Q1 2024 GrafTech International Ltd Earnings Call

Operator: Good morning, ladies and gentlemen, and welcome to the GrafTech First Quarter 2024 Earnings Conference Call and Webcast Conference Call. At this time, all lines are in listen-only mode.

Good morning, ladies and gentlemen, and welcome to the graph that first quarter 'twenty 'twenty four earnings conference call and webcast conference call.

At this time all lines are in listen only mode. Following the presentation, we will conduct a question and answer session.

Operator: Following 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 26, 2024. I would now like to turn the conference over to Mike Dillon. Please go ahead.

And at times during this call and you're required immediate assistance. Please press star zero for the operator. This call is being recorded on Friday April 26, 2024 hours.

I'd now like to turn the call it turn it over to Mike Dillon. Please go ahead.

Michael Dillon: Good morning, and welcome to GrafTech International's first quarter 2024 earnings call. On with me today are Tim Flanagan, Chief Executive Officer; Jeremy Halford, Chief Operating Officer; and Catherine Delgado, Interim Chief Financial Officer. Tim will begin with opening comments. Jeremy will then discuss safety, the commercial environment, sales, and operational matters. Catherine will review our quarterly results and other financial details, and Tim will close with comments on our outlook. We will then open the call to questions.

Michael Dillon: Thank you Constantine.

Michael Dillon: Good morning, and welcome to graphic Internationals first quarter 2024 earnings call.

Michael Dillon: With me today are Tim Flanagan, Chief Executive Officer, Jeremy Hallford, Chief operating Officer, and Katherine Delgado interim Chief Financial Officer.

Timothy K. Flanagan: Tim will begin with opening comments, Jeremy will then discuss safety the commercial environment sales in operational matters, Catherine will review, our quarterly results and other financial details and Jim will close with comments on our outlook. We will then open the call to questions.

Michael Dillon: As you are likely aware, GrafTech is currently involved in a proxy contest related to its upcoming annual meeting. The purpose of today's call is to discuss our earnings, outlook, and other business updates. As such, we will not be commenting on nor taking questions on the proxy contest during this call. If stockholders have questions about the proxy contest that they would like to discuss with management, please reach out to me after this call. Turning to the next slide.

Timothy K. Flanagan: As you are likely aware graphic is currently involved in a proxy contest related to its upcoming annual meeting. The purpose of today's call is to discuss our earnings outlook and other business updates as such we will not be commenting on nor taking questions on the proxy contest during this call.

Timothy K. Flanagan: Stockholders have questions on the proxy contest you would like to discuss with management. Please reach out to me after this call.

Timothy K. Flanagan: Turning to the next slide.

Michael Dillon: As a reminder, some of the matters discussed on this call may include forward-looking statements regarding, among other things, performance, trends, and strategies. Such 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. You can find these slides in the Investor Relations section of our website, www.graftech.com. A replay of the call will also be available on our website. I'll now turn the call over to Tim.

Timothy K. Flanagan: As a reminder, some of the matters discussed on this call may include forward looking statements regarding among other things performance trends and strategies.

Timothy K. Flanagan: These statements are based on current expectations and are subject to risks and uncertainties.

Timothy K. Flanagan: Factors that could cause actual results to differ materially from those indicated by forward looking statements are shown here.

Timothy K. Flanagan: 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 Dot graph Tech dotcom.

Timothy K. Flanagan: A replay of the call will also be available on our website I'll now turn the call over to Tim.

Timothy K. Flanagan: Good morning, everyone, and thank you for joining this morning's call. In the first quarter, GrafTech delivered on our outlook and on the initiative discussed on our last earnings call. That said, we're not satisfied, nor will we ever be satisfied with breakeven EBITDA performance and negative free cash flow. This is a pivotal time for GrafTech with many challenges still in front of us. Yet we are up to the challenge and remain excited about the path we are on and the opportunities that lie ahead.

Timothy K. Flanagan: Good morning, everyone and thank you for joining this morning's call.

Timothy K. Flanagan: In the first quarter graph tech delivered on our outlook and on the initiatives discussed on our last earnings call.

Timothy K. Flanagan: That said, we're not satisfied nor will we ever be satisfied with breakeven EBITDA performance and negative free cash flow.

Timothy K. Flanagan: This is a pivotal time for <unk> with many challenges still in front of us.

Timothy K. Flanagan: Yes, we are up to the challenge and remain excited about the path, we're on and the opportunities that lie ahead.

Timothy K. Flanagan: We are confident that GrafTech can return to the position of generating great value for its shareholders. And on a personal note, I'm honored and excited to have the opportunity to lead the company and its talented team. As I move into this role on a permanent basis, let me highlight three of the key reasons I'm optimistic about the future of GrafTech. First,

Timothy K. Flanagan: We are confident that grass tech can return to the position of generating great value for its shareholders.

Speaker Change: And on a personal note I'm honored and excited to have the opportunity to lead the company and the talented team but.

Speaker Change: As I move into this role on a permanent basis, let me highlight three of the key reasons I'm optimistic about the future of <unk>.

Timothy K. Flanagan: We are confident about our ability to meet the needs of our customers now and into the future. We continue to proactively engage with our customers, reinforcing the importance of our relationships with them and the shared view that this is a mutual partnership. In addition, we are investing in our customer value proposition to further differentiate GrafTech from our competitors. Our initiative to expand our product offerings by adding 800 millimeter supersized electrodes to our portfolio is proceeding well. We are on track for the initial trials to occur in the third quarter of this year.

Speaker Change: We are confident about our ability to meet the needs of our customers now and into the future.

Speaker Change: We continue to proactively engage with their customers reinforcing the importance of our relationships with them and a shared view that this is a mutual partnership.

Speaker Change: In addition, we are investing in our customer value proposition to further differentiate <unk> from our competitors.

Speaker Change: Our initiative to expand our product offerings by adding 800 millimeter supersized electrodes to our portfolio is proceeding well.

Speaker Change: We are on track for initial trials to occurred in the third quarter of this year.

Timothy K. Flanagan: In addition, we are expanding the breadth of our architect system, building upon our best-in-class technical service capability. And with the majority of our original long-term agreements coming to an end, we are broadening our range of contract terms, which can be tailored to meet the needs of our customers. Lastly, on the commercial front, as it relates to LTAs, we are pleased to have received the final award in a longstanding and the largest of our LTA arbitrations. In March, the sole arbitrator ruled in GrafTech's favor.

Speaker Change: In addition, we are expanding the breadth of our architect system building upon our best in class Technical service capabilities.

Speaker Change: And with the majority of our original long term agreements coming to an end we are broadening our range of contract terms, which can be tailored to meet the needs of our customers.

Speaker Change: Lastly on the commercial front as it relates to L. T. A's. We are pleased to have recently, we are pleased to have received the final award and a long standing and our largest of our LTA arbitrations.

Speaker Change: March the sole arbitrator ruled in <unk> favor.

Timothy K. Flanagan: Importantly, as we turn the page and move forward, we are focused on strengthening relationships with existing customers while also fostering new ones with prospective customers. Secondly, we have taken the right actions to improve our cost structure, and we are successfully executing these plans. We are safely and thoughtfully winding down the production activities at St. Mary's and are on track to conclude the work by the end of the second quarter.

Importantly, as we turn the page and move forward, we are focused on strengthening relationships with existing customers, while also fostering new ones with prospective customers.

Speaker Change: Secondly.

Speaker Change: We have taken the right actions to improve our cost structure and we are successfully executing these plans were.

Speaker Change: We are safely and thoughtfully winding down the production activities at St. Marys and are on track to conclude the work by the end of the second quarter.

Timothy K. Flanagan: In addition, we have completed the activities related to the reduction in our overhead structure. And while actions that impact employees are never easy, these are the right steps for the long-term health of the company and for the collective benefit of our stakeholders. The steps we are taking to manage working capital levels are evident in the further reduction of inventory during the first quarter.

Speaker Change: In addition, we have completed the activities related to the reduction in our overhead structure.

And while actions that impact employees are never easy. These are the right steps for the long term health of the company and for the collective benefit of our stakeholders.

The steps we are taking to manage working capital levels are evident in the further reduction of inventory during the first quarter.

Timothy K. Flanagan: Overall, we are on track to achieve the stated benefits from these initiatives, including the anticipated $25 million of annualized cost savings, comprised of a $15 million reduction in our fixed manufacturing costs and $10 million in lower administrative costs. Third, with our cost savings and optimization initiatives having been designed to preserve our ability to capitalize on long-term industry tailwinds, to pursue growth opportunities. I already spoke about some of the actions we are taking to reinforce customer confidence in our graphite electrode business.

Speaker Change: Overall, we are on track to achieve the stated benefits from these initiatives, including the anticipated $25 million of annualized cost savings comprised of $15 million reduction in our fixed manufacturing costs and.

Speaker Change: And $10 million and lower administrative costs.

Speaker Change: Third.

With our cost savings and optimization initiatives, having been designed to preserve our ability to capitalize on long term industry tailwind.

Speaker Change: Simply pursuing growth opportunities.

Speaker Change: I already spoke to some of the actions we are taking to reinforce customer confidence in our graphite electrode business.

Timothy K. Flanagan: As a result, we believe we are well positioned to benefit as the global steel market inevitablyrebounds. In the longer term, as decarbonization efforts drive a further shift to electric arc furnace steelmaking, this will be supportive of increased graphite electrode demand, and we are poised to capitalize on the anticipated growth. Beyond graphite electrodes, we remain proactive in pursuing opportunities in the battery anode space. We continue to engage with a number of third parties on initiatives that would leverage GrafTech's unique capabilities related to both needle coke and graphitization. Against this backdrop, we have not lost sight of where I started my comments.

Speaker Change: As a result, we believe we are well positioned to benefit as the global steel market inevitably rebounds.

Speaker Change: Longer term is de carbonization efforts further.

Speaker Change: Cause decarbonization efforts drive a further shift to electric arc furnace steelmaking. This will be supportive of increased graphite electrode demand and we are poised to capitalize on the anticipated growth.

Speaker Change: Beyond graphite electrodes, we remain proactive in pursuing opportunities in the battery anode space.

Speaker Change: We continue to engage with a number of third parties on initiatives, which would leverage <unk> unique capabilities related to both needle coke Congrats <unk>.

Speaker Change: Against this backdrop, we have not lost sight of where I started my comments, we're still facing many challenges as the industry remains in a cyclical downturn.

Timothy K. Flanagan: We are still facing many challenges as the industry remains in a cyclical downturn. While there is much work to be done, we are confident in emerging from this period as a stronger GrafTech. I will now turn it over to Jeremy to provide more color on the current state of the industry and our commercial performance.

Speaker Change: While there is much work to be done we're confident in the emerging from this period as a stronger graph tech.

Speaker Change: Let me now turn it over to Jeremy to provide more color on the current state of the industry and our commercial performance.

Jeremy S. Halford: Thank you, Tim, and good morning, everyone. Before I provide an industry update, I'll start with a brief comment on our safety performance, which is a core value at GrafTech. We are pleased to have ongoing momentum with a first quarter recordable incident rate that showed further improvement over our solid performance in 2023. And I would like to commend all of our team members for their efforts. While encouraged by this performance, we will not be satisfied until we achieve our ultimate goal of zero injuries.

Jeremy S. Halford: Thank you, Tim and good morning, everyone.

Jeremy S. Halford: Before I provide an industry update I'll start with a brief comment on our safety performance, which is a core value at grass Tech.

Jeremy S. Halford: We are pleased to have ongoing momentum with the first quarter recordable incident rate that showed further improvement over our solid performance in 2023.

Jeremy S. Halford: And I would like to commend all of our team members for their efforts.

Jeremy S. Halford: While encouraged by this performance, we will not be satisfied until we achieve our ultimate goal of zero injuries.

