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

Mike Dillon: Thank you. Good morning, and welcome to GrafTech International's third quarter 2024 earnings call. Along with me today are: Tim Flanagan, Chief Executive Officer; Jeremy Halford, Chief Operating Officer; and Rory O'Donnell, Chief Financial Officer. Tim will begin with opening comments. Jeremy will then discuss safety, the commercial environment, sales and operational matters. Rory will review our quarterly results and other financial details, and Tim will close with 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 in 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. Factors 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.

Tim Flanagan: Good morning, and thank you for joining GrafTech's third quarter earnings call. During the call this morning, we'll discuss the results for the quarter; our current outlook for the industry and our business; and importantly, provide an overview of the financing transactions we announced this morning. Before getting into these topics, I'd like to take a moment to introduce our recently appointed CFO, Rory O'Donnell. With over two decades of experience in senior financial positions, including more than a decade serving in leadership roles at companies within the Metals and Mining space, we are fortunate to have Rory as part of our team, and I look forward to working alongside him. Let me turn the call over to Rory to make a few comments.

Rory O'Donnell: Thank you, Tim, and good morning, everyone. It's a pleasure to join you this morning to report our third quarter results. Since I joined in early September, I've spent much of my time getting to know the GrafTech team, visiting many of our world-class assets and diving deep into the strategic financing transaction that we're pleased to discuss with you today. For those of you that I have yet to meet, I look forward to connecting and personally thanking you for your interest in GrafTech. I trust we share the same enthusiasm for the future as we take steps to stabilize our position in the market, regain share and drive value for all of our stakeholders. Also, thank you to the Board and management team for welcoming me and for your guidance and support. With that, I'll turn it back to Tim to begin our presentation.

Tim Flanagan: In the third quarter, we grew volume, significantly reduced and generated positive free cash flow. In addition, we're capitalizing on an opportunity to improve our liquidity position via a new financing transaction. Importantly, the announced transaction has been structured in a manner to preserve our strategic flexibility to pursue new growth opportunities. To that end, this flexibility and the clarity around our liquidity on a go-forward basis allows us to more aggressively pursue opportunities to further unlock the value of Seadrift, which is an asset that is critical to GrafTech's long-term growth plans. All of these actions demonstrate our absolute focus on controlling those things we can control. So let me share a little bit more on these topics. Starting first on the Commercial side. In the third quarter, our sales volume increased 9% year-over-year and grew sequentially for the third consecutive quarter. On a year-to-date basis, our sales volume is up 13% from the prior year. These are impressive results given the current soft demand environment. We've instilled a customer-centric mindset across our organization and are executing a deliberate customer engagement strategy, and we continue to see the positive results as evidenced by our third quarter performance. And we are confident that we will continue to regain our market share and increase our sales volume as we move ahead. Currently, we're engaged in discussions with many of our existing customers as well as new ones regarding their needs for next year. We're encouraged by the dialogue and expect another year of low double-digit sales volume growth in 2025. In addition, we continue to enter into new strategic multiyear electrode sales agreements with certain customers. While a relatively small percentage of our overall order book, these multiyear agreements reflect the confidence our customers have in our products and services and their recognition of our unique position being vertically integrated into needle coke, and we value their long-term partnership. We also continue to invest in our customer value proposition, including expanding our technical capabilities and product offerings. Of note, during the third quarter, initial trials of our new 800-millimeter electrodes were conducted by a key customer in North America. And as anticipated, those electrodes performed in accordance with our very own high standards. While currently a niche market, demand for 800 [technical difficulty] size electrodes is expected to significantly outpace that of the overall electrode market in the years to come. And we're excited to offer high-quality products to meet this need. Again, we're making steady progress in regaining lost market share that we've noted in the past, and we'll continue to work tirelessly to do so. Ultimately, all of these efforts are about strengthening our customer relationships for the long term to achieve mutual success for years to come. On the operations front, our ongoing efforts to aggressively control costs continue to pay off. For the third quarter, we achieved a 28% year-over-year decrease in our cash COGS per metric ton, exceeding our expectations for the quarter. As we continue to over-deliver on our initial expectations for cost reductions, for the second time in 2024, we are increasing our full year guidance for the improvement in our cash COGS measure. [technical difficulty] these cost control efforts, combined with our focus on managing working capital and capital expenditures has led to solid cash flow performance. This includes $20 million of free cash flow generation in the third quarter. I'm extremely proud of our team's work in all of these areas, and I thank them for their relentless efforts. With that being said, let me pivot to another important topic we'd like to discuss today. As I stated on our last earnings call, we are regularly in conversations with our Financial advisers regarding potential proactive measures to enhance our capital structure. And as I indicated at that time, we view it prudent to have such ongoing dialogue regardless of where we stand in the cycle. This morning, I'm excited to announce a key development in this area. We've entered into a commitment letter with the majority of our existing bondholders and our lenders under our existing revolving credit facility. This commitment letter covers transaction that will provide GrafTech with both new capital at attractive rates and also an extension of the maturities of our existing debt and revolving credit facility. Rory will cover the details of the transactions during his comments, including further color on the benefits to our liquidity position and our debt maturity profile. But let me share a few thoughts on the importance of this announcement. We view this transaction as a critical step towards strengthening our financial foundation and achieving the company's objective of delivering long-term growth and shareholder value. As I'll discuss later in our prepared remarks, GrafTech is well positioned to capitalize on the long-term tailwinds that exist for our business and our industry. However, as you know, we are currently in the down part of the cycle. This transaction provides the additional liquidity and operational flexibility to manage through the near-term industry-wide challenges. This includes supporting our ability to responsibly invest in working capital in order to capitalize on the growth opportunities as the industry recovers and demand increases. Just as [technical difficulty] the strategic flexibility to deliver on the company's long-term potential, both to grow our existing electrode business and to pursue new growth opportunities. Lastly, it affords all of those at GrafTech the ability to refocus our energy on what we're passionate about, which is delivering on the needs for our customers and growing our business to the benefit of our stakeholders. To that end, let me provide a clear message directly to our customers, our employees, our investors and all of our stakeholders. We are absolutely in this business for the long term and have and will continue to take the steps necessary to remain there. We are excited about the path ahead and remain confident about the future of GrafTech. We appreciate the strong support of our lenders, and I'd like to thank them for their engagement in this process. Ultimately, this highlights their confidence in GrafTech's return to more normalized levels of earnings and cash flow in the medium term and our ability to deliver on the company's potential for the long term. With that, let me now turn it over to Jeremy to provide more color on the current state of the industry and our commercial performance.

