Q2 2024 GrafTech International Ltd Earnings Call

July 26, 2024

Good morning, ladies and gentlemen, and welcome to the GrafTech Second Quarter 2024 Earnings Conference Column Webcast.

Operator: And welcome to the GrafTech second quarter 2024 earnings conference column webcast. At this time, all lines are in listen-only mode.

Unknown Executive: and welcome to the GrafTech second quarter 2024 earnings conference call-in webcast. 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, July 26, 2024. I would like now to turn the conference over to Mike Dillon. Please go ahead.

Speaker Change: At this time, all lines are in listen-only mode.

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.

Unknown Executive: If at any time during this call you require immediate assistance, please press star zero for the operator.

Unknown Executive: This call is being recorded on Friday, July 26, 2024.

Speaker Change: This call is being recorded on Friday, July 26, 2024. I would like now to turn the conference over to Mike Dillon. Please, go ahead.

Michael Dillon: I would like now to turn the conference over to Mike Dillon, please. Go ahead.

Michael Dillon: Thank you, Ace. Good morning and welcome to GrafTech International's second 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.

Michael Dillon: Thank you, Ace.

Speaker Change: Good morning and welcome to GrafTech International's second 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.

Michael Dillon: 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: 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.

Speaker Change: Tim will begin with opening comments. Jeremy will then discuss safety, the commercial environment, sales, and operational matters.

Speaker Change: 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.

Unknown Executive: We will then open the call to questions. Turning to our next slide.

Unknown Executive: As a reminder, some of the matters discussed in this call may include forward-looking statements regarding, among other things, performance, trends, and strategies. These statements are based on current expectations and are subject to 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 reconciliation. You can find these slides in the Investor Relations section of our website at www.grafTech.com.

Michael Dillon: As a reminder, some of the matters discussed in 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 uncertainty. 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.

Speaker Change: Turning to our next slide.

Speaker Change: As a reminder, some of the matters discussed in this call may include forward-looking statements regarding, among other things, performance, trends, and strategies.

Speaker Change: These statements are based on current expectations and are subject to risks and uncertainties.

Speaker Change: 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.

Speaker Change: You can find these slides in the Investor Relations section of our website at www.graftech.com. A replay of the call will also be available on our website. I'll now turn the call over to Tim.

Unknown Executive: A replay of the call will also be available on our website.

Timothy Flanagan: I will now turn the call over to Tim. Thanks, Mike, and good morning. And thank you for joining GrafTech's second quarter earnings call.

Michael Dillon: I'll now turn the call over to Tim. Thanks, Mike, and good morning. And thank you for joining GrafTech's second quarter earnings call. Let me start by saying that we operate in a cyclical industry, and we find ourselves in a challenging part of the cycle for our business and, more broadly, for our industry. Graphite electrode demand remains weak, and industry-wide capacity utilization rates remain low, and consequently, cost per ton is high.

Timothy K. Flanagan: At the same time, pricing discipline in inventory has been somewhat sacrificed to support volume. Against this backdrop, GrafTech and we believe most others in our industry are operating their electrode business at losses or low margins. We think these dynamics are well understood.

Timothy K. Flanagan: Thanks, Mike, and good morning. And thank you for joining GrafTech's second quarter earnings call.

Timothy Flanagan: Let me start by saying that we operate in a cyclical industry, and we find ourselves in a challenging part of the cycle. For our business and more broadly for our industry. Graphite electro demand remains weak. Industry-wide capacity utilization rates remain low, and consequently cost-per-turn are high. At the same time, pricing discipline in the inventory has been somewhat sacrificed to support volume. Against this bleak backdrop, GrafTech, and we believe most others in our industry are operating their Electro business at losses or low margins. We think these dynamics are well understood. We also believe it's well understood that these dynamics are not sustainable.

Timothy K. Flanagan: We also believe it's well understood that these dynamics are not sustainable. We don't control all of these underlying forces, particularly the macro or the actions taken by others, but we do control our response and our actions. We are engaging with our customers with a relentless focus on meeting their needs. We are adding to our customer value proposition. We are investing in technological capabilities and offerings. We are aggressively cutting costs without compromising quality, safety, or the environment. We are managing our working capital and capital expenditure levels. We've reduced our production capacity.

Timothy K. Flanagan: Let me start by saying that we operate in a cyclical industry, and we find ourselves in a challenging part of the cycle for our business and more broadly for our industry.

Timothy K. Flanagan: Graphite electrode demand remains weak. Industry-wide capacity utilization rates remain low and consequently cost per ton are high.

Timothy K. Flanagan: At the same time, pricing discipline in the inventory has been somewhat sacrificed to support volume.

Timothy K. Flanagan: Against this backdrop, GrafTech, and we believe most others in our industry, are operating their electrode business at losses or low margins.

Timothy K. Flanagan: We think these dynamics are well understood. We also believe it's well understood that these dynamics are not sustainable.

Timothy Flanagan: We don't control all of these underlying forces, particularly the macro or the actions taken by others, but we do control our response and our actions. We are engaging with our customers with the relentless focus on meeting their needs. We are adding to our customer value proposition. We are investing in technical capabilities and offerings. We are aggressively cutting costs without compromising quality, safety, or the environment. We are managing our working capital and capital expenditure levels. We've reduced our production capacity. We are proactively managing production to balance supply and demand, and we are actively pursuing opportunities to diversify our business and support long-term growth.

Timothy K. Flanagan: We don't control all of these underlying forces, particularly the macro or the actions taken by others, but we do control our response and our actions.

Timothy K. Flanagan: We are engaging with our customers with a relentless focus on meeting their needs.

Timothy K. Flanagan: We are adding to our customer value proposition. We are investing in technical capabilities and offerings.

Timothy K. Flanagan: We are aggressively cutting costs without compromising quality, safety, or the environment.

Timothy K. Flanagan: We are managing our working capital and capital expenditure levels.

Timothy K. Flanagan: We are proactively managing production to balance supply and demand, and we are actively pursuing opportunities to diversify our business and support long-term growth. At the end of the day, we are focused on controlling the controllable. We set out a plan at the beginning of the year to do just that, and we're executing on that plan. We're proud of our team's efforts and thank them for their continued dedication. However, all this said, we recognize that this won't translate into immediate recovery from a financial performance perspective. That wasn't our expectation, nor should it be yours.

Timothy K. Flanagan: We've reduced our production capacity. We are proactively managing production to balance supply and demand.

Timothy K. Flanagan: And we are actively pursuing opportunities to diversify our business and support long-term growth.

Timothy Flanagan: At the end of the day, we are focused on controlling the controllable. We set out a plan at the beginning of the year to do just that, and we're executing against that plan. And proud of our team's efforts and thank them for their continued dedication.

Timothy K. Flanagan: At the end of the day, we are focused on controlling the controllable.

Timothy K. Flanagan: We set out a plan at the beginning of the year to do just that, and we're executing against that plan.

Timothy K. Flanagan: I'm proud of our team's efforts and thank them for their continued dedication.

Timothy Flanagan: All this said, we don't recognize that this won't translate into immediate recovery from a financial performance perspective. That wasn't our expectation, or should it be yours. But they're the right actions to help us navigate the current challenges.

Timothy K. Flanagan: All this said, we recognize that this won't translate into immediate recovery from a financial performance perspective.

Timothy K. Flanagan: But they're the right actions to help us navigate the current challenges. Importantly, we participate in an industry that has many long-term and sustainable tailwinds, and it's very easy to lose sight of that when you're on the downside of a cycle.

Timothy K. Flanagan: That wasn't our expectation, nor should it be yours.

Timothy K. Flanagan: But they're the right actions to help us navigate the current challenges.

Timothy Flanagan: Importantly, we participate in an industry that has many long-term and sustainable tailwinds. And it's very easy to lose sight of that when you're on the downside of a cycle. But cyclical downturns eventually come to an end, and the long term growth opportunities in front of us are very real.

Timothy K. Flanagan: Importantly, we participate in an industry that has many long-term and sustainable tailwinds.

Timothy K. Flanagan: And it's very easy to lose sight of that when you're on the downside of a cycle.

Timothy K. Flanagan: The cyclical downturns eventually come to an end and the long-term growth opportunities in front of us are very real.

Timothy Flanagan: During our comments today, we'll expand on all of these concepts and why we believe we're taking the right actions to manage the current environment and preserve our long-term flexibility.

Timothy K. Flanagan: But cyclical downturns eventually come to an end, and the long-term growth opportunities in front of us are very real. During our comments today, we'll expand on all of these concepts and why we believe we're taking the right actions to manage the current environment and preserve our long-term flexibility. Let me begin with an update on some of our key initiatives, starting in the commercial area. As I mentioned on our last call, 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.

Timothy K. Flanagan: During our comments today we'll expand on all of these concepts and why we believe we're taking the right actions to manage the current environment and preserve our long-term flexibility.

Timothy Flanagan: Let me begin with an update on some of our key initiatives starting in the commercial area. As I mentioned on our last call, 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. We continue to execute our customer engagement strategy, reinforcing the importance of our relationship with our customer and the investments we're making on our customer value proposition to further differentiate GrafTech from our competitors. For example, our initiative to expand our project offering by adding an 800 millimeter supersized electrode door portfolio remains on track, with initial customer trials expected to occur later this quarter.

Speaker Change: Let me begin with an update on some of our key initiatives starting in the commercial area.

Speaker Change: As I mentioned on our last call, 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.

Timothy K. Flanagan: We continue to execute our customer engagement strategy, reinforcing the importance of our relationship with our customers and the investments we're making in our customer value proposition to further differentiate GrafTech from our competitors. For example, our initiative to expand our product offering by adding an 800 millimeter supersized electrode to our portfolio remains on track, with initial customer trials expected to occur later this quarter. We've expanded the breadth of our architect system as part of building upon our best-in-class technical service capability. We also continue to expand our first principles understanding of graphite electrodes, building on a more than 135-year legacy of research and development of graphite and carbon based solutions.

Speaker Change: We continue to execute our customer engagement strategy, reinforcing the importance of our relationship with our customer and the investments we're making on our customer value proposition to further differentiate GrafTech from our competitors.

Speaker Change: For example, our initiative to expand our project offering by adding an 800mm supersized electrode to our portfolio remains on track, with initial customer trials expected to occur later this quarter.

Timothy Flanagan: We've expanded the breadth of our architect system as part of building upon our best-in-class technical service capabilities. We also continue to expand our first principles understanding of graphite electrodes, building on more than 135 year legacy of research and development of graphite and carbon based solutions. We invested in our pin production capabilities and are the only graphite electrode producer with the capability to produce connecting pins on two different continents. In addition, we're building up our connecting pin inventory levels, and we are on track to have 12 months of pin inventory on hand by the end of this year.

Speaker Change: We've expanded the breadth of our architect system as part of building upon our best-in-class technical service capabilities.

Speaker Change: We also continue to expand our first principles understanding of graphite electrodes, building on more than a 135-year legacy of research and development of graphite and carbon-based solutions.

Timothy K. Flanagan: We've invested in our pin production capabilities and are the only graphite electrode producer with the capability to produce connecting pins on two different continents. In addition, we're building up our connecting PIN inventory levels, and we are on track to have 12 months of PIN inventory on hand by the end of this year. All of these examples demonstrate the investments we are making to support our ability to meet the needs of our customers now and into the future.

Speaker Change: We've invested in our pin production capabilities and are the only graphite electrode producer with the capability to produce connecting pins on two different continents.

Speaker Change: In addition, we're building up our connecting PIN inventory levels and we are on track to have 12 months of PIN inventory on hand by the end of this year.

Timothy Flanagan: All of these examples demonstrate the investments we are making to support our ability to meet the needs of our customers now and into the future. And as demonstrated by the feedback I'm receiving from our customers, including a number of interactions which have taken place in recent weeks, are investments in these areas are resonating. Our customer engagement efforts coupled with our compelling value proposition contributed to a 6% sequential improvement in our sales volume for the second quarter. Further, we continue to expect sales volume growth for the full year compared to 2023 as we continue to regain last market share.

Speaker Change: All of these examples demonstrate the investments we are making to support our ability to meet the needs of our customers now and into the future.

Timothy K. Flanagan: And as demonstrated by the feedback I'm receiving from our customers, including a number of interactions which have taken place in recent weeks, our investments in these areas are resonant. Our customer engagement efforts, coupled with our compelling value proposition, contributed to a 6% sequential improvement in our sales volume for the second quarter. Furthermore, we continue to expect sales volume growth for the full year compared to 2023 as we continue to regain lost market share. But more importantly, our customer-centric mindset is all about the long term.

Speaker Change: And as demonstrated by the feedback I'm receiving from our customers, including a number of interactions which have taken place in recent weeks, our investments in these areas are resonating.

Speaker Change: Our customer engagement efforts, coupled with our compelling value proposition, contributed to a 6% sequential improvement in our sales volume for the second quarter.

Speaker Change: Further, we continue to expect sales volume growth for the full year compared to 2023 as we continue to regain lost market share.

Timothy Flanagan: But more importantly, our customer centric mindset set is all about the long term. It's about strengthening relationships with existing customers while fostering new relationships with prospective customers that are mutually beneficial for years to come.

Speaker Change: But more importantly, our customer-centric mindset is all about the long-term.

Timothy K. Flanagan: It's about strengthening relationships with existing customers while fostering new relationships with prospective customers that are mutually beneficial for years to come. To that point, as we mentioned on our last call, we are pleased to have our longstanding and largest LTA arbitration behind us, removing a substantial risk to our financial position. And more importantly, it allows us to focus our energy on the commercial relationship with this customer. Beyond commercial, let me highlight a few accomplishments across other areas of our business. In operations, our facilities continue to run well as they execute our production plan, and we are doing this safely, as our total reportable incident rate remains significantly below the prior year level.

Speaker Change: It's about strengthening relationships with existing customers while fostering new relationships with prospective customers that are mutually beneficial for years to come.

Timothy Flanagan: To that point, as we mentioned in our last call, we are pleased to have our longstanding and our largest LTE arbitration behind us, removing a substantial risk to our financial position. And more importantly, it allows us to focus our energy on the commercial relationship with this customer.

Speaker Change: To that point, as we mentioned on our last call, we are pleased to have a longstanding and our largest LTA arbitration behind us, removing a substantial risk to our financial position.

Speaker Change: And more importantly, it allows us to focus our energy on the commercial relationship with this customer.

Timothy Flanagan: Beyond commercial, let me highlight a few accomplishments across other areas of our business. In operations, our facilities continue to run well as they execute our production plans. And we are doing this safely. As our total reporting will interest rate remains significantly low the prior year level. Ultimately, this is the most important thing we do, and I commend the team for their ongoing commitment to safe. Our initiatives to address key elements of our cost structure are also progressing well. During the second quarter, we safely and thoughtfully wound down the production activities at St. Mary's. In addition, we have completed the activities related to the reduction in our overhead structure.

Speaker Change: Beyond commercial, let me highlight a few accomplishments across other areas of our business.

Speaker Change: In operations, our facilities continue to run well as they execute our production plans.

Speaker Change: And we are doing this safely, as our total reportable incident rate remains significantly low at the prior year level. Ultimately, this is the most important thing we do, and I commend the team for their ongoing commitment to safety.

Timothy K. Flanagan: Ultimately, this is the most important thing we do, and I commend the team for their ongoing commitment to safety. Our initiatives to address key elements of our cost structure are also progressing well. During the second quarter, we safely and thoughtfully wound down the production activities at St. Mary's.

Speaker Change: Our initiatives to address key elements of our cost structure are also progressing well.

Speaker Change: During the second quarter, we safely and thoughtfully wound down the production activities at St. Mary's.

Timothy K. Flanagan: In addition, we have completed the activities related to the reduction in our overhead structure. Overall, we are on track to achieve the projected $25 million of annualized cost savings from these initiatives. In addition, the other actions we have taken to reduce our variable costs and control overall spending levels are already paying off. We saw a further sequential decline in our cash costs on a per metric ton basis in the second quarter, and I've seen an 18% reduction in this metric in the first half of 2024 compared to the first half of 2023.

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

Timothy Flanagan: Overall, we are on track to achieve the projected $25 million of annualized cost savings from these initiatives. In addition, the other actions we have taken to reduce our variable costs and control overall spending levels are already paying off. We saw further sequential decline in our cash costs on a per metric dumb basis in the second quarter, and have seen an 18% reduction in this metric in the first half of 2024, compared to the first half of 2023. And we remain on track to achieve a mid-team percentage point decline in our full year cash costs on a per metric dumb basis, compared to 2023.

Speaker Change: Overall, we are on track to achieve the projected $25 million of annualized cost savings from these initiatives.

Speaker Change: In addition, the other actions we have taken to reduce our variable costs and control overall spending levels are already paying off.

Speaker Change: We saw a further sequential decline in our cash costs on a per metric ton basis in the second quarter and have seen an 18% reduction in this metric in the first half of 2024 compared to the first half of 2023.