Jeremy S. Halford: Let me now turn to the next slide to discuss the commercial environment. As you know, we operate in a cyclical industry and currently find ourselves in a challenging part of the cycle. The macroenvironment continues to be impacted by economic uncertainty and geopolitical conflict, which has contributed to the constrained global steel industry. Looking at the numbers.

Jeremy S. Halford: Let me now turn to the next slide to discuss the commercial environment.

Jeremy S. Halford: Okay.

Jeremy S. Halford: As you know we operate in a cyclical industry and currently find ourselves in a challenging part of the cycle.

Jeremy S. Halford: The macro environment continues to be impacted by economic uncertainty and geopolitical conflict, which has contributed to the constrained global steel industry.

Looking at the numbers using.

Jeremy S. Halford: Data published by the World Steel Association earlier this week shows that on a global basis, steel production outside of China was approximately 213 million tons in the first quarter of 2024. This represents a nearly 4% year-over-year increase, with approximately three quarters of the growth attributable to Turkey and India.

Jeremy S. Halford: And using data published by the World Steel Association earlier this week.

Jeremy S. Halford: On a global basis steel production outside of China was approximately 213 million tons in the first quarter of 2024.

Jeremy S. Halford: This represents a nearly 4% year over year increase was approximately three quarters of the growth attributable to Turkey and India.

Jeremy S. Halford: As it relates to Turkey, with the first quarter 2023 production having been significantly impacted by the earthquake that occurred in February of last year, this year over year growth represents a recovery to historic first quarter norms. Commensurate with the global increase in steel production, the global steel capacity utilization rate outside of China ticked up slightly to 68 percent. Looking at some of our key commercial regions,

Jeremy S. Halford: As it relates to Turkey with the first quarter 2023 production, having been significantly impacted by the earthquake that occurred in February of last year. This year over year growth represents a recovery to historic first quarter norms.

Commensurate with the global increase in steel production, the global steel capacity utilization rate outside of China ticked up slightly to 68%.

Jeremy S. Halford: Looking at some of our key commercial regions.

Jeremy S. Halford: For North America, steel production was down 2% in the first quarter, on a year-over-year basis, reflecting a slight reversal of recent trends in what has been a relatively stable steel market. Steel output in the EU declined 1% as the market remains relatively stagnant, reflecting a weak construction sector and high interest rates that continue to weigh on demand. In addition, steel output in the EU remains well below historic production and utilization rates for that region.

Jeremy S. Halford: For North America steel production was down 2% in the first quarter on a year over year basis, reflecting a slight reversal of recent trends in what has been a relatively stable steel market.

Jeremy S. Halford: Steel output in the EU declined 1% as the market remains relatively stagnant, reflecting a weak construction sector and high interest rates that continue to weigh on demand.

Jeremy S. Halford: Further steel output in the EU remains well below historic production and utilization rates for that region.

Jeremy S. Halford: These dynamics within the global steel industry have, in turn, resulted in persistent challenges in the commercial environment for graphite electrodes. Specifically, industry-wide demand for graphite electrodes has remained weak, with challenging pricing dynamics persisting in most regions. To expand further, the graphite electrode industry continues to suffer from low-capacity utilization. While our competitors in the graphite electrode industry have also acknowledged near-term industry-wide headwinds, we were the first, and thus far, only industry participant to announce definitive actions to reduce capacity.

Yeah.

Jeremy S. Halford: These dynamics within the global steel industry has in turn resulted in persistent challenges in the commercial environment for graphite electrodes.

Jeremy S. Halford: Specifically industry wide demand for graphite electrodes has remained weak with challenging pricing dynamics persisting in most regions.

Jeremy S. Halford: To expand further the graphite electrode industry continues to suffer from low capacity utilization.

Jeremy S. Halford: While our competitors in the graphite electrode industry have also acknowledged near term industry wide headwinds, we were the first and thus far only industry participant to announce definitive actions to reduce capacity.

Jeremy S. Halford: Conversely, despite the weak demand environment, we continue to see a healthy level of electrodes exported from certain countries, including India and China, into non-tariff protected regions, such as the Middle East. These are typically lower priced electrodes, with prices declining further of late.

Jeremy S. Halford: Conversely, despite the weak demand environment, we continue to see a healthy level of electrodes export heard it from certain countries, including India and China into non tariff protected regions such as the middle East.

Jeremy S. Halford: These are typically lower priced electrodes with prices declining further away.

Jeremy S. Halford: As we have spoken about in the past, these export dynamics, we see a knock-on pricing effect in tariff-protected countries, such as within the EU, as Tier 1 competitors have continued to lower prices in these regions to support volume. We are also seeing this dynamic play out in the U.S., with prices softening of late, all of which represent challenges we must manage in the near term. With that background, let's turn to the next slide for more details on our results.

Jeremy S. Halford: As we have spoken to in the past these export dynamics, we see a knock on pricing effect in tariff protected countries such as within the EU as tier one competitors have continued to lower prices in these regions to support volume.

Jeremy S. Halford: We are also seeing this dynamic play out in the U S with prices softening of weight all of which represent challenges we must manage in the near term.

Jeremy S. Halford: With that background, let's turn to the next slide for more details on our results.

Jeremy S. Halford: Yeah.

Jeremy S. Halford: Our production volume in the first quarter of 2024 was 26,000 metric tons. Our sales volume was 24,000 metric tons, a year-over-year increase of 43% and in line with our stated outlook for the first quarter. As a reminder, sales volume for the first quarter of 2023 was significantly impacted by the temporary suspension of our operations in Monterrey, Mexico that occurred in late 2022. Shipments for the first quarter of 2024 included 20,000 metric tons of non-LTA sales at a weighted average realized price of approximately $4,400 per metric ton, and approximately 4,000 metric tons sold under our LTAs at a weighted average realized price of $8,700 per metric ton.

Jeremy S. Halford: Our production volume in the first quarter of 2024 was 26000 metric tons.

Jeremy S. Halford: Our sales volume was 24000 metric tons, a year over year increase of 43% and in line with our stated outlook for the first quarter.

Jeremy S. Halford: As a reminder, sales volume for the first quarter of 2023 was significantly impacted by the temporary suspension of our operations in Monterrey, Mexico that occurred in late 2022.

Jeremy S. Halford: Shipments for the first quarter of 2024 included 20000 metric tons of non LTA sales at a weighted average realized price of approximately $4400 per metric ton.

Jeremy S. Halford: Approximately 4000 metric tons sold under our L. T A's at a weighted average realized price of $700 per metric ton.

Jeremy S. Halford: Expanding on our weighted average price for non-LTA sales, this represented a 27% year-over-year decline and a sequential decline from the fourth quarter of 2023 of approximately 8%, reflecting the pricing dynamics I referenced earlier. Net sales in the first quarter of 2024 decreased 2% compared to the first quarter of 2023. The decline in pricing, along with the ongoing shift in the mix of our business from LTA to non-LTA volume, led to the slight year-over-year decline in net sales, as these factors were mostly offset by higher sales volume.

Jeremy S. Halford: Expanding on our weighted average price for non LTA sales. This represented a 27% year over year decline Sandy sequential decline from the fourth quarter of 2023 of approximately 8%, reflecting the pricing dynamics I referenced earlier.

Jeremy S. Halford: Net sales in the first quarter of 2024 decreased 2% compared to the first quarter of 2023.

Jeremy S. Halford: The decline in pricing along with the ongoing shift in the mix of our business from LTA to non LTA volume led to the slight year over year decline in net sales as these factors were mostly offset by the higher sales volume.

Jeremy S. Halford: Okay.

Jeremy S. Halford: Looking forward, for the reasons already mentioned, we expect that industry-wide demand for graphite electrodes in the near term will remain weak, and pricing pressures will persist in most regions. In response, we remain selective in the commercial opportunities we choose to pursue with a focus on competing responsibly. We expect our sales volume in the second quarter of 2024 to be broadly in line with the sales volume for the first quarter. Furthermore, we continue to expect a modest year-over-year improvement in sales volume for the full year. Let me now turn it over to Catherine to cover the rest of our financial details. Thank you, Jeremy.

Jeremy S. Halford: Looking forward for the reasons already mentioned, we expect that industry wide demand for graphite electrodes in the near term will remain weak and pricing pressures will persist in most regions.

In response, we remain selective in the commercial opportunities, we're choosing to pursue with a focus on competing responsibly.

Jeremy S. Halford: We expect our sales volume in the second quarter of 2024 to be broadly in line with the sales volume for the first quarter.

Jeremy S. Halford: Further we continue to expect a modest year over year improvement in sales volume for the full year.

Let me now turn it over to Catherine to cover the rest of our financial details. Thank you.

Catherine Hedoux: Thank you, Jeremy, and good morning. For the first quarter of 2024, we had a net loss of $31 million, or 12 cents per share. Adjusted EBITDA was essentially break even in the first quarter compared to adjusted EBITDA of $15 million in the first quarter of 2023. The decline reflected lower weighted average pricing and the continued shift in the mix of our business toward non-LTA volumes. These factors were, however, partially offset by year-over-year reductions in cash costs on a per metric ton basis, as well as with the benefit of higher sales volume. As Jeremy previously provided color on most of these drivers, let me expand on the topic of cost.

Catherine: You Jeremy and good morning.

Catherine: The first quarter of 'twenty 'twenty, four we had a net loss of $31 million or 12 cents per share.

Catherine: Adjusted EBITDA was essentially breakeven in the first quarter compared to adjusted EBITDA of $15 million in the first quarter of 2023.

Catherine: The decline reflected lower weighted average pricing and the continued shift in the mix of our business toward non LTE volume.

Catherine: These factors were however, partially offset by year over year reduction in cash costs on a per metric ton basis, as well as with the benefit of higher sales volume.

Catherine: As Jeremy previously provided color on most of these drivers let me expand on the topic of cost.

Catherine Hedoux: As shown in the reconciliation provided in our earnings call materials posted on our website, our first quarter 2020 cash cogs per metric ton declined 18% on a year-over-year basis, and on a sequential basis, it declined 16% from the fourth quarter of 2023. Contributing to the sequential decline was a $5 million benefit, or approximately $200 per metric ton, reflecting the portion of the lower-cost market inventory write-down recorded in the fourth quarter of 2023, which is now related to the inventory sold in the first quarter of this year. Beyond this, the majority of this sequential cost improvement reflected two key drivers. Let me provide some color on each one.

Catherine: As shown in the reconciliation provided in our earnings call materials posted on our website, our first quarter 2024 cash Cogs per metric tonne declined 18% on a year over year basis.

Catherine: On a sequential basis it declined 16% from the fourth quarter of 2023.

Catherine: Contributing to the sequential decline was at $5 million benefit or proximity to 100 dollar permit trick ton, reflecting the portion of the lower of cost or market inventory write down recorded in the fourth quarter of 2023 which is now related to the inventory sold in.

Catherine: In the first quarter of this year.

Catherine: Beyond this the majority of the sequential cost improvement reflected two key drivers let.

Let me provide some color on each one.

Catherine Hedoux: First, as we mentioned in our fourth quarter call, we are addressing all elements of our cost structure. Our efforts related to variable costs are yielding benefits this quarter. Specifically, our technical team continues to work on engineering costs out of our manufacturing processes without compromising quality or performance. Additionally, we are aggressively working with our existing supplier base and qualifying new suppliers as we enhance our procurement practices related to certain key input costs. We are pleased to see these benefits beginning to flow through our variable costs.

Catherine: First as we mentioned in our fourth quarter call that we are addressing all elements of our cost structure.

Sure it's related to variable costs are yielding benefits this quarter, specifically our technical team continues to work on engineering cost out of our manufacturing processes without compromising quality or performance.

Additionally, we are aggressively working with our existing supplier base and qualifying new suppliers as we enhance our procurement practices related to certain key input costs.

