EAF - Earnings call 4 2023 | GrafTech International Ltd.

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Operator

Good morning, ladies and gentlemen, and welcome to the GrafTech Fourth Quarter 2023 Earnings Conference Call and Webcast. [Operator Instructions]. This call is being recorded on Wednesday, February 14, 2024.

I would now like to turn the conference over to Mr. Mike Dillon, Vice President, Investor Relations and Corporate Communications. you. Thank ahead. go Please

Michael Dillon

close Executive morning Fourth to of Quarter today Interim Interim with Good Officer; Chief Call Catherine and XXXX. International's for me Delgado, Chief Flanagan, Tim the Chief and and quarterly sales are Jeremy comments Jeremy matters. and with and you. then Financial Catherine Halford, GrafTech Operating welcome begin Tim results safety, discuss will comments, Tim opening Earnings will our On and operational financials, other the Officer; Thank Full will Officer. review outlook. our with will Year commercial on environment,

We call the to will then questions. open

Turning to our next slide.

These the indicated are could include a regarding, materially performance, cause and among to some of this strategy. on from differ those in things, risks statements that shown forward-looking are expectations current forward-looking matters statements As subject uncertainties. based and statements actual may call Factors here. other to are reminder, and by results discussed trends

certain discuss and also non-GAAP these will relevant the non-GAAP reconciliations. We include slides measures, financial

these in our at call the website section our of of replay A www.graftech.com. also can slides be available will You website. Investor on Relations find the

I'll over call turn Tim. to now the

Timothy Flanagan

and thank joining Good morning, quarter results. for everyone, fourth GrafTech's you

continues as as will that be geopolitical outlook. optimizing which impacted economic long-term our conflict. business. and On optimism our by expectations. Yet cyclical are the downturn which our discuss improving company reasons this a our part our begin our ourselves long-term in by to industry results fact. intact. of start macro to our of With in demand, To a the will have short well response our that operate And for call, structure, cyclical and me footprint prospects Let we acknowledging the for remain and environment, challenging industry simple the I the actions cost our fallen uncertainty a and with find backdrop, include taking about in cycle, we of for positive in

This ongoing of inflation impact combined rate above-target high-risk the interest includes environment.

[ In currently disruptions trade. which strain significant addition, outlook are performance for are regions. relations geopolitical in conflicts all economic many expanding to there as the factors other on well as a military having These ] are impact and multiple of commercial active contributing

EU example, the is in future. to and continue For foreseeable weak the XXXX economy another for which year third are key which largest production economic of our industrial collectively [ the region low ] represented world's a conditions, business, and for expected

electrodes. persistently prices and low contributed will has constrained Jeremy steel for demand to graphite graphite of both factors comments, soft resulted these These dynamics. a Further, remain global electrode his utilization. In in suffered have which on weak, capacity from industry, has elaborate industry the

out suspension Mexican played impact in pressured XXXX. our in GrafTech by late XXXX, a at demand weak the was As temporary of also operations

ongoing cost things to of also us ] took due help those we our We pressures, on partially navigate a number [ steps headwinds focusing experienced last the response, utilization. control. within In to

capital levels production Our our our working further same investments at to and capital our outlook, and to demand with proactively reducing closely expenditures managing offerings. targeted our actions included flexibility the costs, product making volume time, and operational align improve

was impact XXXX And in the significant.

to flow the decline capital reduction manage drove in XXXX the million for inventory nearly led cash ] period a [ positive more loss. course than in of to free Further, reduce working resulting XX% XXXX. Our to $XXX over year, efforts loss initiatives of our our

take response, enter we environment persists as XXXX, must and the in the However, in action. softness additional commercial we

on excellent manufacturing and of same customer initiatives optimize ability our designed to capitalize preserving the plan. structure growth time, the the This of a opportunities. morning, we a while announced our reduce cost to at a cost long-term This footprint, is our deliver rationalization optimization implementation and footprint service to and set

Let the briefly through elements me key program. X the of walk

as as assets most facility indefinitely St. our we electrode Marys activities suspending of certain First, production within indefinitely the manufacturing our footprint. at well are remaining graphite

know, restart supply pin risk as of other of a at that Mary's to our production As Since advanced you primary we component year, intentions St. announced strategy. elements mitigation last then, significantly we our strategy. have

built stock for pin Specifically, capability up pin be we giving us proactively production. different levels inventory Pamplona our secondary out production historical on to exceed X proved stock facility to of Thereby the pin continents. and capabilities a

the needs we remaining in the environment demand, regions. areas, with align these positioned while customers and to all are in and advancement well can to production that supply of costs chains current our the With meet confident adapt our

corporate are company's ensure the Second, resources structure to expenses. thorough structure of and includes reduce forward. we and implementing we our review support all right globally the and actions overhead have that functions moving This a will

evolving Third, will production in production graphite there demand needed as levels weak operate response conditions, we at reduced continue our our aligning our remaining to outlook. electrode facilities market with to

will key actions drive several These outcomes.