Jeremy Halford: Thank you, Tim, and good morning, everyone. As always, before I provide an industry update, I'll start with a few comments on safety, which is a core value at GrafTech. Our year-to-date recordable incident rate continues to show improvement over our performance in 2023. Nevertheless, we are not satisfied with this performance and must do better. Sending our employees home safely at the end of every day is the most important thing we can do and being relentlessly focused on this objective will remain a key priority for our teams as we end this year and move forward into next. Let me now turn to the next slide to discuss the commercial environment. As you know, we operate in a cyclical industry and currently find ourselves in a challenging part of the cycle. The global steel industry remains constrained by economic uncertainty and geopolitical conflict. On a global basis, steel production outside of China was approximately 202 million tons in the third quarter of 2024, representing a 2% decline from the prior year. The global steel capacity utilization rate outside of China declined to 65% in the third quarter, the lowest rate in seven quarters. Looking at some of our key commercial regions. For North America, steel production was down 5% in the third quarter on a year-over-year basis, continuing the recent trend of modest declines in what has been an otherwise relatively stable steel region. Conversely, steel output in the EU increased 3% for the second consecutive quarter, although it remains well below historical production and utilization rates for that region. The current dynamics within [technical difficulty] consistent challenges in the commercial environment for graphite electrodes. Specifically, industry-wide demand for graphite electrodes has remained weak and the graphite electrode industry continues to suffer from low capacity utilization. Reflecting these changes, the competitive dynamics we have spoken to on the last several calls have persisted, including an ongoing increase in the level of electrode exports from certain countries, including India and China. This, in turn, continues to result in the weak pricing environment that we have spoken to previously. With that background, let's turn to the next slide for more details on our results. Our production volume in the third quarter of 2024 was 19,000 metric tons, which resulted in a capacity utilization rate of 46%. The decline in our production levels during the third quarter was consistent with our expectations given the planned maintenance shutdowns at our European facilities during the quarter. Our third quarter sales volume was 26,000 metric tons, which was above our outlook for the quarter. Shipments in the third quarter of 2024 included approximately 23,000 metric tons of non-LTA sales at a weighted average realized price of approximately $4,100 per metric ton; and approximately 3,000 metric tons sold under our LTAs at a weighted average realized price of approximately $7,700 per metric ton. Expanding on our weighted average price for non-LTA sales, this represented a 24% year-over-year decline and a sequential decline from the second quarter of approximately 5%. Net sales in the third quarter decreased 18% compared to the third quarter of 2023, driven by the lower pricing, along with the ongoing shift in the mix of our business from LTA to non-LTA volume. As we move through the fourth quarter, we expect our sales volume for the quarter will be broadly in line with the sales volume for the third quarter. As a result, we are well on our way to achieving our 2024 outlook [technical difficulty] beginning of the year for full year sales volume growth. Looking ahead, we expect the global steel market and therefore, industry-wide demand for graphite electrodes will recover, albeit more slowly than initially anticipated. In addition, as the shift to electric arc furnace steelmaking continues, these factors will lead to an improved commercial environment for the graphite electrode industry. Tim will expand on these concepts in a few moments. As it relates to 2025, with some measure of demand recovery, combined with our efforts to regain share driven by our customer engagement strategy and our compelling customer value proposition, we are confident in delivering another year of sales volume growth in 2025. Let me now turn it over to Rory for rest of our financial details.

