Q4 2024 GrafTech International Ltd Earnings Call

February 7, 2025

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.

and and and and and and

Speaker Change: This call is being recorded on Friday February 7th 2025, I would now like to turn the conference over to Mr. Mike Dillon, Sir. Please go ahead.

Speaker Change: Thank you.

Speaker Change: Good morning, and welcome to graphic Internationals fourth quarter 2024 earnings call.

Speaker Change: And with me today are Tim Flanagan, Chief Executive Officer, Jeremy Hallford, Chief Operating Officer, Rory O'donnell, Chief Financial Officer.

Speaker Change: Tim will begin with opening comments.

Jeremy Hallford: Jeremy will then discuss safety the commercial environment sales and operational matters.

Jeremy Hallford: Lori will review, our quarterly results and other financial details and Tim will close with additional comments on our outlook.

Jeremy Hallford: We will then open the call to questions.

Jeremy Hallford: Turning to our next slide.

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

Jeremy Hallford: 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.

John: John here.

Speaker Change: 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.

John: At Www Dot graphic dot com.

Speaker Change: A replay of the call will also be available on our website.

Tim: I'll now turn the call over to Tim.

Tim: Thanks, Mike.

Tim: Good morning, and thank you for joining <unk> fourth quarter earnings call.

Tim: During the call. This morning, we will provide an overview of our fourth quarter results.

Tim: Sure key operational and commercial update and discuss our outlook for 2025 and beyond.

Tim: But I'd like to begin by highlighting our 2020 for performance in a number of key areas.

Tim: Throughout 2024, we discussed key actions, we're taking in response to the cyclical downturn the graphite electrode industry faced.

Thank you.

Speaker Change: Good morning, and welcome to graphic Internationals fourth quarter 2024 earnings call.

Tim: We've delivered on all fronts with impressive results.

Tim: Let me briefly touch on a few areas.

Speaker Change: And with me today are Tim Flanagan, Chief Executive Officer, Jeremy Hallford, Chief Operating Officer, Gary O'donnell, Chief Financial Officer.

Tim: Since being named CEO, our top priority has been to reinvigorate our customer first focus across our organization.

Speaker Change: Tim will begin with opening comments.

Tim: This included a significant increase in our level of customer engagement and investing further in our customer value proposition, allowing us to accelerate our path to market share recovery.

Speaker Change: Jeremy will then discuss safety the commercial environment sales and operational matters.

Speaker Change: Lori will review, our quarterly results and other financial details and Jim will close with additional comments on our outlook.

Tim: Despite flat global steel production outside of China.

Speaker Change: We will then open the call to questions.

Tim: And flat graphite electrode demand in 2024, we grew our sales volume by 13% year over year.

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 strategies.

Tim: This growth occurred despite continuing challenging competitive dynamics, including an ongoing increase in the level of electrode exports from certain countries, including India and China.

Speaker Change: 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.

Tim: I am proud of this progress towards what we've consistently noted would be a multiyear path to returning to our historical market share levels.

Speaker Change: John here.

Among others one of our key initiatives was the introduction of our 800 millimeter product offering the.

Tim: 800 millimeter launch was executed well by our teams and performed up to the highest of standards during qualifications in 2024.

Speaker Change: Ww diagraph to take dotcom.

Speaker Change: A replay of the call will also be available on our website.

Terry: And now I'll turn the call over to Terry.

Tim: As we head into 2025, we will complete qualification trials on a number of additional furnaces that require 800 millimeter electrodes, making this an important growth platform in the years ahead.

Terry: Thanks, Mike.

Terry: Good morning, and thank you for joining <unk> fourth quarter earnings call.

Terry: During the call. This morning will provide an overview of our fourth quarter results.

Terry: Sure key operational and commercial updates and discuss our outlook for 2025 and beyond.

Tim: On the cross front.

Tim: A year ago at this time, we announced our cost rationalization and footprint optimization plan.

Terry: But I'd like to begin by highlighting our 2020 for performance in a number of key areas.

Tim: This included the idling of our St Maries production facility.

Terry: Throughout 2024, we discussed key actions, we're taking in response to the cyclical downturn in the graphite electrode industry faced.

Tim: A further reduction in capacity at our remaining facilities.

Tim: And a significant reduction in our overhead structure and expenses among other initiatives.

Terry: We've delivered on all fronts with impressive results.

Tim: At the time, we projected this would result in a low teen percentage point decline in our cash Cogs per metric ton for 2024 as compared to 2023.

Terry: Let me briefly touch on a few areas.

Terry: Since being named CEO, our top priority has been to reinvigorate our customer first focus across the organization.

Tim: Instead, we delivered a 23% year over year reduction or more than $200 per metric ton, which sets us up favorably for when the market recovers.

Terry: This included a significant increase in our level of customer engagement and investing further in our customer value proposition, allowing us to accelerate our path to market share recovery.

Tim: Our initiatives to manage our working capital levers levels also over delivered our initial expectations for.

Terry: Despite flat global steel production outside of China.

Terry: And flat graphite electrode demand in 2024, we grew our sales volume by 13% year over year.

Tim: For the year, we reduced our working capital levels by $40 million, which is on top of the $108 million of working capital reductions in 2023.

Terry: This growth occurred despite continuing challenging competitive dynamics, including an ongoing increase in the level of electrode exports from certain countries, including India and China.

Tim: Lastly, we capitalized on an opportunity to improve our liquidity position and strengthen our financial foundation.

Terry: Yeah.

Tim: During the fourth quarter, we closed on our previously announced financing transaction.

Terry: I'm proud of this progress towards what we've consistently noted would be a multiyear path to returning to our historical market share levels.

Tim: With the successful completion of this transaction, we ended 2024 with $464 million of liquidity.

Terry: Among others one of our key initiatives was the introduction of our 800 millimeter product offering.

Further we extended substantially all of our debt maturities to December of 2029.

Terry: 800 millimeter launch was executed well by our teams and performed up to the highest of standards during qualifications in 2024.

Tim: To summarize we laid out a plan and we executed.

Tim: All of these achievements reflect our absolute focus on managing the things within our control in order to preserve our flexibility to capitalize on a future recovery in the market.

Terry: As we head into 2025, we will complete qualification trials on a number of additional furnaces that require 800 millimeter electrodes, making this an important growth platform in the years ahead.

Tim: This is by no means means we are satisfied with our financial performance in 2024 to be clear we are not.

Terry: On the cross front.

Terry: A year ago at this time, we announced our cost rationalization and footprint optimization plan.

Tim: And further actions are needed and I'll discuss those in a moment.

Terry: This included the idling of our St Maries production facility.

Tim: But I would like to express my appreciation for the remarkable efforts of our entire team across the globe.

Terry: A further reduction in capacity at our remaining facilities.

Tim: 24 was a year of significant achievement against the challenging backdrop.

Terry: And a significant reduction in our overhead structure and expenses among other initiatives.

Tim: And I'm incredibly proud of the hard work and commitment demonstrated by everybody at <unk>.

Terry: At the time, we projected this would result in a low teen percentage point decline in our cash Cogs per metric ton for 2024 as compared to 2023.

Tim: As we enter 2025, we're seeing some green shoots in the broader industry as the market is generally predicted projecting a modest increase in global steel demand for the year.

Terry: Instead, we delivered a 23% year over year reduction or more than $1200 per metric ton, which sets us up favorably for when the market recovers.

Tim: However, significant amount of geopolitical uncertainty remains.

Terry: Our initiatives to manage our working capital levers levels also over delivered our initial expectations for the year, we reduced our working capital levels by $40 million, which is on top of the $108 million of working capital reductions in 2023.

Tim: We are particularly focused on the potential for tariffs, including retaliatory tariffs as it relates to Mexico, and how this might impact our north American supply chain.

Tim: While this remains a fluid situation, we are considering a variety of potential tariff outcomes.

Tim: We are actively evaluating our response to the various scenarios and are prepared to act in order to minimize any potential impact.

Terry: Lastly, we capitalized on an opportunity to improve our liquidity position and strengthen our financial foundation.

Tim: It would be through proactive inventory movements or other adjustments to our supply chain.

Terry: During the fourth quarter, we closed on our previously announced financing transaction.

Tim: More broadly as we factor all of these geopolitical considerations into our thinking.

Terry: With the successful completion of this transaction, we ended 2024 with $464 million of liquidity.

Tim: Our current outlook is that demand for graphite electrodes will remain relatively flat in our key regions in the near term.

Terry: Further we extended substantially all of our debt maturities to December of 2029.

Tim: Despite this we expect to capitalize on our commercial momentum to continue to grow our sales volume and increase our market share in 2025.

Terry: To summarize we laid out a plan and we execute it.

Terry: All of these achievements reflect our absolute focus on managing the things within our control in order to preserve our flexibility to capitalize on a future recovery in the market.

Tim: However, challenging pricing dynamics persist in most regions.

Tim: All of this leads to a simple fact.

Terry: This is by no means means we are satisfied with our financial performance in 2024 to be clear we are not.

Tim: The current level of graphite electrode pricing is not sustainable.

It's not good for our business in the near term and more broadly it's not good for the steel industry globally more.

Terry: And further actions are needed and I'll discuss those in a moment.

Terry: But I would like to express my appreciation for the remarkable efforts of our entire team across the globe.

Tim: Than 500 million tons as dealer produced via electric arc furnaces on an annual basis.

Terry: 2024, it was a year of significant achievement against the challenging backdrop and I'm incredibly proud of the hard work and commitment demonstrated by everybody at graph Tech.

Tim: A reliable supply of high quality graphite electrodes as indispensable to Eas steel production.

Tim: Therefore, a healthy and growing still growing steel industry needs.

Terry: As we enter 2025, we're seeing some green shoots in the broader industry as the market is generally predict projecting a modest increase in global steel demand for the year.

Tim: A healthy.

Tim: And growing graphite electrode suppliers that can invest along with it and grow with it.

Tim: We will continually proactively pursue opportunities to improve our cost structure.

Terry: However, significant amount of geopolitical uncertainty remains.

Tim: We will also continue to expand in our working capital management initiatives.

Terry: We are particularly focused on the potential for tariffs, including retaliatory tariffs as it relates to Mexico, and how this might impact our north American supply chain.

Tim: But we cannot cut our way to growth.

Tim: At the end of the day, our average selling price must improve.