Timothy K. Flanagan: And we remain on track to achieve a mid-team percentage point decline in our full-year cash costs on a per metric ton basis compared to 2023. In the EV space, we continue to advance our capabilities and participate in the growing demand for petroleum needle coke and synthetic graphite for anodes for lithium ion batteries. During the second quarter, we received regulatory approval for the permit application we filed last year related to a potential expansion of cedrus production capacity.

Speaker Change: And we remain on track to achieve a mid-team percentage point decline in our full-year cash costs on a per metric ton basis compared to 2023.

Timothy Flanagan: In the EV space, we continue to progress our capabilities and to participate in the growing demand for petroleum needle coke and synthetic graphite for anodes for lithium-ion batteries. During the second quarter, we received regulatory approval for the permit application we filed last year related to a potential expansion of seed risk production capacity. And at the same time, we are making investments within our R&D function, including pilot scale assets in our technical center. This will advance our capabilities as it relates to anode material. This remains a dynamic and exciting opportunity, with our assets and expertise positioning as well to participate in this demand growth.

Speaker Change: In the EV space, we continue to progress our capabilities and to participate in the growing demand for petroleum needle coke and synthetic graphite for anodes for lithium-ion batteries.

Speaker Change: During the second quarter, we received regulatory approval for the permit application we filed last year related to a potential expansion of CDRIF's production capacity.

Timothy K. Flanagan: And at the same time, we're making investments within our R&D function, including pilot-scale assets in our technical center. This will advance our capabilities as it relates to anode material. This remains a dynamic and exciting opportunity with our assets and expertise positioning as well as to participate in this demand growth. In the area of sustainability, we continue to make good progress on our initiative. Earlier this month, we published our latest sustainability report. I encourage everyone to take a look at it.

Speaker Change: And at the same time, we're making investments within our R&D function, including pilot-scale assets in our Technical Center.

Speaker Change: This will advance our capabilities as it relates to anode material.

Speaker Change: This remains a dynamic and exciting opportunity, with our assets and expertise positioning as well to participate in this demand growth.

Timothy Flanagan: In the area of sustainability, we continue to make good progress on our initiatives. Earlier this month, we published our latest Sustainability report. We encourage everyone to take a look at it. We continue to be good stewards in the communities in which we operate, both from an environmental perspective, but also having a positive impact through our community engagement efforts.

Speaker Change: In the area of sustainability, we continue to make good progress on our initiatives.

Speaker Change: Earlier this month, we published our latest sustainability report, encourage everyone to take a look at it.

Timothy K. Flanagan: We continue to be good stewards in the communities in which we operate, both from an environmental perspective and also through our community engagement efforts. In summary, in light of the challenging near-term industry dynamics, we set out a plan, and we're executing against it. We believe these are the right steps to position GrafTech to benefit from a global steel market rebound. Longer term, as decarbonization efforts further drive a shift to electric arc furnace steelmaking and higher graphite electrode demand, we are poised to capitalize on this anticipated growth.

Speaker Change: We continue to be good stewards in the communities in which we operate, both from an environmental perspective but also having a positive impact through our community engagement efforts.

Timothy Flanagan: In summary, in light of the challenging near-term industry dynamics, we set out a plan and were executing against it. We believe these are right steps to position graph tech to benefit as a global steel market rebounds. Longer term is decarbonization efforts further drive a shift to electric arc furnace steel making and higher graphite electrode demand. We are posed to poise to capitalize on this anticipated growth. I'll expand later in our prepared remarks.

Speaker Change: In summary, in light of the challenging near-term industry dynamics, we set out a plan and we're executing against it.

Speaker Change: We believe these are right steps to position GrafTech to benefit as the global steel market rebounds.

Speaker Change: Longer term, as decarbonization efforts further drive a shift to electric arc furnace steelmaking and higher graphite electrode demand, we are poised to capitalize on this anticipated growth.

Timothy K. Flanagan: I'll explain later in our prepared remarks. Overall, we're proud of our recent accomplishments and remain confident in emerging from this period as a stronger GrafTech. Now, I turn it over to Jeremy to provide more color on the current state of the industry and our commercial performance. Thank you, Tim, and good morning, everyone.

Timothy Flanagan: Overall, we're proud of our recent accomplishments and remain confident and emerging from this period as a stronger graph tech.

Speaker Change: I'll explain later in our prepared remarks.

Speaker Change: Overall, we're proud of our recent accomplishments and remain confident in emerging from this period as a stronger GrafTech.

Jeremy Halford: Let me turn it over to Jeremy to provide more color on the current state of the industry and our commercial performance. Thank you, Tim. Good morning, everyone.

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

Jeremy Halford: Before I provide an industry update, I'll start by briefly expanding on Tim's comment about our safety performance. Safety is a core value at Graph Tech, and with a year-to-date recordable incident rate that shows significant improvement over our solid performance in 2023, we're pleased with the ongoing momentum. Sending our employees home safely at the end of every day is our most important priority, and I would like to join Tim in commending all of our team members for their focus on this objective.

Jeremy S. Halford: Before I provide an industry update, I'll start by briefly expanding on Tim's comment about our safety performance. Safety is a core value at GrafTech, and with a year-to-date recordable incident rate that shows significant improvement over our solid performance in 2023, we are pleased with the ongoing momentum. Sending our employees home safely at the end of every day is our most important priority, and I would like to join Tim in commending all of our team members for their focus on this objective.

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

Jeremy S. Halford: Before I provide an industry update, I'll start by briefly expanding on Tim's comment about our safety performance.

Jeremy S. Halford: Safety is a core value at GrafTech, and with a year-to-date recordable incident rate that shows significant improvement over our solid performance in 2023, we are pleased with the ongoing momentum.

Speaker Change: Sending our employees home safely at the end of every day is our most important priority. And I would like to join Tim in commending all of our team members for their focus on this objective.

Jeremy Halford: Let me now turn to the next slide to discuss the commercial environment. As Tim indicated, we operate in the cyclical industry and currently find ourselves in a challenging part of the cycle, reflecting a constrained global steel. Earlier this week, the World Steel Association published their most recent steel production statistics. On a global basis, steel production outside of China was approximately 212 million tons in the second quarter of 2024, which was essentially flat to the fire year. The global steel capacity utilization rate outside of China also remained flat at 69%. For North America, steel production was down 5% in the second quarter on a year-over-year basis, neglecting a slight dip in what has been a relatively stable steel region.

Jeremy S. Halford: Let me now turn to the next slide to discuss the commercial environment. As Tim indicated, we operate in a cyclical industry and currently find ourselves in a challenging part of the cycle, reflecting a constrained global steel industry. Earlier this week, the World Steel Association published their most recent steel production statistics. On a global basis, steel production outside of China was approximately 212 million tons in the second quarter of 2024, which was essentially flat for the fire industry. The global steel capacity utilization rate outside of China also remained flat at 69%.

Speaker Change: Let me now turn to the next slide to discuss the commercial environment.

Speaker Change: As Tim indicated, we operate in a cyclical industry and currently find ourselves in a challenging part of the cycle, reflecting a constrained global steel industry.

Speaker Change: Earlier this week, the World Steel Association published their most recent steel production statistics.

Timothy K. Flanagan: On a global basis, steel production outside of China was approximately 212 million tons in the second quarter of 2024, which was essentially flat for the prior year.

Timothy K. Flanagan: The global steel capacity utilization rate outside of China also remained flat at 69%.

Jeremy S. Halford: Looking at some of our key commercial regions. For North America, steel production was down 5% in the second quarter on a year-over-year basis, indicating a slight dip in what has been a relatively stable steel region. Steel output in the EU increased by 3%, although it remains well below historical production and utilization rates for that region. 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 on pricing, The graphite electrode industry continues to suffer from low capacity utilization.

Speaker Change: Looking at some of our key commercial regions.

Speaker Change: For North America, steel production was down 5% in the second quarter on a year-over-year basis, neglecting a slight dip in what has been a relatively stable steel region.

Jeremy Halford: Steel output in the EU increased 3%, although it remains well below historical production and utilization rates for that region. 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 on pricing, the graphite electrode industry continues to suffer from low capacity utilization. Despite the weak demand environment, we continue to see a healthy level of electrode exports from certain countries, including India and China, into non-tariff protected regions such as the Middle East.

Speaker Change: Steel output in the EU increased 3%, although it remains well below historical production and utilization rates for that region.

Speaker Change: These dynamics within the global steel industry have in turn resulted in persistent challenges in the commercial environment for graphite electrodes.

Speaker Change: Specifically, industry-wide demand for graphite electrodes has remained weak, with challenging pricing dynamics persisting in most regions.

Speaker Change: To expand on pricing,

Speaker Change: The graphite electrode industry continues to suffer from low capacity utilization.

Jeremy S. Halford: Despite the weak demand environment, we continue to see a healthy level of electrode exports from certain countries, including India and China, into non-terra protected regions such as the Middle East. These are typically lower priced electrodes, with prices declining further away. As we've discussed in the past, with these export dynamics, we see a knock-on pricing effect in tariff-protected countries, such as those within the EU, as Tier 1 competitors have continued to lower prices in these regions to support volume.

Speaker Change: Despite the weak demand environment, we continue to see a healthy level of electrode exports from certain countries, including India and China, into non-tariff protected regions such as the Middle East.

Jeremy Halford: These are typically lower priced electrodes, with prices declining further away. As we've discussed in the past, with these export dynamics, we see a knock-on pricing effect in tariff-protected countries, such as those within the EU, as tier 1 competitors have continued to lower prices in these regions to support volume. As we noted last quarter, we're also seeing this dynamic play out in the US, with prices softening further away, all of which represent challenges we must mention in your term.

Speaker Change: These are typically lower-priced electrodes, with prices declining further of late.

Speaker Change: As we've discussed in the past, with these export dynamics, we see a knock-on pricing effect in tariff-protected countries, such as those within the EU, as Tier 1 competitors have continued to lower prices in these regions to support volume.

Jeremy S. Halford: As we noted last quarter, we're also seeing this dynamic play out in the U.S., with prices softening further of late, all of which represent challenges we must manage in the near term. With that in mind, let's turn to the next slide for more details on our results. Production volume in the second quarter of 2024 was 27,000 metric tons, which resulted in our capacity utilization rate increasing to 60%. Additionally, our sales volume was nearly 26,000 metric tons, which was above our stated outlook for the quarter.

Speaker Change: As we noted last quarter, we are also seeing this dynamic play out in the U.S. with prices softening further of late, all of which represent challenges we must manage in the near term.

Jeremy Halford: With that background, let's turn to the next slide for more details on our results. Production volume in the second quarter of 2024 was 27,000 metric tons, which resulted in our capacity utilization rate increasing to 60%. Our sales volume was nearly 26,000 metric tons, which was above our stated outlook for the quarter. Shipments for the second quarter of 2024 included 23,000 metric tons of non-LTA sales at a weighted average realized price of approximately $4,300 per metric ton. And approximately 3,000 metric tons sold under our LTAs at a weighted average realized price of approximately $8,300 per metric ton.

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

Speaker Change: Production volume in the second quarter of 2024 was 27,000 metric tons, which resulted in our capacity utilization rate increasing to 60%.

Speaker Change: Our sales volume was nearly 26,000 metric tons, which was above our stated outlook for the quarter.

Jeremy S. Halford: Shipments for the second quarter of 2024 included 23,000 metric tons of non-LTA sales at a weighted average realized price of approximately $4,300 per metric ton, and approximately 3,000 metric tons sold under our LTAs at a weighted average realized price of approximately $8,300 per metric ton. Expanding on our weighted average price for non-LTA sales, this represented a 23% year-over- Net sales in the second quarter decreased 26% compared to the second quarter of 2023, driven by lower pricing, along with the ongoing shift in the mix of our business from LTA to non-LTA volume.

Speaker Change: Shipments for the second quarter of 2024 included 23,000 metric tons of non-LTA sales at a weighted average realized price of approximately $4,300 per metric ton.

Speaker Change: And approximately 3,000 metric tons sold under our LTAs at a weighted average realized price of approximately $8,300 per metric ton.

Jeremy Halford: Expanding on our weighted average price for non-LTA sales, this represented a 23% year-over-year decline and a sequential decline from the first quarter of approximately 2%. That sales in the second quarter decreased 26% compared to the second quarter of 2023, driven by the lower pricing, along with the ongoing shift in the mix of our business from LTA to non-LTA volume. Looking ahead, 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 response, we remain selective in the commercial opportunities we're choosing to pursue, with a focus on competing responsibly.

Speaker Change: Expanding on our weighted average price for non-LTA sales, this represented a 23% year-over-year decline and a sequential decline from the first quarter of approximately 2%.

Speaker Change: Net sales in the second quarter decreased 26% compared to the second quarter of 2023, driven by the lower pricing, along with the ongoing shift in the mix of our business from LTA to non-LTA volume.

Jeremy S. Halford: Looking ahead, 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 response, we remain selective in the commercial opportunities we choose to pursue with a focus on competing responses. We expect our sales volume in the third quarter of 2024 to be broadly in line with sales volume in the second quarter of 2024. Furthermore, we continue to expect a modest year-over-year improvement in sales for the full year.

Speaker Change: Looking ahead, 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.

Speaker Change: In response, we remain selective in the commercial opportunities we are choosing to pursue with a focus on competing responsibly.

Jeremy Halford: We expect our sales volume in the third quarter of 2024 to be broadly in line with sales volume in the second quarter of 2024. Further, we continue to expect a modest year-over-year improvement in sales for the full year.

Speaker Change: We expect our sales volume in the third quarter of 2024 to be broadly in line with sales volume in the second quarter of 2024.

Speaker Change: Further, we continue to expect a modest year-over-year improvement in sales for the full year.

Jeremy Halford: Longer term, as the global steel market rebounds and the shift to electric arcs for steel-making continues, this will lead to an improved commercial environment for the graphite electrode industry. GrafTech remains well positioned to capitalize as the electrode demand recovers. Our customer value proposition remains intact and includes a strategically positioned manufacturing footprint that provides operational flexibility and reach to key standards. In addition, we continue to offer steel-making regions. Being the only large-scale graphite electrode producer that is substantially vertically integrated into petroleum needle coke, best-in-class customer technical services and solutions that are offered to customers at no incremental cost, and a focus on continually expanding our commercial and product offerings, some of which Tim spoke to earlier.

Jeremy S. Halford: Longer term, as the global steel market rebounds and the shift to electric arc furnace steelmaking continues, this will lead to an improved commercial environment for the graphite electrode industry. GrafTech remains well positioned to capitalize as electrode demand recovers. Our customer value proposition remains intact and includes a strategically positioned manufacturing footprint that provides operational flexibility and reach to key steelmaking regions. Additionally, being the only large-scale graphite electrode producer that is substantially vertically integrated into petroleum needle coat. Best in class customer technical services and solutions that are offered to customers at no incremental cost.

Speaker Change: Longer term, as the global steel market rebounds and the shift to electric arc furnace steel making continues, this will lead to an improved commercial environment for the graphite electrode industry.

Graftec: GrafTech remains well-positioned to capitalize as the electrode demand recovers.

Graftec: Our customer value proposition remains intact and includes a strategically positioned manufacturing footprint that provides operational flexibility and reach to key steelmaking regions.

Graftec: Being the only large-scale graphite electrode producer that is substantially vertically integrated into petroleum needle coke.

Graftec: Best-in-class customer technical services and solutions that are offered to customers at no incremental cost.

Catherine Delgado: And the focus on continually expanding our commercial and product offerings, some of which Tim spoke about earlier. Overall, we believe we provide a compelling value proposition to our customers, and we will compete on more than just price. Let me now turn it over to Catherine to cover the rest of our financial details. Thank you, Jeremy.

Graftec: And a focus on continually expanding our commercial and product offerings, some of which Tim spoke to earlier.

Jeremy Halford: Overall, we believe we provide a compelling value proposition to our customers, and we will compete on more than just price.

Graftec: Overall, we believe we provide a compelling value proposition to our customers, and we will compete on more than just price.

Catherine Delgado: But we now turn it over to Catherine to cover the rest of our financial details. Thank you, Jeremy. For the second quarter of 2024, we had a net loss of $15 million for six cents per share. Adjusted EBITDA was $14 million in the second quarter compared to adjusted EBITDA of $26 million in the second quarter of 2023. This decline reflected lower weighted average pricing and the continued shift in the mix of our business toward non-LCA volume. These factors were partially offset by an 18% year-over-year reduction in cash cost on a per metric ton basis. In addition, second quarter results included a $9 million benefit related to the final award in a long-standing LK arbitration.

