GrafTech International Ltd (EAF) 2014 Q3 法說會逐字稿

Ladies and gentlemen, thank you for standing by, and welcome to the GrafTech third-quarter earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session.

(Operator Instructions)

I would now like to turn the conference over to Kelly Taylor. You may begin

Thank you, Paula. Good morning, and welcome to GrafTech International's third-quarter conference call. On the call today is GrafTech's Chief Executive Officer, Joel Hawthorne; and its Chief Financial Officer, Erick Asmussen.

We issued our earnings release this morning. If you did not receive a copy, please contact Marie Knorr at 216-676-2160, and she will be happy to fax or email a copy to you.

As a reminder, some of the matters discussed during this call may include forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Please note the cautionary language about our forward-looking statements contained in our press release. That same language applies to this call.

Also, to the extent that we discuss any non-GAAP financial measures, you will find reconciliations in our press release that is posted on our website at www.graftech.com, in the investor relations section. In particular, on this call, we will be discussing, for the periods reported, the non-GAAP financial items of EBITDA and adjusted operating income. For your reference, a replay of the call will be available on our website.

At this time, I'd like to turn the call over to Joel.

Thanks, Kelly. Good morning, everyone, and thank you for joining the GrafTech call today. This morning, I'll review our third-quarter results, provide an update on the more than $120 million of cost savings initiatives that we've announced and launched over the past year. Additionally, I'll provide an update on our balance sheet, our current outlook, and the 2015 book-building process. And then at the end of the call, we'll open up to any questions.

Looking at Q3, Company sales were $260 million, down about 14% from Q3 2013. We reported a loss of $35 million, largely as a result of special charges associated with our previously announced rationalization initiatives. Excluding these one-time charges, we reported a loss of $13 million, or $0.09 per share.

EBITDA, which excludes the special charges, came in at $24 million. Operating cash flow for the quarter was $27 million, and net debt was $530 million, a $10 million reduction from year end 2013.

GrafTech is operating in a very challenging environment, and we continue to feel the impact of those global headwinds in our markets and in our financial results. We're working diligently to control the things that we have power to control. I will get into more of that regarding the extensive cost containment efforts we are executing on.

But to put it in perspective, since October of last year, GrafTech has identified over $120 million of total annual cost savings, approximately $100 million of which are cash savings. Further, we are already making substantial progress turning those savings into reality, and our 2014 results include approximately $45 million of cash savings benefits.

Now let me turn to our segment results. In our industrial materials segment, sales declined 11, to $209 million in the third quarter, compared to the prior-year quarter, mainly due to lower realized graphite electrode pricing and weaker graphite electrode shipments outside of United States. We continue to face a challenging operating environment in industrial materials.

As reported in our September release, the demand for graphite electrodes in the United States has been solid. However, that demand has not been strong enough to fully offset weakening demand in other regions. Overall, we saw 5% volume decline compared to the prior-year quarter.

As reported in the September release, we will see a 5% to 10% of our graphite electrode shipments for the second half of 2014 being delayed into 2015. This will result in reduced graphite electrode production rates in our fourth quarter.

Because of our industrial material rationalization announcement last year, we will still run our graphite electrode facilities at high operating rates, slightly above 85% in 4Q. And our Seadrift needle coke facility at over 90%, essentially full capacity in the fourth quarter, even in spite of these recent demand adjustments.

Also, as we reported in our July release and conference call, Seadrift experienced an unplanned outage in July lasting approximately three weeks. While there was no disruption to customer orders or shipments, as we have maintained a good inventory position and connection with an earlier planned shutdown for our regular five-year maintenance in Q2, our costs in the third quarter of 2014 were negatively impacted approximately $2 million due to this outage.

Adjusted operating income for this segment was $2 million, excluding the one-time costs associated with the Seadrift outage. Adjusted operating income was $4 million, or 2% of sales, essentially flat year over year, if you exclude the Seadrift outage adjustment.

Our previously announced rationalization initiatives in industrial materials are complete. We are on track to realize the $50 million of cost savings we expected this year, and the incremental $25 million expected next year, for the total of $75 million in annual savings.

These initiatives will significantly improve GrafTech's competitiveness by reducing manufacturing costs, increasing operating efficiencies, and positioning us to capitalize on a recovery in demand for our products. Importantly, these initiatives are the reason that GrafTech maintained flat year-over-year adjusted segment operating income, despite an 8% drop in graphite electrode pricing, and the weakening regional demand I discussed earlier.