Terry: While this remains a fluid situation, we are considering a variety of potential tariff outcomes.

Tim: We must optimize our order book by actively shifting the geographic mix of our business to regions, where theres an opportunity to capture higher pricing.

Terry: We are actively evaluating our response to the various scenarios and are prepared to act in order to minimize any potential impact.

Tim: This includes walking away for some volume opportunities, where margins are unacceptable low or where customers do not recognize our value proposition.

Terry: Or it be through proactive inventory movements or other adjustments to our supply chain.

Tim: To that end, we recently informed our customers of our intention to increase prices by 15% on volume that is not yet committed for 2025.

More broadly as we factor all of these geopolitical considerations into our thinking.

Terry: Our current outlook is that demand for graphite electrodes will remain relatively flat in our key regions in the near term.

Tim: Okay.

Tim: Actions such as these are not taken lightly but it is important that we are compensated for the additional value, we provide to our customers, especially when compared to our competitors.

Terry: Despite this we expect to capitalize on our commercial momentum to continue to grow our sales volume and increase our market share in 2025.

However, challenging pricing dynamics persist in most regions.

Tim: This increase is a first necessary step on the path to restoring pricing and therefore profitability to normalized levels that will support our ability to invest in our business.

Terry: All of this leads to a simple fact.

Terry: The current level of graphite electrode pricing is not sustainable.

Tim: We are relentlessly committed to meeting the needs of our customers by remaining the industry's preeminent supplier of graphite electrodes, leading edge technical support and high quality petroleum needle Coke.

Terry: Yeah.

Terry: It's not good for our business in the near term and more broadly it's not good for the steel industry.

Terry: Globally more than 500 million tons of steel are produced via electric arc furnaces on an annual basis.

Tim: All of which reflects our focus on creating long term value for our customers our employees our shareholders our communities and all of our constituents.

Terry: A reliable supply of high quality graphite electrodes as indispensable to EAA EF steel production there.

Terry: Therefore, a healthy and growing still growing steel industry needs.

Tim: With that let me turn it over to Jeremy to provide more color on our operational and commercial performance.

Terry: A healthy.

Terry: And growing graphite electrode suppliers that can invest along with it and grow with it.

Tim: Yes.

Thank you, Tim and good morning, everyone.

Tim: As always I'll start my comments with an update on safety, which is a core value at Kraft Tech.

Terry: We will continue to proactively pursue opportunities to improve our cost structure.

Terry: We will also continue to expand in our working capital management initiatives.

Tim: We ended 2024 with a recordable incident rate that was comparable to the prior year and continues to place us in the top tier of the broader manufacturing industry.

Terry: We cannot cut our way to growth.

Terry: At the end of the day, our average selling price must improve.

Tim: However to put it bluntly our safety performance in 2024 was not acceptable, particularly in the fourth quarter of the year.

Terry: We must optimize our order book by actively shifting the geographic mix of our business to regions, where theres an opportunity to capture higher pricing.

Tim: Our operations team is second to none in the industry and we're capable of doing better.

Terry: This includes walking away for some volume opportunities where margins are unacceptable really low or customers do not recognize our value proposition.

Tim: Our expectation is to send every one of our employees home safely at the end of every day and we will not be satisfied until we achieve our ultimate goal of zero injuries.

Terry: To that end, we recently informed our customers of our intention to increase prices by 15% on volume that is not yet committed for 2025.

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

Terry: Okay.

Tim: On a global basis steel production outside of China was approximately 207 million tons in the fourth quarter of 2024, which was relatively flat to the fourth quarter of 2023.

Terry: Actions such as these are not taken lightly but it is important that we are compensated for the additional value, we provide to our customers, especially when compared to our competitors.

Terry: This increase is a first necessary step on the path to restoring pricing and therefore profitability to normalized levels that will support our ability to invest in our business.

Tim: On a full year basis global steel production outside of China was also flat compared to the prior year with utilization rates remaining consistently in the mid to high 60% range for the second consecutive year.

Terry: We are relentlessly committed to meeting the needs of our customers by remaining the industry's preeminent supplier of graphite electrodes, leading edge technical support and high quality petroleum needle Coke.

Tim: Looking at some of our key commercial regions using statistics recently published by the World Steel Association.

Terry: All of which reflects our focus on creating long term value for our customers our employees our shareholders.

Tim: For North America steel production was down 4% in 2024 on a year over year basis.

Tim: This included a 2% reduction in the U S, reflecting a modest decline in what has been an otherwise relatively stable steel region.

Terry: Our communities and all of our constituents.

Terry: With that let me turn it over to Jeremy to provide more color on our operational and commercial performance.

Tim: Conversely steel output in the EU increased 3% for the year, although it remains well below historical production and utilization levels for that region.

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

Jeremy: As always I'll start my comments with an update on safety, which is a core value at Kraft Tech.

Jeremy: We ended 2024 with a recordable incident rate that was comparable to the prior year and continues to place us in the top tier of the broader manufacturing industry.

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

Tim: Okay.

Tim: Our production volume in the fourth quarter of 2024 was 25000 metric tons, which resulted in the capacity utilization rate of 55%.

Jeremy: However to put it bluntly our safety performance in 2024 was not acceptable, particularly in the fourth quarter of the year.

Tim: Sales volume was 27000 metric tons in the fourth quarter, which was up 13% year over year and above our previously stated outlook for the quarter.

Jeremy: Our operations team is second to none in the industry and we're capable of doing better R.

Our expectation is to send every one of our employees home safely at the end of every day and we will not be satisfied until we achieve our ultimate goal of zero injuries.

Tim: Shipments for the fourth quarter of 2024 included approximately 24000 metric tons of non LTA sales at a weighted average realized price of approximately $3900 per metric ton and approximately 3000 metric tons sold under our <unk> at a weighted average realized price.

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

Jeremy: On a global basis steel production outside of China was approximately 207 million tons in the fourth quarter of 2024, which was relatively flat to the fourth quarter of 2023.

Tim: Of approximately $7700 per metric ton.

Jeremy: On a full year basis global steel production outside of China was also flat compared to the prior year with utilization rates remaining consistently in the mid to high 60% rate for the second consecutive year.

Tim: Expanding on our weighted average price per non LTA sales in the fourth quarter. This represented a 19% year over year decline and a sequential decline from the third quarter of approximately 5%.

Reflecting the challenging pricing dynamics that Tim spoke to.

Jeremy: Looking at some of our key commercial regions using statistics recently published by the World Steel Association.

Tim: Okay.

Tim: Net sales in the fourth quarter decreased 2% compared to the fourth quarter of 2023 as higher sales volume was offset by the lower pricing along with the shift in the mix of our business from LTA to non LTA volume.

Jeremy: For North America steel production was down 4% in 2024 on a year over year basis.

Jeremy: This included a 2% reduction in the U S, reflecting a modest decline in what had been an otherwise relatively stable steel region.

Tim: Turning to 2025.

Tim: We recently concluded a key customer negotiation window, where we engaged in discussions with many of our existing customers as well as new ones regarding their needs for 2025.

Jeremy: Conversely steel output in the EU increased 3% for the year, although it remains well below historical production and utilization levels for that region.

Tim: Overall, we were encouraged by the dialogue and pleased with the resulting level of volume commitments.

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

Jeremy: Okay.

Tim: To date, we have over 60% of our anticipated 2025 volume already committed in our order book, which is ahead of where we were at this point last year.

Jeremy: Our production volume in the fourth quarter of 2024 was 25000 metric tons, which resulted in our capacity utilization rate of 55%.

Tim: For the full year, we anticipate a low double digit percentage point increase in our sales volume for 2025, which comes on top of the 13% full year volume increase we achieved in 2024.

Jeremy: Sales volume was 27000 metric tons in the fourth quarter, which was up 13% year over year and above our previously stated outlook for the quarter.

Jeremy: Shipments for the fourth quarter of 2024 included approximately 24000 metric tons of non LTA sales at a weighted average realized price of approximately $3900 per metric ton and approximately 3000 metric tons sold under our L. T A's at a weighted average realized price.

Tim: Okay.

Speaker Change: Reflecting the targeted actions that Tim discussed to actively shift the geographic mix of our business to regions, where theres an opportunity to capture higher pricing. We expect our sales volume growth in 2025 will be primarily concentrated in the U S and European regions.

Jeremy: Of approximately $7700 per metric ton.

Speaker Change: Given the muted demand environment. This reflects the success of our customer engagement strategy aimed at regaining our market share.

Jeremy: Expanding on a weighted average price per non LTA sales in the fourth quarter. This represented a 19% year over year decline and a sequential decline from the third quarter of approximately 5% reflecting.

Speaker Change: It also reflects investments in our customer value proposition.

Speaker Change: These investments include an expansion of our technical capabilities related to our architect furnace productivity system.

Jeremy: The challenging pricing dynamics that Tim spoke to.

Speaker Change: Which is further supported by a world class customer technical service team.

Jeremy: Okay.

Jeremy: Net sales in the fourth quarter decreased 2% compared to the fourth quarter of 2023 as higher sales volume was offset by the lower pricing along with the shift in the mix of our business from LTA to non LTA volume.

Speaker Change: Additionally, we have expanded our product offerings, most notably with the introduction of our 800 millimeter product.

Speaker Change: While currently a niche market demand growth for 800 millimeter and other super size electrodes is expected to significantly outpace that of the overall electrode market in years to come.

Jeremy: Turning to 2025.

Jeremy: We recently concluded a key customer negotiation window, where we engaged in discussions with many of our existing customers as well as new ones regarding their needs for 2025.

Speaker Change: With our successful launch we're excited to offer high quality products to meet this need.

Speaker Change: Lastly, during 2024, we entered into new strategic multiyear electrode sales agreements with certain customers.

Jeremy: Overall, we were encouraged by the dialogue I'm pleased with the resulting level of volume commitments.

Jeremy: To date, we have over 60% of our anticipated 2025 volume already committed that in our order book, which is ahead of where we were at this point last year.

Speaker Change: Which will contribute to our volume growth in 2025.

Speaker Change: Although a relatively small percentage of our overall order book these multiyear agreements reflect the confidence our customers have in our products and services and their recognition of our unique position of being vertically integrated into needle coke.

Jeremy: For the full year, we anticipate a low double digit percentage point increase in our sales volume for 2025, which comes on top of the 13% full year volume increase we achieved in 2024.

