EAF - Earnings call transcript Q3 2024 | GrafTech International Ltd.

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Operator

Good morning, ladies and gentlemen. Welcome to the GrafTech Third Quarter 2024 Earnings Conference Call and Webcast. [Operator Instructions] This call is being recorded on Tuesday, November 12, 2024. I would now like to turn the conference over to Mike Dillon, Vice President of Investor Relations. Please go ahead.

Michael Dillon

Thank you. to Third welcome Call. XXXX and morning, GrafTech Quarter International's Earnings Good Financial with Flanagan, Officer; Chief Chief Tim today and Executive O'Donnell, On are: Halford, Chief me Officer; Jeremy Rory Officer. Operating comments. will with Tim begin opening then matters. will and discuss environment, commercial Jeremy sales the operational safety, our and other review will and financial outlook. results on comments with our quarterly will details, Tim Rory close

will then open We the call to questions.

our slide. next Turning to

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

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

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

Timothy Flanagan

you thank third and quarter morning, for Good call. earnings GrafTech's joining

the our the current announced industry financing morning. this we the for provide for outlook the quarter; and our transactions During we'll and overview results of morning, this an the importantly, business; discuss call

topics, our as alongside of within and working space, Mining part fortunate and introduce of Rory forward these Metals have at the to into getting serving a in financial leadership than appointed in moment O'Donnell. Rory to positions, companies roles decade we like Before senior are a I our With take him. experience over to I'd decades CFO, recently X to including team, more look

few make comments. over call the Let me turn to Rory a to

Rory O'Donnell

know with morning we're you spent diving results. third joined quarter early and you that of Since report my to It's a transaction the I've Thank you, Tim, our GrafTech good to team, and strategic many pleasure pleased financing to assets our of visiting getting into discuss September, world-class to deep in time I the join much everyone. today. this morning,

regain thanking your For forward that in for for to the I thank you as steps of to drive GrafTech. to for have the begin I we take enthusiasm all in and to Board I you share of you to yet our meet, that, value interest the position it your team support. With Also, same back look future the we those me personally to for Tim and stakeholders. and connecting our and share stabilize management I'll market, guidance trust and our presentation. turn for welcoming

Timothy Flanagan

generated free In the third and positive quarter, cash reduced flow. we significantly grew volume,

capitalizing a we're our to In position an on addition, liquidity transaction. via improve opportunity new financing

the announced plans. pursue transaction go-forward and the growth an flexibility to basis unlock pursue us preserve Importantly, is to further growth a GrafTech's asset clarity strategic the long-term liquidity new in has on Seadrift, critical structured which that to end, is this our To aggressively allows value opportunities to our more opportunities. to a flexibility manner around been that of

things All absolute controlling of these we those can on demonstrate actions focus our control.

organization volume as we quarter engaged soft customer will the the the that as we're are impressive performance. XX% In another we share continue as basis, engagement we We've customers given side. volume our topics. Starting sequentially for evidenced executing from by next mindset by up in increased demand growth customer-centric we are our results on deliberate market grew year-over-year quarter, sales X% double-digit confident prior and across bit And ahead. Currently, dialogue third needs and year. our strategy, sales to continue third and We're and the in These increase existing a our our new expect third sales regain XXXX. of see many and me the volume our ones these to encouraged the let year. of on quarter. their positive share is with as current instilled the little are results discussions well environment. a a more regarding first So year-to-date move a low consecutive our sales On Commercial year volume for

strategic we sales addition, continue In agreements customers. enter to into certain multiyear new electrode with

agreements While small recognition position and relatively order products book, these percentage value and needle our overall being a of we our customers coke, our and into the services long-term unique integrated have confidence our their vertically multiyear their reflect in partnership. of

by expanding standards. in those conducted customer XXX-millimeter technical our very during new our were note, And high and in in performed capabilities key own electrodes invest electrodes offerings. third of to continue value America. the quarter, customer including North Of our product our also accordance anticipated, a trials We proposition, initial as with

a to noted in offer term currently achieve high-quality to and products expected niche past, we'll Difficulty] of tirelessly long the our we've [Technical continue of so. to market, all electrodes that work While to electrode share about XXX need. Ultimately, Again, steady market efforts excited for come. overall making these that success to to in for are to the demand years significantly outpace relationships do market meet And progress lost the years is for the we're we're regaining this mutual strengthening in customer come. to

aggressively continue On control ongoing front, the operations to off. our costs to efforts pay

per decrease quarter. metric for XX% we quarter, our year-over-year exceeding cash the achieved ton, our expectations third the COGS For in a

solid expenditures flow that and cost we I'm relentless work of of all and for COGS the initial like proud cash expectations to topic As another today. Difficulty] to for of quarter. includes improvement we'd combined in second in guidance generation control are These full has reductions, on our XXXX, over-deliver free year for measure. [Technical on extremely led working efforts, to focus million I these me cash our our our time third with discuss we important pivot our This cash for them let continue cost capital areas, increasing the capital the in team's being their $XX said, managing to in thank flow performance. efforts. With

the conversations we view I'm call, details at during in further his it majority our development we revolving cover liquidity advisers our potential and commitment color the facility. regardless existing regularly earnings with benefits the comments, credit capital cycle. will commitment maturities provide indicated importance covers of this Financial to capital measures attractive shareholder We've But have our stand where of credit the maturity GrafTech lenders in regarding our of on time, that structure. on into I letter This the the a transactions company's objective with that dialogue rates are letter area. with of as existing including also debt Rory enhance both morning, we will announce bondholders the a and extension prudent proactive to new an and of of and key and our few revolving position to growth profile. as towards this And at such debt me stated excited announcement. We transaction critical thoughts this existing entered view of ongoing long-term our our strengthening our and step on our delivering in I to share As the under our value. last This a a financial achieving let foundation facility. transaction

