Q3 2021 GrafTech International Ltd Earnings Call
Good morning, My name is Sia and I will be the conference operator today at this time I would like to welcome everyone to the graph Tech third quarter 2021 earnings conference call and webcast. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If he would like to ask.
A question during that time simply press star and the number one on your telephone keypad to withdraw the question press the pound key. Thank you at this time I would like to turn the conference over to Adam Dible. Please go ahead, sir thank.
Thank you Tia.
And welcome to <unk> International's third quarter 2021 conference call.
With me today is Dave <unk>, Chief Executive Officer, Quinn, Coburn, Chief Financial Officer, and Jeremy how for Chief operating Officer.
Dave will begin with a review of our safety performance current industry conditions, and our demand and production levels, Jeremy will discuss operational matters and give an update on our ESG initiatives.
Quinn will cover financial details and Dave will close with final remarks, and open the call to questions.
Turning to our first slide.
As a reminder, some of the matters discussed on this call may include forward looking statements regarding among other things results performance trends and strategies.
These statements are based on current expectations and are subject to risks and uncertainties.
Factors that could cause actual results to differ materially from those indicated by forward looking statements are shown here.
We will also discuss certain non-GAAP financial measures and these slides include the relevant non-GAAP reconciliations.
Can find these slides in the Investor Relations section of our website at Www Dot graph Tech Dot com.
A replay of the call will also be available on our website.
I'll now turn the call over to Dave.
Thank you Adam good morning, everyone and thank you for joining our third quarter earnings call.
I Hope you your families and your colleagues are all well.
We began as we always do with safety health and safety Excellence is a core value of graph, Jack and a fundamental element of our success.
Our year to date total recordable injury rate is 0.47 through the end of the third quarter, continuing our meaningful improvement over the last few years and tracking ahead of a record low from 2020.
Thank you to everyone on the graph Tech team for your continued focus and vigilance on health and safety, our ultimate goal of zero injuries and every employee going home safely every day.
Before moving on I'd like to take a moment to discuss our recently announced CFO succession plan.
As previously announced Quinn recently informed us of his intention to retire next year.
We were fortunate to identify a great replacement and Tim Flanagan, who has over two decades of experience in senior financial positions, including that as Chief financial officer of a significant supplier to the steel industry.
Quinn will be staying on through our annual meeting in may to ensure a seamless transition.
I'd like to thank Quinn for his 11 years of service and leadership.
Look forward to working alongside Tim and continuing the progress that we've made over the last number of years during Quinn's tenure.
Now turning to slide four I'll provide some comments on the market.
Conditions in the steel industry continued to improve during the third quarter, gaining in both pricing and capacity utilization rates.
Most types of steel continued to be priced at or near all time highs as a result of solid demand.
Hot rolled coil pricing remains at record levels.
Global steel manufacturing utilization rate outside of China was 74% in the third quarter of 2021, consistent with 75% in the second quarter of this year and a 15% improvement compared to the third quarter of 'twenty 'twenty.
The U S steel industry utilization rate improved to 85% in the third quarter from 82% in the second quarter of 2021 and compared to 65% in the prior year quarter.
But global steel industry's high utilization rates are driving strong demand and increased pricing for graphite electrodes.
We are also seeing rising market prices for petroleum needle Coke, we expect these trends to support significantly higher graphite electrode prices in 2022.
While theres still industry demand has recovered and we expect strong demand for graphite electrodes to continue like many industries. The graphite electrode industry has been impacted by global supply chain challenges and inflationary pressures.
As a result of these conditions, we are seeing rising prices for freight.
Cost for electricity and natural gas are also rising, particularly in our European locations.
In addition prices for raw materials used in the production of graphite electrodes are also rising.
As we look forward, we feel confident in our ability to manage through this inflationary environment.
Turning to slide slide five on the commercial outlook.
As market conditions continue to strengthen and stabilize demand for our products has improved providing superior services and solutions to our customers is of even greater importance. During these times given the tight supply site conditions and rising demand.
Our commercial team is well positioned and focused on servicing our clients and delivering products to meet market demand.
A key indicator for the continued momentum in the market is a rising prices for graphite electrodes are non L. T. A price rose 12% in the third quarter of 2021 compared to the second quarter.
We expect our fourth quarter non LTA prices to increase an additional 7% to 9% over the third quarter.
We expect a larger price increases to come in 'twenty, 'twenty, two which I'll address in more detail later in the call.