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

Catherine Delgado: For the second quarter of 2024, we had a net loss of $15 million, for $0.06 per share. Adjusted EBITDA was $14 million in the second quarter compared to adjusted EBITDA of $26 million in the second quarter of 2023. This decline reflected lower weighted average pricing and a continued shift in the mix of our business toward non-LCA volumes. However, these factors were partially offset by an 18% year-over-year reduction in cash costs on a per metric ton basis.

Catherine Delgado: Thank you, Jeremy.

Catherine Delgado: For the second quarter of 2024, we had a net loss of $15 million for $0.06 per share.

Catherine Delgado: Adjusted EBITDA was $14 million in the second quarter compared to adjusted EBITDA of $26 million in the second quarter of 2023. This decline reflected lower weighted average pricing and a continued shift in the mix of our business toward non-LCA volume.

Catherine Delgado: These factors were partially offset by an 18% year-over-year reduction in cash costs on a per metric ton basis.

Catherine Delgado: In addition, second quarter results included a $9 million benefit related to the final award in a long-standing LTA arbitration. And as this represented a reimbursement of legal fees and other related expenses, it was recorded as a reduction in selling and administrative expenses.

Catherine Delgado: In addition, second quarter results included a $9 million benefit related to the final award in a long-standing LTA arbitration, and as this represented a reimbursement of legal fees and other related expenses, it was recorded as a reduction in selling and administrative expenses.

Catherine Delgado: As this represented a reimbursement of legal fees and other related expenses, it was recorded as a reduction in selling and administrative expenses.

Catherine Delgado: Now, let me expand on the topic of our cash cost of goods sold. As shown in the reconciliation provided in our earnings call materials posted on our website, our second quarter 2020 forecast costs per metric ton were approximately $4,300, which was in line with our expectations for the quarter. Contributing to the 18% decline on a year-over-year basis was a benefit of $6 million in the second quarter, or approximately $230 per metric ton, reflecting the portion of the lower-up cost-to-market inventory write-down recorded in prior periods that was related to the inventory sold in this quarter. However, the majority of the year-over-year cost improvement reflected two key drivers. And let me provide some color on each one.

Catherine Delgado: Now, let me expand on the topic of our cash cost of goods sold. As shown in the reconciliation provided in our earnings call materials posted on our website, our second quarter 2024 cash cost per metric ton was approximately $4,300, which was in line with our expectations for the quarter. Contributing to the 18% decline on a year-over-year basis was a benefit of $6 million in the second quarter, or approximately $230 per metric ton, reflecting the portion of the lower-up cost of market inventory write-down recorded in prior periods that was related to the inventory sold in this quarter.

Catherine Delgado: Now, let me expand on the topic of our cash cost of goods sold.

Catherine Delgado: As shown in the reconciliation provided in our earnings call materials posted on our website, our second quarter 2020 forecast costs per metric ton were approximately $4,300, which was in line with our expectations for the quarter.

Catherine Delgado: Contributing to the 18% decline on a year-over-year basis was a benefit of $6 million in the second quarter, or approximately $230 per metric ton, reflecting the portion of the lower-up cost-to-market inventory write-down recorded in prior periods

Catherine Delgado: that was related to the inventory sold in this quarter.

Catherine Delgado: However, the majority of the year-over-year cost improvement reflected two key drivers, and let me provide some color on each one. First, as part of addressing key elements of our cost structure, our efforts related to variable cost are already yielding benefits. Specifically, our technical and operational teams continue to work on engineering costs out of our manufacturing processes without compromising quality and 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. Second, we had a year-over-year reduction in the level of fixed costs being recognized on an accelerated basis due to low production levels.

Catherine Delgado: However, the majority of the year-over-year cost improvement reflected two key drivers. And let me provide some color on each one.

Catherine Delgado: First, as part of addressing key elements of our cost structure, our efforts related to variable costs are already yielding benefits. Specifically, our technical and operational teams continue to work on engineering costs out of our manufacturing processes without compromising quality and 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. Additionally, we had a year-over-year reduction in the level of fixed costs being recognized on an accelerated basis due to low production levels.

Catherine Delgado: First, as part of addressing key elements of our cost structure, our efforts related to variable costs are already yielding benefits.

Catherine Delgado: Specifically, our technical and operational teams continue to work on engineering costs out of our manufacturing processes without compromising quality and performance.

Catherine Delgado: 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 Delgado: Second, we had a year-over-year reduction in the level of fixed costs being recognized on an accelerated basis due to low production levels. And as a reminder, these are costs recognized in the current period that would otherwise have been inventoried if we were operating at normal production levels.

Catherine Delgado: And as a reminder, these are costs recognized in the current period that would otherwise have been inventoried if we were operating at normal production levels. In the second quarter of this year, as utilization rates at our graphite electrode and seed drift facilities increased, we recognized approximately $1 million of such costs compared to approximately $10 million in the second quarter of 2023. And lastly, the cost savings related to Iving or St. Mary's facilities are beginning to flow through in the second quarter.

Catherine Delgado: And as a reminder, these are costs we have to recognize: approximately $1 million of such costs compared to approximately $10 million in the second quarter of 2023. And lastly, the cost savings related to I think our cent mirrored facilities are beginning to flow through in the second quarter. Reflecting the progress we're making on our cost structure, we continue to anticipate a mid-teen percentage point decline in our cash cost per metric done for 2024 compared to the four-year cash cost per metric done for 2023 of just over $5,500. The first six months of the year, our cash cost per metric done was approximately $4500, which is an 18% decline compared to the first half of 2023.

Catherine Delgado: In the second quarter of this year, as utilization rates at our graphite electrode and seed drift facilities increased, we recognized approximately $1 million of such costs, compared to approximately $10 million in the second quarter of 2023.

Catherine Delgado: And lastly, the cost savings related to Eibing or St. Mary's facilities are beginning to flow through in the second quarter.

Catherine Delgado: Reflecting the progress we're making on our cost structure, we continue to anticipate a mid-team percentage point decline in our cash costs per metric ton for 2024 compared to the full-year cash costs per metric ton for 2023 of just over $5,500. For the first six months of the year, our cash cogs per metric ton were approximately $4,500, which is an 18% decline compared to the first half of 20 Therefore, as the math would imply, we expect to see a sequential increase in our cash cogs per metric ton for the second half of 2024 as compared to the first half of 2024.

Catherine Delgado: The first six months of the year, our cash cogs per metric ton was approximately $4,500, which is an 18% decline compared to the first half of 2023.

Catherine Delgado: Therefore, as the math would imply, we expect to see a sequential increase in our cash cost per metric done for the second half of 2024 as compared to the first half of 2024. Among other factors, this expectation reflects first the benefit from the utilization of the previously recorded lower of cost or market inventory write-down being more heavily weighted toward the first half of 2024. Second, seasonally higher energy costs for our European facilities in the second half of 2024. And third, the impact of upcoming plant production declines on fixed cost of absorption. And specific to the plant production declines, this relates to normal shut down at our European electrode facilities and our plant turnaround activities at our seed risk.

Catherine Delgado: Therefore, as the math would imply, we expect to see a sequential increase in our cash cogs per metric ton for the second half of 2024 as compared to the first half of 2024.

Catherine Delgado: Among other factors, this expectation reflects, first, the benefit from the utilization of the previously recorded lower-of-cost or market inventory write-down being more heavily weighted toward the first half of 2024. Second, seasonally higher energy costs for European facilities in the second half of 2024.

Catherine Delgado: Second, seasonally higher energy costs for our European facilities in the second half of 2024.

Catherine Delgado: And third, the impact of upcoming planned production declines on fixed costs of absorption. And specific to the plant production declines, this relates to normal shutdowns at our European electrode facilities and our planned turnaround activities at our Seadrift needle coke facility, which take place every 18 months to three years. These planned maintenance events are scheduled to take place later in the third quarter.

Catherine Delgado: And third, the impact of upcoming planned production declines on fixed cost of absorption.

Catherine Delgado: Specific to the plant's production declines, this relates to normal summer shutdowns at our European electrode facilities and our planned turnaround activities at our Seadrift Needle Poke facility, which take place every 18 months to 3 years.

Catherine Delgado: Next, needle poke facility, which takes place every 18 months to three years. This plant shutdowns events are scheduled to take place later in the third quarter.

Catherine Delgado: These planned maintenance events are scheduled to take place later in the third quarter.

Catherine Delgado: So, however, despite the quoted-to-quarter lumpiness in cost recognition, the key point is that with the actions we're taking, our overall cost structure is moving in the right direction for 2024, and we would anticipate cost to decline further as we look ahead to 2025.

Catherine Delgado: So, however, despite the quarter-to-quarter lumpiness in cost recognition, the key point is that with the actions we're taking, our overall cost structure is moving in the right direction for 2024, and we would anticipate costs to decline further as we look ahead to 2025. Now, turning to cash flow. For the second quarter of 2024, cash used in operating activities was $37 million, and adjusted free cash flow with a cash usage of $44 million. As a reminder, our semi-annual interest payments of $34 million are made in the second and fourth quarters of the year. As it relates to working capital, inventory levels increased slightly during the second quarter.

Catherine Delgado: Now, turning to cash flow. For the second quarter of 2024, cash used in operating activities was 37 million, and adjusted free cash flow with the cash usage of 44 million. As a reminder, our semi-annual interest payments of 34 million are made in the second and in the fourth quarter of the year. As it relates to working capital, inventory levels increased slightly during the second quarter; however, this was an intentional build in advance of the seasonal production declines, which I just spoke to. As we move through the back half of 2024, we remain focused on reducing our overall inventory levels as part of our initiative.

Catherine Delgado: Now, turning to cash flow. For the second quarter of 2024, cash used in operating activities was $37 million and adjusted free cash flow with a cash usage of $44 million.

Catherine Delgado: As a reminder, our semi-annual interest payments of $34 million are made in the second and in the fourth quarter of the year.

Catherine Delgado: As it relates to working capital, inventory levels increased slightly during the second quarter. However, this was an intentional build in advance of the seasonal production declines which I just spoke to.

Catherine Delgado: However, this was an intentional build in advance of the seasonal production declines which I just spoke about. As we move through the back half of 2024, we remain focused on reducing our overall inventory levels as part of this initiative. We continue to expect the net impact of working capital will be neutral to our full year cash flow performance. And lastly, on cash flow, we continue to anticipate our full year 2020 capital expenditures will be in the range of $35 to $40 million. Moving to the next slide.

Catherine Delgado: As we move through the back half of 2024, we remain focused on reducing our overall inventory levels as part of

Catherine Delgado: We continue to expect the net impact of working capital will be neutral to our full year cash flow performance. And lastly, on cash flow, we continue to anticipate our full year 2024 capital expenditures will be in the range of 35 to 40 million dollars.

Catherine Delgado: initiative. We continue to expect the net impact of working capital will be neutral.

Catherine Delgado: to our full-year cash flow performance.

Catherine Delgado: And lastly, on cash flow, we continue to anticipate our full year 2024 capital expenditures will be in the range of $35 to $40 million.

Catherine Delgado: Moving to the next slide. We ended the second quarter with a liquidity position of 232 million, consisting of 121 million of cash and 111 million available under our revolving credit facility. This reflects the financial covenants that limit the volatility and revolver in certain circumstances. More importantly, we do not anticipate the need to borrow against the revolver in 2024. Further, let me add that we have no debt maturities until the end of 2028.

Catherine Delgado: Moving to the next slide.

Catherine Delgado: We ended the second quarter with a liquidity position of $232 million, consisting of $121 million of cash and $111 million available under a revolving credit facility. This reflects financial covenants that limit scoring, availability, and growth in certain circumstances. More importantly, we do not anticipate the need to borrow against the revolver in 2024. Furthermore, let me add that we have no debt maturities until the end of 2028. Now, I'll turn the call back over to Tim for some final comments on our outlook. Thanks, Catherine.

Catherine Delgado: We ended the second quarter with a liquidity position of $232 million, consisting of $121 million of cash and $111 million available under a revolving credit facility.

Catherine Delgado: This reflects the financial covenants that limits growing availability and growing older in certain circumstances.

Catherine Delgado: More importantly, we do not anticipate the need to borrow against the revolver in 2024.

Catherine Delgado: Further, let me add that we have no debt maturities until the end of 2028.

Timothy Flanagan: Now, let me turn the call back over to Tim for some final comments on our outlook. Thanks, Catherine. To summarize our comments on the quarter and year-to-date results, while we're not satisfied with this level of performance, GraphicTech continues to deliver on our stated outlook and initiatives to control the controllable. We are pleased with the team's execution and remain confident in our ability to manage the near-term headwinds. And further, there are many reasons for optimism about the longer-term prospects for our company as we look ahead. While we remain cautious on the near-term steel industry trends, as we've mentioned, cyclical downturns eventually come to an end.

Catherine Delgado: Now, let me turn the call back over to Tim for some final comments on our outlook.

Timothy K. Flanagan: To summarize our comments on the quarter and year-to-date results, while we are not satisfied with this level of performance, GrafTech continues to deliver on our stated outlook and initiatives to control the controllable. We are pleased with the team's execution and remain confident in our ability to manage the near-term headwinds. And further, there are many reasons for optimism about the longer-term prospects for our company as we look ahead. While we remain cautious on the near-term steel industry trends, as we've mentioned, cyclical downturns eventually come to an end.

Timothy K. Flanagan: Thanks, Catherine.

Timothy K. Flanagan: To summarize our comments on the quarter and year-to-date results.

Timothy K. Flanagan: While we're not satisfied with this level of performance, GrafTech continues to deliver on our stated outlook and initiatives to control the controllable.

Speaker Change: We are pleased with the team's execution and remain confident in our ability to manage the near-term headwinds.

Timothy K. Flanagan: And further, there are many reasons for optimism about the longer-term prospects for our company as we look ahead.

Timothy K. Flanagan: While we remain cautious on the near-term steel industry trends, as we've mentioned, cyclical downturns eventually come to an end.

Timothy Flanagan: World Steel Association's most recent short-term forecast on global steel demand calls for low to mid-single digit percentage increases in 2025 for nearly all of our key regions, including the EU, the Americas, the Middle East, and in Africa. Longer term, as I noted earlier, decarbonization efforts are driving a transition in the approach to steelmaking, with electric arc furnaces continuing to increase the share of total steel production. Based on updated productions, statistics published last month by the World Steel Association, the EAF method of steelmaking accounted for 50 percent of global steel production outside of China in 2023, an increase from 44 percent in 2015, with market share growth in nearly every region.

Timothy K. Flanagan: The World Steel Association's most recent short-term forecast on global steel demand calls for low to mid-single digit percentage increases in 2025 for nearly all of our key regions, including the EU, the Americas, the Middle East, and Africa. Longer term, as I noted earlier, decarbonization efforts are driving a transition in the approach to steelmaking, with electric arc furnaces continuing to increase the share of total steel production. Based on updated production statistics published last month by the World Steel Association, the EAF method of steelmaking accounted for 50% of global steel production outside of China in 2023, an increase from 44% in 2015, with market share growth in nearly every region.

Timothy K. Flanagan: The World Steel Association's most recent short-term forecast on global steel demand calls for low- to mid-single-digit percentage increases in 2025 for nearly all of our key regions, including the EU, the Americas, the Middle East, and in Africa.

Timothy K. Flanagan: Longer term, as I noted earlier, decarbonization efforts are driving a transition in the approach to steelmaking, with electric arc furnaces continuing to increase the share of total steel production.

Timothy K. Flanagan: Based on updated production statistics published last month by the World Steel Association, the EAF method of steelmaking accounted for 50% of global steel production outside of China in 2023, an increase from 44% in 2015, with market-share growth in nearly every region.

Timothy Flanagan: And this trend of EAF share growth is expected to continue. You're tracking approximately 200 announced projects from steel manufacturers regarding plans for new EAF facilities or expansion of existing facilities. Outside of China, these projects are expected to result in over 170 million metric tons per year of new EAF steel production capacity coming online by the end of the decade, with much of this growth concentrated in our key commercial regions. This, in turn, is expected to drive incremental demand for graphite electrodes. In fact, 170 million metric tons of EAF steel capacity, even at conservative assumptions around utilization rates, could translate into about 200,000 metric tons per year of incremental demand for graphite electrodes.

Timothy K. Flanagan: And this trend of EAF share growth is expected to continue. You're tracking approximately 200 announced projects from steel manufacturers regarding plans for new EF facilities or expansion of existing facilities. Outside of China, these projects are expected to result in over 170 million metric tons per year of new EAF steel production capacity coming online by the end of the decade.

Timothy K. Flanagan: And this trend of EAF share growth is expected to continue.

Speaker Change: We are tracking approximately 200 announced projects from steel manufacturers regarding plans for new EF facilities or expansion of existing facilities.

Speaker Change: Outside of China, these projects are expected to result in over 170 million metric tons per year of new EAF steel production capacity coming online by the end of the decade, with much of this growth concentrated in our key commercial regions.

