GrafTech International Ltd.

Good day ladies and gentlemen and welcome to graph tech first quarter 2022 earnings conference call and webcast at this time all participants are in a listen only mode later we will conduct a question and answer session and instructions will follow at that time if anyone should require assistance during the conference please press star then zero on your touch tone telephone as a reminder this conference call is being recorded I would now like to turn the conference over to your host, Mr. Mike Dillon, Vice President of Investor Relations. Thank you. Please go ahead, sir.

Thank you. Good morning and welcome to Graf Tech International's first quarter 2022 earnings call. On with me today are Dave Rintoul, Graf Tech's Chief Executive Officer, Tim Flanagan, Chief Financial Officer, Jeremy Halford, Chief Operating Officer, and Quinn Coburn, Senior Vice President. Dave will begin with a review of our safety performance, current industry conditions, and demand for our products. Jeremy will discuss our sales, production, and operational matters, as well as give an update on our sustainability initiatives. Tim will cover financial details, and Dave will close with final remarks, after which we will open the call to questions. Turning to our first slide, As a reminder, some of the matters discussed in this call may include forward-looking statements regarding, among other things, results, 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 Dave.

Thanks, Mike. Good morning, everyone. Thank you for joining our first quarter earnings call. I hope you, your families, and your colleagues are all well. We begin, as we always do, with safety. Health and safety excellence is a core value of Graftech. and is fundamental to everything we do. People are our most important asset, and getting health and safety right leads us to doing business right. We are encouraged that our performance in this area continues to place us among the best operators in the manufacturing industry. As we continue our journey to achieve our ultimate goal, which is zero injuries, we will remain steadfast in our efforts that we send every employee home safely every day. Now turning to an industry update on slide four. While the near-term operating environment for all businesses remains dynamic, we are encouraged by the ongoing trends in the graphite electrode market. Continued strong demand has led to increased electrode pricing. Longer term, we expect demand trends to remain positive as electric arc furnace steelmaking, which is advantaged in terms of its variable cost structure, operational flexibility, and lower environmental footprint, continues to increase its share of crude steel production relative to integrated steelmaking. We also anticipate the demand for petroleum needle coke, a key raw material used to produce graphite electrodes, will continue to expand in the coming years. This reflects increased needs for higher electrode demand given the strength of the electric arc furnace steel industry. In addition, needle coke is used in the anodes for lithium ion batteries for the fast-growing electric vehicle industry. We view the growing demand for petroleum needle coke as another positive long-term trend for our business, as higher demand will result in continued, elevated pricing for needle coke and ultimately support higher sustained electrode pricing. For these reasons, Gravtech's substantial vertical integration into petroleum needle coke represents a unique competitive advantage. Turning more broadly to the current steel industry trends, the overall fundamentals remain generally solid. First quarter global steel production, excluding China, was essentially flat year over year. Capacity utilization rates continue to be healthy, particularly in North America. In addition, steel prices remain well above historic levels, which will serve to further encourage the industry to maintain high utilization rates. Turning to slide five and more specifics on our business, demand for our electrodes remains good and we remain committed to providing our customers with high quality products to meet their needs. As I mentioned, our vertical integration is a key component of our strength in being a reliable supplier and a dependable business partner. This demand for graphite electrodes has led to higher pricing for our products. Our average non-LTA price rose 19% in the first quarter of 2022 compared to the fourth quarter of 2021, in line with our expectations. This was on top of a 10% sequential increase in the fourth quarter. We expect our average non-LTA pricing for the second quarter to be consistent with our first quarter average. Turning to our LTAs, we have updated our estimates for graphite electrodes volume and revenue under our LTAs to reflect a timing shift between periods resulting from the conflict between Ukraine and Russia. We have provided force majeure notices with respect to certain LTAs serving customers in Russia. As a result, we expect the contracted volume under the impacted LTAs to shift out of 2022 and into the 2023 through 2024 period. We expect to offset the majority of the resulting lower LTA volume in 2022 with higher non-LTA sales reflecting the ongoing demand in the industry. As we progress through 2022, Our commercial team will be focused on leveraging our vertical integrated position, which makes us a key top tier electrical producer that can provide our customers with security of supply. Now, Jeremy will walk us through slide six.