We have slightly increased our 2021 estimates for graphite electrode sales under our L. T A's and I've left the balance unchanged, reflecting our confident outlook that the industry remains healthy and is driving demand for our products.
Now turning to slide six.
We are pleased with the continued strength we are experienced in the third quarter with our sales volume.
Sales volumes of graphite electrodes remained robust at 43000 metric tons in the third quarter up 30% compared to the third quarter of last year.
Our third quarter shipments were comprised of 28000 metric tons of graphite electrodes under our L. T. A's at an average approximate price of $9500 per metric ton.
And 15000 metric tons of non LTA sales at an average approximate price of $4600 per metric ton.
To provide further insight the reported quarterly non L. T. A price reflects a mix of annual agreements negotiated in the fourth quarter of 2020.
Quarterly agreements negotiated earlier in 2021.
As well as spot agreements.
Our non LTA pricing has steadily improved through the year and we expect these trends to continue for the remainder of this year and into 2022.
Flight volume more than three quarters of our non L. T E sales, where price is agreed to under annual and quarterly agreements at a time when graphite electrode prices were lower than they are currently.
This then means that less than one quarter of the Q3 non LTA business was that spot.
Lastly, net sales in the third quarter increased 21% compared to the third quarter of 2000 $20 million to $347 million.
Now I'll turn the call over to Jeremy to discuss operating items in our ESG progress over the past quarter.
Thanks, Dave we produced 39000 metric tons of electrodes in the third quarter up 22% compared to the third quarter of 2020.
As planned during the third quarter, we executed our annual maintenance shutdowns in our European production facilities, resulting in lower throughput as compared to the second quarter of 2021.
As I discussed last quarter, we've been enhancing our capabilities across our manufacturing footprint this year.
The pin production line at our St. Marys, Pennsylvania facility is now operational and we are ramping up production.
Importantly, this provides us with two connecting pin production facilities.
All of our manufacturing sites continue to be very focused on further improving efficiencies and maximizing production given the strong demand for our graphite electrodes.
So turning to slide seven.
Yeah.
In September we published our second annual sustainability report, which is available on our website.
We are pleased with our progress over the past year and encourage you to review our report we welcome your feedback.
We provided some highlights from the report on slide seven which includes an overview of our material ESG topics and key ESG initiatives during 2020.
We're also continuing to develop our longer term ESG goals and look forward to discussing our progress with you in future quarters.
Now I'll turn it over to Quinn to discuss our third quarter financial results on slide eight.
Okay. Thanks, Jeremy.
We're pleased with another strong financial performance in the third quarter, which is a result of our operational achievements, allowing us to increase sales and profitability.
Net income totaled $120 million or <unk> 45 of GAAP earnings per share.
Third quarter, adjusted EBITDA of $172 million was $19 million higher than third quarter of 2020 with an adjusted EBITDA margin of 50%.
Third quarter cash flow was also strong we generated $134 million of operating cash flow and $125 million of adjusted free cash flow.
We continued to achieve strong free cash flow conversion with 73% of third quarter's adjusted EBITDA converting to adjusted free cash flow.
Now turning to slide nine.
We further strengthened our capital structure with 100 million reduction in our term loan during the third quarter.
Our total year to date debt reduction through the end of the third quarter is now 300 million.
And our total debt to adjusted EBITDA is one seven times.
As of September 30th our total liquidity was approximately $334 million consisting of $87 million of cash and $247 million available under our revolving credit facility.
Now turning to slide 10.
We're very pleased with the strong earnings and cash flow that we have delivered through the first three quarters of 2021.
While we have used the majority of that cash flow to reduce debt.
And plan to continue to do so through the balance of this year in the third quarter. We also used $46 million to repurchase four 3 million shares of our stock at.
At an average price of $10 77.
In addition.
As we previously announced our board of Directors has approved a new $150 million open market stock repurchase program.
The company has now authorized to repurchase up to $163 million in shares of the company's common stock inclusive of the $13 million remaining under the prior stock repurchase program as of the end of the third quarter. This year.
We're committed to delivering value to our shareholders through a disciplined capital allocation strategy. This.
This includes returning capital to our shareholders, while investing in our business and continuing to reduce debt to further strengthen our balance sheet.
We're maintaining our full year 2021 capital expenditure outlook of $55 million to $65 million.
We are using these funds to support our high quality low cost global operating assets and to target high return operational improvements.
Our continued focus on a strong capital structure provides us with significant financial operational and strategic flexibility.
Now I'll hand, it back to Dave on Slide 11.
