GrafTech International Ltd.

Ladies and gentlemen, thank you for standing by. The conference call will begin momentarily. Please do not disconnect your lines. Your patience is appreciated. Once again, the conference call will begin momentarily. Please do not disconnect your lines. Your patience is appreciated. Thank you. Thank you. Good day, ladies and gentlemen, and welcome to the Graf Tech first quarter 2023 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 require immediate assistance, please press star zero for the operator. This call is being recorded on Friday, April 28, 2023. I would now like to turn the conference over to Mike Dillon. Please go ahead.

Thank you. Good morning, and welcome to Graphic International's first quarter 2023 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.graptech.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 Graf Tech's first quarter earnings call. When we last spoke to you in February, we shared our perspectives regarding 2023. We noted that there will be a significant impact on our performance due to four factors. One, the residual effect of the Monterey suspension that occurred in late 2022. Second, the substantial shift in mix from LTA to non-LTA revenue. Third, higher costs, and fourth, softness in graphite electrode demand. We anticipated the first quarter to be the earnings trough for the year, reflecting the lowest sales volume and the highest cost per ton. We expected performance to gradually improve as we proceeded through 2023 and then further accelerate in 2024. Lastly, we highlighted the actions being taken to navigate the current headwinds and that we remain optimistic regarding the longer-term outlook for our business. Our performance in the first quarter, which Jeremy and Tim will speak to later, met our internal projections. As it relates to the balance of the year, I highlighted the four headwinds that are impacting our 2023 financial performance. Our outlook for the first three factors remains largely unchanged. On the other hand, regarding the fourth factor, softness in graphite electrode demand, our outlook has become slightly more cautious. As Jeremy will discuss, we do see some encouraging signs for key steel market indicators. However, we are not yet seeing this translate into demand for graphite electrodes, and we anticipate softness in the commercial environment for the balance of the year. We attribute this to two reasons. First, the magnitude of the steel industry recovery remains constrained by global economic uncertainty. And second, current graphite electrode inventory levels at our customers exceed typical norms, reflecting the recent softness in steel utilization rates. As a result, our full-year volume expectations have been slightly reduced compared to our original projections. We currently estimate our 2023 sales volume to be in the range of 100 to 115,000 metric tons. That said, we continue to expect sequential improvement in our volume on a quarter-over-quarter basis as we proceed through 2023. Our outlook for costs in the year remains largely unchanged. As we look ahead to 2024, based on the latest outlook from the World Steel Association, Steel demand is expected to further recover with growth accelerating in most regions. This includes a projected 6% year-over-year increase in European steel demand for 2024, as well as a 2% increase in North America. As such, we continue to expect electrode demand and our sales volume to return to more normalized levels in 2024. To manage the near-term challenges in the market, we are successfully executing the plans we discussed on the last call. These plans include closely managing our operating costs, capital expenditures, and working capital levels, proactively reducing our production volume to align with the near-term demand output for graphite electrodes, and making targeted investments to further improve our competitive positioning and support long-term growth. We are pleased with the progress we are making to advance our business on several fronts. I would like to highlight some important accomplishments. Our Monterey facility in Mexico has been running well since the suspension was lifted in November 2022. The plant is operating consistent with our expectations. We are successfully executing our production plan and progressing well on our objective to rebuild our pinstock inventory. We are satisfying all the conditions that were agreed upon with the state authorities in Nuevo Leon in accordance with the timeline established at the restart last November. In addition, we continue to expand our engagement with the authorities as well as with members of the local community, and we look forward to operating the Monterey facility and supporting the community for many years to come. We have also made significant progress on our risk mitigation strategies related to pinstock. Earlier this month, we received the regulatory approval to restart production activities at our St. Mary's facility in Pennsylvania. Following this milestone, the facility recently received its first shipment of needle cloak since 2016. We are now in the process of beginning production at St. Mary's. In addition, Our efforts to initiate pinstock production capabilities at our Pamplona facility in Spain also remain on track. We are pleased with the progress of both initiatives, as this will provide important risk mitigation for pin production. On the commercial front, we have opened a new sales office in Dubai and added new sales and technical service representatives in additional countries. Although our business mix has shifted to be predominantly non-LTA now, we remain uniquely positioned to offer our customers surety of supply via multi-year electrode supply agreements. In fact, we are pleased to have recently entered into new multi-year agreements with several customers in North America and in Europe. This reflects our customers' confidence in Graf Tech's ability to reliably deliver high-performing products over time. We also continue to make progress on the sustainability front. Last week, we applied to join the United Nations Global Compact and look forward to participating in this important initiative alongside many other leading companies. Aligning our sustainability strategies under the UN Global Compact principles will further strengthen our business and lead to better results for our customers, employees, and other key stakeholders. Finally, We are taking actions that we believe will optimally position graph tech to benefit from medium to longer-term industry tailwinds and deliver shareholder value. Decarbonization is driving a transition in steel, with electric arc furnace steelmaking and resulting demand for graphite electrodes expected to experience accelerating growth. In addition, the demand for petroleum needle coke, the key raw material we use to produce our graphite electrodes, is also expected to accelerate the device used in lithium ion batteries for the growing electric vehicle market. We are well positioned to capitalize on these favorable long-term industry trends, and I will touch on this further at the end of our prepared remarks. I want to thank the entire Graf Tech team for their efforts and dedication as we continue to execute our plans to move our business ahead. With that, let me turn the call over to Jeremy.