Catherine: We are pleased to see these benefits beginning to flow through our variable costs.

Catherine: Second.

Catherine Hedoux: We had a quarter of a quarter reduction in the level of fixed costs being recognized on an accelerated basis due to low production levels. As a reminder, these are costs recognized in the current period that would have been inventoried if we were operating at normal production levels. In the first quarter, as utilization rates at both our graphite electrode and seed drip facilities increased sequentially, we recognized approximately $6 million of such costs compared to approximately $10 million in the fourth quarter of 2023.

Catherine: We had a quarter over quarter reduction in the level of fixed costs being recognized on an accelerated basis due to low production levels. As a reminder, these are costs recognized in the current period that would have been inventory. If we were operating at normal production levels.

Catherine: In the first quarter.

Catherine: Italy's Asian rates at both our graphite electrode and Cedric facilities increased sequentially.

We recognized approximately $6 million of such costs compared to approximately 10 million in the fourth quarter of 2023.

Catherine: Okay.

Catherine Hedoux: Then, while not materially benefiting the first quarter cash cost performance, our initiatives to reduce fixed costs are on track to generate cost savings as we proceed through the year. Reflecting the progress we're making on our cost structure as it relates to the full year, we now anticipate a mid-teen percentage point decline in our cash cogs per metric ton for 2024 compared to the full year cash cogs per metric ton for 2023

Catherine: Then why not materially benefiting the first quarter cash cost performance, our initiatives to reduce fixed costs, they're on track to generate cost savings as we proceed through the year.

Catherine: Reflecting the progress we're making on our cost structure as it relates to the full year. We now anticipate a neat a mid teen percentage point decline in our cash Cogs per metric ton for 2024 compared to the full year cash Cogs per metric ton for 2023.

Catherine Hedoux: This compares to our original guidance provided on the fourth quarter call of a year-over-year low teen percentage point decline. Turning now to cash flow. For the first quarter of 2024, cash from operating activities was essentially break-even as the net loss was offset by, among other factors, a further reduction in working capital, most notably in inventory, reflecting our first quarter capital expenditures adjusted free cash flow of negative $11 million. We continue to anticipate our full year 2024 capital expenditures will be in the range of $35 to $40 million. Now, moving to the next slide.

Catherine: This compares to our original guidance provided on the fourth quarter call, although year over year low teen percentage points decline.

Catherine: Okay.

Catherine: Turning now to cash flow for the first quarter of 2024 cash from operating activities was essentially breakeven as the net loss was offset by among other factors a further reduction in working capital most notably in the Tory.

Catherine: Okay.

Catherine: Reflecting our first quarter, our first quarter capital expenditures adjusted free cash flow was negative $11 million. We continue to anticipate a full year of 2020 for capital expenditures will be in the range of $35 million to $40 million.

Speaker Change: Now moving to the next slide.

Catherine Hedoux: We ended the first quarter with a liquidity position of $275 million, consisting of $165 million of cash and $110 million available under our revolving credit facility. This reflects the financial covenants that limit borrowing availability under a revolver in certain circumstances. More importantly, we do not anticipate the need to borrow against the revolver in 2024. And furthermore, we know that we have no debt maturities until the end of 2028. Let me turn the call back over to Tim for some final comments on our outlook. Thanks.

Speaker Change: We ended the first quarter with a liquidity position of $275 million consisting of $165 million of cash.

Speaker Change: And $110 million available under our revolving credit facility.

Speaker Change: This reflects the financial covenants that limit borrowing availability under our revolver in certain circumstances.

Speaker Change: More importantly, we do not anticipate the need to borrow against the revolver in 2024 and further we know that we have no debt maturities until the end of 2028.

Speaker Change: Let me turn the call back over to Tim for some final comments on our outlook.

Timothy K. Flanagan: Thanks Catherine.

Timothy K. Flanagan: Let me reiterate my earlier comment that there are many reasons for optimism about the long-term prospects for our company. However, as we look to the near term, we recognize that a significant amount of global economic uncertainty remains as an overhead on steel demand and, therefore, graphite electrode demand. While it's prudent to remain cautious on near-term industry trends, we can't lose sight of the fact that all cyclical downturns eventually come to an end.

Timothy K. Flanagan: Let me reiterate my earlier comment that there are many reasons for optimism about the long term prospects for our company.

Timothy K. Flanagan: As we look to the near term, we recognize that a significant amount of global economic uncertainty remains as an overhead on steel demand.

Timothy K. Flanagan: And therefore graphite electrode demand.

While it is prudent to remain cautious on near term industry trends, we can't lose sight of the fact that all cyclical downturns eventually come to an end.

Timothy K. Flanagan: Earlier this month, the World Steel Association published its updated short-term forecast on global steel demand. Their forecast calls for low to mid-single-digit percentage increases in steel demand in both 2024 and 2025 for nearly all of our key regions, including the EU, the U.S., and the Middle East. As I mentioned earlier, we are well positioned to benefit as the global steel market recovers. We believe we provide a compelling value proposition to our customers, and we can compete on more than just price.

Timothy K. Flanagan: Earlier this month the World Steel Association published their updated short term forecast on global steel demand.

Timothy K. Flanagan: Their forecast calls for low to mid single digit percentage increases in steel demand in both 2024 and 2025 for nearly all of our key regions, including the EU the U S and middle East.

Timothy K. Flanagan: As I mentioned earlier, we are well positioned to benefit as the global steel market recovers.

Timothy K. Flanagan: Okay.

We believe we provide a compelling value proposition to our customers and we can compete on more than just price.

Timothy K. Flanagan: Our value proposition includes a strategically positioned manufacturing footprint that provides operational flexibility and reach to key steelmaking regions, being the only large-scale graphite electrode producer that is substantially vertically integrated into petroleum needle coke, and best in class customer technical services and solutions, and focusing on continually expanding our commercial and product offerings.

Our value proposition includes.

Timothy K. Flanagan: Our strategic strategically positioned manufacturing footprint that provides operational flexibility and reach to key steelmaking regions.

Timothy K. Flanagan: Being the only large scale graphite electrode producer that is substantially vertically integrated into petroleum needle coke.

Timothy K. Flanagan: Best in class customer technical services and solutions.

Timothy K. Flanagan: And our focus on continually expanding our commercial and product offerings.

Timothy K. Flanagan: Longer term, as I noted earlier, decarbonization efforts are driving a transition in steel, with electric arc furnaces continuing to increase their share of total steel production. The ongoing transition towards EAS dealmaking is expected to drive demand growth for graphite electrodes over the longer term. Overall, considering planned EAF capacity additions based on seal producer announcements, along with production increases at existing EAF plants, we estimate that this would translate to global graphite electrode demand outside of China growing at a 3-4% kegger over the next five years.

Timothy K. Flanagan: Longer term as I noted earlier <unk>.

Timothy K. Flanagan: Carbonization efforts are driving a transition in steel with electric arc furnace is continuing to increase share of total steel production.

Timothy K. Flanagan: The ongoing transition towards EAM steelmaking is expected to drive demand growth for graphite electrodes over the longer term.

Timothy K. Flanagan: Overall, considering plan D E F capacity additions based on steel producer announcements along with production increases at existing <unk> plants. We estimate that this would translate to global graphite electrode demand outside of China growing at a 3% to 4% CAGR over the next five years.

Timothy K. Flanagan: Since the strategic actions we are taking to reduce costs have been designed to preserve our ability to capitalize on long-term industry tailwinds, we view GrafTech as being well positioned to benefit from this trend. Further, anticipated demand growth for petroleum needle coke, the key raw material we use to produce graphite electrodes, will also present a tailwind for our business, given our substantial vertical integration. To expand on this point, needle coke demand is expected to accelerate driven by its use to produce synthetic graphite for the anode portion of lithium ion batteries used in the electric vehicle market. Growing demand for needle coke should result in elevated needle coke prices, and given the high historical correlation between petroleum needle coke prices and graphite electrode prices, this trend should translate to higher market prices for electrodes.

Timothy K. Flanagan: As the strategic actions, we are taking to reduce costs have been designed to preserve our ability to capitalize on long term industry tailwind.

Timothy K. Flanagan: We view <unk> as being well positioned to benefit from this trend.

Timothy K. Flanagan: Further anticipated demand growth for petroleum needle coke the key raw material used to produce graphite electrodes. We will also present, a tailwind for our business given our substantial vertical integration.

Timothy K. Flanagan: To expand on this point needle Coke demand is expected to accelerate driven by its used to produce synthetic graphite for the anode portion of lithium ion batteries used in electric vehicle market.

Timothy K. Flanagan: Growing demand for needle Coke should result in elevated needle coke pricing and given the high historical correlation between petroleum needle coke pricing and graphite electrode pricing this trend should translate to higher market pricing for electrodes.

Timothy K. Flanagan: Additionally, we continue to see potential long-term value creation opportunities by directly participating in the development of the Western supply chain for the EV battery market. With our needle coke and graphization capabilities, we possess key assets, resources, and know-how that uniquely position GrafTech to participate in this industry. We remain excited about the development of the supply chain and our associated prospects. In closing, we are working through the challenges we face, but we have many reasons for optimism as we look ahead.

Timothy K. Flanagan: Additionally, we continue to see potential long term value creation opportunities by directly participating in the development of western supply chain for the EV batteries, the EV battery market.

Timothy K. Flanagan: With our needle coke and grabbed position capabilities, we possess key assets resources and knowhow that uniquely position graphic grass tech to participate in this industry.

Timothy K. Flanagan: We remain excited about the development of the supply chain and our associated prospects.

Timothy K. Flanagan: In closing we are working through the challenges we face, but there are many reasons for optimism as we look ahead.

Timothy K. Flanagan: We continue to believe GrafTech will successfully manage through the near-term challenges and remain an industry-leading supplier of mission-critical products to the EAF industry. In the long term, we possess a distinct set of assets, capabilities, and competitive advantages to capitalize on growth opportunities. As we think about the company's key stakeholders, we are instilling a renewed focus on a customer-first mantra, as meeting the needs of our customers must be central to everything we do. At the same time, we must ensure the safety and professional growth of our more than 1,200 employees, our most valuable asset.

Timothy K. Flanagan: We continue to believe <unk> will successfully manage through the near term challenges and remain an industry, leading supplier of Michigan critical products to the a F industry.

Timothy K. Flanagan: Longer term, we possess a distinct set of assets capabilities and competitive advantages to capitalize on growth opportunities.

Timothy K. Flanagan: As we think about the company's key stakeholders, we are instilling a renewed focus on our customer first mantra.

Timothy K. Flanagan: Is meeting the needs of our customers must be central to everything we do.

Timothy K. Flanagan: At the same time, we must ensure the safety and professional growth of more than 200 employees, our most valuable asset.

Timothy K. Flanagan: We must act responsible.

Timothy K. Flanagan: Stewards of our local communities protecting our environment and investing in community programs.

Timothy K. Flanagan: We must act responsibly as stewards of our local communities, protecting our environment and investing in community programs. If we do right by our customers, our employees, and the communities in which we operate, we are confident we can deliver long-term value for our shareholders. This concludes our prepared remarks. We'll now open up the call to questions.

Timothy K. Flanagan: Do we do right by our customers our employees and the communities in which we operate we are confident we can deliver long term value for our shareholders.

Speaker Change: This concludes our prepared remarks, we'll now open up the call for questions.

Speaker Change: Yeah.

Speaker Change: Thank you ladies.

Speaker Change: Ladies and gentlemen, we will now begin the question and answer session should you have a question. Please press star followed by the number one on your Touchtone phone, you'll hear a prompt that <unk> had has been raised should you wish to decline from the polling process. Please press star followed by the number too.

Operator: 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 number one on your touchtone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star followed by the number 2. If you are using a speakerphone, please lift the handset before pressing any button.

