Ferroglobe - Q4 2025

Transcript

Operator (participant)

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.

Alex Rotonen (VP of Investor Relations)

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 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 two 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 exhibits to those filings, which are available on our website at ferroglobe.com. In addition, this discussion includes references to EBITDA, Adjusted EBITDA, Adjusted Gross Debt, Adjusted Net Debt, and Adjusted Diluted Earnings Per Share, among other non-IFRS measures. Reconciliations of those non-IFRS measures may be found in our most recent SEC filings.

We'll be participating in the BMO Metals, Mining, and Critical Materials Conference in Hollywood, Florida, on February 23rd and 24th. We hope to see you there. With that, I'll turn the call over to Marco.

Marco Levi (CEO)

Thank you, Alex, and thank you all for joining us today. We appreciate your continued interest in Ferroglobe. While 2025 presented significant external challenges, including muted demand, tariff uncertainty, delayed trade measures, and elevated levels of predatory imports, it was a year in which Ferroglobe made important strategic progress and substantially strengthened its position for future growth. Most importantly, we achieved significant and impactful trade measures in both the European Union and the United States. In Europe, the European Commission voted to protect the ferroalloy industry by implementing safeguards, targeting a 25% reduction in imports relative to the baseline of average imports by country and products from 2022 through 2024. During those years, annual imports of ferrosilicon averaged approximately 450,000 tons, and manganese-based alloys averaged approximately 900,000 tons.

These safeguards create a substantial opportunity for domestic producers, including Ferroglobe, to regain market share under a more balanced competitive framework, while ensuring security of EU supply chains for critical and strategic materials. We are encouraged by the European Commission's advocacy to support and strengthen the long-term sustainability of local industry. To further enhance the EU manufacturing base and drive economic growth, the Made in Europe pledge was signed by more than 1,000 business leaders. This is similar to the Buy American pledge, encouraging increased use of products with domestic content. In the United States, the International Trade Commission ruled in favor of imposing antidumping and countervailing duties on ferrosilicon imports from Brazil, Kazakhstan, and Malaysia, after having ruled similarly against Russia in 2024. These decisions meaningfully improve the long-term outlook for the U.S. ferrosilicon market.

To capitalize on improving ferrosilicon economics, we have converted three furnaces from silicon metal to ferrosilicon, one in the U.S. and two in Europe. This highlights the benefits of our diversified global footprint, which enables us to optimize production in response to market dynamics and geopolitical factors. With respect to silicon metal in the U.S., the case was delayed due to the government shutdown. Prior to the shutdown, the preliminary decision in September indicated strong measures against Angola, Australia, Laos, Norway, and Thailand. The preliminary combined antidumping and countervailing duties range from 21% for Norway to 334% for Laos. We now expect a final decision on Angola, Laos, and Thailand later today, with Australia and Norway anticipated in June. Operationally, we executed with discipline and focus.

Through proactive cost control measures, including a hiring freeze and reduced discretionary and capital spending, we successfully navigated through weaker demand and lower pricing while maintaining a solid balance sheet. After the EU safeguard announcement on November 18th, CRU index prices for ferrosilicon and manganese alloys in Europe jumped approximately 20%. While ferrosilicon has retreated some in recent weeks, it's still, still up more than 10% since the safeguard announcement. Our outlook for silicon metal remains more measured due to its exclusion from EU safeguards and continued aggressive imports from China and increasingly from Angola. In the U.S., the silicon market is expected to grow modestly according to CRU. We are actively studying longer-term opportunities associated with our idled operations in Venezuela. This site includes three large ferrosilicon furnaces and a manganese alloy furnace, originally designed to produce silicon metal, which can be converted back to silicon metal.

