Rec Silicon Asa · OSL:RECSI

Rec Silicon Asa — Q3 2020 Earnings Presentation

36 slides from Rec Silicon Asa's earnings presentation, Oct 29, 2020

  1. Slide 1: Third Quarter 2020 Presentation

    SECOND QUARTER 2020 THIRD QUARTER 2020 1 © REC Silicon ASA. All rights reserved. Confidential July 23, 2020 PRESENTATION

  2. Slide 2: Disclaimer

    THIRD QUARTER Disclaimer 2020 This presentation includes and is based, inter alia, on forward-looking information and statements that are subject to risks and uncertainties that could cause actual results to differ. These statements and this presentation are based on current expectations, estimates

  3. Slide 3: Agenda

    THIRD QUARTER Agenda 2020 Q3 Results Tore Torvund Financial Review James A May II Silicon Gases and Semiconductor Market Update Kurt Levens Trade and Non-Chinese Solar Value Chain Francine Sullivan PV Market Update Chuck Sutton Battery Update Jeff Johnson Financials for Moses Lake Restart James A Ma

  4. Slide 4: Third Quarter Highlights

    THIRD QUARTER Third Quarter Highlights 2020 Revenues: $30.3M EBITDA: $17.9M September 30, 2020 cash balance of $35.9M Subsequent to Quarter End - Cash increase of $4.3M - Cash inflows from operating activities of $3.6M Business cooperation agreements signed - Violet Power – efforts to establish a no

  5. Slide 5: Third Quarter Key Metrics

    THIRD QUARTER Third Quarter Key Metrics 2020 Polysilicon Sales Volume ** Total 401MT Inventory Decrease 163MT Total Polysilicon Production Semiconductor Production Silicon Gases Sales Vol. Actual 237MT Actual 167MT Actual 746MT Prior Quarter* 234MT Prior Quarter* 136MT Prior Quarter* 831MT Increase

  6. Slide 6: Financial Review

    THIRD QUARTER 2020 Financial Review 6 © REC Silicon ASA. All rights reserved. Confidential October 29, 2020 James A May II

  7. Slide 7: Summary of Segments

    THIRD QUARTER Summary of Segments 2020 (USD million) Q3 2020 Q2 2020 2019 Revenues EBITDA Revenues EBITDA Revenues EBITDA Semiconductor Materials 30.3 7.3 30.7 9.4 126.7 37.8 Solar Materials - 14.6 0.3 (2.3) 33.4 (26.6) Other 0.0 (4.0) 0.0 (4.1) 0.0 (24.1) Eliminations - - - - 0.0 0.0 REC Silicon Gr

  8. Slide 8: Key Financial Results – Semiconductor Materials

    THIRD QUARTER Key Financial Results – Semiconductor Materials 2020 Revenues EBITDA $40 M Revenues: $30.3M (2.2% decrease vs. Q2’20) › Polysilicon sales volumes 401MT $30 M $30.7 (24.2% increase vs. 323MT in Q2’20) $29.7 $30.0 $30.3 - Semiconductor grade volumes 174MT (14.5% decrease vs. 203MT in Q2’

  9. Slide 9: Key Financial Results – Solar Materials and Other

    THIRD QUARTER Key Financial Results – Solar Materials and Other 2020 Revenues EBITDA (Solar Materials) EBITDA (Other & Eliminations) $20 M Solar Materials $10 M EBITDA Contribution: $14.6M $14.6 - Includes $16.0M Non-cash settlement of property tax from $6.6 years 2012 to 2015 $0.2 $0.3 $0 M $1.7 ›

  10. Slide 10: Cash Flows

    THIRD QUARTER Cash Flows 2020 $55 Cash inflows from operating $17.9 activities $3.6M $50 › EBITDA of $17.9M $45 › Non-cash effect of property tax settlement Included in EBITDA ($16.0M) $40 $3.3 › Working capital decrease $3.3M $0.5 $1.3 - Decrease in inventories $3.9M $35 USD million ($1.4) ($0.7) (

  11. Slide 11: Debt

    THIRD QUARTER Debt 2020 Debt maturity profile Nominal debt - $221.5M USD Million › Increase of $11.1M in Q3’20 Indemnity Loan $114M - $9.9M Note payable property tax settlement C.A.R.E.S. Act Loan - $0.7M Increase in Lease Liabilities (IFRS 16) Lease Liabilities - $0.8M Increase due to deferral of p