Speaker Change: You are using a speaker phone please lift the handset before pressing any keys, one moment, while we queue up the questions for you.

Speaker Change: Your first question comes from the line of Curt Woodworth from UBS. Please go ahead.

Curtis Rogers Woodworth: I was wondering if you could help us understand maybe some of the relative profitability differences between what you're seeing your EU operations relative.

Operator: One moment while we queue up the questions for you. Your first question comes from the line of Kurt Woodworth from UBS. Please go ahead.

Curtis Rogers Woodworth: The facility in Mexico, I mean, our understanding is that pricing is significantly below.

Curtis Rogers Woodworth: I was wondering if you could help us understand maybe some of the relative profitability differences between what you've seen in your EU operations and the facility in Mexico. I mean, our understanding is that pricing is significantly below North America and Europe. And can you comment on whether there's any discussion around potentially taking more permanent capacity actions in Europe to accelerate fixed cost reduction and potentially baseload other facilities? And then, just with respect to, you know, pricing in Europe and incremental competition from China, has there been any further capacity rationalization you've seen in Europe? And have there been any discussions on potential further trade actions or things that Europe could do to try to safeguard the profitability of local suppliers in Europe?

Curtis Rogers Woodworth: North America.

Curtis Rogers Woodworth: In Europe and can you comment on if there's any discussion around potentially taking more permanent capacity actions in Europe to accelerate fixed cost reduction and potentially face.

Curtis Rogers Woodworth: Faithful at other facilities and then just with respect to pricing in Europe and incremental competition from China has there been any.

Curtis Rogers Woodworth: Any further capacity rationalization, you've seen in Europe and have there been any discussions on potential more trade actions or things that Europe could do to try to safeguard.

Curtis Rogers Woodworth: Profitability of local suppliers in Europe.

Speaker Change: Thanks Kurt.

Kurt: I appreciate that question and if I, if I Miss a piece of it.

Kurt: Let me now because there was a lot there.

Kurt: I think first and foremost, let's start with kind of the EU and the current state of the market there.

Timothy K. Flanagan: Thanks, Curt, and I appreciate that question. And if I miss a piece of it, please let me know because there was a lot there.

Kurt: As Jeremy noted right do you remain stagnant from an overall.

Timothy K. Flanagan: You know, I think first and foremost, let's start with the EU and the current state of the market there. As Jeremy noted, right, the EU remains stagnant from an overall steel demand perspective. I think we're down probably 15% from the high back in 2021.

Kurt: Steel demand I think we're down probably 15% from the high back in 2021, and while there is some anticipated demand growth here this year.

Kurt: Into 2025 based on the latest world steel projections, it's still a relatively muted environment that obviously has an impact on pricing in electric demand.

Kurt: As well.

Kurt: In terms.

Timothy K. Flanagan: And while there's some anticipated demand growth here this year and into 2025 based on the latest world steel projections, it's still a relatively muted environment that obviously has an impact on pricing and electrode demand as well. You know, in terms of capacity in Europe right now, you know, I'm not going to speak to anything that anybody else is doing. You know, back in Q1, we took the steps that we felt were the right steps to align our production capacity to how we see demand evolving over the short term, mid term, and longer term, and we'll continue to rationalize our production accordingly.

Kurt: Of capacity in Europe right now.

Speaker Change: I'm not going to speak to anything that anybody else is doing.

Speaker Change: In Q1, we took the steps that we felt were the right steps to align our production capacity to how we see demand evolving over the short term midterm and longer term and will continue to rationalize our.

Speaker Change: Production Accordingly.

Speaker Change: Back in fourth quarter conference call, we talked about the actions in St. Marys in particular, but then as it relates to the E. U we will be taking normalized summer outages.

Speaker Change: In Europe again to match our production with the demand forecast.

Speaker Change: As we think about our overall production network, we think about it globally right, we don't necessarily say, the EU versus monterey or or or.

Timothy K. Flanagan: Back on the fourth quarter conference call, we talked about the actions at St. Mary's in particular, but then as it relates to the EU, we will be taking normalized summer outages in Europe again to match our production with the demand forecast. You know, as we think about our overall production network, we think about it globally, right? We don't necessarily say the EU versus Monterey or vice versa. So right now, certainly there are markets that are more challenged than other markets from a pricing perspective, but we'll continue to remain focused on what we can control, which is, you know, the efforts on the cost front, as well as operating our plants as efficiently as we can in the interim, and then, you know, pricing down the road will take care of itself.

Speaker Change: Or vice versa. So right now certainly there are markets that are more challenged than other markets from a pricing perspective, but we will continue to remain focused on what we can control, which is the efforts on the cost front as.

Speaker Change: As well as operating our plants as efficiently as we can in the interim and then pricing down the road will take care of itself.

Speaker Change: Okay.

Speaker Change: Okay, and then as a follow up just on the cost guidance.

Speaker Change: For down mid teens. It seems it would seem to imply that you would be roughly roughly where you are this quarter and I know in <unk>. You also had a roughly $10 million benefit from byproduct credit can you just elaborate on how you see byproducts.

Timothy K. Flanagan: Okay. And then as a follow-up, just on the cost guidance, you know, for down to the mid-teens, it would seem to imply that you'd be roughly where you are this quarter. And I know in 1Q, you also had a roughly $10 million benefit from the byproduct credit. Can you just elaborate on how you see byproduct, you know, benefits this year? And then, in terms of the arbitration settlement, can you kind of quantify what the benefit to the business would be for that?

Speaker Change: Benefits this year and then in terms of the arbitration settlement and can you kind of quantify what the benefit to the business would be for that.

Speaker Change: Yeah. So so let me let me start with the cost and then we'll go to the arbitration.

Speaker Change: The cost side, you mentioned, the byproduct credit that actually gets backed out of our cash cogs per ton.

Speaker Change: So roughly $9 million, so that doesn't factor into the.

Timothy K. Flanagan: Yeah, so let me start with the cost and then we'll go to arbitration. On the cost side, you mentioned the byproduct credit that actually gets backed out of our cash fogs per ton. So you're roughly $9 million. So that doesn't factor into the cost numbers that we're otherwise putting out as we look. Catherine, anything you want to add on the cost side?

Speaker Change: The cost numbers that were otherwise putting out as we look so.

Speaker Change: So <unk>.

Speaker Change: Kathryn anything want to add on the cost side, yes. So just as I indicated we do expect now our estimate to say that we will have a cost decrease in the mid teen percentage point versus last year.

Catherine Hedoux: Yeah, so just as I indicated, our estimates say that we will have a cost decrease in the mid-team percentage point versus last year. And essentially, this is due in part to our overachievement on cost in the first quarter. And I talked about that overachievement in my prepared remarks.

Kathryn: And essentially this is due in part to our over achievement on cost in the first quarter and I talked to that over achievement in my prepared remarks, and we also continue to expect the benefit of the initiatives too.

Catherine Hedoux: We also continue to expect the benefit of the initiative to rationalize our fixed cost structure, as we indicated in our February earnings call. And so we expect that our costs will show the impact of the decline in fixed costs. We talked about the $15 million annualized benefit to our fixed costs, which will be fully implemented by the end of the second quarter. And then, with the modest improvement that we expect in our sales and production volume in 2024, that will also benefit our cash cost per metric ton. So this was to add a bit of color on the mid-teen percentage point decline expected on cash cogs for the full year as compared to last year.

Kathryn: Rationalized, our fixed cost structure as we indicated in our February earnings call and so we expect that our costs, which show the impact of the decline in fixed cost are.

Kathryn: We talked about the $15 million annualized benefit to our fixed cost, which fully implemented will be fully implemented by the end of the second quarter and then with the modest year over year improvement that we expect in our sales and production volume in 2024 that will also benefit our cash cogs per metric ton.

Kathryn: So this was to add a bit of color on the mid teen percentage point decline expected on cash Cogs for the full year as compared to last year.

Timothy K. Flanagan: And then with respect to the arbitration, right, as I noted in my prepared remarks that, you know, the final award was issued, all of the claims against GrafTech were dismissed, and we were awarded reimbursement of legal fees and expenses. We expect that to be about $9 million once that gets settled.

Kathryn: And then with respect to the arbitration rate as I noted in my prepared remarks that.

Kathryn: The final award was issued all of the claims against graph Tech were dismissed and we were awarded reimbursement of legal fees and expenses, we expect that to be about $9 million once that gets settled.

Timothy K. Flanagan: But I mean, I think arbitration is really a means of resolving a contractual dispute, and we've maintained commercial relationships through this process. And really, I think we're happy to have this behind us so that we can focus all of our efforts on the commercial relationship going forward. Great, thank you very much.

Kathryn: But I mean I think the important thing is an arbitration is really a means of resolving a contractual dispute.

Kathryn: And we've maintained commercial relationships through this process and.

Kathryn: And really I think we're happy to have this behind us. So that we can focus all of our efforts on the commercial relationship going forward.

Speaker Change: Great. Thank you very much.

Timothy K. Flanagan: Great. Thank you very much.

Speaker Change: Thanks.

Operator: Your next question comes from the line of Bill Peterson from J.P. Morgan. Please go ahead.

Speaker Change: Your next question comes from the line of Bill Peterson from Jpmorgan. Please go ahead.

William Chapman Peterson: Hi, thanks for taking the questions. Maybe piggybacking on the cost improvements. If we were just to even, I guess, flatline the cost improvements from the first quarter, it would seem to kind of indicate a high teens, maybe closer to 17% year-on-year cost decline. So I'm trying to understand, is that right? And I guess, are there, is this mid-teens?

Hi, Thanks for taking the questions maybe piggybacking on the cost improvements.

William Chapman Peterson: If we were just to even guess flatline.

William Chapman Peterson: <unk> in the first quarter it would seem to kind of indicate a high teens, maybe closer to 17% year on year cost declining. So I'm trying to understand is that right and I guess are there or is this mid teens is that kind of the way you think about it or.

Timothy K. Flanagan: Is that kind of the way you think about it? Or is there a further upside there? Just trying to get a better sense of how to think about the cost downs from here as we go? Go ahead.

Or is there further upside there.

Speaker Change: Just trying to get a better sense of how to think about the cost downs from here as we look ahead.

Timothy K. Flanagan: Yeah, Bill, thanks for the question. Certainly, we feel confident in the mid-team numbers that we're putting out there. There is some variability in our cost structure as we move through the year, as we think about the summer outages that I referenced earlier that we'll take in Europe, some of the pricing dynamics with our power contracts, they're not flat over the course of the year. So that's why I would say that the mid-teams is a good number given those considerations.

Speaker Change: Yes, Bill Thanks for the question.

Speaker Change: Certainly we feel confident in the mid teen number that we're putting out there.

Speaker Change: There is some variability of our cost structure as we move through the year as we think about the summer outages that I referenced earlier that will take in Europe.

Speaker Change: Some of the pricing dynamics with our power contracts Theyre not flat over the course of the year.

Speaker Change: So that's why I would say that the mid teens is a good number given those considerations yeah, I would add to that that the recognition of the lower cost of market write down in the fourth quarter of 2023.

Catherine Hedoux: Yeah, I will add to that the recognition of the lower cost of markets right down in the fourth quarter of 2023, as you heard earlier, benefited the first quarter cost of sales by about $5 million or $200 per metric ton. So we see a higher impact of that right down in the first half of the year than in the second half of the year.

Speaker Change: As you heard earlier benefited the first quarter cost of sales by about $5 million or 200, and $200 per metric ton and so we see a higher impact of that write down in the first half of the year than in the second half of the year.

Speaker Change: Okay.

William Chapman Peterson: Okay, yeah, thanks for that. Thanks for that color.

Speaker Change: Okay, yes, thanks for that thanks for that color, maybe kind of put it into the U S not asking for pricing per se, but.