Timothy K. Flanagan: With much of this growth concentrated in our key commercial regions, this, in turn, is expected to drive incremental demand for graphite electricity. In fact, 170 million metric tons of EAF steel capacity, even at conservative assumptions around utilization rates, could translate into about 200,000 metric tons per year of incremental demand for graphite-electric power. That would be more than 25% of the total manufacturing capacity that currently exists outside of China. All in, this would drive graphite electrode demand, increasing at a compound annual growth rate of 3-4% through the end of the decade.

Speaker Change: This, in turn, is expected to drive incremental demand for graphite electrodes.

Speaker Change: In fact, 170 million metric tons of EAF steel capacity, even at conservative assumptions around utilization rates, could translate into about 200,000 metric tons per year of incremental demand for graphite electrodes.

Timothy Flanagan: That would be more than 25% of the total manufacturing capacity that currently exists outside of China. All in, this would drive graphite electrode demand increasing at a compound annual growth rate of 3 to 4% through the end of the decade. Importantly, about 80% of that growth would take place in regions where we already have a strong presence. As the strategic actions we are taking to reduce costs have been designed to preserve our competitive advantage that we have spoken to. We view graphite as being well positioned to capitalize on long-term industry tailwinds. Further, anticipated depend for growth in petroleum needle coke will also present a tailwind for our business given our substantial vertical integration.

Speaker Change: That would be more than 25% of the total manufacturing capacity that currently exists outside of China.

Speaker Change: All in, this would drive graphite electrode demand, increasing at a compound annual growth rate of 3-4% through the end of the decade.

Timothy K. Flanagan: Importantly, about 80% of that growth would take place in regions where we already have a strong presence, as the strategic actions we are taking to reduce costs have been designed to preserve our competitive advantage that we have spoken about.

Speaker Change: Importantly, about 80% of that growth would take place in regions where we already have a strong presence.

Speaker Change: As the strategic actions we are taking to reduce costs have been designed to preserve our competitive advantage that we have spoken to, we view GrafTech as being well-positioned to capitalize on long-term industry tailwinds.

Timothy K. Flanagan: We view GrafTech as being well-positioned to capitalize on long-term industry tailwinds. Further, anticipated demand for growth in petroleum needle coke will also present a tailwind for our business given our substantial vertical integration. We expect this demand for high-quality needle coke to be driven by two factors. First, the demand for graphite electrodes from the ongoing shift to EAF steelmaking I just spoke about, and second, and more importantly, the demand for synthetic graphite anode material for use in electrical vehicle batteries, where needle coke is a key precursor material.

Speaker Change: Further, anticipated depend for growth in petroleum needle coke will also present a tailwind for our business given our substantial vertical integration.

Timothy Flanagan: We expect this demand for high quality needle coke to be driven by two factors. First, the demand for graphite electrodes from the ongoing shift to EAF steel making I just spoke to. And second, and more importantly, the demand for synthetic graphite and owed material for use in electrical vehicle batteries, where needle coke is a key precursor material. Growing demand for needle coke should result in elevated needle coke pricing, and given the high historical correlation between petroleum and needle coke pricing and graphite electrode pricing, this trend to translate to higher market pricing for graphite electrodes. This again reinforces the key competitive advantage that our substantial vertical integration and needle coke affords us as it relates to our graphite electrode business.

Speaker Change: We expect this demand for high-quality needle coke to be driven by two factors.

Speaker Change: First, the demand for graphite electrodes from the ongoing shift to EAF steelmaking I just spoke to, and second, and more importantly, the demand for synthetic graphite anode material for use in electrical vehicle batteries, where needle coke is a key precursor material.

Timothy K. Flanagan: 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 graphite electrodes. This again reinforces the key competitive advantage that our substantial vertical integration into needle coke affords us as it relates to our graphite electrode business. Beyond graphite electrodes, we continue to evaluate ways to leverage our assets and technical know-how to directly participate in the demand growth for anode materials for the EV market.

Speaker Change: 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 graphite electrodes.

Speaker Change: This again reinforces the key competitive advantage that our substantial vertical integration into Needlecoke affords us as it relates to our graphite electrode business.

Timothy Flanagan: Beyond graphite electrodes, we continue to evaluate ways to leverage our assets and technical know-how to directly participate in the demand growth for anode material for the EV market. There's a strong desire by Western OEMs and supported by Western governments to establish EV battery supply chains that are independent of the current reliance on China. Our unique manufacturing footprint would allow us to participate in the establishment of these supply chains in two potential ways. First, this is a supplier of petroleum needle coke, given that we are only one of two Western manufacturers of these key materials. And second, as one of the largest Western operators of graphitization capacity, we could leverage these assets to convert needle coke into synthetic graphite.

Speaker Change: Beyond graphite electrodes, we continue to evaluate ways to leverage our assets and technical know-how to directly participate in the demand growth for anode material for the EV market.

Timothy K. Flanagan: There is a strong desire by Western OEMs, supported by Western governments, to establish EV battery supply chains that are independent of the current reliance on China. Our unique manufacturing footprint would allow us to participate in the establishment of these supply chains in two potential ways. First, as a supplier of petroleum needle coke, given that we are only one of two Western manufacturers of this key material, and second, as one of the largest Western operators of graphitization capacity, we could leverage these assets to convert needle coke into synthetic graphite.

Speaker Change: There is a strong desire by Western OEMs and supported by Western governments to establish EV battery supply chains that are independent of the current reliance on China.

Speaker Change: Our unique manufacturing footprint would allow us to participate in the establishment of these supply chains in two potential ways.

Speaker Change: First, as a supplier of petroleum needle coke, given that we are only one of two Western manufacturers of this key material, and second, as one of the largest Western operators of graphitization capacity, we could leverage these assets to convert needle coke into synthetic graphite.

Timothy Flanagan: We continue to hold dialogue with leading participants in the space and remain excited about the opportunity to about the opportunity and the development of the supply chain and our associated prospects.

Timothy K. Flanagan: We continue to hold dialogue with leading participants in the space and remain excited about the opportunity and the development of the supply chain and our associated prospects. In closing, this is a pivotal time for GrafTech, with many challenges still ahead of it. Yet we're up to the challenge, and we continue to believe GrafTech will successfully manage through the near-term uncertainty and remain an industry-leading supplier of mission-critical products to the EAF industry. In the longer term, we possess a distinct set of assets, capabilities, and competitive advantages. Capitalizing on Growth Opportunities. For these reasons, we are confident we can return GrafTech to the position of generating great value for its stockholders.

Speaker Change: We continue to hold dialogue with leading participants in the space and remain excited about the opportunity in the development of the supply chain and our associated prospects.

Timothy Flanagan: In closing, this is a pivotal time for graphite, with many challenges still in front of us. Yet, we're up to the challenge, and we continue to believe graphite will successfully manage your the near-term uncertainty and remain an industry-leaning supplier of mission-critical products to the EAF industry. Longer term, we possess a distinct set of assets, capabilities, and competitive advantages to capitalize on growth opportunities. For these reasons, we are confident we can return GrafTech to the position of generating grape value for its stockholders.

Speaker Change: In closing, this is a pivotal time for GrafTech, with many challenges still in front of us. Yet, we're up to the challenge and we continue to believe GrafTech will successfully manage through the near-term uncertainty and remain an industry-leading supplier of mission-critical products to the EAF industry.

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

Speaker Change: For these reasons, we are confident we can return GrafTech to the position of generating great value for its stockholders.

Unknown Executive: This concludes our prepared remarks. We'll now open up the call for questions. Thank you.

Timothy K. Flanagan: This concludes our prepared remarks. We will now open up the call for questions. Thank you.

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

Operator: Ladies and gentlemen, we will now begin the question and answer session. So do you have a question? Please press the star sign followed by the number one on your touch phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press the star sign followed by the number two. If you are using a speakerphone, please lift the handset before pressing any key.

Unknown Executive: Ladies and gentlemen, we will now begin the question-and-answer session. Should you have a question, please press the star sign followed by the number one in your touch phone. You will hear a prompt that your hand has been raised. Should you reach the decline from the polling process, please press the star sign followed by the number two. If you are using a speaker phone, please lift the handstand before pressing any keys. One moment, please, for your first question.

Speaker Change: Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press the star sign followed by the number one in your touch phone.

Speaker Change: You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press the star sign followed by the number 2. If you are using a speakerphone, please lift the handset before pressing any keys.

Operator: One moment, please, for your first question. Our first question is from Bill Peterson from J.P. Morgan. Go ahead. Yeah, hi. Good morning, team.

Speaker Change: One moment, please, for your first question.

William Peterson: Our first question is from Bill Peterson from JP Morgan. Go ahead. Good morning, team. Nice job on the continued efforts on the cost side.

Speaker Change: Our first question is from Bill Peterson from J.P. Morgan.

William Chapman Peterson: Nice job on the continued efforts on the cost side. Although you mentioned before the guidance does apply a step up in cost to the back half of the year, you discussed downtime. I believe you also may have seasonal energy impacts in Europe, but I guess first on these outages: how long are these outages planned to be?

Speaker Change: Go ahead.

Speaker Change: Hi, good morning team. Nice job on the continued efforts on the cost side. Although you mentioned before the guidance does apply a step up in cost to the back half of the year, you discussed the downtime. I believe you also may have seasonal

William Peterson: Although you mentioned before, the guidance does apply a step up and cost to the back after the year. You discussed the downtime. I believe you also may have seasonal energy impacts in Europe. How long are these outages planned to be?

Jeremy S. Halford: And then taking into account the shutdowns and maybe potential energy impacts, how should we think about the cash cost at an absolute level in the third quarter and then the fourth quarter? Should we assume it to be higher in the third quarter than decline in the fourth quarter? How should we think about the cost? Thanks; we'll split that up. I'll start talking about the shutdowns, and then Catherine can talk a little bit about the financial impact.

Speaker Change: Michael Dillon, Marcel Kessler, Timothy Flanagan

William Peterson: Taking into account the shutdowns and potential energy impacts, how should we think about the cash cost at an absolute level in the third quarter and then the fourth quarter? Should we assume higher in the third quarter than declining in the fourth quarter? How should we think about the cost from here? Thanks.

Speaker Change: How should we think about the cash costs at an absolute level in the third quarter and then the fourth quarter? Should we assume higher in the third quarter than declining in the fourth quarter? How should we think about the costs from here?

Jeremy S. Halford: So, the shutdowns are typically two to three weeks. We do it on a little bit of a rolling basis at the plants in order to make sure that we have some amount of staff on site so that we can respond to any customer demands that may change over the course of the shutdown. And so, you know, I would generally anticipate that for Europe, think two to three weeks for most of the operating action there. For Cdrift, it will be something similar, focused primarily on the calcination portion of the plant.

Unknown Executive: We will split that up.

Jeremy Halford: I will start talking about the shutdowns, and then Catherine can talk a little bit about the financial impact. The shutdowns are typically two to three weeks. We do it on a little bit of a rolling basis through the plants in order to make sure that we have some amount of staff on site so that we can respond to any customer demands. That may change over the course of the shutdown. I would generally anticipate that for Europe. Think two to three weeks for most of the operating action there. In Sea Drift, it will be something similar, focused primarily on the calcination portion of the plant.

Speaker Change: Yeah, thanks. We'll split that up. I'll start talking about the shutdowns and then Catherine can talk a little bit about the financial impact.

Catherine Delgado: So, the shutdowns are typically, you know, two to three weeks. We do it on a little bit of a rolling basis through the plants in order to, in order to make sure that we have.

Catherine Delgado: You know some amount of staff on site so that we can respond to any customer demands.

Catherine Delgado: That may change over the course of the shutdown. And so, you know, I would generally anticipate that for Europe , you know, think two to three weeks for most of the operating action there.

Catherine Delgado: in C-Drift.

Catherine Delgado: It will be something similar, focused primarily on the calcination portion of the plant.

Catherine Delgado: And so, again, think of roughly three weeks for that as well. But let me hand it over to Catherine to talk about the financial question. Thank you, Jeremy.

Jeremy Halford: Again, think of roughly three weeks for that as well.

Catherine Delgado: And so, you know, again, think of, you know, roughly three weeks for that as well.

Catherine Delgado: Let me hand it over to Catherine to talk about the financial question.

Catherine Delgado: Yes, Bill. So, we have maintained our full-year cost reduction estimate of a mid-team percentage point decrease from the level of 2023, which was $5,500. So, as I indicated earlier, for the second half of this year, we expect a little bit of a sequential uptick versus where we landed for the first half. Now, and I mentioned that earlier, seasonally higher energy costs for our European facilities in the second half of 2024 will be a factor. And the benefit from the utilization of the previously recorded lower-up cost-to-market inventory write-down was certainly more heavily weighted toward the first half of 2024 than it will be for the second half.

Catherine Delgado: Thank you, Jeremy. Yes, Bill. We have maintained our full-year cost reduction estimate of a mid-teen percentage points decrease from the level of 2023, which was 5,500. As I indicated earlier, for the second half of this year, we expect a little bit of a sequential uptake versus where we landed for the first half. I mentioned that earlier, seasonally higher energy costs for our European facilities in the second half of 2024 would be a factor. The benefit from the utilization of the previously recorded lower-up cost-for-market inventory right down was certainly more heavily weighted toward the first half of 2024 than it will be for the second half.

Catherine Delgado: But let me hand it over to Catherine to talk about the financial question.

Catherine Delgado: Thank you, Jeremy. Yes, Bill. So, you know, we have maintained our full year cost reduction estimate of a mid-team percentage points decrease, you know, from the level of 2023, which was

Catherine Delgado: So, as I indicated earlier, for the second half of this year, we expect a little bit of a sequential uptick versus where we landed for the first half.

Catherine Delgado: Now, and I mentioned that earlier, seasonally higher energy costs for our European facilities in the second half of 2024 would be, will be a factor.

Speaker Change: And, you know, the benefit from the utilization of the previously recorded lower-up cost-to-market inventory write-down was certainly more heavily weighted toward the first half of 2024 than it will be for the second half. And then lastly, as we spoke about with Jeremy, we have the impact of the planned maintenance shutdown on the absorption of our fixed costs.

Catherine Delgado: Lastly, as we spoke about with Jeremy, we have the impact of the plant maintenance shutdown on the absorption of our fixed cost.

William Chapman Peterson: And then, lastly, as we spoke about with Jeremy, we have the impact of the planned maintenance shutdown on the absorption of our fixed costs. But, you know, overall, I think the key points to keep here in mind are that, on a full-year basis, our overall cost structure is moving in the right direction, reflecting the actions we're taking. And, you know, we would anticipate further after 2025 that our costs would continue coming down. Okay, thanks for that.

Catherine Delgado: But overall, I think the key point to keep here in mind is that, on a full-year basis, our overall cost structure is moving in the right direction, reflecting the actions we're taking. We wouldn't dissipate further after in 2025 that our cost would continue coming down.

Speaker Change: But, you know, overall, I think the key points to keep here in mind is that on a full year basis, our overall cost structure is moving in the right direction, reflecting the actions we're taking. And, um,

Speaker Change: You know, we would anticipate further after 2025 that our costs would continue coming down.

William Peterson: Okay, thanks for that. Spot pricing fell another $100 per ton, so I guess less pronounced decline this quarter. However, on your commentary, it sounds like the competitive dynamics are still challenging; pricing remains challenging.

Timothy K. Flanagan: Spot pricing fell another $100 per ton, so I guess a less pronounced decline this quarter. However, based on your commentary, it sounds like the competitive dynamics are still challenging. Pricing remains challenging.

Speaker Change: Okay, thanks for that. Spot pricing fell another $100 per ton, so I guess less pronounced decline this quarter. However, on your commentary, it sounds like the competitive dynamics are still challenging. Pricing remains challenging.

William Peterson: So I guess how does the spot pricing decline compared to the latest needle coke prices you've seen, and I guess what are your directional price expectations, both for your product as well as needle coke from here? Yeah, thanks, Bill, and in the morning. Appreciate the questions. You know, from a pricing perspective, and I think we've set it a couple of times in our prepared remarks, right? The competitive market, and it continues to be a competitive market given the overall dynamics around supply and demand. And therefore, you're seeing that reflected in the spot pricing or the non-LTA pricing that we reported this quarter.

William Chapman Peterson: So, I guess, how does the spot price decline compared to the latest needle code prices you've seen? And, I guess, what are your directional pricing expectations? You know, both for your product as well as for MinoCoke from here. Yeah, thanks, Bill. And good morning.

Speaker Change: So I guess, how does the SPOT pricing decline compared to the latest Needlecoke prices you've been seeing? And I guess, what are your directional pricing expectations, you know, both for your product as well as Needlecoke from here?

Timothy K. Flanagan: I appreciate the question. From a pricing perspective, and I think we said it a couple times in our prepared remarks, right, the competitive market, and it continues to be a competitive market given the overall dynamics around supply and demand. And therefore, you're seeing that reflected in the spot pricing or the non-LTA pricing that we reported this quarter. You know, I think those pressures are going to continue, and they're going to persist.