In addition, the facility includes a Soderberg-based plant that could be used to produce electrodes. While it is too early to determine the timing and condition of the infrastructure and operations, the asset base represents a potential opportunity for the future. Given Venezuela's proximity to the U.S. market, this opportunity could become strategically meaningful over time. We also took important steps to enhance our long-term cost structure and operating flexibility, signing a new competitive 10-year French energy agreement effective January 1st, 2026. In addition to competitive energy prices, this agreement provides greater flexibility, enabling us to produce up to 12 months a year in France. Combined with implementation of safeguards, this flexibility meaningfully improves the earnings potential of our ferroalloys business by allowing higher volumes to leverage our fixed operating costs.

Beyond our core operations, we continued to invest in long-term opportunities, increasing our total investment in Coreshell to $10 million in 2025, reflecting strong technological progress in the development of advanced silicon-rich EV batteries. In addition to ongoing collaboration with automotive OEMs, Coreshell is expected to begin initial shipments to defense and robotics customers in the first quarter of this year. Furthermore, we are in the process of finalizing a multi-year supply agreement with Coreshell. For those who are new to the Coreshell story, silicon-rich anodes offer lower cost batteries with increased capacity, longer driving range, faster charging, and maybe most importantly, a reduced reliance on graphite, of which more than 90% is produced in China. We believe this technology has the potential to become increasingly strategic over time. Alongside these trade developments and operational enhancements, we continue to execute on shareholder-friendly capital allocation.

We increased our first quarter 2025 dividend by 8% to $0.014 per share, and we are increasing it again by 7% to $0.015 per share, starting in the first quarter of 2026. In addition, during the early part of 2025, we selectively executed discretionary share repurchases, acquiring 1.3 million shares at an average price of $3.55 per share. Looking forward to 2026, Ferroglobe is well positioned to benefit from the cumulative impact of the trade actions. We expect most of our segments to post considerable growth in 2026, and we anticipate revenues improving to a range of $1.5 billion-$1.7 billion, an increase of 20% at the midpoint over 2025.

This expectation is driven primarily by strong volume growth in the silicon-based and manganese-based alloys segment. The implementation of EU ferroalloy safeguards and the U.S. ferrosilicon antidumping and anti-circumvention rulings give us increased confidence in this outlook. Next slide, please. Our shipments increased by 13% to 165,000 tons on the strength of silicon-based and manganese-based alloys, resulting in a 6% increase in quarterly revenue to $329 million. Our Adjusted EBITDA declined slightly to $15 million, while our free cash flow was -$19 million. Beatriz will provide more detailed comments in her section. Next slide, please. I'll update on our segments, starting with silicon metal on slide five. This may sound like a repeat of last quarter, but the situation remains essentially unchanged.

The demand is still weak across our regions, and Europe is still plagued by unabated predatory imports from China, which roughly doubled in 2025, as well as by rising imports from Angola, up nearly fourfold, driving prices to unsustainable levels. As a critical and strategic material, the European Commission should ensure sufficient EU production to meet basic demand. Overall, volumes and revenues declined by approximately 3% due to an 8% decline in U.S. shipments, partially offset by a 5% increase in shipments in the EU. It is important to note that the EU shipments in the fourth quarter were up from a very weak third quarter. We idled our EU silicon metal plants in the fourth quarter to the extremely low, unprofitable prices.

Within the silicon metal segment, the aluminum sector is performing better in relative terms, as highlighted by the recent recovery in aluminum prices, compared to the weak polysilicon sector. The chemical sector remains weak, also due to imported siloxane and silicones from China into Europe and the U.S. The U.S. index prices rose a modest 2% in the fourth quarter over the third quarter. EU prices declined by 7%, primarily due to imports. For the year, European prices are down by a third, while U.S. index is up less than 2%. In the U.S., we expect the volumes to improve in the second half of 2026, as the antidumping and anti-circumvention measures are expected to be finalized in February and June. Next slide, please. The story is quite different in our other product segments. Globally, silicon-based alloys had a very strong fourth quarter.

