EAF - Earnings call transcript Q2 2024 | GrafTech International Ltd.

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Operator

Good morning, ladies and gentlemen, and welcome to the GrafTech Second Quarter 2024 Earnings Conference Call and Webcast. [Operator Instructions] This call is being recorded on Friday, July 26, 2024. I would like now to turn the conference over to Mike Dillon. Please go ahead.

Michael Dillon

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

to then call questions. will We the open

Turning next slide. to our

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

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

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

Timothy Flanagan

second Thanks, Mike, call. morning, you and thank and joining good quarter earnings GrafTech's for

believe are losses we are dynamics at sacrificed most inventory time, margins. We business others to are understood. high. At our me and find their backdrop, ourselves ton that Let pricing demand industry-wide low somewhat electrode and rates we cycle challenging industry. Graphite of part more for the in industry, a for the low has think support this per our capacity well we been a same the cyclical weak, broadly start discipline remain electrode in GrafTech, volume. operating operate business in or consequently Against and and in these cost remains industry saying our utilization by

actions. not macro we all these well actions by or it's underlying our our understood forces, but are sustainable. don't We control the believe of control and others, also the taken response particularly do that these We dynamics

with customers meeting are needs. focus We on relentless with their a our engaging

value proposition. We our are adding customer to

in offerings. investing We technical are and capabilities

environment. without are quality, We the aggressively safety compromising or cutting costs

reduced We've expenditure working and our We are our capital production capital levels. managing capacity.

our set managing support actively proactively growth. At demand, on we end supply we the are business focused and to production balance day, and and diversify long-term are the the controlling are We to opportunities pursuing that we're of proud We team's them out I'm do plan of the against efforts and dedication. executing just to for beginning of that, plan. and controllable. our the continued a their at thank year

navigate this this All into actions don't immediate recognize but right of performance said, challenges. from should yours, be us the That or won't nor a recovery that current -- wasn't our recognize they're we the we perspective. expectation, financial it help to translate

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

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

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

mantra, customer-first are on call, to our focus central must a customers needs a do. be our I we mentioned we meeting as renewed As on last the instilling of everything

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

our adding customer architect as to initial an of remains quarter. our initiative XXX-millimeter on breadth We've system of expanded part our with trials supersized later our capabilities. portfolio track electrode upon product our to this technical expected building the occur to best-in-class example, For service expand by offering

electrode legacy and more solutions. of of and development different producer a produce in capabilities connecting We've only pin capability two electrodes, XXX-year graphite with our on than on continents. We the to our carbon-based invested graphite of expand pins production also understanding continue and first research to principles building are graphite the

to on building are we're months connecting and have levels, inventory by year. our addition, inventory we pin In up of XX end this hand pin the track of on

demonstrate support place examples of from we our as areas investments these meet feedback of and resonating. I'm the by in weeks, the needs interactions, making to to are are recent our have of which ability now these into a including demonstrated the the our All customers, our investments future. And receiving customers taken number in

importantly, new a our to mutually Our that long-standing customer the to removing more lost And allows to sales substantial with long our existing our while engagement fostering importantly, to relationship But call, compared us, prospective is we customer. continue It's term. on customer-centric value quarter. Further, XXXX with customers year relationships for a volume come. To commercial the as growth as our regain that mentioned and X% to sequential on financial more about last for efforts, mindset our in market our behind focus share. to compelling beneficial largest proposition, full strengthening for with customers are we to with risk LTA improvement we continue are it point, pleased to our about the expect coupled the our contributed energy this second years have us we volume arbitration all sales position. relationships

continue highlight of our our production execute facilities we this significantly they a let to the safely the commend I year as commitment is our and well for me level. are reportable ongoing remains their team across few low areas as accomplishments rate business. other the this safety. our doing In important prior interest run thing most total do, plans, and operations, Ultimately, Beyond to commercial, we

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

Marys. and wound at production thoughtfully down the activities During the we second St. quarter, safely

to have In completed these million Overall, of the our initiatives. cost in addition, projected the reduction savings we we related achieve activities annualized the track structure. to are on overhead $XX from