Speaker Change: Thanks, Bill, and good morning. I appreciate the questions.

Speaker Change: You know, from a pricing perspective, and I think we said it a couple times in our prepared remarks, right, the competitive market, and it continues to be a competitive market given the overall dynamics around supply and demand.

Speaker Change: And therefore, you're seeing that reflected in the spot pricing or the non-LTA pricing that we reported this quarter.

William Peterson: You know, I think those pressures are going to continue, and they're going to persist. But one thing I think you have to keep in mind, and we start to lose a little bit of visibility around pricing this time of year, as you know, the order book is largely locked in place, and there's less volume being transacted, broadly speaking.

Speaker Change: You know, I think those those pressures are going to continue and they're going to persist.

Timothy K. Flanagan: But one thing I think you have to keep in mind, and we start to lose a little bit of visibility around pricing this time of year as, you know, the order book is largely locked in place, and there's less volume being transacted, broadly speaking. But right now, I think our view is that, you know, challenging pricing is going to persist. And we'll have a better read on that as we get into the negotiations with customers here in the third and fourth quarter.

Speaker Change: But one thing I think you have to keep in mind, and we start to lose a little bit of visibility around pricing this time of year as, you know, the order book is largely locked in place and there's less...

William Peterson: But right now, you know, I think our view is that that, you know, challenging pricing is going to persist, and we'll have a better read on that as we get into the negotiations with customers here in the third and fourth quarter. On the needle coke market, I would say we're still trading sideways compared to where we were in the second quarter. You know, somewhere in around that $1,100 to $1,300 range, depending on the graded coke in the market.

Speaker Change: Volume being transacted.

Speaker Change: Broadly speaking, but right now, I think our view is that challenging pricing is going to persist, and we'll have a better read on that as we get into the negotiations with customers here in the third and fourth quarter.

Timothy K. Flanagan: On the Needle Coke market, I would say we're still trading sideways compared to where we were in the second quarter, you know, somewhere in around that eleven hundred to thirteen hundred dollar range, depending on the grade of Coke in the market. So the Needle Coke side is stabilized in many respects, but I would hope to see that start to trend in the right direction as you start to see demand picked up with, you know, maybe some better demand numbers out of the steel industry heading into twenty, twenty five. Great, thanks for that! And just a bit of housekeeping.

Speaker Change: On the Needlecoke market, I would say we're still...

Speaker Change: Trading sideways compared to where we were in the second quarter, you know, somewhere in around that $1,100 to $1,300 range, depending on the grade at Coke.

William Peterson: So the needle coke side is stabilized in many respects, but would hope to see that start to trend in the right direction as you start to see demand picked up with, you know, maybe some better demand numbers out of the steel industry heading into 2025.

Speaker Change: in the market. So, the needle coke side is stabilized in many respects, but would hope to see that start to trend in the right direction as you start to see demand picked up with, you know, maybe some better demand numbers out of the steel industry heading into 2025.

William Peterson: Great, thanks for that.

William Chapman Peterson: So adding back the $9 million to SG&A, but I guess I should take into account other actions you've been taking, belt tightening, and other maybe productivity initiatives. Can you give us a level set on how we should think about SG&A for the third quarter and then trajectory thereon? I mean, SDNA will remain at the run rate that you've seen. If you look at the first half of the year, excluding that $9 million benefit, I think we're seeing the impact of our rationalization activities, and this has started to show in our underlying cost for the second quarter of SDNA. We would expect that run rate to continue over the rest of the year. Thanks. Our second question is from Alex Hacking from Cedar Research. Please go ahead.

William Peterson: And just a bit of housekeeping. So adding back the $9 million S-G-N-A, but I guess taking into account other actions you've been taking, belt tightening and other maybe productivity initiatives.

Speaker Change: Great, thanks for that. And just a bit of housekeeping, so adding back the $9 million to SG&A, but I guess taking into account other actions you've been taking, belt tightening and other maybe productivity initiatives, can you level set us on how we should think about SG&A for the third quarter and then trajectory later on?

Catherine Delgado: Can you love to set us on how we should think about S-G-N-A through the third quarter and then trajectory there on? I mean, S-G-N-A will remain at the run rate that you've seen. You know, if you look at the first half of the year, excluding that $9 million benefit, I think we're seeing the impact of our rationalization activities, and this has started to show in our underlying cost. For the second quarter in S-G-N-A, we would expect that run rate to continue over the rest of the year. Okay, thanks.

Speaker Change: SD&E will remain at the run rate that you've seen, you know, if you look at the first half of the year, excluding that $9 million benefit, I think we're seeing the impact of our rationalization activities and this has started to show in our underlying cost for the second quarter in SD&E and we would expect that run rate to continue over the rest of the year.

Alexander Hacking: I'll pass on. Our second question is from Alex Hacking from Cedar Research.

Speaker Change: Okay, thanks, Dr. Haslund.

Speaker Change: Our second question is from Alex Hacking from Cedar Research. Please go ahead.

Alexander Hacking: Please go ahead. Hi, yet just to quickly follow up on the pricing outlook. Based on your comments, it sounds like this realized spot price would be weaker in the second half of the year than the first half of the year. Is that a fair assumption? Or am I reading a two negatives? Yeah, I mean, I think we continue to see challenges, and the pricing, you know, also what's going to play into that is mixed, right? And where we're delivering tons on a relative basis, right? Because that average, that price, you know, the $4,300 plus dollars that we reported is an average over across all of the regions that we shift to.

Alexander Nicholas Hacking: Hi, yeah, just to quickly follow up on the pricing outlook. Based on your comments, it sounds like the realized spot price would be weaker in the second half of the year than in the first half of the year. Is that a fair assumption?

Alexander Nicholas Hacking: Hi, yeah, just to quickly follow up on the pricing outlook.

Speaker Change: Based on your comments,

Alexander Nicholas Hacking: It sounds like this realized spot price

Speaker Change: in the second half of the year than the first half of the year. Is that a fair assumption?

Jeremy S. Halford: Or am I reading it too negatively? Yeah, I mean, I think we continue to see challenges in pricing. Also, what's going to play into that is the mix, right? And where we're delivering tons on a relative basis, right? Because that average, that price, the $4,300 plus that we reported is an average over all of the regions that we ship to. So, I wouldn't sit here and say that we think there's a real rosy outlook for pricing as we look into the back half of the year. But mix will play into it as well.

Speaker Change: Or am I reading it two negatives?

Speaker Change: Yeah, I mean, I think we continue to see challenges in the pricing, you know, also what's going to play into that is mix, right? And where we're delivering tons on a relative basis, right? Because that average, that price, you know, the $4,300 plus that we reported is an average over all of the regions that we ship to. So you know.

Alexander Hacking: So, you know, I wouldn't sit here and say that we think there's a real arosy outlook for pricing. I think as we look into the back half of the year, but you know, mix will play into it as well.

Speaker Change: I wouldn't sit here and say that we think there's a real rosy outlook for pricing as we look into the back half of the year, but you know, mix will play into it as well.

Alexander Hacking: Okay, thanks. And then I guess Bloomberg and some other media, you know, have reported that the company is working with advisors, considering various different options to improve liquidity.

Alexander Nicholas Hacking: Okay, thanks. And then, I guess. Bloomberg and some other media have reported that the company is working with advisors and considering various options to improve liquidity. Could you maybe comment on that? If you're able to, what's under consideration, and what will be the timeline?

Speaker Change: Okay, thanks. And then I guess...

Speaker Change: Bloomberg and some other media.

Speaker Change: you know, have reported that the company is

Speaker Change: Working with advisors considering various different options to improve liquidity. Could you maybe comment on that, if you're able to, kind of what's under consideration and what will be the timeline? Thank you.

Timothy Flanagan: Did you maybe comment on that if you're able to kind of what fund the consideration and what will be the timeline? Thank you. Thanks for that, Alex. You know, and maybe let me start by just reiterating the comments that Catherine made on the liquidity front. You know, we ended the quarter with $121 million of cash and a little more than $111 million of availability on the revolver. So, you know, $230 plus million of total liquidity here at the end of the second quarter. And again, don't feel or don't see a need or use of the revolver and feel good about the cash position for the foreseeable future.

Timothy K. Flanagan: Thank you. Yeah, thanks for that, Alex. You know, and maybe I should start by just reiterating the comments that Catherine made on the liquidity front, you know, and we ended the quarter with 121 million dollars of cash and a little more than 111 million dollars of availability on the revolver. So, you know, 230 plus million dollars of total liquidity here at the end of the second quarter. And again, don't feel or don't see a need or use for the revolver and feel good about the cash position for the foreseeable future. But, you know, more specifically to your question.

Speaker Change: Yep, thanks for that Alex. You know, and maybe let me start by

Speaker Change: Just reiterating the comments that Catherine made on the liquidity front, we ended the quarter with $121 million of cash and a little more than $111 million of availability on the revolver.

Speaker Change: You know, $230-plus million of total liquidity here at the end of the second quarter. And again, don't feel or don't see a need or a use of the revolver and feel good about the cash position for the foreseeable future.

Timothy Flanagan: But, you know, I guess more specifically to your question, right? I think we've tried to be proactive, you know, since I joined the company in November of '21. I think we've tried to be proactive with our capital structure around refinancing the revolver, refinancing the term loan, and we continue to have conversations with advisors on various fronts, you know, around our capital structures and trying to be proactive. And I think that's a proof move for any company and organization, regardless if you're in, you know, the downside of a cycle or the upside of a cycle. I think we're always looking at our existing capital structure.

Alexander Nicholas Hacking: Right. I think we've tried to be proactive since I joined the company in November of 21. I think we've tried to be proactive with our capital structure around refinancing the revolver, refinancing the term loan, and we continue to have conversations with advisors and various parties around our capital structures and trying to be proactive. And I think that's a prudent move for any company and organization, regardless of whether you're in the downside of a cycle or the upside of a cycle.

Speaker Change: But, you know, I guess more specifically to your question, right?

Speaker Change: I think we've tried to be proactive, you know, since I joined the company in November of 21, I think we've tried to be proactive with our capital structure around

Speaker Change: refinancing the revolver, refinancing the term loan, and we continue to have conversations with advisors in various fronts, you know, around our capital structures and trying to be proactive, and I think that's a prudent move for any company and organization, regardless if you're in, you know, the downside of a cycle or the upside of a cycle, I think we're always looking at our existing capital structure. Beyond that, I'm not going to comment on...

Alexander Nicholas Hacking: I think we're always looking at our existing capital structure. Beyond that, I'm not going to comment on market speculation or rumors that are coming out of the media. Okay, thanks. I'll leave it there and jump back in the queue.

Timothy Flanagan: Beyond that, I'm not going to comment on market speculation or rumors that are coming out of the media. Okay, thanks.

Speaker Change: market speculation or rumors that are coming out of the media.

Timothy Flanagan: I'll leave it there and jump back in the queue. Thanks, Alas.

Andrew Jones: Thanks, Al. Our next question is from Andrew Jones from UBS. Please go ahead.

Speaker Change: Okay, thanks. I'll leave it there and jump back in the queue.

Andrew Jones: Our next question is from Andy Jones from UBS. Please go ahead.

Speaker Change: Thanks, folks.

Speaker Change: Our next question is from Andrew Jones from UBS. Please go ahead.

Andrew Jones: Hi, just a bigger picture question on the structure of the industry. I mean, we've clearly seen this significant downside in pricing. I don't think it's, you know, there'd be too much pushback on your comments about the demand growth that will come from greater EAF penetration in Europe and the US and probably elsewhere, but on the supply side, there's overcapacity issues that clearly persist, like what, in your view, can be done? To change that in your core markets, I mean, are we, is there any prospect of any sort of import protection?

Andrew Jones: I just have a bigger picture question on the structure of industry. I mean, if we've clearly seen this significant downside in pricing, I don't think it's, you know, there be too much pushback on your comments about the mangrove who will come from great to the AF penetration in Europe and the US and propials were, but on the supply side is over capacity issue. You know, clearly persists like what in your view can be done to change that in your core market? So are we. Is there any prospect of any sort of import protection coming at any point in the near future, or any discussion about it?

Andrew Jones: Just a bigger picture question on the structure of the industry, I mean, we've clearly seen this significant downside in pricing.

Speaker Change: I don't think it's, you know, it's, there'd be too much pushback on your comments about the demand growth that will come from greater EAF penetration in Europe and the US and probably elsewhere.

Speaker Change: On the supply side, this overcapacity issue clearly persists. What, in your view, can be done?

Speaker Change: To change that in your core markets, I mean, are we, is there any prospect of any sort of import protection coming at any point in the near future or any discussion about it?

Andrew Jones: coming at any point in the near future or any discussion about, or, you know, any of your competitors, talking about how unlikely they are to be taking out capacity soon or you know what, in your view, can be done, you know, by the industry to actually help to sort of correct the course of the ship, because it's, you know, it's a pretty ugly price chart when you look at it on Bloomberg. Thanks.

Andrew Jones: Or, you know, any of your competitors talking about or likely to be taking out capacity soon? Or, you know, what? What in your view? You can be done by the industry to actually help to correct the course of the ship, because it's a pretty, it's a pretty ugly price chart when you look at that on Bloomberg. Thanks. Yeah, thanks for that. And try to touch on all the points.

Speaker Change: Or, you know, any of your competitors talking about or likely to be taking out capacity soon? Or, you know, what, what, what, what in your view?

Speaker Change: can be done, you know, by the industry to actually help to sort of correct the course of the ship, because it's, you know, it's a pretty, it's a pretty ugly price chart when you look at, look at that on Bloomberg. Thanks.

Timothy K. Flanagan: Yeah, thanks for that. I'll try to touch on all the points. You know, and maybe we should start with, you know, how we view market recovery, both in the shorter term and then in the medium and longer term. And it's really driven by four things.

Speaker Change: Yeah, thanks for that and I'll try to touch on all the points, you know, and maybe let's start with, you know, how we view market recovery, both in the shorter term and then into the medium and longer term, and it's really driven kind of by four things.

Andrew Jones: And maybe let's start with, you know, how we view market recovery both in the shorter term and then into the medium and longer term. And it's really driven kind of by force. One, certainly, is an improvement in demand, in particular in the EU. You know, I think if you look at EU steel production levels are probably down 20% from the peak back in 2021. So any sort of meaningful uptick in EU demand will help, especially us given our geographical footprint, but, you know, I would say just the Western electorate industry more broadly. And two, I think they continue.

Timothy K. Flanagan: One certainly is an improvement in demand, in particular in the EU. You know, I think if you look at EU steel production levels, they are probably down 20% from the peak back in 2021. So any sort of meaningful uptick in EU demand will help, especially us given our geographical footprint, but you know, I would say just the Western electrode industry more broadly. And two, I think the continued growth of EAFs, you know, we talked about the 170 million tons of capacity coming online over the balance of the decade.

Speaker Change: One certainly is an improvement in demand, in particular in the EU.

Speaker Change: I think if you look at EU steel production levels are probably down 20% from the peak back in 2021.

Speaker Change: So, any sort of meaningful uptick in EU demand will help.

Speaker Change: Especially us, given our geographical footprint, but I would say just the Western electrode industry more broadly.

Andrew Jones: We talked about the 170 million tons of new capacity coming online over the balance of the decade. You know, some of that is front unloaded, and we'll start to see new mills come online in the geographies in which we have a significant presence here over the next couple of years. That continued growth and the move to some of the new products we're offering will help on the demand front as well. You know, you mentioned supply reduction. You know, supply reduction and supply rationalization is an important piece and really could be the thing that is a catalyst for near term reaction or impetus for pricing to change.

Speaker Change: Two, I think the continued growth of EAFs. We talked about the 170 million tons of new capacity coming online over the balance of the decade. Some of that is front-end loaded and we'll start to see new mills come online

Timothy K. Flanagan: You know, some of that is front-end loaded, and we'll start to see new mills come online in the geographies in which we have a significant presence here over the next couple of years. That continued growth and the move to some of the new products we're offering will help on the demand front as well. You know, you mentioned supply reduction. Supply reduction and supply rationalization is an important piece and really could be the thing that is a catalyst for near-term reaction or impetus for pricing to change. You know, we started back in the first quarter of February when we announced the idling of St. Mary's and the rationalization of our footprint. And we took down, you know, 24,000 tons of production.

Speaker Change: In the geographies in which we have a significant presence here over the next couple of years, that continued growth and the move to some of the new products we're offering will help on the demand front as well.

Speaker Change: You know.

Speaker Change: You mentioned supply reduction, you know, supply reduction and supply rationalization is an important piece and really could be the thing that

Speaker Change: is a catalyst for near-term reaction or impetus for pricing to change.