Total volumes increased by 19% to 51,000 tons, with the EU and North America increasing 25% and 14%, respectively. Pricing trends were mixed in the fourth quarter. The EU ferrosilicon index rebounded strongly in the quarter, rising 22% to 1,495 EUR from Q3, driven by the implementation of safeguards in November. In the US, the ferrosilicon index retreated a modest 4% during the quarter. For the full year, the European index gained 12%. The U.S. index is down less than 2% for the year. Overall, we are optimistic that 2026 will be a stronger year for total silicon-based alloy sales for Ferroglobe. We have already booked incremental business for 2026 in Europe and in US.

An additional catalyst for the second half of the year is expected from enhanced EU steel safeguards, with a proposal to reduce import quotas by 50% and double tariffs to 50% for exceeding the quota. It is anticipated that domestic EU production will be ramped up as a result. These measures are expected to take place on July 1st, 2026. Next slide, please. Our manganese segment reported another strong quarter with a 16% volume increase to 81,000 tons, up from 70,000 tons in the third quarter. We benefit from a larger customer base as well as safeguards. EU sales, which accounts for more than 90% of our manganese volumes, grew 18%. Manganese alloy index prices improved substantially in the fourth quarter, with ferromanganese and silicon manganese increasing 16% and 21%, respectively.

A combination of solid demand from our European steel customers, whose business is expected to grow by 3% in 2026 in the EU, and safeguards, should propel a robust volume increase in 2026. Accordingly, we are optimistic about the European market opportunity for manganese this year. I would now like to turn the call over to Beatriz García-Cos, our Chief Financial Officer, to review the financial results in more detail. Beatriz?

Beatriz García-Cos (CFO)

Thank you, Marco. Please turn to slide nine for the review of the fourth quarter income statement. Fourth quarter sales grew 6% over the prior quarter to $329 million, while raw material costs increased 22%, excluding the $40 million impact of PPA for all power purchase agreements. Fourth quarter raw materials and energy as a percentage of sales increased from 58% to 67%, primarily due to temporary idling in France. Again, excluding PPAs or purchase price agreement. These PPAs are mark-to-market using fair value. Given the long-term nature of our EDF contract, which accounts for the majority of the PPA impact, we will continue to strip out PPA mark-to-market volatility to provide a clearer view of our underlying operational performance.

A strong silicon-based alloys and manganese-based alloys volumes drove the increased sales, with quarter-over-quarter volumes increasing 19% and 16% respectively. Silicon metal volumes declined by 3%. Volume improvements were partially offset by a 6% decline in average selling price of silicon-based alloys and manganese-based alloys, with silicon metal prices essentially flat. Adjusted EBITDA declined 20% from the prior quarter to $15 million versus $18 million. Adjusted EBITDA margin declined to 4%, driven by lower prices and elevated costs, a result of idling in France. Next slide, please. Moving to product segment, Adjusted EBITDA averages, silicon metal revenue declined 3% sequentially to $96 million in Q4, driven by a 3% decrease in shipments to 33,000 tons. The average selling price was essentially flat at $2,957 per ton.

Volumes remained constrained due to soft markets in the U.S. and by Chinese and Angolan dumping of silicon metal in the European Union. Silicon metal Adjusted EBITDA declined from $12 million to $1 million in Q4, with margins decreasing to 1%. The margin compression was primarily due to idling in France, slightly offset by improved cost in North America. Next slide, please. Silicon-based alloys revenue grew 12% to $104 million, driven by a 19% sequential increase in volumes to 51,000 tons, partially offset by a 6% decline in average selling prices to $2,020 per ton. Adjusted EBITDA increased to $60 million in the fourth quarter from $12 million in the third quarter. Margins expanded by 160 basis points to 15%.