William Chapman Peterson: Maybe kind of pivoting to the U.S., not asking for pricing per se, but I think you mentioned that the market's been, you know, you're seeing weakness there too. But if we think about the U.S. market, the utilization trends have been relatively better, maybe stable, maybe even positive bias, depending on how you look at it over the last, you know, few months. With some new capacity coming online too, that should help as well. But trying to understand how you can reconcile the weaker price environment, again, given the utilization trends are, have been relatively, you know, steadier with the U.S. market, at the benefit of capacity coming online. Yeah,

Speaker Change: I think he mentioned that the market's been.

Speaker Change: Are you seeing weakness there too, but if we think about the U S market the utilization trends have been relatively better maybe stable, maybe even upper bias depending on how you look at it over over the last few months.

Speaker Change: With some new capacity coming online to that should help as well, but trying to understand how to reconcile the weaker price environment again, given the utilization trends are have been relatively steady here with some.

Speaker Change: The added benefit of capacity coming online.

Speaker Change: Yeah, I would I would describe the U S market from a demand perspective, certainly is stable right you see it in the statistics.

Speaker Change: Both in terms of production and utilization rate.

Timothy K. Flanagan: Yeah, I would describe the U.S. market from a demand perspective certainly as stable, right? You see it in the statistics, both in terms of production and utilization rate. But the fact is, when you've got weakness in the other markets around the world, you know, everybody pushes toward the strongest market, which has historically been the U.S. And you're seeing increased competition in the U.S. now that maybe people at outlets in other parts of the world differently. So it's not certainly a weak demand environment by any means, but we are seeing more competition in the U.S. than we've historically seen Thanks.

Speaker Change: But the fact is when you've got a weakness in the other markets around the world.

Speaker Change: Body pushes towards.

Speaker Change: The strongest market, which has historically been the U S and you're seeing increased competition in the U S. Now that maybe people at outlets in other parts of the world.

Speaker Change: Differently. So its not certainly a weak demand environment by any means but we are seeing more competition in the U S than what we've historically seen.

Speaker Change: Okay. Thanks, I'll pass on them and re queue.

Speaker Change: Okay.

Speaker Change: Your next question comes from the line of Aaron Viswanathan from RBC. Please go ahead.

Speaker Change: Okay.

Arun Shankar Viswanathan: Great. Thanks for taking my questions. Good morning, Okay well.

William Chapman Peterson: Okay, thanks. I'll pass on and requeue.

Operator: Your next question comes from the line of Arun Viswanathan from RBC. Please go ahead.

Arun Shankar Viswanathan: So yeah, I guess first off just carrying a further on that that last question.

Arun Shankar Viswanathan: You know I guess are there is a heightened level of competitive activity and U S electronic markets.

Arun Shankar Viswanathan: Great, thanks for taking my questions. Good morning. Hope you're well.

Arun Shankar Viswanathan: So, yeah, I guess first off, just carrying on from that last question. You know, I guess there is a heightened level of competitive activity in US electrode markets. And you alluded to maybe some of the weaker regions domestically exporting some of those volumes maybe out of China and India. So, I guess implicit in that comment also is an acknowledgement that those Chinese electrodes are now at equal competitive levels. Could you just comment on, maybe, the quality of the product that's coming out of China?

Arun Shankar Viswanathan: And you alluded to.

Arun Shankar Viswanathan: Maybe some of the weaker regions domestically exporting.

Arun Shankar Viswanathan: You know some of those volumes are maybe out of China and India. So I guess implicit in that comment also is an acknowledgment that the Chinese electrodes are now.

Arun Shankar Viswanathan: At equal competitive levels, maybe could you just comment on you know maybe the quality of the product that's coming out of China.

Arun Shankar Viswanathan: To your knowledge, in the past, we had always kind of assumed that those electrodes were smaller in diameter, they would break, and there was maybe a little bit of an inherent shield there. But it sounds like now, you know, customers are, you know, okay using those electrodes. And so that would kind of imply that some of this share has been structurally displaced. Is that a fair characterization, or how do you expect, you know, to see a decline in this competitive activity or at least win back that share?

Arun Shankar Viswanathan: To your knowledge I mean in the past, we had always kind of assumed that those electrodes or smaller in diameter and they would break in and there was a maybe a little bit of an inherent shield there, but it sounds like now you have cut.

Arun Shankar Viswanathan: Our.

Arun Shankar Viswanathan: Okay, using those electrodes and and so that would kind of imply that some of this share has been structurally displays is that is that a fair characterization or how do you expect them.

Arun Shankar Viswanathan: To see a decline in this competitive activity or at least went back that share.

Timothy K. Flanagan: Yeah, so I don't, I don't think that's a fair characterization because I don't think we're implying that the Chinese are the driver of the increased competition, right? You know, I would still suggest, and I still think we strongly believe that there is a marked differentiation in terms of what we provide.

Speaker Change: Yes, so I don't I don't think Thats, a fair characterization, because I don't think we're implying that the Chinese are the driver of the increased competition right.

Speaker Change: No.

Speaker Change: I would still.

Speaker Change: Suggest that I still think we strongly believe that there is a marked differentiation in terms of what we provide not only in the quality of the electrodes that we produce but also the other elements of our value proposition.

Timothy K. Flanagan: Not only in the quality of the electrodes that we produce but also in the other elements of a value proposition versus the Chinese competitors. You know, and think that, in the longer term, we compete on more than just price with the Chinese. Right now, if you look across the globe, it's a challenging market just about everywhere where, you know, competition is pretty fierce, but we'll continue to focus on those things that we can control and again, operating our plants as efficiently as possible, continuing to improve our overall cost position, and move from there. But again, longer term, and our views around quality and where demand is going haven't changed, and we think that the market will recover.

Speaker Change: Versus the Chinese competitors.

Speaker Change: And think that longer term that we compete on more than just price.

Speaker Change: With the Chinese.

Speaker Change: Right now if you look across the globe, it's a challenging market just about everywhere where competition is pretty fierce.

Speaker Change: But.

We will continue to focus on those things that we can control and again operating our plants as efficiently as possible continuing to improve our overall cost position.

Speaker Change: And move from there.

Speaker Change: But again longer term in our views around quality and where demand goes haven't changed and we think that the market will recover.

Arun Shankar Viswanathan: Great, thanks. And then another question along those lines, just given your utilization rates, where would you, I guess, you see these kind of trends over the next several quarters? Do you see, you know, because I think some of your competitors, you know, some of the Indian competitors are operating at an 80% rate or above. And I know that could be, you know, some of those volumes could be exported and not necessarily reflective of actual demand levels, but do you see a path for your own utilization rates to get back to, you know, 80% or so? And, you know, obviously functioning in the closure of St. Mary's.

Speaker Change: Great. Thanks, and then another question along those lines.

Speaker Change: Just given your utilization rates.

Speaker Change: Well, Yeah, where would you I guess do you see those kind of trending over the next several quarters.

Speaker Change: Do you see it because I think some of your competitors.

Speaker Change: Some of the Indian competitors are operating in the in the 80% rate or above.

Speaker Change: And I know that that could be you know some of those volumes could be exported and not necessarily reflective.

Speaker Change: Of actual demand levels, but.

Speaker Change: Do you see a path for your own utilization rates to get back to.

Speaker Change: You know, 80% or so and you know obviously functioning in closure of St Marys.

Timothy K. Flanagan: How do you see those evolving? And, you know, the reason I'm asking is because, to me, it seems like that's probably the most important lever to getting your cost per ton down and your profitability back up would be higher utilization. So maybe you can just comment on that. Thanks.

Speaker Change: How do you how do you see those evolving and the reason I'm asking is because to me. It seems like that that's probably the most important lever to getting your cause.

Speaker Change: Cost per ton down in your profitability back up.

Speaker Change: Would be higher utilization. So maybe you can just comment on that thanks.

Timothy K. Flanagan: Yeah, sure. And certainly, fixed cost leverage will help improve our cost structures. And we've commented on this before, as we look into the future and we return to what we would consider a normal operating rate in kind of mid-cycle sort of conditions, there is a benefit from that. But there are still benefits that will drive out of our cost structure via the variable cost side and actually take costs out of the system, not just getting better absorption of our fixed costs.

Speaker Change: Yes, sure and certainly fixed costs leverage will help improve our cost structures and we've commented on this before as we look into the future and we returned to what we would consider a normal operating rate.

Speaker Change: Kind of mid cycle sort of conditions. There is a benefit from that but there still are benefits that will drive out of our cost structure via the variable cost side and actually taking cost out of the system not just getting better absorption of our fixed costs.

Timothy K. Flanagan: With respect to utilization, you know, right, we were at 58% in the first quarter. I would expect, you know, just given our overall view on the commercial side for the year, we're getting to a modest increase over last year. And the fact that we've more right-sized our inventory, that we will continue to see a small uptick in our utilization rates, you know, but until we start getting back into more mid-cycle, like demand conditions, right?

Speaker Change: With respect to utilization.

Speaker Change: We were at 58% in the first quarter.

Speaker Change: I would expect just given our overall view on the commercial side for the year, where we're guiding to a modest increase over last year and the fact that we have.

Speaker Change: More right sized our inventory that we will continue to see a small uptick in our utilization rates, but until we start getting back into more mid cycle like demand conditions right. We're going to we're not going to be operating at 80% level, but we definitely think there's a path as we look out into the future kind of given all of the midterm and long term.

Timothy K. Flanagan: We're not going to be operating at an 80% level, but we definitely think there's a path as we look out into the future, kind of given all of the mid-term and long-term trends we've talked about.

Arun Shankar Viswanathan: Great, thanks. And then one more on your overall liquidity and financial position. So we've gotten some questions around your liquidity levels and, Uh, your comfort level there. So could you maybe kind of walk us through how you see cash burn over the next couple quarters? And, um, your liquidity needs and, if you need any, the need to raise capital at all.

Speaker Change: Trends, we've talked about.

Speaker Change: Great. Thanks, and then.

Speaker Change: One more just on your.

Speaker Change: Overall liquidity and financial position, so we've gotten some questions around.

Speaker Change: You know liquidity levels and.

Speaker Change: Your comfort there. So could you just maybe kind of walk us through how you see kind of cash burn over the next couple of quarters and.

Speaker Change: You know your liquidity needs and if you need any.

Speaker Change: The need to raise capital at all thanks.

Timothy K. Flanagan: So, yeah, yeah, so, so.

Speaker Change: So yeah, yeah. So so.

Timothy K. Flanagan: Yeah, so, so. You know, in terms of liquidity, we ended the first quarter with $275 million of total liquidity, $165 million of that is cash, and $110 million of that is availability under a revolving credit facility. And again, given the structure of our revolver, that remains available to us kind of at any period or cycle. You know, we've noted, and we'll say again that we don't anticipate borrowing against the revolver in the current year. So we feel comfortable about the liquidity position and where we sit today. And, you know, we'll go from there as the market moves forward.

Speaker Change: In terms of liquidity, we ended the first quarter with $275 million of total liquidity of $165 million of that is cash and $110 million of that is availability under our revolver and again given the structure of our revolver that remains available to us kind of at any any period or cycle.

We've noted and will say again that we don't anticipate borrowing against the revolver in the current year.

Speaker Change: So we feel comfortable about the liquidity position and where we sit today.

Speaker Change: And we'll go from there as the market moves forward.

Speaker Change: Okay.

Arun Shankar Viswanathan: Great. And then, if I could, just one last one is, you know, would you consider further portfolio moves? You know, I know that some of these assets do have significant value that's potentially not reflected in your market value right now. So what is the path forward as you evaluate the portfolio? Do you feel comfortable where you are? And maybe you can just comment on that in the frame of your further investments into the anode side of the EV battery. Would you need all of these assets to kind of make those investments as well? Or maybe some of the graphitization could be disposed of or at least monetized to accelerate that process? Thanks.