Andrew Jones: You know, we started back in the first quarter in February when we announced the idling of St. Mary's and the rationalization of our footprint, and we took down 24,000 tons of production. We felt that that was the right step for us at the time. We've seen one of our competitors take about 24,000 tons out of their footprint and announced the potential to take 24,000 tons out of their footprint. I mean, I think those are the moves that are needed when you find yourself in a market that's over supplied in the West, as it is today.

Speaker Change: You know, we started...

Speaker Change: Back in the first quarter in February when we announced the idling of St. Mary's and the rationalization of our footprint, and we took down 24,000 tons of production, we felt that that was the right step for us at the time.

Timothy K. Flanagan: We felt that that was the right step for us at the time. We've since seen one of our competitors take about 24,000 tons out of their footprint and announce the potential to take another 24,000 tons out of their footprint. I mean, I think those are the moves that are needed when you find yourself in a market that's oversupplied in the West, as it is today. But I think there's room for more people to engage in kind of that rationalization as we go forward. You know, China, I think, is the fourth big piece, and China certainly is the entity that weighs on pricing the most. And I think China is really probably driven by two things.

Speaker Change: We've since seen one of our competitors take about 24,000 tons out of their footprint and announced the potential to take 24,000 tons out of their footprint.

Speaker Change: I mean, I think those are the moves that are needed when you find yourself in a market that's oversupplied in the West as it is today. But I think there's room for more people to engage in kind of that rationalization as we go forward.

Andrew Jones: But I think there's room for more people to engage in kind of that rationalization as we go forward.

Andrew Jones: You know, China I think is the fourth big piece, and China certainly is the entity that weighs on pricing the most. And I think China really is, you know, probably driven by two things. One, their domestic markets in terms of construction, their EV market overall steel production. You know, right now the construction is 30% of China's overall GDP, and it's underperforming. So that's certainly weighing on their overall economy, which obviously impacts steel production, which then impacts graphite electrode consumption domestically. And then they're announced transition from E AF steel production. Right now, China produces about 10% of its steel via E AFs.

Speaker Change: You know, China, I think, is the fourth big piece. And China certainly is the entity that weighs on pricing the most. And I think China really is.

Timothy K. Flanagan: One, their domestic markets, in terms of construction, their EV market, overall steel production, you know, right now. [inaudible] And that was announced, or they reconfirmed or reiterated their commitment to move to a 15% target. Now, we've heard this in the past, and it hasn't come to fruition, but any sort of genuine effort to move the Chinese steel market from 10% to 15% will have a meaningful impact on not only EF-produced steel but graphite electrode consumption.

Speaker Change: [inaudible]

Speaker Change: 30% of construction, 30% of China's overall GDP, and it's underperforming. That's weighing on their overall economy, which obviously impacts steel production.

Speaker Change: Then Imprex graphite electrode consumption domestically. And then their announced transition from EAF steel production. Right now China produces about 10% of its steel via EAFs.

Andrew Jones: And that is was announced or they reconfirmed or reiterated their commitment to move to a 15% target. Now, we've heard this in the past, and it hasn't come to fruition, but any sort of genuine effort to move the Chinese steel market from 10% to 15%. We'll have a meaningful impact on not only EF produced steel, but graphite electrode consumption. Right, you're talking 50 million tons of steel at that 5%, which is probably more than 80,000 tons of graphite electrode demand that would come along with it. So all of those things combined, I think help move the market.

Speaker Change: And that is...

Speaker Change: was announced or they reconfirmed or reiterated their commitment to move to a 15% target.

Speaker Change: We've heard this in the past and it hasn't come to fruition, but any sort of genuine effort to move the Chinese steel market from 10% to 15% will have a meaningful impact on not only EF-produced steel, but graphite electrode consumption.

Timothy K. Flanagan: You're talking 50 million tons of steel at that 5%, which is probably more than 80,000 tons of graphite electrode demand that would come along with it. So all of those things combined, I think, help move the market. Some of them are shorter-term in nature, and some of them are kind of more structural returns to where the market historically has been, which would be around a $6,000 average price over the last 20 years or so.

Speaker Change: You're talking 50 million tons of steel at that 5%, which is probably more than 80,000 tons.

Speaker Change: of Graphite Electrode Demand that would come along with it.

Andrew Jones: Some of them are shorter term in nature, and some of them are kind of more structural returns to where the market historically has been, which would be around a $6,000 average price over the last 20 years or so. And this is really all absent, you know, some of the electric vehicle and needle coke demand elements that we've talked about on numerous occasions, right. You know, we still firmly believe that we're going to see a Western supply chain for electric vehicles set up. The demand for needle coke is going to increase exponentially here over the balance of the decade.

Speaker Change: So, all of those things combined, I think, help move the market.

Speaker Change: Some of them are shorter term in nature and some of them are kind of more structural returns to where the market historically has been, which would be around a $6,000 average price over the last 20 years or so.

Timothy K. Flanagan: And this is really all absent, you know, some of the electric vehicle and needle coke demand elements that we've talked about on numerous occasions, right? You know, we still firmly believe that we're going to see a Western supply chain for electric vehicles set up, and needle coke demand is going to increase exponentially here over the balance of the decade.

Speaker Change: And this is really all absent, you know, some of the electric vehicle and needle coke demand elements that we've talked about on numerous occasions, right? You know, we still firmly believe that we're going to see a Western supply chain for electric vehicles set up.

Speaker Change: The demand for Needlecoke is going to increase exponentially here over the balance of the decade and being vertically integrated and having Seadrift as a strategic asset for the company will position us very well. And all of that, I think, is why we still have long-term

Andrew Jones: And being vertically integrated and having C drift as a strategic asset for the company, I will position us very well. And in all of that, I think is why we still have long term. Conviction on where the business can go, where the market's heading, and now it's just a matter of us continuing to execute in the short term. Yeah, that makes sense.

Timothy K. Flanagan: And being vertically integrated and having C-Drift as a strategic asset for the company will position us very well. And all of that, I think, is why we still have long-term conviction on where the business can go and where the market's heading. And now it's just a matter of us continuing to execute in the short term. Yeah, that makes sense. And on the policy side, do you see any proposals or any measures that have been tabled either in the EU or on the US side that would potentially restrict imports from, you know, from markets like Yeah, so just to level the playing field, right, if you look at the landscape as it exists today, in the US, there are trade restrictions on Chinese imports ranging from 25% to 150%. The EU has restrictions on both Chinese electrodes and Indian electrodes. Chinese, I think, 23% to 75%, and then Indians are a little bit smaller at 7% to 15%, depending on the size and the grade.

Speaker Change: conviction on where the business can go, where the market's heading, and now it's just a matter of us continuing to execute in the short term.

Andrew Jones: And on the policy side, do you see any proposals or any, you know, any measures that've been tabled even in the EU or on the US side that, you know, would potentially restrict imports from, you know, from markets like China? Yeah, so just the level set, right? If you look at the landscape as it exists today, in the US, there are trade restrictions on Chinese imports ranging from 25 to 150 percent. The EU has restrictions on both Chinese electrodes and Indian electrodes. Chinese, I think, 23 to 75 percent, and the Indians are a little bit smaller at 7 to 15 percent, depending on the size and the grade.

Speaker Change: Yeah, that makes sense. And on the policy side, do you see any...

Speaker Change: proposals or any, you know, any measures that have been tabled either in the EU or on the US side that, you know, that would potentially restrict imports from, you know, from markets like China.

Speaker Change: Just to level set, if you look at the landscape as it exists today, in the U.S. there are

Speaker Change: Trade Restrictions on Chinese Imports.

Speaker Change: Ranging from 25 to 150 percent.

Speaker Change: The EU has restrictions on both Chinese electrodes and Indian electrodes. Chinese, I think, 23% to 75% and then the Indians are a little bit smaller at 7% to 15% depending on the size and the grade.

Andrew Jones: So there are trade restrictions in place, and we think they do have an impact and they work as they exist today. You know, I think everybody's always looking much like we see our customers on the seal side, trying to protect their markets. You know, I think we're no different in terms of looking for opportunities to strengthen our domestic position and support our businesses and the geographies that we operate in. So beyond that, I can't really comment on status and where that stands, but certainly something that, you know, everybody's always looking at.

Timothy K. Flanagan: So there are trade restrictions in place, and we think they do have an impact, and they work as they exist today. I think everybody's always looking, much like we see our customers on the seal side trying to protect their markets. I think we're no different in terms of looking for opportunities to strengthen our domestic position and support our businesses and the geographies that we operate in. So beyond that, I can't really comment on the status and where that stands, but it's certainly something that everybody's always looking at. And just finally, any risks that you see around, you know, the fact that... I guess in the EU there's been some movement from some right-wing populist parties making progress in various countries, obviously in the US.

Speaker Change: So there are trade restrictions in place and we think they do have an impact and they work as they exist today. You know, I think everybody's always looking much like we see our customers on the seal side trying to protect their markets. You know, I think we're no different in terms of looking for opportunities to strengthen our domestic position and support our businesses and the geographies that we operate in.

Speaker Change: Beyond that, I can't really comment on status and where that stands, but certainly something that everybody's always looking at.

Andrew Jones: And just finally, any risks that you see around, in fact, I guess in the EU, there's been some move from some right-wing populist policies, making progress in various countries, obviously in the US. I guess a Trump presidency looks a bit more likely. I mean, could we see roll back on some of the proposed sort of decarbonisation initiatives and subsidies for EVs and things like that, but you can see as a material risk to the electrode market in the medium term, if that penetration might slow down, for example, in Europe. Yeah, I've made it a habit of not trying to predict political outcomes.

Speaker Change: And just finally, any risks that you see around, you know, the fact that

Speaker Change: I guess in the EU there's been some move from some right-wing populist parties making progress in various countries, obviously in the US, I guess a Trump presidency looks a bit more likely, I mean could we see rollback on

Andrew Jones: Yeah, I guess a Trump presidency looks a bit more likely. I mean, could we see a rollback? Some of the proposed sort of decarbonization initiatives and subsidies for EVs and things like that that you see as a material risk to the electrode market in the medium term if that EEF penetration might slow down, for example. Yeah, I've made it a habit of not trying to predict political outcomes my entire career. So I'm not going to start now, certainly not.

Speaker Change: Some of the proposed sort of decarbonisation initiatives and subsidies for EVs and things like that, that you see as a material risk to the electrode market in the medium term, if, you know, that EEF penetration might slow down, for example, in Europe .

Andrew Jones: My entire career, so I'm not going to start now, certainly. But yeah, I mean, I think the impact on policy and regulation is something we keep an eye on. Again, I think we believe that decarbonisation story and the electrification of the auto fleets, both in Europe and the US, is a real story and those trends will continue. I'm sure we will continue to see twists and turns along the way as how it all comes to market. But just, you know, the chart continues to go up and to the right. It may not be an exactly straight line, but we still see this as the path we're heading to longer term.

Speaker Change: Yeah, I've made it a habit of not trying to predict political outcomes my entire career, so I'm not going to start now, certainly. But yeah, I mean, I think the impact on policy and regulation is something we keep an eye on. Again, I think we believe that the decarbonization story and the electrification of

Timothy K. Flanagan: But yeah, I mean, the impact on policy and regulation is something we keep an eye on. Again, I think we believe that the decarbonization story and the electrification of auto fleets, both in Europe and the US, is a real story. And those trends will continue. I'm sure we will continue to see twists and turns along the way as it all comes to the market. But just, you know, the chart continues to go up and to the right.

Speaker Change: The auto fleets both in Europe and the U.S. is a real story and those trends will continue.

Speaker Change: I'm sure we will continue to see twists and turns along the way as how it all comes to market, but just, you know, the chart continues to go up and to the right.

Timothy K. Flanagan: It may not be an exactly straight line, but we still see this as the path we're heading on longer term. And I think all of that is constructive for our business. Yeah. Okay. Thank you very much. Our next question is from Abe Landa from Bank of America. Please go ahead. Good morning.

Speaker Change: It may not be an exactly straight line, but we still see this as the path we're heading to longer term, and I think all of that is constructive for our business.

Andrew Jones: And I think all of that is constructive for our business. Good.

Andrew Jones: Yep. Okay. Thank you very much.

Speaker Change: Agreed, yeah. Okay, thank you very much.

Abraham Landa: Our next question is from Abe Lada from Bank of America. Please go ahead. Good morning. Thanks for letting me ask some questions. Maybe just start off just for the press on liquidity. You kind of reiterate that you expected to remain adequate for this year.

Speaker Change: Our next question is from Abe Landa from Bank of America. Please go ahead.

Abraham Raul Landa: Thanks for letting me ask some questions. Maybe just to start off, just to further press on liquidity, can you kind of reiterate that you expect it to remain adequate for this year? But I guess, what do you think about maybe plans to obtain it, maybe some additional equity for 2025? Is that something you would look to prior to the annual selling season in the fall? Or would you kind of wait until you see it?

Abraham Raul Landa: Good morning. Thanks for letting me ask some questions. Maybe just to start off, just to further press on liquidity, you kind of reiterated that you expect it to remain adequate for this year.

Abraham Landa: I guess what do you think about maybe planning to obtain it made some additional liquidity for 2025? Is that something you would look to prior to the annual selling season in the fall, or would you kind of wait until you see? Some more visibility there. Yeah, thanks. Thanks for that, Abe. I mean, again, reiterating where we sit today from a liquidity position, we feel good about our liquidity. You know, if you look at the first half of the year, we used $54 million a cash. So let's call it, on average, $27 million a quarter. So we feel good about where our cash position otherwise is right now.

Abraham Raul Landa: I guess, what do you think about maybe planning to obtain it, maybe some additional equity for 2025? Is that something you would look to prior to the annual selling season in the fall, or would you kind of wait until you see some more visibility there?

Timothy K. Flanagan: Some more visibility there. Yeah, thanks for that, Abe. I mean, again, reiterating where we sit today from a liquidity position, we feel good about our liquidity. You know, if you look at the first half of the year, we used $54 million of cash, so let's call it on average $27 million a quarter. So we feel good about where our cash position is otherwise right now. You know, we continue to look at our crystal ball going into the future and try to see what 25 and beyond looks like. But again, I think we feel good about where we sit.

Speaker Change: Yeah, thanks. Thanks for that, Abe. I mean.

Speaker Change: Again, reiterating where we sit today from a liquidity position, we feel good about our liquidity.

Speaker Change: If you look at the first half of the year, we used $54 million of cash, so let's call it on average $27 million a quarter, so we feel good about where our cash position otherwise is right now.

Abraham Landa: You know, we continue to look at our crystal ball going into the future and try to see what 25 and beyond looks like. But again, I think we feel good about where we sit. Obviously, that'll continue to be informed by conversations with customers and economic indicators and steel indicators that we continue to monitor.

Speaker Change: You know.

Speaker Change: We continue to look at our crystal ball going into the future and try to see what 25 and beyond looks like, but again, I think we feel good about where we sit. Obviously, that will continue to be informed by conversations with customers and economic indicators and steel indicators that we continue to monitor, but otherwise,

Abraham Raul Landa: Obviously, that'll continue to be informed by conversations with customers and economic indicators and steel indicators that we continue to monitor. But otherwise, you know, we're good with where we sit today. OK. And then. Thanks for that color on your lower costs or market or inventories. Do you have a dollar amount?

Abraham Landa: But otherwise, you know, we're good with where we sit today.

Speaker Change: You know, we're good with where we sit today.

Catherine Delgado: Okay, and then thanks for that color on your little costs or marketer's inventory. Do you have a dollar amount? I know you kind of did it on a per ton basis. Do you have a dollar amount in 2Q in the first half? And maybe what do you expect that impact in 3Q in the second half of the year? Yes, yes, thank you for the question. As we indicated in our remarks, the second quarter impact of the utilization of the lower cost market reserve was about $230 benefit to our cash COGS. And you know, it was somewhat in a $200 range in the first quarter this year.

Abraham Raul Landa: I know you kind of did it on a per ton basis. Do you have a dollar amount for 2Q in the first half? And maybe, what impact do you expect that to have on 3Q in a second?

Speaker Change: Okay, and then.

Speaker Change: Thanks for that color on your lower cost or market of the inventories. Do you have a dollar amount? I know you kind of did it on a per ton basis, but do you have a dollar amount in 2Q in the first half?

Speaker Change: And maybe, what do you expect that impact in 3Q in the second half of the year?

Catherine Delgado: Yes, yes, thank you for the question. As we indicated in our remarks, the second quarter impact of the utilization of the lower cost to market reserve was about $230 benefit to our cash cogs. And, you know, it was somewhat in a $200 range in the first quarter of this year.

Speaker Change: Thank you for the question. As we indicated in our remarks, the second quarter impact of the utilization of the lower cost-to-market reserve was about $230 benefit to our cash cogs.

Abraham Raul Landa: So, as we move now into the second half of the year, we would expect roughly about half of that benefit on a per metric ton basis. So call it about, you know, $100 per metric ton. That would be the expectation for the second half of the year. And if we were to kind of, reverse out in the second quarter, that 230, you kind of get up. 4550, give or take.