Thank you, Marcel, and good morning, everyone. I will start my comments as I always do with a brief update on our safety performance, which is a core value at Graf Tech. As I indicated on our year end call, improvement in this area is a key point of emphasis with our team in 2023 as our prior year performance did not meet our high standards. I'm pleased that our recordable incident rate for the first quarter of 2023 is well below where we were throughout 2022 and places us among the top operators in the broader manufacturing industry. We will remain highly diligent in this area and seek to build on this momentum as we continue working toward our ultimate goal of zero injuries. Let me now turn to the next slide for an update on steel industry trends as additional context for our first quarter results and outlook commentary. During the first quarter, while we saw encouraging signs among key market indicators, the overall recovery of the steel industry remained somewhat constrained. Global steel production excluding China in the first quarter of 2023 was approximately 198 million tons. This represented a 2% sequential improvement from the fourth quarter, but a 7% decline compared to the same period in the prior year. This same trend carries through to global capacity utilization rates excluding China, which increased slightly on a sequential basis to 65% in the first quarter, but remained down by approximately 500 basis points year over year. Looking at some of the regions in which we participate, in Europe, we continue to see a stabilization of key trends, including steel production and pricing, although both remain significantly below year-ago levels. In the US, utilization rates continue to tick up, averaging 74% for the first quarter, with HRC prices rising significantly through the quarter. This sequential step up in U.S.-based steel trends reflects improved auto production and construction spending, among other factors. While these trends are encouraging, we also recognize that a significant amount of economic uncertainty remains. This is reflected in the wide range of possibilities presented in the outlook of key market participants. Turning to Graphtec's first quarter performance. Our production volume was approximately 16,000 metric tons, representing a 66% year-over-year decline and resulting in a combined capacity utilization rate for our three primary electrode facilities of 31% for the quarter. As we have indicated, toward the end of the fourth quarter, we began to proactively reduce production at our European manufacturing facilities. Combined, our facilities in Calais and Pamplona operated at just below one quarter of their capacity for the first three months of 2023. We expect to increase output in the second quarter and then increase further in the back half of the year based on steel market conditions. This is being done to align our production volume with our evolving outlook for graphite electrode demand, as well as to manage high energy costs more efficiently. For our Monterey facility, production output for the first quarter was in line with our expectations and reflected our focus on rebuilding our pinstock inventory levels. Turning to sales, our first quarter sales volume of approximately 17,000 metric tons was in line with our expectations. The impact of Monterey being suspended in late 2022 during a key commitment window for customer purchases covering the first half of 2023 was the primary driver of the 61% year-over-year decline in sales volume in the first quarter. Lower demand for electrodes also contributed to the decrease. Further, the terms for most of our LTAs ended in 2022, and our mix has shifted to more non-LTA business. First quarter shipments included 7,000 metric tons sold under our LTAs at a weighted average realized price of $9,000 per metric ton. and nearly 10,000 metric tons of non-LTA sales at a weighted average realized price of $6,000 per metric ton. Both of these prices were consistent with our expectations. As a result of these combined factors, net sales in the first quarter of 2023 decreased 62% compared to the first quarter of 2022. As we proceed through the second quarter of 2023, While the residual impact of the Monterey suspension will continue to have a significant impact, we anticipate our sales volume will begin to recover and be in the range of 24,000 to 27,000 metric tons for the quarter. Non-LTA pricing is expected to decline slightly from first quarter levels, reflecting softness in the commercial environment. In the second half of the year, we anticipate our sales volume will further recover as we move past the Monterey suspension-driven impact. However, as we've noted, given economic uncertainty and elevated graphite electrode inventory levels at our customers, we are now more cautious regarding our commercial outlook for the second half of 2023. Reflecting all of this, we currently estimate our full year sales volume will be in the range of 100 to 115,000 metric tons. Let me now turn it over to Tim to cover the rest of our financial results.

