NYSE:EAF GrafTech International Q1 2025 Earnings Report $0.60 +0.01 (+1.58%) Closing price 03:59 PM EasternExtended Trading$0.60 +0.00 (+0.27%) As of 04:09 PM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. Earnings HistoryForecast GrafTech International EPS ResultsActual EPS-$0.13Consensus EPS -$0.15Beat/MissBeat by +$0.02One Year Ago EPS-$0.10GrafTech International Revenue ResultsActual Revenue$111.84 millionExpected Revenue$122.33 millionBeat/MissMissed by -$10.49 millionYoY Revenue GrowthN/AGrafTech International Announcement DetailsQuarterQ1 2025Date4/25/2025TimeBefore Market OpensConference Call DateFriday, April 25, 2025Conference Call Time10:00AM ETConference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckPress Release (8-K)Quarterly Report (10-Q)Earnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by GrafTech International Q1 2025 Earnings Call TranscriptProvided by QuartrApril 25, 2025 ShareLink copied to clipboard.There are 10 speakers on the call. Operator00:00:00Good morning, ladies and gentlemen, and welcome to GrafTech First Quarter twenty twenty five Earnings Conference Call and Webcast. At this time, all lines are in a listen only mode. Following the presentation, we will conduct a question and answer session. I would now like to turn the conference over to Mike Dillon. Please go ahead. Speaker 100:00:32Thank you, Jenny. Good morning, and welcome to Graphic International's first quarter twenty twenty five earnings call. On with me today are Tim Flanagan, Chief Executive Officer Jeremy Halford, Chief Operating Officer and Roy O'Donnell, Chief Financial Officer. Tim will begin with opening comments. Jeremy will then discuss safety, the commercial environment, sales and operational matters. Speaker 100:00:56Rory will review our quarterly results and other financial details, and Tim will close with additional comments on our outlook. We will then open the call to questions. Turning to our next slide. As a reminder, some of the matters discussed on this call may include forward looking statements regarding, among other things, performance, trends and strategies. These statements are based on current expectations and are subject to risks and uncertainties. Speaker 100:01:21Factors that could cause actual results to differ materially from those indicated by forward looking statements are shown here. We will also discuss certain non GAAP financial measures, and these slides include the relevant non GAAP reconciliations. You can find these slides in the Investor Relations section of our website at www.graftech.com. A replay of the call will also be available on our website. I'll now turn the call over to Tim. Speaker 200:01:46Good morning, and thank you for joining GrafTech's first quarter earnings call. During the call this morning, we'll provide an overview of our first quarter performance, share key operational and commercial updates, and discuss our outlook for the rest of 2025 and beyond. But I'd like to begin with an update on the proactive steps that we've been taking in response to the current industry conditions and increased macro uncertainty. Just over a year ago, we began outlining a series of strategic initiatives. Our objective was to increase sales volume, regain market share, right size our capacity, reduce our costs, decrease working capital levels, improve our liquidity, and strengthen our financial foundation, all the while maintaining flexibility to generate strong returns when the market recovers. Speaker 200:02:36I'm pleased to report that we continue to deliver on all fronts. While the near term market conditions remain challenging, we have made enormous strides in our strategic initiatives, and we're excited about the opportunities that lie ahead. Let me expand on this by noting a few recent highlights. We are leveraging our customer value proposition and capitalizing on our commercial momentum to drive further volume and market share growth. We grew sales volume by 2% year over year in the first quarter. Speaker 200:03:06More importantly, we remain on track to increase our sales volume by a low double digit percentage on a full year basis for 2025 compared to last year. This will result in cumulative sales volume growth of approximately 25% since 2023. This is impressive growth in any market, but is particularly the case as demand for graphite electrodes has been relatively flat for the past two years. However, weak demand and excess capacity have led to challenging pricing dynamics which persist in nearly all of our regions. Simply put, the current level of graphite electrode pricing remains unsustainable. Speaker 200:03:44As we've consistently noted, a reliable supply of high quality graphite electrodes is indispensable to EAF steel production. Therefore, a healthy and growing steel industry requires a healthy graphite electrode industry. Recognizing these challenges, we have taken and will continue to take significant actions to improve our overall financial performance. These include ongoing actions to shift the geographical mix of our business to regions where there's opportunity to capture higher selling prices, and sometimes this means walking away from certain volume opportunities where margins are unacceptably low and customers do not recognize our value proposition. A key goal is to grow our volume and market share in The United States, which remains the highest priced region in the industry, and we're doing just that. Speaker 200:04:34In the first quarter, we increased our sales volume in The United States by nearly 25% year over year, which also represents a step change in our U. S. Share, and we're not done. On a full year basis for 2025, we expect to outpace first quarter growth rate as we continue to increase our market share in this key region. While shifting the geographic mix of our business is important to optimize our order book, ultimately, the absolute level of pricing needs to increase. Speaker 200:05:03Earlier this year, we informed our customers of our intention to increase our prices by 15% on uncommitted volumes for 2025. This increase is the first step necessary on a path to restoring pricing and therefore profitability levels that will support our ability to invest in our business. As we head into customer negotiations related to volume for the back half of 2025, we look forward to discussing the incremental value we provide that supports a higher price point. This value proposition includes an extended portfolio of high quality products, further enhancements to our world class technical services and support, and providing our customers with reliable supply through our integrated and flexible production footprint. This is increasingly important given the current uncertainty around global trade. Speaker 200:05:55All of these and other elements of our value proposition support our customers' ability to produce high quality steel without disruption to their operations or performance. Ultimately, our commercial approach reflects a customer first mentality that permeates our organization. We are unwavering in our commitment to serve our customers and be the most trusted and value added supplier of high quality graphite electrodes. Allow me to pivot to cost and operational excellence. Our team has done an incredible job of dramatically improving our cost structure. Speaker 200:06:27In early twenty twenty four, we laid out a plan to aggressively reduce all of the elements of our cost structure from fixed fixed and variable operating expenses to corporate overhead costs. The results have been significant. In 2024, we delivered 23% year over year reduction in our cash COGS per metric ton. For 2025, we remain on track to achieve our guidance of an incremental mid single digit percentage year over year decline in cash COGS per metric ton. Importantly, all of this is being accomplished without compromising our product quality and reliability nor our commitment to the environment or to safety. Speaker 200:07:06In fact, based on our year to date performance, we are on track for a third consecutive year of lowering our total recordable incident rate. These results are a testament of the hard work and attention to detail of our more than 1,000 global employees. Let me now expand on a topic that has been top of mind for many companies, including Graphtec global trade policymaking and the impact of tariffs on our business. As this remains a fluid situation, our focus has been on continuously assessing a range of tariff outcomes and taking proactive measures to mitigate potential impacts. To illustrate this point, let me describe how we're approaching the situation regarding U. Speaker 200:07:45S. Tariffs. We're proud of our ability to serve our customers across a variety of markets through our world class graphite electrode manufacturing facilities located in Mexico, France and Spain. In addition, we continue to have supplemental electrode and pin machining and shipping capabilities at our idle production facility in St. Marys, Pennsylvania. Speaker 200:08:07All of these facilities are enabled by our needle coke production facility located in Texas. Our integrated and global production network provides flexibility around where we manufacture our products and how we deliver them to the end markets in an efficient manner. In addition, we maintain inventories in various geographies around the world. Given the higher level of uncertainty related to The U. S. Speaker 200:08:31Tariffs and potential retaliatory tariffs, we staged additional inventory in St. Mary's in anticipation of these announcements. This provides us with further flexibility in the near term. But more importantly, the materials coming from our facility in Mexico to The U. S. Speaker 200:08:47Are USMCA compliant and therefore are not subject to current tariffs. Further, to the extent that the current tariffs against the EU remain in place or are increased, these tariffs would be reduced by the amount of content in the goods that originated in The US. Therefore, for our electrodes produced in our European facilities, the value of the needle coke produced in The US and the value added activities conducted in The US will significantly reduce the impact of tariffs. As such, we believe we're well positioned to minimize the potential impact imposed by the evolving trade policies and estimate that this will have less than a 1% impact on our full year cash COGS per metric ton. In addition to considering the direct impacts on our product flows, we also continue to assess how various tariff scenarios might impact steel industry trends and the commercial environment for graphite electrics. Speaker 200:09:40For example, expanded Section two thirty two tariffs have been implemented on steel and aluminum imports into The U. S. Without exemptions. Our view is that such tariffs on steel and aluminum will have greater staying power than other tariff programs that have been implemented recently. To the extent that higher Section two thirty two tariffs result in increased steel production in The U. Speaker 200:10:02S, we view this as an opportunity. Approximately 70% of the steel produced in The U. S. Is manufactured via electric arc furnaces, which require a reliable supply of high quality graphite electrodes. Given our market presence in The US, combined with newly introduced as well as increased tariffs that will impact certain foreign graphite electrode competitors, we're well positioned to compete for incremental demand from our U. Speaker 200:10:28S. Customers. Overall, we will continuously assess the trade policymaking environment and adjust our responses accordingly in order to minimize any potential impact and to capitalize on these potential opportunities. As always, our focus will remain on meeting the needs of our customers, and we're well positioned to do so. To briefly summarize my opening comments, we've laid out a plan to manage through the near term industry headwinds, and we're executing. Speaker 200:10:55All of our achievement reflects our absolute focus on managing the things within our control to preserve our flexibility to capitalize on the future recovery of the market. To that end, I'd like to express my appreciation for the remarkable efforts of our entire team across the globe. With that, let me turn it over to Jeremy to provide more color on our operational and commercial performance. Speaker 300:11:17Thank you, Tim, and good morning, everyone. I'll begin with an update on safety, which is a core value at GrafTech. We're pleased that our recordable incident rate improved further in the first quarter. Maintaining this positive trend will continue to be a point of emphasis with our teams as we proceed through the year. When it comes to safety, we remain among the top performers in the broader manufacturing industry, but we will not be satisfied until we achieve our ultimate goal of zero injuries. Speaker 300:11:47Let me now turn to the next slide to discuss the commercial environment. On a global basis, steel production outside of China was approximately two zero nine million tons in the first quarter of twenty twenty five, which was modestly below the first quarter of last year. The global utilization rate for the first quarter also declined year over year, but was in line with the fourth quarter of twenty twenty four. Looking at some of our key commercial regions using data published by the World Steel Association earlier this week. For North America, steel production was flat in the first quarter compared to the prior year. Speaker 300:12:28Specific to The U. S, World Steel reported a 1% reduction for the quarter, reflecting a modest decline in what has been an otherwise relatively stable steel region. In The EU, steel output decreased 3% year to date and remains well below historical levels of steel production and utilization for that region. With that background, let's turn to the next slide for more details on our results. Our production volume in the first quarter was 28,000 tons. Speaker 300:13:00This resulted in a capacity utilization rate of 63%, representing a more than 500 basis point increase from the prior year. For the quarter, production exceeded sales volume. This inventory build was planned and is a result of one of our cost savings initiatives, which is to level load our production for the year. On a full year basis, our focus remains on balancing production volume with our expectations regarding sales volume. As it relates to sales volume, in the first quarter, we sold 25,000 metric tons. Speaker 300:13:36This was a 2% year over year increase and was in line with our expectations for