our capitalize later our prepared well industry. on discuss business for remarks, in and that to exist I'll the positioned our is long-term tailwinds As GrafTech

provides you on through challenges. supporting flexibility liquidity to order the to This currently working recovers part the demand increases. growth opportunities includes and know, and in additional responsibly the we our This manage are as to as in down near-term industry-wide the invest capital of However, capitalize operational transaction in ability the industry cycle. the

and to to deliver opportunities. strategic grow the flexibility as potential, on Difficulty] new Just pursue [Technical growth to both company's electrode long-term existing business the our

Lastly, for to growing what it message a benefit business passionate To our employees, end, our investors refocus customers let on and clear our our of the our me affords to energy about, our the all needs GrafTech we're is our provide stakeholders. those customers, which ability the delivering all our and of of directly at stakeholders. to that on

We continue necessary are take have absolutely the remain this to the and to long in steps will for and there. business term

the cash process. Jeremy confidence the lenders, GrafTech's and to to and to support GrafTech. deliver medium about ahead them term. With on this the remain company's and for strong and color long their term excited are it ability this more more for our turn in to potential our Ultimately, the earnings over their the thank like the levels now our provide in performance. about the current industry flow of that, I'd path of in return We confident of of on We let to normalized me the future state commercial highlights engagement appreciate and

Jeremy Halford

Thank Tim, good and morning, you, everyone.

an provide start I update, on core before value comments industry which a always, safety, few a with I'll at GrafTech. is As

end performance this this day a our over important Nevertheless, is employees on this can thing we rate at Sending for satisfied home most to objective forward XXXX. Our focused with better. and not end year-to-date improvement incident we every continues the of move must recordable into safely the will as year performance our are relentlessly and next. in we teams remain do show key our and do priority being

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

of of representing X a operate know, The The the production industry the capacity global of in in rate currently challenging On of global geopolitical from million was rate and you quarters. the XXXX, steel As outside outside find XX% lowest remains in steel year. by cyclical third steel we global cycle. the China China declined in conflict. constrained to quarter, a uncertainty XXX approximately utilization tons third quarter industry economic a in X% a ourselves part prior basis, decline and the

regions. Looking commercial of key at some our

[Technical challenges down output increased on the remains for region. historical stable America, for modest current recent The well declines for in environment graphite what continuing has consistent X% Conversely, electrodes. of EU was utilization below commercial although quarter, and steel steel X% the North an year-over-year dynamics quarter relatively second the the otherwise been it trend basis, For Difficulty] production in that within steel production rates in consecutive third region. the in a

and next to has including spoken Specifically, to the increase graphite have our in to the pricing calls details slide turn, the level dynamics industry-wide environment the from in of weak turn ongoing electrode have an result in electrode and last persisted, including continues results. to exports background, on weak low for several that changes, electrodes on suffer the we spoken from China. graphite capacity certain let's the these competitive more With industry demand for countries, we India remained continues to previously. utilization. Reflecting that This, have

quarter which given our of the European production our Our our planned quarter facilities was third capacity XX%. in decline a with utilization expectations consistent third production of XX,XXX The in during the metric at tons, the levels shutdowns the during XXXX volume was in maintenance rate resulted quarter.

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

move will for we line the be our with for broadly the fourth quarter, quarter third volume the As volume in we the quarter. sales sales expect through

[Technical well Difficulty] we way the on result, sales growth. are XXXX year year beginning a volume outlook to achieving our for As of full our

demand electrodes expect Looking than initially the ahead, anticipated. therefore, albeit industry-wide market we for more and will recover, global steel slowly graphite

these arc continues, expand Tim electric few these the In improved to an will will moments. lead graphite factors as environment to shift electrode concepts industry. on commercial addition, the for furnace a steelmaking in

compelling our we with sales measure to our XXXX, combined growth another customer of regain value strategy are in share our As some efforts driven with it demand year of recovery, customer to engagement delivering by confident XXXX. in volume proposition, and relates

Let over it details. me to rest for now [Technical Rory Difficulty] of turn our financial

Rory O'Donnell

Jeremy. you, Thank

of reflected for of EBITDA third $X was average quarter net a XXXX. mix of volumes. adjusted $XX third to million continued the third shift EBITDA weighted or compared had non-LTA $X.XX in per the pricing of in For quarter million Adjusted the loss the our million decline share. of The the business $X negative towards we quarter and XXXX, lower

These adjustment year-over-year valuation cash market recorded per of reduction on metric we of $X factors a basis. third addition, lower ton XX% XXXX. In quarter inventory were mostly an in cost a by costs in million the or offset

