GrafTech International Ltd. Q1 2023 Earnings Call
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[music].
Good day, ladies and gentlemen, and welcome to the <unk> first quarter 2023 earnings conference call and webcast.
At this time all lines are in a listen only mode.
Knowing the presentation, we will conduct a question and answer session.
If at any time during this call you require immediate assistance. Please press star zero for the operator.
This call is being recorded on Friday April 28 2023.
Now I'd like to turn the conference over to Mike Dillon. Please go ahead.
Thank you.
Good morning, and welcome to graphic Internationals first quarter 2023 earnings call.
With me today are Marcel Kessler, Chief Executive Officer, Jeremy Albert Chief Operating Officer, and Tim Flanagan Chief Financial Officer.
Marcel will begin with opening comments, Jeremy will then discuss safety sales and operational matters.
Tim will review, our quarterly results and other financial details.
Marcel will close with comments on our outlook.
We will then open the call to questions.
Turning to our next slide.
As a reminder, some of the matters discussed on this call may include forward looking statements regarding among other things performance trends and strategies.
These statements are based on current expectations and are subject to the 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.
You can find these slides in the Investor Relations section of our website at Www <unk> com.
A replay of the call will also be available on our website.
I'll now turn the call over to Marcel.
Good morning, everyone.
Thank you for joining <unk> first quarter earnings call.
When we last spoke to you in February we shared our perspectives regarding 2023.
Note that that there will be a significant impact on our performance due to four factors.
One <unk>.
It will affect us to Monterrey suspension that occurred in late 2022.
Second the substantial shift in mix from LTE to non LTE revenue.
Higher costs and fourth softness in graphite electrode demand.
We anticipate that the first quarter to be the earnings trough for the year, reflecting the lowest sales volume and the highest cost per ton.
We expect this performance to gradually improve as we proceed through 2023 and then further accelerate in 2024.
Lastly, we highlighted the actions being taken to navigate the current headwinds and that the rate remain optimistic regarding the longer term outlook for our business.
Our performance in the first quarter, which Jeremy Tim will speak to later met our internal projections.
As it relates to the balance of the year.
Highlighted the four headwinds that are impacting our 2020 financial performance.
Our outlook for the first three factors remains largely unchanged.
The other hand regarding the fourth factor softness in graphite electrode demand our outlook has become slightly more cautious.
This is Jeremy will discuss we do see some encouraging signs for PC market indicators. However, we are not yet seeing this translate into demand for graphite electrodes and we anticipate softness in the commercial environment for the balance of the year.
We attribute this to two reasons.
First the magnitude of the steel industry recovery remains constrained by global economic uncertainty and second current graphite electrode inventory levels at our customers exceeds typical norms, reflecting the recent softness in steel utilization rates.
As a result, our full year volume expectations has been slightly reduced compared to our original projections.
We currently estimate our 2023 sales volume to be in the range of 100 to 150000 metric tons.
That said, we continue to expect sequential improvement in our volume on a quarter over quarter basis. As we proceed through 2023.
Our outlook for costs in the year remains largely unchanged.
As we look ahead to 2024 based on the latest outlook from the World Steel Association steel demand is expected to further recover with growth accelerating in most regions.
This includes a projected 6% year over year increase in European steel demand for 2024, as well as a 2% decrease in North America.
We continue to expect the electrode demand and our sales volume to return to more normalized levels in 2024.
To manage the near term challenges in the market. We are successfully executing the plan that we discussed on the last call.
These plans include closely managing our operating costs capital expenditures and working capital levels.
Proactively reducing our production volume to align with our near term demand outlook for graphite electrodes.
And making targeted investments to further improve our competitive positioning and support long term growth.
We are pleased with the progress we are making to advance our business on several fronts I would like to highlight some important accomplishments.
Our Monterey facility in Mexico has been running well since the suspension was lifted in November 2022.
The plan is to operate and consistent with our expectations.
We are successfully executing our production plan and progressing well on our objective to rebuild our feedstock inventory.
We are satisfied all of the conditions that were agreed upon with the state authorities in Waverly off.
In accordance with the timeline established at a restart last November .
In addition, we continue to expand our engagement with the authorities as members of the local community and we look forward to operating the Monterrey facility and supporting the community for many years to come.
We have also made significant progress on our risk mitigation strategy related to feedstock.