the quarter. Of particular note was our success in actively shifting a significant portion of our volume to The U. S. As we have discussed. In fact, we grew sales volume in this region by nearly 25% in the first quarter versus last year, which we are particularly pleased with given the 1% decline in steel production in this region that I mentioned earlier. Speaker 300:14:06Our average selling price for the first quarter was $4,100 per metric ton, which represented a 20% year over year decline. This decline was largely driven by the substantial completion in 2024 of the higher priced LTAs that we have spoken to previously. Additionally, the lower average selling price in the first quarter also reflected the persistent challenges with industry wide pricing. Our focus remains on mitigating these impacts in the near term, including the previously mentioned geographic mix shift toward The US. Similar to all regions, average pricing in The US is below year ago levels, but it remains the strongest region for graphite electrode pricing globally. Speaker 300:14:50In fact, we estimate that the increase in our US volume for the first quarter boosted our average selling price by nearly 100 per metric ton. But coming back to my earlier point regarding the completion of the LTAs, when sequentially comparing our weighted average price for the first quarter to the more comparable non LTA price we reported for the fourth quarter, we're excited to have achieved a price increase of approximately 5%. As part of our initiative to actively shift the mix of our business, Western Europe is also a focus area. To that end, for the first quarter, we increased our sales volume in Western Europe by more than 40% year over year. As pricing remains soft in this market, this will not translate into immediate support for our average selling price. Speaker 300:15:41However, this is an important strategic market for the long term, given tariff protections and growth expectations that Tim will speak to in a moment. Increasing our share in the EU will position us well for recovery in this region. Given the muted demand environment, our success in growing sales volume in the key US and EU regions reflects our customer engagement strategy aimed at increasing our market share. It also reflects our compelling value proposition. As we have noted, this includes unmatched technical capabilities related to our architect furnace productivity system, which is further supported by our world class customer technical services team, ongoing investments in our research and development capabilities, further expanding GrafTech's leading position in graphite electrode and petroleum needle coke technology a growing product portfolio, most notably with the recent introduction of our new 800 millimeter product and our unique position of being vertically integrated into needle coke, providing surety of supply for our key raw material. Speaker 300:16:51Ultimately, we remain committed to strengthening our customer relationships for the long term to achieve mutual success for years to come. Let me now turn it over to Rory to cover the rest of our financial details. Speaker 400:17:04Thank you, Jeremy, and good morning, everyone. For the first quarter, we had a net loss of $39,000,000 or $0.15 per share. Adjusted EBITDA was negative $4,000,000 in the quarter compared to adjusted EBITDA being flat in the first quarter of twenty twenty four. The decline reflected lower average selling prices, partially offset by a 21% year over year reduction in cash costs on a per metric ton basis. Let me expand on the cost favorability, which included a couple of timing related accounting items that had an outsized benefit in the first quarter. Speaker 400:17:41First, inventory written down in prior periods due to lower of cost or market inventory valuation adjustments had a $7,000,000 favorable impact on COGS year over year for the first quarter of twenty twenty five. Second, the first quarter of last year included the accelerated recognition of $10,000,000 of fixed manufacturing costs related to low production levels that did not recur in the first quarter of twenty twenty five. Combined, these two factors accounted for approximately two thirds of the year over year decline in our cash cost per ton for the first quarter. The remaining decline reflected the impressive ongoing efforts of our teams in identifying and executing against cost reduction opportunities across various components of our variable and fixed costs. In addition, our cost structure continues to benefit from improved fixed cost leverage, reflecting the increase in volume. Speaker 400:18:43All in, this resulted in cash COGS per metric ton of approximately $3,650 for the first quarter of twenty twenty five. As we have noted previously, we will have periodic quarter to quarter fluctuations in our cash cost recognition as a result of timing impacts. However, the key point is that our cost structure continues to trend in the right direction. On a full year basis, we remain on track to achieve our projected mid single digit percent year over year decline in our cash COGS per metric ton for 2025. This would translate into cash COGS per metric ton of approximately $4,100 for the full year. Speaker 400:19:29Our ongoing ability to reduce costs while continuously enhancing our customer service, our product quality, and our performance remains an impressive accomplishment. Turning to cash flow. For the first quarter, cash used in operating activities was $32,000,000 Adjusted free cash flow was negative $40,000,000 compared to adjusted free cash flow of negative $11,000,000 in the first quarter of twenty twenty four. The change primarily reflected timing related items in working capital, including the planned inventory build in the first quarter that Jeremy discussed. For the full year, we continue to expect that working capital will be favorable to our cash flow performance in 2025. Speaker 400:20:18These working capital benefits will be realized through a combination of production cost improvements and inventory management, while maintaining adequate safety stock of pins and electrodes. Overall, our use of cash in the first quarter was in line with our expectations. For the full year, we remain on track with the cash flow projections that underpinned our thesis for our recent capital transactions. Turning to the next slide and expanding on this point. We ended the first quarter with total liquidity of $421,000,000 consisting of $214,000,000 of cash, dollars 107,000,000 of availability under our revolving credit facility, and $100,000,000 of availability under our delayed draw term loan, which is available to be drawn until July of twenty twenty six. Speaker 400:21:12As it relates to our $225,000,000 revolving credit facility, which matures in November of twenty twenty eight, we had no borrowings outstanding as of the end of the quarter. However, based on a springing financial covenant that considers our recent financial performance, borrowing availability under the revolver remains limited to approximately $115,000,000 less currently outstanding letters of credit, which approximated $8,000,000 as of the end of the quarter. Overall, our strong liquidity position, along with the absence of substantial debt maturities until December of twenty twenty nine, will support our ability to manage through near term industry wide challenges, which is, once again, consistent with our refinancing thesis. Let me turn the call back to Tim for some final comments on our outlook. Speaker 200:22:05Thanks, Rory. In summary, we've built a plan and we're delivering against it. As a result, we're growing our volume and market share, particularly with key customers in The US and The EU. We're reducing our cost structure, and we're effectively managing our working capital levels and cash position. All of this reflects on our focus on controlling the controllable during a challenging time for our industry, while putting GrafTech in a strong position for future growth as the market recovers. Speaker 200:22:33To this last point, while much of our commentary today is focused on The US market, let me expand a bit on The EU. As Jeremy noted, steel production in The EU remains below historical levels. However, we're beginning to see initial signs that point towards potential recovery in the near to medium term. These include the EU Commission's recent announcements related to their Steel Action Plan, which demonstrate the Commission is taking steps to create policy backdrop that is more supportive for their domestic steel industry. In addition, Germany's recently announced infrastructure investment plan, as well as EU wide initiatives to increase defense spending should significantly boost steel demand in Europe in the coming years. Speaker 200:23:15And last but certainly not least, the potential end to the war in Ukraine should lead to increased steel demand needed for reconstruction while boosting market confidence across the continent. As it relates to these demand drivers, the impact could be meaningful. In fact, one analyst projected that these combined factors could lead to a low double digit percentage increase in annual steel demand within The EU in the coming years as compared to the current level of steel consumption. Further, with graphite electrode inventories remaining at low levels in Europe, an increase in European steel production should lead to an outsized increase in graphite electrode demand. This is an important strategic market for GrafTech for the long term, and our current commercial momentum in The EU that Jeremy spoke to positions us well for recovery in this region. Speaker 200:24:02More broadly speaking, as it relates to both the EU and beyond, we believe that decarbonization efforts will continue to reshape steelmaking in the years ahead. We're confident that the electric arc furnace will continue to increase their share of total steel production over time, which will drive higher demand for graphite electrodes. And with demand for petroleum needle coke, our key raw material also expected to rise, our vertical integration puts us in an advantaged position. To this last point, the growth of needle coke market is expected primarily to occur to support the building of a western supply chain for electric vehicles and energy storage applications, and we share the market's confidence that this growth will be significant. The establishment of those western supply chains, from a raw material manufacturing through to the OEMs, remains in its early stages. Speaker 200:24:52However, we believe that the uncertainty caused by tariffs and the potential for international trade disruptions highlights the need for the West to continue to reduce reliance on other countries for continued critical minerals, such as graphite, and to accelerate development of a domestic supply with the support of policymaking. While we're closely monitoring these developments, we have also continued to build out our technical capabilities and demonstrate those to the key market participants. Thanks to these efforts and our deep expertise in needle coke and synthetic graphite, we are confident we are well positioned to be a valuable strategic partner in this space. In closing, this is an exciting time for GrafTech. We've set out a plan to manage the current market dynamics, and we're successfully executing against it. Speaker 200:25:37As a result, GrafTech is in a strong position to benefit from long term favorable trends that will shape the future of our industry. For these reasons, we're confident in GrafTech generating long term value for our customers, our employees, our shareholders, our communities, and all of our constituents. This concludes our prepared remarks. We'll now open up the call for questions. Operator00:26:00Thank you. Ladies and gentlemen, we will now begin the question and answer session. Your first question is from Bennett Moore from JPMorgan. Your line is now open. Speaker 500:26:35Good morning, Tim and team, thank you for taking my questions. Good morning. The past, you've talked about The U. S. Market having the highest pricing but also facing the most downward pressure. Speaker 500:26:47I guess I'm wondering with India material now facing at least 10% tariffs, has that changed the pace of declines at all? Speaker 200:26:57Yeah, so maybe as a little bit of a backdrop, so historically we have not seen any sort of trade protection around The US market from imports coming out of India. We have seen it from the Chinese, and certainly I think over the last two years we've seen an influx of material coming from India into The US market, albeit a relatively small share still compared to some of the tier one suppliers, but that percentage certainly has increased. Now I would suspect that as we look out into the future, to the extent that those tariffs remain in place, whether they're at the 10% or the announced 26% level, that that'll dramatically impact the availability of this market to the Indian competitors, just given the incremental cost as well as the freight disadvantage, and I think that's where we look to capitalize the most in terms of our proximity to The US, and the service that we provide to our customers here. You know, ultimately that is something that could be a bit of a landscape changer for us in The US market. Speaker 500:28:08Thanks for that. And then real quick, you've mentioned you've gained share in The US, which is great to see. I'm wondering how much more room you think there is to go, Or I guess said another way, you know, where does your share stand now relative to Monterey temporarily coming offline back in 2022? Speaker 200:28:26Yeah, so I would say that we're while we won't give specific numbers, we're ahead of where we were previously, and certainly we're very pleased with the effort that the commercial team has made that resulted in the 25 increase in volume in Q1, and as we stated in our comments, we expect to continue to grow that share throughout the year. I think the, you know, we're not limiting ourselves to a specific percentage. I think I said that on the year end call as well. We'll continue to, partner with our customers in The US. I think in The US in particular, our value proposition with Architect, CTS, the new product offering, the demands of The US market from a furnace performance perspective, really align well to what we're doing at GrafTech from a technical quality basis. Speaker 200:29:15So feel very good about where we're at in The US and North America more broadly, and think there's still room for us to grow in that market. And