Speaker Change: Great and then if I could just one last one is.

Speaker Change: Or would you consider further portfolio moves.

Speaker Change: You know I know that you know some of these assets do you have.

Speaker Change: If they can't value.

Speaker Change: That's potentially not reflected in your market value right now so.

Speaker Change: What is the path forward to.

As you evaluate the portfolio do you feel comfortable where you are.

And maybe you can just comment that in the in the.

Speaker Change: Yeah.

Speaker Change: Of your further.

Speaker Change: Investments into.

Speaker Change: The anode side of the EV battery.

Speaker Change: Would you need all of these assets to kind of make those investments as well or maybe some of the graphic position could be disposed or at least monetize to accelerate that process. Thanks.

Timothy K. Flanagan: Yeah, you know, Arun, I think it's a good line of discussion. We look at our business right now as an electrode business. As we look out into the future, this will be an electrode business and a battery anode business because there's a great parallel between our capabilities in the production of needle coke and the ability to graphitize those materials, which are two of the major steps in producing synthetic graphite for anodes.

Speaker Change: Yeah, Arun I think it's a good kind of line of discussion.

Arun: You know.

Speaker Change: We look at our business right now is an electrode business as we look out into the future. This will be an electrode business and a battery anode business because there's a great parallel between our capabilities from the production of needle coke as well as the ability to graphitize those materials, which are two of the major steps in producing.

Speaker Change: Synthetic graphite for anodes. So we think that the combination of assets, we have on the ground position us to be a significant player.

Timothy K. Flanagan: So, we think that the combination of assets we have on the ground positions us to be a significant player in both the electrode business going forward, our core business, as well as in the development of the Western supply chain for electric vehicles and the related batteries and materials. So, disposing of additional assets, monetizing for short-term benefit at the detriment of longer-term shareholder value creation certainly isn't the way we're looking at it. We think that we can capitalize on the assets we have and really strengthen our business as we look ahead.

Speaker Change: In both the electric business going forward, our core business as well as in the development of the western supply chain for electric vehicles and the related batteries materials. So disposing of additional assets monetizing four for short term benefit with the detriment of longer term shareholder value creation.

Speaker Change: Certainly isn't the way we're looking at it we think that we can capitalize on the assets, we have and really strengthen our businesses and we look forward.

Speaker Change: Thanks.

Operator: Your next question comes from the line of Alex Hacking from Citi. Please go ahead.

Speaker Change: Your next question comes from the line of Alex Hacking from Citi. Please go ahead.

Alexander Nicholas Hacking: Hi. Yes. Thanks. So, just to follow up on your last point there, any update or thoughts around the timing of when you might do something on the EV side? Thank you.

Alexander Nicholas Hacking: Hi, yes. Thanks, So just a follow up on your last point there.

Alexander Nicholas Hacking: Any update or thoughts around the timing.

Alexander Nicholas Hacking: Of when you might do something on the EV side. Thank you.

Timothy K. Flanagan: Yeah, so no real updates. We continue to progress on the permitting process at C-DRIFT. We just went through the public comment period, and that continues to move forward. Again, this all really depends on the development of the market and how quickly the OEMs, the battery makers, and everybody kind of align. I would say that we've gone from a very fevered, pitched market a year or so, or 18 months ago, to a very hot market, or still really compelling market. But everybody is just now kind of aligning their supply chains, ultimately looking forward to kind of production on scale starting in 2026. So no updates beyond that from a timing perspective.

Yeah. So so so no real updates we continue to progress on.

Alexander Nicholas Hacking: The permitting process at Seadrift, who just went through the public comment period and that continues to move forward again. This all really depends on the development of the market and how quickly.

The Oems the battery makers and everybody kind of aligned I would say that we've gone from a very fevered pitch market.

Alexander Nicholas Hacking: Year, or so or 18 months ago to a a a very hot market are still really compelling market.

Alexander Nicholas Hacking: But everybody is just now kind of aligning.

Alexander Nicholas Hacking: Their supply chains, ultimately looking forward to kind of production and scale starting in 2026 so.

No updates beyond that from a timing perspective.

Alexander Nicholas Hacking: And then I just want to check my math on the LTA pricing. I think it was $8,700 in the quarter. If I look at the full year numbers, it seems like the price should be closer to $8,100. I don't know if my math there is correct, and is there a reason why the first quarter LTA price looks so relatively strong? Thank you.

Speaker Change: Thank you.

And then I just wanted to check my math on the LTA pricing.

I think it was 8700.

Speaker Change: In the quarter.

Speaker Change: If I look at the full year numbers it seems like the price should be closer to 8100.

Speaker Change: I don't know if my math is correct and is there a reason why the <unk>.

Speaker Change: First quarter LTA price look so relatively strong thank you.

Timothy K. Flanagan: Yeah, your math is spot on. We'll guide you to the 8100 for the full year.

Speaker Change: Yes, your math is spot on we would guide you to the 8100 for the full year.

Timothy K. Flanagan: There's a mixing issue, right? Not all LTA contracts are priced the same. If you remember, given the fact that these contracts are now winding down and coming to the end of life, there are certain contracts that are still under their original terms or other contracts that have been blended and extended. So, you've got a little bit of a variety of pricing constructs that are at the tail end of these contracts. So, 8700 was the number for Q1, and 8100 is still a good data point based on the math that we provided for the full year.

Speaker Change: There is a mix issue right not all LTA contracts are priced the same as you remember given the fact that these are now winding down and coming to end of life. There are certain contracts that are still under their original terms or other contracts that had been blended and extended so you've got a little bit of a variety of pricing constructs that are in the tail end of these.

Speaker Change: Contracts. So the 8700 was the number for Q1 and 8100 is still a good data point.

On the math that we provided for the full year.

Alexander Nicholas Hacking: Okay, thanks. And then I just have one final one.

Speaker Change: Okay. Thanks, and then just one final one.

Speaker Change: <unk>.

Would you characterize the steel industry is destocking.

Alexander Nicholas Hacking: Would you characterize the steel industry as destocking electrodes at the moment or the inventory levels there? fairly stable. And I guess what I'm getting at is this current electrode demand reflect current steel production or is it lagging? Thank you.

Speaker Change: Destocking electrodes at the moment or or inventory levels there.

Fairly stable and I guess, what I'm getting at is just current.

Speaker Change: Electronic demand reflect current steel production or is it is it lagging thank you.

Jeremy S. Halford: Yeah, let me let Jeremy answer that one.

Speaker Change: Yeah, Let me, let me, let Jeremy answer that one yes.

Jeremy S. Halford: So, our comments on this are always kind of a broad brush, right? But in general, we've said in the past that the steel industry tends to hold about three months' worth of electrode inventory. And really, we're seeing trends similar to what we saw in Q4. In North America, we continue to see steel makers holding, you know, somewhere in the neighborhood of about four months' worth of electrode inventory. So, reflecting their confidence in the ongoing strength of the domestic industry, whereas in Europe, we're seeing an industry that's not as strong, and as a result, some of our customers are a little bit more hand-to-mouth, and so we're seeing them run a lot tighter from an inventory perspective, carrying about two months' worth of inventory. And so, not that different from what we saw in the fourth quarter at the moment. Yes, we're about two to three.

Jeremy S. Halford: So our comments on this are always kind of broad brush right, but but in general we've said in the past that the steel industry tends to.

Jeremy S. Halford: It tends to hold about three months worth of electrode inventory and.

Jeremy S. Halford: Really we're seeing trends.

Jeremy S. Halford: Similar to what we saw in Q4.

Jeremy S. Halford: In North America, we continued to see steelmakers holding somewhere in the neighborhood of about four months worth of electrode inventory.

Jeremy S. Halford: Reflecting their confidence in the ongoing strength of the domestic industry, whereas in Europe, we're seeing.

Jeremy S. Halford: We are an industry that is not as strong and as a result some of our.

Jeremy S. Halford: Some of our customers are a little bit more hand to mouth and so we're seeing we're seeing them run a lot tighter from an inventory perspective carrying about two months worth of worth of inventory and so.

Jeremy S. Halford: Not that changed from what we saw in the fourth quarter at the moment, yes. So we're about two to three quarters now I think of of similar dynamics, both in Europe and in the U S. So I think buying patterns are really reflective of demand at this point in time.

Jeremy S. Halford: Yes, we're about two to three quarters now, I think of similar dynamics both in Europe and in the US. So I think, you know, buying patterns are really reflective of demand at the

Alexander Nicholas Hacking: Okay, so there isn't, I guess there isn't a D stock, right? Different regions have different levels. But those levels have stayed relatively constant over the last couple quarters, so nobody's buying excess, and nobody's selling or destocking, as you said. Okay, so in order to get better electrode demand, we need better steel production, if I could. That's right. All right.

Speaker Change: Okay, so, but there isn't I guess, there isn't a destock right like different regions have different levels.

Speaker Change: But those levels and those levels have stayed relatively constant over the last couple of quarters. So.

Speaker Change: Nobody's nobody's buying excess and nobody's selling are destocking as you said.

Speaker Change: Okay. So in order to get better electrode demand, we need we need better steel production effectively.

Speaker Change: Right right alright.

Speaker Change: Thank you very much.

Okay.

Operator: Your next question comes from the line of Matt Vittorioso from Jeffreys. Please go ahead.

Speaker Change: Your next question comes from the line of Matt Peter You also from Jefferies. Please go ahead.

Speaker Change: Okay.

Matthew Vittorioso: Yeah, good morning. Thanks for taking my question. I guess just on capacity, you mentioned in your comments that you guys are kind of the only ones. When a commodity goes into the basement here like electrode pricing has, you'll get some kind of supply response that, you know, we just haven't seen this cycle, at least so far. So, you know, any comments on that would be helpful.

Matthew Vittorioso: Yeah. Good morning, Thanks for taking my question.

Matthew Vittorioso: I guess just on capacity you mentioned in your comments.

Matthew Vittorioso: That you guys are kind of the only.

Matthew Vittorioso: Participant, but taking any meaningful action on capacity.

Matthew Vittorioso: What do you think needs to happen there why does nobody else wanted to.

Matthew Vittorioso: Curtail capacity to help support the price I mean typically.

Matthew Vittorioso: When a commodity goes into the.

The baseline here like electric pricing has.

Matthew Vittorioso: You'll get some kind of supply response that we just haven't seen the cycle at least so far so.

Timothy K. Flanagan: Yeah, Matt, I think it would be unfair of me to comment on the mindset or what other people are doing, or the decisions they're making. You know, we took the actions we took to not only improve our cost structure but do what we thought was appropriate, given, you know, our outlook on demand here in the short and midterm. You know, beyond that, I don't think everybody can continue to run at utilization rates in the 50 to 60% range for a long time, but how they respond, I can't speculate.

Speaker Change: Any comments on that would be helpful.

Speaker Change: Yeah, Matt I think it would be unfair of me commenting on what the mindset or what other people are doing or are the decisions they're making.

Speaker Change: The actions, we took to not only improve our cost structure, but do what we thought was appropriate given kind of our outlook on demand here in the short and mid term.

Speaker Change: Beyond that I don't think everybody can continue to run at utilization rates in the 50% to 60% range for a long time, but how they respond to I can't speculate.

Matthew Vittorioso: Well, I guess that's my question. Maybe just said another way. Is there some cost advantage that your competitors have that allows them to continue to throw supply into this market, or is it your expectation that at some point, that supply response will come?

Speaker Change: Well I guess, that's my question, maybe just said another way is there some cost.

Speaker Change: The advantage that your competitors have that allow them to continue to grow supply into this market or is it your expectation that at some point that supply response will come.