Earlier. This month, we received the regulatory approval to restart production activities of our snacks Marys facility in Pennsylvania.
Following this milestone to facility recently received its first shipment of needle Coke since 2016.
Now in the process of beginning production that taxpayers.
In addition, our efforts to initiate installed production capabilities at our Panful Hopper.
Spain also remain on track.
We are pleased with the progress on both initiatives as this will provide important risk mitigation for peak production.
On the commercial front, if you have opened a new sales office in Dubai, and new sales and technical service Representatives in additional countries.
Although our business mix has shifted to be predominantly non LTE now we remain uniquely positioned to offer our customers security of supply by a multiyear electric supply agreement.
In fact, we are pleased to have recently entered into new multiyear agreements with several customers in North America and in Europe .
We also continue to make progress on the sustainability front.
Last week, we apply to join the United Nations Global compact and look forward to participating in this important initiative alongside many other leading companies.
Aligning our sustainability strategies under the UN global compact principles, we will further strengthen our business and lead to better results for our customers employees and other key stakeholders.
Finally, we are taking actions that we believe to optimally position <unk> to benefit from medium to longer term industry tailwind and deliver shareholder value.
The carbonization is driving a transition in steel with electric arc furnace, steelmaking, and resulting demand for graphite electrodes expected to experience accelerating growth.
In addition to the macro petroleum needle Coke a key raw material used to produce our graphite electrodes is also expected to accelerate driven by it.
It's used in lithium ion batteries for the growing electric vehicle market.
We are well positioned to capitalize on these favorable long term industry trends.
And I will touch on this further at the end of <unk>.
Prepared remarks.
I want to thank the entire <unk> four hours for their efforts and dedication as we continue to execute our plans to move our business ahead.
With that let me turn the call over to Jeremy.
Thank you Marcel and good morning, everyone.
I will start my comments as I always do with a brief update on our safety performance, which is a core value at graph tech.
As I indicated on our year end call improvement in this area is a key point of emphasis with our team in 2023 as our prior year performance did not meet our high standards.
I am pleased that our recordable incident rate for the first quarter of 2023 is well below where we were throughout 2022 and places us among the top operators in the broader manufacturing industry.
We will remain highly diligent in this area and seek to build on this momentum as we continue working toward our ultimate goal of zero injuries.
Let me now turn to the next slide for an update on steel industry trends as additional context for our first quarter results and outlook commentary.
During the first quarter, while we saw encouraging signs among key market indicators. The overall recovery of the steel industry remained somewhat constrained.
Global steel production, excluding China in the first quarter of 2023 was approximately 198 million tons.
This represented a 2% sequential improvement from the fourth quarter, but a 7% decline compared to the same period in the prior year.
This same trend carries through to global capacity utilization rates, excluding China.
Which increased slightly on a sequential basis to 65% in the first quarter, but remained down compared or pardon me remain down by approximately 500 basis points year over year.
Looking at some of the regions in which we participate in Europe , we continue to see a stabilization of key trends, including steel production and pricing, although post remains significantly below year ago levels.
In the U S utilization rates continue to tick up averaging 74% for the first quarter with HRC prices rising significantly through the quarter.
This sequential step up in U S based steel trends reflects improved auto production and construction spending among other factors.
While these trends are encouraging we also recognize that a significant amount of economic uncertainty remains.
This is reflected in the wide range of possibilities presented in the outlook of key market participants.
Turning the graphics first quarter performance.
Our production volume was approximately 16000 metric tons, representing representing a 66% year over year decline.
And resulting in a combined capacity utilization rate for our three primary electrode facilities of 31% for the quarter.
As we have indicated towards the end of the fourth quarter, we began to proactively reduce production at our European manufacturing facilities.
Combined our facilities in Calais and Pamplona operated at just below one quarter of their capacity for the first three months of 2023.
We expect to increase output in the second quarter, and then increase further in the back half of the year based on steel market conditions.
This is being done to align our production volume with our evolving outlook for graphite electrode demand as well as to manage high energy costs more efficiently.
For our Monterey facility production output for the first quarter was in line with our expectations and reflected our focus on rebuilding our pins stock inventory levels.
Turning to sales.
Our first quarter sales volume of approximately 17000 metric tons was in line with our expectations.
The impact of Monterrey being suspended in late 2022 during a key commitment window for customer purchases covering the first half of 2023 was the primary driver of 61% year over year decline in sales volume in the first quarter.