The improvement in Adjusted EBITDA and margins result from lower cost in Spain, partially offset by early idling in France. Next slide, please. Manganese-based alloys revenue increased 10% to $93 million from $84 million in the prior quarter. Improvement was primarily due to a 16% increase in volumes to 81,000 tons. Fourth quarter average selling price declined 6% to $1,147, mainly due to a lag versus index prices. Adjusted EBITDA in the fourth quarter doubled to $9 million, while Adjusted EBITDA margins increased from 5% to 9%. This margin expansion was primarily driven by improved performance in Norway and higher overall volumes. Next slide, please.

Adjusted EBITDA for the full year was $28 million, down from $154 million in 2024, and the Adjusted EBITDA margin declined to 2%. The price decline, driven by weak demand and increased imports to Europe, had a significant impact on Adjusted EBITDA, accounting for more than 80% or $104 million of the decline. Reduced volumes account for another 16% of the EBITDA decline. Cost impact on Adjusted EBITDA was negligible, while head office and non-core business detract less than $3 million from Adjusted EBITDA. Next slide, please. There are lots of details on this slide, so I will just highlight a few of the most important items. For the full year, we generated $51 million in cash from operations, driven by a $48 million improvement in net working capital.

We could sell CapEx by $60 million-$63 million in 2025. For the year, our free cash flow was -$12 million. During the fourth quarter, we consumed $4 million in operating cash flow due to weak EBITDA and an increase in net working capital of $8 million. For the year, we reduced our net working capital by $48 million, in line with our target of $50 million. Energy rebate was $7 million for the fourth quarter. As we operate under the new contract in France in 2026, we don't expect energy rebates going forward, which will help align our Adjusted EBITDA generation more closely with our cash flow. Fourth quarter capital expenditures total $14 million, representing a $5 million reduction versus the third quarter. Next slide, please.

Despite the headwinds in 2025, our balance sheet remains strong. In total, we paid $10.5 million in dividends during the year, and we are again increasing our dividend. Starting in the first quarter of 2026, our quarterly dividend will increase 7% to $0.015 per share. It will be paid on March 30th to shareholders of record on March 23rd. While we did not repurchase any shares in the second half, we bought back 1.3 million shares for the first half. Our discretionary share repurchase plan remains in place. Our net debt position increased to $30 million in 2025, and we remain in a solid financial position to support growth in 2026. We reduced our 2025 CapEx by 20% to $63 million.

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

Marco Levi (CEO)

Thank you, Beatriz. Before opening the call to Q&A, I'd like to provide key takeaways from today's presentation on slide 15. 2025 was a year of important progress for Ferroglobe. The trade measures secured in Europe and in the United States represent a clear positive shift in our markets, particularly in ferroalloy. Europe safeguards and U.S. antidumping and countervailing duty rulings significantly improve competitive conditions, support pricing, and give us increased confidence in a much stronger market environment in 2026. At the same time, we continue to execute a disciplined, shareholder-friendly capital allocation strategy. Despite the challenging macro backdrop, we increased our dividend during 2025, completed selective share repurchases, and have announced another dividend increase beginning in the first quarter of 2026. These actions underscore our confidence in the business and our focus on delivering consistent shareholder returns.

We've also taken important steps to enhance the economics and flexibility of our operations. The new long-term energy agreement in France, combined with our ability to ship production from silicon metal to ferrosilicon, allow us to optimize volumes, better leverage fixed costs, and respond efficiently to changing market conditions across our global footprint. At the same time, we managed through a difficult demand and pricing environment in 2025 with discipline and focus. Proactive cost control, strong execution, and a solid balance sheet allowed us to navigate near-term headwinds while strengthening the foundation for future growth. Overall, we believe Ferroglobe is exceptionally well-positioned for 2026 and beyond. With improving market fundamentals, increased confidence driven by trade actions, and more flexible, efficient operating platform, we see a clear path to stronger performance and long-term value creation for our shareholders. Operator, we are ready for questions.