XXXX. paying cash first on half And we for achieve cash compared are We and graphite per a the XXXX. In the addition, second ton year metric percentage of decline our an coke in levels our to for quarter batteries. and on to the reduction in reduce basis EV XX% participate demand further full a we and we actions decline continue for saw to per mid-teen basis to of cost overall in our this ton already compared In XXXX space, in half progress off. other in control capabilities the a and have metric lithium-ion remain seen track cost a on sequential costs the petroleum anodes needle metric growing first spending to taken the have our variable synthetic to point in

a make R&D everyone last the including our expansion positioning potential we sustainability capacity. investments we relates published anode our of in time, This take received with to to filed to progress the as regulatory Seadrift good a growth. In center. initiatives. and pilot dynamic permit function, at a exciting the well opportunity remains Earlier same us application will continue we year for our area assets related it participate in to During the second within and latest it. we report, advance assets look This encourage our material. this we sustainability, capabilities on quarter, of to expertise this demand production scale month, making technical at approval our are our And

to light communities against challenging but community impact also engagement and industry good the in through and global right the out be shift to remain operate, position remarks. believe We growth. steps I'll GrafTech having market we're furnace we proud to set perspective, stronger benefit steelmaking steel our dynamics, as are as accomplishments we are the our a which environmental stewards rebounds. Longer GrafTech. these and we're continue a efforts summary, efforts. In decarbonization of both demand, our we a further in an Overall, of executing positive We term plan, graphite near-term in the expand from recent in capitalize poised this to higher a as drive electrode this electric emerging later period on from and confident arc to prepared anticipated it.

state commercial turn on the more and Now the to provide industry color me let to over of it current Jeremy performance. our

Jeremy Halford

you, everyone. and good morning, Thank Tim,

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

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

basis, production statistics. of China cyclical World Earlier XXX published ourselves global currently essentially the we and outside the challenging this a utilization Association constrained Tim a also industry tons in quarter the reflecting which As recent remained XXXX, steel part indicated, in global of The most million rate approximately their steel in operate year. outside XX%. production Steel a to of China of global flat steel steel industry. a was cycle, week, at capacity On second find flat the prior was

Looking at some key our of commercial regions.

for region. was production persistent a X% well stable in remains EU the commercial region. global for challenges has in historical the has rates slight dynamics utilization in production Steel it steel steel industry quarter electrodes. year-over-year although a America, been on what graphite steel the basis, a below in down X%, North resulted These environment For relatively within in increased and dip second reflecting output that turn in the

with suffer lower Specifically, of weak such are Middle pricing India continue with continues countries, graphic from persisting declining into to and environment, on regions remained regions. as level electrodes prices in typically pricing, utilization. Despite to demand further nontariff certain electrode from dynamics see These we industry-wide the most China priced East. electrodes challenging a the for graphite low-capacity late. the healthy exports demand expand including of weak electrode protected has industry To

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

with increasing the on last seeing XX,XXX of metric quarter turn challenges tons, Production resulted was our rate XX%. in second of of background, the utilization capacity slide which late, next dynamic are represent details to quarter, let's we noted XXXX for all the our volume more also softening in return. With we to further must which out that results. this we manage in As play U.S. in prices

the metric weighted at Our included metric metric average stated second which metric the first XX,XXX average and XX% ton. Expanding of Net year-over-year realized metric pricing, $X,XXX a non-LTA XXXX sales volume XXXX, sold the with approximately this was ton and decreased a price quarter quarter compared sequential was per at driven of approximately our by from approximately X%. X,XXX sales represented quarter second sales, ongoing mix per of non-LTA under the the on XX% weighted shift of quarter. Shipments our from LTAs realized $X,XXX for of the price a weighted XX,XXX tons in for outlook LTA business decline the in our to approximately the above tons tons, of our lower decline quarter price volume. of nearly for average a sales to along second non-LTA

Looking pursue term ahead, near the industry-wide weak with we already we're competing that pressures focus opportunities in pricing for reasons expect responsibly. mentioned, commercial in on choosing the demand we the persist. to remain and will In for selective response, remain a will graphite electrodes

continue quarter volume of expect electrode in the full year. improved with for Longer well an to third to the be sales line remains recovers. positioned expect quarter the shift the XXXX. broadly steel electrode to of sales industry. GrafTech second commercial as year-over-year we in We continues, environment furnace XXXX electric to term, and in volume will a this modest Further, global the improvement sales our for the rebounds to steelmaking graphite market the lead demand as capitalize arc in

positioned focus compete into and customer provides to earlier. solutions electrode to and best-in-class intact services will strategically manufacturing on Overall, and than footprint value petroleum some to Tim at are steelmaking that spoke producer expanding price. proposition our remains product proposition and to provide a our compelling incremental operational coke, that commercial flexibility we believe of the which large-scale substantially key just value no customer only vertically we needle continually reach Our offered a and more that on customers we to customers, cost offerings, and regions. integrated graphite technical Being is includes

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

Catherine Hedoux-Delgado

Thank you, Jeremy.

second the XXXX, we of EBITDA per EBITDA compared quarter $XX the second of the quarter or in metric and by non-LTA XXXX. For of partially the loss basis. pricing $XX $XX reduction a lower offset $X.XX was Adjusted net of factors share. an shift second a per our weighted in reflected had These year-over-year cost million to million XX% million quarter decline This adjusted toward on of continued business in average in cash the were mix ton volume.