Let reduction which a performance. impressive continuation on represents me our this of point, expand last cost

with our shown ton COGS quarter. for As identifying opportunities performance under Along costs reconciliation third in XXXX. and expectation XXXX. earnings $X,XXX website, materials were our year XXXX. other is lower our to our $X,XXX the our full cash which in guidance for call in our XXXX. ton expectations previous have $X,XXX just reduction compares result quarter full now without on product than for provided continued This compromising would metric posted the the COGS of metric cost our and per basis, benefit the we costs favorable the approximately cost $X,XXX against of or factors, reflect ton activities, our teams to the of our a executing our strong on metric the meet freight per ability per updated customers' for on needs reduction year approximately for metric cash our anticipate overdelivery in of to decline per XX% quality. Reflecting We of COGS ton This year-over-year lower

as ton addition, COGS will into decline further In per that anticipate XXXX. we our we move cash metric

flow. Turning to cash

cash flow provided the we of operating Difficulty] performance Overall, pleased quarter. [Technical of cash was level the free activities million this million. with in $XX by XXXX, third was For cash are $XX adjusted quarter flow

million with will While expect $XX CapEx our guidance quarter, in CapEx second third in from declined to our the and full of complete million. quarter $XX invest to the spending year sequentially year we line to business continue

these of favorable will relates now We expect to and levels our levels as under consisting we million, million as well impact. production third facility. previous another focused to, the quarter net capital versus the ended credit liquidity which be to inventory initiatives. quarter inventory -- working working XXXX and decline had working we execution million it a our $XXX performance capital of our We with our in reflecting to in $XXX reducing $XXX cash spoke of of shutdowns, year revolving the favorable our planned expectation As remain of flow capital, our seasonal the impact part Jeremy overall full of on as initiatives, overall of cash total available with neutral approximately ongoing

announced for of the me liquidity, capital that topic this On on morning. transactions let new provide details some we the

the and portion remaining Difficulty] for be described months a Of extend the of quarter [Technical indicated, will Tim be December delayed loan is to million expected The to form maturities. loan debt will $XXX any As debt. at the subject bondholders of The of $XXX hoc XX group transactions which undrawn financing available commitment cost providing lower $XXX the million in portion mature draw ad drawn until is term will in new closing, term of be be the our $XXX existing occur basis on to attractive transaction a following fourth existing bear this existing specifically, transaction new More terms that drawn. are on loan, will term drawn million that GrafTech the our drawn million senior points term loan to the interest at year. The in XXX any period plus of closing. in XXXX. will SOFR a with to

to be will bonds and December exchange new par of for exchanged million interest anticipate $XXX of bondholders, existing and of maturity our existing existing notes offer, subject to participate all nearly bonds in exchanged extension. level the to will from offer at launched extension Based we the on bonds the been XXXX, the December exchange X-year an which have of of be can with in be existing maturity received to whereby rates senior of the our due date a Regarding shortly, XXXX. commitments at

mature our XXXX. November will in $XXX credit million revolving with be new of mature million Lastly, of credit that to $XXX a in scheduled facility XXXX revolving facility May replaced will

the financial capital of currently million our financial revolver credit. under of more available the our amount GrafTech importantly, words, not the overall the after change. be performance effect the less limits in other million will outstanding $XXX currently giving springing availability to reduced the $XXX In to to $X is million, approximately letters While capacity covenant that will revolver recent of the structure, new

agreements have revolver maturity will the same the provide With to the our financing further benefit million of announced in turn position less the slide liquidity new the next continue that $XXX to we our the background, revolver profile. to scenario, demonstrate availability let that debt of credit. With me will and letters to

in delayed of current ended $XXX drawn, than we earlier, approximately third fully liquidity, Factoring double the loan this liquidity to quarter approximately with it million when term the more $XXX new mentioned I increasing million. As million. $XXX would draw total our

matures new debt our maturity to delayed million draw $XXX in term profile. The Turning XXXX. loan

company to debt May our As XXXX a the extension through their exchange to revolver X-year has originally the December previously, it the the confidence Further, maturity we been our this of and versus date. to maturities proud will extended with until Overall, the outstanding no to to upcoming exchange relates guide down we offer, company the have full have participation indicated notes, cycle current are to of existing ability XX XXXX. in of in in assuming maturing and million the I Therefore, months profitable appreciate current XXXX. partners $XXX offering reached outcome growth. as restore November provides the

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

Timothy Flanagan

and ability financing environment. to execution remain GrafTech we Thanks, and controlling initiatives in deliver our our proud the supported through by announced Rory. our near-term controllable. continues team's manage on confident focus And its as to on transaction, the continue we outlook to let summarize. our of me We're

about remains intact. optimism long-term industry our ahead, look our we As

industry cyclical we consistently cautious steel trends, come an to on we near-term noted have downturns While remain eventually end. that

In position we with competitive to many continue unique industry remain advantages, that and capitalize. combined addition, we confident our and well long-term are to tailwinds, has positioned believe our sustainable we

For are these in us reasons, we long-term very believe real. growth of front opportunities the

in some more me positive X% October, is On Let demand most demand. World Steel China provide outside steel projecting our global East many in be growth the for Africa. steel global in the the projected World rebounding find Americas, the In more for although Steel note, than the published of is outlook key EU, This all slowly nearly of growth on and And initially expected, we regions, concepts. a these includes color XXXX. projected Association the including growth short-term steel market encouraging. Middle their recent to

electrode the healthy are During not this the call, way our many a the time, healthy to current performance. improved term. industry. price our spoke like graphite last increases the health needs spending announced and encouraged long-term demand this and translate we financial our regions do as we that others. Pivoting promote improve in are And shown have as to of but we cut this our healthier supply environment. are of sustainable and seeing discipline, pricing well announced A growth cost on by seeing cannot the of we Ultimately, steel levels industry. pricing a need the now and into about industry reductions, and incredible not recognized We steel are to we impact longer

with region. global share in furnaces method increase production statistics market outside share for to XXXX, in to of drive World of growth expected EAF steelmaking total increase China this with production XX% the steel trend in of Steel the the of Association, to We arc transition published continue an latest by EAF efforts every growth in XXXX And electric share continuing on nearly production. from continue. to is steelmaking approach XX% expect of accounted a steel the Based decarbonization to

expected steel approximately year this facilities metric drive manufacturers to we're XXX This, previously, noted by announced projects over turn, of with tons production incremental our we've for commercial facilities. of is online this XXX or projects steel these new concentrated EAF to of expansions expected much capacity plans in key coming for million existing of of in EAF regarding result As China, electrodes. from tracking in the are demand per graphite new growth decade, end regions. Outside