Speaker Change: And we of course value their long term partnership.

Speaker Change: Ultimately all of these initiatives are about strengthening our customer relationship for the long term to achieve mutual mutual success for years to come.

Speaker Change: Let me now turn it over to Rory to cover the rest of our financial details.

Rory: Thank you Jeremy and good morning, everyone for.

Speaker Change: For the fourth quarter of 2024, we had a net loss of $49 million.

Given the muted demand environment. This reflects the success of our customer engagement strategy aimed at regaining our market share.

Rory: Or <unk> 19 per share.

Rory: Adjusted EBITDA was negative $7 million in the fourth quarter.

Speaker Change: It also reflects investments in our customer value proposition.

Rory: Third to adjusted EBITDA of negative $22 million in the fourth quarter of 2023.

Speaker Change: These investments include an expansion of our technical capabilities related to our architect furnished productivity system.

Rory: The improvement was driven by a 25% year over year reduction in cash costs on a per metric ton basis.

Speaker Change: Which is further supported by a world class customer technical service team.

Rory: This was partially offset by the impact of lower weighted average pricing and a shift in the mix of our business towards non LTA volumes as Jeremy referenced.

Speaker Change: Additionally, we have expanded our product offerings, most notably with the introduction of our 800 millimeter product.

Rory: As we have previously indicated the legacy LTA contracts have been almost entirely fulfilled as of the end of 2024.

Rory: As such future results will not be significantly impacted by the mix of LTA versus non LTA volumes.

Speaker Change: With our successful launch we're excited to offer high quality products to meet this need.

Rory: Let me expand on the cost favorability, which represents an over delivery compared to our previously stated expectations.

Speaker Change: Lastly, during 2024, we entered into new strategic multiyear electrode sales agreements with certain customers, which will contribute to our volume growth in 2025.

As shown in the reconciliation provided in our earnings call materials posted on our website, our cash Cogs per metric ton were just under $4100 for the fourth quarter of 2024.

Rory: This brought our full year cash cogs per metric ton to $4290 for a 23% reduction year over year exceeding our most recent guidance of a 20% decline.

Speaker Change: And we of course value their long term partnership.

Speaker Change: Ultimately all of these initiatives are about strengthening our customer relationship for the long term to achieve mutual mutual success for years to come.

Rory: This impressive cost performance reflects reflects the efforts of our teams in identifying and executing against cost reduction opportunities.

Speaker Change: Let me now turn it over to Rory to cover the rest of our financial details.

Rory: Without compromising our ability to meet our customers' needs or our product quality.

Rory: Thank you Jeremy and good morning, everyone for.

Rory: For the fourth quarter of 2024, we had a net loss of $49 million.

Rory: Moving ahead, we anticipate that our cash cost per metric ton will continue to trend down further over time.

Rory: Or <unk> 19 per share.

Rory: Adjusted EBITDA was negative $7 million in the fourth quarter.

Rory: The percentage of magnitude of the decline.

Rory: Paired to adjusted EBITDA of negative $22 million in the fourth quarter of 2023.

Rory: Which has reflected the team's incredible execution of our cost savings programs.

Rory: The improvement was driven by a 25% year over year reduction in cash costs on a per metric ton basis.

Rory: As expected to moderate over the coming periods compared to the 23% reduction in 2024, but we will continue to trend toward our long term expectation of approximately $3700 per metric ton.

Rory: This was partially offset by the impact of lower weighted average pricing and a shift in the mix of our business towards non LTA volumes as Jeremy referenced.

Rory: Specific to 2025, we will continue to build on our recent cost reduction initiatives across various components of variable and fixed costs in our business.

Rory: As we have previously indicated the legacy LTA contracts have been almost entirely fulfilled as of the end of 2024.

Rory: In addition, our cost structure will benefit from improved fixed cost leverage reflecting the expected increase in our production volume levels.

Rory: As such future results will not be significantly impacted by the mix of LTA versus non LTA volumes.

Rory: As a result, we anticipate a mid single digit percentage point decline in our cash Cogs per metric ton in 2025, which would translate into cash cogs per metric ton of approximately $4100 on a full year basis in 2025.

Rory: Let me expand on the cost favorability, which represents an over delivery compared to our previously stated expectations.

Rory: As shown in the reconciliation provided in our earnings call materials posted on our website, our cash Cogs per metric ton were just under $4100 for the fourth quarter of 2024.

Rory: Turning to our cash flow for the fourth quarter of 2020 for cash used in operating activities was $26 million and adjusted free cash flow was negative $21 million.

Rory: This brought our full year cash cogs per metric ton to $4290 for a 23% reduction year over year exceeding our most recent guidance of a 20% decline.

Rory: This brought full year 2024, adjusted free cash flow to negative $56 million.

Rory: This impressive cost performance reflects it reflects the efforts of our teams in identifying and executing against cost reduction opportunities.

Rory: Compared to being a source of cash in 2023 of approximately $50 million.

Rory: Without compromising our ability to meet our customers' needs or our product quality.

Rory: The year over year change reflected a $40 million net benefit from working capital in 2024 as compared to a $108 million working capital benefit in 2023 with the favorability in both years driven by a reduction in inventory, reflecting our efforts to align inventory levels.

Rory: Moving ahead, we anticipate that our cash cost per metric ton will continue to trend down further over time.

Rory: The percentage of magnitude of the decline.

Rory: Which has reflected the team's incredible execution of our cost savings programs.

Rory: With our view of demand.

Rory: It is expected to moderate over the coming periods compared to the 23% reduction in 2024, but we will continue to trend toward our long term expectation of approximately $3700 per metric ton.

Rory: As we enter 2025, we will continue to build on our working capital management initiatives.

Rory: For the full year, we anticipate working capital will be favorable to our cash flow performance in 2025, although to a lesser extent than in the last two years.

Specific to 2025, we will continue to build on our recent cost reduction initiatives across various components of variable and fixed costs in our business.

Rory: These working capital benefits will be realized through a combination of production cost improvements and quantity reductions, while maintaining adequate safety stock of pins and electrodes.

In addition, our cost structure will benefit from improved fixed cost leverage reflecting the expected increase in our production volume levels.

Rory: Our decisions and actions in this area will continue to be informed by our balanced focus on reducing working capital levels to preserve cash while remaining well positioned from a working capital perspective to meet the evolving needs of our customers and capitalize on a recovery in demand.

Rory: Turning to the next slide.

Rory: We ended the year with total liquidity of $464 million, representing a $210 million increase in our liquidity from the end of the third quarter driven by the successful completion of our capital transactions that were announced in November.

Turning to our cash flow for the fourth quarter of 2020 for cash used in operating activities was $26 million and adjusted free cash flow was negative $21 million.

Rory: This brought full year 2024, adjusted free cash flow to negative $56 million compared to being a source of cash in 2023 of approximately $50 million.

Rory: Our year end liquidity consisted of $256 million of cash $108 million of availability under our revolving credit facility and $100 million of availability under our new $275 million delayed draw term loan.

Rory: As it relates to our $225 million revolving credit facility, which matures in November of 2028, we had no borrowings outstanding as of the end of 2024.

Rory: However, based on a springing financial covenant that considers our recent financial performance borrowing availability under the revolver remains limited to approximately $115 million less currently outstanding letters of credit, which was $7 million as of the end of the year.

With our view of demand.

Rory: As we enter 2025, we will continue to build on our working capital management initiatives.

Rory: For the full year, we anticipate working capital will be favorable to our cash flow performance in 2025, although to a lesser extent than in the last two years.

Rory: Turning to our debt maturity profile.

Rory: Our new delayed draw term loan of which $175 million is currently drawn.

Rory: Matures in December of 2029.

Rory: As it relates to our $950 million in notes.

Rory: We had over 99% participation in the recently completed exchange offer which provided for a one year extension to the original maturity date of December of 2028.

Rory: As a result of these transactions we have substantially no maturities of our funded debt until December of 2029.

Rory: Turning to the next slide.

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

Speaker Change: Thanks Marie <unk>.

Speaker Change: To summarize we've set out a plan and we continue to deliver.

Speaker Change: We're engaging with our customers with a relentless focus on meeting their needs.

Speaker Change: We're adding to our customer value proposition.

Speaker Change: We're investing in our technical capabilities and product offerings.

Speaker Change: As a result, we're growing our market share, particularly with key customers in the U S.

Speaker Change: We're aggressively cutting costs without compromising quality safety or environmental performance.

Rory: As it relates to our $225 million revolving credit facility, which matures in November of 2028, we had no borrowings outstanding as of the end of 2024.

Speaker Change: We're managing our working capital and capital expenditure levels, while making targeted investments in key areas.

We've reduced our operating capacity and we are proactively managing our production to balance supply and demand.

Rory: However.

Rory: Just on a springing financial covenant that considers our recent financial performance.

Speaker Change: And we've capitalized on an opportunity to improve our liquidity position and strengthen our financial foundation.

Rory: Availability under the revolver remains limited to approximately $115 million less currently outstanding letters of credit, which was $7 million as of the end of the year.

Speaker Change: All of these efforts reflect our absolute focus on controlling the controllable to navigate the cyclical downturn our industry downturn in our industry, while preserving our ability to capitalize on long term growth opportunities.

Rory: Turning to our debt maturity profile.

Rory: Our new delayed draw term loan of which $175 million is currently drawn matures in December of 2029.

Speaker Change: To that last point.

Speaker Change: While we remain cautious on near term industry trends, we participate in an industry that has many long term and sustainable tailwind and our long term optimism about our industry remains intact.

Rory: As it relates to our $950 million in notes.

Rory: We had over 99% participation in the recently completed exchange offer which provided for a one year extension to the original maturity date of December of 2028.

As I noted earlier based on industry analyst projections modest growth in global steel demand is expected for 2025.

Rory: As a result of these transactions we have substantially no maturities of our funded debt until December of 2029.

Speaker Change: This includes projected growth in nearly all of our key regions that you the Americas, the middle East and Africa.

Speaker Change: Although the global steel market is rebounding more slowly than many initially expected we find the projected growth to be encouraging.

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

Tim: Thanks Marie.

Speaker Change: More importantly, we expect de carbonization efforts will continue to drive the transition and the approach to steelmaking over the long term.

Tim: To summarize we've set out a plan and we continue to deliver.

Tim: We're engaging with their customers with a relentless focus on meeting their needs.