Timothy K. Flanagan: Yeah, I mean, if you look at, you know, broadly speaking, our Tier 1 competitors, they operate in the same geographic regions that we do and are subject to the same labor, power, and supply costs that we would otherwise find ourselves. So, in the current environment, I think we're all in a similar cost position. I think as demand picks up, and we continue our vertical integration with C-DRIFT, I think that gives us a little bit of an advantage. But, you know, I don't think there's a meaningful advantage that they have over us from a cost perspective right now.

Speaker Change: Yes, I mean, if you if you look at.

Broadly speaking against our tier one competitors they operate in the same geographic regions that we do and are subject to the same labor and power and supply costs that we would otherwise find herself. So.

Speaker Change: In the current environment I think we're all in a similar cost position.

Speaker Change: Zinc as demand picks up and our vertical integration with seadrift I think that gives us a little bit of advantage, but.

Speaker Change: I don't think Theres a meaningful.

Speaker Change: Advantage that they have over us from a cost perspective right now.

Matthew Vittorioso: Okay. And then maybe just, Tim, if you could just maybe talk a little bit more about, I think you've probably been out seeing customers quite a bit in your new role and, you know, looking to maybe rebuild certain customer relationships post some of the LTA friction that has occurred. Maybe just talk a little bit about how those conversations are going. And then also, I think you've mentioned sort of some of the other services that you guys provide or the value add that GrafTech provides away from just a good quality product. Maybe just talk briefly about some of those services that you guys provide, monitoring electric arc furnaces and whatnot, just to kind of, you know, increase the value that GrafTech offers.

Speaker Change: Okay.

Speaker Change: And then maybe just Tim if you could just.

Timothy K. Flanagan: Maybe talk a little bit more about I think you've probably been out being customers quite a bit.

Timothy K. Flanagan: In your new role and.

Timothy K. Flanagan: Looking to maybe rebuild certain customer relationships post some of the LTA.

Timothy K. Flanagan: Friction that has occurred maybe just talk a little bit about how those conversations are going and then.

Timothy K. Flanagan: Also.

Timothy K. Flanagan: I think you've mentioned sort of the some of the other services that you guys provide or the value add that that graph tech.

Timothy K. Flanagan: <unk> away from just the good quality product, maybe just talk briefly about some of those services that you guys provide monitoring electric arc furnaces and whatnot just to.

Timothy K. Flanagan: Kind of.

Timothy K. Flanagan: Increase the value add that.

Timothy K. Flanagan: That graph Tech offers.

Timothy K. Flanagan: Yeah, I'll speak to the customer side, and then I'll let Jeremy comment on Architect and what we're doing there with our customer technical service team, but I mean, listen. We're moving away from the LTA world and the structured contracts to a more spot-oriented business.

Speaker Change: Yeah, I'll speak to the customer side, and then I'll, let Jeremy comment on architect and what we're doing there with our customer.

Speaker Change: Nickel service team, but.

Speaker Change: I mean.

Speaker Change: Listen, we're moving away from the LTA World and these structured contracts to more spot oriented business and so I think it's more important than ever that we're engaging with customers.

Timothy K. Flanagan: And so I think it's more important than ever that we're engaging with customers on a regular and maybe even more frequent cadence as we go forward. And like any business, all relationships are not equal, but it's important that we're engaging and putting energy into every customer relationship we have. And while not getting into particular customer situations, you know, I think overall, our conversations have been encouraging. And, you know, I think we've really been out there stressing a couple of things.

Jeremy S. Halford: On a regular and maybe even more frequent cadence.

Jeremy S. Halford: As we go forward.

Jeremy S. Halford: And like any business all relationships are not equal.

Jeremy S. Halford: But it's important that we're engaging in putting energy into every customer relationship we have in and while not eating into particular customer situations I think overall, our conversations have been encouraging and.

Jeremy S. Halford: I think we've really been out there stressing a couple of things one we want our customers to understand the value proposition of what we bring to the table.

Timothy K. Flanagan: One, we want our customers to understand the value proposition and what we bring to the table. Two, we want to make sure we're meeting their needs in terms of depth and breadth of product offerings, which includes how we're supporting them via Architect and CTS. But I think lastly, and probably most importantly, is that they understand we're focused on long-term partnerships and remain willing to invest in those partnerships alongside of them. You know, we made some big announcements in the fourth quarter as it related to our footprint, our cost structure, and things that we are doing.

Jeremy S. Halford: Two we want to make sure we're meeting.

Jeremy S. Halford: Their needs from a depth and breadth of product offerings.

Jeremy S. Halford: Which includes how we're supporting them the architect and Cts, but I think lastly, and probably most importantly is that they understand we're focused on long term partnerships and remain willing to invest in those partnerships alongside of them. We've made some big announcements in the fourth quarter.

Jeremy S. Halford: As it related to our footprint, our cost structure and things that we're doing and we thought it was important that we add direct face to face conversations with our customers about what we're doing why we're doing it and how were positioning ourselves to be long term suppliers forum. So.

Timothy K. Flanagan: And we thought it was important that we had direct face-to-face conversations with our customers about what we're doing, why we're doing it, and how we're positioning ourselves to be long-term suppliers for them. So all in all, I think very positive developments from a customer standpoint. Jeremy, you want to comment on Architect and CTS? Yeah. Yeah, I would say that.

Jeremy S. Halford: All in all I think very positive developments from a customer standpoint, Jeremy you want to comment on an architect and Cts.

Jeremy S. Halford: Yeah, I would say that all of this is just part of the long term investment we've been making month over month year over year in strengthening our relationships with our customers beats.

Jeremy S. Halford: Yeah, I would say that all of this is just part of, you know, the long-term investment we've been making, month over month, year over year, in strengthening our relationships with our customers through the CTS individuals that go on a regular basis to be physically present in the steel mills and meet with not just the procurement people, but it's really our opportunity to meet with melt shop managers and the people that are actually operating their furnaces. And all of this is part of an effort to help our customers be better at what they do.

Jeremy S. Halford: Between the Cts individuals that go on a regular basis to be physically present in the in the steel mills and meet with are.

Jeremy S. Halford: Not just the procurement, but it's really our opportunity to meet with melt shop managers and the people that are actually operating their furnaces and all of this is part of an effort to help our customers be better at what they do and architect is a tool that we use that not only gives them better visibility into their own operations, but also it gives us.

Jeremy S. Halford: And Architect is a tool that we use that not only gives them better visibility into their own operations but also gives us an opportunity to provide remote support when we can't be there in person. And we continue to work with customers to understand where else or how else we can deploy a tool like that in order to continue to benefit them and help them continue to get better at what they do. So we really appreciate the partnership that we have with those customers. And, you know, through the support that we give them, they also help us make our product offering better as well.

Jeremy S. Halford: Opportunity to provide remote support remote support when we can't be there in person and we continue to work with the customers to understand where else or how else we can deploy.

Jeremy S. Halford: A tool like that in order to continue to to continue to benefit them and help them continue to get better at what they do so we really appreciate the partnership that we have with those customers.

Jeremy S. Halford: And through the support that we give them. They also help us make our product offering better as well.

Matthew Vittorioso: That's helpful. Maybe just lastly, I know you've commented on liquidity and certainly understand the comments there. I mean, I guess I would say, you know, with $165 million of cash on hand to say that you won't borrow against the revolver or don't think you need to. You know, it's comforting, but maybe it doesn't say a whole lot.

Speaker Change: That's helpful. Maybe just lastly, and.

Speaker Change: I know you've commented on liquidity.

Speaker Change: And certainly understand the comments there I mean, I guess, I'd say with $165 million of cash on hand to say that you won't borrow against the revolver don't think you need to.

Speaker Change: It's comforting, but maybe it doesn't fail a whole lot but.

Matthew Vittorioso: But, you know, there have certainly been financial news sources highlighting that there are groups out there talking about ways that they could maybe offer you additional liquidity. Maybe just comment on your openness and if you think it makes sense now to consider such a move just in case the downturn in pricing holds for longer than you expected. I mean, sometimes it's better to just take the liquidity when it's offered and have it for a rainy day.

Speaker Change: There's certainly been.

Financial news sources, highlighting that there are groups out there talking about ways that they could maybe offer you additional liquidity, maybe just comment on your openness when do you think.

Speaker Change: It makes sense now to consider such a move just in case the downturn in pricing holds for longer than you expected I mean, sometimes it's better to do that.

Take the liquidity when it's offered and have it for a rainy day.

Timothy K. Flanagan: Yeah, thanks. And again, I'm not going to comment on market speculation or articles quoting unnamed sources. But, you know, to the latter part of your question, right? I think even since I joined two and a half years ago, we've always looked at our balance sheet, our capital structure, and tried to be proactive in terms of refinancing the revolver, refinancing our notes. So we're always having conversations with, you know, our advisors, our, you know, our banks, about our capital structure and how to best optimize our positioning.

Speaker Change: Yeah, Thanks and.

Speaker Change: Again, I'm not going to comment on market speculation or our articles.

Speaker Change: Quoting unnamed sources, but.

Speaker Change: I think to the latter part of your question right I think even since I joined two and a half years ago. We've always had to look through our balance sheet, our capital structure and tried to be proactive in terms of refinancing the revolver refinancing our notes. So we're always having conversations with.

Speaker Change: Our advisors are.

Our banks about our capital structure, and how to best optimize our positioning but.

Timothy K. Flanagan: But, you know, beyond that, I think we're comfortable with the liquidity position we sit in today. And, you know, we'll continue to work on the cost side of our business and focus on those things that we can control.

Speaker Change: Beyond that.

Speaker Change: I think we're comfortable with the liquidity position, we sit in today and we will continue to work on that.

Speaker Change: Cost side of our business and and focus on those things that we could control.

Matthew Vittorioso: Thanks for the time. I appreciate it.

Speaker Change: Okay.

Speaker Change: Got it thanks for the time I appreciate it.

Speaker Change: Thank you.

Speaker Change: Yeah.

Speaker Change: Yeah.

Operator: Your next question comes from the line of Abe Landa from Bank of America. Please go ahead.

Speaker Change: Your next question comes from the line of Abe Landa from Bank of America. Please go ahead.

Abraham Raul Landa: Good morning. Thank you for taking my questions. Maybe the first one just on, I know you've historically provided this, but there were Needlecoke prices in one queue. Where do you see them now and for the rest of the year? I know we see some charts on Bloomberg where it says it looks like the Chinese version has declined 10 percent year to date.

Good morning, Thank you for taking my questions.

Abraham Raul Landa: We were the first one just on I know you've historically provided this but.

Abraham Raul Landa: Our needle coke prices in one queue.

Abraham Raul Landa: And then where do you see them now and kind of for the rest of the year.

Abraham Raul Landa: We see some charts on Bloomberg, where it says it looks like the Chinese version has kind of declined 10% year to date.

Jeremy S. Halford: Yeah, so, you know, looking at looking at export statistics, we what we would see is that things are pretty much where they were a quarter ago. You know, we would be looking for pricing for super premium needle coke in the range of 1000 to $1,300. For the higher end or super premium needle cokes that that are typically used in, in our applications. You know, with regard to the rest of the year, of course, we don't know, right, you know, as you know, needle coke pricing can be highly volatile, you know, reflecting the market conditions at the time, but, you know, currently we see things at $1,000 to $1,300, you know, but in the recent past, we've seen prices as high as $3,000 in 2022, and as low as $1,000 a year before that, you know, kind of consistent with where we find ourselves currently.

Abraham Raul Landa: Yes, so looking at looking at exports statistics, but we would see is that things are pretty much where they were a quarter ago.

Abraham Raul Landa: We would be looking for pricing for Super premium needle coke in the range of $1300 for the higher end or Super premium needle Coke that that are typically used in.

Abraham Raul Landa: In our applications.

Abraham Raul Landa: Yeah.

Speaker Change: You know it.

Speaker Change: With regard to the rest of the year of course, we don't know right.

As you know needle coke pricing can be highly volatile, reflecting the market conditions at the time, but.