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

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

petroleum for our coke. we will anticipated tailwind Moving on needle growth demand to The business graphite key a raw integration. the coke, material to substantial for electrodes petroleum our produce vertical also needle use present given

needle demand We spoke X expect to needle be more demand factors: driven electric for batteries, to coke coke for material. precursor coke key demand shift Growing key and from electrodes coke to; I importantly, for this where the and by a use elevated graphite pricing. for the second, result vehicle should EAF in high-quality graphite steelmaking needle first, material needle the demand is for just ongoing anode synthetic in

to remain This to substantially into expand on within for pursuing to relates petroleum of ways provide substantial electrodes. pricing, assets competitive partnership focus and Seadrift. higher graphite meaningful needle Given the anode it serve market This capacity the graphite graphite electrodes. historical us between to of includes our maximize vertically production maintaining that material continue capacity beyond to coke expansion we and the market unique business. Both integrated graphite would value adequate as capacity pricing translate graphite our correlation to integration capabilities. An while electrodes, and to advantage opportunities this trend pricing again should coke affords the vertical the electrode key for high electrode needle our reinforces

dynamics, pilot positioning This making growth R&D opportunity participating space. In As scale capabilities. exciting and remains of are it this our also a key be in to player growing expertise -- technical in we dynamic with in in within to the relates investments the our well us closing, including anode the our set manage industry global have that the arc near-term to plan, improved it. confident We're steel we're and out as a shift furnace the we're to we anticipated executing higher steps capitalize benefit challenging the a the electric and further drive against position through poised efforts market in taking, function, steelmaking market, advance graphite rebounds. assets and further demand, decarbonization as our that term, a we electrode to are assets to center technical on growth. material Longer to GrafTech

anchored of recent is and distinct We'll that in and now confidence Overall, stockholders. This its to. call for competitive of questions. Our GrafTech's proud spoken set value open generating we've assets, remain GrafTech our advantages concludes capabilities in prepared we're remarks. the accomplishments great our for confident

Operator

Instructions] with of line JPMorgan. And first Peterson comes Bill the your question from [Operator

William Peterson

Nice down job doing. [ on efforts been cost the you've ]

I the Just order on pricing last like quarters. how spot needle seeing? term? the consistent we near-term it's does which few spot over competitive decline remains the is pricing in But the quarter-to-date commentary think $XXX latest the pricing, looks compared The And or environment, weak, pricing near-term your should about in per expectations fallen to guess coke near you're another ton. how book guess, I

Timothy Flanagan

geographies. as decline the And range fairly the I absolutely We're think Bill. We've jurisdiction call gone the over steady relatively the the, through of market, up for we've the grades around right and time. balance about quarter that have this winding year, spot all Thanks, needle coke needle would a on depending across in still $X,XXX say that Yes. basis in consistent it, average weighted pricing at $X,XXX I right? prices coke. observation a in seen you're to remained $X,XXX on

least on the slide needle seeing little support level of electrode side, a at a or So we've seen the still price floor coke some bit you're but a on side.

demand stated, go right, contracts that But reasons the delivered it pricing. for time, that's will forward, are yes, of takes immediately Some which a pricing I turns certainly, tough if in a again, all of effect think as bit and quarter. a needle anticipate we've But rebound we or knock-on has timing environment. then do we of electrode needle negotiated still coke, up up as through that pricing little again a the and look coke as both we for drive related, whether as pricing picks

you electrode that the jurisdictions as would or a industry broadly, I sustainable for think now, of industry. I at seeing healthy steel healthy the needs not of right in healthy Pricing players describe we're more industry in look I this the market. and as commented any a many key

the talked others' at time, here either whether in companies in reductions, point in announced some by pricing QX, announcement So our to take continue about back which we've or see talked again, which that's action, seen in pricing supply we've will we actions, competitors more about announcements market QX some recently. you'll announcement

all steel of you place healthy market a underpin growth for those going the So actions otherwise, won't will demand because market have to take to to balance out have forward. the

William Peterson

fixed cost which better the absorption. as thought again, side, on maybe have we And expected, sales seen Okay. cost environment would than may not much the have with

year? next the expectations quarters? and How So potential your should progressing think maybe I that guess, for how should we over the several about about next for underlying growth assumptions around we cost think downs

Timothy Flanagan

Yes.

cost work to self-help the So business, the by more over turn This energy down. let right? this me then a Rory start, we our is and on tremendous a of I been really teams, But to this to amount on tremendous a that little and for our there's can it comment is bit mean, side the do side. I'll cost effort

being helping job on cost to that of increasing which the from laser-focused cost is operations has a benefiting basis, a control continue. are really fixed We volume, but good on team and expect done more broadly

and more Rory to over it turn I'll details. So can some he provide

Rory O'Donnell

Yes.