a of St. reduce quarter, Marys million. the $X Further, in second overhead a go-forward be to estimated impact will tons, cost XXX,XXX are production [ XXX,XXX in graphite costs, our from reduction the metric $XX stated manufacturing remaining implemented led fully which of approximately efficient at the onetime suspension to electrode of indefinite across footprint and the assets excluding certain basis by capacity of idling the XX%. Specifically, end metric our the drive once reduction annualized ] million corporate tons will savings of on

customers' the market. we gives meet conditions to as of future upswings market, flexibility needs and ability in respond step. light it of the the prudent this the behaviors to a In others in economic At us to time, current and our same view our preserves

reduce will capital and these expenditures inventory capital levels XXXX. working support and our manage to Lastly, actions efforts further in

right of for our For these all believe business. the health we reasons I've noted, are the long-term the steps

to growth for the tailwinds. decarbonization will include expectations an electric we with While is of long-term continue how continued methodic it's demand. fact headwinds share industry in furnace lose the the discussion arc today are operate responding, to focus important graphite increased near-term driving and that production, of we on my the thereby These efforts steel substantial not drive steel industry sight that electrode

as number petroleum a that possesses customer In addition, support raw by graphite for of into driven key vertical a of competitive demand to electrodes portion ion use coke these ability set we a supports substantial value on advantages used accelerate synthetic as capitalize in material for compelling the is needle distinct GrafTech anode unique trends. produce batteries to include use electrical graphite market. proposition. lithium of coke, integration to its expected produce the to capabilities, vehicle the These the which petroleum needle well our

first, these around positioned these let benefit value. turn prepared to growth topics call future well near-term and outlook. over opportunities GrafTech followed results color by end and create me all reasons, Jeremy, the from our is remarks. our shareholder provide at of of For I'll more to the Katherine revisit as But they

Jeremy Halford

and Tim, morning, everyone. you, Thank good

As value always, comments t with update brief safety GrafTech. a our my is on a I'll start core performance, which

our must of our encouraged Yet a internal injuries. Improvement and the area XXXX will I better, XXXX, goal be rate the we of improved and continue in we satisfied thank team from year are of members to ultimate our broader top industry. operators X to our incident level was prior and in their this significantly emphasis not for key we do like with teams all the would point in manufacturing achieve places We recordable that us among efforts. until

be on Let by the China been production high to economic this weak now of me conditions color commercial outside slide exports environment. multiyear reached Compounding constrained has next provide of industry to to and continues China, turn the more due current the global demand XXXX. steel from to which impact macro in a Steel uncertainty.

global steel approximately the production XXX XXXX. recently outside on Association, tons a data World basis, million was of Looking Steel at in published by China

divergence production XX% total, a among production line this While In steel -- XXXX in was X% in in with China level of in there regions. and increased India XXXX, Russia. was significant

this declines commercial by key However, of was growth our in regions. most offset

X% to XXXX steel demand weigh output industrial energy ongoing as steel on market high slowdown production. in declined costs in Specifically, and continue production, in subdued Europe the

producer the Americas, was in in year-over-year. production the steel flat U.S., In despite that being largest X% in XXXX output steel down the region

of production significant of on in an economic through we amount ongoing demand global for uncertainty as industry-wide the move part softness in overhang the a has XXXX, demand. and electrode resulted term. in near we As believe steel that remains turn, graphite early This,

impact In further addition, recent having changes in competitive on dynamics are graphite pricing. a electrode

certain Middle continuing East. First, despite to such late. to China These environment, demand with electrode level protected including a electrodes decline priced continue from countries, are exports and India into healthy typically regions the weak lower prices of as the nontariff of further see we

the effect to in Tier -- to to continue have see these support countries, given Second, competitors dynamics, such regions within a in lower pricing tariff-protected export as X continued knock-on these pricing volume. we as

as view the during will expand Tim As ] transitory [ his changes comments, on in competitive closing landscape. we

nevertheless these to that have factors responding. However, With our the for and let's manage next are we how we in turn near how the these must background, details term. are more impacted that on dynamics slide results

price a Our decline pricing This included sold reflecting a fourth production XXXX approximately more the realized key proactively XX%, average metric XX,XXX focus metric of our sales realized a A price of metric was of tons a outlook, $X,XXX referenced. our XX% the shipments non-LTA production represents were price of throughout and than to under evolving and were per Fourth average tons. execution of demand this sequential per I and metric metric weighted $X,XXX quarter we tons year-over-year average X,XXX volume weighted quarter decline at XX,XXX And from sales with at LTAs our align manage non-LTA for the quarter volume dynamics ton. with third strategy. team's to for pleased than weighted of XXXX approximately more both approximately sales ton.

was volume lower contributing. quarter compared of in the XX% in decreased LTA to XXXX -- the our and from also fourth of business sales pricing shift the with volume Net of driver the ongoing year-over-year non-LTA mix overall the decline key to

expect demand remain weak most in that the persist and term already actions to in outlined For in pricing we the reasons near are mentioned, In graphite taking electrodes industry-wide response, regions. for will pressures his we the comments. Tim

the with competing pursue are are focus we commercial responsibly. in addition, choosing to being opportunities we a In selective on

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

into strategically needle to on reach coke, customer, the includes value incremental no manufacturing steelmaking substantially flexibility that integrated offering that electrode and the customer continually cost provides offerings. only technical vertically services at product producer productivity and expanding furnace to architect our to commercial is and access and large-scale footprint a Our system focus graphite regions. Being key the a proposition petroleum operational positioned

serve to a on For but of example, to our supersized we market. remain growing track add segment by small electrode XXX-millimeter graphite XXXX electrodes end the UHP to portfolio the of

always, future. and highest producing the needs remain customers of relentlessly and in meeting to electrodes we the As committed the quality now graphite our