Thanks, Jeremy. For the first quarter, we had a net loss of $7 million, or $0.03 per share. Adjusted EBITDA was $15 million, or an adjusted EBITDA margin of 11%. This is a decrease from $170 million in the first quarter of 2022, primarily reflecting lower sales volume and higher year-over-year costs on a per metric ton basis. Expanding on costs. Reflecting the full-year impact of raw material, energy, and freight cost increases that occurred throughout 2022, Higher priced inventory was sold during the first quarter of 2023. In addition, during the quarter, our cash costs included approximately $10 million of fixed costs that otherwise would have been inventory if we were operating at normal production levels as compared to our 31% capacity utilization rate for the first quarter. Factoring all of this in, for the first quarter of 2023, our cash COGS per metric ton were approximately $5,600 and represented a 9% sequential increase compared to the fourth quarter of 2022. As a reminder, cash COGS per metric ton excludes depreciation and amortization, as well as cost of goods associated with byproduct sales and other non-cash items. On a full year basis, we continue to project year-over-year cashing year-over-year increase in our cash COGS per metric ton that is in line with our prior cost guidance for 2023. We also continue to expect that the first quarter cash COGS represents the high water mark for our costs in 2023. As such, looking ahead to the balance of the year, we project our cash costs per metric ton to improve slightly compared to the first quarter. As a result of input costs remaining elevated in 2023, as well as the impacts of fixed cost leverage based on our low utilization rate, we remain focused on cost management. For example, our procurement and technology teams continue to evaluate the sources of raw materials we use, are working to qualify new suppliers, and look to drive costs out of the business. Additionally, our operating teams are assessing ways of reducing scrap and waste in the production process. as well as identifying opportunities to reduce usage levels of key variable cost elements. Furthermore, we continue to expect market pricing to decline in the medium to long term for certain key elements of our cross-structure, including energy and decan oil. For these reasons, with an anticipated increase in our capacity utilization as sales volume is expected to return to more normalized levels for the full year of 2024, We are optimistic that our cost per metric ton will improve significantly as we move beyond the current year. Turning to cash flow. In the first quarter, we generated $25 million of cash from operations and $3 million of adjusted free cash flow, with both measures decreasing compared to the first quarter of 2022, reflecting lower net income. The lower net income was partially offset by an increase in cash provided by the net change in working capital as we continue to closely manage our working capital levels. Moving to the next slide. Our gross debt to adjusted EBITDA ratio is 2.4 times as of March 31st, compared to 1.7 times at the end of 2022. On a net debt basis, we ended the quarter at a ratio of 2.1 times. As of March 31st, our total liquidity was approximately $462 million, consisting of $135 million of cash and $327 million available under our revolving credit facility. This liquidity level was consistent with where we ended in 2022. Our history has demonstrated our commitment to executing a prudent and disciplined long-term capital allocation strategy. For 2023, This entails a focus on maintaining sufficient liquidity as we recover from the impact of the Monterey suspension, while making targeted investments such as the restart of our St. Mary's operations. For the full year, we continue to expect our capital expenditures will be in the range of $55 to $60 million, including investment supporting growth. With our focus on managing costs, capital expenditures, and working capital levels, we continue to expect to be free cash flow positive for 2023. And we remain confident that we have ample liquidity between the cash on hand and availability under our existing credit facility to navigate the current market conditions. I'll now turn it back to Marcel for his perspective on the outlook.

