QUARTER 2020
PRESENTATION
Disclaimer 2020
FOURTH QUARTER
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 and projections about global economic conditions, the economic conditions of the regions and industries that are major markets for REC Silicon ASA's (including subsidiaries and affiliates) lines of business. These expectations, estimates and projections are generally identifiable by statements containing words such as "expects", "believes", "estimates" or similar expressions. Important factors that could cause actual results to differ materially from those expectations include, among others, economic and market conditions in the geographic areas and industries that are or will be major markets for REC Silicon ASA's businesses, energy prices, market acceptance of new products and services, changes in governmental regulations, interest rates, fluctuations in currency exchange rates and such other factors as may be discussed from time to time in the presentation. Although REC Silicon ASA believes that its expectations and the presentation are based upon reasonable assumptions, it can give no assurance that those expectations will be achieved or that the actual results will be as set out in the presentation. REC Silicon ASA makes no representations or warranties, expressed or implied, as to the accuracy, reliability or completeness of the presentation, and neither REC Silicon ASA nor any of its directors, officers or employees will have any liability to you or any other persons resulting from your use.
This presentation was prepared for the fourth quarter 2020 results on February 19, 2021. Information contained herein will not be updated. The following slides should be read and considered in connection with the information given orally during the presentation.
REC Silicon ASA shares have not been registered under the U.S. Securities Act of 1933, as amended (the "Act"), and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Act.
Agenda 2020
| Q4 Results |
Tore Torvund |
|
|
| Financial Review |
James A May II |
|
|
| Silicon Gases & Semiconductor Update |
Kurt Levens |
|
|
PV Market Update & Non-Chinese Solar Value
Chain |
Francine Sullivan
Chuck Sutton |
|
|
| Yulin JV Update |
Tore Torvund |
|
|
| Battery Update |
Francine Sullivan |
|
|
| Short-term Business Plan |
Tore Torvund |
|
|
| Q&A |
Tore Torvund |
|
|
Revenues: \$36.0M EBITDA: \$ 1.9M
December 31, 2020 cash balance of \$134.9M
- Cash increase of \$99.0M
- Cash outflows from operating activities of \$2.8M
- Private placement of equity NOK 1.0 billion
Silicon gas sales
- Sales volume of 881MT (vs. 746MT in Q3'20)
- 2.8% Silane gas price decrease vs. Q3'20
Semiconductor segment polysilicon silicon
- Semiconductor grade polysilicon sales volume of 250MT
- › 0.2% Semiconductor grade polysilicon price decrease vs. Q3'20
Private placement of equity
- Completed on October 14, 2020
- Issued 92,592,592 shares at NOK 10.8/share
- Received gross proceeds of:
- NOK 302M on October 27, 2020
- NOK 698M on November 19, 2020
Solar Materials Developments
- Increases in PV demand is driving polysilicon prices higher
- Substantial increases in available polysilicon capacity will be required to meet increases in PV demand
- Continued interest in developing a Non-Chinese PV supply chain
Battery Materials Developments
- High level of interest by several battery materials companies to secure silane supply