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

Now me of our the cash of sold. let goods expand cost on topic

was As market decline shown cost were or periods was provided the $XXX year-over-year call $X per basis in quarter. was on reflecting metric per metric our sold materials write-down approximately expectations recorded in quarter a with of prior website, line quarter. Contributing the approximately in the a benefit earnings lower our in portion second our related the in our XXXX reconciliation the this quarter COGS $XXXX, ton, to posted that second XX% in the inventory of which on ton for the inventory of cash million to

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

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

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

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

of the otherwise been period year, XXXX we recognized we reminder, costs structure, Second, our to second we per to facilities of levels. In would electrode the XXXX level in accelerated we're of point million quarter. Reflecting our mid-teen as recognized were cost this on had an reduction quarter we recognized these year-over-year $XXXX. in COGS the related production if operating the COGS $XX for metric over in XXXX. normal beginning at a just are cash due approximately current continue of as graphite Seadrift to full ton percentage Marys the compared the that utilization the And flow in production facilities on to second rates levels. such for million to of And a inventoried have at costs St. the cost to in second progress ton anticipate our fixed a low basis and approximately costs increased, $X our cash decline lastly, idling compared year quarter savings per are metric through making being

for of the approximately of inventory XXXX the $XXXX, sequential our of months was expectation the per a we reflects, the an XX% previously X cost compared from towards as XXXX. is COGS the of expect this market other ton imply, math ton half Therefore, or cash recorded half the weighted lower first first as the more the benefit compared of factors, utilization the second XXXX. Among write-down COGS per heavily half metric For being first increase see which decline year, would first to the first, cash metric to in to half of XXXX. our

quarter. shutdowns half at the upcoming to declines, fixed higher to XXXX. maintenance scheduled facilities turnaround the for facilities our coke years. These impact And place declines on absorption. facility, our our normal to plant third, relates production XX planned to in place planned cost takes second our X third And Second, this in specific European European the of Seadrift are shed of later every summer plant's the activities seasonally and electrode take production energy at which events months needle cost

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

flow. cash to turning Now

For activities cash free of the in XXXX, adjusted was and used second $XX of operating cash flow million was cash million. a quarter usage $XX

the reminder, payments of fourth year. As in million interest quarter our a and the of $XX semiannual made are the in second

build the I was to however, level of during it this working spoke And seasonal the advance production which relates an just As slightly inventory intentional quarter. to. declines, capital, second increased in

back focused our our inventory move as we we overall the on of initiatives. half of As through remain levels part XXXX, reducing

capital anticipate net year we to the our performance. range million expenditures capital XXXX in expect to full of lastly, year impact flow be cash of continue the $XX be full on will to neutral We And flow, cash working to will our $XX million. continue

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

no against that Further, the XXXX. the end add we importantly, me need debt we maturities anticipate in XXXX. revolver the have not to borrow until of let More do

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

Timothy Flanagan

the performance, summarize and comments the initiatives our stated level controllable. year-to-date with our deliver not To on Catherine. Thanks, of results, and we're this continues to satisfied control GrafTech quarter on while outlook to

remain We the for are execution are for team's our the there many in prospects further, we pleased to ability headwinds. And about as with longer-term look near-term company manage our optimism the reasons ahead. confident and

cautious result Middle the Association, cyclical including remain are steel our share on month with and World method Steel increase production. Based Africa. steelmaking of in steelmaking for total of noted last of And XX% I to every this statistics are in the approximately electric concentrated production is expected is projects earlier, market to EAF driving share steel EAF the XXXX in demand in by in to for accounted term, XXX from a arc new as growth China, mid-single-digit to steel over capacity production on these China trend nearly the or EAF forecast key much percentage all continue. We're as in regions. This, Longer the EAF by of end decarbonization steel existing production this calls facilities coming drive XXX expansion downturns in the of our year turn, tracking outside continuing updated steel transition increase in graphite come steel commercial facilities. approach eventually region. efforts East projects furnaces of published XXXX, the million most XX% the manufacturers plans for end. World we've to of we industry nearly with electrodes. of decade, trends, the demand for new share tons mentioned, expected of regions, low regarding While XXXX in key short-term of EU, increases from to for of announced to growth Steel an per growth metric global global expected online with Outside on Association's recent an the incremental Americas, near-term