Thank you, Ted. Let me reiterate that we remain confident in our ability to overcome year-term headwinds and are encouraged by the significant progress our teams have made over the last few months. And we remain optimistic about the long-term outlook for our business. To this point, we are taking actions that we believe will optimally position Grafstech to benefit from sustainable industry tailwinds and deliver shareholder value. Specifically, we continue to expect the steel industry's efforts to decarbonize will drive a further shift to electric arc furnace steelmaking, supporting medium to long-term demand growth for graphite electrodes. Announcements of planned EAF capacity additions by steel producers and estimated production increases at existing EAF plants could result in incremental annual graphite electrode demand outside of China of 200,000 metric tons by 2030. This compares to global graphite electrode demand outside of China in 2022 of approximately 680,000 metric tons. On a regional basis, based on industry announcements, this could translate into incremental graphite electrode demand for approximately 65,000 metric tons in Europe and 25,000 metric tons in North America. We also anticipate the ban for petroleum needle coke to accelerate, driven by its use as a precursor material to produce synthetic graphite for the anode portion of lithium-ion batteries for the rapidly growing electric vehicle market. Based on estimates from the International Energy Agency regarding projected growth in EV sales and battery pack sizes, This could result in global needle coke demand for use in UV applications increasing at the compound annual growth rate of over 20% through 2030. Our sustainable competitive advantages are critical differentiators and foundational to our ability to meet our electrode customers' needs. We are operating three of the highest capacity electrode manufacturing facilities in the world, and we have substantial vertical integration into petroleum use of coke through our Seagriff production facility. In addition, the actions I spoke to earlier will uniquely position GrafTech to produce pins in three different facilities on two continents. We also see long-term value creation opportunities beyond our existing electrode business. We have been studying the ways in which we can participate in the anticipated growth of the EV market, and we see two potential avenues for Graphtec. The first is by leveraging our assets and technical know-how in petroleum needle cloak production, given the expected demand growth. Our participation could include either the expansion of Seagriff or construction of a Greenfield needle cloak facility, potentially in partnership with a third party. We are actively studying both options. As it relates to C-drift, we have piloted the use of petroleum needle coke produced at our facility for the purpose of creating lithium ion battery anode material with several third parties. As a result, we are confident in our ability to produce needle coke that meets the quality standards and specifications needed to be a precursor material for battery anodes. The second potential opportunity is leveraging our graphitization resources and knowledge to produce synthetic graphite material for battery anodes. Regardless of the source of the needle coke, graphitization is required to convert it to synthetic graphite. And graph tech possesses some of the largest graphitization resources and required expertise in the world. While we have not made any firm commitments, we are excited about the possibility in participating in some or all of the scenarios that I described, and we look forward to sharing more as we can. In closing, we are effectively executing the plans put in place to manage the current environment. Further, our long-term thesis remains intact. Graf Tech possesses an industry-leading position, a distinct set of capabilities and competitive advantages, and a talented and dedicated team that is committed to providing value-added services and solutions for our customers. Lastly, as a result of our disciplined capital allocation strategy, we have a strong balance sheet and ample liquidity to navigate the near term. For these reasons, I remain confident in our ability to deliver shareholder value. That concludes our prepared remarks. We will now open the call for questions.

Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the one on your touchtone phone. You will hear a three-tone prompt acknowledging your request. Should you wish to decline from the polling process, please press star followed by the two. If you are using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question. The first question comes from Ron Wishwanatab from RBC. Please go ahead.

Great. Thanks for taking my question. So I guess first off, just on the outlook for this year then, so you moderated the volume picture just a touch because of the uh backdrop uh macro and demand wise um what what what uh i guess what changes have you seen specifically is it kind of weakening and continued weakening in europe maybe some moderation in asia as well or maybe a slower than expected recovery there um what are you seeing specifically that led you to to moderate the volume outlook i guess first off well thank you for your question uh i think there

We have seen probably a slight moderation across all regions, and I think the primary driver continues to be the elevated levels of inventories. I wouldn't point to a specific region or really any reason beyond that. I think that's probably all we can share. I think the relatively weak utilization of steel mills in the recent months has simply led to higher inventory levels. I think that is the key driver.