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

Catherine Hedoux-Delgado

mix Thank inventory of goodwill impairment soft million of a to, spoken or near-term a continued cost sales the towards volume; demand, the per a adjustment you, quarter Jeremy, Adjusted all. business EBITDA in net noncash fourth pricing of to market of the both We second, have and pricing, morning had adjusted positive decline the and good the valuation of quarter charges Both million EBITDA million share. industry-wide our $XX reflected, or reflect loss lower of compared our million. market with inventory of weak impact balance $X.XX lower third, graphite in higher fourth, cost these negative lower volume; fourth or non-LTA of included $XXX This sheet. EBITDA in cost adjustment. electrode the lower $XX The first, to XXXX. coinciding $XX in on charge dynamics shift million remaining the $XXX and of was we

decline in on per higher adjusted ton cost basis. year-over-year the was metric to EBITDA contributing Also a

the However, we metric in quarter a third improvement sequential did as this see anticipated. from we

of quarter in fourth our was materials volumes. per in if approximately been the earnings in quarter-over-quarter production being X% of were cash to In ton the these quarter. production that on reduction our are the there costs low call posted website, improvement COGS inventoried reconciliation are metric this normal recognized on levels. would level due an current shown our provided XXXX from in costs driver the other The period, accelerated key recognized a As the of third we operating words, fixed have at basis declined to

As quarter, recorded of attributable a through approximately million $XX half of Seadrift reminder, being third costs, quarter. we such in the the which approximately temporarily third idled to was

approximately increase at in such to quarter, the with fourth production a This, coke million. the needle production electrode quarter, modest recognized of in graphite declining Seadrift amount fourth along the In $XX resumed. costs in resulted

teen decline full COGS we in to metric a as copper ton our percentage low Now relates cash year XXXX. the compared anticipate XXXX, metric cash it of to ton point per

the In factors. decline that impact in timing the of quarter driven valuation to fourth into adjustment we lower addition to cost market the 'XX, of we expect X COGS in cash or by 'XX the recorded be

of million savings estimated of approximately once $XX be reduced annualized we impact cost as will Tim the the costs. annualized end of reflected discussed, the the manufacturing the quarter, First, by cost activities rationalization savings fully of expect in implemented the second $XX million that fixed

our tar, to key cost and pitch elements as continues for expected. pricing including coal market of moderate Second, energy structure, oil, decant

per a sales on COGS fixed and ton. on rates, reduce amount The recognized this our volume two-pronged have significantly our will and accelerated a anticipated 'XX, we would increase production Third, volume in improvement utilization being expect capacity of which costs an cash production impact in metric our modest in the year-over-year basis.

our base the addition, compared costs to recognized over volume larger year. will prior In a fixed be

Turning to cash flow.

we the working million that flow GrafTech million. inventory our our as this year. our efforts $X our cash free managing resulted our was in $X activities levels, to This cash cash of well flow positive throughout expenditures another flow generated from fourth capital and area managing performance as costs, pleased quarter. quarter significant in I'm disciplined for of of during the free by including on adjusted For operating this reduction supported focus ongoing capital in XXXX, being cash the with note 'XX,

borrowing slide. the million We facility. next the available reflects a $XXX circumstances. to limit year covenants in $XXX financial position available and $XXX Moving revolver our ended our with of of under revolving the million that million, liquidity cash This under consisting availability certain credit

until not borrow XXXX. have no of we we the the debt need the importantly, do anticipate revolver in to maturities More further, And against XXXX. end

let back me turn on over additional our to the comments Now call for Tim outlook. some

Timothy Flanagan

discussed current how far, the we environment Thanks, Catherine. we've responding. and Thus are

as tough prospects things our last our manage looking comments, cyclical Let by optimism control. reiterate the To near-term of of decisions our one for the opening further beyond me we times making my We company in spend minutes the a at industry, remarks about challenges. remains our few necessitates ahead operate prepared intact. long-term within the which

we've As market before, the on today been a actions have our market, and we company and announced recover. and been a the management the expect preserve team, to to here designed that flexibility capitalize to in future we recovery

to nearly remain in Why total with continue with are steel share continue. production for accounts an nearly of arc growth Decarbonization to outside expected in share of EAF And do global cyclical, steelmaking a market and While driving of is share The steel we of also in in from now increase of we XX% half China EAF operate trend efforts growth every with XXXX furnaces this confident? region. electric steel long-term significant tailwinds. method an transition production. industry increase

of towards we examples governments to capacity. over for in help fact, companies drive incentives to steelmaking the to term. is continue This to In EAF investments graphite longer growth expected ongoing demand providing EAF new fund electrodes transition see

electrode to demand planned a would we China on outside considering X% capacity at a announcements, over this existing years. translate steel along that growing Overall, graphite the with next EAF production plants, at estimate based EAF to producer increases of X X% additions CAGR

demand for change are cycle. few unexpected a being point growth as the to well isn't of from While as to largely electrodes view positioned entirely We transitory, we've and indicated, at this late, note seen competitive graphite benefit long-term reasons. we in the the in the Jeremy dynamics this these

have anticipated First, demonstrated, as recovery demand ease current competitive electrode pricing prior coming cycles in the the will help graphite in years pressures.