Now let me turn to our engineered solutions segment. As announced in September, the financial results of our engineered solutions segment for the second half of this year are being negatively impacted by a slowdown in demand for our advanced consumer electronics products. This slowdown is largely due to lower than expected demand from one of our customer's consumer electronic product programs.

We have strong customer relationships in advanced consumer electronics market. We continue to diversify our customer base and product offerings into this end market. Of the top 10 advanced consumer electronic vendors for smartphones, we have provided product solutions to every one in the past.

We will continue to innovate and provide thermal management solutions into next-generation electronics programs. In addition, earlier this month, one of our customers of our advanced graphite material business unexpectedly filed for bankruptcy. This resulted in a $5 million charge in the third quarter of 2014 related to accounts receivable and inventory.

This is a disappointing development. We will -- currently, we will continue to monitor the developments in the bankruptcy reorganization proceedings and make adjustments accordingly. We will continue to evaluate the impact of developments and reorganization plans for the customer's business, as well as our own initiatives on future business plans for high temperature furnace systems related to [sat fire] for consumer electronics.

We continue to collaborate with our customers on other high temperature product applications that are in the marketplace. For the third quarter, sales of our engineered solutions segment decreased 26% to $52 million, compared to the prior-year period, mainly due, as I mentioned above, reduced sales of our advanced consumer electronic products.

Adjusted operating loss, excluding the impacts of the customer bankruptcy and of rationalization-related charges, was $2 million, which was better than expected due to aggressive cost containment. While discrete events such as a weak product launch by an end customer and an unexpected bankruptcy of another, have significantly affected our 2014 expectations for engineered solutions, we continue to believe that this segment will be an important contributor to shareholder value creation.

We are fully committed to returning the segment to profitability. It is a priority for me, and we are taking actions to improve its performance.

Turning to our cost savings actions. We continue our relentless focus on creating a more streamlined business model, with greater accountability and cost efficiency. This will allow us to compete better in the global marketplace, and best position GrafTech to drive innovation for future success.

On September 23, we announced that we concluded another phase of our ongoing cost savings assessments. We've identified an incremental $30 million in cost saving actions designed to streamline, simplify, and decentralize the organization. We believe that these enhancements will allow GrafTech to work more closely with its customers, drive greater accountability at the local level, and respond even more efficiently to changing market dynamics.

These initiatives include additional right-sizing initiatives to reduce costs and create a high-level business ownership at the local level. Actions included a combination of reduced contractor costs, attrition, early retirements and layoffs, as well as a redesign of our research and development function.

The R&D redesign will place greater emphasis on driving innovation to support new product development. Building on GrafTech's 128-year heritage, we will transform our R&D capabilities into a technology and innovation center focused on commercializing next-generation technologies in carbon graphite material science.

In conjunction with the organizational improvements identified, we will downsize our corporate functions by 25% and relocate to a smaller, more cost-effective corporate headquarters within Northeast Ohio.

These actions are expected to generate annualized re-occurring cost savings of approximately $30 million. Approximately 75% of which these will be reflected in the overhead expenses and the remainder in the cost of goods sold. The majority of these savings are expected to be realized in 2015.

We expect to incur approximately $20 million of charges related to this initiative, $8 million of which were incurred in the third quarter of 2014. We also expect to disperse the majority of the estimated $12 million of cash expenditures related to these actions in 2015. These new initiatives build on two previously announced initiatives.

Let me just summarize. First, we achieved savings of $75 million from the industrial materials rationalization that was announced in October 2013. This included the closure of our two highest cost graphite electrode plants, a machine shop in Russia, and reductions in corporate and industrial materials overhead.

This resulted in a 20% reduction of our global work force at the time. These actions were completed at the end of the third quarter this year, and as mentioned earlier, have contributed $50 million in savings in 2014.

Second, we generated an additional $18 million in savings by streamlining our product offering in engineered solutions segment. This was the announcement at the end of 2Q for the isomolded product line that we exited.

Including the $30 million in cost savings announced here in September of 2014, the annual cost savings GrafTech has identified and executing on total over $120 million, approximately $100 million of which are cash savings directly improving EBITDA. In 2014, as discussed, we expect $50 million of the savings, of which approximately $45 million are cash savings benefiting 2014 EBITDA results.

While it's always difficult to make decisions that impact your teammates, these actions are designed to make GrafTech a more competitive global company that is better positioned to drive growth and innovation, and respond more quickly to customer demands.