Operator (participant)

Thank you. If you wish to ask a question, you will need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. We will take our first question. The question comes from the line of Martin Englert from Seaport Research Partners. Please go ahead. Your line is open.

Martin Englert (Senior Equity Research Analyst)

Hello, good day, everyone.

Marco Levi (CEO)

Hi, Martin.

Beatriz García-Cos (CFO)

Hi, Martin.

Martin Englert (Senior Equity Research Analyst)

Hey. Wanted to touch on volume expectations across the three businesses for 2026, and then also the plan for the EU silicon assets. I know you provided some detail about the furnaces converting over to ferrosilicon, but what remains idle there, and is it to remain idle for the foreseeable future? But any type of goalposts for volumes on silicon metal in 2026, silicon-based alloys and manganese-based alloys would be helpful. Thank you.

Marco Levi (CEO)

Yeah. Thank you, Martin. Let me try to address your first question on volumes, and then I move to the assets. Starting from Europe, the safeguards basically on ferrosilicon and ferrosilicon kind of products free up 25% of imports that were 450,000 tons in 2025. So 25%, about 110,000 tons of these products are made available for EU 27 producers. For manganese, the imports were around 1 million tons. So when you calculate 25% of it, you end up to 250,000 tons available for EU 27 producers.

Of course, all this pie has to be shared among the local producers, assuming that the safeguards are controlled and put in place in a proper way. When you go to the U.S., I think that we are at the end of the period where inventories, mainly of Russian product, but also other products, have been waiting on volumes and also price recovery. We expect, we expect some gains in ferrosilicon, and we see that already from our customer portfolio in the U.S., in the first quarter, 2026. On top, talking about trends, steel will improve, is expected to improve, in Europe by about 3% across the year, mainly in the second part of the year, when the new safeguard measures imposed by the EU will be applied.

We refer the reduction of imports of 50% and increase of tariffs to 50% for excess of products. Aluminum is expected to grow in Europe by a solid 3% next year. In the U.S., aluminum is expected to grow between 8% and 9%, while steel is expected to start recovering, and actually, we have seen asset utilization in the U.S. recovering already in quarter four, 2025. These are the major indicators for volumes in ferroalloys, both in the U.S. and Europe. Going to your second question, yes, we have converted one furnace in Beverly to ferrosilicon already during 2025. We have converted, as of January, two furnaces in Europe, one in Sabón and one in Laudun, from silicon metal to ferrosilicon.

Concerning the utilization of the other silicon metal furnaces in U.S. and Canada, we're fully utilized, while in Europe, we are selectively restarting furnaces based on contracted demand. So some furnaces will stay idled in this first quarter, while some others have been restarted to supply contracted volumes already in January. Sorry for my voice.

Martin Englert (Senior Equity Research Analyst)

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

Marco Levi (CEO)

Yeah. Well, the key question is demand, which is not until now, has not been great or has been muted, both in Europe and in the U.S. The key question is, how much demand is gonna ramp up for the different products? There is definitely enough capacity in the EU to cover the safeguards for all products. If you look at what happened until now, in Europe, in ferrosilicon, prices have jumped up by 22% on ferrosilicon immediately after safeguards have been announced. Due to stocks at traders and others, the index price has been going back, and today is only 10% higher than previous safeguards announcement. Different trend for manganese. Manganese, the products have jumped up around 20% on average in terms of index price.

The price is holding, is not improving, but is holding at this level. This is why I say that demand is critical. And again, I expect a major improvement of steel demand in Europe in the second half of 2026.

Martin Englert (Senior Equity Research Analyst)

... Do you know if Ukraine's manganese alloys facilities are still producing and supplying some into the region overall?

Marco Levi (CEO)

Yes, they are, but at a very small, at a very small rate, for reasons that are related to supply chain, but also conditions of the assets. Of course, I do not have too many details, the insights about the status of the assets, but considering the number of years of war, the location of the assets, I think that even when peace is signed, if ever gets signed, it will take a while before they ramp up to the previous rates.