current is point, reference selling the averaged $X,XXX over inflation, metric our a volume for ton XX significantly historical last non-LTA which has price adjusted above years, As approximately the prices. per market for

driven coke growth Second, on petroleum also that Growing by needle expected pricing. portion in demand result should a use needle coke is to material lithium produce produce to demand we its graphite [ pricing electric for with use will point, the expand used coke elevated graphite for in coke, tailwind. needle the of needle accelerate anticipated raw market. coke demand this electrodes ion batteries synthetic to ] To needle present vehicle

this metric Given between graphite the correlation years, that ton last an XX and electrode translate trend averaged inflation-adjusted pricing high historical should for petroleum electrodes. $X,XXX coke the needle per pricing, to pricing approximately higher market with spread has over

for be and and producers, of imports limit our turf these from longer opportunity the including electrode Third in The regions, to steelmaking protections competition inroads customs their the the into these graphite Chinese U.S. EU, view over from term. to and other China key continue duties into competitive specific -- the of and to imposition the we to with limited EAF imports served level have key China markets regions.

will Further, Chinese gap Tier years. between X and electrodes coming as the producers, more become in which evident with exists online come quality applications EAFs new demanding increasingly still a

As XX% China's graphite demand, domestic the metric basis, country it produced steelmaking. to traditional method electrode tons on using an of produces relates steel X of the approximately approximately still with annual billion

small output level markets. the export explore incentives EAF friendly to thereby this for of environmentally electrode shift a production, in significant percentage the the more to would model, even domestic With absorb them relatively decreasing graphite a

position than can Lastly, provide our Jeremy referenced and reasons more for price. and compete value a we to compelling to that just GrafTech, specific customers all the on

to the will continue of through that challenging an electric preeminent and as leader arc emerge GrafTech products we believe industry such, industry. this to furnace period, As mission-critical get supplier the

battery remarks, towards participation the in transition chain. prepared update of EV efforts a me our our brief to a development Western concluding supply let Before on

this creation in as assets, this long-term to we key opportunities continue resources know-how and value to support see We possess space industry. potential

to both activities previously. areas continue in the to Our advance have spoken we

technical area in coke expected demand of petroleum the needle assets First, know-how growth raw leveraging our given material. the and for this production key

graphitization produce the excited about material we can. to our expertise opportunity as to more battery remain synthetic for leveraging resources look graphite Second, We anodes. and forward and sharing

to long-term we our and for our about deliver business closing, the value. optimistic ability share remain In outlook

and for an set product method arc competitive is industry-leading furnace possess mission-critical advantages. of a We assets, of electric growing that distinct consumable are provider We capabilities a the steelmaking. of

of a ample our Lastly, result near we as capital the term. to have navigate strategy, liquidity disciplined allocation

now remarks. our questions. This for open the concludes We'll prepared call

Operator

Ladies the and [Operator gentlemen, we will now session. begin question-and-answer Instructions].

line Your question the Vittorioso Jefferies. comes from first of Matt from

Matthew Vittorioso

that appreciate try low spot rough the picturing color that on I high fourth pricing what So you or some environment. the realized you, the ballpark? teens, hoping market. of could of this price neutral steps cash you're non-LTA current or X costs for just expectations guys, being of kind to that to provided the XXXX was some in matches that and or down maybe the that leads I maybe just same do all are I of -- the to X,XXX. you to you Is math seems rough EBITDA had sort kind you kind kind costs around a on of realized in of taking if price sort color navigate quarter, the of cash very X,XXXs, you as kind into navigate we get

Timothy Flanagan

year-over-year. at end But think what way the I Yes, certainly, the do, kind to at improve And Matt, math you spot I kind we've price appreciate that to that, the suggest. sales a you remind cost still of normalized would We expect the fact guidance here reflects and of quarter if that just running also it. below you and slightly that's I fourth do question, it the that be rate well capacity. also of the would apply said think utilization increase or thanks volume going I current the we're for while

through. for down to So there's room we think we move still as come cost

fair the in to the towards we up, is what down pricing recognized statement. think the volumes I fourth quarter, environment, a that's spot range said But current the expect we pick in navigate over cost time. lower As you at X,XXX

Matthew Vittorioso

Okay. I capital a about throughout generate -- job talk the And to just working you actually could done was cash. then ease Obviously, hoping you've managing working nice XXXX capital. to

XXXX inventory the the progresses or and liquidity what's we working opportunity year? you about Just of how over capital see as that think of just sort the that in course

Timothy Flanagan

Yes.

pin we that XXXX, pick the took of optimization some That hand not million volumes over that levels, but offset of but a we've a out some seen of So also an the certainly magnitude we've the additional our in both inventory on some little further of during on just bit just little course you'll opportunity there's as offset to production to of bit in opportunities there's with relieve sales capital. the inventory the the of commented year, right? think inventory stock, over 'XX. We we there. up, inventory we to here the So and impact of outlined side $XXX year, footprint being reduce working order reduction additional said, negative with on get a building

So net-net, go working capital perspective we an overall balanced the as throughout from year. fairly

Matthew Vittorioso

and I given think having to or think you today reason And money or of steps comment from manage the I a the we've $XXX see context gotten things outlined just preserve as picture. lot raise question additional And liquidity liquidity. capital of in nice borrow million additional Okay. some today? liquidity But any to current today, you've investors the of

Timothy Flanagan

St. what environment. steps corporate business, hard position overhead announced and rest We at million to the with year ended the we've the the the kind the as of and said well really rationalization that's was you We where the of well. manage as today. right? of revolver. side the a that of footprint those liquidity our taking feel there, as near-term And idling this look context of we the end about position us all the well the the morning stand Marys, at good of think cash it and on really, of all availability the steps of We the in it's and Yes, $XXX

