GrafTech International Ltd.

Ladies and gentlemen, thank you for standing by and welcome to the graph tech first quarter 2020 earnings conference call and webcast. At this time, all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this time, you will need to press star then one on your telephone. If you require any further assistance, please press star then zero. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Mr. Adam Diebel. Please go ahead, sir.

Thank you, Amy. Good morning and welcome to Graf Tech International's first quarter 2020 conference call. On the call with me today is Graf Tech's Chief Executive Officer, Dave Rintoul, and Chief Financial Officer, Quinn Coburn. Now turning to our first slide. As a reminder, some of the matters discussed on this call may be may include forward looking statements regarding among other things results, performance 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 these indicated those indicated by forward looking statements are shown here. We will also discuss certain non gap financial measures for which you will find reconciliations in these slides. The slides are posted on our website at www.graftech.com in the investor section. For your reference, a replay of the call will also be available on our website. Now, I am pleased to turn the call over to Dave.

Thank you, Adam. Good morning, everyone, and thank you for joining us today. I hope this call finds you, your families, and your colleagues well. On that theme, we'll begin, as we always do, with safety. which is more critical than ever in these times. Health and safety excellence is a core value of Graphtec. Our first quarter total recordable injury rate has improved significantly to 0.54, a more than 40% decrease from the prior year. I would like to thank the team for their efforts associated with this achievement. Over the last 18 months, we have made significant progress in improving our safety program. This is fundamental to our belief that a safe plant provides a foundation to achieve success on the balance of the business metrics. Now turning to slide four, I would like to give you an update on where we stand within the context of COVID-19 and the impact that it has upon our business But first, I'd like to acknowledge and thank the healthcare workers and first responders who have been the heroes working to help those directly affected by the virus. Early on in this crisis, we established a COVID-19 response team, which continues to meet three to five times per week and consists of a cross-functional group of senior management. Initial actions taken consisted of bans on travel and in-person meetings, as well as working from home wherever possible. We have developed a safe work playbook outlining exact protocols for safe operations in this new environment. For those team members and plants, this means actions such as taking temperatures where local privacy laws permit, mandating the use of gloves by all plant employees, additional cleaning using disinfectants, and using good social distance practices to name a few. We have implemented daily check sheets to maintain focus and ensure compliance with new practices and procedures. We have also developed return to work protocols so that when the time is right, we may have team members currently working from home safely return to the office. Now turning to slide five. I can't say enough about our team and the job they have done to keep our plants running safely and effectively throughout this crisis. As a result of their hard work, all of our facilities have managed to stay open and operating. We did this by proactively working with eight different sets of government controls and guidelines given our global footprint. As a result of our rapidly implemented protective measures to keep our employees and work environment safe, I am happy to report that over 99% of our employees have remained healthy. Not only have our plants remained operating, We have met all of our customer requirements and achieved an on-time delivery rate of 96% in the first quarter. The team did all of this while still achieving safety performance that I discussed earlier. Moving on to slide six. Despite the steel industry being deemed an essential business in many countries, a number of our customers have temporarily suspended or otherwise reduced operations. As a result, global steel production was down 1.4% in the first quarter and 4.1% if China is removed from those values. We currently serve customers in over 300 locations, and many have been adversely impacted in one way or another. The pace of customer inventory destocking was going as we expected until the pandemic outbreak. The impact of the pandemic has slowed the pace of destocking, which will now largely depend upon the timing of the economic recovery. Our substantial vertical integration into needle coke to provide us competitive advantage has provided us a competitive advantage. Although we are not currently negotiating any third party needle coke purchases, we do monitor international trade data that suggests some thinly traded needle coke transactions took place at just under $3,000 during the first quarter. We are planning our biannual turnaround at our Seadrift plant in June to conduct regular maintenance projects. This outage will last approximately four weeks, and we have sufficient needle coke to last us through that outage. Now turning to slide seven. As a result of COVID-19, we have received over 20 force majeure notices on our long-term agreements. While there have been no additional bankruptcies within our customer base, we have had customers who have had their operations disrupted and are struggling to take volumes and perform on the contracts. Adding to this pressure, the spot price for graphite electrodes has been declining in recent periods, and pricing pressure has been exasperated by the COVID-19 crisis. We have now reached a point where our spot price, which averaged approximately $6,500 per ton in the first quarter, is below what is in the long-term agreements. While most customers understand the situation and value the long-term contracts for the security of supply and price certainty, some have recently chosen not to perform on their contractual obligations. In light of these challenges, we are now estimating that our 2020 long-term agreement shipments will be in the range of 100 to 115,000 metric tons. This is down from our previous quarter estimate of 130,000 tons. However, we expect some of this decrease will in fact be deferrals, which will be recovered in future years. We will continue to work with our valued customers for viable solutions to these issues, but we will take every measure to ensure that both Graphtec and our customers honor these contracts. Now we'll turn it over to Quinn on slide eight for more details on our first quarter results.