Turning to our balance sheet, our financial position remains solid. Our debt to capital ratio at the end of Q3 was 33%. However, due to lower EBITDA over the past year, our debt to EBITDA ratio is 4.6 times higher than our targeted level. We are focused on driving free cash flow and lowering our debt to EBITDA ration to our target of less than 3 times.

We made solid progress against our goal of reducing working capital. In the nine months ended September 30, we reduced working capital by nearly $50 million. We expect to continue to decrease working capital requirements as reduced inventory levels in the fourth quarter and next year, providing additional liquidity as we close the year and move into 2015.

In addition to lowering working capital, we expect to be able to meaningfully reduce our capital expenditures in 2015, as we launched and completed several planned larger than normal maintenance projects during 2014. With those actions behind us, our maintenance capital requirement is approximately $60 million to $70 million annually.

As of the end of Q3, we have approximately $340 million of availability on our revolving credit facility, of which we have utilized $60 million. This leaves us with approximately $280 million of availability remaining. This facility does not mature until April 2019.

We continually evaluate all opportunities to ensure that we maintain adequate liquidity and a solid capital structure as we move into 2015.

Let me turn to our outlook. In its October report, the International Monetary Fund reduced its estimate for 2014 global GDP growth to 3.3%, 0.4 percentage points lower than its April forecast. The report states that downside risk to the global recovery economy have increased due to geopolitical uncertainty and volatility in the financial markets.

Although recoveries in certain developed countries, including the United States, have been stronger than previously expected, the slowdown in emerging economies has contributed to lower global growth projections.

The impact on steel, according to the World Steel Association, 2014 global steel production, excluding China, increased only 2% through the end of September 2014. In Q3, global steel production, excluding China, increased 1.9% on a year-over-year basis.

However, steel production in September, excluding China, on a year-over-year basis, was negative. While North American steel production operating rates continue to show improvements in the third quarter of 2014 and September, the European Union reported lower steel production year over year in the month of September, by almost 2%, reversing prior growth trends.

Other major steel-producing countries showing negative growth trends in September included Brazil, down 3.8%, South African, down 3.1%, and Turkey, down 3.1%. This decrease in production led to reduced graphite electrode demand and inventory adjustments, including delayed shipments of our graphite electrodes.

We continue to watch indicators of nonresidential construction, as it is a key driver for growth in EAF production. While we are seeing positive indicators in the United States, ABI, Architectural Building Index, and customer sentiment, the timing of the recovery in the rest of the world remains uncertain. As we have said many times, this is a key sector to watch on a global basis, for EAF production and the resulting change in electrode demand.

Let me give a little color on the status of our 2015 order book. We're in the very early stages in the book building process for both needle coke and graphite electrodes. We have had discussions with our global customer base, and informed our customers that we are seeking a 10% price increase for graphite electrodes next year in order to better align prices and cost, following the significant price reductions we have seen over the last couple years in price.

As we have discussed previously, graphite electrode and needle coke prices are determined based on global demand and supply, capacity utilization, and raw material cost changes. We continue to assess the demand environment for global [sale] customers, which has become more volatile than we would like, as we're building our 2015 order book.

Additionally, we continue to assess trends in oil prices and other input costs to determine what impact that will have for our graphite electrode and needle coke in 2015.

There have been a few small confirmed orders to date, so it is too early to comment on pricing indications at this point in the book-building process. We continue to balance price/volume equation to maximize profitability into 2015.

Our strategy to maximize profitability remains to differentiate and sell the value of our product offerings, dependant on the segment or specific product application. Our value equation is based on superior product quality, performance, delivery, reliability and customer technical service. We believe that we offer one of the best value equations in the industry, backed by what we believe is the lowest cash cost structure among our peers.

GrafTech is driven to maintain a sustainable differentiated business model. We are focused on innovating new products and processes, and providing exceptional value to our customers.

We are committed to the highest levels of quality, reliability and service. Our resolve to maintain a differentiated, low-cost business model that effectively and efficiently, that performs through all market environments, is unwavering.

To summarize, we continue to face a challenging and volatile operating environment in both our engineered solutions and industrial materials segments. We remain focused on our operations, on things we could control.

This includes execution of the remaining $55 million of EBITDA enhanced cost savings initiatives. Providing our customers with superior service and quality as we balance share, volume, price, economics. Driving innovation in our ES segment to meet evolving customer needs and market opportunities.

