GrafTech International Ltd.

Ladies and gentlemen, thank you for standing by and welcome to the Graf Tech third 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 the session, you will need to press star one on your telephone keypad. If you require any further assistance, please press star zero. Thank you. I would now like to hand the conference over to your speaker today. Wendy Watson, please go ahead.

Good morning, and welcome to Graf Tech International's third quarter 2020 conference call. On the call with me today is Dave Rintoul, Graf Tech's chief executive officer, and Quinn Coburn, our chief financial officer. Turning to our first slide. As a reminder, some of the matters discussed on this call may include forward-looking statements regarding, among other things, results, performance, trends, and strategies. These statements are based on current expectation 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 Dave.

Thank you, Wendy. Good morning, everyone, and thank you for joining our third quarter call. I hope you, your families, and your colleagues are healthy and well. We will begin, as we always do, with safety, which has become even more important during the pandemic. Excellence in health and safety is a core value of graph tech and a key priority. Our year-to-date total recordable injury rate at the end of Q3 was 0.57, a 40% decrease from 2019. Thank you to the graph tech team for your continued diligence and hard work in this area. However, The only correct number is zero with every employee going home safely every day. Health and safety is fundamental to our belief that a safe plant is a foundation for the success on the balance of our business metrics. Turning to slide four. We continue to proactively manage through the COVID-19 pandemic. Our executive-led COVID-19 response team continues to meet three times per week to monitor developments and make responsive changes to our safe work playbook to facilitate team member and customer safety. Our plants have been diligent throughout the COVID-19 pandemic and thorough in their controls and associated audits. Our team members continue to adhere to exacting protocols and cleaning, PPE, social distancing, and other measures designed for safe operation of our facilities. Regular team member communication and education is critical and ongoing. During these challenging times, we are also focused on providing the highest level of service to our customers and maintaining an on-time delivery rate of 98% in the third quarter. Turning to slide five, we are very pleased to have launched our inaugural sustainability report in September. We are committed to advancing our ESG efforts and continue to monitor progress on our environmental initiatives. As we focus globally on being good environmental stewards, we are mindful that electric arc furnace steel production yields 75% less carbon emission than traditional blast furnace production. The steel industry overall is a leader in recycling, and more steel is being recycled every year in North America than paper, aluminum, plastic, and glass combined. We are proud of our inaugural sustainability report and are fully committed to these efforts across our organization. We expect to issue our sustainability report on an annual basis. Moving to slide six, we are seeing measured improvement from the second quarter in the global steel industry with regions recovering at different rates. Third quarter global steel production outside of China improved to 187 million tons from 167 million tons in the second quarter. According to the World Steel Association, China is expected to achieve a new high for steel production estimated at just over 1 billion tons in 2020. Global steel manufacturing utilization rates outside of China also improved in the third quarter to just over 60% from approximately 57% in the second quarter. In the U.S., the utilization rate now stands at just over 70%. Steel prices have also been increasing in the third quarter, with USA hot-rolled coil values at approximately $700 per ton, North European hot-rolled coil at 513 euros per metric ton, or $593 to $600 U.S. dollars per metric ton, and Black Sea billet pricing at $412 per metric ton, all of these up over the second quarter. While demand is improving in the steel industry, we expect customer graphite electrode destocking efforts to continue for the remainder of 2020. We expect measured improvement in graphite electrode demand as the electric arc furnace steel industry recovers. Due to a favorable mix in the third quarter, Our average price for non-LTA sales of graphite electrodes in the third quarter improved slightly to $5,700 per metric ton. However, as anticipated, we believe the general spot price of graphite electrodes continue to trend lower during the quarter. Turning to slide seven. Our commercial team has been working hard in the current environment to serve our customers and to develop mutually beneficial solutions for customers who have struggled to take the volumes they have committed to under our LTAs. We have made substantial progress in negotiating LTA modifications with several of our customers, providing them near-term relief in exchange for additional contractual commitments going forward. We expect to continue finalizing more of these mutually beneficial negotiations in the coming months. For the full year 2020, we anticipate LTA sales volumes will be above the midpoint of our expected range of 100 to 115,000 metric tons. Given the good progress we are making in the LTA negotiations with our customers, we estimate that our graphite electrode LTA sales volumes in 2021 will be in the range of 98 to 108,000 metric tons. In 2022, we will be in the range of 95,000 to 105,000 metric tons. And for the years 2023 through 2024, we estimate LTA sales volumes of 35 to 45,000 metric tons. This effort represents the partnership that Gravtech has with our customer base. Now I'll turn it over to Quinn on slide eight to discuss our third quarter financial results.