that's not even including the benefits of a growing 800 millimeter market in The US. I think we've commented in the past that we did trials last year. We're completing some additional trials here successfully in 2025, which gives us access to even a broader market of US customers, as well as just overall demand growth, whether it be from tariffs or just organic growth for, you know, growth in The US market from steel consumption. So feel very good and think we have a lot of potential here in The US. Speaker 500:29:54Thanks for that, Tim. Best of luck. Speaker 600:29:56Thank you. Operator00:30:01Thank you. Your next question is from Alex Hacking from Citi. Your line is now open. Speaker 600:30:09Yes. Thanks. Good morning. I guess a couple of things. I'm not sure if you're willing to, but could you quantify what percentage of sales are now coming from US and Western Europe? Speaker 600:30:21Is that north of 50% now for you guys? Closer to 75%? Just trying to get some sense of the big market share gains that you've seen in the first quarter. Thank you. Speaker 200:30:34Yeah, sure. I mean, we'll disclose as we do on an annual basis. But certainly now, if you look at Europe and The US, from a volume and revenue perspective, we're well over 50% in both of those markets combined. Collectively, right. Speaker 600:30:51Okay. And then in terms of your supply to The US, I assume the vast majority is coming from Monterrey, but I guess what's the balance there of supply in The US from Monterrey versus Europe? Speaker 200:31:09Yeah, so if you think about, kind of our commentary on all our calls, we really look at all three plants as an integrated system, and certain plants have certain capabilities, and I know we've talked on past calls that we continue to produce pin stock out of Monterey. So as a result, Monterey is supplying pins for our global production network. So I would say a substantial portion of the the material for The US market is coming out of Monterey, but we do bring material in from Europe, to to service US customers as well and and meet the needs of of this market, and we'll continue to do so, Right? And and think, you know, as we talk about tariffs and what we laid out, you know, we've got a pretty good action plan as to how we mitigate that. Speaker 600:31:54Okay. Thanks. So then when you said that there would be less than 1% impact on COGS from all of this, That's of whatever tariff you're paying on the non US material from your Speaker 200:32:07That's right. From your US Yeah. When think about the Speaker 700:32:10Okay. Speaker 200:32:11Yeah. So when you think about the material coming out of the USMCA compliance, so Mexico to The US, as well as the material coming from Europe, you know, we're bringing in semi finished goods from Europe that ultimately are finished in The US, so there's a value add to that, as well as, you know, the needle coke is all coming out of Seadrift, so with the structure of the tariff regime as it is today, that mitigates a substantial portion of the impact of those tariffs. Speaker 600:32:39Ah, so you're, this value add happening at St. Mary's, that makes sense. And then, sorry, one final one, if I may. Any commentary around, like, how successful that you've been with the 15% price hike on the noncontract customers? Is that something that the market seems to be accepting, given that your peers were also looking to push prices up? Speaker 200:33:04Yeah. I mean, it'll maybe I'll take an opportunity to provide a little bit of a broader comment here. I mean, we've consistently been saying we're in a tough part of the cycle, right? Demand is weak. You know, I think pricing I would still describe as unsustainably low across the market. Speaker 200:33:25Capacity utilization rates in the industry, are again unsustainably low, it drives up costs, this is a high fixed leverage business, and I think, you know, if you look at at least most of the western participants or or you know, the tier one competitors are operating at a loss. So really it's a, it's an unsustainable market if we stay in these pricing levels. We've taken a lot of action, first and foremost around our costs, our balance sheet, our capacity with the idling of St. Mary's and some other capacity around our network, and still invest in R and D, products and technical services, and we did all of that before we announced the price increase because it was important for us to show our customers, who we view as partners, that we're taking steps in the same action to improve the overall health of this industry, and we led with that. Back in Q1, we did announce the 25, or sorry, the 15% increase on sales that weren't yet committed, and we'll get into those discussions for second half volumes here, in the coming months. Speaker 200:34:30But I would say, you know, a number of our customers, many of our customers certainly understand where we're coming from. They under, they appreciate where we're coming from. They acknowledge that, you know, we are indispensable to their business and that they need us to be healthy and the market to be healthy for them to be successful, long term. And also that we're a relatively small piece of their overall cost structure, but we're as important as every ton of scrap they put in their mill, or every kilowatt of power that they pump into their furnaces. So, they get it, they understand it, but that's not to say that we won't have customers that push back, or customers that it's a bit of a challenge, not all markets are equal at this point in time. Speaker 200:35:09So I'm still optimistic that we'll be able to drive pricing in the back half of the year, but we think we've done the work necessary to set up the groundwork and set the landscape so that we can, have these constructive conversations going forward with our customers. Speaker 600:35:28Okay, thanks Tim and team, appreciate all the color. Best of luck, thank you. Speaker 400:35:31Thanks Alex. Operator00:35:38Thank you. Your next question is from Aaron Viswanathan from RBC Capital Markets. Your line is now open. Speaker 800:35:47Great. Good morning. Thanks for taking my questions. I hope you guys are well. Speaker 200:35:50Yes, Speaker 800:35:53I guess maybe first question would just be a quick update on the progress that you guys have achieved on some of the share recovery. Is there any way we can you can kind of frame that opportunity as far as maybe tonnage or volumes and what you expect kind of over the next year or so? Speaker 200:36:16Yeah, I think I think probably the important metrics or data points to keep in mind, you know, we're reiterating our belief that we'll have low double digit growth in volume year over year. So we continue to have good visibility into our order book and think that we have a strong path forward to continue to increase sales, broadly. We've also, you know, grown, our sales volume in North America, or US in particular, but North America as well, and Europe as well. You know, we always talk about our two most strategic markets and and the two markets that historically have been, the best end markets for our products that also very much mirror our operating footprint, have been North America and Europe, and I think the the team has done job of of growing sales in both of those regions, and and we'll continue to see that mix. You know, I think we'll we'll be much heavier weighted, into The Americas. Speaker 200:37:20If you think about our historic sales mix between The Americas versus Europe and The Middle East versus Asia Pacific, you know, we've pretty much been 45, 40 five and 10. I think you can expect us to be, much more heavy heavy weighted to The Americas, north of 50%. And, you know, Europe and The Middle East will hold drop a few points, but we'll also see a decline in Asia Pacific, again, just given the competitive nature of that market, on an export basis. Speaker 800:37:52Okay, thanks for that. And then it sounded like, you know, obviously, the long term outlook for graphite electrodes is still positive, driven by the long term outlook for EAF steel production. But over the near term, I guess, where do you see kind of steel utilization rates going over the next, say, to twelve months? Speaker 600:38:16I know there's a lot Speaker 800:38:16of uncertainty out there, but I guess you know and what are some of the drivers there? Would you say you know you're kind of feeling a little bit cautious just given kind of uncertainty on global industrial production and fuel utilization, or would you say that you're feeling a little bit more optimistic just given that you've gone through quite a bit of destocking and declines over the last few years already? Speaker 200:38:47Yeah, I think broadly speaking, right, everybody, every business, regardless of the industry that you're in right now, has to have an eye or an ear to the ground, if you will, to understand, you know, where the markets are going. I think you see a lot of, differing views on, how the tariff and the policy making is going to play out, and and, you know, I I think, you know, it's it's probably changed since we started this call. So, I think we have to continue to remain diligent and continue to understand. I think we have put together a good, you know, cross functional team organizationally to assess kind of all the potential ramifications. I think where they stand today, there certainly are opportunities for us both in The US and Europe, that, you know, we'll look to capitalize on. Speaker 200:39:34But I think we're going to hear as we go through this earnings season, everybody's going to express some level of cautiousness or uncertainty. And and I think we've heard that commentary already out of certain steelmakers that, you know, their optimistic order books are strong, but they're also, you know, foreshadowing at least a little bit of uncertainty as to what end customer demand is going to be. Right now, we feel good with who our customers are and what we're hearing from them in terms of our demand, and that gave us the confidence to reiterate, our sales volume guidance for the year. And we do think there will be opportunities that come out of any sort of disruption, and that disruption could become from incremental demand or demand that materializes from the displacement of participants in the market. So I think there's a number of ways we can benefit, and I think we're well positioned to take advantage of that. Speaker 800:40:27Okay. And then another question I had was just on pricing. So appreciating your comments on it seems like there's been some convergence in the market between spot and and say maybe some other longer term contracts. But, know, how do we think about pricing going forward? I mean, we have got, you know, oil prices kind of lower, which may drive needle coke lower, EV demand also lower, which may drive needle coke lower, and that, you know, could ultimately result in lower graphite electrode pricing. Speaker 800:41:05We've got that uncertainty around demand, but then maybe there's some support from tariffs. I know if that's necessarily the case. So is there any kind of guidance you can provide for us on how you think pricing for both electrodes and needle coke would evolve from here? I guess we've been bouncing along the bottom maybe on needle coke for a little while and and so maybe there's some optimism that things could get better there. But again, I don't know if it's feedstock driven or anything else. Speaker 800:41:42But yeah, it's just so opaque for us. Any any guidance you can provide you know, some some fair assumptions on price would be helpful. Thanks. Speaker 200:41:53Yeah, mean, you know, as we always do, I'm not gonna get into particulars of of what we see next quarter and the quarter after looks like, we're always negotiating contracts, but I think on breaking it down between needle coke and electrodes, on the needle coke side, I think we've been in the same trading range for probably almost a year to eighteen months now, And I think you see some some firm support at this level. So any sort of incremental demand for needle coke or or any sort of disruption in the market, I would suspect we'll start to see, you know, better needle coke pricing as we go forward. And as we've talked about, you know, on numerous calls, there's a direct correlation between needle coke pricing and electrode pricing. So we do think there's still, you know, a lot of positive upside on that. But we will acknowledge, there's uncertainty in the EV market, there's uncertainty around how that continues to develop. Speaker 200:42:52But, you know, I think if anything comes out of this current trade, you know, I won't call it a trade war, but this trade discussion or trade negotiation is that, you know, the western governments are going to become less reliant on particular economies for critical minerals and supplies of essential items. So, so I do think we still have a very bullish outlook there. On the graphite electrode side, you know, I think, you know, throughout '24, you saw a decline in in spot pricing, and I I would say that's fair to say that across every region globally. Some held better than others, but you know, from q one to q four prices were down. If we look Q4 to Q1 on a regional basis, I would say we're pretty flat, so, while I won't necessarily say that that's a floor because you still have people that are maybe irrationally chasing volumes in certain regions or making decisions that we won't necessarily follow or make, you know, we do start to see some price stability where we're at right now, and that's part of why we're announcing a price increase, part of why we're trying to shift our mix to those regions, that all allow us to be positioned for, a broader market recovery. Speaker 200:44:06You know, we did see, from Q3, end of Q3, you know, through, I guess, end of Q1, an increase in Chinese electrode prices. You know, some of that was higher on the small diameter side, you know, call it five to 10 to 15% on the small diameter side, five to 10% on the large diameter, you know, albeit still low and depressed from where they were, you know, in in say 2022. That's a positive development because, again, that creates a little bit of a floor, for the marginal, volume that that's picked up by the Chinese exporters. So so I think there's some things that are starting to provide some price stability, and you know, I think we'll continue to focus on where we're selling, who we're selling to, emphasizing what we're selling, which isn't just an electrode that we drop at your gate and walk away till the next quarter and come back. The service we provide, the