Thanks Quinn.
As you heard we continue to be encouraged by the demand and pricing trends in the graphite electrode industry driven in large part by the strength in global electric arc furnace steelmaking.
Over the long term, we expect electric arc furnaces will continue to grow their share of the global steel market.
We are now seeing the impact of higher graphite electrode prices and our reported results and as graphite electrode prices continue to increase we expect the impact on our results to continue well into 2022.
As Quinn discussed our board has approved a new open market stock repurchase program.
We are committed to a disciplined capital allocation strategy that enhances shareholder value, while also improving <unk> financial profile, giving us the flexibility to successfully operate through industry cycles.
Our proven track record of high quality earnings and significant cash flow generation further supports our capital allocation strategy.
We believe the graph tech continues to be well positioned for solid long term growth.
One of the largest producers of ultra high powered graphite electrodes in the world, we have a sustainable and long term competitive advantage from our low cost structure and vertical integration into our key raw material petroleum needle coke.
Our graphite electrodes are highly engineered and require extensive process knowledge to manufacture.
The services and solutions that graph Tech provides help position, both our customers and our company for a better future.
With a commitment of our people and our significant competitive advantages. We continue to strongly believe <unk> is well positioned to deliver results today and over the long term.
This concludes our prepared remarks, we'll now open the call up for questions.
At this time I would like to remind everyone that if he would like to ask a question you May Press Star and then number one on your telephone keypad now again Thats star one for any questions, we'll pause for just a moment.
And your first question will come from David Gagliano with BMO capital markets. Please go ahead.
Hi, Thanks for taking my questions first of all I'd like to congratulate Quinn on his retirement and thank you for all the help over the years.
As well.
Just turning to a couple of quick questions.
A couple.
Couple of quick questions on the commentary on the on the near term pricing I thought it was interesting to hear.
The emphasis on on the acceleration in 2022.
And I was wondering if you can get a little more color you mentioned I think he said 75 and I could be wrong here, but I need you said, 75% ish of the.
Fourth quarter volumes were priced you know one lags.
Yeah from a while back.
And I'm wondering if you could just give us you know.
Of the total increase that goes back seven and 9% for everything.
What's the embedded increase in there.
At 75% piece.
So I was actually thanks, thanks for your interest Dave.
It was actually Q3, we were referencing.
Sell 75%.
All our non L. T a business in the third quarter was based upon negotiations that took place in the fall and late 2020 as part of an annual program for 2020 one.
As well as.
Early in the year quarterly arrangements, where we're trying to stress or provide some additional transparency for everyone is that that's why we've been question about you know why is it your percentage increase in pricing larger than than what you're reporting in the rationale and the reason is is that three.
Quarters of what we're talking about in the non LTA space was deals that were negotiated.
Either last year or early this year and dose for the third and fourth quarter. So those are with us and all of that pricing won't change. So we're only having about a little less than 25% of that.
That business, that's true spot business and reflecting today's environment.
Is that helpful.
It is it is and I was trying to ask exactly that question and it's sort of a roundabout way.
The sort of the follow up here.
If you could tell us what you know the 25% that was price.
Closer to current prices.
And what was your.
I wanted to tell us that price that would be great or if not maybe just the percentage increase that's flowing through that overall, 12% increase that we saw in the third quarter if that makes sense.
Well.
We need to be.
Careful and then from a competitive position to protocols in an effort to provide you transparency without causing some of the issues. We had in 18, when we used to provide that information I would had nausea.
So you know you back into I guess some of it mathematically in that.
Know that.
<unk>.
There are only 25% of it was based upon what's happening currently in the third what's happening currently in the third quarter. So the rest of it was at the same price as the material in the second quarter. So you can actually and I E.
You can actually do that calculation.
Hey, Brian.
So it's reasonable to assume that that other that's a 75 or so it was kind of flat quarter over quarter and everything was the 17th twenty-five the 12% increase was all due to the 25% that was repriced is that reasonable to assume it's pretty much. So it's not 100% perfect, but it's it'll get you you know within spitting distance.
So.
Yeah, there would've been a little bit of an increase beyond the Q1 and Q2 numbers just because it is Q3, but you're in you're in the right you're heading in the right direction there Dave.
Alright Thats helpful. Thank you and then just my other question on the cost side the commentary about obviously.
<unk> wide cost pressures and you gave us the sort of the expectation on our overall realized prices improving improvements in the fourth quarter can you give us a similar.
You know range of expectations for overall car.
In the fourth quarter.