Rory O'Donnell: Thank you, Jeremy. For the third quarter of 2024, we had a net loss of $36 million or $0.14 per share. Adjusted EBITDA was negative $6 million for the third quarter compared to adjusted EBITDA of $1 million in the third quarter of 2023. The decline reflected lower weighted average pricing and the continued shift in the mix of our business towards non-LTA volumes. In addition, we recorded an $8 million lower of cost or market inventory valuation adjustment in the third quarter of 2024. These factors were mostly offset by a 28% year-over-year reduction in cash costs on a per metric ton basis. Let me expand on this last point, which represents a continuation of our impressive cost reduction performance. As shown in the reconciliation provided in our earnings call materials posted on our website, our cash COGS per metric ton were just under $4,200 for the third quarter of 2024. This is lower than our expectations for the quarter. Along with the benefit of favorable freight costs and other factors, the lower costs reflect the continued strong performance of our teams in identifying and executing against cost reduction opportunities without compromising our ability to meet our customers' needs or our product quality. Reflecting the overdelivery on our cost reduction activities, we have updated our full year COGS per metric ton guidance for 2024. We now anticipate approximately 20% year-over-year decline on a full year basis, which would result in cash COGS per metric ton of approximately $4,400 for 2024. This compares to our previous expectation of $4,600 to $4,800 per metric ton for 2024. In addition, we anticipate that our cash COGS per metric ton will decline further as we move into 2025. Turning to cash flow. For the third quarter of 2024, cash provided by operating activities was $24 million [technical difficulty] adjusted free cash flow was $20 million. Overall, we are pleased with this level of cash flow performance in the quarter. While third quarter CapEx spending declined sequentially from the second quarter, we will continue to invest in our business and expect to complete the year in line with our full year CapEx guidance of $35 million to $40 million. As it relates to working capital, we had another favorable quarter with the decline in inventory levels reflecting the planned seasonal production shutdowns, which Jeremy spoke to, as well as ongoing execution of our working capital initiatives. We remain focused on reducing our overall inventory levels in 2024 as part of these initiatives, and we now expect the net impact of working capital will be favorable to our overall -- to our full year cash flow performance versus our previous expectation of a neutral impact. We ended the third quarter with total liquidity of approximately $254 million, consisting of $141 million of cash and $112 million available under our revolving credit facility. On the topic of liquidity, let me provide some details on the transactions for new capital that we announced this morning. As Tim indicated, the transactions described in the commitment [technical difficulty] on attractive terms and extend our existing debt maturities. More specifically, the ad hoc group of existing bondholders are providing new financing to GrafTech in the form of a $275 million delayed draw term loan that will be senior to our existing debt. Of the $275 million term loan, $175 million will be drawn at transaction closing, which is expected to occur in the fourth quarter of this year. The remaining $100 million will be available to be drawn for a period of 19 months following the transaction closing. The new term loan will bear interest at SOFR plus 600 basis points on any portion that is drawn with any undrawn portion subject to a lower cost until drawn. The term loan will mature in December of 2029. Regarding our existing $950 million of senior notes due in December of 2028, an exchange offer will be launched shortly, whereby existing bonds can be exchanged at par and at existing interest rates for new bonds with a one-year extension of the maturity to December of 2029. Based on the level of commitments to participate in the exchange offer, which have been received to date from the bondholders, we anticipate nearly all of our existing bonds will be exchanged and subject to the maturity extension. Lastly, our $330 million revolving credit facility scheduled to mature in May of 2027 will be replaced with a new $225 million revolving credit facility that will mature in November of 2028. While the overall capacity of the revolver will be reduced in the new capital structure, more importantly, the amount that is available to GrafTech after giving effect to the springing financial covenant will not change. In other words, our recent financial performance currently limits our availability under the $330 million revolver to approximately $115 million, less the currently outstanding $3 million of letters of credit. With the new revolver in the same scenario, we will continue to have $115 million of revolver availability less the letters of credit. With that background, let me turn to the next slide to further demonstrate the benefit that the announced financing agreements will provide to our liquidity position and our debt maturity profile. As I mentioned earlier, we ended the third quarter with total liquidity of approximately $254 million. Factoring in the new $275 million delayed draw term loan when fully drawn, this would more than double our current liquidity, increasing it to approximately $529 million. Turning to our debt maturity profile. The new $275 million delayed draw term loan matures in 2029. As it relates to the existing $950 million notes, the exchange offering provides a 1-year extension versus the current maturity date. Therefore, assuming full participation in the upcoming exchange offer, we will have no outstanding debt maturities until December of 2029. Further, as I indicated previously, the revolver originally maturing in May of 2027 has been extended 18 months to November of 2028. Overall, we are proud to have reached this outcome with our partners and appreciate their confidence in our ability to guide the company through the current down cycle and to restore the company to profitable growth. Let me turn the call back to Tim for some final comments on our outlook.