conservative incremental In at utilization metric about That demand EAF XXX,XXX translate tons of million fact, rates at could total tons capacity, more of the of even of electrodes. graphite assumptions per end XXX a would be the steel of currently demand electrode than drive year exists around annual China. All for this into to capacity XX% growth compound decade. through of the would X% increasing manufacturing that in, outside graphite rate metric X%

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

are to our in view spoken demand the to reduce vertical that actions growth substantial have needle strategic our well advantage a taking petroleum GrafTech costs As being industry integration. our we we long-term to, given present anticipated to have coke tailwinds. for capitalize been will business for also Further, on as competitive tailwind we positioned designed preserve

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

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

the ways directly for material growth desire EV to anode market. continue participate to assets Beyond in by evaluate our demand China. governments western There's western know-how that EV to graphite supported we and reliance the and independent battery are leverage to strong supply OEMs current the establish of on chains for electrodes, a technical by

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

First petroleum one only of material. are given manufacturers the coke its two is graphite. needle could assets to synthetic convert western leverage needle of as operators the largest coke into we one capacity, of supplier western that we key of second, graphitization these And of

and closing, many we're of continue hold development up the on the we manage with advantages to to in continue for and GrafTech challenges challenge, to chain associated assets, the will participants believe of and a and to products We through in pivotal set opportunities. supply competitive and supplier industry-leading possess the time to space excited industry. Longer our the capabilities prospects. In capitalize us. and a dialogue successfully about an remain uncertainty GrafTech leading remain distinct the Yet the is we still EAF opportunity growth near-term with this of term, front mission-critical of

remarks. the to call great are can these reasons, up concludes open For for confident our generating prepared GrafTech the its questions. now value for position We'll of return we stockholders. This we

Operator

question Go ahead. Our first from is Instructions] [Operator from you. Thank Bill JPMorgan. Peterson

William Peterson

on the cost efforts side. job the continued Nice on

fourth guidance you energy the third how long year, the step-up a of to impacts these before, maybe mentioned in I first, declining about higher back imply cost have assume we potential fourth here? shutdowns the and the impacts, I at on in should quarter we seasonal in taking the the these think account cost planned the costs also quarter? absolute you through how then into cash the Should level in from quarter? outages you the outages, may energy Although discussed be? an How we the quarter half third then believe think should and in about than guess, Europe. But the does And are downtime.

Jeremy Halford

Catherine split a bit the little We'll impact. talk talking about I'll then shutdowns financial about that the and up. Thanks. can start

X little order a the we respond of to through weeks. are demands the So on the that shutdown. we amount that of typically X change can sure the basis any to We do may of it customer on site staff make that some bit rolling to shutdowns course a have over plants so in

I for generally Europe, of that for it anticipate X think portion the similar, primarily so Seadrift, on something would to the I there. X And the weeks In of most be action will plant. focused operating calcination

again, think that so X to question. as for weeks of it And roughly the well. to over financial But about let hand Catherine me talk

Catherine Hedoux-Delgado

Jeremy. Bill. Yes, you, Thank

So, a cost estimate percentage we our level have decrease XXXX, X,XXX. reduction points maintained was full year of the mid-teen which of from

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

a that the facilities seasonally be was toward continue would will second factor. in costs write-down down. further is half heavily I the in half. spoke and XXXX anticipate inventory more -- previously right And is lastly, will utilization with planned mentioned we our first the fixed of weighted -- from costs the And energy market of after our overall we impact our of would our taking. full have European full that of moving as cost in the overall, cost than direction, year recorded maintenance mind the in XXXX Jeremy, earlier, of second basis, coming on certainly that I for the point higher the actions think Now key shutdown on half up the we lower then benefit our But keep for XXXX to of structure the about absorption it reflecting here be And the we're cost. a the

William Peterson

fell another pricing per Spot $XXX ton.

less pronounced guess, I quarter. So, this decline

like it challenging. your sounds are remains the Pricing challenging. However, competitive dynamics on commentary, still

how needle the And you've prices well here? as as both guess, I So, what does coke the for decline guess, directional been spot to are expectations compared product your coke seeing? pricing pricing from your needle I latest

Timothy Flanagan

spot it couple pricing overall think our reflected competitive Bill, good right, a I dynamics non-LTA it pricing remarks, reported the Thanks, that the said market, and we you're questions. we to in From quarter. of perspective, the the a appreciate around seeing that continues in be and I competitive and therefore, the market times a And and supply or demand. given prepared pricing this morning.

