silicon plant is on-track 

 Exploring new comercial opportunities  Project  Development stage  Product and process commercially and technically provenFirst phase plant under constructionCommercial negotiations underway  2019-2020  2021-2022  First production  1,400 tpy$20m annualized revenuePotential unit margin affected by scale  Launching full scale plant  20,000-30,000 tpy$300-400 m revenueSignificant margin potential  Need of a new business model?  Enhancing value of by-productsLow cost process for high value added products. Fast industrial implementationExploring commercial alternatives  3,000 tpy$20m revenue$2m EBITDA per quarter  Installing production equipment  Multiple R&D routes  Multiple collaborations with start-ups and research institutionsEarly success on silicon anode technologyLooking into implications for Mn content in cathodes  Potential production for Si-Cathodes  The right business model depends on the results achieved   High value added products target to contribute up to 15-20% to Ferroglobe´s results  Medium to long term ― New products and technologies provide significant growth potential  Solar Grade Silicon  High Value Powders  Batteries 

   Q2 confirms the positive evolution of our business  Strong demand fundamentals with potential volatility in prices and input costs  Commitment to strong balance sheet and free cash flow generation to support shareholder value  Closing remarks 

    Q&A  

 Advancing Materials Innovation  NASDAQ: GSM    Second Quarter 2018