Speaker Change: Based on the latest production statistics published by the World Steel Association. The EIF method of steelmaking accounted for 50% of global steel production outside of China in 2023 and.

Tim: We're adding to our customer value proposition.

Tim: We're investing in our technical capabilities and product offerings.

Tim: As a result, we're growing our market share, particularly with key customers in the U S.

Speaker Change: An increase from 44% in 2015 with market share growth in nearly every region.

We're aggressively cutting costs without compromising quality safety or environmental performance.

Speaker Change: While certain certain steel producers have recently announced a delay in their upcoming transition plans as they evaluate government de carbonization policies and market developments such companies and we're not backing away from your long term decarbonization goals.

Tim: We're managing our working capital and capital expenditure levels, while making targeted investments in key areas.

Tim: We've reduced our operating capacity and we're proactively managing our production to balance supply and demand.

Speaker Change: As such we remain confident that electric arc furnaces will continue to increase their share of total steel production over the long term, which will in turn drive incremental demand for graphite electrodes.

Tim: And we've capitalized on an opportunity to improve our liquidity position and strengthen our financial foundation.

Tim: All of these efforts reflect our absolute focus on controlling the controllable to navigate the cyclical downturn our industry downturn in our industry, while preserving our ability to capitalize on long term growth opportunities.

Further the anticipated demand growth for petroleum needle Coke the key raw material. We use the produced graphite electrodes will also present, a tailwind for our business given our substantial vertical integration.

Tim: To that last point.

Both of these key macro themes that we've spoken to a number of times in the past.

Tim: While we remain cautious on near term industry trends, we participate in an industry that has many long term and sustainable tailwind and our long term optimism about our industry remains intact.

Speaker Change: Our belief about the potential for significant growth and the needle coke market to support the establishment of a western supply chain for electric vehicles and energy storage applications is consistent with that of the market.

Tim: As I noted earlier based on industry analysts' projections modest growth in global steel demand is expected for 2025.

The establishment of those supply chains from raw material manufacturing through to the Oems remains in early stages.

Tim: This includes projected growth in nearly all of our key regions that you the Americas, the middle East and Africa.

Speaker Change: As such during this time, we have continued to build our technical capabilities and demonstrate those to key market participants.

Tim: Although the global steel market is rebounding more slowly than many initially expected we find the projected growth to be encouraging.

Speaker Change: Given the results of those efforts and with our extensive institutional knowledge and expertise around needle Coke production. We are confident that we are well positioned to be an attractive strategic partner in this space.

Tim: More importantly, we expect de carbonization efforts will continue to drive the transition in the approach to steelmaking over the long term.

Speaker Change: Both within and beyond graphite electrodes, we continue to focus on ways to maximize the value of our unique assets and capabilities.

Tim: Based on the latest production statistics published by the World Steel Association D. E. F method of steelmaking accounted for 50% of global steel production outside of China in 2023 and.

Speaker Change: Overall, we believe <unk> is well positioned to capitalize on the long term industry tailwind.

Tim: An increase from 44% in 2015 with market share growth in nearly every region.

Speaker Change: In closing this is a pivotal time for <unk> with many challenges still in front of us.

Speaker Change: Yes, we're up to the challenge.

Tim: While certain certain steel producers have recently announced a delay in their upcoming transition plans as they evaluate government de carbonization policies and market developments such companies that are not backing away from their long term de carbonization goals.

Speaker Change: We set out a plan we're executing against it.

Speaker Change: And the steps were taken have positioned <unk> to benefit as the global steel market rebounds in the coming years.

Speaker Change: Further we possess a distinct set of assets capabilities and competitive advantages that will allow us to capitalize on long term growth opportunities.

Tim: As such we remain confident that electric arc furnaces will continue to increase their share of total steel production over the long term, which will in turn drive incremental demand for graphite electrodes.

For these reasons, we are confident in graph tech generating great value for our stockholders.

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

Tim: Further the anticipated demand growth for petroleum needle coke the key raw material, we use to produce gas graphite electrodes will.

Speaker Change: Okay.

Speaker Change: Ladies and gentlemen, we will now begin the question and answer session.

Tim: Also present, a tailwind for our business given our substantial vertical integration.

Speaker Change: Should you have a question. Please press star followed by the number one on your Touchtone phone you.

Tim: Both of these key macro themes that we've spoken to a number of times in the past.

Speaker Change: You will hear a prompt that your hand is being raised.

Tim: Our belief about the potential for significant growth and the needle coke market to support the establishment of a western supply chain for electric vehicles and energy storage applications is consistent with that of the market.

Speaker Change: Should you wish to decline from the polling process. Please press star followed by the number too.

Speaker Change: If you are using a speaker phone please lift your handset before pressing any case.

Tim: The establishment of those supply chains from raw material manufacturing through to the Oems remains in early stages.

Speaker Change: Your first question comes from the line of Abe Landa from Bank of America. Your line is now open.

As such during this time, we have continued to build our technical capabilities and demonstrate those to key market participants.

Abe Landa: Hi, Good morning, Thank you for taking my questions.

Speaker Change: Maybe just turning a bit off.

Speaker Change: Hi, Good morning, just to start off just a housekeeping question that lower of cost or market or that LCM inventory adjustment.

Tim: Given the results of those efforts and with our extensive institutional knowledge and expertise around needle Coke production. We are confident that we are well positioned to be an attractive strategic partner in this space.

Speaker Change: I think that favorably impacted our cash costs by 14 million in the first nine months, maybe what was that benefit for the full year or just for the fourth quarter and I know you've made some additional adjustments in the fourth quarter I think it was 25 nine for 'twenty for how much will that benefit 2025 stocks.

Tim: Both within and beyond graphite electrodes, we continue to focus on ways to maximize the value of our unique assets and capabilities.

Tim: Overall, we believe <unk> is well positioned to capitalize on the long term industry tailwind.

Tim: In closing this is a pivotal time for graph deck with many challenges still in front of us.

I think the full year, but hi, Abe this is rory the full year benefit for 2025 that will realize is probably about in the range of $16 million to $17 million.

Speaker Change: Yeah, we're up to the challenge.

Tim: We set out a plan we're executing against it.

Tim: And the steps, we've taken have positioned <unk> to benefit as the global steel market rebounds in the coming years.

Speaker Change: I'm sorry in the U S for about the fourth quarter as well.

Tim: Further we possess a distinct set of assets capabilities and competitive advantages that will allow us to capitalize on long term growth opportunities.

Speaker Change: Well I guess I could just do the math, it's like $2 million to $300 million is my sense.

Tim: For these reasons, we are confident in graft tech generating great value for our stockholders.

Speaker Change: So and then the valuation adjustments that you made kind of throughout the year, how much of that benefit.

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

Speaker Change: The 2025 number.

Speaker Change: That number I gave you was the 2025 cash Cogs number.

Tim: Okay.

Tim: Ladies and gentlemen, we will now begin the question and answer session.

Speaker Change: Okay, I'm, sorry, got 17 million will flow through as a benefit to 2025, sorry for the got it great.

Tim: Should you have a question. Please press star followed by the number one on your Touchtone phone.

Speaker Change: That's perfect.

Tim: You will hear a prompt that their hand has been raised.

Speaker Change: And then im sure Youre going to get a number of questions on tariffs, obviously, a lot of discussion on that 25% tariffs on it.

Tim: Should you wish to decline from the polling process. Please press star followed by the number too.

Mexico, you've kind of mentioned potential inventory movements and some other adjustments.

Tim: If you are using a speaker phone please lift your handset before pressing any case.

Speaker Change: Adjustments just wanted to flesh that out a little that mean you would.

Tim: Your first question comes from the line of Abe Landa from Bank of America. Your line is now open.

Speaker Change: Those Mexican production volumes would be redirected to.

Speaker Change: Other regions, our European assets kind of redirect to the.

Abe Landa: Hi, Good morning, Thank you for taking my questions maybe.

Tim: Maybe just wondering a bit off.

Speaker Change: U S and then maybe add at all.

Tim: Hi, Good morning, just to start off just a housekeeping question that lower of cost or market or that LCM inventory adjustment.

Speaker Change: Your commitments at 60% commitments you have for the year does that take tariffs into account and.

Speaker Change: It doesn't what would happen there.

Tim: I think that favorably impacted our cash costs by 14 million in the first nine months, maybe what was that benefit for the full year or just for the fourth quarter and I know you've made some additional adjustments in the fourth quarter I think it was 25 nine for 'twenty for how much will that benefit 2025 stocks.

Speaker Change: Yes, thanks, and not surprised to get a question about tariffs for sure and I think probably what's most important as this remains a.

Speaker Change: Fairly fluid dynamic situation.

Speaker Change: And I think every business and we're no different really is trying to answer a couple of questions. One. If these are going to be put into place to how much will they be in three how long will they last and we've really been focused on trying to cover this off for mall conceivable angles to make sure that we're prepared.

Tim: I think the full year, but hi, Abe this is rory the full year benefit.

Speaker Change: For 2025 that will realize is probably about in the range of $16 million to $17 million.

Speaker Change: I'm sorry, you asked for about the fourth quarter as well.

Speaker Change: At the end of the day and we've talked about this on previous calls we look at our operating facilities between main production sites of Saint Mary, Sorry, Monterey, Kelly and Pamplona as well as the operations that we still.

Speaker Change: Well I guess I can just do the math, it's like $2 million to $300 million.

Speaker Change: Yeah and then.

Speaker Change: So and then the valuation adjustments that you made kind of throughout the year, how much of that benefit.

Speaker Change: The 2025 past December.

Speaker Change: Conductor and St. Marys is kind of an integrated supply chain ultimately to deliver to our end customers.

Speaker Change: That number I gave you was the 2025 cash Cogs number okay, I'm, sorry, $17 million will flow through as a benefit 2025, sorry for the got it great.

Speaker Change: So we have flexibility in that supply chain to move production around amongst the various sites that wood wood.

Speaker Change: That's perfect.

Speaker Change: And then im sure Youre going to get a number of questions on tariffs, obviously, a lot of discussion on that 25% tariffs.

Allow us to continue to deliver to our customers at the end of the day, we think we've got a plan.

Speaker Change: A portion of our Mexico, you've kind of mentioned potential inventory movements and some other.

Speaker Change: For just about every scenario that we can conceive at this point in time to minimize the impact at the end of the day, there still will be an impact right. We can't completely avoid these things but.