technology we provide, and we think all of those things will position us well. Speaker 800:45:06Great, thanks a lot. Speaker 200:45:10Thanks, Arun. Operator00:45:14Thank you. Our next question is from Kirk Lidkum from Imperial Capital. Your line is now open. Speaker 900:45:21Hello, Tim, Jeremy, Rory, Mike. Thank you for the call and the detail. With respect to the tariffs, could you remind us how how much of the The US how much of the graphite electrodes sold in The US are sourced from outside The US? And if you can break that down by country of origin, that'd be super helpful. Speaker 200:45:45Yeah, so we don't break down kind of plant by plant, you know, supply demand dynamics, but I'd say, you know, call it roughly half, give or take, of the production coming into The US is gonna come out of Monterey, and the balance is gonna come out of the two European facilities depending on the product. Speaker 900:46:06Right. No, I was I was, talking about the overall market. Like, I'm trying to think of, you know, how much of The US market will be subject to US tariffs, incremental US tariffs. So I'm just India. You know, you mentioned India was a Speaker 200:46:23Yep. Yeah. You know, if you look at the predominance of suppliers, right, you know, the largest shares are going to be held by GrafTech, the two Japanese competitors. They're both going to be subject to tariffs on material that, you know, that they don't produce domestically, they do produce some in Europe, some in, Southeast Asia, as well as, you know, their pin stock that comes out of Japan. And then you have the Indians who, you know, have a share of the market called mid teens, you know, percentage of the market, they would be subject and probably the biggest impact of, you know, the four biggest buckets of producers that sell into The US market. Speaker 900:47:08I missed the last part. So the the the India about mid teens, like, 15% of of of the graph graphite electrodes Speaker 200:47:18will need that come from India. Graphite electrodes. Speaker 900:47:21And then and then how much comes from Japan? Speaker 200:47:25So I would say the remaining 85% is split between us and the two Japanese, and I would put us on the high end of that. I wouldn't just divide 85 by three, I would put us on the high end of that. Speaker 900:47:40Okay, you have the lion's share of that. Okay, that's super helpful. And of that, of the graphite electrodes that are sourced from outside The US, to what extent can those graphite electrodes use US needle coke? In other words, reduce the tariffs by sourcing US needle coke? I know it's a tough question. Speaker 200:48:05Yeah, mean, to the same extent that, you know, if we think about the global needle coke market, four major players, p 66, us, and then two Japanese producers. Some of P66's production is in The US, some of it is in The UK. So to the extent that, you know, people are using P66 material out of The US, then they would be able to, you know, have the same benefit, you know, in terms of offsetting some of the tariff impact. Speaker 900:48:42Sounds like most of most of those electrodes that are coming in from outside are are using also using foreign sourced. Speaker 200:48:54Yeah. I I can't comment on what the actual splits are, but, you know, some are some are gonna have some US originated material and some aren't. Yeah. A % of what we produce has domestically produced needle coke. Speaker 900:49:09It sounds like these tariffs are gonna be could be a pretty significant positive for you? Speaker 200:49:17We very much think that it'll be an opportunity for us to continue to increase our presence in The US market for sure. Speaker 900:49:25Got it. And to what extent do you think that trade negotiations are going to lead to capacity reductions? Speaker 200:49:40I'm not sure how to speculate on that. What would say, is without an improvement in the overall economics of the graphite electrode market, people are gonna start to make decisions around capacity because, again, while we were at 63%, we increased our capacity utilization here in the first quarter from where we were last year, us running our business at 63% isn't where we wanna be. Others are facing the same or lower capacity utilizations, and so everybody has to make the same kind of capital allocation decisions as they move forward. So whether it's driven by tariffs, whether it's driven by dislocation of markets that people historically have served that can't serve any longer because of profitability or pricing in that region or whatever the driver is, I would expect that you'll continue to see discussion around capacity reductions as we continue to see and hear from others to balance out the market and try to not only, you know, push prices in regions, but also improve the overall profitability of the industry. Speaker 900:50:49Got it. That's super helpful. Last question. So you mentioned that it looks like the looks like pricing is improving in The US. Have you noticed any change in in the pricing outlook rest of world, particularly Europe since Speaker 700:51:07April 2? Speaker 200:51:10Yeah, it's probably too early to say what pricing looks like from April 2. I would go back to what I said previously. You know, I think pricing in all geographies declined year over year, I'm sorry, from Q one of last year to Q four. We're seeing stability from Q four to Q one. But The US market, the North American market, you know, still is a a, you know, a significantly higher priced market than the rest of the world. Speaker 200:51:41So the hundred dollar impact that Jeremy disclosed or discussed around, that's being driven by our shifting more volume into The US market and taking it out less profitable markets. Speaker 900:51:53Got it. Yes. You're you're benefiting from a shift in mix. Was just trying to think, you know, just apples and apples, how's the market look in Europe? You'd see that improving in Europe as well? Speaker 200:52:10Did you Again, stability, price, you know, like, you know, kind of like when, over the last couple of years, we've talked about inflation and the rate inflation is slowing versus, you know, not inflating. I think we're seeing price stability in Europe. I think the commentary we provided around Europe, whether it's the EU action plan, whether it's the incremental defense spending that is being announced by the respective governments, Germany's infrastructure bill, we're starting to see impetus in Europe to support their domestic steel and domestic industrial manufacturing. I think all of that will start to to promote and give greater support for electrode pricing, whether that manifests in q two or or or yet will be yet to be seen. But I think the backdrop and and and the opportunities are starting to present themselves. Speaker 900:53:03Got it. I appreciate. Thank you very much. Speaker 200:53:05Thank you. Operator00:53:11Thank you. Your next question is from Abe Lanta from Bank of America. Your line is now open. Speaker 700:53:19Morning. Thank you taking my questions. How are you? Your sales volume in the first quarter was up 2.5% and you also affirmed your sales volume guidance for upload double digits. Guess, how does that sales volume, I guess, accelerate going forward? Speaker 700:53:36And then maybe embedded there, just how much of that volume for your double digit guide is committed volume? And how much do you have to go out there and win? Speaker 200:53:46Yeah. So reaffirming our our 10%, or low double digit increase, year over year, I think, you know, q one is historically a, lower or a seasonal, time frame as as customers are managing, you know, q four inventory. So you you see a little bit of flux between what happens, at shipments at the end of the year. So there's always a little bit of inventory management that takes place. And, you know, just depending on the timing of when Q4 negotiations get wrapped, right, there's always a little bit of lag in terms of when you actually start delivering those volumes to those customers. Speaker 200:54:27So, you know, we think that, and the reason why we continue to produce on a level loaded basis in Q1 is because we will be at that run rate, you know, as we move forward, you know, throughout the year. So feel good about the volume prospects. I said before we have good visibility in the order book. I would probably put us somewhere in the neighborhood of 75% plus committed at this point in time. So again, we have good visibility and on track with where we'd otherwise expect to be. Speaker 700:55:00Oh, that that's very interesting. Good color on the 75%. And, maybe our kind of my understanding, think The US has like been pretty much fully committed for this year. I guess if we're kind of thinking about Europe, I guess how are discussions in Europe given just that you have two of your big competitors are reducing capacity by midyear. Think one even talked about cutting additional capacity. Speaker 700:55:25Maybe how are discussions going in Europe? Speaker 200:55:28Yeah, maybe let me go back. I'm not sure I would say that The US is fully committed at this point in time. I think we've described in the past that that typically that that annual buy that takes place in the back half of the the year is about 80% of the need. So we think there's always some opportunity for for spot volume, you know, based on on kind of normalized production levels. I do think there is potential for some upside, as we think about the impact and and where steel producers are running, in The US, and again, both on increased demand but also, you know, potential displacement of tons in the market. Speaker 200:56:04So, with respect to Europe, you know, I think you're right, you continue to hear discussions around capacity. I think Europe is still, well below historical levels from a steel demand perspective, but all of those factors that we've talked about a couple times in terms of, you know, demand for steel, in Europe, you know, those are going to start to manifest themselves in customer conversations. And, and we are hearing a, you know, I won't call it an overwhelming, but a marginally more positive tone from some of our European customers that are looking to lock in some volume and get ahead of, you know, some stronger production aspirations in the back half of the year. Speaker 700:56:55And then you kind of partially touched on this, but can you just maybe touch on this production volume disconnect and maybe tied to how your inventory went up? I think you're kind of had some additional inventory in The US. And I guess if we're kinda thinking about going forward, production and volume kinda be a little bit more even? Just maybe how to think about kinda the cadence of those That's it for me. Speaker 300:57:22Yeah, maybe just thinking about a couple of key facts here. The, you know, the first one is that our goal is to, minimize our production cost. And one of the ways that we can do that is by level loading our production so that at periods later in the year, we can avoid premium costs that we might otherwise be incurring. And so we made the decision that it was worth investing in a little bit of inventory right now in order to keep our costs lower as we head into the back half of the year. And so we have also said and we continue to be committed to that over the course of the year, our production will generally align with our sales rate. Speaker 300:58:07And so the inventory build that we took in the first quarter of the year was planned and it was what we expect to do and it's really just part of executing, our annual plans and that inventory, will come out of the system over the course of the year as, sales ramp in the back half. Speaker 700:58:31Thank you very much. Speaker 200:58:36Thanks. Operator00:58:39Thank you. This concludes our question and answer session. I will now hand the call back over to Mr. Flanagan for closing comments. Speaker 200:58:50Thank you, Jenny. I'd like to thank everyone on the call for your interest in GrafTech, and we look forward to speaking with you next quarter. Have a great day. Operator00:58:58Thank you. Ladies and gentlemen, the conference has now ended. Thank you all for joining. You may all disconnect your lines. Speaker 200:59:22Levels from a steel demand perspective, but all of those factors that we've talked about a couple times in terms of, you know, demand for steel in Europe, you know, those are gonna start to manifest themselves in customer conversations. And we are hearing a, you know, I won't call it an overwhelming, but a marginally more positive tone from some of our European customers that are looking to lock in some volume and get ahead of, you know, some some, you know, stronger production aspirations in the back half of the year. Speaker 701:00:01And then you kind of partially touched on this, but can you just maybe touch on this production volume disconnect and maybe tied to how your inventory went up? I think you're kind of had some additional inventory in The U. S. And I guess if we're kind of thinking about going forward, production and volume kind of be a little bit more even? Just maybe how to think about kind of the cadence of those two numbers. Speaker 701:00:26That's it for me. Speaker 301:00:28Yeah, maybe just thinking about a couple of key facts here. The first one is that our goal is to minimize our production costs. And one of the ways that we can do that is by level loading our production so that at periods later in the year, we can avoid premium costs that we might otherwise be incurring. And so we made the decision that it was worth investing in a little bit of inventory right now in order to keep our costs lower as we head into the back half of the year. And so we have also said and we continue to be committed to that over the course of the year, our production will generally align with our sales rate. Speaker 301:01:13And so, you know, and so the inventory build that we took in the first quarter of the year was planned and it was what we expected to do and it's really just part of executing, our annual plans and that inventory, will come out of the system over the course of the year as, sales ramp in the back half. Speaker 701:01:37Thank you very much. Speaker 501:01:42Thanks. Operator01:01:45Thank you. This concludes our question and answer session. I will now hand the call back over to Mr. Flanagan for closing comments. Speaker 201:01:56Thank you, Jenny. I'd like to thank everyone on the call for your interest in GrafTech, and we look forward to speaking with you next quarter. Have a great day. Operator01:02:04Thank you. Ladies and gentlemen, the conference has now ended. Thank you all for joining. You may all disconnect your lines.