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

were to in $X,XXX say in that would the sideways compared somewhere or in quarter, the $X,XXX we're on the depending we grade where range second coke I to market. coke the trading market, needle On still of around

pick start we'd the up better respects, the the numbers in stabilized with right to demand steel of but that out has So, you XXXX. to side as into direction hope heading some many needle coke demand to maybe see trend see start in industry

William Peterson

of housekeeping. bit a just And

we So adding into initiatives. million $X think productivity back should other and taking guess how quarter but you've third and for the maybe SG&A on us level belt-tightening about then on? SG&A, Can other there the you I account set been trajectory actions taking

Catherine Hedoux-Delgado

at I run seen. rate SG&A remain will mean that you've the

that for $X underlying excluding of continue cost million expect in over second run in I of the the we're activities, first think that seeing show at of to benefit, would our the look the rest you year. year, If quarter rationalization We and SG&A. the impact half our this rate the to started has

Operator

Our Alex Hacking second Research. question is Citi from from

Alexander Hacking

realized quickly your reading too assumption? price this Based pricing I the second outlook. half year follow comments, on the of like it in Just be half year. a weaker Or up Is the to than fair it spot am negative? the sounds that the on first would of

Timothy Flanagan

Also, what's over pricing. basis, continue that because is going relative we that that is I an on right, we're mean that all average to. see mix, and to the think of plus $X,XXX -- right, to tons ship delivering a in we I the play that average into regions we where price, reported challenges the

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

Alexander Hacking

improve guess, that various other considering media working then the the some different to consideration what's advisers be is reported And I you're would comment to and on liquidity. company time that if able have options under with line? kind what maybe of Could Bloomberg and you

Timothy Flanagan

that, me for of by and made than Alex. with start a $XXX the the revolver. of maybe let ended Catherine liquidity cash quarter on We million million on front. availability $XXX that little reiterating comments the more the Thanks just And

cash the of specifically be since tried at millions and here or need again, don't guess, joined don't see I and your about question, $XXX-plus feel November position to revolver I of use the the end to of foreseeable for So, total or right, feel a liquidity the a 'XX. company I think proactive the we've the of more second good future. But quarter, in

various refinancing loan. the upside tried in you're proactive. or have And term downside of the regardless our think prudent cycle move a continue to and conversations company if capital any we trying for to of a be with that's think and I our the be the cycle. a structure around organization structures advisers we've in And revolver, to with around refinancing proactive fronts capital I

structure. we're always at looking think existing I capital our

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

Operator

from next UBS. question Jones Andy Our is from

Andrew Jones

view, to in -- too the near will capacity point seen bigger we markets? your this your on don't import it? core competitors any demand sort be come coming taking future or if EAF in the of any -- the we've any talking discussion any clearly issue at penetration in your to price pricing. your from chart there'd industry. comments or the to overcapacity Just greater is the of actually downside pretty I likely you it's and I structure done and on that about correct at on change year elsewhere. But the be - the What a protection much what, the of there's soon? industry about persists. supply be of question clearly are mean there about your it on look can pushback when probably a help view growth in Or Or that I be prospect side, done Bloomberg. out course U.S. look in think any picture it's by to significant of can of on Europe ugly in mean, sort at the because

Timothy Flanagan

certainly that, and it's how and things. One, four into all for the driven both try by in let's of medium And And term we particular, start and longer shorter maybe I'll touch with on in in term. points. view in improvement Thanks is the to kind an then recovery, market the really the demand, EU.

EU if down think XXXX. steel probably back you the production look levels are at I in peak from XX%

given would We the the online XXX us, especially balance decade. million demand say in the EU talked uptick any EAFs. just western help, of of sort more will footprint. I I industry capacity So, new about of But tons broadly. And growth coming the the of continued geographical two, think over electrode our meaningful

well. and we'll significant is and geographies here which that come to growth new of loaded, mills we will front-end some the the couple have of the next online as help new continued see the the years. to we're move offering on demand That in in of products presence start a Some front over