Tim Flanagan: Thanks, Rory. And let me summarize. GrafTech continues to deliver on our outlook and its initiatives as we continue to focus on controlling the controllable. We're proud of our team's execution and supported by our announced financing transaction, we remain confident in our ability to manage through the near-term environment. As we look ahead, our long-term optimism about our industry remains intact. While we remain cautious on near-term steel industry trends, we have consistently noted that cyclical downturns eventually come to an end. In addition, we continue to believe that our industry has many long-term and sustainable tailwinds, combined with our unique position and competitive advantages, we remain confident we are well positioned to capitalize. For these reasons, we believe the long-term growth opportunities in front of us are very real. Let me provide some more color on these concepts. In October, the World Steel Association published their most recent short-term outlook for global steel demand. On a positive note, World Steel is projecting 3% growth for steel demand outside of China in 2025. This includes projected growth in nearly all of our key regions, including the EU, the Americas, the Middle East and in Africa. And although the global steel market is rebounding more slowly than many initially expected, we find the projected growth to be encouraging. During this time, we have shown incredible cost and spending discipline, but we cannot cut our way to growth and improve financial performance. Ultimately, the improved steel demand as well as the impact of announced supply reductions, announced price increases and the like need to translate into a healthier pricing environment. A healthy steel industry needs a healthy graphite electrode industry. And the current pricing levels we are seeing in many of our regions are not sustainable and do not promote the long-term health of our industry. We spoke about this on our last call, and we are encouraged that we are now seeing this recognized by others. Pivoting to the longer term. We continue to expect decarbonization efforts to drive a transition in the approach to steelmaking with electric arc furnaces continuing to increase share of total steel production. Based on the latest production statistics published by the World Steel Association, the EAF method of steelmaking accounted for 50% of global steel production outside of China in 2023, an increase from 44% in 2015 with market share growth in nearly every region. And this trend of EAF share growth is expected to continue. As we've noted previously, we're tracking approximately 200 announced projects from steel manufacturers regarding plans for new EAF facilities or expansions of existing facilities. Outside of China, these projects are expected to result in over 170 million metric tons per year of new EAF steel production capacity coming online by the end of this decade, with much of this growth concentrated in our key commercial regions. This, in turn, is expected to drive incremental demand for graphite electrodes. In fact, that 170 million metric tons of EAF steel capacity, even at conservative assumptions around utilization rates at 75% could translate into about 200,000 metric tons of incremental demand for graphite electrodes on an annual basis. That would be 25% more than the total manufacturing capacity that currently exists outside of China. All in, this would drive graphite electrode demand increasing at a compound annual growth rate of 3% to 4% through the end of the decade. Importantly, about 80% of that growth would take place in regions where we already have a strong presence. Moving on to petroleum needle coke. The anticipated demand growth for petroleum needle coke, the key raw material we use to produce graphite electrodes will also present a tailwind for our business given our substantial vertical integration. We expect this demand for high-quality needle coke to be driven by two key factors: first, the demand for graphite electrodes from the ongoing shift to EAF steelmaking I just spoke to; and second, and more importantly, the demand for synthetic graphite anode material for use in electric vehicle batteries, where needle coke is a key precursor material. Growing demand for needle coke should result in elevated needle coke pricing. Given the high historical correlation between petroleum needle coke pricing and graphite electrode pricing, this trend should translate to higher market pricing for graphite electrodes. This again reinforces the key competitive advantage that our substantial vertical integration into needle coke affords us as it relates to our graphite electrode business. Both within and beyond graphite electrodes, we continue to focus on ways to maximize the value of our unique assets and capabilities. This includes pursuing partnership opportunities to expand the production capacity of Seadrift. An expansion would provide meaningful capacity to serve the anode material market while maintaining adequate capacity to remain substantially vertically integrated for graphite electrodes. As it further relates to participating in the growing -- in the growth of the anode material market, we are also making investments within our R&D function, including pilot scale assets in our technical center to advance our technical capabilities. This remains a dynamic and exciting opportunity with our assets and expertise positioning us well to be a key player in this space. In closing, to manage through the challenging near-term industry dynamics, we set out a plan, and we're executing against it. We're confident in the steps we're taking, have improved the position that GrafTech to benefit as the global steel market rebounds. Longer term, as decarbonization efforts drive a further shift to electric arc furnace steelmaking and higher graphite electrode demand, we are poised to capitalize on that anticipated growth. Our confidence is anchored in GrafTech's distinct set of assets, capabilities and competitive advantages that we've spoken to. Overall, we're proud of our recent accomplishments and remain confident in GrafTech generating great value for its stockholders. This concludes our prepared remarks. We'll now open the call for questions.

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

Bill Peterson: Yes, hi, good morning. Thanks for taking the questions. And nice job on the cost time efforts you've been doing. Just on the near-term environment, competitive in pricing, spot looks like it's fallen another $200 per ton. The near-term commentary remains weak, which is consistent over the last few quarters. But I guess how does the spot pricing decline compared to the latest needle coke pricing you're seeing? And I guess, how should we think about the pricing expectations in your order book quarter-to-date or near term?

Tim Flanagan: Yes. Thanks, Bill. And I think you're absolutely right in the observation around the spot market, right? We've seen a fairly steady decline in pricing as we've gone through the balance of the year, winding up this quarter at about $4,150 on a weighted average basis across all the geographies. I would say that needle coke prices have remained relatively consistent over that time. We're still in the, call it, $1,000 to $1,300 range depending on grades and jurisdiction for needle coke. So we've seen a little bit of a floor or at least a price support level on the needle coke side, but you're still seeing some slide on the electrode side. Some of that's timing related, right, as contracts are negotiated and delivered as we go through the quarter. But yes, still a tough pricing environment. But certainly, I think as we look forward, again, for all of the reasons that we've stated, whether that pricing turns immediately or if it takes a little bit of time, we do anticipate a rebound both in needle coke pricing as demand picks up for needle coke, which again then has a knock-on effect and will drive up electrode pricing. I think as you look at the industry more broadly, and I commented that a healthy steel industry needs a healthy electrode industry. Pricing in many of the jurisdictions we're seeing right now, I would not describe as healthy or sustainable for any of the key players in this market. So at some point in time, either companies will continue to take action, whether that's announced supply reductions, which we've talked about our announcement back in Q1, we talked about others' announcements in Q2 or you'll see pricing actions, which again, we've seen some pricing announcement here by competitors in the market more recently. So those actions will have to take place to balance out the market because otherwise, you won't have a healthy market to underpin all of the demand growth for steel going forward.