Yes, Dave This is Quinn might remind you as well that last quarter, we had.
Last quarter I think we said we haven't.
Cost increase of one 5% last quarter. This quarter. It was a little over 2% I would expect in the fourth quarter to be kind of similar to the past two quarters, where we would see an increase of maybe one and a half to two.
1.5% to 2% in the fourth quarter.
On total cost.
Okay perfect. That's helpful. Thank you read obviously on a per unit basis.
Understood got it thanks.
The next question is from Curt Woodworth with credit Suisse. Please go ahead.
Yes, Hey, good morning.
Good morning.
Our first question is with respect to.
I guess the.
Kind of your commercial strategy entering next year right. So you're talking about how this quarter you had deals.
Now on the non LTA that were said you know almost a year ago and some annual contracts are you.
You know are you trying to get shorter duration with respect to your spot can you give us a sense for maybe relative to the first half of next year, how much of your order book.
Is sold and then the comment on.
Spot up 7% to 9% sequentially and then you said significantly greater pricing next year and an acceleration sequentially.
Relative to that seven to nine so should we should we think that your non LTA pricing should be up sequentially you.
You know more in the 15% range for <unk> based on that commentary.
So let me address that.
Commercial strategy item first.
So as we go to market.
We're the only ones that can offer.
Full scope of commercial options from annual agreements quarterly agreements biannual agreements.
And L T A's.
And so.
All of those opportunities exist in various customers have their own preference depending upon the way they choose to operate there.
You know particular companies and in some cases.
Some of our non LTA sales are to people would have LTA. So they've already got a portion of their buy are tied up in AR and a hedge like mechanism are to begin with so all of those things factor in but.
But all of them are in play or order book for next year has a mixture of some annual deals.
Some semi annual deals.
Some that are based on a quarterly one or two that are based upon a formula and a couple of that are signed up and are adding to our somebody L. T any thoughts.
So on of course next year is a big year for frown Tas for us, but all of those are options that our customers are utilizing but the big issue for us as we go into next year is the is the reset we get.
Last year. When you know if you think back to October and November last year, while their steel industry is beginning to improve there was a lot of uncertainty about the future. So the graphite electrode market had not yet seen the uptick.
<unk> down as a supplier we get a reset on that whole set of circumstances through these negotiations that have been taking place here in.
In October and November so that's good news and that's what allows us to be a use.
Using the kind of language, we are around significant improvements for next year, because we get reset on a big.
Portion of tonnage to customers that were on a more annual basis and that's helpful. In terms of nailing that number down.
We're not completely finished yet so I can't.
I'll give you an exact number because that might influence some.
Some of the negotiations that aren't completed as well as.
Some of the problems I alluded to when we used to give that information out back in early 18.
And what's happening with our competitors, so I think that.
There's nothing about what youre, suggesting that would scare us, but we can't nail it down just yet because I don't want to influence the negotiations that arent quite complete yet in some cases.
And given the demand I guess, the order book and the demand outlook, which is in a very strong and then on top of that you've got all the new Eas are there going to be ramping as well what is your expectation right now that you feel like you should be running at.
Close to full productive capacity next year is there any.
Have you given any thought to.
Restarting St Marys.
So outside of the hour.
Inside of the pen machining.
Sure look we're evaluating options as to how to maximize our tonnage for next year.
Recognize that.
You know running somewhere around you know in the 90% range of any unit, whether it's so gratifying electrical plant or a steel plant or whatever the case may be.
You know you never have the ability to run at a 100% on a sustained basis on a permanent basis.
That doesn't happen by and large in manufacturing, but we.
We expect to utilize our resources and run for the whole year at as hard as we can in terms of St Marys and we need to finish ramping up this pin machining operation. That's a critical addition, and provides us more flexibility.
And at the same time, you know, we'll we'll look our handover and determine whether.
There is something we want to do there as well as opportunities with some of the other plants.
That are being studied.
As we speak.
Sorry, yes, where we'll be looking hard along as to ways to.
Increased capacity and throughput so that as the global industry.
Grows that we can grow with it.
Great and just last one on needle coke.
You know we'd be hearing that availability has become somewhat of an issue.
And then when you look at what PSX is doing with Nevada, and some of the other.
Investments being made in Europe, as well around synthetic graphite production for the <unk> to the E D.
Theoretically, it's a pretty big increase in the needle coke demand right.
So I'm just curious your thoughts on that do you have any concerns around availability and and as the rate of change in the spot needle coke market.