- Group 14 Technologies installing pilot facility at Moses Lake plant
Yulin JV
- Write down of investment due to estimates of fair value
- Mono capable FBR production
- Design capacities demonstrated
Financial Review
James A May II
| (USD million) |
Q4 2020 |
|
2020 |
|
2019 |
|
|
Revenues |
EBITDA |
Revenues |
EBITDA |
Revenues |
EBITDA |
| Semiconductor Materials |
35.9 |
11.7 |
121.4 |
36.3 |
126.7 |
37.8 |
| Solar Materials |
0.1 |
(2.8) |
0.5 |
6.7 |
33.4 |
(26.6) |
| Other |
0.0 |
(7.0) |
0.1 |
(19.3) |
0.0 |
(24.1) |
| Eliminations |
- |
- |
- |
- |
0.0 |
0.0 |
| REC Silicon Group |
36.0 |
1.9 |
122.1 |
23.8 |
160.2 |
(12.9) |
Key Financial Results – Semiconductor Materials
FOURTH QUARTER
2020
Key Financial Results – Solar Materials and Other 2020
9 © REC Silicon ASA. All rights reserved. Confidential February 19, 2021
Cash Flows
Cash outflows from operating activities \$2.8M
- › EBITDA of \$1.9M
- › Working capital decrease \$0.4M
- Decrease in inventories \$5.5M
- Increase in receivables (\$4.9M)
- Decrease in payables and accruals (\$0.2M)
- › Interest paid (\$8.5M)
- › US pension plan contributions (\$1.1M)
- › Currency gain of \$4.6M (Weaker USD vs. NOK)
Cash outflows from investing activities \$0.8M
- › Capex (\$0.4M)
- › Increase in restricted cash balances (\$0.4M)
Cash inflows from financing activities \$102.6M
- › Payment of lease liabilities (\$0.5M)
- › Payment of property tax Note (\$2.8M)
- › Private placement of equity \$105.9M
Nominal debt - \$220.6M
- › Decrease of \$0.8M in Q4'20
- (\$0.4M) Decrease in Lease Liabilities (IFRS 16)
- (\$2.8M) Decrease in Property Tax Note
- \$2.3M Increase in indemnity loan (Due to a weaker USD vs. NOK)
Nominal net debt - \$85.7M
- › Decrease of \$99.9M in Q4'20
- Increase in cash of \$99.0M (Placement of Equity)
- Decrease in nominal debt of \$0.8M
Contingent Liabilities
› Indemnity loan - \$23.4M
Debt maturity profile
USD Million
- C.A.R.E.S. Act Loan
- Indemnity Loan
- Lease Liabilities
- Note Property Tax Settlement
- USD Senior Secured Bond
Silicon Gases and Semiconductor
Kurt Levens
Electronic Grade Polysilicon Increase 2020
› Q4 in line with stronger H2 2020
- 250MT in Q4'20 vs. 174MT in Q3'20
- Customer prep for operations during Lunar New Year period
- Strongest shipment quarter since 2018
- › 2021 demand picture is firming
- Q1 seasonally lower shipments
- Potential for stronger quarters through the year
- Customers are considering increased demand scenarios
Silicon Gas Shipments Respond to Demand 2020
- › Increase in Silicon Gas shipments
- Less inventory in supply chain Quicker response
- Semi and FPD remained at high utilization
- Logistics cycle times increasing due to Ocean Freight
- Q1 firming up to be stronger than normal Q1 periods
- › Silicon Gases for Advanced Process nodes in Integrated Circuits (IC)
- Demand continues to increase
- Increasing in share of overall shipments
- Trend to continue over next 5 years
- Need additional capacity to meet customer growth
Q4 Q1 Q2 Q3 Q4
2019 2020
0
REC Silicon produces FZ rods, EG CZ rods/chunk, Silicon Gases – All value creation starts with Silane Production
REC Products
REC Silicon Product Applications 2020
Basic Semiconductor Manufacturing Process 2020
Unit Volume Growth Resumes & Content Increases 2020
Semiconductor Unit Growth Forecast 2020
Source: IC Insights, Inc. – Global Wafer Capacity 2021-2025.