So thanks, Bill.

probably breakdown. is fixed, Just cost Essentially, and as production the our about split costs like. cost a remainder other being costs. coke of costs labor freight cost The largest is such component evenly reminder needle that fixed the variable between on our XX% and energy, costs

of process made, We that we've base. -- have also made variable strategies, procurement the supplier only different in kind controlling different improvements costs but we've engineering progress our through not tremendous diversified we've

of vendors raw of So materials we and of qualification through the down price brought our of the additional like. some some

a of created it's we've So starting really little between pricing show some a to bit benefits. our battle vendors, and of

XXXX. So for that's

As you the out know, St. fixed in XXXX, curtailment also of we with of a took costs Marys. lot

took some first year. the quarter the We cost of overhead initiatives in also reduction

just as down So see leverage wraparound the we're the of what future. I've into things, into we're all bring cost looking -- effect to ton the with down per an continuing that to increased fixed volumes Those at the of moving cash key and XXXX, really going outlook cost bringing is of coupled things sources mentioned.

William Peterson

comment, sneak If to more battery looking I sounds in here. more invest like you're It in. could it's interesting. In one the

change here, change wondering how maybe manufacturing domestic looking view to that kickers versus government that have -- it move be the wanting consistent of to likes you balance local customers' does your Just content local actually in going of, I let's likelihood and that does is away. production may Or and work any how you? and guess, ahead? say, your in some government change a or a see with the do behavior potential to

Timothy Flanagan

going been elections I speculate early Seadrift the not that think would doing or suitable on strong and -- to don't on team how provides remains change interest still and the well, precursor a drive demonstrating from me otherwise what front I'm coke abilities and of -- that's are going [ going have the in [Technical needle the development But can I too it's to how outcomes ] Yes. and the materials. a to what needle there anode for say I Difficulty] that landscape. work think to perspective, be that coke

as ability expand optimistic very really, And to the huge but the to diversify market because we leverage as an also and and term. solidify asset that's again, put integrated into anode an business our end market, vertically our our overall business position feel that again, think about think to still we operation. material Seadrift we of So asset longer being us then for have about our continue as a

Jeremy Halford

a electric something lack think had going supply want to of see Bill, established. evolving saying, production fleet have chain you're domestic they're curtail their a just over only would And an I since supply as of automakers to domestic we time, add I chain. X what to we're to years vehicle that to because that vehicle Maybe Tim.

I so to supply good in And practice that to regardless have it's politician think which just domestic business be chain. of office, happens

William Peterson

job on side. cost the Nice

Operator

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

Alexander Hacking

Just tenor affected of to negotiations dynamic? assume that how season. announced And the has price in follow up guess, your is the competitors question. one contracting half by for next I that we're the I increase how of first XX% of year? on pricing

Timothy Flanagan

Yes. Thanks, And appreciate right. you're question. and absolutely Alex, the

price the first would are XX% the America, in consider the deliveries for middle year. Certainly, next customers of and an for we We key broadly basis more but annualized QX our in of. North supportive increase, what certainly I'm for negotiation season, on half

The think level. couple things. what now, ultimate XX% point I healthy I One, industry. Because think regions think of it's everybody previous level the my is two, of we given right of exact go then think And and all the needs to talking healthy is move, pricing starting that feel we of don't of that a going I electrode that right don't depend that to is on about a across commentary is. same you're it's sustainability have to starting from the about. that the board. where pricing the realization your But

helps. moving think multiplying it But ultimately, we we're forward. not So just XX% by taking it and pricing

as the it an more be to approach and want dialogue Europe say February. we the a update about strategic the we're our we'll more encouraged on having, Americas, So call can about in discussions are in broadly well. certainly don't as and our Probably overall, and customers. But dialogues, fulsome a update than but give from QX ongoing overall those broader more that perspective in as active contracting much and both

Alexander Hacking

it's follow-up had I do I investment. a a with ongoing. Have Or And just on HEG investment? any the dialogue question them? hands-off this you is appreciate guess that completely

Timothy Flanagan

bit a thanks it. that. for maybe just background. of No, for Yes. Appreciate And

acquiring did earlier position in HEG they public began in that inform a disclosed report position before March. that came the year. So begun inquiring shares They in had disclosure They out company. their in this us annual that that

they their XXG And and over that's today on filing. based at so, X%, just I sit think

business mean, and vertical think of as not your behind well. ownership So dollars passive I it's position one a asset the public have, but your I only unique again, an our of the comments a more perspective competitors, and commentary. But their with consistent indication strength with of of underwriting on we importantly, of that good putting the integration the it they're

how that that And out appreciate forward. we we'll plays So so see going endorsement. yes,

Operator

Arun RBC of comes question Viswanathan with Markets. the line Capital from next Your

Arun Viswanathan

I a production sales. bit about wanted ask to and little

in ratcheted in but it tons, down tons metric able QX, that sell production like to volumes XX,XXX quarter. looks still really So XX,XXX back were to you you your the

trend out So strategy rates move ratcheted you the of Is the QX sold it production your you your say some -- Would of kind you've inventory. some are you put inventories looks your that into How like as complete? that QX? good into say positions? through you to that you back facilities. of European in forward Would in of expecting some and and you

Jeremy Halford

we exactly do. Yes. planned had We what to did

As we the one, inventory equipment; manage take the of we to annual beginning properly maintain downtime the to combination manage for a our going set down our thirdly, targeted of the knew factors: in that were of kind our we secondly, to take to year, costs; to our time at to plan and some Europe levels.

at. where and exactly they with I what do, we're was quite hoping So happy team the think executed we're I would

to into the production takes out we as expect as year, here we As assets. of kind and get line year. -- production we build from sales do the on what it inventory that through rest pardon march in the next go And me, will forward, we of achieve operating we'll and greatest should that return plan, then largely the