Speaker Change: Adjustments just want to flesh that out a little that mean you would.

Speaker Change: Those Mexican production volumes would be redirected to.

Speaker Change: But we think we can minimize it to the or.

Speaker Change: Pretty large extent as we move forward.

Speaker Change: Other regions, our European assets kind of redirect to the.

Speaker Change: We're prepared to act on that to the extent that these are put in place and come into fruition.

Speaker Change: U S and then maybe add at all.

Speaker Change: And we will continue to adjust as the markets continue to adjust right.

Speaker Change: Your commitments at 60% commitments you have for the year does that take tariffs into account and.

We're a global company with a global supply chain. So this is just one of many sort of <unk>.

Speaker Change: It doesn't what would happen there.

Speaker Change: Yeah, Hey, thanks.

Speaker Change: Intricacies that we have to deal with on a regular basis.

Speaker Change: Not surprised to get a question about tariffs for sure and.

Speaker Change: Do you have a 2020 for a number of <unk>.

Speaker Change: Probably what's most important as this remains a.

Speaker Change: Our revenue.

Speaker Change: Mexican.

Speaker Change: Fairly fluid dynamic situation.

Speaker Change: Products imported to the U S. It's just a way for us to put a number around it.

Speaker Change: And I think every business and we're no different really is trying to answer a couple questions. One. If these are going to be put into place to how much will they be in three how long will they last and we've really been focused on trying to cover this off from all conceivable angles to make sure that we're prepared.

Speaker Change: Yes.

Speaker Change: Mexico.

Speaker Change: Monterrey is a facility has capacity for about 30 35000 tons of production.

Speaker Change: That is split between pins Doc production as we've talked in the past, we still produce pins in.

Speaker Change: In that facility.

Speaker Change: But again, we've built up a fairly sufficient supply of pin stock that's now sitting.

Speaker Change: For the in St Marys to the extent that it is going to serve the U S market. So.

Speaker Change: Conduct and St. Marys is kind of an integrated supply chain ultimately to deliver to our end customers.

Speaker Change: We produce about 35000 tons out of Monterrey, not all of that volume.

Speaker Change: It goes into the U S.

Speaker Change: So we have flexibility in that supply chain to move production around amongst the various sites that wood wood.

Speaker Change: But certainly.

Speaker Change: Some of that volume would otherwise come into the U S, but again if.

Speaker Change: If we think about the overlapping capabilities of the manufacturing network with our plants in Europe, we have flexibility to move that production to the extent we need and.

Speaker Change: Allow us to continue to deliver to our customers at the end of the day, we think we've got a plan for.

Speaker Change: Just about every scenario that we can conceive at this point in time to minimize the impact at the end of the day, there still will be an impact right. We can't completely avoid these things but.

Speaker Change: You asked previously about the 60% committed.

Speaker Change: We are committed we've agreed with customers on volume and pricing for that and we will honor that and we will we will deliver those tons.

Speaker Change: But we think we can minimize it to the to a pretty large extent as we move forward and we're prepared to act on that to the extent that these are put in place and come into fruition.

Speaker Change: To customers around the globe as expected.

Speaker Change: And then maybe just one final one before I pass it along.

Speaker Change: And we'll continue to adjust as the markets continue to adjust right.

Speaker Change: Congratulations on the.

Speaker Change: We're a global company with a global supply chain. So this is just one of many sort of intricacies that we have to deal with on a regular basis.

Speaker Change: That transaction.

Speaker Change: And maybe what are your intentions to draw on that delayed term loan.

Speaker Change: Is there kind of a minimum cash level that you want to maintain.

Speaker Change: Do you have a 224 number.

Speaker Change: Sure so.

Speaker Change: Revenue.

Speaker Change: Of Mexican.

Speaker Change: I think you may recall that part of the delayed draw term loan it requires us to draw the final $100 million within 19 months of the transaction.

Speaker Change: Products imported to the U S.

Speaker Change: It's a way for us to put a number around it.

Speaker Change: Yeah, I mean, we.

Speaker Change: Mexico.

Speaker Change: That would be around June or July of 2026.

Speaker Change: Monterey as a as a facility has capacity for about 30000 35000 tons of production.

Speaker Change: Right now we have no plans to draw in 2025 based on our based on our view of the business.

Speaker Change: That is split between pin stock production as we've talked in the past we still produce pins.

Speaker Change: So that that is not a component of our liquidity as far as minimum cash balances.

Speaker Change: In that facility.

Speaker Change: Again, we've built up a fairly sufficient supply of pin stock that's now sitting.

Speaker Change: We don't really we haven't really put a peg on that but I will tell you that.

For the in St Marys to the extent that it's going to serve the U S market. So.

Speaker Change: We think that.

Speaker Change: Operating operating safely and operating responsibly.

Speaker Change: We produce about 35000 tons out of Monterrey, not all of that volume.

We could go well well below the historical levels that.

Speaker Change: It goes into the U S.

Speaker Change: We've had over the past year or 18 months.

Speaker Change: But certainly.

Speaker Change: Some of that volume would otherwise come into the U S, but again if.

Speaker Change: If you want to put a number to it I think we could operate.

Speaker Change: If we think about the overlapping capabilities of the manufacturing network with our plants in Europe, we have flexibility to move that production to the extent we need and.

Speaker Change: Pretty pretty comfortably below the $50 million Mark.

Speaker Change: Thank you very much for your time.

Speaker Change: You asked previously about the 60% committed.

Speaker Change: Thanks.

Speaker Change: We are committed we've agreed with customers on volume and pricing for that and we will honor that and we will we will deliver those tons.

Speaker Change: Your next question comes from the line of Ben It more from Jpmorgan. Please go ahead.

Speaker Change: Good morning, Tim Jeremy already thank you for taking my questions.

To customers around the globe as expected.

Speaker Change: I'm wondering what.

Speaker Change: And then maybe just one final one before I pass it along.

Speaker Change: The customer feedback has been thus far on the targeted 8% price hike and how this might compare to what you've seen from peers in your other key markets.

Speaker Change: Congratulations on the.

That transaction.

Speaker Change: And maybe what are your intention to draw on that delayed term loan.

Speaker Change: Okay.

Ben It: Yeah, Ben and thanks to that.

Speaker Change: Is there kind of a minimum cash level that you want to maintain.

Speaker Change: It sounded like you said, 50%, it's a 15% price hike it team.

Speaker Change: Sure so.

Speaker Change: Yes, yes, yes.

Speaker Change: No I appreciate that question and again this is focused on what we need to do to return our business to a profitable state.

Speaker Change: I think you may recall that part of the delayed draw term loan it requires us to draw the final 100 and within 19 months of the transaction.

Speaker Change: We've been focused for now almost two years.

Speaker Change: So that would be around June or July of 2026.

Speaker Change: The market has been challenged in many respects on.

Speaker Change: Our cost performance on our working capital managing our liquidity taking care of our balance sheet. We've done all of those things will continue to do those things, but at the end of the day pricing in and around the levels that we're seeing today arent sustainable and Theres certainly not sustainable that would promote further investment for producers like ourselves to continue to grow along.

Speaker Change: Right now we have no plans to draw it in 2025 based on our based on our view of the business.

Speaker Change: So that that is not a component of our liquidity as far as minimum cash balances.

Speaker Change: We don't really we haven't really put a peg on that but I will tell you that.

Speaker Change: We think that.

Speaker Change: <unk> side of our customers.

Speaker Change: Operating operating safely and operating responsibly.

Speaker Change: This is a first step in many that we will have to take to get there, but that's the rationale and maybe if we just.

Speaker Change: We could go well well below the historical levels that.

Speaker Change: We've had over the past year or 18 months.

Speaker Change: Before I talk about feedback and customer views, let's put this in context for a second.

Speaker Change: If you want to put a number to it I think we can we could operate.

Speaker Change: So Q4 pricing was about $4000 in terms of spot pricing. So if you put 15% on $4000 at $600 increase for a ton of an electrode.

Speaker Change: Pretty pretty comfortably below the $50 million Mark.

Speaker Change: Thank you very much for your time.

Speaker Change: Thanks, Thanks, Dave.

Speaker Change: We disclosed in our 10-K that its one six kilograms of electrode consumption per ton of steel produced so $600, a 60 kilogram or <unk> 96.

Speaker Change: Your next question comes from the line of Ben <unk> from Jpmorgan. Please go ahead.

Ben: Good morning, Tim Jeremy already thank you for taking my questions.

Speaker Change: Over that one 6%.

Speaker Change: 96, <unk> on a ton of steel that selling for more than $700 is less than a 10th of a percent.

Speaker Change: I'm wondering what the.

Speaker Change: Customer feedback has been thus far on the targeted 8% price hike and how this might compare to what you're seeing to peers in your other key markets.

Speaker Change: So from a customer perspective. This is a small investment to keep the health of their suppliers in place for something Thats as indispensable as an electrode.

Speaker Change: Okay.

Speaker Change: Yeah, Ben it thanks for that.

Speaker Change: So we're.

Speaker Change: It sounded like you said, 50%, it's a 15% price hike it team.

Speaker Change: We're taking these steps because we need to take these steps and we're focused on those customers that want to partner with us for the long term. There are certainly customers out there that will buy based solely on price and whether it's 110th of 1% of their their overall margin or if it's $50, they're going to make a value decision based on price alone.

Speaker Change: Yeah, Yeah, yeah, okay.

No I appreciate that question right and again this is focused on what we need to do to return our business to a profitable state.

Speaker Change: We've been focused for now almost two years as the market has been challenged and in many respects on.

Speaker Change: <unk>, we think we deliver more than just an electrode to our customer we deliver technology technical solutions.

Speaker Change: Our cost performance on our working capital managing our liquidity taking care of our balance sheet. We've done all those things will continue to do those things, but at the end of the day.

Speaker Change: Deliver customer technical services.

Speaker Change: <unk>.

Speaker Change: Those things, we think we should be compensated for and I think there are customers out there that certainly we will engage with us in and we will work forward. So.

<unk> in and around the levels that we're seeing today arent sustainable and there is certainly not sustainable that would promote further investment for producers like ourselves to continue to grow alongside of our customers.

Speaker Change: We will push hard to get the 15% recognizing that that not all customers will go along with us.