Lower demand for electrodes also contributed to the decrease.
Further the terms for most of our Lta's ended in 2022, and our mix has shifted to more non LTA business.
First quarter shipments included 7000 metric tons sold under our LTA is at a weighted average realized price of $9 per metric ton.
And nearly 10000 metric tons of non LTA sales at a weighted average realized price of $6000 per metric ton.
Both of these prices were consistent with our expectations.
As a result of these combined factors net sales in the first quarter of 2023 decreased 62% compared to the first quarter of 2022.
As we proceed through the second quarter of 2023, while the residual impact of the Monterey suspension will continue to have a significant impact we anticipate our sales volume will begin to recover and be in the range of 24 to 27000 metric tons for the quarter.
Non LTA pricing is expected to decline slightly from first quarter levels, reflecting softness in the commercial environment.
In the second half of the year, we anticipate our sales volume will further recover as we move past the Monterey suspension driven impact.
However, as we've noted given economic uncertainty and elevated graphite electrode inventory levels at our customers. We are now more cautious regarding our commercial outlook for the second half of 2023.
Reflecting all of this we currently estimate our full year sales volume will be in the range of 100 to 115000 metric tons.
Let me now turn it over to Tim to cover the rest of our financial results.
Thanks, Jeremy.
For the first quarter, we had a net loss of $7 million or <unk> <unk> per share.
Adjusted EBITDA was $15 million or an adjusted EBITDA margin of 11%.
This is a decrease from $170 million in the first quarter of 2022, primarily reflecting lower sales volume and higher year over year cost on a per metric ton basis.
Expanding on costs.
Collecting the full year impact of raw material energy and freight cost increases that occurred throughout 2022.
Higher priced inventory was sold during the first quarter of 2023.
In addition, during the quarter, our cash costs included approximately $10 million of fixed costs that otherwise would've been inventory. We are operating at normal production levels as compared to our 31% capacity capacity utilization rate for the first quarter.
Factoring all of this in for the first quarter of 2023, our cash Cogs per metric tonne were approximately $5600 and represented a 9% sequential increase compared to the fourth quarter of 2022.
As a reminder, cash cogs per metric ton excludes depreciation and amortization as well as cost of goods associated with byproduct sales and other noncash items.
On a full year basis, we continue to project year over year caching year over year increase in our cash Cogs per metric ton that is in line with our prior cost guidance for 2023.
We also continue to expect that the first quarter cash Cogs represents the high watermark for our cost in 2023.
As such looking ahead to the balance of the year, we project, our cash costs per metric ton to improve slightly compared to the first quarter.
As a result of input costs remaining elevated in 2023 as well as the impacts of <unk> fixed cost leverage based on our low utilization rate.
We remain focused on cost management.
For example, our procurement and technology teams continue to evaluate the sources of raw materials. We use are working to qualify new suppliers and look to drive costs out of the business.
Additionally, our operating teams are assessing ways of reducing scrap and waste in the production process as well as identifying opportunities to reduce usage levels, a key variable cost elements.
Furthermore, we continue to expect market pricing decline in the medium to long term.
For certain key elements of our cost structure, including energy and decant oil.
For these reasons and with an anticipated increase in our capacity utilization and sales volume is expected to return to more normalized levels for the full year of 2024, we are optimistic that our cost per metric ton will improve significantly as we move beyond the current year.
Turning to cash flow.
In the first quarter, we generated $25 million of cash from operations and $3 million of adjusted free cash flow with both measures decreasing compared to the first quarter of 2022, reflecting lower net income.
The lower net income was partially offset by an increase in cash provided by networks. The net change in working capital as we continue to closely manage our working capital levels.
Moving to the next slide.
Our gross debt to adjusted EBITDA ratio was two four times as of March 31, compared to one seven times at the end of 2022.
On a net debt basis, we entered ended the quarter at a ratio of two one times.
As of March 31, our total liquidity was approximately $462 million consisting.
Consisting of $135 million of cash and $327 million available under our revolving credit facility.
This liquidity level was consistent with where we ended 2022.
Our history has demonstrated our commitment to executing our prudent and disciplined long term capital allocation strategy.
For 2023, this entails a focus on maintaining sufficient liquidity as we recover from the impact of the Monterey suspension, while making targeted investments such as the restart of our St Marys operations.