  12. Slide 12: Silicon Gases and Semiconductor

    Silicon Gases and Semiconductor Kurt Levens

  13. Slide 13: Butte plant divestment no longer under consideration

    THIRD Butte plant divestment no longer under consideration QUARTER Attractive investments will improve profitability 2020 REC Silicon is the clear market leader with lowest cost Stronger financial position unlocks business opportunities › New equity allows preferred retention of Butte in REC Silicon

  14. Slide 14: Electronic Grade Polysilicon Increase

    THIRD QUARTER Electronic Grade Polysilicon Increase 2020 REC Shipments - Semiconductor › Semiconductor grade polysilicon Polysilicon sales - 174MT in Q3’20 vs. 203MT in Q2’20 - 9.0% Semiconductor grade average price increase vs. Q2’20 › Q4‘20 in line with Q3‘20 - Close out stronger H2 2020 Metric to

  15. Slide 15: Butte is the only large capacity silicon gas provider

    THIRD QUARTER Butte is the only large capacity silicon gas provider Largest module fleet globally (30x closest competitor) with established distribution infrastructure 2020 Silicon Gas Advantages › Largest producer and distributor of Silane Gas Silicon Gases - Unmatched experience and safety record

  16. Slide 16: Butte silicon products have unique position

    THIRD Butte silicon products have unique position QUARTER Positive outlook and high barriers 2020 • 7,200 MT silane capacity Silicon gases • 240 MT DCS capacity • 300 MT MCS capacity • 2.4 MT DiSilane capacity Silicon • Dominant outside of China Silane gas market • Largest supplier inside of China g

  17. Slide 17: Trade and Non-Chinese Solar Value Chain

    THIRD QUARTER 2020 Trade and Non- Chinese Solar Value Chain 17 © REC Silicon ASA. All rights reserved. Confidential October 29, 2020 Francine Sullivan

  18. Slide 18: US currently dependent on China for imported solar panels

    THIRD QUARTER US currently dependent on China for imported solar panels 2020 › US polysilicon production Solar Value can currently support 18 – Chain Metallurgical Polysilicon Ingot growth Solar Solar Installations 20 GW of installations grade silicon / wafers cell module - REC Silicon: 5 GW ROW, 25

  19. Slide 19: Momentum building to re-establish non-Chinese supply chain

    THIRD QUARTER Momentum building to re-establish non-Chinese supply chain In US and Europe 2020 › Re-shoring/self-reliance dynamic growing support for “Made in USA” - Push to re-shore semiconductor - Clean energy dependence on China is not acceptable - Solar energy manufacturing provides high tech ma

  20. Slide 20: PV Market Outlook

    THIRD QUARTER 2020 PV Market Outlook 20 © REC Silicon ASA. All rights reserved. Confidential October 29, 2020 Chuck Sutton

  21. Slide 21: Strong PV demand expected in the next years

    THIRD QUARTER Strong PV demand expected in the next years 2020 › Global demand expected to rebound with solid growth - EU Green Deal - Annual US installation ~18 GW - China installations remain steady ~40 GW per year - APAC and MEA increased PV installation › Levelized Cost of Electricity (LCOE) dro

  22. Slide 22: Solar market divided into four major markets

    THIRD Solar market divided into four major markets QUARTER US, Europe & China + Rest of the World 2020 › China 2020 ~40 GW - 2060 carbon neutral pledge › US 2020 ~18 GW - Federal and state support - Corporate carbon targets - Residential market strength - ESG preferences Source: PV InfoLink, REC Sil

  23. Slide 23: Several initiatives to build a Non-Chinese PV value chain

    THIRD QUARTER Several initiatives to build a Non-Chinese PV value chain 2020 › NorSun is the major non- Chinese ingot and wafer Non-Chinese initiatives producer - <1% of total capacity 1 GW today in Norway, evaluating to add 3-4 GW of wafer production capacity › Several non-Chinese solar initiatives