FOURTH QUARTER REC Silicon Aligned with present & future market leaders2020
FOURTH
PV Market Outlook
Francine Sullivan, Chuck Sutton
FOURTH QUARTER
Outside China Solar Value Chain 2020
- › Biden Administration elected on green energy transformation platform
- Decarbonization & deployment of renewable energy
- Buy American & create high paying manufacturing jobs
- Specific policies under development, likely to form part of future stimulus
- › Both US & Europe set up to take actions to support renewables
- › A sustainable solar supply chain a growing global focus
- Need to reduce the carbon footprint of solar panels
"Not all solar panels are created equal"
PV Demand Forecast Increasing 2020
› China
- 55-58 GW in 2021
- Yearly growth
› US
- Investment Tax Credit (ITC) Extension
- 23-26 GW annually next 3 years
- Expect further installation support
› EU
- 25-30GW in 2021Low Carbon focus
- Average 30GW yearly beyond 2021
› ROW
- India recovery after COVID-19
- GW level installation countries increasing
- › Strong Demand Outside of China
- 50GW annually in US and Europe
- Supports outside China value chain
0 50 100 150 200 250 300 350 2020 2021 2022 2023 2024 Low High Base
Source: Bernreuter Research, The Polysilicon Market Outlook 2024
Global Installation Outlook
- increased installations next 3 years
- › Additional 15GW of installations due to ITC extension
- › Presidential Executive Orders lead to positive directives on clean energy purchasing and support
2.00 4.00 6.00 8.00 10.00 12.00 14.00 16.00 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV 2020 2021 Polysilicon Pricing PV Insights China Mono
Source: PV Insights
› Pricing volatility in 2020 due COVID-19 and factory incidents
- › End of year pricing increased due to demand
- › 2021 pricing may increase due to limited polysilicon capacity available
- › Pricing supports investment for polysilicon -
26 © REC Silicon ASA. All rights reserved. Confidential February 19, 2021
DEC JAN FEB
Yulin JV Update
Yulin JV, China 2020
Plant characteristics Current Status
4 th Quarter and 2020 Production
- › Q4 Production
- 68 MT of Loaded Silane
- 2109 MT of FBR Granular
- 14 MT of Siemens
- › 2020 Production
- 169 MT of Loaded Silane
- 5855 MT of FBR Granular
- 74 MT of Siemens
Battery Opportunities
FOURTH QUARTER
2020
Francine Sullivan
Electrification Transition
Silicon Increases Battery Performance
- › Battery/EV industry experiencing significant tailwind
- › Numerous new EV players, major incumbent automakers make moves into the industry
- Ford significant EV investments
- GM all electric by 2035
- › Biden administration/global policy makers focus on the importance of domestic battery supply chain and deployment of EVs to combat climate change
- › Significant investor interest in the sector
Silane SiH4 EV Market Investments and Expansion in Next Generation Advanced Anode Material
- › Next generation silicon anode materials using silane achieving 20-30% increased performance
- ~50% performance increase within time
- Better value that graphite
- › Silane preferred silicon source for next generation silicon anode technologies
- › Advantages: Improves energy density, reduces battery weight and costs, unlocks cathode capacity, increases the power acceptance allowing faster charging and longer range
Group14 Partnership
› First commercial scale silicon anode manufacturing plant globally
- › Group14 Technologies (Group 14) plans to build 12,000MT nameplate capacity advanced silicon anode manufacturing plant co-located at REC's facility in Moses Lake
- › Expected to break ground in 2021
- › REC Silicon to supply silane via pipeline
- › REC Silicon and Group14 to develop pipeline infrastructure
- › Group14 pilot plant installation activities underway in Moses Lake
Group14 anticipates entry to the EV market in 2023, overtaking less advanced silicon anodes by 2024 High performance silicon anode batteries facilitate cost competitiveness of EVs with ICEs
REC well positioned to supply global market 2020
REC Silicon Moses Lake
Market Leading Si Anode Makers
- › REC Silicon supplying silane to several silane anode industry leaders, including those partnering with leading car companies
- › Large quantities of silane forecasted for battery and EV demands
Co-location is Necessary
- › Current silane distribution network +/-7,000 MT/yr.
- › Distribution capacity expansion capex ~\$30M per 1,000MT
- › Requires additional Opex
footprint
- › Loading of modules and maintenance
- › Freight and logistics
Short Term Business Plan
Tore Torvund
Silane: Feedstock for the Energy Transition 2020
First quarter 2021 business plan for REC Silicon 2020
- › Stronger financial position creates business opportunities
- Implement previously identified business opportunities with limited investment and high return
- › Focus efforts on restart of the Moses Lake plant pursuing the following opportunities:
- Development of a non-Chinese PV value chain
- Agreement with silicon anode battery companies for industrial scale production of silicon anode materials
- Compliance by China with Phase 1 Trade Agreement commitments
Q1 2021 Reporting May 11, 2021
36 © REC Silicon ASA. All rights reserved. Confidential February 19, 2021
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