For the full year, we continue to expect our capital expenditures will be in the range of $55 million to $60 million, including investments supporting growth.
With our focus on managing costs capital expenditures and working capital levels. We continue to expect to be free cash flow positive for 2023.
And we remain confident that we have ample liquidity between the cash on hand, and availability under our existing credit facility to navigate the current market conditions.
I'll now turn it back to Marcel for his perspective on the outlook.
Thank you Ted.
Let me reiterate that we remain confident in our ability to overcome near term headwinds.
Encouraged by the significant progress our teams have made over the last few months.
And we remain optimistic about the longer term outlook for our business.
So at this point, we are taking actions that we believe will ultimately position graph text benefits from sustainable industry tailwind and deliver shareholder value.
Typically we continue to expect that the lenses. These efforts to Decarbonize will drive a further shift to electric arc furnace steel, making some.
Importantly, medium to long term demand growth for graphite electrodes.
Alex and then a flat eas capacity additions by steel producers and estimate the production increases of ethics 16, EES plants could result in incremental annual graphite electrode demand outside of China of 200000 metric tons by 2030.
This compares to global graphite electrode demand outside of China in 2022 of approximately 680000 metric tons.
On a regional basis based on industry announcements this could translate into incremental graphite electrode demand of approximately 65000 metric tons in Europe , and 25000 metric tons in North America.
We also anticipate the bank for petroleum needle coke to accelerate driven by its use as a precursor material to produce synthetic graphite for the <unk> portion of lithium ion batteries for the rapidly growing electric vehicle market.
Based on estimates from the International Energy agency regarding projected growth in sales and battery pack sizes. This could result in global needle coke demand for using applications, increasing at a compound annual growth rate of 420, 20% through 2030.
Our sustainable competitive advantages are critical differentiator, <unk> and foundational to our ability to our electrodes customers' needs.
We are operating three of the highest capacity electrode manufacturing facilities in the world and yet a substantial order to collect declaration to petroleum needle coke through our seadrift production facility.
In addition, the actions I spoke of earlier will uniquely position <unk> to produce teams in three different facilities on two continents.
We also see long term value creation opportunities beyond our existing electrical business.
The SEC staff being the ways in which we can participate in the anticipated growth of the market and we see two potential added with <unk> Tec.
The first is by leveraging our assets and technical Knowhow in petroleum needle Coke production, given the expected demand growth.
Our participation could include either expansion of seafood.
Our construction of our Greenfield needle Coke facility potentially in partnership with a third party.
We are actively studying both options.
As it relates to the seadrift, we have piloted the use official needle coke produced at our facility for the purpose of creating lithium ion battery annual material with several third parties.
As a result, we are confident in our ability to produce needle coke that meet the quality standards and specifications needed to be a precursor materials with battery anodes.
The second potential opportunity is leveraging our graph utilization resources and knowledge to produce synthetic graphite materials were bad we animals.
Regardless of the source of the needle Coke rapid deflation is required to convert it to synthetic graphite.
And grass tech processes, some of the largest graphic <unk> resources and required expertise in the world.
While we have not made any firm commitments. We are excited about the post possibility in participating in some or all of the scenarios that I described and we look forward to sharing more SC Chien.
In closing.
<unk>.
As actively executing to the plan put in place to manage the current environment.
Further our long term thesis remains intact.
<unk> possesses an industry leading position in a distinct set of capabilities and competitive advantages at talented and dedicated team that is committed to providing value added services and solutions for our customers.
Lastly, as a result of our disciplined capital allocation strategy, we have a strong balance sheet and ample liquidity to navigate the near term.
For these reasons, we remain confident in our ability to deliver shareholder value.
That concludes our prepared remarks, we will now open the call for questions.
Thank you ladies and gentlemen, we will now begin the question and answer session should you have a question. Please press star followed by the one on your Touchtone phone.
You'll hear us retool them prompt acknowledging your request should you wish to decline from the polling process. Please press star followed by the team.
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One moment. Please for your first question.
The first question comes from Ron.
From RBC. Please go ahead.
Great. Thanks for taking my question so.
I guess first off.
Just on the outlook for this year, then so you've moderated the volume picture just to touch because of the.
Backdrop macro and demand wise.
What what I guess, what changes have you seen specifically is it kind of weakening and continued weakening in Europe , maybe some moderation in Asia, as well or maybe a slower than expected recovery there.