Bill Peterson: Okay, thanks for that. And again, on the cost side, better than expected, which we would have thought with maybe the sales environment may not have seen as much fixed cost absorption. So I guess, how should we think about the potential for cost downs and maybe underlying assumptions around your growth expectations for next year? How should we think about that progressing over the next several quarters?

Tim Flanagan: Yes. So let me start, and then I'll turn it over to Rory to comment a little bit more on the cost side. But I mean, this is a really tremendous effort by our teams, right? This is the self-help that we can do for our business, and there's been a tremendous amount of energy on the cost side to work this down. We are benefiting from increasing volume, which is helping on a fixed cost basis, but the operations team more broadly has done a really good job of being laser-focused on cost control and expect that to continue. So I'll turn it over to Rory and he can provide some more details.

Rory O'Donnell: Yes. So thanks, Bill. Just a reminder on our cost breakdown. Essentially, our production cost is about 25% fixed, the largest component of that fixed cost being labor costs. The remainder is probably evenly split between needle coke costs and other variable costs such as energy, freight costs and the like. We have made tremendous progress in not only controlling the variable costs through different procurement strategies, different process engineering improvements that we've made, but we've also kind of -- we've diversified our supplier base. So we brought down some of the price of some of our raw materials through qualification of additional vendors and the like. So we've created a little bit of a pricing battle between some of our vendors, and it's really starting to show benefits. So that's for 2024. As you know, in 2024, we also took out a lot of fixed costs with the curtailment of St. Mary's. We also took some overhead cost reduction initiatives in the first quarter of the year. So moving into 2025, we're going to see the wraparound effect of all the things I've just mentioned. Those things, coupled with an outlook of increased volumes and fixed cost leverage is really what we're looking at as the key sources of bringing down -- continuing to bring down that cash cost per ton into the future.

Bill Peterson: Thanks for that Rory. If I could sneak one more in. In the battery comment, it's interesting. It sounds like you're looking to invest more in here. Just wondering here, how does the change in government -- how does that change your view of, let's say, a government that likes to balance and have local production and local manufacturing versus maybe a potential likelihood that some of the domestic content kickers may be going away. I guess, do you see any change in your customers' behavior or wanting to work with you? Or is it actually consistent and looking to move ahead?

Tim Flanagan: Yes. I don't think -- well, I would say it's too early to -- and I'm not going to speculate on what outcomes of elections are otherwise going to drive or how that's going to change the landscape. But I think there still remains strong interest in the needle coke that Seadrift provides and what the work that me and the team have been doing from a development perspective demonstrates [technical difficulty] on the needle coke front and how that can be a suitable precursor for anode materials. So we still feel very optimistic about our ability to leverage Seadrift as an asset and again, diversify our overall business and expand that operation. And really, again, have the material to put into the anode market as an end market, but then also continue to solidify our position of being vertically integrated because we think that's a huge asset for us as we think about our business longer term.

Jeremy Halford: Maybe I would just add something to what you're saying, Tim. Bill, we're only three years since automakers had to curtail production because of a lack of a domestic supply chain. And I think that as we see their vehicle fleet evolving to an electric vehicle over time, they're going to want to have that domestic supply chain established. And so regardless of which politician happens to be in office, I think it's just good business practice to have that domestic supply chain.

Bill Peterson: Yes, those comments make sense. Thanks again. Nice job on the cost side.

Jeremy Halford: Thanks Bill.

Operator: And your next question comes from the line of Alex Hacking with Citi. Please go ahead.

Alex Hacking: Good morning. Just to follow up on the pricing question. I guess, how is the tenor of negotiations for first half of next year? I assume that we're in contracting season. And how has the 20% price increase announced by one of your competitors affected that dynamic? Thank you very much.

Tim Flanagan: Yes. Thanks, Alex, and appreciate the question. And you're absolutely right. We are in the middle of what we would consider our key negotiation season, certainly for customers on an annualized basis in North America, but more broadly for the Q1 and first half deliveries for next year. Certainly, the 20% price increase, I'm supportive of. I think it's the right move, given all of my previous commentary about the sustainability of pricing and where we feel that electrode pricing needs to go to have a healthy industry. Because right now, I don't think that we think that is healthy across the board. The ultimate level of realization of that 20% is going to depend on a couple of things. One, the regions that you're talking about. But then two, it's what your starting point is. And I don't think everybody is starting from the exact same level. So we think it helps. But ultimately, we're not just taking pricing multiplying it by 20% and moving forward. So we'll be strategic about it as we approach our customers. But overall, encouraged about the dialogue and the discussions we're having, both in the Americas, in Europe and more broadly as well. Probably don't want to say much more than that from an overall contracting perspective as those are active and ongoing dialogues, but certainly can give a broader update and a more fulsome update on our Q4 call in February.

