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.