Okay, and then similarly then, from a price standpoint, what are you seeing, I guess, in electrode markets? Obviously, you've had, you know, last year you saw some improvement on that spot price to the $6,000 per ton range. How do you think, you know, electrode prices will evolve as you move through 23? And then I guess I would have a similar question on needle coke. You know, is there downward pressure just given the soft volume backdrop?

I will talk to electro pricing, and then I'm going to hand it over to Jeremy for needle coke. So as Jeremy pointed out, so for the second quarter, we do expect non-LTA pricing to decline slightly from first quarter levels, reflecting the softness in the commercial environment. And we continue to expect pricing headings for the balance of the year, given the weak demand. We obviously understand the desire for more clarity on pricing going further into 2023 and beyond. But the reality is that we actually have quite limited visibility on pricing further out. And as we all know, pricing levels in this market can move very quickly. In fact, you may remember that We saw this just over a year ago when our non-LTA pricing increased by about 20% from Q4 21 to the following quarter, Q1 2022. So we recognize that things can change quickly, which is why our guidance is typically focused on the upcoming quarter where we have more visibility. With all of that said, though, we remain positive about the fundamentals of our business for the reasons we have indicated. which we expect to be supportive of both volume and pricing. And as you know, and we've talked about that on previous calls as well, historically there has been a spread between needle coke pricing and electro pricing that has averaged about $3,800 to $3,900 per metric ton, and we expect this correlation to hold over the longer term.

Yeah, and so picking up those very similar themes on the needle coke front, we've seen similar cyclicality or volatility in the needle coke pricing. What we've been seeing here recently is that super premium needle coke we've been seeing pricing somewhere right around $2,000 a ton and the more normal premium a little bit below that. And so that's kind of what we're seeing right now. As we look at needle coke pricing, it's been highly volatile as high as $3,000 within the last 12 months and as low as below $1,500 12 months prior to that. So, you know, I think that it is highly volatile in reflecting the market conditions at the time. And as we said, we've seen some softness in the electrode market and the growth that's coming from the EV market hasn't fully offset that.

Okay, thanks for that.

And then just to sum all that up then, so, EBITDA for this year, I would imagine, is biased downwards versus kind of the prior range of 2 to 250. Is that a fair statement?

Yeah, I mean, so I think... Given Marcel's commentary on the pricing side and Jeremy's reference points on the needle coke side as well as the cost guidance, I think we've given you quite a few data points that will help in the modeling, certainly. I think when you put that in, you should have a pretty good picture of what otherwise we would look, you know, our EBITDA projection to be for the year. Okay.

And just lastly, I appreciated the comments on the opportunities that you're seeing on the EV anode battery side. Is there a timeline that you could share as far as, you know, maybe some commercialization and when we can expect to see some kind of contribution, earnings contribution from any of your endeavors there? What are some of the mileposts that have to be completed to get there? And, yeah, is there any kind of timeline on when we can expect some of that to start flowing through?

I appreciate the question. And as I've noted, we have not yet made any firm commitments. So as we continue to study this space, I think we've developed a much better understanding of the opportunities and how we might participate. And I felt it was important to share with you our current thinking of how this might evolve and how we might participate. But we have not made any firm commitments, and therefore I cannot put any dates or milestones out there at this point.

I will be more than happy to share this as soon as we can. Thanks a lot.

Thanks, Rune. Thank you. The next question comes from Alex Hacking of Citi. Please go ahead.

Yeah, morning, and thanks for the call. I guess first question just on St. Mary's. What kind of production levels are you hoping to achieve there? Thanks.

Yeah, thanks. So the, you know, when we came into the year, you know, our intent was to do the full restart of St. Mary's, really to de-risk our PIN supply chain. And that's the primary objective as we go into it. And that's how we're going to progress with this. Beyond having that de-risking complete. The volumes that we put through there are really going to be based on market conditions and we'll balance the production among our plants really to achieve the highest level of customer service at the lowest landed price.