Matthew Vittorioso

I for one me, squeeze it just Helpful. in. Last if could

The just and place as rolled relationships have to sure lot to other there ill agreements. conversation customers' having of long-term contracting you're we conversations. customers And those off being maybe that long-term is going around or have pertains customer certain specifics a just some agreements post bad prices. that mouths at those provide not were will taste higher on I'm in And in it

But feel any body you around talked give seems like, or language that sort pretty can that progress in problem? positive, long-term a commentary Are can in making get of or bridging graces. us which you You about here, persistent customers is assuming the gap sort you opportunity your with of customers? good back

So thoughts be on that helpful. really just would or any color

Timothy Flanagan

that way not we've good right? with we pretty say, played Matt, And 'XX no, would that out matter. both particular the the year. the or customer engagement It's ongoing for throughout With difficult we're pleased any of the went as on world Europe to that terms relationships. as in the process, customers, negotiation in in level backdrop into talked we're And But rest and of Yes, question. macro interactions the Americas think pretty continues, I it's with the going which comment I a to. of well

that relationships having value furnace So relationships and build monitoring customers our we're the that continuous we to on we customers And that proposition customers these offer. generally It's are with, focus speaking, with and long-term stand. to Those they where it's pleased we're most continue very relationship that table. the the the those that where to success customer value value the the going we with. technical services, the bring

moment. So we're our with pleased where stand the customers at

Operator

line question Peterson the from of from JPMorgan. And your Bill next comes

William Peterson

as not of today sort we context half sales think in you the provided second profile expectation first we their think a relative 'XX, to I'm 'XX of of about pricing, guess at of peers. X versus there's year. around in they but the I'm I about are to as the the of Tier to outlook the second back of throughout one And 'XX asking No, the but and half in from it decline again should also improvement of shipments the what of some how shipment the expect see really indicate sure seem shape half no least would half. XXXX. of your first half assumptions decline

to a that. So view how just kind of on you're get wanted thinking about

Timothy Flanagan

tough way they've and kind relationships really or to somebody do shipping It's of the contracted they the that else's how way manage their comment on and Yes. patterns customer that. they

I think as commented, QX in volume specific the providing to be year. 'XX year, do as then increase modest next we we We'd look sales out there. we'll numbers, in in And we in an from progress in a sales expect without line increase, anticipate we've where did from QX.

we I out anticipating into XXXX, longer think head recovery. as continue volumes up as we look we are to to pick and market some

William Peterson

the had supply. a in from directionally, in some than how peers of It utilization industry we but also responding of peers GrafTech. the more, are again, your few output terms are guess reducing advantage And higher I have point, Okay. at appears

or you are doesn't what appear capacity, is the peers as your be that capacity So given I really it terminal much are. as pricing share guess, maybe your risk environment not trimming to to continued

Timothy Flanagan

probably But do respective what are than business. us is their optimal taking I now, for are mean assets operating cost in steps in I would think electrodes Yes. and we're believe the we out what allow that us we've focused our that most that. of best our deliver allow will, And think also GrafTech term, only again, laid terms near regions. everybody to to doing right plans of from levels us are we, Absent no all our that the to I perspective, position and we but say their generally efficient right competitors the not continue customers as to own drivers business at utilize utilization on less different. a in a are

William Peterson

maybe Okay. like evaluating Are are take I secured progress sales, debt issuance worse? other get down what It guess, on cash decline a that Just were, anything another you're sounds shipments be guess alternatives there to actually leg to the for such your could the or have. position and -- as should else asset I trying liquidity with demand alternatives things sense comfortable year, significantly. of you but you table or that

Timothy Flanagan

that I program this rationalization cost went certainly always further. as have process the fair optimization we that negotiation for And locked and portion through. move market book that into Yes. that down through. just the risk looked account is the we a footprint given year we time, something sideways in mean, of we took our there's we order went to point the just just continues at or At that the

feel about the steps again, world will positions year. going out we're out taking it So us as play and the how this the world forward. And we good plays

William Peterson

take Okay. the there navigating luck leave here. but good Well, it environment it with off-line, I'll and

Operator

And the question Alex line from Citi. of comes your from Hacking next

Alexander Hacking

could missed for pricing outlook the I this, I apologize if but the of first on provide you half this any year? color

Timothy Flanagan

the Yes, Alex, appreciate thanks joining you call. and

provided any for in no getting outlook haven't is. into environment. discussion terms where And around pricing We the of a benefit pricing frankly, there's

if pricing, look the what for reported that and we fourth you want. quarter can at You use

Alexander Hacking

production Do you bit guess last they steel I then exports. exports electrodes. those or from China last to what's seem Okay. the think Thanks. I be year. increase in capacity exporting color I any on happened And driving up graphite Chinese there? year. and regions? more up steel mentioned, was Yet adds what's Yes, have guess, strongly was probably as Indian a production little regarding you India

Timothy Flanagan

Yes.

may the our bit some Chinese So steel side. talked the on I I electrode we about graphite And of But about exports, kind exports export Chinese a fraction pricing of are was slightly a actually think market, quarter. a but exports in introducing market up percentage. Indian Chinese be year-over-year, think which maybe what again, pressures little are looks double-digit the third a on scale, year-over-year, the in they're electrode exports down like. commentary

the market, So certainly. that into I much net-net, there's the more think being more I has put think don't pricing material aggressive but been export

Alexander Hacking

Okay. Thanks.