Speaker Change: This is a first step in many that we will have to take to get there, but that's the rationale and maybe if we just kind of before I talk about feedback and customer views, let's put this in context for a second.

Speaker Change: But I think some early reactions from customers as they understand where they're coming from and.

Speaker Change: And they recognize the need for.

Speaker Change: <unk> in particular to be a piece of their supply chain and that that requires us debt to be in.

Speaker Change: So Q4 pricing was about $4000 in terms of spot pricing. So if you put 15% on $4000 at $600 increase for a ton of an electrode.

Speaker Change: And our sound kind of operating from a profitability standpoint.

Speaker Change: So we'll see we'll continue to push it and deliver it but again, it's a relatively small ask in the Grand scheme of things.

Speaker Change: We disclose in our 10-K that its one six kilograms of electrode consumption per ton of steel produced so $600, a 60 kilogram or <unk> 96.

Speaker Change: On a relative basis to us.

Speaker Change: Thanks for that color Tim.

Speaker Change: Over that one 6%.

Speaker Change: And then assuming these price hikes <expletive> when could we start to see them through a flow through results and also if you could give any context on the latest needle coke pricing youre seeing in the market too.

Speaker Change: 96, <unk> on a ton of steel that selling for more than $700 is less than a 10th of a percent.

Speaker Change: So from a customer perspective. This is a small investment to keep the health of their suppliers in place for something that is indispensable as an electrode.

Speaker Change: Sure.

Speaker Change: I'll take the first part and I'll, let Jeremy talk to the needle coke prices.

Speaker Change: So just just to step back for a second and talk about the contracting process.

Speaker Change: No.

Members. So we said 60% of our volume is committed for 2025.

Speaker Change: If we kind of think about regions in big buckets right.

Speaker Change: U S purchasers tend to buy on annual contracts, so theres very little.

Speaker Change: That volume, that's otherwise uncommitted realm.

Speaker Change: <unk>, we think we deliver more than just an electrode to our customer we deliver technology technical solutions.

Speaker Change: A relatively small percentage of what we would expect to deliver in the U S is not committed at this point in time, but those would tend to be second half deliveries to the extent that there is incremental volume needs.

Speaker Change: Deliver customer technical services.

Speaker Change: So.

Speaker Change: Those things, we think we should be compensated for and I think there are customers out there that certainly will engage with us and we will work forward. So.

Speaker Change: Other regions of the world tend to be more quarterly or semi annually. So this really will take effect in those negotiations will be what we're entering into here in the first quarter for second quarter and beyond deliveries.

Speaker Change: We will push hard to get to 15% recognizing that that not all customers will go along with us, but I think some early reactions from customers as they understand where they're coming from.

Speaker Change: So.

Speaker Change: The first time, you would see it our deliveries into the second quarter as we move forward everything that we've committed in that 60% will remain as committed and as priced when we went through the negotiations here in the fourth quarter.

Speaker Change: And they recognize the need for Ah graph tech.

Speaker Change: In particular to be a piece of their supply chain and that that requires us to be in a sound kind of operating from a profitability standpoint.

Speaker Change: Yeah, excuse me and then relative to your question on needle Coke really it's largely unchanged as we know as we.

Speaker Change: So we'll see we'll continue to push it and deliver it but again, it's a relatively small ask in the Grand scheme of things.

Speaker Change: Studying the import export data, we're still seeing pricing for Super premium Coke in the 1000 <unk> hundred dollars type of range per metric ton.

Speaker Change: On a relative basis to us.

Speaker Change: Thanks for that color Tim.

Speaker Change: And then assuming these price hikes <expletive> one could we start to see them through a flow through results and also if you could give any context on the latest needle coke pricing youre seeing in the market too.

Speaker Change: And so we still have a long term view on needle coke that that anticipates a shortage as we as we progress into the future, but for the time being things remain.

Speaker Change: Sure.

Speaker Change: I'll take the first part and I'll, let Jeremy talk to the needle coke prices.

Speaker Change: Relatively flat with where we saw a group.

Speaker Change: Three quarters of the year.

Speaker Change: So just just to step back for a second and talk about the contracting process remembers. So we said 60% of our volume is committed for 2025.

Speaker Change: That's very helpful. Thank you and best of luck.

Speaker Change: Thanks.

Speaker Change: Yeah.

Speaker Change: Your next question comes from the line of Iron <unk> from RBC capital markets. Please go ahead.

Speaker Change: If we kind of think about regions in big buckets right.

Speaker Change: U S purchasers tend to buy on annual contracts, so theres very little.

Speaker Change: Hey, guys hope you're doing well thanks for taking my questions.

Speaker Change: That volume, that's otherwise uncommitted, a relatively small percentage of what we'd expect to deliver in the U S.

Speaker Change: Yes look it's been a it's been a challenging period for you guys for a few years now.

Speaker Change: Is not committed at this point in time, but those would tend to be second half deliveries to the extent that there is incremental volume needs.

Speaker Change: Definitely appreciate all the hard work and.

Speaker Change: Going through the commercial side as well as operations.

Speaker Change: So I guess as you look forward.

Speaker Change:

Speaker Change: I guess the price increase.

Speaker Change: It's probably a you explained it very well there so I appreciate that.

Speaker Change: The first time you'd see it our deliveries into the second quarter.

And I definitely see the densification, but.

Speaker Change: I'm also curious on the share side. So you did have some share recovery where are you in that journey and I guess as you look forward is there.

Speaker Change: As we move forward everything that we've committed in that 60% will remain as committed and as priced when we went through the negotiations here in the fourth quarter.

Speaker Change: Optimism on how much share you can regain and what's kind of the the mechanism on how you regain that share is that as you said kind of delivering service to customers.

Speaker Change: Yeah, excuse me and then relative to your question on needle Coke really it's largely unchanged as we.

Speaker Change: So as we study the import export data, we're still seeing pricing for Super premium Coke in the 1000 <unk> hundred dollars type of range per metric ton.

Speaker Change: And are you in the process also.

Speaker Change: <unk> may be some customers, who don't appreciate that value.

Speaker Change: Just to provide some comments on those items.

Speaker Change: And so we still have a long term view on needle coke that that anticipates a shortage as we as we progress into the future, but for the time being things remain.

Speaker Change: Yeah. Thanks, Arun I appreciate that question hope Youre doing well.

Speaker Change: If we talk about the market share recovery certainly if you go back we did take a step back when Monterrey.

Relatively flat with where we saw the first three quarters of the year.

Speaker Change: Was idled or suspended for a period of time.

Speaker Change: And we said that this would take a while right. We use the analogy of you go down in the elevator and you walk back up on the stairs.

Speaker Change: That's very helpful. Thank you and best of luck.

Speaker Change: Thanks.

Speaker Change: Okay.

Speaker Change: I think we made tremendous progress in the U S. In particular through the efforts of the entire team.

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

Speaker Change: Both our.

Speaker Change: Our commercial team, which is on the front lines with our customers, but just as importantly, our Cts team, which is in the mills on a day to day basis.

Iron Viswanathan: Hey, guys I hope you're doing well thanks for taking my questions.

Iron Viswanathan: Yeah look it's been a it's been a challenging period for you guys for a few years now definitely appreciate all the hard work and are going through the commercial side as well as operations.

Speaker Change: Delivering kind of value added services to each of our customers.

Speaker Change: So you asked how we do it right, it's engaging with their customer it's being in front of them, providing them service and solutions to their problems.

Speaker Change: Improving the overall total cost of ownership right.

Iron Viswanathan: So I guess as you look forward and.

Speaker Change: And I think we've done a good job of that through 2024, and I think the results.

Iron Viswanathan: You know I guess the price increase.

Iron Viswanathan: It's probably you explained it very well there so I appreciate that.

Speaker Change: It will be shown as we can continue to deliver.

Iron Viswanathan: And I definitely see the justification but.

Speaker Change: Our expectation and results here in 2025.

Iron Viswanathan: I guess I'm also curious on the share side. So you did have some share recovery where are you in that journey and I guess as you look forward is there.

Speaker Change: You asked where we're at on that journey.

Speaker Change: As far as I'm concerned that journey doesn't stop at any point in time.

Speaker Change: We think we can continue to provide quality service will continue to improve our product offering.

Iron Viswanathan: Optimism on how much share you can regain and what's kind of the the mechanism on how you regain that share is that as you said kind of delivering service to customers.

Speaker Change: For those customers and we want to be the key supplier in the preeminent supplier to every customer.

Iron Viswanathan: And are you in the process also.

Speaker Change: We have in our order book, So we don't have a.

Iron Viswanathan: Selling maybe some customers who don't appreciate that value.

Speaker Change: Capped if you will on where we think.

Iron Viswanathan: Maybe just provide some comments on on those items.

Speaker Change: We want to be from a market share perspective.

Speaker Change: Okay.

Speaker Change: I think regionally you are absolutely right.

Iron Viswanathan: Yeah. Thanks, Arun I appreciate that question hope you're doing well.

Speaker Change: Yes.

Iron Viswanathan: If we talk about the market share recovery certainly if you go back we did take a step back when Monterrey.

Speaker Change: We're heavily focused not only because of our production footprint file.

Speaker Change: In North America and Europe.

Iron Viswanathan: It was idled or suspended for a period of time.

Speaker Change: But there are other regions in the world that have been important markets for us in the past some of those regions today arent nearly as competitive for us as they have been in the past.

Iron Viswanathan: And we said that this would take a while right. We use the analogy of you go down in the elevator and you walk back up on the stairs.

Speaker Change: So, we're making tough choices with certain customers that were not bidding on business, we're not engaging.

Iron Viswanathan: I think we made tremendous progress in the U S. In particular through the efforts of the entire team.

Speaker Change: Because they either are volume value buyers and they are only price oriented.

Iron Viswanathan: Both our.

Speaker Change: Counted or they don't necessarily or aren't willing to pay a premium for all of the incremental services and value right.

Iron Viswanathan: Our commercial team, which is on the front lines with our customers, but just as importantly, our Cts team, which is in the mills on a day to day basis.

Speaker Change: Not in the business of just delivering an electrode onto a boat and dropping it on a dock or a customer and say cost next quarter. When you need more we want to be engaged on a regular basis to demonstrate the value we can provide.

Iron Viswanathan: Delivering kind of value added services to each of our customers.

Iron Viswanathan: So you asked how we do it right, it's engaging with our customer it's being in front of them.