What are you seeing specifically that led you to moderate the volume outlook I guess first off.
Well. Thank you for your question.
I think there is.
<unk> drove the slight moderation across all regions and I think the primary driver continues to be the elevated levels of inventories I would point to a specific region or or or really any reason beyond that I think thats, probably all while we can share.
The relatively the acute utilization of steel Nielsen in the recent months simply led to higher inventory levels I think that that is the key driver.
Okay and then.
Similarly, then from a price standpoint, what are you seeing I guess in electrode markets.
Obviously you've had.
Last year, you saw some improvement on that spot price to the $6000 per ton range.
How do you think you know electrode prices will evolve as you move through 'twenty three.
And then I guess I would have a similar question on needle Coke.
Is there downward pressure just given the soft volume background backdrop.
I'll talk to electro pricing is that I'm going to hand, it over to the chair before for needle Coke So as Jeremy pointed out so far as the second quarter of the two we expect non LTA pricing declined slightly from first quarter levels, reflecting the salt softness in the commercial environment.
We continue to expect pricing headwinds for the balance of the year given the weak demand.
Obviously I understand the desire for more clarity on pricing going further into 2023 and beyond.
But the reality is that we actually have quite limited visibility on pricing further out and as you all know pricing levels. In this market can move very quickly. In fact, you may remember that we saw this just over a year ago and our non LTA pricing increased by about 20% from Q4 'twenty one.
Yes.
The following quarter Q1 in 2022.
The recognized that these can change quickly which is why our guidance is typically focused on the upcoming quarter, we already have more visibility.
With all that said, though we remain positive about the fundamentals of our business for the reasons, we have indicated which we expect to be supportive of both volume and pricing.
And as you know in these talks about that from previous calls as well historically there has been the spread between needle coke pricing and electro pricing averaged about 38% to $3900 per metric ton and do you expect this correlation to <unk> over the longer term.
And so picking up those very similar themes on and on.
<unk> seen similar cyclicality or volatility in the needle coke pricing, what we've been seeing here recently is that super premium.
Needle Coke, we've been seeing pricing somewhere right around $2000 a ton.
The more normal premium a little bit below that and so that's that's kind of what we're seeing right now.
We look at needle Coke pricing, it's been highly volatile as high as $3000.
Within the last 12 months.
As low as below $500 12 months prior to that so.
I think that is a highly volatile reflecting the market conditions at the time and as we said we've seen some softness in the electrode market and the growth that's coming from the EV market Hasnt fully offset that.
Okay. Thanks for that and then just to sum all that up and so EBITDA for this year I would imagine is biased downwards.
Versus kind of the prior range of two to $2 50.
Is that a fair statement.
Yes.
So I think given them ourselves commentary.
The pricing side and Jeremy as reference points on the needle coke side as well as the cost guidance I think we've given you.
A few data points that will help in the modeling certainly.
I think when you put that and you should have a pretty good picture of what otherwise we would look.
Our EBIT projections for the year.
Okay, and just lastly.
I appreciated the comments on the opportunities that youre seeing on the EV battery side.
Is there a timeline that you could share as far as maybe some.
Commercialization and when we can expect to see some kind of contribution earnings contribution from any of your endeavors there.
What are some of the mileposts that has to be completed to get there.
Yes is there any kind of timeline on when we can expect.
Some of that to start flowing through.
I appreciate the question.
As I have noted we have not yet made any firm commitments.
So.
We continue to study this space I think he has developed a much better understanding of the opportunities and how we might participate and I felt it was important to share with you.
Our current thinking of how this might evolve and how we might participate but we have not made any firm commitments and therefore I came up with any dates for milestones out there at this point, but we'll be more than happy to share. This as soon as we can.
Thanks, a lot.
Thanks Ryan.
Thank you. The next question comes from Alex Hacking of Citi. Please go ahead.
Okay.
Yes, good morning, and thanks for the call I guess first question just on St Marys.
What kind of production levels are you hoping to.
To achieve there.
Yes, I think so.
When we came into the year.
Our intent was to do the full restart St Marys really to.
Derisk arpin supply chain and that's the primary objective as we go into it and that's how we're going to have progressed with this beyond having that.
That derisking complete.
Volumes that we put through there are really going to be based on market conditions.
And we will balance the production among our plants really to achieve the highest level of customer service at the lowest landed price.