Commensurate with what Youre seeing on the non LTA pricing. So your Mark you said you would expect unit margins to still improve on that basis. Thank you.
Well I'll start with your last point, yes, we do expect as we move through 2022 from a margin perspective, we would continue to improve despite.
You know all of the inflationary.
Pressures, including you know the needle coke situation, but you're you're correct that there is a lot of demand.
Factors coming to play in needle Coke, particularly as the EV World begins to.
Ramp up perhaps even faster than you know had been projected even as late as a year ago. So I think all of those are Ah, you're correct and that they have to be taken in consideration and Jeremy and his crew are working hard with a needle coke suppliers make.
Making sure that we get what we require for next year, but I think that will the outcome of all of that is there'll be upward pressure on on needle Coke. There's no question about that I don't think.
Great. Thanks very much.
And once again, if you would like to ask a question ladies and gentlemen, Please press star followed by the number one again Thats star one for any questions. Our next question will come from Arun Viswanathan with RBC capital markets. Please go ahead.
Great. Thanks for taking my question.
And thanks for all your help Quinn congrats on your retirement.
So I guess just wanted to ask a little bit about spot pricing. So it sounds like you're.
You're optimistic about another increase sequentially of 7% to 9%.
But that would still kind of puts you I would imagine you know in the mid fives and kind of so you know quite a ways away from your contract pricing. So could you just describe the contracting environment as you see it now are you seeing your customers kind of come to you.
With you know our objective of extending their contracts and if so.
You know, what what where would they be comfortable with on a pricing standpoint, I imagine it's not necessarily at the 9500 dollar level.
You know from previous but maybe somewhere in between spot and that level is that is that is that a fair assumption or how should we think about that.
So E.
L T A's are hedging mechanism and.
Windows are deals mature, which is not until the end of 2022. So we actually don't expect to have much conversation with existing LTA folks about that until we get into.
Third quarter, probably more like September next year, because they are a hedge and you know from the number of years when I was stealing I hedged other come other items, whether it's gas or electricity et cetera.
It would be unusual a year in advance to start thinking about it unless you had.
You know some suspicion that it was going to be in your favor. So given that pricing is in a in an upward mode right now on graphite electrodes.
I would not expect that people would be.
Looking to ante up a year in advance, but I think that would be unusual I think theyre going to wait and see how the next 12 months or so or 10 months play out.
In terms of the supply and demand them from their side.
And then make a decision as to where they want to go so I'm I'm not I would not have expected.
That we've had a couple of our new players come in and talk about you know complete.
Completely new LTA.
But I don't think the bulk of those discussions would happen until then and at that point.
Just like any other hedge it'll be priced at what the market is bearing at the point in time.
Our hedges applied so.
It's a bit impossible for me to answer your question in terms of what I expect on pricing it'll be what wherever the market gets too.
By that by that point in time say September next year and to the extent to which you know people want want to hedge your or otherwise, which we still think that that's a very valuable tool for both us and our customers and.
But the bulk of those negotiations are still almost a year away.
Okay, Thanks for that and.
So again just another question on this topic.
So you've seen a couple of quarters now sequential increases.
You know I think a year or year and a half ago. When the steel market has started to rise you know we had the impression that electrode pricing would.
Would follow hot rolled pricing a hot rolled pricing, you know triple and eclipsed $2000 a ton at times.
But electrode pricing is kind of.
<unk> been a lot slower to get to regain that momentum.
We've now actually seen hot rolled pricing rollover at times and potentially start to plateau. So.
Have we missed kind of the electrode ramp in pricing or is it your expectation that we continue to see kind of.
You know mid or high single digit.
So gains on electrode pricing over the next 12 months.
So there will be and when we use the word significant so I think the first time that I've chosen to use that adjective since we went public.
Speaking with pricing.
I'll try to your attention that I never use that adjective about Q3 or Q4.
So the best I can do for you to draw that to your attention, yes, I expect pricing to increase significantly for 2022.
Now the reason for the lag we've talked about in the past a room there was a lot of graphite electrode inventory on the ground.
And that had to be worked through until the supply and demand dynamics.
Dynamics actually came into play, which really didn't start happening until the second quarter of this year. So we're really only two quarters.
Into true supply and demand.
Dynamics are taking place.
Yeah.
Got you and then.
If I could also ask a similar question around needle coke so it.
It sounds like you're you're indicating that the electrode market.
Is tightening up and and so would you say that utilization rates in electrodes are.