Speaker Change: And, you know, it was somewhat in the $200 range in the first quarter of this year. So as we move now into the second half of the year, we would expect roughly about half of that benefit only on a per metric ton basis, so call it about, you know, $100 per metric ton. That would be the expectation for the second half of the year.

Catherine Delgado: So, as we move now into the second half of the year, we would expect roughly about half of that benefit only on a per metric ton basis. So call it about, you know, $100 per metric ton. That would be the expectation for the second half of the year. And if we were to kind of reverse out in the second quarter, that 230 kind of get a 4,550, give or take.

Speaker Change: And if we were to kind of reverse out in the second quarter, that $230, you kind of get a...

Catherine Delgado: And you kind of alluded to some potential improvements into 2025. I mean, I guess, what is your ability to kind of improve from? that that 4,550 per metric ton level, like what additional actions can we take? beyond kind of the go-forward. You know, the biggest component over time on the cost is really our fixed cost absorption and, ultimately, volume levels increasing across, you know, our manufacturing sites and higher production levels.

Catherine Delgado: And you kind of alluded to some potential improvements into 2025. I mean, I guess what is your ability to kind of improve from that, that call it 4,550 per metric ton level? Like what additional actions can we take on kind of to go forward? You know, the biggest component over time on the cost is really our fixed cost absorption and ultimately, you know, volume levels increasing across, you know, our manufacturing sites. You know, higher production levels are variable cost. You know, we're making really very good progress on it this year. And if we expected to stick, you know, this would remain into 25 as well.

Speaker Change: $4,550 give or take.

Speaker Change: And you kind of alluded to some potential improvements into 2025. I mean, I guess, what is your ability to kind of improve from?

Speaker Change: That 4,550 per metric ton level, like what additional actions can we take beyond kind of the go forward burn rate?

Speaker Change: You know, the biggest component over time on the cost is really our fixed cost absorption and ultimately, you know, volume levels increasing across, you know, our manufacturing sites, you know, higher production levels.

Catherine Delgado: Our variable cost, you know, we're making really, very good progress on it this year. And if we expect it to stick, you know, this would remain into 2025 as well. So overall, we'd say the most important parameters going forward will be production levels in terms of helping our fixed cost absorption.

Speaker Change: Our variable cost, you know, we're making really very good progress on it this year. And if we expect it to stick, you know, this would remain into 2025 as well. So overall, we'd say the most important parameters going forward will be the production level in terms of helping our fixed cost absorption.

Catherine Delgado: So overall, we see the most important parameter is going forward will be the production level in terms of helping our fixed cost absorption. And I would just add to that, I mean, and we've talked about this on past calls, and, you know, despite the challenges we're facing right now, we continue to invest in our business, right? And part of those investments are projects that help improve our overall cost position. And one of the projects in particular that we've talked about, and, you know, it's not only a good ESG story because it's reducing natural gas consumption, but it certainly helps our.

Timothy K. Flanagan: And Abe, I would just add to that. I mean, we've talked about this on past calls and, you know. Despite the challenges we're facing right now, we continue to invest in our business, right? And part of those investments are projects that help improve our overall cost position.

Speaker Change: And Abe, I would just add to that, I mean, and we've talked about this on past calls and, you know,

Abraham Raul Landa: And one of the projects in particular that we've talked about, and it's not only a good ESG story because it's reducing natural gas consumption, but it certainly helps our cost position in Pamplona as well. We will continue to make those sort of investments in our plants and think that this is a little bit of a roadmap for us to continue to drive costs out of our system. Yes, there's a capital cost to it, but those are the things that we have to do to continue to be competitive and also position us for the long term and our views around the long-term positioning of the company. Thank you. And then, maybe just my last question.

Abraham Raul Landa: Despite the challenges we're facing right now, we continue to invest in our business, right? And part of those investments are projects that

Abraham Raul Landa: help improve our overall cost position. And one of the projects in particular that we've talked about, and you know, it's not only it's a good ESG story because it's reducing natural gas consumption, but it certainly helps our cost position in Pamplona as well.

Catherine Delgado: Our cost position in Pamplona as well, we will continue to make those sorts of investments in our plants and think that, you know, this is a little bit of a roadmap for us to continue to drive costs out of our system. Yes, there's a capital cost to it, but those are the things that we have to do to continue to be competitive and also position us for the long term and our views around the long term positioning of the company.

Abraham Raul Landa: We will continue to make those sort of investments in our plants.

Abraham Raul Landa: and think that this is a little bit of a roadmap for us to continue to drive costs out of our system. Yes, there's a capital cost to it, but those are the things that we have to do to continue to be competitive and also position us for the long term and our views around the long term positioning of the company.

Abraham Landa: Thank you.

Abraham Raul Landa: You had a competitor, maybe last quarter, indicating that they expected the prices of pet needle coke to increase in the second half of this year. Is that, I know it's early in the quarter, but is that something you're seeing, or do you share that view? And kind of related, like, what's the capacity that Seadrift is running at today?

Abraham Landa: And then maybe just my last question. Yeah, a competitor in the last quarter was indicating that they expected the prices of that needle code to increase in the second half of this year. Is that, I don't know, it's early in the quarter, but is that something you're seeing, or do you share that view, and kind of on a related, like, what's the capacity that Cedris has grown at today? That's it for me. Yeah, so I think on the broader needle code market, as I stated before, I think it's relatively flat at this point in time. But again, that is somewhat, I'll call it stale data because it's typically about a month old when we see it.

Speaker Change: Thank you. And then maybe just my last question. You had a competitor maybe last quarter was indicating that they expected the prices of pet needle coke to increase in the second half of this year. Is that correct?

Speaker Change: I know it's early in the quarter, but is that something you're seeing, or do you share that view, and kind of on a related, like, what's the capacity that Seadrift is growing at today? That's it for me.

Timothy K. Flanagan: Yeah, so I think on the broader needle coke market, as I stated before, I think it's relatively flat at this point in time. But again, that is somewhat stale data because it's typically about a month old when we see it. But, you know, I do think we'll start to see them. Maybe as early as the back half of 24, but certainly as we get into 25, you'll start to see more of a pull on needle coke demand, not only from higher utilization rates, because we continue to expect volumes to go up from our perspective, but also on the EV side, right, as supply chains start to get organized and more work is being done to align to kind of some of the 2027 key milestones that the OEMs and others have.

Speaker Change: Yeah, so I think on the broader Needlecoat market, as I stated before, I think it's relatively flat at this point in time, but again, that is somewhat, I'll call it stale data because it's typically about a month old when we see it, but you know, I do think we'll start to see

Abraham Landa: But, you know, I do think we'll start to see, maybe as early in the back half of '24, but certainly as we get into '25, that you'll start to see more of a pull on needle code demand, not only from higher utilization rates, because we continue to expect volumes to go up from our perspective, but also on the EV side rate as supply chains start to get organized, and more work is being done to align to some of the 2027 kind of key milestones that the OEMs and others have. So, you know, again, crystal ball aside, you know, we expect needle code prices to continue to go up from this point, as they've been trading sideways for a quarter or two now.

Speaker Change: Maybe as early in the back half of 24, but certainly as we get into 25, that you'll start to see more of a pull on needle coke demand.

Speaker Change: Not only from higher utilization rates, because we continue to expect volumes to go up from our perspective, but also on the EV side, right, as supply chains start to get organized and more work is being done to align to kind of some of the 2027 kind of key milestones that the OEMs and others have. So, you know,

Timothy K. Flanagan: So, you know, again, the crystal ball aside, we expect needle coke prices to continue to go up from this point as they've been trading sideways for a quarter or two now. And then seed drift utilization, you know, we're probably running commensurate with where the electrode plants are, right? We're matching, you know, seed drift production with what our demands or internal needs are right now. Thank you very much. We have Kirk Ludkey from Imperial Kabbalah.

Speaker Change: Again, crystal ball aside, we expect needle coat prices to continue to go up from this point as they've been trading sideways for a quarter or two now.

Abraham Landa: And then Cedrif utilization, you know, we're probably running commensurate with where the electrode plants are, right? We're matching, you know, Cedrif production with what our demands or internal needs are right now.

Speaker Change: And then C-drift utilization, you know, we're probably running commensurate with where the electrode plants are, right? We're matching, you know, C-drift production with what our demands or internal needs are right now.

Kirk Ludtke: Thank you very much.

Speaker Change: Thank you very much.

Kirk Ludtke: We have Kirk Lugke from Imperial Cabelo.

Kirk Ludtke: Please go ahead. Hello, Tim. Jeremy Caffer and Mike, thank you for the call. Appreciate it.

Speaker Change: We have Kirk Ludke from Imperial Kabbalah. Please go ahead.

Kirk Ludkey: Please go ahead. Hello Tim, Jeremy, Catherine, and Mike, thank you for the call. Appreciate it. With respect to the shift toward EAF, I'm curious, you know, I know it's, You've got forecasts through the end of the decade, but I'm curious, you know, can you quantify how much will come online in the very near term, say, you know, the second half of this year in 2025. Yeah, I mean, I don't have exact numbers year by year.

Kirk Ludke: Hello Tim, Jeremy, Catherine, Mike. Thank you for the call. Appreciate it.

Kirk Ludtke: With respect to the shift toward EAF, I'm curious; you know, I know it's, you've got forecast through the end of the decade, but I'm curious, you know, can you quantify how much will come online in the very near term, say, you know, second half of this year and 2025? Yeah, I mean, I don't have exact numbers year by year. I think we could probably get those to offline in terms of what we're tracking, but certainly I think there's a number of projects here domestically in the US that we know are coming online. You know, a few mills anticipate to ramp up here and strike their first arc in the back half of '24 and would, you know, see fairly good production levels in 2025, but we can get that to you offline.

Kirk Ludke: [inaudible]

Kirk Ludke: With respect to the shift toward EAF, I'm curious, you know, I know it's...

Speaker Change: You've got forecasts through the end of the decade, but I'm curious, you know, can you quantify how much will come online in the very near term, say, you know, second half of this year in 2025?

Timothy K. Flanagan: I think we could probably get those to you offline in terms of what we're tracking. But certainly, I think there's a number of projects here domestically in the US that we know are coming online. A few mills anticipate ramping up here and striking their first arc in the back half of 2024 and would see fairly good production levels in 2025. But we can get that to you offline.

Speaker Change: Yeah, I mean, I don't have exact numbers year by year. I think we could probably get those to you offline in terms of what we're tracking, but certainly I think there's a number of projects here domestically in the U.S. that we know are coming online. A few mills anticipate to ramp up here and strike their first arc in the back half of 2024 and would see fairly good production levels in 2025.

Kirk Ludtke: Okay, and anything in chime, you mentioned the shift from 10 to 15% are there, is there anything happening at the plan level that you that might suggest that this time it's different? Yeah, I mean, not other than the Chinese government saying that this time they're serious and it's going to happen. You know, I think it's too early from that announcement really to see a change in operating levels and rates. I think, you know, we haven't seen a significant uptick in operating rates here, you know, over the last month or two. But, you know, I think, you know, time will tell. But ultimately, you know, I think if China wants to continue to, you know, be a more active engage in kind of the world economy, right?

Kirk Ludkey: Okay, and anything in QIIME, you mentioned the shift from 10 to 15%; is there anything happening at the plant level that might suggest that this time it's different? Yeah, I mean, other than the Chinese government saying that this time they're serious and it's going to happen. You know, I think it's too early from that announcement really to see a change in operating levels and rates. I think, you know, we haven't seen a significant uptick in operating rates here over the last month or two, but, you know, I think, you know, time will tell.

Speaker Change: But we can get that to you offline. Okay. And anything in QIIME, you mentioned the shift from 10% to 15%. Is there anything happening at the plant level that might suggest that this...

Speaker Change: This time it's different.

Speaker Change: Yeah, I mean, other than the Chinese government saying that...

Speaker Change: This time they're serious and it's going to happen. You know, I think it's too early from that announcement really to see a change in operating levels and rates. I think, you know, we haven't seen a significant uptick in operating rates here, you know, over the last month or two, but, you know, I think.

Kirk Ludkey: But ultimately, you know, I think if China wants to continue to be a more active, engaged in the world economy, right? The decarbonization efforts need to be real, and they need to act upon those.

Speaker Change: you know, time will tell. But ultimately, you know, I think if China wants to continue to, you know,

Timothy K. Flanagan: So hopefully, this time around, we'll see better action. So I'll couch it as cautious optimism at this point. Got it. Thank you. I appreciate it. And then, and I know you're not providing guidance, but directionally, it seems as though spot pricing sequentially is weaker, and you've got the downtime scheduled for the third quarter. It seems as though sequentially earnings will be down. Uh, between the second and the third quarter, then maybe a rebound in the fourth, is that? Is that directionally accurate?

Kirk Ludtke: The decarbonization efforts need to be real, and they need to act upon those. So hopefully this time around, we'll see better action. So I'll couch it as cautious optimism at this point in time. Got it. Thank you. I appreciate it.

Speaker Change: Be more active, engage in kind of the world economy, right? The decarbonization efforts need to be real and they need to act upon those. So hopefully this time around we'll see better action. So I'll couch it as cautious optimism at this point in time.

Kirk Ludtke: And then, and I know you're not providing guidance, but I directionally it seems as though, you know, spot pricing sequentially is weak. You've got the downtime scheduled for the third quarter. It seems as though sequentially earnings will be down between the second and the third quarter. Then maybe rebound and the fourth. Is that, is that directionally accurate? Yeah, I mean, I think you captured kind of at least what we've said around pricing direction as well as, you know, Catherine's discussion around the lumpiness of our costs. So yeah, without providing guidance, I think you're fair. Got it.

Speaker Change: Got it. Thank you. I appreciate it. And then, and I know you're not providing guidance, but directionally, it seems as though...

Speaker Change: Spot pricing, sequentially, is weaker. You've got the downtime scheduled for the third quarter. It seems as though, sequentially, earnings will be down.

Speaker Change: between the second and the third quarter, then maybe rebound in the fourth, is that?

Kirk Ludkey: Yeah, I mean, I think you've captured kind of at least what we've said around pricing direction as well as, you know, Catherine's discussion around the lumpiness of our costs. So yeah, without providing guidance, I think you're fair. Got it. And with respect to the energy cost.

Speaker Change: Is that directionally accurate?

Catherine Delgado: Yeah, I mean I think you you captured kind of at least what we've said around pricing direction as well as, you know, Catherine's discussion around the lumpiness of our costs. So yeah, without providing guidance I think you're fair.

Kirk Ludtke: And with respect to the energy costs, is that just the seasonality of energy? Or do you have contracts that are rolling off that we should try to think through? Yeah, I would describe it as seasonality, right? I mean, you know, different markets have different incentives at various times. You know, the summer season is a high energy use season in certain jurisdictions. So it's not unusual to see higher prices as we go into the third quarter. Got it. Thank you.

Timothy K. Flanagan: Is that just the seasonality of energy, or do you have contracts that are rolling off that we should try to think through? Yeah, I would describe it as seasonality, right? I mean, you know, different markets have different incentives at various times. For example, the summer season is a high energy use season in certain jurisdictions.

Speaker Change: Got it. And with respect to the energy costs...

Speaker Change: Is that just the seasonality of energy or do you have contracts that are rolling off that...

Catherine Delgado: that we should

Speaker Change: We should try to think through.

Speaker Change: Yeah, I would describe it as seasonality, right? I mean, you know, different markets have different incentives at various times. You know, the summer season is a high energy use season in certain jurisdictions, so it's not unusual to see higher prices as we go into the third quarter.

Kirk Ludkey: So it's not unusual to see higher prices as we go into the third quarter. Got it. Thank you. And then last question: You have access to all the cash. There are no limitations on you moving cash around to service debt.

Kirk Ludtke: And then last question. You have access to all the cash. There's no limitations on you moving cash around to service that. No, that's correct. Got it. I appreciate. Thank you.

Speaker Change #100: Got it. Thank you. And then last question, you have access to all the cash. There's no limitations on you moving cash around to service debt.

Kirk Ludkey: Now, that's great. Got it. I appreciate it. Thank you. Thank you. And our last one will be Arun Viswanathan from RBC Capital Markets. Please go ahead.

Speaker Change #101: No, that's correct.

Speaker Change #102: Got it. I appreciate it.

Unknown Executive: And our last will be our own V's one, often from our BC capital markets.

Speaker Change #102: Thank you. And our last one will be Arun Viswanathan from RBC Capital Markets. Please go ahead.

Unknown Executive: Please go ahead. Great. Thanks for taking my questions. I hope you guys are well. So I just wanted to understand, you know, kind of the path forward here. So it looks like, you know, if you remove that gain, maybe nine million or so, you would be at like a $5 million run rate of EBITDA in this quarter. Do you see kind of a path to, you know, maybe the 25 to 50 million dollar level? And the reason I'm asking is because you are going to be, you know, I guess, if volumes could be increasing, which is out lower production costs, then you do have continued roll off of the LTAs.