Okay. Thanks.
And then I just wanted to clarify on the <unk>.
On the cost guidance for the year right, you said 5600 cash cost in the first quarter.
It sounded like that wasn't going to come down much in the rest of the year, but I'm a little confused by that given that you would obviously have a lot more fixed cost amortization right you've run through the high cost inventory.
So I was sort of expecting that that cash cost number would be not necessarily coming down dramatically, but coming down in a relevant way for the rest of the year.
Yes, and Youre right. So 5600 for the first quarter, which again I think is the high watermark as we see it for the year.
I think we're still holding firm on the guidance, we provided in the first quarter, which we.
We guided to.
Range of 17% to 20% over 2020, twos cash costs, which averaged about $4300 a ton now, albeit in the first quarter performance, probably puts us towards the higher end of that range. So we will see some moderation as we go through the back half of the year, but the full year average will again still be right around the high end of the range that we previously.
<unk>.
Okay. Thanks, and then.
Just on putting your graphite and some for them into the EV supply chain.
Is.
This is a really basic question, but does V. I, a raw kind of encourage use of domestic graphite.
Primary market, yes, very much so absolutely I think that that's really the driver for the opportunity for us at least in North America, there may be opportunities in other regions as well, but thats the clear driver Florida.
Potentially you were saying.
Seadrift needle coke and potentially using our <unk> assets in North America, a couple of them.
Okay makes sense, thanks, a lot.
Thanks.
Thank you. The next question comes Scott Jensen.
Of BMO. Please go ahead.
Hi, Thank you for taking my questions.
Looking to 2004, I think you mentioned you expect volumes to return to more normalized levels.
You talk a bit more about that what normalized maintenance is closer to what we saw in 2018 or 19 or how should we think about that.
Yes, I mean.
So certainly we.
We're at a fairly low point here in the first half and we see some improvement in the second quarter, we expect to see sequential improvement through Q3, and Q4, leading into next year and I think the steel demand statistics that Jeremy cited lead us to believe that.
We'll see a bit of a pickup as well heading into 2000 and for what exactly that looks like from an absolute demand number I'd point you back to 2021 were in the 167000 ton range for 2021.
And that was the year that we ran our assets not.
Not flat out or fully running but certainly at a pretty high utilization rate and.
I think with the restart of St Marys and some <unk>.
Some additional capacity that brings certainly we could get to that level or beyond.
Again, all dependent on market conditions, but certainly we won't have.
The impact of the St Marys or sorry, the Monterey shutdown.
That we're seeing here in the first quarter and the second quarter of this year.
<unk> as we head into 2020 for US overall 2024 should be a very good commercial year for us.
Okay, and I think you mentioned that you signed some new multiyear agreements can you talk a bit about that what does that mean.
These volume types of agreements because I don't think I saw any change in that L. P. H.
Yes so.
The guidance on the LTA front again it relates to those original LTA is that were signed back in 2017 and 18.
We have had some success here.
In the early part of this year, we have signed several new agreements.
Albeit on similar terms not exactly the same or arrangements that we had in the past, but but I think again they reflect.
Our customers.
Kind of commitments <unk> and graft X commitment to our customer base.
And their confidence in our ability to deliver these these electrodes and the high quality electrodes into the market.
So these customers obviously value the surety of supply that we can provide.
So those will hopefully continue to grow as part of our overall portfolio.
Yes, we're very happy with the progress, we're making on that front.
Maybe to further clarify if I may Tim so the LTA tables that are disclosing do not include any new multiyear sales agreements right. So those are purely original ones that are anchored in two five years ago.
And we will not include the new multiyear sales in those traditional LTA tables going forward given that the prices of cheese and the terms are different right. The pricing obviously closer to current market positions. So it will quite comparable so we don't think it would be correct to lump them in existing LTA tables.
Are you going to provide any information going forward on these new contracts.
Yes, it certainly is as they become a more material piece of our overall commercial portfolio will provide some necessary direction.
Okay. Thank you very much.
Thank you.
This concludes our question and answer session.
I'll hand, the call back over to Mr. Kessler for closing remarks.
Thank you operator I.
I would like to thank everyone on this call for your interest in grass Tech and we look forward to speaking with you in August .
Nice weekend.
Ladies and gentlemen, this does conclude the conference call for today, we thank you for your participation and ask that you. Please disconnect your lines.
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Okay.
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