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallGrafTech International Q1 202500:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsSlide DeckPress Release(8-K)Quarterly report(10-Q) GrafTech International Earnings HeadlinesGrafTech reports Q1 EPS (15c), consensus (13c)April 26, 2025 | markets.businessinsider.comGrafTech sees FY25 CapEx $40MApril 26, 2025 | markets.businessinsider.comBlackrock’s Sending THIS Crypto Higher on PurposeWhile everyone's distracted by Bitcoin's moves, a stealth revolution is underway. One altcoin is quietly positioning itself to overthrow the entire banking system.May 2, 2025 | Crypto 101 Media (Ad)Q1 2025 GrafTech International Ltd Earnings CallApril 26, 2025 | finance.yahoo.comGrafTech International Ltd. 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There are 10 speakers on the call. Operator00:00:00Good morning, ladies and gentlemen, and welcome to GrafTech First Quarter twenty twenty five Earnings Conference Call and Webcast. At this time, all lines are in a listen only mode. Following the presentation, we will conduct a question and answer session. I would now like to turn the conference over to Mike Dillon. Please go ahead. Speaker 100:00:32Thank you, Jenny. Good morning, and welcome to Graphic International's first quarter twenty twenty five earnings call. On with me today are Tim Flanagan, Chief Executive Officer Jeremy Halford, Chief Operating Officer and Roy O'Donnell, Chief Financial Officer. Tim will begin with opening comments. Jeremy will then discuss safety, the commercial environment, sales and operational matters. Speaker 100:00:56Rory will review our quarterly results and other financial details, and Tim will close with additional comments on our outlook. We will then open the call to questions. Turning to our next slide. As a reminder, some of the matters discussed on this call may include forward looking statements regarding, among other things, performance, trends and strategies. These statements are based on current expectations and are subject to risks and uncertainties. Speaker 100:01:21Factors that could cause actual results to differ materially from those indicated by forward looking statements are shown here. We will also discuss certain non GAAP financial measures, and these slides include the relevant non GAAP reconciliations. You can find these slides in the Investor Relations section of our website at www.graftech.com. A replay of the call will also be available on our website. I'll now turn the call over to Tim. Speaker 200:01:46Good morning, and thank you for joining GrafTech's first quarter earnings call. During the call this morning, we'll provide an overview of our first quarter performance, share key operational and commercial updates, and discuss our outlook for the rest of 2025 and beyond. But I'd like to begin with an update on the proactive steps that we've been taking in response to the current industry conditions and increased macro uncertainty. Just over a year ago, we began outlining a series of strategic initiatives. Our objective was to increase sales volume, regain market share, right size our capacity, reduce our costs, decrease working capital levels, improve our liquidity, and strengthen our financial foundation, all the while maintaining flexibility to generate strong returns when the market recovers. Speaker 200:02:36I'm pleased to report that we continue to deliver on all fronts. While the near term market conditions remain challenging, we have made enormous strides in our strategic initiatives, and we're excited about the opportunities that lie ahead. Let me expand on this by noting a few recent highlights. We are leveraging our customer value proposition and capitalizing on our commercial momentum to drive further volume and market share growth. We grew sales volume by 2% year over year in the first quarter. Speaker 200:03:06More importantly, we remain on track to increase our sales volume by a low double digit percentage on a full year basis for 2025 compared to last year. This will result in cumulative sales volume growth of approximately 25% since 2023. This is impressive growth in any market, but is particularly the case as demand for graphite electrodes has been relatively flat for the past two years. However, weak demand and excess capacity have led to challenging pricing dynamics which persist in nearly all of our regions. Simply put, the current level of graphite electrode pricing remains unsustainable. Speaker 200:03:44As we've consistently noted, a reliable supply of high quality graphite electrodes is indispensable to EAF steel production. Therefore, a healthy and growing steel industry requires a healthy graphite electrode industry. Recognizing these challenges, we have taken and will continue to take significant actions to improve our overall financial performance. These include ongoing actions to shift the geographical mix of our business to regions where there's opportunity to capture higher selling prices, and sometimes this means walking away from certain volume opportunities where margins are unacceptably low and customers do not recognize our value proposition. A key goal is to grow our volume and market share in The United States, which remains the highest priced region in the industry, and we're doing just that. Speaker 200:04:34In the first quarter, we increased our sales volume in The United States by nearly 25% year over year, which also represents a step change in our U. S. Share, and we're not done. On a full year basis for 2025, we expect to outpace first quarter growth rate as we continue to increase our market share in this key region. While shifting the geographic mix of our business is important to optimize our order book, ultimately, the absolute level of pricing needs to increase. Speaker 200:05:03Earlier this year, we informed our customers of our intention to increase our prices by 15% on uncommitted volumes for 2025. This increase is the first step necessary on a path to restoring pricing and therefore profitability levels that will support our ability to invest in our business. As we head into customer negotiations related to volume for the back half of 2025, we look forward to discussing the incremental value we provide that supports a higher price point. This value proposition includes an extended portfolio of high quality products, further enhancements to our world class technical services and support, and providing our customers with reliable supply through our integrated and flexible production footprint. This is increasingly important given the current uncertainty around global trade. Speaker 200:05:55All of these and other elements of our value proposition support our customers' ability to produce high quality steel without disruption to their operations or performance. Ultimately, our commercial approach reflects a customer first mentality that permeates our organization. We are unwavering in our commitment to serve our customers and be the most trusted and value added supplier of high quality graphite electrodes. Allow me to pivot to cost and operational excellence. Our team has done an incredible job of dramatically improving our cost structure. Speaker 200:06:27In early twenty twenty four, we laid out a plan to aggressively reduce all of the elements of our cost structure from fixed fixed and variable operating expenses to corporate overhead costs. The results have been significant. In 2024, we delivered 23% year over year reduction in our cash COGS per metric ton. For 2025, we remain on track to achieve our guidance of an incremental mid single digit percentage year over year decline in cash COGS per metric ton. Importantly, all of this is being accomplished without compromising our product quality and reliability nor our commitment to the environment or to safety. Speaker 200:07:06In fact, based on our year to date performance, we are on track for a third consecutive year of lowering our total recordable incident rate. These results are a testament of the hard work and attention to detail of our more than 1,000 global employees. Let me now expand on a topic that has been top of mind for many companies, including Graphtec global trade policymaking and the impact of tariffs on our business. As this remains a fluid situation, our focus has been on continuously assessing a range of tariff outcomes and taking proactive measures to mitigate potential impacts. To illustrate this point, let me describe how we're approaching the situation regarding U. Speaker 200:07:45S. Tariffs. We're proud of our ability to serve our customers across a variety of markets through our world class graphite electrode manufacturing facilities located in Mexico, France and Spain. In addition, we continue to have supplemental electrode and pin machining and shipping capabilities at our idle production facility in St. Marys, Pennsylvania. Speaker 200:08:07All of these facilities are enabled by our needle coke production facility located in Texas. Our integrated and global production network provides flexibility around where we manufacture our products and how we deliver them to the end markets in an efficient manner. In addition, we maintain inventories in various geographies around the world. Given the higher level of uncertainty related to The U. S. Speaker 200:08:31Tariffs and potential retaliatory tariffs, we staged additional inventory in St. Mary's in anticipation of these announcements. This provides us with further flexibility in the near term. But more importantly, the materials coming from our facility in Mexico to The U. S. Speaker 200:08:47Are USMCA compliant and therefore are not subject to current tariffs. Further, to the extent that the current tariffs against the EU remain in place or are increased, these tariffs would be reduced by the amount of content in the goods that originated in The US. Therefore, for our electrodes produced in our European facilities, the value of the needle coke produced in The US and the value added activities conducted in The US will significantly reduce the impact of tariffs. As such, we believe we're well positioned to minimize the potential impact imposed by the evolving trade policies and estimate that this will have less than a 1% impact on our full year cash COGS per metric ton. In addition to considering the direct impacts on our product flows, we also continue to assess how various tariff scenarios might impact steel industry trends and the commercial environment for graphite electrics. Speaker 200:09:40For example, expanded Section two thirty two tariffs have been implemented on steel and aluminum imports into The U. S. Without exemptions. Our view is that such tariffs on steel and aluminum will have greater staying power than other tariff programs that have been implemented recently. To the extent that higher Section two thirty two tariffs result in increased steel production in The U. Speaker 200:10:02S, we view this as an opportunity. Approximately 70% of the steel produced in The U. S. Is manufactured via electric arc furnaces, which require a reliable supply of high quality graphite electrodes. Given our market presence in The US, combined with newly introduced as well as increased tariffs that will impact certain foreign graphite electrode competitors, we're well positioned to compete for incremental demand from our U. Speaker 200:10:28S. Customers. Overall, we will continuously assess the trade policymaking environment and adjust our responses accordingly in order to minimize any potential impact and to capitalize on these potential opportunities. As always, our focus will remain on meeting the needs of our customers, and we're well positioned to do so. To briefly summarize my opening comments, we've laid out a plan to manage through the near term industry headwinds, and we're executing. Speaker 200:10:55All of our achievement reflects our absolute focus on managing the things within our control to preserve our flexibility to capitalize on the future recovery of the market. To that end, I'd like to express my appreciation for the remarkable efforts of our entire team across the globe. With that, let me turn it over to Jeremy to provide more color on our operational and commercial performance. Speaker 300:11:17Thank you, Tim, and good morning, everyone. I'll begin with an update on safety, which is a core value at GrafTech. We're pleased that our recordable incident rate improved further in the first quarter. Maintaining this positive trend will continue to be a point of emphasis with our teams as we proceed through the year. When it comes to safety, we remain among the top performers in the broader manufacturing industry, but we will not be satisfied until we achieve our ultimate goal of zero injuries. Speaker 300:11:47Let me now turn to the next slide to discuss the commercial environment. On a global basis, steel production outside of China was approximately two zero nine million tons in the first quarter of twenty twenty five, which was modestly below the first quarter of last year. The global utilization rate for the first quarter also declined year over year, but was in line with the fourth quarter of twenty twenty four. Looking at some of our key commercial regions using data published by the World Steel Association earlier this week. For North America, steel production was flat in the first quarter compared to the prior year. Speaker 300:12:28Specific to The U. S, World Steel reported a 1% reduction for the quarter, reflecting a modest decline in what has been an otherwise relatively stable steel region. In The EU, steel output decreased 3% year to date and remains well below historical levels of steel production and utilization for that region. With that background, let's turn to the next slide for more details on our results. Our production volume in the first quarter was 28,000 tons. Speaker 300:13:00This resulted in a capacity utilization rate of 63%, representing a more than 500 basis point increase from the prior year. For the quarter, production exceeded sales volume. This inventory build was planned and is a result of one of our cost savings initiatives, which is to level load our production for the year. On a full year basis, our focus remains on balancing production volume with our expectations regarding sales volume. As it relates to sales volume, in the first quarter, we sold 25,000 metric tons. Speaker 300:13:36This was a 2% year over year increase and was in line with our expectations for the quarter. Of particular note was our success in actively shifting a significant