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

Tim Flanagan: Yes. No, thanks for that. Appreciate it. And maybe just for a bit of background. So HEG began acquiring a position earlier in this year. They disclosed that position in their annual report in March. They did inform us that before that public disclosure came out that they had begun inquiring shares in the company. And so, I think they sit today at just over 8%, and that's based on their 13G filing. So again, an indication of a passive ownership perspective and consistent with their public commentary. But I mean, I think more importantly, it's a good underwriting of our business with one of your competitors, not only comments on the strength of your asset and the unique position of the vertical integration that we have, but they're putting the dollars behind it as well. So we appreciate that endorsement. And yes, so we'll see how that plays out going forward.

Alex Hacking: Okay, thanks Tim. And team, best of luck.

Tim Flanagan: Thank you.

Operator: Your next question comes from the line of Arun Viswanathan with RBC Capital Markets. Please go ahead.

Arun Viswanathan: Great. Thanks for taking my question. I wanted to ask a little bit about production and sales. So it looks like in Q3, you really ratcheted back your production volumes down to that 19,400 metric tons, but you were still able to sell 26,400 tons in the quarter. So it looks like you sold through some inventory. Would you say that out of some of the -- and you ratcheted back the rates in some of your European facilities. Is that strategy complete? Would you say that you've put your inventories in good positions? How are you expecting your production to kind of trend as you move forward into Q4 and into Q1?

Jeremy Halford: Yes. We did exactly what we had planned to do. As we set our annual plan at the beginning of the year, we knew that we were going to take some downtime in Europe for kind of a combination of factors: one, to take the time to properly maintain our equipment; secondly, to manage our costs; and thirdly, to manage our inventory down to the targeted levels. So I think the team executed exactly what I was hoping they would do, and we're quite happy with where we're at. As we go forward, we should expect that production and inventory -- pardon me, production and sales will largely march in line from here through the rest of the year. And then as we get into next year, as we build out that operating plan, we'll do what it takes to achieve the kind of the greatest return on assets.

Tim Flanagan: Yes, Arun, I'll just add to Jeremy's comments. Think about working capital to be fairly neutral in the fourth quarter, a fair amount of alignment again between production and sales. Going back to kind of the increased liquidity, that gives us the ability and the flexibility to rebuild some of the inventory as we go through '25, in line with our expectations for growth, not only in '25, but certainly beyond that as well. So in the near term, fairly balanced. There isn't much more to take out on the inventory front other than continuing to drive down costs and lower our unit costs sitting on the balance sheet.

Arun Viswanathan: Great. And then just further on your expectations, the global steel utilization rate was the lowest in Q3 according to your Slide 6 versus some other recent periods. So how do you see that trending, I guess? And maybe if it's helpful, you could give us some commentary by end market. I know auto, we are expecting maybe flat to slightly down auto global production next year. What's your expectations on how volumes and production could evolve maybe into '25? Maybe you could help us out with that as well.

Tim Flanagan: Yes. So maybe I'll start with and -- we do expect an increase in our sales volume heading into next year. We're guiding to low double-digit growth off of what we otherwise expect for this year. So we do think that ultimately, we'll see greater demand for our products. Some of that is regaining market share. Some of that's increased demand. If we talk about regions in particular, Europe is still very much a hand-to-mouth market where buying is being done on very limited basis and inventory levels are relatively low. I think the U.S., maybe there was a bit of a slowdown in steel production in the third quarter. And I think some of that is a combination of just election uncertainty and just taking a pause in and a breather, but we don't really see a significant change in the landscape in the U.S. as we look out, right? Still expecting some small low single-digit growth as we head into next year from an overall demand perspective in the U.S. I don't think the outlook on particular industries has materially changed. Probably the one thing that is still waiting or seeing how it manifests itself is all the stimulus in China, what that does to their property sector, their domestic steel production and how that otherwise impacts pricing and utilizations going forward. But overall, I would say that nothing has changed from our outlook significantly and but do expect to start to see a little bit of recovery as we head into next year from an underlying demand perspective.

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

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

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

Tim Flanagan: So I mean, I think it's a couple of things. One, we do expect the market to start to begin to recover. That will be a portion of it. Secondly, I mentioned the development of the 800-millimeter electrode. This is a market that we have not been a participant in, in the past. We have a product that works as we expected. So we anticipate volume in the 800-millimeter market next year as well as our efforts on the commercial front to reengage on a more holistic level with our customers and regain the market share we lost when Monterrey was shut down. And we're seeing that. We continue to see quarter-over-quarter increases in our sales volume, while others are announcing decreases in volume year-over-year. So we're pleased with the effort. It's just -- it is a slow methodical march in regaining that volume. But we think best that we can tell, we anticipate that it will be low double digits as we head into next year.

Arun Viswanathan: Okay. That's helpful. And then from a profitability standpoint then, so I guess the hope is that you will turn the corner back on to profitability. Do you expect that, I guess, as soon as Q4? And how sustainable is that? Is that mainly driven by your own actions on the cost side? Or would it be dependent on volumes continuing to improve? And then on that point, is there any cost per ton metrics we should keep in mind when thinking about our initial '25 framework?