Timothy Flanagan

add just of amount capital again sales. working quarter, Jeremy's and alignment production Think I'll neutral about fair Arun, to the between fourth comments. in Yes, to fairly a be

gives line growth, Going that we not the inventory as beyond some through 'XX, go certainly to back us of liquidity, in flexibility and well. the kind ability in of that rebuild the the increased 'XX, for but to with only as our expectations

near on term, the to down sheet. to So in balanced. balance costs inventory fairly out the isn't continuing take There other unit more drive sitting lower costs and than much front the our on

Arun Viswanathan

in Great. X utilization QX steel other And the expectations, some according was recent your versus lowest global Slide periods. further then to just on your rate the

that auto, could auto expectations by could and how how What's into production some maybe trending, that next know So your you guess? And slightly as evolve do on I are maybe see could commentary production we market. out volumes us down give expecting end to year. maybe 'XX? you if global it's well. help us flat helpful, you I Maybe with

Timothy Flanagan

Yes.

volume expect what double-digit maybe I'll So otherwise in an our start of growth to next we increase expect sales this year. heading low We're year. guiding with we -- into and do for off

So we'll see we greater demand ultimately, think that do our for products.

is Some market regaining share. of that

talk Some we where done is levels of regions demand. If limited very buying still on are increased a in much basis hand-to-mouth Europe very that's low. relatively market about is being inventory particular, and

has that see third right? look growth from election overall U.S. as a really landscape think of single-digit I the we Still a demand is head out, and U.S., just slowdown some a on change year the significant as in think was we U.S. I the there a taking in in a but we the expecting in an but industries outlook changed. all in some perspective production And don't to in low a head uncertainty going the is little materially seeing into maybe small next think to do don't that demand I the of otherwise of in itself our just pricing production combination and the quarter. is that pause or waiting breather, bit of has the outlook steel a start recovery would and China, sector, stimulus changed underlying their how from from how what forward. impacts bit we utilizations year and see nothing thing into I manifests property expect next that it that as But still steel an overall, does say Probably significantly to one perspective. domestic and their particular

Arun Viswanathan

that Okay. did you that expect And Or how Or double-digit growth just volumes? next Is low that that? year? say we is clarify, do you for should about to think EBITDA?

Timothy Flanagan

year expect low our volume, we yes, -- volume. sales growth next in double-digit sales sales Our

Arun Viswanathan

And back of Or ratcheting that year? different Okay. part driving in maybe year-on-year this increase? that this some is of periods what's

Timothy Flanagan

expect I I So to begin start of That of One, will it. be to things. recover. market think we it's to couple the a mean, portion do a

a we participant of development XXX-millimeter a the mentioned market I in, the the This in electrode. Secondly, is that not past. been have

a works have We that expected. product we as

our was in the lost reengage year Monterrey XXX-millimeter we're volume next when holistic to customers with as So more shut we commercial market as the well And down. market regain a on our the we efforts level front seeing that. on and anticipate share

We volume our continue decreases to see sales in quarter-over-quarter others volume, increases in while announcing year-over-year. are

slow with we But we're digits It's next double it tell, we that head a just that effort. as pleased anticipate will So that we march year. -- the regaining we volume. it low be into in is best methodical think can

Arun Viswanathan

on hope as that? as sustainable the expect Okay. I back is continuing driven that And so guess, side? it would by is soon a you you And then initial the cost your to we that, on there profitability. is to improve? framework? I QX? 'XX point, when that guess then, mainly mind profitability own on And Or keep Is That's be actions our cost on should helpful. ton Do metrics volumes corner how in per standpoint any the thinking from that turn will then dependent about

Timothy Flanagan

Yes.

So think hoping here a get just I don't we're lot there. things sitting better.

so to $X,XXX XX% down full certainly cost cost go ton on be we can as year a, a are a basis. we definitively as We metric that, guided We've forward. as ensure now the to and we roughly side, taking on action are competitive

out We head the be cost as of increase XXXX, to able we'll normalized even and And down continue into to to our better costs alluded certainly, Rory drive we term, I we as more be expect expect longer we to as continue drive further. fixed that think get business. leverage will to And out capacity, to to. volumes

So cost we being we forward. fully as move competitive anticipate

of right? increases. see if sustainable before more in that In you're price the dynamics talked of to coming you was we've be to terms action the increases, about will, already. at place sown, meaningful needs to some seeds There change quarter capacity starting pricing, in competitors being and profitability, you terms price offline, of announcing $X,XXX. takes third see pricing The Pricing

So roughly cost quarter. and look out over a margin around you're we've levels if I of on current in to, to line think we current what pricing profit right, take a the -- fourth full guided levels kind as year, the on breakeven you

Arun Viswanathan

great. That's one I those could sorry. comments. really I'm all I more. ask appreciate just If

rates utilization in the are Europe, downtime actions any your if itself, guys portfolio can taking this and assets there Are with take maybe right the -- comfortable of you maybe either you to, up within footprint? given Or are on all you But footprint to the now? on a -- I Just you that are the your can just change room of bit quite need do liquidity you breathing wrap -- front, that do not. with have just comments that now of some on front. maybe downturn

Timothy Flanagan

Yes.