India Chinese so you lost -- haven't year. you material guess I So at share market and last

In exports anything, have down. if that share would if you fact, were against gained

Timothy Flanagan

areas certain it. in we would our I EU. at regions, see would in those don't No, otherwise into, I into if of are otherwise from U.S. sell markets material not fair? mean. and where would activity markets Is and non-tariff core that put it those to the you more the I players that's know the look the want we way There

Alexander Hacking

And around the just share finally, U.S. Okay. in your I market comments particular. market in guess any then

I for think given you attractive that last year, share the of some lost market it's issues. know the market most electrodes. Monterrey beginning We potentially

So update share? on market your any U.S.

Timothy Flanagan

market share. responses X into a forward. terms the particular going in of QX think I quarter negotiation year the from those for us the U.S., way we've pleased Americas how were step as commented be to our is substantial And with of to about [ very to and be on to go for give my business in and again, necessarily our allocated full able window part first all specifics ] question, this, just went of that customers. we will ability a we of continue But with a all we and of we're year. don't And customers those negotiations third commit not to the Yes. volumes was with customers, our to the the the done in And -- volumes the the that, in

Operator

Viswanathan And the Capital line your from Markets. question next from RBC of comes Arun

Arun Viswanathan

walk greater required? Is get or down just need or the And to it -- ton through there's be that so you'd XXs think or will per optimization our utilization $X,XXX first are but order that. the that of plants not I the Marys, cost I there's know as understand per you Or that of St. rates the I consider about significant down of into Pamplona footprint being move XX% range. On ton that. guess that reduction. through ]? cost down you your per $X,XXX it's noted that shutting help can [ to running get kind XXs other there you're you Kadale what year? us would it take? math, I maybe seem question those at utilized. maybe shutting that But in actions that should really capacity would we into some you a would in XX%, ton like Would can imply the mean or

Timothy Flanagan

to kind that's of of come so part, let of on overall back kind And roughly how cost fixed represent structure. lot of cost the to a or cost leverage please remember, I XX% question Arun. our to. guiding what going we're Fixed otherwise I a all we Thanks, not fixed cost Yes. respect reductions, on levels or right? get guess me in and that miss if your question, And below so with question to know. first costs

improvement all any in utilization and benefit cost coke anticipate but do continue trends for Europe. price well we will improve the as as prices increase market kind in those variable energy seeing costs, to So us of those, of of of in So structure, in from going forward, other particularly terms we're the further needle our right? favorable the will

shut and your was is view our question In St. we've another world our predicated of with would actions of me the and taken and second -- again, the this side our terms don't part this market when down we steps I through be we of on of navigate think around the it taken way, Marys say necessarily we've back the trough the needed overhead our think -- to plant we today understanding corporate successful up. business anticipate to get and other market and let picking the to

up steel few the make as the products to and in the able otherwise But picks our Both times, Us being in commitments we to ability deliver pick needle and are said of on coke decarbonization market customers. all to important EV will in of running and longer we up well to for our market well the demand plants market. that as because Europe as as deliver the we've move when firmly Monterrey capitalize a our term, again, the through believe our forward. of as it which, --

we're So to those but we're as them run run we to can. going continue to efficiently going as assets,

Arun Viswanathan

mute. about on Sorry was I that

question. one other Just

commercialization from EV ] your get market. there? can pursue elaborate plans to strategic there any on [ or Is could other you support initiatives any Just IRA of the your needle you coke into

Timothy Flanagan

let one. Arun. Jeremy Thanks, that I'll take

Jeremy Halford

there. Arun, Yes. of things a so couple

if XX% we calcine coke. by you'll went and we and said forward July, expand previously of a at with that Seadrift we file the all, that we to to we have capacity be needle permit to we significantly ability the noted, able as application would about ton recall the -- First a project, adoption in nameplate time, through would the of did at check increase pre-calcined capacity the XXX,XXX combination

anticipate said permitting have that at than be taking don't this or And that point. so at path. we And we a about to think shorter year. that process would time, down the process any the We're continuing will that longer reason we that any

actually commercializing we as path, a and potential a engaging customers, that terms from down well needle of continue In coke both as graphitization with perspective.

done there trials say And would I with activity several We have of that the customers. is increasing. pace

so to we're where feel announce this And we at, time. about but good nothing at

Arun Viswanathan

of proposition at -- potential that source [ just ] Great. there's appear selective to would to in ] you Presumably, the and during just be back can the competition strategy And the of Monterrey, was would back volumes? substitute but on share. value that of then potential from think try [ that I that know services Indian that would suppliers. What's or and electrode to given get other of that regaining electrodes. customers. just to that some that some wanted ask pricing lastly, share? Maybe be time that I and on other elaborate service price you just again kind those get helpful it environment from issue said the of Chinese the your you you lever some Maybe provide, main there

Timothy Flanagan

the right? compelling the else what you relationship, it's again, a quality providing But only through they not think customers electrodes it's product, the and ultimately I view which, well. mean I best you Arun, a think quality. proposition, in terms and Yes, relationship value as in our like any It's are how we offer of commercial also your

healthy remember And U.S. running the at or determination given to or to important fact that money. isn't very in always of just utilization terms I sort in it's Any that market, the still think U.S. them particular, quality their rates. interruption price of line furnaces bottom cost the the are breakage in mills especially the ultimately issues

electrodes, So they're on remain focused we to err what the that's continue producing going on. of and side to quality