Speaker Change: Currently we see things at $1300.

Speaker Change: But in the recent past, we've seen prices as high as $3000 in 2022.

Speaker Change: And as low as $1000 a year before that what kind of <unk>.

Consistent with where we find ourselves currently so.

Jeremy S. Halford: So I don't really have good guidance for you for where I think that's going to go for the balance of the year. Volatility is really kind of key in the needle coke space. Yeah. And the only thing I'd add.

Speaker Change: I don't really have a.

Speaker Change: A good guidance for you for where I think that's going to go for the balance of the year.

Speaker Change: Volatility is a is really kind of key in our needle Coke space, Yes. The only thing I'd add is I think we saw a fairly.

Jeremy S. Halford: Yeah, the only thing I'd add is, you know, I think we saw a fairly steady quarter-over-quarter decline as we moved throughout 2023, and now we've probably seen a bit of a flattening of the pricing here over the last quarter or two, and it's held kind of in this range that Jeremy talked about.

Speaker Change: Steady quarter over quarter decline as we moved throughout 2003.

Speaker Change: And now we've probably seen a bit of a flattening.

Speaker Change: The pricing here over the last quarter or two and it's held kind of in this range that Jeremy talked about so.

Abraham Raul Landa: That's very helpful, Culler. And then if I look at Zdrift, I mean, how does your costs at Cedra kind of compare to market prices today, and maybe what Cedra fuelization is currently, and kind of how do you expect that to trend?

Speaker Change: That's very helpful color.

Speaker Change: And then if I look at.

Speaker Change: Seadrift.

Speaker Change: How does.

Speaker Change: Your costs at seadrift kind of compare it to the market pricing today.

Speaker Change: And maybe what is ctrip utilization currently and kind of how do you expect that to trends as well.

Timothy K. Flanagan: Yeah, so seed drift utilization is going to align with our overall, you know, kind of utilization rates, right? We're running seed drift in line with kind of our internal demand for needle coat for our graphite electrode plants as we go forward. Like our large electrode plants, running them at capacity makes them more cost-effective. I'd say Seadrift is competitive in this market but does not give us the same cost advantage that we normally would benefit from in being vertically integrated, as you do when you see needle coat prices kind of more in the mid-cycle type levels or even the high end of the ranges that Jeremy was speaking to earlier.

Speaker Change: Yeah. So so ctrip utilization is going to align with our overall kind of utilization rates right. We're running seadrift in line with Ah.

Speaker Change: Kind of our internal demand.

Speaker Change: For needle coke for our graphite electrode plants.

Speaker Change: As we go forward.

Speaker Change: Kind of like our.

Speaker Change: Large electrode plants right running them at capacity makes a more cost effective I'd.

Speaker Change: I'd say at Seadrift is competitive in this market, but does not give us the same.

Cost advantage that we normally would benefit from being vertically integrated as you do when you see.

Speaker Change: Needle coke prices.

Speaker Change: Kind of more in the mid cycle type levels or even the high end of the ranges that Jeremy was speaking to earlier.

Abraham Raul Landa: And then maybe my last question, and this is kind of a follow-up question from an earlier one, you kind of mentioned increased competition with the U.S. Is that primarily coming from, like, traditional Tier 1 Japanese competitors, or not? Is it coming from kind these other Chinese or Indian? Like I know one of the Indian competitors just added 20,000 tons of capacity? I just kind of want more color on the comp.

Speaker Change: That's very helpful. And then maybe my last question and this is kind of a follow up question.

Speaker Change: From another one.

Speaker Change: You mentioned increased competition with the U S is that is that primarily coming from like traditional tier one Japanese competitors or.

Speaker Change: Is it coming from kind of these.

Speaker Change: We're trying to use our India and like I know one of the Indian competitors, just added 20000 tons of capacity.

Speaker Change: Just kind of more color on the competition.

Timothy K. Flanagan: Unknown Speaker Yeah, so that's it.

Timothy K. Flanagan: Yeah, so that 20,000 tons came on at the end of last year, but, you know, the competition really is from those tier one competitors, right? I mean, again, the US tends to be the strongest market out there, and you're seeing everybody fight for volumes in that market.

Speaker Change: So that 20000 tonnes came on at the end of last year, and but you know.

The competition really is from those those tier one competitors right I mean.

Speaker Change: Again, the U S tends to be the strongest market.

Speaker Change: Out there and.

And Youre seeing.

Speaker Change: Body fight for volumes in that market.

Abraham Raul Landa: Thank you very much for that color. I appreciate it.

Speaker Change: Thank you very much for that color I appreciate it.

Operator: Your next question comes from the line of Kirk Liedtke from Imperial Capital. Please go ahead.

Speaker Change: Your next question comes from the line of Kirk Ludtke from Imperial Capital. Please go ahead.

Kirk Liedtke: Hello, Tim, Jeremy, Catherine, and Mike. Thanks for the call. Just a couple follow-ups. This came up earlier. I was curious, could you expand on any pending trade restrictions, anything on the regulatory front that we might want to keep an eye on?

Kirk Ludtke: Hello, Tim Jeremy Katherine Mike Thanks for the call.

A couple of follow ups.

Kirk Ludtke: This came up earlier I was curious could you expand on the.

Kirk Ludtke: Uh-huh pending trade restrictions anything on the regulatory front that might.

Timothy K. Flanagan: Yeah, so just as a recap, right now, you've got trade protection in the EU against both Indian and Chinese electrodes. You have trade protection in the U.S. against Chinese imports, and I think all of those cases are pretty stable. I don't think any of them are coming up for renewal or re-judgment here any time in the near future. I think there was just an announced trade case in Japan against Chinese electrodes, so I think everybody is starting to take note of what the Chinese are doing in the market. Outside of that, I don't think there's anything pending that I can comment on right now.

Kirk Ludtke: We might want to keep an eye on.

Speaker Change: Yes, so just as a recap right you've got trade protections right now in the EU against both Indian and Chinese electrodes.

Speaker Change: You have trade protections in the U S against Chinese imports.

Speaker Change: And I think all of those cases are in pretty pretty stable I don't think any of them are coming up for renewal or re re judgment here anytime in the near future.

Speaker Change: I think there was just announced a trade case in Japan.

Speaker Change: Against Chinese electrodes I think everybody is starting to take note of what the Chinese are doing in the market.

Speaker Change: Outside of that I don't think theres anything pending that I can comment on right now.

Speaker Change: Okay I appreciate that thank you.

Kirk Liedtke: Okay, I appreciate that. Thank you. With respect to the... The monetization of the battery opportunity, you reiterated, I think, 2026. When would you have to make a decision? in terms of your capacity at C-Drift in order to participate on that kind of timeline?

Speaker Change: With respect to the.

Speaker Change: The monetization of the of the battery opportunity you reiterated I think 2026 when would you have to make a decision.

Speaker Change: In terms of your capacity at seadrift in order to participate on that kind of timeline.

Jeremy S. Halford: Yeah, Jeremy, do you want to talk about the construction timeline, and then we can come back to when we have to start making decisions? Yeah. Yeah.

Speaker Change: Yes, Jeremy do you want to talk to the construction timeline and then we can come back when we have to start making decisions.

Jeremy S. Halford: So, you know, we would expect the, you know, the permit to come through sometime in the third quarter of this year. That is kind of our expectation right now on that. And then once we make a decision on an investment, you know, we're probably looking at a timeline of, you know, somewhere around 18 months, I would guess, for construction, assuming, you know, that all of the permitting is in place and we're in good shape. You know, and in terms of a broader strategic timeline and decision making, it really depends on where we go with the process. Right?

Jeremy S. Halford: We would expect to be.

Jeremy S. Halford: Hum.

Jeremy S. Halford: The permit to come through sometime in the third quarter of this year is kind of our expectation right now on that and then once we make a decision on an investment.

Jeremy S. Halford: And we're probably looking at a timeline of <unk>.

Jeremy S. Halford: Somewhere around 18 months I would guess for construction assuming.

Jeremy S. Halford: Assuming that all of the permitting is in place and where we are in good shape.

And in terms of broader strategic timeline and decision, making it really depends on where we go with the process rate our ability right now I. Just commented previously about seadrift not running at capacity. If we just wanted to spell sell more needle coke into the market, we could do that and make that decision here.

Timothy K. Flanagan: Our ability right now, I just commented previously about CGIF not running at capacity. If we just wanted to sell more Needlecoke into the market, we could do that and make that decision here today. You know, obviously, the further you go into the supply chain and fully develop an anode plant, you know, that obviously will take a longer lead time just given the construction window that Jeremy mentioned and also the capital requirements of that. So, it really depends on where we ultimately land in terms of our position in the full value chain.

Jeremy S. Halford: Today.

Jeremy S. Halford: Obviously, the further you go into the supply chain and fully developing Av.

And anode plant that obviously will take a longer lead time, just given the construction window, the Jeremy pointed and also the capital.

Jeremy S. Halford: The requirements of that so it really depends on where ultimately we land in terms of our position in the full value chain.

Kirk Liedtke: Got it. Thank you. And lastly, have you recovered? I know market share is a bit of a moving target, but do you feel as though you've recovered the share you lost pursuant to Monterey.

Speaker Change: Got it thank you and then lastly.

Speaker Change: Have you recovered.

Speaker Change: I know market share is a bit of a moving target, but do you feel as though you've recovered the share you lost.

Timothy K. Flanagan: Yeah, I mean, we talked a little bit about this at year end, right? You know, we're rolling off an environment where we're highly contracted, you know, obviously we had the challenges that were caused by the shutdown of Monterey, and we're doing all of this during a very challenging demand environment, broadly from a market standpoint. So, you know, I think we made good progress in the commercial cycle that we concluded in the third and fourth quarters of 23, and we'll continue to work through it, but we're not going to get it all back just in one fell swoop. So, we think we're heading in the right direction and making good progress, but you don't recover from everything just in one bidding cycle.

Speaker Change: Pursuant to Monterrey.

Speaker Change: Yeah, I mean, I think we talked a little bit about this at year end right. We're rolling off.

Speaker Change: Oh.

Speaker Change: An environment, where we're highly contracted.

Speaker Change: Obviously, we had the challenges that were caused by the shutdown of Monterrey.

Speaker Change: And we're doing all of this during a.

A very challenging demand environment broadly from a market standpoint so.

I think we made good progress in the commercial cycle that we concluded in the third and fourth quarter of 'twenty, three and we will continue to work through it but we're not going to get it all back just in one fell swoop. So we think we're headed in the right direction and making good progress, but you don't you don't recover from everything just in one one.

Kirk Liedtke: Got it. Would you say that you're tracking on that front, you know, in line with expectations? Very much so, yes. Thank you.

Speaker Change: Bidding cycle.

Speaker Change: Got it what did you say that you're you're tracking on that front.

Speaker Change: In line with expectations.

Kirk Liedtke: Thank you very much. So, yes. Transcription by Trans-Expert at Fiverr.com

Speaker Change: Very much so yes.

Speaker Change: Thank you very much.

Timothy K. Flanagan: This concludes our question and answer session. I will now hand the call back over to Mr. Flanagan for closing comments. Please go ahead.

Speaker Change: Yeah.

This concludes our question and answer session I will now hand, the call back over to Mr. Flanagan for closing comments. Please go ahead.

Timothy K. Flanagan: With that, I'd like to thank everyone on this call for their interest in GrafTech, and we look forward to speaking with you again next quarter. Have a great day. Ladies and gentlemen, this concludes today's conference call. Thank you for your participation, and you may now disconnect.

Flanagan: Thanks Constantine.

Flanagan: With that I'd like to thank everyone on this call for your interest in <unk> can we look forward to speaking with you again next quarter have a great day.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation and you may now disconnect.

Operator: Thank you for watching.

Flanagan: Yeah.

Flanagan: Yeah.