Martin Englert (Senior Equity Research Analyst)

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

Marco Levi (CEO)

So this is a question that requires about one day of explanations, but let me try to be to be short. First of all, at the moment on CBAM, we are impacted only for high carbon ferromanganese, not for the other products. And the way that the CBAM works, basically looks at the imported products, looked at the content of actually the emissions of CO2 per ton required to produce these products. And they apply to this amount the cost of CO2 in Europe per ton, deducting whatever the supplier is paid in his own country for his CO2 emissions. So the overall game is to tax CO2 heavy exporters to Europe to favor European producers who are at lower CO2-producing with lower CO2 emissions.

Now, all of this would be beautiful, was beautiful, if, one, there was a proper calculation of the CO2 emissions for every kind of producer in the exporting countries. All of this would be beautiful if, you know, if Europe was not anxious to reduce our CO2 credit. Because trying to implement these measures when you don't have all the data, you end up potentially penalizing more of the European producers than these exporters. So, there is of course, the commission is aware of that. They're doing, they're doing their best, so still is heavily involved in that. We will see how the situation develops. But again, we are our impact at the moment is minor due to the fact that CBAM is applied on this high carbon ferromanganese.

Martin Englert (Senior Equity Research Analyst)

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

Marco Levi (CEO)

Thank you, Martin.

Alex Rotonen (VP of Investor Relations)

Thanks, Martin.

Operator (participant)

Thank you. Once again, if you wish to ask a question, please press star one one on your telephone. We will take our next question. The question comes from Nick Giles from B. Riley Securities. Please go ahead. Your line is open.

Nick Giles (Senior Research Analyst)

Thanks, operator. Good morning, guys.

Alex Rotonen (VP of Investor Relations)

Hi.

Beatriz García-Cos (CFO)

Hi, Nick.

Marco Levi (CEO)

Morning.

Nick Giles (Senior Research Analyst)

My first question was maybe just back to silicon metal's exclusion from EU safeguards, and just wanted to get your perspective on what the EU's appetite might be to revisit, you know, an inclusion of silicon metal in those safeguards. And maybe any background you can provide on kind of what prevented them from being included in the first place. Thanks.

Marco Levi (CEO)

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

The third reason was about our point is related to the fact that silicon metal and ferrosilicon are interchangeable, which is hard to dispute, because we can convert our furnaces to, from silicon metal and ferrosilicon, and vice versa, and our customers in steel can move from ferrosilicon to silicon metal. So the fact that they called for non-interchangeability was quite a surprise, due to the time and the number of meetings that we spent to explain our business. The top reason was a strong opposition of the chemical industry to protect silicon metal and the strong opposition of Germany to trade measures. And so there is a combination of... There was a combination of technical, if you want, and political and legal aspects that excluded silicon, silicon metal from, from the safeguards.

This situation doesn't make any sense for two reasons. One is that without protecting silicon metal, you basically don't protect ferrosilicon. And because it's quite easy for steel producers to replace ferrosilicon with silicon metal, when the price difference is not there. Silicon metal should be much more expensive because of the energy which is required to produce it. So approving safeguards for ferrosilicon and then not protecting silicon metal is like shooting in your own foot. And this shouldn't be a surprise for the European community. Going to the first part of your question, yes, we are working on new measures for silicon metal in Europe. Actually, the commission has asked us to submit our data, so we have submitted them mid-December, relative to the last year in Europe, and we are waiting for their reactions to this document.

The expectation is that we will go for anti-dumping against the major dumpers in Europe. China is number one, and then we are still to see how do we address Angola, which is a sort of subsidiary of China, with the same pricing policy. The combined volume of the two countries, if you calculate also Vietnam, which is pure circumvention of silicon metal from China, basically shows that last year, the volume coming from China or China subsidies doubled. And in a market that has been going down, of course, with pure liquidity, they have been determining price based on index. And you know that, like I reported in the last quarter, they go to market with prices 25%-30% below the cash cost of European producers.