Operator

[ Parel question next line from from ] the And comes ] of Capital. your Ki [ Kurt

Unknown Analyst

a few Just may. I if follow-ups,

are which you about be I can do the moving on price. On the cost But think X competitive not And all just do landscape, a in. plants they your curve? are you target. completely Maybe cost where recognize quartile think it's

Timothy Flanagan

necessarily manufacturing Sorry. look again, Yes, And as their had continue we separately. I competitive on that competitive. our but up overall a cost the the positioned cost plants down further from I even question certainly, utilization well we a cost at We as overall network. speculate, to global perspective. won't thought And drive don't those size just given curve, plants scale. footprint more We're plants, think makes we we're think you a that. and exactly break kind at to we or our of we're more the very

Unknown Analyst

you might editors is have it. you idling any Do on capacity front? what And be happening to electrode -- expand Got estimates with of that can respect that? on

Timothy Flanagan

competitors But doing. be our comment want capacity, they are okay that. speculation. if can't I'm would with pure I just idle It

Unknown Analyst

China Okay. limiting graphite. that Great. that -- export that was the Last comments synthetic Is on of call, you mentioned any front?

Jeremy Halford

Yes.

materials the seeing synthetic graphite the fleet. had comment further with start a think of of as use for we specific of do value I anode to of and in recognition electrification kind the graphite synthetic

is vehicle something or to to with, material. experience electric of they're chain. restricting kind importance the least the synthetic know requiring they're export but And we've that continues of at do that direct of before the It's supply allowed a perhaps not of potential licenses overall from driver case, recognition And a we the in from got key that so that producers that, exports graphite be there.

Unknown Analyst

Great. would And in capacity much cost? XX% on a increase Cedar, how

Timothy Flanagan

Yes.

linear, north right? million a isn't provided can specific addition the XX% past than what we've is of not number, more So We It's or Seadrift but of we in XX% a of efficient that $XXX replication that guided it $XXX of and million. haven't replication that. the the would much do full to be

yes. So

Unknown Analyst

Last sold you volume? fiscal helpful. have how the for Super one, book, it. Got much how 'XX, much order

Timothy Flanagan

Yes.

into we total at the quarter. this of we what full in -- heading haven't for well first we're So we're exact XX% expect but volume point over numbers the committed terms provided year,

Unknown Analyst

For the full year?

Timothy Flanagan

the year. For full

Operator

question And Curt of the from UBS. line your next comes Woodworth from

Curtis Woodworth

deals the [ So on just So with have PSX the cracking in of sort that to EV coke follow wanted side signed and the -- around some side. so of market, terms right? code up on you ]

lot underway. a EV development got of You've

And the synthetic. process side the going the advantage have also equipment on material just on coke the capability then one hand, side, pure competitive And you into you on petroleum machining a so have business.

economics, it what potentially the question relative the about it's greatly that guess likely could more you to compelling or excess I like think is and is us think Coke side? processing be you think the portfolio? that more So use frame capacity of but it's And about most you the on then where be do Is early I stages, -- you that someone you Or us know anything expand that have for kind in would would Do next your appreciated. steps. could how we value should partner help really the machining and with Seadrift? to makes synthetic, utilized think

Timothy Flanagan

Yes.

any decades. the for really were as those today assets of for assets, we as start a decades me commented The whether is areas Jeremy, anode have of sets expertise as well. And constructed to you graphitization creating to of graphitizing utilization we the been pretty then opportunity than Both our the expansion. electrodes doing well as let and particular, an I we are in as and on, in see for where as process Seadrift in dual-use is that relates and because chime isn't material our assets it facility, that compelling X process right? ask I'll if it really So both different do pursue to or are us

the go of margin an utilization an that markets only have opportunity not us there's arbitrage longer also for to opportunity our but it's to really, our after best maximize assets, So the term.

but there's of in there's we for in longer-term ways the of run, or could right, wouldn't The head out. do certainly, most in 'XX, outlay sort from play ways position be But know think we cost exciting what own different cases, of that this all a These right really this given or we expansion upside I opportunities are kind no than now, dozen the right? environment on way challenging our wouldn't right? the as still a are any Given dozen Seadrift, don't to looks nor benefit place you if In we of out add short more to on ventures could in take our that own. Jeremy, wanted sheet a significant to on and that that? want capital construct different play like, us, about the we certainly balance kind this a it out. perspective or

Jeremy Halford

you've a comparatively really into be key XXXX the This near and the the thinking accelerate and we term, think of part the Western as participant. small see when to opportunity be chains XXXX supply an latter seeking I and developing points, through will decade Yes, in is are that we hit Tim. the is

Curtis Woodworth

last then will order on we think in needle magnitude, have. commented for as past, electrodes. in for price But fashion you know comments fall pricing that XQ hesitant the of think should coke give would Or where data to provide us any And on a Q-on-Q? any you commentary directionally similarly you're non-LTA Can be your helpful. And speaking, pricing sense you've the terms you needle Okay. coke? in I third-party then that

Timothy Flanagan

Yes.

let prices electrode I'll basis, specific orders macro going the negotiating on sort those any Yes, the we've side, where Jeremy comment and right? to benefit kind We're on to needle we outlook, we're directional are provided, signal daily not of coke. kind still provide us to of beyond then commentary of go. on doesn't a it me and let start So not or think whether going

Jeremy Halford

the $X,XXX were and to a But fourth softening quarter. further needle needle they of the $X,XXX coke, [ did But the high is XXXX some some closer see lag the in needle was third from on past, at we we pricing quarter Again, we ton did in can $X,XXX trading, a that the We very by market when, were rely highly Telus data is that months. recent where to And we the where coke in Yes. in is if a as for something to market. before coke market couple spot look that. $X,XXX see see tend to range, of further ] import which year does fact, as this volatile we in decline export prices

where pretty it's So volatile.

form on really, electrode the now, of yet. But in offset We reflection a coke. the are is the market chains in soft think, supply expanding still Western of needle trends an graphite the right EV I without the long-term softness

Curtis Woodworth

would of captive cost And Seadrift below your $X,XXX?