Say mid eighty's across the industry, you know or where are we on utilization rates side of electrodes and then similarly with needle coke.
Do you expect you know kind of a needle coke to get back into a more of an inflationary cycle as well kind of in the.
The you know three to 5000 dollar per ton range and if so what's kind of the cadence it would kind of be.
Ratable increases over the next year or so are you expecting a spike or how should we think about utilization rates and the needle coke market as well. Thanks.
So in terms of utilization rates.
Not all of our competitors.
Release for share with their operating rates are from our I'll call. It market intelligence our belief is.
That outside of China, they're they're all running about as hard as they say you know how.
At this point in time.
But youre not going to find out in a public report anyway cause anywhere because they don't report are we we get some of this obviously in the market and some of it's anecdotally through through our contacts in the industry and from customers. So our belief is everybody outside of China is running pretty hard inside China, we know that they've had some.
Issues with electricity and that's caused their domestic industry within China, both steel and graphite electrodes to run at less than capacity over the last probably quarter, maybe four months.
Jeremy anything more you would ask for that.
On the graphite electrode capacity no I think I think you've really kind of hit it Dave.
As best as we can tell everybody's everybody's hitting them as hard as they can.
And in terms of needle Coke you know.
From our perspective, it would appear that.
Those outside of China are.
Our running and making as much needle Coke is they know how and there is no there's not a lot of it theres no extra needle coke can be found at the moment.
Yeah.
So you do expect needle coke prices to rise as well over the next 12 to 24 months or so.
Yeah, what I guess I would say is that.
You know, we've we've talked in the past about.
The import export data and some of the ranges we've seen on pricing and I think the last time, we talked about this we said that we were seeing prices in the range of <unk> hundred 1800, maybe something or something along those lines.
If we look at the recent data we see that trending up in you know over the course of the last quarter, we've seen pricing more in the range of 1700 2300.
And.
I guess, we would expect that if theres continued tightness in availability that we.
We would continue to trend towards the high end of that range.
It's important to acknowledge that the data that Jeremy is referencing is trade data, which is always lagging right. So.
That that data is publicly available.
But it's always a quarter.
Roughly yes.
Just on one was contract right.
Yes.
Okay. Thanks, a lot.
The next question is from Alex hacking with Citi. Please go ahead.
Yeah morning, and let me add my best wishes to Quinn.
I spoke to a free clarifications, if that's okay. So firstly.
You know as we look at your pricing.
Pricing heading into next year and in 2022 will there be any carryover from this lower price.
Non contract.
Pricing you know that that you referenced you know and in this quarter or are you really start to next year with them you know prices all sort of reset to the levels that we've seen more recently in the last three months or so thanks.
Alex there thanks for your question.
They are reset there's there's really no carryover everything gets reset for January and that's that's why we're oh.
As optimistic and bullish and using the kind of words that we are.
Okay, Great and then in terms of the trajectory of the spot price.
Is it still sort of moving higher in your view is it higher today than it was two or three months ago or it's it's kind of plateaued here. Thanks.
<unk>.
It's higher today than it was two or three months ago oriented we're heavy into them.
And pretty much what will soon be completed.
We're nearing during the final phases of a few.
A few i's and crossing a few Ts if you will but yeah, it's been a steady stair.
Steady improvement, we'll see where the first quarter next year. It takes us, but so you know so far it's been continuing to improve.
Okay. Thanks, and then just finally on needle Coke I mean, obviously, if you're going to run hard next year you need to are you going to be up and your push this off the paci needle Coke I mean, what.
Are there any challenges on availability, there or it or it was fairly straightforward for you to get as much material as you need it.
To my earlier comments, there is no extra needle coke anywhere so.
I would I would classify that describe the needle coke market as being a.
A situation that it's becoming tight.
Okay, it's as tight as it was in 2018.
Perhaps for a few different reasons, we're approaching.
A pretty.
Pretty aggressive supply and demand situation 2018 had some.
Special components to it that created.
Some very lofty numbers, so I want to be careful not to suggest that.
Checking those kind of lofty numbers to return, but certainly.
It's good to be a needle coke producer right now.
Alright, very good thank you so much.
And at this time there are no further questions I would like to turn the conference back over to Mr. <unk> for any closing comments.
Thank you very much operator.
Thank everyone for their interest.
And the opportunity cause.
Speak with our investors today and address some of their questions and we wish all of you good health in the coming months. Thank you and have a great day.
Ladies and gentlemen, thank you for participating in today's conference call you may now disconnect.
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