portion of our volume to The U. S. As we have discussed. In fact, we grew sales volume in this region by nearly 25% in the first quarter versus last year, which we are particularly pleased with given the 1% decline in steel production in this region that I mentioned earlier. Speaker 300:14:06Our average selling price for the first quarter was $4,100 per metric ton, which represented a 20% year over year decline. This decline was largely driven by the substantial completion in 2024 of the higher priced LTAs that we have spoken to previously. Additionally, the lower average selling price in the first quarter also reflected the persistent challenges with industry wide pricing. Our focus remains on mitigating these impacts in the near term, including the previously mentioned geographic mix shift toward The US. Similar to all regions, average pricing in The US is below year ago levels, but it remains the strongest region for graphite electrode pricing globally. Speaker 300:14:50In fact, we estimate that the increase in our US volume for the first quarter boosted our average selling price by nearly 100 per metric ton. But coming back to my earlier point regarding the completion of the LTAs, when sequentially comparing our weighted average price for the first quarter to the more comparable non LTA price we reported for the fourth quarter, we're excited to have achieved a price increase of approximately 5%. As part of our initiative to actively shift the mix of our business, Western Europe is also a focus area. To that end, for the first quarter, we increased our sales volume in Western Europe by more than 40% year over year. As pricing remains soft in this market, this will not translate into immediate support for our average selling price. Speaker 300:15:41However, this is an important strategic market for the long term, given tariff protections and growth expectations that Tim will speak to in a moment. Increasing our share in the EU will position us well for recovery in this region. Given the muted demand environment, our success in growing sales volume in the key US and EU regions reflects our customer engagement strategy aimed at increasing our market share. It also reflects our compelling value proposition. As we have noted, this includes unmatched technical capabilities related to our architect furnace productivity system, which is further supported by our world class customer technical services team, ongoing investments in our research and development capabilities, further expanding GrafTech's leading position in graphite electrode and petroleum needle coke technology a growing product portfolio, most notably with the recent introduction of our new 800 millimeter product and our unique position of being vertically integrated into needle coke, providing surety of supply for our key raw material. Speaker 300:16:51Ultimately, we remain committed to strengthening our customer relationships for the long term to achieve mutual success for years to come. Let me now turn it over to Rory to cover the rest of our financial details. Speaker 400:17:04Thank you, Jeremy, and good morning, everyone. For the first quarter, we had a net loss of $39,000,000 or $0.15 per share. Adjusted EBITDA was negative $4,000,000 in the quarter compared to adjusted EBITDA being flat in the first quarter of twenty twenty four. The decline reflected lower average selling prices, partially offset by a 21% year over year reduction in cash costs on a per metric ton basis. Let me expand on the cost favorability, which included a couple of timing related accounting items that had an outsized benefit in the first quarter. Speaker 400:17:41First, inventory written down in prior periods due to lower of cost or market inventory valuation adjustments had a $7,000,000 favorable impact on COGS year over year for the first quarter of twenty twenty five. Second, the first quarter of last year included the accelerated recognition of $10,000,000 of fixed manufacturing costs related to low production levels that did not recur in the first quarter of twenty twenty five. Combined, these two factors accounted for approximately two thirds of the year over year decline in our cash cost per ton for the first quarter. The remaining decline reflected the impressive ongoing efforts of our teams in identifying and executing against cost reduction opportunities across various components of our variable and fixed costs. In addition, our cost structure continues to benefit from improved fixed cost leverage, reflecting the increase in volume. Speaker 400:18:43All in, this resulted in cash COGS per metric ton of approximately $3,650 for the first quarter of twenty twenty five. As we have noted previously, we will have periodic quarter to quarter fluctuations in our cash cost recognition as a result of timing impacts. However, the key point is that our cost structure continues to trend in the right direction. On a full year basis, we remain on track to achieve our projected mid single digit percent year over year decline in our cash COGS per metric ton for 2025. This would translate into cash COGS per metric ton of approximately $4,100 for the full year. Speaker 400:19:29Our ongoing ability to reduce costs while continuously enhancing our customer service, our product quality, and our performance remains an impressive accomplishment. Turning to cash flow. For the first quarter, cash used in operating activities was $32,000,000 Adjusted free cash flow was negative $40,000,000 compared to adjusted free cash flow of negative $11,000,000 in the first quarter of twenty twenty four. The change primarily reflected timing related items in working capital, including the planned inventory build in the first quarter that Jeremy discussed. For the full year, we continue to expect that working capital will be favorable to our cash flow performance in 2025. Speaker 400:20:18These working capital benefits will be realized through a combination of production cost improvements and inventory management, while maintaining adequate safety stock of pins and electrodes. Overall, our use of cash in the first quarter was in line with our expectations. For the full year, we remain on track with the cash flow projections that underpinned our thesis for our recent capital transactions. Turning to the next slide and expanding on this point. We ended the first quarter with total liquidity of $421,000,000 consisting of $214,000,000 of cash, dollars 107,000,000 of availability under our revolving credit facility, and $100,000,000 of availability under our delayed draw term loan, which is available to be drawn until July of twenty twenty six. Speaker 400:21:12As it relates to our $225,000,000 revolving credit facility, which matures in November of twenty twenty eight, we had no borrowings outstanding as of the end of the quarter. However, based on a springing financial covenant that considers our recent financial performance, borrowing availability under the revolver remains limited to approximately $115,000,000 less currently outstanding letters of credit, which approximated $8,000,000 as of the end of the quarter. Overall, our strong liquidity position, along with the absence of substantial debt maturities until December of twenty twenty nine, will support our ability to manage through near term industry wide challenges, which is, once again, consistent with our refinancing thesis. Let me turn the call back to Tim for some final comments on our outlook. Speaker 200:22:05Thanks, Rory. In summary, we've built a plan and we're delivering against it. As a result, we're growing our volume and market share, particularly with key customers in The US and The EU. We're reducing our cost structure, and we're effectively managing our working capital levels and cash position. All of this reflects on our focus on controlling the controllable during a challenging time for our industry, while putting GrafTech in a strong position for future growth as the market recovers. Speaker 200:22:33To this last point, while much of our commentary today is focused on The US market, let me expand a bit on The EU. As Jeremy noted, steel production in The EU remains below historical levels. However, we're beginning to see initial signs that point towards potential recovery in the near to medium term. These include the EU Commission's recent announcements related to their Steel Action Plan, which demonstrate the Commission is taking steps to create policy backdrop that is more supportive for their domestic steel industry. In addition, Germany's recently announced infrastructure investment plan, as well as EU wide initiatives to increase defense spending should significantly boost steel demand in Europe in the coming years. Speaker 200:23:15And last but certainly not least, the potential end to the war in Ukraine should lead to increased steel demand needed for reconstruction while boosting market confidence across the continent. As it relates to these demand drivers, the impact could be meaningful. In fact, one analyst projected that these combined factors could lead to a low double digit percentage increase in annual steel demand within The EU in the coming years as compared to the current level of steel consumption. Further, with graphite electrode inventories remaining at low levels in Europe, an increase in European steel production should lead to an outsized increase in graphite electrode demand. This is an important strategic market for GrafTech for the long term, and our current commercial momentum in The EU that Jeremy spoke to positions us well for recovery in this region. Speaker 200:24:02More broadly speaking, as it relates to both the EU and beyond, we believe that decarbonization efforts will continue to reshape steelmaking in the years ahead. We're confident that the electric arc furnace will continue to increase their share of total steel production over time, which will drive higher demand for graphite electrodes. And with demand for petroleum needle coke, our key raw material also expected to rise, our vertical integration puts us in an advantaged position. To this last point, the growth of needle coke market is expected primarily to occur to support the building of a western supply chain for electric vehicles and energy storage applications, and we share the market's confidence that this growth will be significant. The establishment of those western supply chains, from a raw material manufacturing through to the OEMs, remains in its early stages. Speaker 200:24:52However, we believe that the uncertainty caused by tariffs and the potential for international trade disruptions highlights the need for the West to continue to reduce reliance on other countries for continued critical minerals, such as graphite, and to accelerate development of a domestic supply with the support of policymaking. While we're closely monitoring these developments, we have also continued to build out our technical capabilities and demonstrate those to the key market participants. Thanks to these efforts and our deep expertise in needle coke and synthetic graphite, we are confident we are well positioned to be a valuable strategic partner in this space. In closing, this is an exciting time for GrafTech. We've set out a plan to manage the current market dynamics, and we're successfully executing against it. Speaker 200:25:37As a result, GrafTech is in a strong position to benefit from long term favorable trends that will shape the future of our industry. For these reasons, we're confident in GrafTech generating long term value for our customers, our employees, our shareholders, our communities, and all of our constituents. This concludes our prepared remarks. We'll now open up the call for questions. Operator00:26:00Thank you. Ladies and gentlemen, we will now begin the question and answer session. Your first question is from Bennett Moore from JPMorgan. Your line is now open. Speaker 500:26:35Good morning, Tim and team, thank you for taking my questions. Good morning. The past, you've talked about The U. S. Market having the highest pricing but also facing the most downward pressure. Speaker 500:26:47I guess I'm wondering with India material now facing at least 10% tariffs, has that changed the pace of declines at all? Speaker 200:26:57Yeah, so maybe as a little bit of a backdrop, so historically we have not seen any sort of trade protection around The US market from imports coming out of India. We have seen it from the Chinese, and certainly I think over the last two years we've seen an influx of material coming from India into The US market, albeit a relatively small share still compared to some of the tier one suppliers, but that percentage certainly has increased. Now I would suspect that as we look out into the future, to the extent that those tariffs remain in place, whether they're at the 10% or the announced 26% level, that that'll dramatically impact the availability of this market to the Indian competitors, just given the incremental cost as well as the freight disadvantage, and I think that's where we look to capitalize the most in terms of our proximity to The US, and the service that we provide to our customers here. You know, ultimately that is something that could be a bit of a landscape changer for us in The US market. Speaker 500:28:08Thanks for that. And then real quick, you've mentioned you've gained share in The US, which is great to see. I'm wondering how much more room you think there is to go, Or I guess said another way, you know, where does your share stand now relative to Monterey temporarily coming offline back in 2022? Speaker 200:28:26Yeah, so I would say that we're while we won't give specific numbers, we're ahead of where we were previously, and certainly we're very pleased with the effort that the commercial team has made that resulted in the 25 increase in volume in Q1, and as we stated in our comments, we expect to continue to grow that share throughout the year. I think the, you know, we're not limiting ourselves to a specific percentage. I think I said that on the year end call as well. We'll continue to, partner with our customers in The US. I think in The US in particular, our value proposition with Architect, CTS, the new product offering, the demands of The US market from a furnace performance perspective, really align well to what we're doing at GrafTech from a technical quality basis. Speaker 200:29:15So feel very good about where we're at in The US and North America more broadly, and think there's still room for us to grow in that market. And that's not even including the benefits of a growing 800 millimeter market in The US. I