Timothy Flanagan

Yes.

So again, cost a haven't of still market, competitive given in given as on this we Seadrift the lot quality of been this Cedar for the market. of coke, competitive detail a we us. it see because coke is advantage do needle Even in sort it needle

Operator

Thank you.

from Our last [ ] question line comes Bank of from Evelenda of the America.

Unknown Analyst

maybe Europe, your regions. and sense kind the what few a touch like between how relates outlook electrode U.S. of me. seeing I utilization pricing Maybe those questions terms primarily to and maybe seeing of what a graphite regional on guess, side, of between in areas? you're X seeing kind of for competition capacity by you want the differences what it there to you're differences, on the are Kind Just of

Timothy Flanagan

Yes. right? broadly, fairly Thanks, East again, [ healthy it market be rates the the to a standpoint. more ]. story certainly the to follows really a outlook is challenged The Steel economic Europe remained market terms more that be by utilization mid-South from in U.S. Dave of is us. in macro [ ] an And region, for has continue

utilization in range. or think Europe I year the in ended XX% capacity the XX%

reduce the quality overall intensity kind thereby, or of you those So markets. kind can of of

Indian in have it's U.S. In terms Chinese and imports. in tariff and against of other U.S., imports. competition, in Europe, we there's in the tariffs protections Chinese do And Europe. both the place

manufacturing a think at I at. capacity our Again, look are certainly continue don't to of network, we forward really at as of look footprint and business. we kind capacitization our We So have going kind terms plant. global relevant won't by markets provide where they're of is utilization. in [ yes, ] how will the so

Unknown Analyst

of or differences and non-Tier or the impact X in pricing? of that intensity different really? U.S. its you Do kind Is versus competition it any not notice Europe the on

Timothy Flanagan

see your part, market. of don't of you right? the in much Indians, It's Tier -- X the a the most mean that that I in the are presence incumbents or Chinese the Europe -- No. either are for the players ones

do a see presence I intensity right? in You any U.S., that know would but the if say is Indian I don't the different, small

Unknown Analyst

we that think your Can and through at kind levels. that And you the over? this, just on implementing how footprint rationalization us I you you're from your point, mentioned third it. of about then kind Got XXX trend to that, of kind walk XXX and cost -- of operating taking of plan, how thinking reduced you mentioned kind expect And tons. to

Timothy Flanagan

Yes.

So really, production there's So idling our Marys taking St. X things of the Marys, is down the location. there. we're at of right? St. One most activities

are and of the, again, We also we the our the utilization of assets optimize assets ones looked which can assets. across most our said, that at our of and entire all best efficient footprint are how

continuing plants to running as otherwise subset there's we're other of So productive another of will that stop won't run part in and assets consider our those capacity. that the

going will metric utilization that the against -- footprint will X million the remaining forward. and of those ton what things XXX,XXX capacity combination is The $XXX inform sorry, measure our

footprint commercial commentary of With part our the again, around operating that to are tons production XXX,XXX to respect relative matching of our it's the capacity. demand, our

of our where efficiently we're alignment 'XX, will We our operate right? need in ensure demand, possible going time operations production demand. capital, working to much here points to we're overall we've as be continue on in back where with at to to We in as done scaled scale various like our we've conscious we'll that and

Unknown Analyst

certain assets market for of downturn? seems like maybe look maybe at to potentially takes reason, to it idle the that further Is right for way better order some room it? a to if, the have it match kind you So some

Timothy Flanagan

or those view can the say Certainly, we're as points best idled it various I again, time and the as us we production as recovers would assets we think begin position in we the over we've market mean, exists at to long I the down forward. on our want to Yes. a production ready during to again, look that have year. today. we look assets that navigate out in slow assets we But And -- as and other the market continue position term. out

Unknown Analyst

one, of follow-up side, think my And previous you is it's cash a you'd When be to last that liquidity minimum on comfortable kind cash about number operating like some especially there questions. at? your a your operating

Timothy Flanagan

a position we've just sitting as overall into Yes. operational just out said manage to for from I liquidity But XXXX. the $XX I we're or in think liquidity, look think the number an past, business healthy mean effective I very in a us very again standpoint on. we easy million is

Operator

over will for back This comments. now the to concludes question-and-answer our session. you. Thank call I Flanagan hand Mr. closing

Timothy Flanagan

look call for Have we day. with speaking next forward to thank to quarter. today, like I'd and your interest Ina. in everyone or your great call everyone Thanks, our a

Operator

does our all That today. conference for you. you for conclude participating. Thank Thank

You may disconnect. all

GrafTech International (EAF) 14 Feb 242023 Q4 Earnings call transcript