  24. Slide 24: Non-Chinese polysilicon capacity sufficient to support demand in US/Europe

    THIRD Non-Chinese polysilicon capacity QUARTER Sufficient to support demand in US/Europe 2020 › ~140,000 MT polysilicon available supporting ~40 GW Non-Chinese PV Polysilicon Capacity 42 GW › Market price of ~$15/kg for polysilicon in US/EU Cash Cost › REC produced REC FBR polysilicon has low cash c

  25. Slide 25: Corporations & regulators push for low carbon footprint

    THIRD QUARTER Corporations & regulators push for low carbon footprint 2020 Module carbon footprint using French CRE standard Moses Lake FBR has substantially less carbon emissions Combined carbon footprint › France & South Korea have established programs to incentivize solar with low-carbon footprin

  26. Slide 26: Battery Opportunities

    THIRD QUARTER 2020 Battery Opportunities 26 © REC Silicon ASA. All rights reserved. Confidential October 29, 2020 Jeff Johnson

  27. Slide 27: Use of silicon in the anode unlocks fast charge & increased range

    THIRD QUARTER Use of silicon in the anode unlocks fast charge & increased range 2020 Silane SiH4 in Next Generation Advanced Anode Material Tesla Battery Day September 2020 › Next generation silicon anode materials using silane › Tesla is currently using silicon in its batteries achieving 20%-30% in

  28. Slide 28: Cooperation with leading silicon anode companies

    THIRD QUARTER Cooperation with leading silicon anode companies Drives battery development and growth of EVs 2020 Group14 Partnership Market Leading Si Anode Makers › Group14 Technologies (Group14) pilot plant for advanced silicon anode material on- › REC Silicon supplying silane to going at REC in M

  29. Slide 29: REC well positioned to supply global market with silicon gases

    THIRD QUARTER REC well positioned to supply global market with silicon gases 2020 REC Silicon Moses Lake REC Silicon Butte › Largest producer and distributor of Silane REC Silicon Next Generation Silicon Anode Manufacturing Gas Moses Lake, WA Moses Lake, WA › Unmatched experience and safety record S

  30. Slide 30: Financials for Moses Lake Restart

    THIRD QUARTER 2020 Financials for Moses Lake Restart 30 © REC Silicon ASA. All rights reserved. Confidential October 29, 2020 James A May II

  31. Slide 31: Key assumptions – Moses Lake

    THIRD QUARTER Key assumptions – Moses Lake 2020 Moses Lake Ambitions (per annum) FBR Sales Volumes 6,900 MT Silane Gas Sales Volume 7,700 MT Annual Revenues $225M Silane Capacity Utilization 75% Moses Lake EBITDA Contribution > $100M › Estimated polysilicon production cash cost < $10/kg at 75% utili

  32. Slide 32: Equity raise provides liquidity and financial flexibility

    THIRD QUARTER Equity raise provides liquidity and financial flexibility 2020 Liquidity development through June 2022 (USD million) $160 $104.3 $140 $0.7 $120 ($8.5) ($4.7) ($0.3) ($3.7) $13.0 $100 $80 ($31.6) ($23.5) $124 USD million $60 ($11.9) $40 $70 $20 $36 $- › NOK 1 billion equity raise provid

  33. Slide 33: Short Term Business Plan

    THIRD QUARTER 2020 Short Term Business Plan 33 © REC Silicon ASA. All rights reserved. Confidential October 29, 2020

  34. Slide 34: New partnerships for Moses Lake

    THIRD New partnerships for Moses Lake QUARTER Silicon anode batteries and non-Chinese solar value chain 2020 Group 14 Partnership Violet Power Partnership › Group14 pilot plant testing on-going at REC Moses › Violet Power solar cell & module production co- Lake located with REC Silicon in Moses Lake

  35. Slide 35: Fourth quarter 2020 business plan for REC Silicon

    THIRD QUARTER Fourth quarter 2020 business plan for REC Silicon 2020 › Stronger financial position creates business opportunities - Allows preferred retention of Butte in REC Silicon - Implement previously identified business opportunities with limited investment and high return › Focus efforts on r

  36. Slide 36: Q4 2020 Reporting February 2021

    THIRD QUARTER 2020 Q4 2020 Reporting February 2021 36 © REC Silicon ASA. All rights reserved. Confidential October 29, 2020 recsilicon.com

REC Silicon — Q3 2020 Earnings Presentation on 6ix