think we've commented in the past that we did trials last year. We're completing some additional trials here successfully in 2025, which gives us access to even a broader market of US customers, as well as just overall demand growth, whether it be from tariffs or just organic growth for, you know, growth in The US market from steel consumption. So feel very good and think we have a lot of potential here in The US. Speaker 500:29:54Thanks for that, Tim. Best of luck. Speaker 600:29:56Thank you. Operator00:30:01Thank you. Your next question is from Alex Hacking from Citi. Your line is now open. Speaker 600:30:09Yes. Thanks. Good morning. I guess a couple of things. I'm not sure if you're willing to, but could you quantify what percentage of sales are now coming from US and Western Europe? Speaker 600:30:21Is that north of 50% now for you guys? Closer to 75%? Just trying to get some sense of the big market share gains that you've seen in the first quarter. Thank you. Speaker 200:30:34Yeah, sure. I mean, we'll disclose as we do on an annual basis. But certainly now, if you look at Europe and The US, from a volume and revenue perspective, we're well over 50% in both of those markets combined. Collectively, right. Speaker 600:30:51Okay. And then in terms of your supply to The US, I assume the vast majority is coming from Monterrey, but I guess what's the balance there of supply in The US from Monterrey versus Europe? Speaker 200:31:09Yeah, so if you think about, kind of our commentary on all our calls, we really look at all three plants as an integrated system, and certain plants have certain capabilities, and I know we've talked on past calls that we continue to produce pin stock out of Monterey. So as a result, Monterey is supplying pins for our global production network. So I would say a substantial portion of the the material for The US market is coming out of Monterey, but we do bring material in from Europe, to to service US customers as well and and meet the needs of of this market, and we'll continue to do so, Right? And and think, you know, as we talk about tariffs and what we laid out, you know, we've got a pretty good action plan as to how we mitigate that. Speaker 600:31:54Okay. Thanks. So then when you said that there would be less than 1% impact on COGS from all of this, That's of whatever tariff you're paying on the non US material from your Speaker 200:32:07That's right. From your US Yeah. When think about the Speaker 700:32:10Okay. Speaker 200:32:11Yeah. So when you think about the material coming out of the USMCA compliance, so Mexico to The US, as well as the material coming from Europe, you know, we're bringing in semi finished goods from Europe that ultimately are finished in The US, so there's a value add to that, as well as, you know, the needle coke is all coming out of Seadrift, so with the structure of the tariff regime as it is today, that mitigates a substantial portion of the impact of those tariffs. Speaker 600:32:39Ah, so you're, this value add happening at St. Mary's, that makes sense. And then, sorry, one final one, if I may. Any commentary around, like, how successful that you've been with the 15% price hike on the noncontract customers? Is that something that the market seems to be accepting, given that your peers were also looking to push prices up? Speaker 200:33:04Yeah. I mean, it'll maybe I'll take an opportunity to provide a little bit of a broader comment here. I mean, we've consistently been saying we're in a tough part of the cycle, right? Demand is weak. You know, I think pricing I would still describe as unsustainably low across the market. Speaker 200:33:25Capacity utilization rates in the industry, are again unsustainably low, it drives up costs, this is a high fixed leverage business, and I think, you know, if you look at at least most of the western participants or or you know, the tier one competitors are operating at a loss. So really it's a, it's an unsustainable market if we stay in these pricing levels. We've taken a lot of action, first and foremost around our costs, our balance sheet, our capacity with the idling of St. Mary's and some other capacity around our network, and still invest in R and D, products and technical services, and we did all of that before we announced the price increase because it was important for us to show our customers, who we view as partners, that we're taking steps in the same action to improve the overall health of this industry, and we led with that. Back in Q1, we did announce the 25, or sorry, the 15% increase on sales that weren't yet committed, and we'll get into those discussions for second half volumes here, in the coming months. Speaker 200:34:30But I would say, you know, a number of our customers, many of our customers certainly understand where we're coming from. They under, they appreciate where we're coming from. They acknowledge that, you know, we are indispensable to their business and that they need us to be healthy and the market to be healthy for them to be successful, long term. And also that we're a relatively small piece of their overall cost structure, but we're as important as every ton of scrap they put in their mill, or every kilowatt of power that they pump into their furnaces. So, they get it, they understand it, but that's not to say that we won't have customers that push back, or customers that it's a bit of a challenge, not all markets are equal at this point in time. Speaker 200:35:09So I'm still optimistic that we'll be able to drive pricing in the back half of the year, but we think we've done the work necessary to set up the groundwork and set the landscape so that we can, have these constructive conversations going forward with our customers. Speaker 600:35:28Okay, thanks Tim and team, appreciate all the color. Best of luck, thank you. Speaker 400:35:31Thanks Alex. Operator00:35:38Thank you. Your next question is from Aaron Viswanathan from RBC Capital Markets. Your line is now open. Speaker 800:35:47Great. Good morning. Thanks for taking my questions. I hope you guys are well. Speaker 200:35:50Yes, Speaker 800:35:53I guess maybe first question would just be a quick update on the progress that you guys have achieved on some of the share recovery. Is there any way we can you can kind of frame that opportunity as far as maybe tonnage or volumes and what you expect kind of over the next year or so? Speaker 200:36:16Yeah, I think I think probably the important metrics or data points to keep in mind, you know, we're reiterating our belief that we'll have low double digit growth in volume year over year. So we continue to have good visibility into our order book and think that we have a strong path forward to continue to increase sales, broadly. We've also, you know, grown, our sales volume in North America, or US in particular, but North America as well, and Europe as well. You know, we always talk about our two most strategic markets and and the two markets that historically have been, the best end markets for our products that also very much mirror our operating footprint, have been North America and Europe, and I think the the team has done job of of growing sales in both of those regions, and and we'll continue to see that mix. You know, I think we'll we'll be much heavier weighted, into The Americas. Speaker 200:37:20If you think about our historic sales mix between The Americas versus Europe and The Middle East versus Asia Pacific, you know, we've pretty much been 45, 40 five and 10. I think you can expect us to be, much more heavy heavy weighted to The Americas, north of 50%. And, you know, Europe and The Middle East will hold drop a few points, but we'll also see a decline in Asia Pacific, again, just given the competitive nature of that market, on an export basis. Speaker 800:37:52Okay, thanks for that. And then it sounded like, you know, obviously, the long term outlook for graphite electrodes is still positive, driven by the long term outlook for EAF steel production. But over the near term, I guess, where do you see kind of steel utilization rates going over the next, say, to twelve months? Speaker 600:38:16I know there's a lot Speaker 800:38:16of uncertainty out there, but I guess you know and what are some of the drivers there? Would you say you know you're kind of feeling a little bit cautious just given kind of uncertainty on global industrial production and fuel utilization, or would you say that you're feeling a little bit more optimistic just given that you've gone through quite a bit of destocking and declines over the last few years already? Speaker 200:38:47Yeah, I think broadly speaking, right, everybody, every business, regardless of the industry that you're in right now, has to have an eye or an ear to the ground, if you will, to understand, you know, where the markets are going. I think you see a lot of, differing views on, how the tariff and the policy making is going to play out, and and, you know, I I think, you know, it's it's probably changed since we started this call. So, I think we have to continue to remain diligent and continue to understand. I think we have put together a good, you know, cross functional team organizationally to assess kind of all the potential ramifications. I think where they stand today, there certainly are opportunities for us both in The US and Europe, that, you know, we'll look to capitalize on. Speaker 200:39:34But I think we're going to hear as we go through this earnings season, everybody's going to express some level of cautiousness or uncertainty. And and I think we've heard that commentary already out of certain steelmakers that, you know, their optimistic order books are strong, but they're also, you know, foreshadowing at least a little bit of uncertainty as to what end customer demand is going to be. Right now, we feel good with who our customers are and what we're hearing from them in terms of our demand, and that gave us the confidence to reiterate, our sales volume guidance for the year. And we do think there will be opportunities that come out of any sort of disruption, and that disruption could become from incremental demand or demand that materializes from the displacement of participants in the market. So I think there's a number of ways we can benefit, and I think we're well positioned to take advantage of that. Speaker 800:40:27Okay. And then another question I had was just on pricing. So appreciating your comments on it seems like there's been some convergence in the market between spot and and say maybe some other longer term contracts. But, know, how do we think about pricing going forward? I mean, we have got, you know, oil prices kind of lower, which may drive needle coke lower, EV demand also lower, which may drive needle coke lower, and that, you know, could ultimately result in lower graphite electrode pricing. Speaker 800:41:05We've got that uncertainty around demand, but then maybe there's some support from tariffs. I know if that's necessarily the case. So is there any kind of guidance you can provide for us on how you think pricing for both electrodes and needle coke would evolve from here? I guess we've been bouncing along the bottom maybe on needle coke for a little while and and so maybe there's some optimism that things could get better there. But again, I don't know if it's feedstock driven or anything else. Speaker 800:41:42But yeah, it's just so opaque for us. Any any guidance you can provide you know, some some fair assumptions on price would be helpful. Thanks. Speaker 200:41:53Yeah, mean, you know, as we always do, I'm not gonna get into particulars of of what we see next quarter and the quarter after looks like, we're always negotiating contracts, but I think on breaking it down between needle coke and electrodes, on the needle coke side, I think we've been in the same trading range for probably almost a year to eighteen months now, And I think you see some some firm support at this level. So any sort of incremental demand for needle coke or or any sort of disruption in the market, I would suspect we'll start to see, you know, better needle coke pricing as we go forward. And as we've talked about, you know, on numerous calls, there's a direct correlation between needle coke pricing and electrode pricing. So we do think there's still, you know, a lot of positive upside on that. But we will acknowledge, there's uncertainty in the EV market, there's uncertainty around how that continues to develop. Speaker 200:42:52But, you know, I think if anything comes out of this current trade, you know, I won't call it a trade war, but this trade discussion or trade negotiation is that, you know, the western governments are going to become less reliant on particular economies for critical minerals and supplies of essential items. So, so I do think we still have a very bullish outlook there. On the graphite electrode side, you know, I think, you know, throughout '24, you saw a decline in in spot pricing, and I I would say that's fair to say that across every region globally. Some held better than others, but you know, from q one to q four prices were down. If we look Q4 to Q1 on a regional basis, I would say we're pretty flat, so, while I won't necessarily say that that's a floor because you still have people that are maybe irrationally chasing volumes in certain regions or making decisions that we won't necessarily follow or make, you know, we do start to see some price stability where we're at right now, and that's part of why we're announcing a price increase, part of why we're trying to shift our mix to those regions, that all allow us to be positioned for, a broader market recovery. Speaker 200:44:06You know, we did see, from Q3, end of Q3, you know, through, I guess, end of Q1, an increase in Chinese electrode prices. You know, some of that was higher on the small diameter side, you know, call it five to 10 to 15% on the small diameter side, five to 10% on the large diameter, you know, albeit still low and depressed from where they were, you know, in in say 2022. That's a positive development because, again, that creates a little bit of a floor, for the marginal, volume that that's picked up by the Chinese exporters. So so I think there's some things that are starting to provide some price stability, and you know, I think we'll continue to focus on where we're selling, who we're selling to, emphasizing what we're selling, which isn't just an electrode that we drop at your gate and walk away till the next quarter and come back. The service we provide, the technology we provide, and we think all of those things will position us well. Speaker 