in reduction. and is out of and for we supply think to take underperforming. certainly us rationalization to the driven think I February today. of it's room in and our weighs first announced But footprint, there's when the of for it that's catalyst seen steel two kind out most. that an St. big as quarter now, of XX,XXX things. Right a And about impetus is fourth China footprint. terms of I in China's for you the mentioned potential one felt entity we at those pricing that, -- it's took really and back think, time. We've of or One, oversupplied piece, yourself supply that of that is their their moves We is rationalization the I is XX% tons pricing the the and take down our could reaction are as since right overall that needed GDP, step XX,XXX a on I rationalization was engage by be for in and probably idling reduction the overall market, forward. China, is the the mean, and in to think is I XX,XXX tons piece Mary's change. the really the footprint markets find announce west started We go China near-term domestic people production. You more thing of when tons are in Supply their important competitors that their production. market of construction the we EV construction,

which -- Right consumption So impacts produces from a their their steel about domestically. And reiterated China to that's target. is or to graphite transition that of its which impacts XX% certainly now, And announced via steel steel then economy, overall commitment reconfirmed then was weighing announced obviously electrode production. production, on move EAFs. or the they EAF XX%

demand would heard of only which tons right? XX% consumption, steel, we've XX% graphite more that XX,XXX steel million fruition. have to of the probably But electrode hasn't EAF market genuine and move to past produced sort on Now any along is electrode graphite You're Chinese it. effort talking meaningful but XX will that with it to from come a the at this not tonnes X%, come impact steel in of than

the So, all market. think, combined, helped of things move I those

still demand in coke $X,XXX company, balance be structural as the some are will here decade where market needle term for up. would having which nature to some well. really the on about us very strategic a electric occasions, western this And being that set and over that numerous We to believe increase position for and vehicles Seadrift of coke absent is talked all integrated chain right? firmly still think, elements over it's asset for are going more a short and demand a XX all of see the is been, market the vertically of the or the and exponentially historically years I we're conviction around long-term of so. we the returns continuing where The electric And in the vehicle Some just to a why price go, us average now of we've on have them supply business where last kind has them the is going shorter And that, can term. to needle is matter of execute of heading.

Andrew Jones

that be see on And the been the do tabled side from imports policy side, China? like any EU strict measures either the proposals you or on markets U.S. any would potentially in that have or

Timothy Flanagan

it ranging at XXX%. level in to as just trade to are U.S., from set, exists EU the right, landscape there So has the Chinese The restrictions look today, electrodes restrictions XX% the to on electrodes. grade. Indians bit you if both on little the size X% XX% and then and Chinese, Chinese and XX% I at the depending Indian XX% a on are think smaller imports, to

do place, and as restrictions trade and we an they work think they they in have are there today. So, exist impact,

to side always looking customers seal their trying markets. I see we our much like on think everybody protect is the

of terms support to no we're the domestic geographies that think and we strengthen our and different I businesses position looking for our operate opportunities in. in

I really but So, something at. can't and everybody on is status that comment where stands, that, looking certainly that beyond always

Andrew Jones

decarbonization in fact likely. some that various to things for I making that, countries, bit on market progress might any from right electrode see with some guess, the in in some mean, if medium you slow just more EU, around the the that, the as subsidies the And could move proposed we initiatives see obviously, risk sort U.S. penetration example, presidency populist that for the in there's and in you Trump Europe? EVs it rollback wing term, guess, looks of been that risks a I of finally, down, see and like a parties material I

Timothy Flanagan

see in I'm made to yes, start career, I've trying outcomes, this eye not the Europe I mean, will up that trends an U.S. along auto to of constructive to we're straight now think path all be impact right. all the decarbonization and sure fleets, my keep I as just those both continue. twists to and and predict a we to I political think we how And see we it the of it the business. on. electrification not so of Again, continue the market. But and the to turns something It the a that to and continues is entire longer story and as go may on going think an I habit policy we certainly. heading exactly not still comes line, our the way will real regulation I'm believe for But is story but term. the is chart

Operator

Our Landa next Bank of Abe from from question America. is

Abraham Landa

press Maybe just to start further off, liquidity. just to on

about the of would planning expect you you prior until see You Maybe XXXX. I it? annual adequate what liquidity remain it you kind look think some that of some wait reiterated additional year. Or to But fall? do you to kind something selling visibility obtain to Is for in there? more to you for that maybe this the guess season

Timothy Flanagan

I again, that, Abe. sit we today position, mean, our we liquidity. liquidity feel reiterating for good about where a Thanks from

million first $XX half at used of If the we year, you the cash. look of

million quarter. it So, average, $XX let's call a on

So, good position feel where right is we cash our about now. otherwise

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

Abraham Landa

year? in market basis. you you of first on XQ have do color do of a dollar XQ that I the then you're in the what in in amount per your the thanks of it or you a lower But expect know have that ton kind And dollar on Do impact the half? half second inventories. for And cost a did maybe amount?

