GrafTech International Ltd.

Good morning, ladies and gentlemen, and welcome to the Graf Tech fourth quarter 2022 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. If at any time during this call you need assistance, please press star zero for the operator. This call is being recorded on Friday, February 3rd, 2023. I would now like to turn the conference over to Mike Dillon, Vice President, Investor Relations and Corporate Communications. Please go ahead.

Thank you. Good morning and welcome to Graf Tech International's fourth quarter 2022 earnings call. On with me today are Marcel Kessler, Chief Executive Officer, Jeremy Halford, Chief Operating Officer, and Tim Flanagan, Chief Financial Officer. Marcel will begin with opening comments. Jeremy will then discuss safety, sales, and operational matters. Tim will review our quarterly results and other financial details. Marcel 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 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. 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.graftex.com. A replay of the call will also be available on our website. I'll now turn the call over to Marcel.

Good morning, everyone. Thank you for joining Graftex's fourth quarter earnings call. 2022 was a challenging year. Geopolitical conflict, high levels of inflation, supply chain pressures, and economic uncertainty impacted global markets and the steel industry. This has negatively impacted demand for graphite electrodes and continues to do so. In addition, the temporary suspension of our operations in Monterrey, Mexico in the fourth quarter affected our business. These factors, along with a substantial shift in mix from LTA to non-LTA volume, will have a significant impact on our 2023 business performance. However, With the determination and resolve of our talented Graf Tech team, we are confronting these challenges head on. And we remain optimistic regarding the longer term outlook for the business and our ability to deliver shareholder value. I would like to highlight several points. First, our Monterey facility has restarted and is running well. We are pleased to have reached an agreement in November that allows for the restart and we remain confident in our ability to achieve a full resolution of this matter. The impact of the suspension on our sales volume in the first half of 2023 will be significant though. However, we will be well positioned to fully meet our customer needs as well as we enter the second half of the year. and we expect to meet all our remaining LTA commitments throughout 2023. Second, we are taking proactive actions. These include closely managing our operating costs, capital expenditures, and working capital levels, proactively reducing our production volume to align with the near-term demand for graphite electrodes, and making targeted investments to further improve our strategic positioning and support long-term growth. Third, as a result of our disciplined capital allocation strategy, we have a strong balance sheet and ample liquidity to navigate the near-term challenges. Lastly, electric arc furnace steelmaking and demand for graphite electrodes are expected to experience accelerating growth in the medium to longer term. GrasTech's sustainable competitive advantages remain intact, These include three of the highest capacity electrical manufacturing facilities in the world and our substantial vertical integration into petroleum needle coke. As such, we are well positioned to capitalize on long-term demand growth. I will now expand on my comments regarding our operations in Monterrey, Mexico. As we have previously reported, in September of 2022, inspectors from the environmental authorities for the state of Nuevo Leon, Mexico, visited our facility and issued a temporary suspension notice. In mid-November, we announced that our efforts towards the resolution resulted in an agreement with the authorities that allowed for the conditional lifting of the suspension notice and the restart of the facility. The lifting of the suspension notice was subject to a completion of certain agreed-upon activities and we are well on track to accomplish all aspects of the condition. We expect the full resolution of this matter and we continue to expand our engagement with the authorities in the State of Nuevo León and the community in the area. At the same time, we continue to pursue the risk mitigation activities related to pink stock that we discussed on the previous earnings call. These include the full restart of our St. Mary's, Pennsylvania operation, as well as other alternatives for the production of pinstock. While we are encouraged to be working towards final resolution of the situation, the negative impact of the suspension on our operating performance in the first half of 2023 will be significant. Although production of electrodes and pinstock began immediately upon the lifting of the The required manufacturing time for our products is generally several months. As such, the rebuilding of our pink stock inventory will take time. In addition, on the commercial front, the timing of the suspension coincides with the critical timeframe to secure customer orders for the first half of 2023. As a result of the uncertainty caused by the suspension, during this contract negotiation window, our ability to enter into new customer commitments for the first half of 2023 was limited. As a result, we estimate our sales volume for the first six months of this year will be approximately half of the level we reported in 2022, with the largest negative impact materializing in the first quarter of this year. As we move into the second half of 2023 with replenished pinstock inventory, we will be much better positioned. We expect our second half sales volumes to recover as we move past the Monterey suspension-driven uncertainty and as we anticipate a gradual improvement in market conditions. Importantly, we continue to expect to meet all of our remaining LTA commitments throughout 2023. We will provide more detailed comments on our outlook during this call. But first, I want to thank the entire Grafstech team, and in particular, all our employees in Monterey, for their ongoing efforts to address this situation and to continue to focus on moving our business ahead. And I also want to thank our customers for their ongoing support and understanding. With that, let me turn the call over to Jeremy.