a St. believe We this of market we tons. to going the and of view talk from and other idled need back what a in capacity kind So XXX,XXX to of took when took we our that did and let and require and to is some me QX us nameplate step go-forward basis. on reset action offline Mary's year, production with

now facilities. the closed and restart was our journey we flawlessly. primary So we shutdown issued today, between operating since permit for of And going and got mix XXXX. that the all have we've are whole from facilities Monterrey, that the supply us ever November of in of have, Monterrey forward. Those right sit behind is facilities us that conditional standpoint, that out of has operating here the been as back kind we are feel we've X production the facilities the assets established the collection X chains quality the

pleased on well. very facilities. to we're run European that. continue the facilities And are those world-class again, So And

changes of same capacity? in. the production somehow really XXX,XXX and that term shutting to long in think So the is a not plant at outlook right, that doesn't jurisdictions would for because need do today. Where I the itself decision then have fixed short-term or manifest our if it is, the way, However, we is a changes short-term say, in footprint operate right they a or measure, look we tons cost the of network down and

You much year don't money X. save

we, So a shareholders. said, for are don't money view else, it that like everybody that our you here to need that supply before off. All have returns being take to multiyear and you have create you make

if with profitability. we So the to we're doesn't company existing that steps will it to able we footprint, that and the change not to the take to, do return need

Operator

Ludtke Kirk next comes question the Imperial of with your And line from Capital.

Kirk Ludtke

Tim, stabilizing. Jeremy, topic. Rory, there know I pricing like the more year. pricing is that Mike, you're But a are there year for negotiations conversations signs just next seems follow-up -- conversations than are agreements? are there on or early It have any in regarding last your longer-term

Timothy Flanagan

believe use want are with as as about relationship, strategic of right? of pricing. that Not know that both is a contracts customers if conversations a work the lock We I'll long-term I don't the to let means engaging well. Jeremy for there in they Those a weigh Yes. party. point agreements. necessarily sides what in trying in low have more those to customers are

horizon. on the are the book. happy that very everybody. very of them, we're They're have So piece they're buys the to customers we engaging be for them. forged pleased We're commented, those the order partnership to relatively going as Not that and small again, I a with engagement with and not everybody longer-term

given the in than if just there is from I after run. don't and ago. Probably today -- year conversations necessarily So year, the and and we just, industry a to about there's removed next year going in were again, fact agreements GrafTech the that for yes, longer-term the the position were around be to that reinforce our trying Monterrey X last know year was and long we the year shutdown, more

agreements. guess I there we're yes, bit So thinking -- on maybe but these color of a little how about

Kirk Ludtke

something timing? you react Would then how like come that And that appreciate sense region? that And the will on Is about? focused I prices. as raised particular typically have that follow-up interesting. you announce Can before the competitor some how on any to customers you That's on a comment would it. to that?

Timothy Flanagan

level get increase they I to industry the and improve a had appropriate look know on ability can of XX% but can't comment of or comfort I the what announcement. health as again, and more broadly, to step the stick Yes. really timing try don't comment to Certainly, beyond an if much the of it's out that we confidence in I that.

Kirk Ludtke

this, from term just on you but make would I facility? the I are draw touched that then think accessing new congratulations financial sure, covenants loan And want And there you delayed Okay. in that lastly, the prevent any money. to on

Timothy Flanagan

Yes.

thanks the I view transaction quick appreciate for question. issue us mean, a liquidity important the So really and we that, to Maybe for Kirk, I this comment. take just customers the as costs, allow and on that off front our to like and cutting for us can we but question our only engaging business, things really center focus with customers. control operate not investors, an

of So is so. But this do the on those. for covenants, let Rory transaction big lenders and the to really a respect us, we're RCF comment our with pleased I'll have and lenders to support to

Rory O'Donnell

said, far it's accessible from As money, closing. as as accessibility we for the XX months of new

initial would that taking accessing accessible covenants of the directly. second restrictions additional on XX question your us like, the are it that for on is The certain prevent to draw consider from draw delayed or There covenants after I but answer them the draw that months. funding are and surprise component there's customary. additional debt So no

Operator

Vittorioso question line comes of next Jefferies. Your from with the Matt

Matthew Vittorioso

just that to debt. comment up around Congrats follow restrictions lien transaction. on on additional last on first guess the I

lien are something you think at much that to How would existing that lien key going Is be the additional new can debt now in can layer? bonds that for bonds. today? I be the layer that us second you provide first

Rory O'Donnell

head. I you up. the don't I'm of top can provide that off happy to to follow think I my

Okay.

Matthew Vittorioso

a additional on But debt? is lien first there cap

Rory O'Donnell

And million of and priority is. credit now the debt there of $XXX million. money Yes, revolving facility again, the the new is first $XXX

that X new which, is again, if obtained we transaction. in we've priority have instruments, $XXX we revolver liquidity, those million money view we standby So the The this can -- as the liquidity anything.

Matthew Vittorioso

Yes.

or support discount. existing great you traded transaction obviously, say, lenders, that bonds runway guys time Was were some like load some didn't low are see and in a thing obviously the be, load? had potentially company at great think this capture, guess, a ultimately your with to of consideration would is guess question second I capture that earnings? ability And at is my I you to one prices. fact I mind, to the then the And some mid-cycle earnings comfortable have hopefully Okay. looking the and Like that for comment this your better give that point? days does was extend appropriate suggest debt in any your The folks as dollar you a this to for market. electrode discount for recover, that this push debt on, pretty the