Tim Flanagan: Yes. So a lot there. I don't think we're sitting here just hoping things get better. We are certainly and definitively taking action to ensure that, a, we are as cost competitive as we can be as we go forward. We've guided to now 20% down on the cost side, so roughly $4,400 a metric ton on a full year basis. We expect that to be better as we head out into 2025, as Rory alluded to. And I think longer term, we expect to continue to be able to drive costs out of the business. And certainly, as volumes will continue to increase and we get to more normalized capacity, we'll drive down our fixed cost leverage even further. So we fully anticipate being cost competitive as we move forward. In terms of profitability, we've talked about pricing already. Pricing in the third quarter was at $4,150. The dynamics to change pricing, you're starting to see some of the seeds being sown, if you will, in terms of competitors announcing price increases, capacity coming offline, right? There needs to be more action that takes place before you see meaningful and sustainable price increases. So I think as we look out over the full year, if you take kind of current pricing levels and current cost levels to what we've guided to, you're right, roughly around breakeven on a profit -- on a margin line in the fourth quarter.

Arun Viswanathan: I'm sorry. That's great. I really appreciate all those comments. If I could just ask one more. Just on the footprint itself, if your utilization rates maybe are -- and you are taking this downturn -- downtime in Europe, are you guys comfortable with all of the assets within the portfolio right now? Are there any actions you can take to either change that footprint? Or do you need to, given that you do have quite a bit of breathing room now on the liquidity front, maybe not. But just -- maybe I can just wrap up with some of your comments on that front. Thanks.

Tim Flanagan: Yes. So let me step back and talk to when we took action in Q1 of this year, and idled St. Mary's and took some other production capacity offline and kind of reset our nameplate to 178,000 tons. We did that with a view of what we believe the market is going to need and require from us on a go-forward basis. So from that standpoint, we feel that the assets we have, the collection of the operating and supply chains we've established between the three facilities that are our primary production facilities is the right mix for us going forward. Those three facilities are all quality facilities. Monterrey, ever since the shutdown has been operating flawlessly. And now as we sit here today, we've kind of got the whole journey of Monterrey behind us and have closed out the conditional restart permit that was issued back in November of 2022. So we're very pleased on that. And the European facilities continue to run well. And again, those are world-class facilities. So the footprint is right for today. Where I think that changes is, if outlook in the long term somehow changes or it doesn't manifest itself in the same way, then we would have to look at our production network and say, do we really need 178,000 tons of capacity? However, shutting down a plant is not a short-term decision or a short-term measure, right, because of the fixed cost and the jurisdictions that they operate in. You don't save much money year 1. So you have to have a multiyear view that you don't need that supply before you take it off. All that being said, we, like everybody else, are here to make money and create returns for our shareholders. So if that doesn't change and we're not able to do it with the existing footprint, we will take the steps that we need to, to return the company to profitability.

Operator: And your next question comes from the line of Kirk Ludtke with Imperial Capital. Please go ahead.

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

Tim Flanagan: Yes. I'll let Jeremy weigh in as well. I don't know if there are more conversations about long-term agreements. We use those as a means of engaging with customers that want a strategic relationship, right? Not necessarily customers that are trying to lock in what they believe is a low point in the pricing. Those contracts have to work for both sides of the party. So again, as I commented, they're going to be a relatively small piece of the order book. We're very happy to have them, and we're very pleased with the engagement and the partnership that we forged with those customers that are engaging them. They're not for everybody. Not everybody buys on the longer-term horizon. So I don't know if there's more conversations necessarily about longer-term agreements today than there was a year ago. Probably yes, just given the fact that -- last year, we were in the one year removed from the Monterrey shutdown, and we were just, again, trying to reinforce our position in the industry and that GrafTech is going to be around next year and the year after and for the long run. So -- but yes, I guess maybe a little bit of color there on how we're thinking about these agreements.

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

Tim Flanagan: Yes. I don't know if I can comment on what level of comfort or confidence they had in the ability to get a 20% increase to stick and the timing of that announcement. Certainly, again, it's an appropriate step as we look out and try to improve the health of the industry more broadly, but I really can't comment much beyond that.

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

Tim Flanagan: Yes. So Kirk, thanks for that, and I appreciate the question. Maybe just a quick comment. I mean, we view this as really an important transaction for us to take the liquidity issue off the front and center question for not only investors, but our customers and really allow us to operate our business, focus on things that we can control like cutting costs, engaging with customers. So this is a really big transaction for us, and we're pleased to have the support of our lenders and RCF lenders to do so. But with respect to the covenants, I'll let Rory comment on those.

Rory O'Donnell: As far as accessibility of the new money, as we said, it's accessible for 19 months from closing. So the delayed draw component of it is accessible for 19 months. The covenants are I consider them customary. There are certain restrictions on taking on additional debt and the like, but there's no surprise covenants that would prevent us from accessing that second draw or that additional draw after the initial funding to answer your question directly.

Kirk Ludtke: Awesome. I appreciate it. Thank you.

Rory O'Donnell: Thank you.

Operator: Your next question comes from the line of Matt Vittorioso with Jefferies. Please go ahead.

Matt Vittorioso: Yes, good morning. Thanks for taking my call and congrats on the transaction. I guess just to follow up on that last comment on restrictions around additional first lien debt. I think that would be the key for the existing bonds that are now going to be second lien bonds. How much additional debt can you layer in at that new first lien layer? Is that something you can provide us today?

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

Matt Vittorioso: But there is a cap on additional first lien debt?

Rory O'Donnell: Yes, there is. And again, the first priority debt is now the new money of $275 million and the revolving credit facility of $225 million. So we have those two priority instruments, which, again, we can -- we view the revolver as standby liquidity, if anything. The $275 million is the liquidity that we've obtained in this new money transaction.