Catherine Hedoux-Delgado

you for question. Thank the

range the benefit it And this indicated was year. we remarks, cost about COGS. As the in somewhat to lower our of second $XXX reserve utilization impact our in of in the of was quarter first $XXX the quarter to cash the market

half move That ton. expectation that about ton be a for So, year, of the per into we we would now benefit roughly half second only per it half of year. of on metric so the expect call metric second as would $XXX about basis, the the the

Abraham Landa

level. metric what ability kind beyond from ton can out XXXX. is up guess, we of I And the $X,XXX of per $X,XXX, what we some rate? in kind it, of second And get into the mean, reverse run that that, to kind kind alluded to you go-forward you I potential of actions quarter, call Like take. kind or were improvements to of take $XXX, if your improve give additional

Catherine Hedoux-Delgado

and The is biggest volume the ultimately fixed levels our higher over cost manufacturing really time cost absorption across levels. our on component increasing sites, production

progress Our it this would very variable this it as And to well. 'XX year. on good remain if expect really we're stick costs, making into we

fixed say production absorption. So we'd level overall, going will be most our the cost terms the important parameters of helping forward in

Timothy Flanagan

but part mean overall projects one we've those well. talked our our gas the in about, that consumption, are we're it's we've cost that in of I about we it's past of And position. only Pamplona to improve add and Abe, help calls a and on I this good our talked as continue it that. right? -- business, certainly would investments in despite just it's invest now, to particular natural because and ESG challenges projects facing right the -- position not cost helps And -- story And reducing

continue term we position long-term continue to of positioning in will also to of there's our Yes, a of to little that plants cost We our and this to to those competitive a around bit continue long- us sort of to system. cost be us investments map road for out a the and and drive have our things it, the think make the to those but is that capital views are company. do the for

Abraham Landa

then And last just maybe my question.

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

Timothy Flanagan

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

internal right from point been our electrode right? what they've or are, up for needs quarter or running sideways ball go again, prices So two now. commensurate we as Seadrift to trading this with expect needle continue a We're plants coke with matching probably crystal to the where production aside, now. And demands we're are utilization, Seadrift

Operator

have Kirk from We Imperial Ludtke Capital.

Kirk Ludtke

respect curious, very for it's it. of how will you second know this can -- EAF, got say, I'm much in term, XXXX? come Appreciate you through the With curious, but online I of half you've shift the the quantify the near to end and I'm year Thank decade, forecast the towards call.

Timothy Flanagan

don't I mean exact year. have by year numbers I

good but are number first we I think get I certainly, think the offline. up online. in levels in of production those and anticipate of domestically fairly to back mills of coming we ramp in you But terms I their can know A we're tracking. here what could 'XX a you probably strike here half arc offline that we and see that few to get the would in to XXXX, U.S. there's projects

Kirk Ludtke

anything And in China.

You suggest time at is that the XX%. to that anything -- this mentioned happening from Are XX% it's level different? shift there might there the plant

Timothy Flanagan

other government than the going to saying Yes. happen. I it's mean Chinese and time serious this that they're

a from too I change in and levels early think really it's announcement to operating rates. that see

and haven't be more operating wants efforts two, a need I will seen to think right, here continue world uptick kind ultimately, to need economy, the if significant think but act of time to I those. over I decarbonization upon the active the be in they we China or engaged in rates real, a think last month to tell. But

better this action. time around, hopefully, So see we'll

So this at as cautious optimism I'll it point couch in time.

Kirk Ludtke

I though providing pricing and seems directionally, -- spot sequentially as then not And you're but guidance, is weaker. it know

It seems rebound the accurate? the directionally down the sequentially, got as then maybe second will third that quarter You've third scheduled though in be and earnings quarter. downtime and fourth. the for the between Is

Timothy Flanagan

as I mean of I lumpiness pricing of kind captured as Catherine's the you've think costs. at what discussion well our we've around least around said direction

think So yes, without fair. you're providing guidance, I

Kirk Ludtke

contracts the energy cost, that that you that to is to we through? of off the think try just respect have with should And seasonality do are Or rolling energy?