Okay, thanks. I just wanted to clarify on the cost guidance for the year. You said $5,600 cash cost in the first quarter. It sounded like That wasn't going to come down much in the rest of the year, but I'm a little confused by that, given that you'd obviously have a lot more fixed-cost amortization, right? You've run through the high-cost inventory. So I was sort of expecting that that cash cost number would be, you know, not necessarily coming down dramatically, but coming down, you know, in a relevant way for the rest of the year. Thanks.

Yeah, and you're right. So $5,600 for the first quarter, which, again, I think is the high-water mark as we see it for the year. I think we're still holding firm on the guidance we provided in the first quarter, which we guided to a range of 17% to 20% over 2022's cash costs, which averaged about $4,300 a ton. Now, albeit the first quarter performance probably puts us towards the higher end of that range. So we'll see some moderation as we go through the back half of the year, but the full year average will, again, still be right around the high end of the range that we previously provided.

Okay, thanks. And then just on putting your graphite in some form into the EV supply chain, this is a really basic question, but does the IRA kind of encourage use of domestic graphite products?

Very much so. Absolutely. I think that's really the driver for the opportunity for us, at least in North America. There may be opportunities in other regions as well, but that's the clear driver for us. Potentially using Cedris and Eagle Coke and potentially using our gratification assets in North America for that purpose.

Okay.

Makes sense. Thanks a lot. Thanks.

Thank you. The next question comes from Kecha Jensi of BMO. Please go ahead.

Hi. Thank you for taking my questions. Looking to 24, I think you mentioned you expect volumes to return to more normalized levels. Can you talk a bit more about that, what normalized means? Is this closer to what we saw in 2018 and 19, or how should we think about that?

Yeah, I mean, so certainly we – You know, we're at a fairly low point here in the first half, and we see some improvement in the second quarter. We expect to see sequential improvement through Q3 and Q4 leading into next year. And I think the steel demand statistics that Jeremy cited lead us to believe that we'll see a bit of a pickup as well heading into 2024. what exactly that looks like from an absolute demand number. You know, I'd point you back to 2021. You know, we were in the 167,000-ton range for 2021, and that was the year that we ran our assets not flat out or fully running, but certainly at a pretty high utilization rate. And I think with the restart of St. Mary's and some additional capacity that brings, you know, certainly we could get to that level or beyond there. Again, all dependent on market conditions, but certainly we won't have the impact of the Monterey shutdown that we're seeing here in the first quarter and the second quarter of this year looming over us as we head into 2024. So overall, 2024 should be a very good commercial year for us.

Okay, and I think you mentioned that you signed some new multi-year agreements. Can you talk a bit about What does that mean? Are these volume types of agreements? Because I don't think I saw any change in the LTAs.

Yeah, so the guidance on the LTA front, again, relates to those original LTAs that were signed back in 2017 and 18. We have had some success here in the early part of this year where we've signed several new agreements. albeit on similar terms, not exactly the same arrangements that we had in the past. But I think, again, they reflect our customers' kind of commitment to Graphtec and Graphtec's commitment to our customer base and their confidence in our ability to deliver these electrodes and high-quality electrodes into the market. So these customers obviously value the surety of supply that we can provide Those will hopefully continue to grow as part of our overall portfolio. We're very happy with the progress we're making on that front.

Maybe to further clarify, so the LTA tables that we are disclosing do not include any new multi-year sales agreements. purely the original ones that were entered into five years ago, and we will not include the new multi-year sales agreements in those traditional LTA tables going forward, given that the prices achieved and the terms are different, right? And the pricing is obviously closer to current market positions, so they're not quite comparable. So we don't think it would be correct to lump them into the existing LTA tables.

Are you going to provide any information going forward on these new contracts?

Yes, certainly as they become a more material piece of our overall commercial portfolio, we'll provide some necessary direction.

Okay, thank you very much. Thank you.

This concludes our question and answer session. I will hand the call back over to Mr. Kessler for closing remarks.

Thank you, Operator. I would like to thank everyone on this call for your interest in graph tech, and we look forward to speaking with you in August. Have a nice weekend.

Ladies and gentlemen, this does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your lines.