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

Tim Flanagan: Yes. Thanks for that, Matt. And as you know, I mean, there's always levers that are push and pulls in these sort of transactions and negotiations, and it's a balance of what's most important in terms of whether it's the cost of the debt, whether it's the maturity, whether it's discount capture. And so I think without getting into specifics, we weighed kind of all of those options and said this was ultimately the best deal that gave us very cost competitive capital for a company like ours. It gave us the maturity extension we wanted, and it also gave us the strategic flexibility to continue to pursue kind of the growth and expansion opportunities that are important to us. So we're very pleased with the deal and the construct that we reached in there. With respect to the overall leverage perspective, right, we've talked about this in the past, and I don't think my view on this has changed. We ultimately will need to bring our leverage down, and we'll do that over time. But this was an important step again to ensure that the liquidity question is off the table. The pressures that are associated with the liquidity questions are off the table and allow us to focus on running the business and move forward. So over time, debt will come down. We will improve the overall leverage. That will happen twofold: one, by reducing debt, but also increasing overall EBITDA levels as we go forward.

Matt Vittorioso: Great. Again congrats on the transaction. Thanks guys.

Tim Flanagan: Thanks, appreciate it.

Operator: And your last question comes from the line of Abe Landa with Bank of America. Please go ahead.

Abe Landa: Good morning. Also congratulations on the debt transaction. I noticed within your 8-K, you provided some EBITDA and levered free cash flow guidance. I'm wondering if you can maybe provide some of the underlying price volume and cash COGS per ton assumptions?

Tim Flanagan: Yes. Thanks, Abe, and I appreciate that. So certainly, and customary with transactions like this, we did provide some forward-looking outlook to support the underwriting process of both our existing bondholders as well as the revolving credit facility lenders. I will say and maybe just say this upfront, it doesn't really change our perspective on how we're going to provide guidance and kind of more near-term guidance and outlook will remain customary to what we've historically done in terms of some direction and some short-term indications of where we think the business is heading. But I think if you look more broadly, that 5-year outlook is really underpinned in the short term on our views around the market as it exists today, some of the data points that we've talked to around the short-term outlook from World Steel, our engagement with customers, our views on cost in the short run. As we look out further, the longer-term outlook is really underpinned by the growth of the EAF industry, the growth in the demand for needle coke and all of our kind of benefits that we get associated with that as well, both from the electrode business and where we want to head on the EV business. I will add that if you look at our existing footprint of operating assets in the 178,000 tons of capacity, that is the base assumption in that outlook. It's not assuming a broad expansion of any sort of assets as we look out there. So that's really a view on the base business. And longer term, and we've talked a lot about this in the past. We think there's strong support for both needle coke pricing as a key raw material, but then more importantly, electrode pricing to return to historical averages, and that will be a combination of industry growth as well as demand on the needle coke side. So those longer-term averages kind of underwrite our expectations into the future as well as our views around costs that we've talked about. So costs in the neighborhood of $4,400 for this year expect that to come down in '25, and we'll continue to drive down costs and get the benefit of fixed cost leverage as we go forward. So beyond that, I don't want to get into specifics on year-over-year type of movements or changes. But hopefully, that gives you a little bit of color and views around kind of the thinking of that -- those outlook items.

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

Rory O'Donnell: Yes. So we've included in the collateral package the majority of the assets in our foreign locations as part of the collateral package. There are some that are excluded. We continue to have some nonoperating legal entities in foreign jurisdictions that aren't included in the collateral package. But we've included -- it's a pretty significant increase in the assets subject to the collateral package. I think we can say safely that all of the operating assets are included at this time.

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

Tim Flanagan: Yes. Again, I'm not sure I want to speculate on how an administration plays out. I mean, yes, the U.S. is a very important market to us. And yes, we're headquartered in the U.S., but we have operations and customers globally, and it's just one of many geopolitical forces that impact our business. I would say the administration, the last go around was very pro steel, pro-domestic steel. And certainly, that helps our U.S. customers and continues to support what is an otherwise healthy industry. And I think you're seeing the world more broadly take a bit of a position more quickly than maybe they did back in '15, '16, '17 on China and the exports, right? And I don't think the world is going to let a repeat happen where that flood of low-priced exports erodes and otherwise decimates domestic steel market. So given the fact that our two main regions are the Americas and Europe, we'll continue to benefit from the trade protections that are in place on the electrode side. We expect those regions to continue to have tariffs in place on the steel side, which will support those domestic markets. But that leaves other areas of the world kind of exposed to Chinese exports, and those continue to be challenged markets broadly for both steel and the electrode business more broadly. So that's why I think we go back to China needing some reform on their part, whether that comes in the form of rationalizing their domestic supply both on the steel and the electrode side or more importantly is, as they continue to establish their scrap supply chains and collection vehicles, that EAF industry not only grows to the stated 15% that they're targeting, which, again, is an extra 50 million tons of annual steel production, but that it runs at a utilization rate similar to where their blast furnaces run. So you get back to north of 70%, 75% blended kind of rate on utilization, that would go a long way to otherwise supporting the industry more broadly.

Abe Landa: Thank you.

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

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

Operator: Thank you. And this now concludes our presentation. Thank you all for attending. You may now disconnect.