Arun Shankar Viswanathan: Great. Thanks for taking my questions. I hope you guys are well.

Arun Shankar Viswanathan: So I just wanted to understand, you know, kind of the path forward here. So it looks like, if you remove that gain, maybe $9 million or so, you would be at like a $5 million run rate of EBITDA in this quarter. Do you see kind of a path to, you know, maybe the $25 to $50 million level? And the reason I'm asking is because you are going to be, you know, I guess volumes could be increasing, which could help lower your production costs.

Arun Shankar Viswanathan: Great. Thanks for taking my questions. I hope you guys are well.

Arun Shankar Viswanathan: So I just wanted to understand, you know, kind of the path forward here. So it looks like, you know, if you remove that gain, maybe $9 million or so, you know, you would be at like a $5 million run rate of EBITDA in this quarter.

Speaker Change #104: Do you see kind of a path to, you know, maybe the $25 to $50 million level? And the reason I'm asking is because you are going to be...

Speaker Change #105: You know, I guess volumes could be increasing, which could help lower your production costs, then you do have continued roll-off of the LTAs.

Arun Shankar Viswanathan: Then you do have, you know, continued roll-off of the LTAs. So just wondering, you know, if we kind of assume kind of a normal 4,500 or so, 4,000 or so on the cash cost per ton level, what kind of volumes can you get to? And what does that really mean for you?

Timothy K. Flanagan: Maybe you can just help us give us some break points on that journey. Thanks. Yeah, so again, we don't provide a lot of guidance, and I'm not going to sit here and start speculating about next year, other than, you know, I think we're laying the groundwork with our customers in all the work that we've been doing. And we've been saying this ever since Q4 of 2022, that we're confident that we'll continue to claw back our market share.

Unknown Executive: So just wondering, you know, if we kind of assume kind of a normal 4,500 or so, 4,000 or so on the cash cost per ton level, what kind of volumes can you get to? And what does that really mean for EBITDA?

Speaker Change #106: So just wondering, you know, if we kind of assume kind of a normal $4,500 or so, $4,000 or so on the cash cost per ton level, what kind of volumes can you get to and what does that really mean for you? Maybe you can just help us, give us some break points on that journey. Thanks.

Unknown Executive: Maybe you can just help us give us, give us some break points on that journey. Thanks.

Timothy Flanagan: Yeah, so again, we don't provide a lot of guidance, and I'm not going to sit here and start speculating about next year. Other than, you know, I think we're laying the groundwork with our customers in all the work that we've been doing, and we've been saying this, you know, ever since Q4 of 2022 that we're confident that we'll continue to claw back our market share. And yeah, maybe we went down in the elevator and we're climbing back up on the stairs, but we will continue to drive forward and get market share back as we head into 2025.

Speaker Change #107: Yeah, so, again, we...

Speaker Change #108: Don't provide a lot of guidance, and I'm not going to sit here and start speculating about next year, other than, you know, I think we're laying the groundwork with our customers.

Timothy K. Flanagan: And yeah, maybe we went down in the elevator, and we're climbing back up on the stairs, but we will continue to drive forward and get market share back as we head into 2025. So, while we expect modest increases in volume this year, I would think it's fair to continue to expect increases in volume as we head into 2025. And Catherine commented on the cost side, where, you know, the moral of the story is the cost trend is going in the right direction from 2023 to 2024, and we expect that to continue from where we sit today, heading into 2025.

Speaker Change #108: In all the work that we've been doing, and we've been saying this ever since Q4 of 2022,

Speaker Change #108: That we're confident that we'll continue to claw back our market share. And yeah, maybe we went down in the elevator and we're climbing back up on the stairs.

Speaker Change #108: But we will continue to drive forward and get market share back.

Timothy Flanagan: So, while we expect modest increases in volume this year, I would think it's fair to continue to expect increases in volume as we head into 2025. And Catherine commented on the cost side where, you know, the moral of the story is the cost trend is going in the right direction from 23 to 24, and we expect that to continue from where we sit today heading into 25. So a lot of the things that we can control and that we can drive are progressing as we would expect and as we've been saying they would. You know, the question that remains, you know, the uncertainty and the question that I can't answer for you today is what is pricing will get like next year.

Speaker Change #108: As we head into 2025, so while we expect modest increases in volume this year, I would think it's fair to continue to expect increases in volume as we head into 2025.

Speaker Change #108: And Catherine commented on the.

Catherine Delgado: The cost side where, you know, the...

Catherine Delgado: The moral of the story is that the cost trend is going in the right direction from 2023 to 2024 and we expect that to continue.

Timothy K. Flanagan: So, a lot of the things that we can control and that we can drive are progressing as we would expect, and as we've been saying, they should. You know, the question that remains, you know, the uncertainty, and the question that I can't answer for you today is, what will pricing look like, like, next year? And we won't know that until we start engaging more fully with our customers here in the late 3rd quarter and early 4th quarter as we get into contract negotiations.

Catherine Delgado: For where we sit today heading into 25. So, a lot of the things that we can control and that we can drive are progressing as we would expect and as we've been saying they would.

Speaker Change #109: You know, the question that remains, you know, the uncertainty and the question that I can't answer for you today is what does pricing look like next year?

Timothy Flanagan: And we won't know that until we start engaging more falsely with our customers here in the late third quarter and early fourth quarter as we get into contract negotiation. So hopefully that helps at least give you a little bit of direction is the way we see 25, and I think that trend just continues because some of the bigger drivers around EF and steel demand, as well as needle coke demands, really start to come into play as we get more into 26 and beyond. So hopefully that gives you a little more visibility, or at least a sense of how we're viewing kind of the recovery and kind of the growth curve for the businesses we look out here over the midterm.

Catherine Delgado: We won't know that until we start engaging more fulsomely with our customers here in the late third quarter and early fourth quarter as we get into contract negotiations. Hopefully, that helps at least give you a little bit of direction as the way we see 25. I think that trend just continues because some of the bigger drivers around EAF and steel demand as well as needle coke demands really start to come into play as we get more into 26 and beyond. Hopefully, that gives you a little more visibility or at least a sense of how we're viewing.

Timothy K. Flanagan: So, hopefully that helps at least give you a little bit of direction as to how we see 25. And I think that trend just continues because some of the bigger drivers around EAF and steel demand as well as needle coke demands really start to come into play as we get more into 26 and beyond. So, hopefully, that gives you a little more visibility, or at least a sense of how we're viewing the kind of recovery and kind of the growth curve for the business as we look out here over the midterm. Thanks for that, Tim. Maybe I could just ask a follow-up question in a slightly different way.

Catherine Delgado: Kind of the recovery and kind of the growth curve for the business as we look out here over the midterm.

Timothy Flanagan: Thanks for that, Tim. Maybe I can just ask follow-up in a slightly different way. So would you say, would you agree that the market has bottomed? I know it has on a, maybe it has on a volume front, but again, with your LTAs rolling off, I know pricing won't necessarily, you know, also it's probably not bottomed per se on an average realization basis, but would you say that prices have have bottomed, you know, from a, you know, overall spot basis? Yeah, a room much like not speculating on political outcomes. I think I'm going to, going to refrain from calling a bottom; usually doesn't work well for most folks, but I mean, again, I think, you know, you're seeing some stability.

Arun Shankar Viswanathan: So, would you say, would you agree that the market has bottomed? I know it has on a, maybe it has on a volume front, but again, with your LTAs rolling off, I know pricing won't necessarily, you know, also it's probably not bottomed per se on an average realization basis, but would you say that prices have bottomed, you know, from a, you know, overall spot basis? Yeah, Arun, much like not speculating on political outcomes, I think I'm going to refrain from calling a bottom. That usually doesn't work well for most folks.

Speaker Change #112: Thanks for that, Tim. Maybe I could just ask a follow-up in a slightly different way. Would you say, would you agree that the market has bottomed? I know it has on a, maybe it has on a volume front.

Speaker Change #111: But again, with your LTAs rolling off, I know pricing won't necessarily...

Speaker Change #110: Also, it's probably not bottomed, per se, on an average realization basis, but would you say that prices have bottomed from an overall spot basis?

Speaker Change #110: Yeah, Arun, much like not speculating on political outcomes, I think I'm going to...

Timothy K. Flanagan: But, I mean, again, I think, you know, you're seeing some stability. I would certainly think so now that we are, you know, six months, almost six months removed from our announcement of reducing capacity in St. Mary's. Again, I mentioned one of our competitors came out, and they've taken action around their production capacity. As I stated before, I don't think that all of the Western producers operating at losses or kind of thin or single-digit margins is a sustainable business.

Speaker Change #110: I'm going to refrain from calling a bottom, that usually doesn't work well for most folks.

Timothy Flanagan: I would certainly think that now that we are, you know, six months to almost six months removed from our announcement of reducing capacity in St. Mary's, again, I mentioned one of our competitors come out and they've taken action around their production capacity. I stated before, I don't think that all of the Western producers operating at, at losses or kind of thin or single digit margins is a sustainable business. And certainly, you know, if we think about how essential we are to the production of steel in EAS, right? It's not really sustainable for our customers either, right?

Speaker Change #110: You know, you're seeing some stability. I would certainly think that now that we are

Speaker Change #110: You know, six months, almost six months removed from our announcement of reducing capacity in St. Mary's.

Speaker Change #110: Again, I mentioned one of our competitors come out.

Speaker Change #110: They've taken action around their production capacity. I stated before, I don't think that all of the Western producers operating at losses or

Speaker Change #110: Thin or single-digit margins is a sustainable business and certainly

Timothy K. Flanagan: And certainly, you know, if we think about how essential we are to the production of steel in EAFs, right? It's not really sustainable for our customers either, right? So at some point in time, you have to see some better pricing support across the industry. And again, whether that's through higher demand, more supply rationalization, or just better overall demand and economic conditions. We do see things returning to more normalized conditions as we move into 2025 and beyond.

Speaker Change #110: You know, if we think about how essential we are to the production of steel.

Timothy Flanagan: So at some point in time, you have to see some, some better pricing support across the industry. And again, whether that's, you know, through higher demand, more supply rationalization, or just better overall demand and economic conditions. You know, we do see, see things returning back to more normalized conditions, and as we move through into 25 and beyond. So. Okay. Thanks.

Speaker Change #110: Bye.

Speaker Change #110: in EAFs, it's not really sustainable for our customers either. So at some point in time, you have to see some better pricing support across the industry. And again, whether that's through higher demand, more supply rationalization, or just better overall demand and economic

Speaker Change #110: conditions you know we do see see things returning back to more normalized conditions and as we move through into 25 and beyond so

Timothy K. Flanagan: Okay, thanks. And then, just last time, you spoke last time about some improved commercial actions that you're taking, some, you know, initiatives to win back some share, and maybe, you know, you noted this time laying the groundwork with a lot of customers. So, where are you on that journey?

Timothy Flanagan: And then just lastly, you know, you spoke last time about some improved commercial actions that you're taking, some, you know, initiatives to win back some share. And maybe you know, you know, you know, to this time laying the groundwork with a lot of customers. So, where are you on that journey? Have you actually gotten any customers back? And do you feel like that's also kind of, you know, bottomed and heading higher as far as your, you know, kind of share gain recovery? Yeah, I mean, I would, I would absolutely, and I don't know how I call a customer bottom, but I would say that, you know, we continue myself.

Speaker Change #114: Okay, thanks. And then just lastly, you know, you spoke last time about...

Speaker Change #113: Some improved commercial actions that you're taking, some initiatives to win back some share.

Arun Shankar Viswanathan: Have you actually gotten any customers back? And do you feel like that's also kind of, you know, bottomed and heading higher as far as your, you know, kind of share gain recovery? Yeah, I mean, I would absolutely, and I don't know how I call it, customer bottom, but I would say that, you know, we continue, myself, Jeremy, Inigo Perez, our head of sales, continue to engage with our customers on an in-person basis, you know, and we've been doing so throughout this year, and we'll continue to do so because I think it's important that we continue to articulate to them not only the value proposition that we think we offer that we've talked about on this call, but also to make sure that the products that we're delivering to them meet their specification and needs, and that we're thinking about ways to help them improve their business and their cost competitiveness, you know, and really the technical services we provide them, all the value add that we think we can provide that is truly a differentiator from our competition.

Speaker Change #119: And maybe, you know, you noted this time laying the groundwork with a lot of customers. So where are you on that journey? Have you actually gotten any customers back? And do you feel like that's also kind of...

Speaker Change #115: you know, bottomed and heading higher as far as your, you know, you know, kind of share gain recovery.

Speaker Change #116: Yeah, I mean, I would, I would absolutely, and.

Speaker Change #117: I don't know how I call it customer bottom, but I would say that, you know, we continue myself.

Timothy Flanagan: Jeremy, an ego pres are ahead of sales, continue to engage with our customers on an in person basis. You know, and we've been doing so throughout this year, and we'll continue to do so because I think it's important that we continue to articulate to them not only the value proposition that we think we offer that we've talked about on this call. But also to make sure that the products that we're delivering to them meet their specification and needs, and that we're thinking about ways to help them improve their business and their cost competitiveness. You know, and really the technical services we provide them, all the value add that we think we can provide, that is truly a differentiator from our competition.

Speaker Change #118: Jeremy, Inigo Perez, our Head of Sales, continue to engage with our customers on an in-person basis.

Speaker Change #118: You know, and we've been doing so throughout this year and we'll continue to do so because I think it's important that we continue to articulate to them not only the value proposition,

Speaker Change #118: that we think we offer that we've talked about on this call, but also to make sure that the products that we're delivering to them meet their specification and needs, and that we're thinking about ways to help them improve their business and their cost competitiveness.

Speaker Change #118: You know, and really the technical services we provide them all the value add that we think we can provide that is truly a differentiator from our competition. So

Arun Shankar Viswanathan: So, I think that is paying dividends, and I think, maybe somewhat differently than in the past, really articulating to them that these are partnerships. These are long-term relationships, and that's what we want. We don't want customers who buy from us one quarter, and we don't see them again for a couple years, right? We want customers that are, you know, concerned about our business because we're concerned about their business, and, you know, that we're willing to invest in those partnerships for the long-term health of both companies.

Timothy Flanagan: So I think that is paying dividends. And I think most importantly, and maybe somewhat different than in the past, is really articulating to them, you know, that these are partnerships. These are long-term relationships. And that's what we want. We don't want customers who buy from us one quarter, and we don't seem again for a couple years. Right. We want customers that are, you know, concerned about our business because we're concerned about their business and, you know, that we're willing to invest in those partnerships for the long-term health of both companies. So that is resonating. I think I think that message is being well received, and we'll continue to see that dividends being paid as we look out into 25 and beyond.

Speaker Change #118: I think that is paying dividends, and I think most importantly, and

Speaker Change #118: may be somewhat different than in the past.

Speaker Change #118: is really articulating to them that these are partnerships, these are long-term relationships and that's what we want. We don't want customers who buy from us one quarter and we don't see them again for a couple of years. We want customers that are concerned about our business because we're concerned about their business and that we're willing to invest in those partnerships.

Timothy K. Flanagan: So, that is responding. I think that message is being well-received, and we'll continue to see dividends being paid as we look out into 2025 and beyond. Thanks a lot. Thanks, Arun. This concludes our question and answer session. I will now hand the call back over to Mr. Flanagan for closing comments. Thank you, Ace. I'd like to thank everyone on this call for their interest in GrafTech. We look forward to speaking with you again next quarter. Have a great day. Thank you, ladies and gentlemen. This concludes our conference call. You may now disconnect.

Speaker Change #118: For the long-term health of both companies. So that is resonating. I think that message is being well received and we'll continue to see that dividends being paid as we look out into 2025 and beyond.

Unknown Executive: Thanks a lot.

Timothy Flanagan: Thanks for him. This includes our question and answer session.

Speaker Change #118: Thanks a lot.

Speaker Change #118: Thanks, Arun.

Unknown Executive: I will now hand the call back over to Mr. Flanagan for closing comments. Thank you, Ace. I'd like to thank everyone on this call for your interest in GrafTech. We look forward to speaking with you again next quarter. Have a great day. Thank you, ladies and gentlemen. This concludes our conference call. You may now disconnect.

Speaker Change #118: This concludes our question and answer session. I will now hand the call back over to Mr. Flanagan for closing comments.

Timothy K. Flanagan: Thank you, Ace. I'd like to thank everyone on this call for your interest in GrafTech. We look forward to speaking with you again next quarter. Have a great day.

Speaker Change #120: Thank you, ladies and gentlemen. This concludes our conference call. You may now disconnect.

Q2 2024 GrafTech International Ltd Earnings Call

Request a DemoDemo

EAF

GrafTech

Earnings