Timothy Flanagan

season seasonality, I various The markets is a mean use incentives would as describe different I have summer jurisdictions. right? times. certain it season energy high different in at

go into prices So, it's higher third not unusual to as the quarter. we see

Kirk Ludtke

question. last then And

There's moving debt? access to on service you cash. around to the all no have You limitations cash

Timothy Flanagan

correct. that's No,

Operator

Please be will one last ahead. Markets. our Arun Capital Viswanathan And RBC you. Thank go from

Arun Viswanathan

I guys you hope are well.

kind just path of wanted I So, forward to the understand here.

that you roll-off of $XX increasing, million in asking costs, remove million to to million be, so, maybe continued could to EBITDA at guess, I you you of gain, a maybe run be of because quarter. volumes Do $XX $X if I'm million like do be $X level? And like or you'd then have is you this lower could LTAs. a reason the path rate the your production the see going which looks it So, kind are

Maybe what XXXX you us or get just for give ton So EBITDA? if can so that XXXX assume what wondering cost or that can of does of help kind so, really journey. you mean cash some per of kind on we just kind a on normal us breakpoints volumes to? And the level,

Timothy Flanagan

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

heading today to from expect So, cost think that while the sit where in trend to into year, the going volume into to this moral we expect Catherine fair volume XXXX. head and expect continue would we right from And as of we we I modest 'XX. on it's commented continue side story increases in the is is, cost where the in the direction 'XX 'XX, to increases

in does and the pricing engaging know get we question and fulsomely next I that So, we uncertainty you the third we into quarter until quarter things and The more today we've can that is customers we as a what and at that fourth control progressing would. answer And we of late drive negotiations. as look the as been like can we expect that lot early that for they are won't the question remains, here can't with saying, would our contract start year?

as least think to bigger and we continues EAF come start see trend hopefully, around 'XX. I the helps, as well that the demands at and some more of we give needle So as of bit drivers 'XX get coke play way that direction steel into as beyond. just because you really demand, a little into And

least sense that here of business visibility as midterm. hopefully, curve the a gives out the kind kind look we're growth for So we and of little viewing over you recovery more at a the of the how or

Arun Viswanathan

slightly a way. follow-up I Maybe different a just could in ask

I agree say a So, would prices -- basis. it -- it's not on it maybe overall se the again, volume has the know LTAs realization pricing would would on know But won't market bottomed But with from per you spot necessarily also, that have you on front. has your rolling -- I that probably basis? bottomed? off, has an say bottomed average you an

Timothy Flanagan

sustainable see in supply our of the some production point But customers a think St. or steel again, conditions the speculating industry. that not political think usually do at I some or to folks. support you're stability. most on single-digit of -- through more months time, thin certainly like for that conditions, back we sustainable are business. X across through move essential don't almost are at just overall normalized refrain to our from of from right, one work mean, months to we It outcomes, have better and removed for going or come and higher I calling competitors economic think bottom. in in Mary's. Again, I we some right? So, mentioned kind more production would losses X doesn't you out if about our things action much not certainly, And really see is I 'XX of beyond. whether EAF, and we pricing I'm announcement seeing Arun, how And I we a better think Western I stated returning producers capacity to well into again, rationalization now that's demand either, around I that they've margins before, of demand, as to reducing all operating it's taken think capacity. the their

Arun Viswanathan

back time just taking, time groundwork initiatives the this win maybe some noted to And of about laying spoke some share. last actions a then some lastly, improved you And lot customers. you're commercial you with that

customers journey? your where of like share actually heading higher back? So that on far And kind any do of are feel also kind bottomed Have as you and recovery? gain gotten you as you that's

Timothy Flanagan

I technical we've -- continue to that on of an ways that in-person would Jeremy, we we're products cost we to is to talked really, absolutely this Head year, continue I their we myself, that been bottom, important basis call, we thinking we're we've provide because engage think them to Yes. And that know I the services but them, provide that call our differentiator needs I Inigo say the value only customer would about I we'll their this continue think continue think value-add the articulate proposition to how we make our Sales all that that their not also and mean to business help to delivering Perez, them competition. specification throughout that but offer on and don't sure them it's our truly the so about we it meet and I competitiveness. doing improve we that customers a and do can and with to so from

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

resonating. is that So

that 'XX and well we received, out continue message and as being that is I beyond. being look dividend into think we'll to paid see

Operator

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

Timothy Flanagan

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

Operator

this And call. gentlemen. and our concludes ladies conference you, Thank

disconnect. now may You

GrafTech International (EAF) 26 Jul 242024 Q2 Earnings call transcript