Iron Viswanathan: Regarding them service and solutions to their problems.

Speaker Change: So customers that value that we're having a lot of success with customers that don't value that we're stepping away from in the near term.

Iron Viswanathan: Improving the overall kind of total cost of ownership right and I think we've done a good job of that through 2024, and I think the results are.

Speaker Change: I think as the market recovers in those markets.

Iron Viswanathan: It will be shown as we can continue to deliver.

Speaker Change: The pricing in those markets again becomes competitive for us and more profitable for us I think theres an opportunity to re engage because they will want the quality of the electrodes that we produce and sell.

Iron Viswanathan: Our expectation and results here in 2025.

Iron Viswanathan: You asked where we're at on that journey.

Iron Viswanathan: As far as I'm concerned that journey doesn't stop at any point in time.

Speaker Change: But that will have to take hold as again.

Iron Viswanathan: We think we can continue to provide quality service will continue to improve our product offering.

Speaker Change: Announced price increase take hold and overall market conditions.

Speaker Change: <unk> so.

Iron Viswanathan: For those customers and we want to be the key supplier in the preeminent supplier to every customer.

Speaker Change: I think theres a lot of work to be done still but proud of the team's progress through the fourth quarter, we'll keep pressing as we move through 2025.

Iron Viswanathan: That we have in our order book. So we don't have a cap if you will on where we think.

Speaker Change: Longer term again, I believe fully in the macro tailwind to this business around.

Iron Viswanathan: We want to be from a market share perspective.

Iron Viswanathan: Okay.

Iron Viswanathan: I think regionally you you're absolutely right.

Speaker Change: Production and where those are where that's headed as well as the demand for needle coke more broadly.

Iron Viswanathan: Yeah.

Iron Viswanathan: We're heavily focused not only because of our production footprint file.

Speaker Change: I think there's probably been a little bit of uncertainty here recently on the needle Coke front and really around EV adoptions and support and stuff, but I think the the overall view and thematic is we will see electrification of autos that will increase the.

Iron Viswanathan: In North America and Europe.

Iron Viswanathan: But there are other regions in the world that have been important markets for us in the past some of those regions today arent nearly as competitive for us as they have been in the past.

Iron Viswanathan: So, we're making tough choices with certain customers that were not bidding on business, we're not engaging.

Speaker Change: Demand.

Speaker Change: Just maybe not be at quite the exponential.

Iron Viswanathan: Because they either are volume value buyers and their only price oriented where they don't necessarily or aren't willing to pay a premium for all of the incremental services and value right. We're not in the business of just delivering an electrode onto a boat and dropping it on a dock or a customer and say cost next quarter. When you need more we want to be engaged on a regular basis to.

Speaker Change: Exponential price pace that we were.

Speaker Change: <unk> are that the market was predicting a few years back but all signs still are positive as we look out medium and long term.

Speaker Change: Okay.

Speaker Change: Thanks for that and then as a follow up just on the regional production that you have so Monterrey Pamplona in Calais.

Iron Viswanathan: Right the value we can provide so.

Iron Viswanathan: So customers that value that we're having a lot of success with customers that don't value that we're stepping away from in the near term.

Speaker Change: Is there anything else that you I'm sure you're considering a lot of different scenarios, but maybe you can just talk a little bit about that.

Iron Viswanathan: As the market recovers in those markets.

Speaker Change: Do you kind of I guess.

Iron Viswanathan: The pricing in those markets again becomes competitive for us and more profitable for us I think theres an opportunity to re engage because they will want the quality of the electrodes that we produce and sell.

Speaker Change: When you make an electrode in Mexico.

Speaker Change: Is that shipped over here to the U S and would that be considered an export or could you potentially get some some exclusions there.

Iron Viswanathan: But that will have to take hold as again, our announced price increase that called and overall market conditions.

Speaker Change: Because you are an American company and sending it to American companies I don't know if thats possible.

Iron Viswanathan: Improve so.

Speaker Change: Or would you instead be shipping from Mexico to other regions and maybe you can ship from Cali, and Pamplona to the U S.

Iron Viswanathan: I think theres a lot of work to be done still but proud of the team's progress.

Iron Viswanathan: Through the fourth quarter, we'll keep pressing as we move through 2025 and.

Speaker Change: And then I guess, along those lines do you send materials inputs directly from the U S down too.

Iron Viswanathan: Longer term again, I believe fully in the macro.

Iron Viswanathan: <unk> this business around.

Speaker Change: Monterrey to be converted and the other facilities are.

Iron Viswanathan: As production and where those are where that's headed as well as the demand for needle coke more broadly.

Speaker Change: Does some of your trade.

Speaker Change: And logistics kind of work.

Speaker Change: Not familiar with that.

Iron Viswanathan: I think there's probably been a little bit of uncertainty here you recently on the needle Coke front and really around EV adoptions and support and stuff, but I think the overall view and thematic is we will see electrification of autos that will increase the.

Speaker Change: Yes, I think if you think about it broadly right everything starts down in Portland at Seadrift and the production of needle Coke right. So we produced needle coke in seadrift and that needle Coke is shift shipped to all three operating facilities globally.

Iron Viswanathan: Demand.

Iron Viswanathan: Just maybe not be at quite the exponential.

Speaker Change: We supplant that from time to time with third party purchases across the globe, but we get other raw materials across the globe as well but.

Iron Viswanathan: Exponential price pace, sorry that we were predicting or that the market was predicting a few years back but all signs still are positive as we look out medium and long term.

Speaker Change: The bulk of our raw materials come through our <unk>.

Speaker Change: Through seadrift.

Speaker Change: The electrodes that are produced in each of those facilities ended up really is a balance of customer mix. The size the nature of the product ultimately, but generally speaking you can think about the geographies as Kelly and Pamplona serve Europe, and the middle East and kind of that side, but there is some trans Atlantic movement of <unk>.

Iron Viswanathan: Okay.

Speaker Change: Thanks for that and then as a follow up on just on the regional production that you have so Monterrey Pamplona in Calais.

Speaker Change: Is there anything else that you I'm sure you're considering a lot of different scenarios, but maybe you can just talk a little bit about that do you kind of I guess.

Speaker Change: Electrodes into the U S.

Speaker Change: <unk> serves the U S market as well as Mexico, and South America, as well, but again you get some movement again because of some unique products and such.

Speaker Change: When you make an electrode in Mexico.

Speaker Change: Is that shipped over here to the U S and would that be considered an export or could you potentially get some.

Speaker Change: Between them. So we have flexibility we have overlapping capabilities between our facilities in terms of.

Speaker Change: Exclusions there.

Speaker Change: Because you are an American company and sending it to American companies I don't know if thats possible or.

Speaker Change: Size and diameter capabilities that give us give us flexibility.

Speaker Change: Or would you instead be shipping from Mexico to other regions and maybe you can ship from Cali, and Pamplona to the U S.

Speaker Change: Obviously, the supply chain as we have it designed today, we feel is optimized for efficient and not only operationally efficient, but efficient from a raw material and input perspective, but ultimately for delivery to our end customers and we'd like to keep operating that way, but we have flexibility to pivot and.

Speaker Change: And then I guess, along those lines do you send materials inputs directly from the U S down to Monterey to be converted and the other facilities are.

Speaker Change: Does some of your trade.

Speaker Change: And modify.

Speaker Change: Logistics kind of work.

Speaker Change: That.

Speaker Change: That supply chain to the extent that there are these sort of.

Speaker Change: Not familiar with that.

Speaker Change: Yeah, I think if you think about it broadly right everything starts down in Portland rock at Seadrift and the production of needle Coke right. So we produced needle coke in seadrift and that needle Coke is shift shipped to all three operating facilities globally.

Tariff or sort of other disincentives to move material from one market into another market, but again, it's probably premature to speculate on what that looks like or how we're going to respond other than saying.

Speaker Change: We've looked at Jeremy and team have spent countless hours scenario planning for.

Speaker Change: We supplant that from time to time with third party purchases across the globe, but we get other raw materials across the globe as well but.

Speaker Change: All of the different permutations that that could take place with.

Speaker Change: Okay.

Speaker Change: The bulk of our raw materials come through.

Speaker Change: Okay, Great and then just lastly, when you think about.

Through seadrift.

Speaker Change: Pricing here, obviously, you've announced that increase.

Speaker Change: The electrodes that are produced in each of those facilities ended up really is a balance of customer mix.

Speaker Change: What do you have further support for further increases driven by needle coke or is it going to be driven by supply and demand and if it is driven by supply demand.

Speaker Change: Size the nature of the product ultimately, but generally speaking you can think about the geographies as Kelly and Pamplona serve Europe, and the middle East and kind of that side.

Speaker Change: You said your utilization rates kind of continue to tick up.

Speaker Change: There is some trans Atlantic movement of electrodes into the U S.

Speaker Change: On steel demand or where are we in kind of the supply demand.

Speaker Change: Monterey serves the U S market as well as Mexico, and South America, as well, but again you get some movement again because of some unique products and such.

Speaker Change: For the electric industry and are you optimistic about.

Speaker Change: Potential for Rick.

Speaker Change: Between them. So we have flexibility we have overlapping capabilities between our facilities in terms of.

Speaker Change: Recovery and in price.

Speaker Change: As you look forward.

Speaker Change: Yes, I mean, it's certainly certainly optimistic long term right.

Speaker Change: Size and diameter capabilities that give us give us flexibility.

Speaker Change: Thank.

Speaker Change: We would say that right now that we don't recognize that there are challenges in the market, which is again, which is why we're focused on all the things that we've been talking about and all the steps, we're taking including the price increase right.

Speaker Change: We do think that there is some.

Speaker Change: Some forward looking view that.

Speaker Change: And modify.

Speaker Change: Supply demand will continue to imbalance right now there is more than enough supply for electrodes in the west.

Speaker Change: That.

Speaker Change: That supply chain to the extent that there are these sort of.

Speaker Change: And we've talked on previous calls about our actions announced capacity reductions from others.

Speaker Change: Tariff or sort of other disincentives to move material from one market into another market, but again, it's probably premature to speculate on what that looks like or how we're going to respond other than saying we.

Speaker Change: At some point those will start to take hold.

Speaker Change: And that should tighten the market and allow prices to move up because of demand.

Speaker Change: Along with the steel growth in the steel demand that we've talked about in in 2025, albeit relatively low growth.