So it's clear dumping. The case is clear. The difficulty is not the case, it's the fact that, as you know, Europe and the industry in Europe is finally reacting to these situations. And so the Commission is... The Commission table is jammed with cases asking for protection for every kind of products. And this causes some delays. So at the moment, the game is all about triage, politically pushing to get our case at the top of the pile of cases of the European Commission.

Nick Giles (Senior Research Analyst)

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

Marco Levi (CEO)

Well, it all depends on demand and appetite of steelmakers to embark in reformulating with silicon metal, knowing that medium term, it doesn't make sense to have silicon metal at the price of ferrosilicon in Europe. At this stage, our order portfolio has started going up already in quarter four on ferrosilicon, both in U.S. and in Europe.

Nick Giles (Senior Research Analyst)

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

Marco Levi (CEO)

Well, today, when you look at our total business, I would say that 70%-80% of the business is protected, and only 20% is not, which is basically silicon metal in Europe. So the other high level thing is not a surprise that the United States, apart from government shutdown, are pretty favorable to protect critical and strategic, sorry, critical and strategic minerals. And this is why we are going for antidumping, anti-circumvention, and things are going fast.

But it's also true that things are changing in Europe, maybe not at the speed that we would like, but in terms of political support, I have to assure you that our case is at the top of the agenda of all the states that are involved in ferroalloys and silicon metal. So Europe has decided to protect industry, has decided to protect our industry, like the chemical industry or other industries. The problem is that Europe is not united like the United States. So there is quite a continuous exchange of responsibilities between the center, the EU Commission, and the single states.

The last, the last case was last week, when von der Leyen basically say, told, the states who were complaining about how slow the EU is in deciding, basically pushing back decision to the states. And this, this delicate, situation in the EU is causing the progress in the EU is much slower. On the other side, when I talk to politicians in Spain, in Norway, and in France, they are pretty aware of what we need to do, which is a combination of protection, right, energy price for, for the industry, and make sure that when they think about products, they think about supply chains and not by, by about single products.

Nick Giles (Senior Research Analyst)

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

Beatriz García-Cos (CFO)

Yeah. Thank you. Thank you for the question, Nick. As you have been seeing on the deck, the cash position at the end of the year is we finished the year with a strong cash position. Nevertheless, I have to say that this difficulty, the cash is coming mainly from the release of the working capital. So we're having releasing at the end, $48 million of working capital, and therefore, a total positive operating cash flow for the year, right?

Looking into 2026, I think, one of the things that we are working, and we are already seeing the results, is the will be additional release of the working capital, even if the business, we are planning to produce more volumes and sell a higher number of tons, that this is typically creates consumption of working capital, because we have this S&OP in place, we plan to continue to release additional working capital. And I refer to the targets that we put out there, I think, in 2024, when we said that we want to run the company with 20% less of working capital, if you remember.

Now we are close to $400 million, and we expect to continue to go down into the release of working capital. So that's one angle. On the other side, we are in a net debt position at the end of the year, and we expect to improve slightly, maybe as well, this net debt position as we go during the year, and of course, supported by the release of the working capital and cost reductions, as Marco has been mentioning.

Nick Giles (Senior Research Analyst)

Just CapEx, you would expect CapEx to be pretty similar to 2025 levels?

Beatriz García-Cos (CFO)

Yeah. So this year we went to $63 million for CapEx. That is already at 30% less versus 2024. And in 2026, we expect a similar or slightly lower levels of CapEx. Of course, this is always talking about maintenance CapEx, right, of the company or sustaining CapEx. Yeah, maybe around the same number.

Nick Giles (Senior Research Analyst)

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

Marco Levi (CEO)

Thank you.

Operator (participant)

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

Marco Levi (CEO)

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

Operator (participant)

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