Timothy Flanagan

most terms what's in and transactions in whether for the of and mean, it's that, Thanks of always of it's sort maturity, debt, it's discount are and it's Yes. balance important Matt. you there's capture. know, as whether I a And levers the that of push the pulls these negotiations, cost whether

the expansion maturity opportunities I to we of capital gave specifics, so for getting to the gave kind And It extension best are this flexibility think to cost deal us that competitive important gave ultimately pursue very said wanted, ours. a and those growth the and like into strategic was that also us options we us. of and without us the continue of kind all weighed company it

to and ultimately pleased in think bring need in perspective, the very and this this and deal with view overall reached we're that that and again table So about ensure to leverage has the with to liquidity on don't off are the But past, this we construct the my forward. talked focus respect on down, the time. our The the We will associated there. With running the leverage right, changed. we've off I is the allow an important do table. to business the that that question are over and us step move liquidity questions was we'll pressures

down. debt So will come over time,

increasing leverage. overall by the improve as but forward. go That happen one, reducing twofold: we will EBITDA debt, overall also levels will We

Operator

line your comes from And the with last Abe of question Bank Landa of America.

Abraham Landa

can transaction. flow on within your ton underlying assumptions? EBITDA cash I'm [ and ] the X-K, guidance. provide you some congratulations wondering and noticed cash COGS price the some maybe you I Also debt volume if levered provided of free per

Timothy Flanagan

I and Abe, Yes. Thanks, that. appreciate

short-term the that and direction talked it I heading. But some where the of our on outlook facility transactions existing So process lenders. of and like we will that short-term customary Steel, World well to some forward-looking underwriting credit X-year is to more with this, really look some certainly, cost some and as support provide indications as both run. views of the the our say outlook as the underpinned did I just remain revolving we our and bondholders business views term is in kind it historically we've this think if today, think perspective engagement of you from our doesn't market short more in going guidance to in upfront, and customary provide will broadly, customers, change on data done our the outlook short really what say terms near-term we're on the exists maybe guidance with around we've the of points outlook around to how

broad assets look to demand from the by out of where that look benefits operating head as well, that our assumption that business we of both get we a the existing As that the you that the EAF XXX,XXX further, assuming business. I if all of footprint industry, we EV and on at is want the coke in as expansion of not is there. outlook our longer-term electrode the outlook. any we really in assets It's in kind underpinned of with for capacity, look out of needle the the the tons of growth associated and base sort will add growth

a demand coke pricing So well more a that in talked think a support And key needle on on about a to there's as the of and business. longer the strong historical the view side. base growth and be to as really then that's term, We return both for past. this combination needle but lot pricing raw electrode averages, as material, importantly, industry will we've coke

underwrite of about. as kind the into averages that well talked longer-term we've as around expectations those our our future costs views So

and So of as in costs neighborhood $X,XXX we'll go the this that of cost 'XX, the to costs drive forward. down for expect and leverage down get year to in continue fixed come benefit we

that, and around -- those that the of that into I you gives of color don't want little thinking beyond So changes. kind get views items. hopefully, movements to on specifics type bit outlook a year-over-year But of of or

Abraham Landa

Yes, new debt maybe on that better more does It nice some subsidiary additional provide describe [Technical a framework. guarantors one there? Maybe transaction. you like Can Difficulty] what's the seems there's

Rory O'Donnell

Yes.

the So package. part in we've majority included the the package are foreign assets as There collateral of the in that of are collateral our some locations excluded.

-- entities assets jurisdictions in foreign that some package. legal have the package. nonoperating pretty significant included the to collateral increase it's a in in continue included aren't subject But We collateral we've the to

included I think we this assets can say safely are that all of at the operating time.

Abraham Landa

talk tariffs, impact maybe North number given on just Can tariffs the tariffs. also America, proposed only industry I Trump China general? that you and elections, steel know how potential announced I impact coming other of from have in about has future just potential globally the of lastly, a in maybe countries would And the know but not

Timothy Flanagan

very I a they 'XX, bit that and that than a China quickly And globally, certainly, forces on did business. the Yes. exports is and the where more Again, market. And to our happen in U.S. 'XX, very think flood don't take otherwise headquartered erodes decimates impact U.S. important steel to the of we going I'm around of not steel. repeat many the the helps out. and yes, I 'XX of I a administration what I administration, yes, I position is And to sure speculate maybe to have is steel, an geopolitical otherwise U.S., just that want industry. healthy we're and seeing but exports, was how go let on the plays right? would market think a it's an world back our mean, pro-domestic us. more customers domestic customers low-priced broadly support say you're last And continues pro operations one in the and world

the So are main Americas and to from continue protections Europe, benefit place given side. X trade in the fact our the electrode that that regions are we'll on the

have and to other kind world side, will those support regions We expect which markets. more areas markets domestic tariffs both steel those those to But electrode the Chinese continue the the to challenged broadly to on steel be place continue for that exports, in and leaves of broadly. of exposed business

the run. we targeting, steel XX% EAF million their that scrap collection that side electrode and and on XX So stated they furnaces chains that's runs only they're the establish tons I of that why similar production, of grows industry back the again, part, extra at vehicles, domestic as it but an their to where importantly not supply on in is the a blast more some annual whether to continue which, steel that or utilization supply rate go form their to needing China think reform comes rationalizing is, to both their

utilization, that you rate long get of a north industry the go way of XX%, blended XX% to to on otherwise So would broadly. supporting back more kind

Operator

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

Timothy Flanagan

today Thanks, look forward support next call. with We Ludy. ongoing GrafTech. your of appreciate you to and everyone's I time speaking

Operator

you And for attending. you. our this now Thank presentation. Thank all concludes

You may now disconnect.

GrafTech International (EAF) 12 Nov 242024 Q3 Earnings call transcript