800:45:06Great, thanks a lot. Speaker 200:45:10Thanks, Arun. Operator00:45:14Thank you. Our next question is from Kirk Lidkum from Imperial Capital. Your line is now open. Speaker 900:45:21Hello, Tim, Jeremy, Rory, Mike. Thank you for the call and the detail. With respect to the tariffs, could you remind us how how much of the The US how much of the graphite electrodes sold in The US are sourced from outside The US? And if you can break that down by country of origin, that'd be super helpful. Speaker 200:45:45Yeah, so we don't break down kind of plant by plant, you know, supply demand dynamics, but I'd say, you know, call it roughly half, give or take, of the production coming into The US is gonna come out of Monterey, and the balance is gonna come out of the two European facilities depending on the product. Speaker 900:46:06Right. No, I was I was, talking about the overall market. Like, I'm trying to think of, you know, how much of The US market will be subject to US tariffs, incremental US tariffs. So I'm just India. You know, you mentioned India was a Speaker 200:46:23Yep. Yeah. You know, if you look at the predominance of suppliers, right, you know, the largest shares are going to be held by GrafTech, the two Japanese competitors. They're both going to be subject to tariffs on material that, you know, that they don't produce domestically, they do produce some in Europe, some in, Southeast Asia, as well as, you know, their pin stock that comes out of Japan. And then you have the Indians who, you know, have a share of the market called mid teens, you know, percentage of the market, they would be subject and probably the biggest impact of, you know, the four biggest buckets of producers that sell into The US market. Speaker 900:47:08I missed the last part. So the the the India about mid teens, like, 15% of of of the graph graphite electrodes Speaker 200:47:18will need that come from India. Graphite electrodes. Speaker 900:47:21And then and then how much comes from Japan? Speaker 200:47:25So I would say the remaining 85% is split between us and the two Japanese, and I would put us on the high end of that. I wouldn't just divide 85 by three, I would put us on the high end of that. Speaker 900:47:40Okay, you have the lion's share of that. Okay, that's super helpful. And of that, of the graphite electrodes that are sourced from outside The US, to what extent can those graphite electrodes use US needle coke? In other words, reduce the tariffs by sourcing US needle coke? I know it's a tough question. Speaker 200:48:05Yeah, mean, to the same extent that, you know, if we think about the global needle coke market, four major players, p 66, us, and then two Japanese producers. Some of P66's production is in The US, some of it is in The UK. So to the extent that, you know, people are using P66 material out of The US, then they would be able to, you know, have the same benefit, you know, in terms of offsetting some of the tariff impact. Speaker 900:48:42Sounds like most of most of those electrodes that are coming in from outside are are using also using foreign sourced. Speaker 200:48:54Yeah. I I can't comment on what the actual splits are, but, you know, some are some are gonna have some US originated material and some aren't. Yeah. A % of what we produce has domestically produced needle coke. Speaker 900:49:09It sounds like these tariffs are gonna be could be a pretty significant positive for you? Speaker 200:49:17We very much think that it'll be an opportunity for us to continue to increase our presence in The US market for sure. Speaker 900:49:25Got it. And to what extent do you think that trade negotiations are going to lead to capacity reductions? Speaker 200:49:40I'm not sure how to speculate on that. What would say, is without an improvement in the overall economics of the graphite electrode market, people are gonna start to make decisions around capacity because, again, while we were at 63%, we increased our capacity utilization here in the first quarter from where we were last year, us running our business at 63% isn't where we wanna be. Others are facing the same or lower capacity utilizations, and so everybody has to make the same kind of capital allocation decisions as they move forward. So whether it's driven by tariffs, whether it's driven by dislocation of markets that people historically have served that can't serve any longer because of profitability or pricing in that region or whatever the driver is, I would expect that you'll continue to see discussion around capacity reductions as we continue to see and hear from others to balance out the market and try to not only, you know, push prices in regions, but also improve the overall profitability of the industry. Speaker 900:50:49Got it. That's super helpful. Last question. So you mentioned that it looks like the looks like pricing is improving in The US. Have you noticed any change in in the pricing outlook rest of world, particularly Europe since Speaker 700:51:07April 2? Speaker 200:51:10Yeah, it's probably too early to say what pricing looks like from April 2. I would go back to what I said previously. You know, I think pricing in all geographies declined year over year, I'm sorry, from Q one of last year to Q four. We're seeing stability from Q four to Q one. But The US market, the North American market, you know, still is a a, you know, a significantly higher priced market than the rest of the world. Speaker 200:51:41So the hundred dollar impact that Jeremy disclosed or discussed around, that's being driven by our shifting more volume into The US market and taking it out less profitable markets. Speaker 900:51:53Got it. Yes. You're you're benefiting from a shift in mix. Was just trying to think, you know, just apples and apples, how's the market look in Europe? You'd see that improving in Europe as well? Speaker 200:52:10Did you Again, stability, price, you know, like, you know, kind of like when, over the last couple of years, we've talked about inflation and the rate inflation is slowing versus, you know, not inflating. I think we're seeing price stability in Europe. I think the commentary we provided around Europe, whether it's the EU action plan, whether it's the incremental defense spending that is being announced by the respective governments, Germany's infrastructure bill, we're starting to see impetus in Europe to support their domestic steel and domestic industrial manufacturing. I think all of that will start to to promote and give greater support for electrode pricing, whether that manifests in q two or or or yet will be yet to be seen. But I think the backdrop and and and the opportunities are starting to present themselves. Speaker 900:53:03Got it. I appreciate. Thank you very much. Speaker 200:53:05Thank you. Operator00:53:11Thank you. Your next question is from Abe Lanta from Bank of America. Your line is now open. Speaker 700:53:19Morning. Thank you taking my questions. How are you? Your sales volume in the first quarter was up 2.5% and you also affirmed your sales volume guidance for upload double digits. Guess, how does that sales volume, I guess, accelerate going forward? Speaker 700:53:36And then maybe embedded there, just how much of that volume for your double digit guide is committed volume? And how much do you have to go out there and win? Speaker 200:53:46Yeah. So reaffirming our our 10%, or low double digit increase, year over year, I think, you know, q one is historically a, lower or a seasonal, time frame as as customers are managing, you know, q four inventory. So you you see a little bit of flux between what happens, at shipments at the end of the year. So there's always a little bit of inventory management that takes place. And, you know, just depending on the timing of when Q4 negotiations get wrapped, right, there's always a little bit of lag in terms of when you actually start delivering those volumes to those customers. Speaker 200:54:27So, you know, we think that, and the reason why we continue to produce on a level loaded basis in Q1 is because we will be at that run rate, you know, as we move forward, you know, throughout the year. So feel good about the volume prospects. I said before we have good visibility in the order book. I would probably put us somewhere in the neighborhood of 75% plus committed at this point in time. So again, we have good visibility and on track with where we'd otherwise expect to be. Speaker 700:55:00Oh, that that's very interesting. Good color on the 75%. And, maybe our kind of my understanding, think The US has like been pretty much fully committed for this year. I guess if we're kind of thinking about Europe, I guess how are discussions in Europe given just that you have two of your big competitors are reducing capacity by midyear. Think one even talked about cutting additional capacity. Speaker 700:55:25Maybe how are discussions going in Europe? Speaker 200:55:28Yeah, maybe let me go back. I'm not sure I would say that The US is fully committed at this point in time. I think we've described in the past that that typically that that annual buy that takes place in the back half of the the year is about 80% of the need. So we think there's always some opportunity for for spot volume, you know, based on on kind of normalized production levels. I do think there is potential for some upside, as we think about the impact and and where steel producers are running, in The US, and again, both on increased demand but also, you know, potential displacement of tons in the market. Speaker 200:56:04So, with respect to Europe, you know, I think you're right, you continue to hear discussions around capacity. I think Europe is still, well below historical levels from a steel demand perspective, but all of those factors that we've talked about a couple times in terms of, you know, demand for steel, in Europe, you know, those are going to start to manifest themselves in customer conversations. And, and we are hearing a, you know, I won't call it an overwhelming, but a marginally more positive tone from some of our European customers that are looking to lock in some volume and get ahead of, you know, some stronger production aspirations in the back half of the year. Speaker 700:56:55And then you kind of partially touched on this, but can you just maybe touch on this production volume disconnect and maybe tied to how your inventory went up? I think you're kind of had some additional inventory in The US. And I guess if we're kinda thinking about going forward, production and volume kinda be a little bit more even? Just maybe how to think about kinda the cadence of those That's it for me. Speaker 300:57:22Yeah, maybe just thinking about a couple of key facts here. The, you know, the first one is that our goal is to, minimize our production cost. And one of the ways that we can do that is by level loading our production so that at periods later in the year, we can avoid premium costs that we might otherwise be incurring. And so we made the decision that it was worth investing in a little bit of inventory right now in order to keep our costs lower as we head into the back half of the year. And so we have also said and we continue to be committed to that over the course of the year, our production will generally align with our sales rate. Speaker 300:58:07And so the inventory build that we took in the first quarter of the year was planned and it was what we expect to do and it's really just part of executing, our annual plans and that inventory, will come out of the system over the course of the year as, sales ramp in the back half. Speaker 700:58:31Thank you very much. Speaker 200:58:36Thanks. Operator00:58:39Thank you. This concludes our question and answer session. I will now hand the call back over to Mr. Flanagan for closing comments. Speaker 200:58:50Thank you, Jenny. I'd like to thank everyone on the call for your interest in GrafTech, and we look forward to speaking with you next quarter. Have a great day. Operator00:58:58Thank you. Ladies and gentlemen, the conference has now ended. Thank you all for joining. You may all disconnect your lines. Speaker 200:59:22Levels from a steel demand perspective, but all of those factors that we've talked about a couple times in terms of, you know, demand for steel in Europe, you know, those are gonna start to manifest themselves in customer conversations. And we are hearing a, you know, I won't call it an overwhelming, but a marginally more positive tone from some of our European customers that are looking to lock in some volume and get ahead of, you know, some some, you know, stronger production aspirations in the back half of the year. Speaker 701:00:01And then you kind of partially touched on this, but can you just maybe touch on this production volume disconnect and maybe tied to how your inventory went up? I think you're kind of had some additional inventory in The U. S. And I guess if we're kind of thinking about going forward, production and volume kind of be a little bit more even? Just maybe how to think about kind of the cadence of those two numbers. Speaker 701:00:26That's it for me. Speaker 301:00:28Yeah, maybe just thinking about a couple of key facts here. The first one is that our goal is to minimize our production costs. And one of the ways that we can do that is by level loading our production so that at periods later in the year, we can avoid premium costs that we might otherwise be incurring. And so we made the decision that it was worth investing in a little bit of inventory right now in order to keep our costs lower as we head into the back half of the year. And so we have also said and we continue to be committed to that over the course of the year, our production will generally align with our sales rate. Speaker 301:01:13And so, you know, and so the inventory build that we took in the first quarter of the year was planned and it was what we expected to do and it's really just part of executing, our annual plans and that inventory, will come out of the system over the course of the year as, sales ramp in the back half. Speaker 701:01:37Thank you very much. Speaker 501:01:42Thanks. Operator01:01:45Thank you. This concludes our question and answer session. I will now hand the call back over to Mr. Flanagan for closing comments. Speaker 201:01:56Thank you, Jenny. I'd like to thank everyone on the call for your interest in GrafTech, and we look forward to speaking with you next quarter. Have a great day. Operator01:02:04Thank you. Ladies and gentlemen, the conference has now ended. Thank you all for joining. You may all disconnect your lines.Read morePowered by