Speaker Change: We've looked at Jeremy and team have spent countless hours.

Speaker Change: Scenario planning for <unk>.

Speaker Change: All of the different permutations that that could take place with.

Speaker Change: Here from 24% to 25, but still.

Speaker Change: Okay.

Speaker Change: Okay, Great and then just lastly, when you think about our pricing.

Speaker Change: It is a positive development versus the downward side, we had some movement we have otherwise seen.

Speaker Change: Pricing here, obviously, you're not as it increase.

I do think we're going to continue to see.

Speaker Change: What do you have further support for further increases driven by needle coke or is it going to be driven by supply and demand and if it is driven by supply demand.

Speaker Change: We're going to start to see some tightness in the needle coke market.

Speaker Change: There are a number of producers of anode material that are organizing their their respective supply chains here in the west and that they are working feverishly to two.

Speaker Change: You said your utilization rates kind of continue to tick up.

Speaker Change: Steel demand or where are we in kind of the supply demand.

Speaker Change: To get their business is ready for.

Speaker Change: For the electric industry and are you optimistic about a you know a potential for a recovery and in price.

Speaker Change: The coming demand for that material and therefore, theyre going to need needle Coke and if you go back a few years it was a relatively balanced market.

Speaker Change: There is supply available now, but that will tighten up pretty quickly when you start talking about the size of a battery facility and how much needle coke or synthetic graphite that otherwise recover so.

Speaker Change: As you as you look forward.

Speaker Change: Yeah, I mean, it's certainly certainly optimistic long term right.

Speaker Change: Thank you.

Speaker Change: Long term, we feel good short term catalysts are needed to push prices quicker to allow our business to recover and get profitability, where we want it to be in those catalysts could be further capacity reductions any sort of sort of trade announcements.

Speaker Change: We do think that there is some.

Speaker Change: <unk>.

Speaker Change: In and around China in terms of if you think about the the huge swing player in the market right now it certainly is the Chinese with.

Speaker Change: Some forward looking view that.

Speaker Change: Supply demand will continue to imbalance right now there is more than enough supply for electrodes in the west.

Speaker Change: The amount of material that they otherwise export at relatively meager prices that influence kind of the rest of the global electro trade. So theres a few short term catalyst that can move it otherwise it's going to be a little bit of a slower progressive March as supply and demand rebalance and you get the the uptick from.

Speaker Change: And we've talked on previous calls about our actions announced capacity reductions from others.

Speaker Change: At some point those will start to take hold.

Speaker Change: And that should tighten the market and allow prices to move up because of demand.

Speaker Change: Along with the steel growth in the steel demand that we've talked about in in 2025, albeit relatively low growth.

Speaker Change: Needle coke otherwise.

Speaker Change: Here from 20% to 25, but still.

Speaker Change: Thanks, a lot.

Speaker Change: It's a positive development versus the downward or sideways movement, we have otherwise seen.

Speaker Change: Thanks, Ron.

Speaker Change: Your last question comes from the line of Alex Hacking from Citi. Your line is now open.

Speaker Change: I do think we're going to continue to see.

Speaker Change: We're going to start to see some tightness in the needle coke market.

Speaker Change: Yes, good morning, <unk>, thanks for the call.

Speaker Change: There are a number of producers of anode material that are organizing their their respective supply chains here in the west and that there are working feverishly to two.

Speaker Change: 60% that you have committed is that all firmly price store as it popped.

Speaker Change: In part contingent thank you.

Yes, so going back to my earlier comments it is committed both on price and volume.

To get their business is ready for.

Speaker Change: The coming demand for that material and therefore, theyre going to need needle Coke and if you go back a few years it was a relatively balanced market.

Speaker Change: Okay, and then not sure if you're willing to.

Speaker Change: Closed, but any color around the pricing trend.

Their supply available now, but that will tighten up pretty quickly when you start talking about the size of a battery facility and how much needle coke or synthetic graphite that otherwise recover so.

Speaker Change: Yes, I think we're going to stick to our past practice of not providing specific guidance around pricing but.

Speaker Change: <unk>.

Speaker Change: I think.

Speaker Change: If you just go back to some of our previous comments and where the market's at we've seen four consecutive quarters of decline.

Speaker Change: And we ended the fourth quarter at about 3900 are little little more than $3900 a ton.

Speaker Change: In and around China in terms of if you think about the the huge swing and player in the market right now it certainly is the Chinese with.

Speaker Change: Mix plays an influence on that.

Speaker Change: If we put more tons into the middle East and regions are in Europe versus the North American region.

Speaker Change: The amount of material that the otherwise export at relatively meager prices that influence kind of the rest of the global electrode trade. So theres a few short term catalysts that can move it otherwise it's going to be a little bit of a slower progressive March as supply and demand rebalance and you get the uptick from.

Speaker Change: Certainly that will drive that price down, but certainly some some pricing challenges I think we've seen at least some stabilization in domestic Chinese prices right. So that influences what their export market looks like.

Speaker Change: So it really comes down to how everybody else in the west competes.

Speaker Change: Four four material going forward.

Speaker Change: Needle coke otherwise.

Probably one thing thats important to point out or otherwise remember.

Speaker Change: Thanks, a lot.

Speaker Change: If you think about the U S volume right. The 60%. That's committed is certainly overweight to the U S. Just because they tend to commit on an annual basis versus quarterly contracting and stuff. You know prices are lower in Q4 of 'twenty for them, where they were in Q4 of 23, so youre going to see a little bit of down drag from the <unk>.

Yes.

Speaker Change: Thanks, Brian.

Speaker Change: Your last question comes from the line of Alex Hacking from Citi. Your line is now open.

Alex Hacking: Yeah, Good morning, Tim and team thanks for the call.

Speaker Change: The 60% that you have committed is that all family price store as it.

Speaker Change: The us but.

Alex Hacking: Pop time in part contingent thank you.

Speaker Change: But.

Speaker Change: But otherwise good progress in terms of the overall volume committed.

Alex Hacking: Yeah, so going back to my earlier comments it is committed both on price and volume.

Speaker Change: And the levels at which we were able to contract those tons and again I'll go back to where we have stepped away from certain markets that aren't profitable for us, which will help our asps as well.

Alex Hacking: Okay, and then not sure if you're willing to.

Alex Hacking: Closed, but any color around the pricing trend.

Speaker Change: Okay. Thank you for the color and then just one final housekeeping question. If I may what should we be modeling for interest expense for 2025. Thank you.

Speaker Change: Yeah, I think we're going to stick to our past practice of not providing specific guidance around pricing but.

Alex Hacking: <unk>.

Alex Hacking: I think.

Alex Hacking: Thanks, Alex.

Alex Hacking: If you just go back to some of our previous comments and where the market's at we've seen four consecutive quarters of decline.

Speaker Change: So for 2025.

Speaker Change: As you know we will have our fixed debt still outstanding we will have that first draw of $175 million outstanding.

Alex Hacking: And we ended the fourth quarter at about 3900 are little little more than $3900 a ton.

Speaker Change: And then dropped to the $100 million will have a commitment fee of about 375 basis points commitment charge.

Alex Hacking: Mix plays an influence on that.

Alex Hacking: If we put more tons into the middle East and regions are in Europe versus the North American region.

Speaker Change: So right around 90% is where we should have interest expense for 25.

Speaker Change: Okay. Thank you very much thanks for the call.

Alex Hacking: Certainly that will drag that price down, but certainly some some pricing challenges I think we've seen at least some stabilization in.

Speaker Change: Thanks, a lot.

Speaker Change: Yeah.

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

Alex Hacking: Domestic Chinese prices right, so that that influences what their export market looks like so it really comes down to how everybody else in the west competes.

Flanagan: Thanks Constantine.

Flanagan: I'd like to thank everyone on the call today for your interest in graphic and we look forward to speaking with you again next quarter have a great day.

Alex Hacking: For material going forward.

Alex Hacking: Probably one thing that's important to point out or otherwise remember.

Alex Hacking: If you think about the U S volume right. The 60%. That's committed is certainly overweight to the U S. Just because they tend to commit on an annual basis versus quarterly contracting and stuff prices are lower in Q4 of 'twenty for them, where they were in Q4 of 23%, so youre going to see a little bit of down drag from the.

Flanagan: This.

Flanagan: Today's conference call. Thank you very much for your participation you may now disconnect.

Alex Hacking: But.

Alex Hacking: But otherwise good progress in terms of the overall volume committed and.

Alex Hacking: And the levels at which we were able to contract those tons and again I'll go back to where we have stepped away from certain markets that aren't profitable for us, which will help our asps as well.

Alex Hacking: Okay. Thank you for that color and then just one final housekeeping question. If I may what should we be modeling for interest expense for 2025. Thank you.

Alex Hacking: Thanks, Alex.

Alex Hacking: So for 2025.

Alex Hacking: As you know we will have our fixed debt still outstanding we will have that first draw of $175 million outstanding.

Alex Hacking: And then dropped to $100 million will have a commitment fee of about 375 basis points commitment charge.

Alex Hacking: So right around 90 is where we should have interest expense for 25.

Speaker Change: Okay. Thank you very much thanks for the call.

Alex Hacking: Thanks, a lot.

Alex Hacking: Yeah.

Operator: This concludes our question and answer session I will now hand, the call back over to Mr. Flanagan for closing remarks.

Speaker Change: Thanks Constantine.

Speaker Change: Like to thank everyone on the call today for your interest in <unk>. When we look forward to speaking with you again next quarter have a great day.

Speaker Change: Yeah.

Speaker Change: This concludes today's conference call. Thank you very much for your participation you may now disconnect.

Speaker Change: Yeah.

Speaker Change: Okay.

Speaker Change: Yeah.

Speaker Change: Yes.

Speaker Change: No.

Speaker Change: Yes.

Speaker Change:

Speaker Change: Yeah.

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Okay.

[music].

Speaker Change: Yeah.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Yeah.

Speaker Change: [music].

Speaker Change: Yes.

Speaker Change: [music].

Speaker Change: Yeah.

Speaker Change: [music].

Speaker Change: Yeah.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: No.

Speaker Change: Yeah.

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Yes.

Speaker Change: [music].

Speaker Change: Yes.

Q4 2024 GrafTech International Ltd Earnings Call

Request a DemoDemo

EAF

GrafTech

Earnings