In addition, de-leveraging our balance sheet remains a priority for our Company. And we continue to reduce inventories, capital expenditures, to achieve that goal.

We are targeting $70 million working capital reductions in 2014, and fourth-quarter capital expenditures should begin to reflect the maintenance levels we see going forward. We also continually look at means to enhance our liquidity, and believe there are many options available to us to enhance both our near- and long-term liquidity requirements.

As we stated in our September release and as the result of the uncertainty that exists in our end markets today, we are in the process of re-evaluating the guidance practice going forward, and plan to provide more detail during our fourth-quarter call early next year.

The GrafTech Board, the Management team, our global employees, are committed to restoring and growing value for our shareholders, by leveraging the backward integration, low-cost, differentiated business model and executing on our strategy by commercializing advanced product solutions. I continue to believe that GrafTech is well positioned as one of the best carbon and graphite material science companies in the world, and we are committed to improving performance in the short term, as well as the long term.

That concludes my prepared remarks. And Paula, I would now like to open the call up for questions.

(Operator Instructions)

Your first question comes from the line of Luke Folta of Jefferies.

Good morning, Joel

Morning, Luke.

Question on cost cuts. A lot of numbers provided. If I want to look at the third quarter industrial materials performance as a baseline to think about the impact of cost cuts you've already realized, and then those that are still forthcoming. Of the $50 million of total cost savings that you've realized, how much of that is in IM?

The vast majority of it is in IM, Luke. (multiple speakers)

And that is going to be reflected in the third-quarter performance?

Yes. As we said, the rationalization that we started last year, those costs benefits are there. The only impact you'll see is, again, inventory flow. That the cost savings are there, obviously, on an ongoing basis. But you still do have some inventory flow of higher cost materials [that] we've seen in Q3.

Okay. How big of a headwind would you say that was for you?

We didn't disclose how big of a headwind it was, but it will obviously help a little bit as we move into Q4, because that inventory is now out of the system.

Okay. And the results for the third quarter that -- I think it is $2.4 million or so of operating profit, that -- to adjust for the outage, we would add $2 million back to that, for the Seadrift outage in the quarter? Is that right?

Correct. Yes.

Okay. All right.

And then, in terms of additional cost cuts that have been announced but are not yet realized -- in IM, what would that impact be, from here?

In IM, of the $30 million savings we announced out there, probably an estimate of, I will say, around $5 million, 20%, of that $30 million would be a good gauge to use.

$5 million of the $30 million will impact the IM segment? I would have thought it would've been more; because of the corporate actions that you have made, I would have thought it would've been a greater allocation towards the IM segment, just given it's bigger.

Yes, that's just a direct. The corporate allocation would be different. We said we were going to save about $30 million, of which 75% relates to overhead, and 25% relates to cost of goods sold

Okay. But in the segment reporting format, that would both be included in the --

Both would be included, yes. So then you go to the allocation of the remaining corporate, which you -- roughly, you could use on a percentage of sales.

Okay

On allocation

Got you. Okay.

And I guess second question, on the guidance for the year -- you didn't really narrow the range, which keeps the door pretty open in terms of some volatility in the fourth quarter. As you see things today, can you just give us the sort of directional segment outlook, 3Q to 4Q? Just some of the moving parts?

Yes, when you look at -- as -- I'll start with IM. And as you said, we came out with $2 million in 3Q. As you just mentioned, you could add the $2 million to Seadrift to that. That gets you to $4 million. Sequentially, again, as we said, volume from Q3 to Q4, we saw reductions in Q3. As we said in year over year, that was about a 5% reduction. Volume going into 4Q will probably be similar to what we saw in Q3.

So volume -- what we're seeing right now would be flat. Price -- on the price front, we said that year over year, we were down 8% in Q3. Year to date, we're down about 11%. That would imply the price going into the fourth quarter also would be very similar to 3Q.

And our costs, as I said, the only impact we get on cost is the inventory flow-through. So there may be a little bit of impact pick-up on that, but not -- I would say, not major, just a little.

Okay. And then ES -- there was the product launch issue. I actually would have thought that there would be a bigger loss than that in the third quarter. Does that -- do you stand by your full-year guidance, previously, that EBIT should basically break even from full year there?

Yes. Stand by that. Again, the team -- the ES team did a great job reacting on the cost containment, as I mentioned. And made tough decisions, and moved quickly, and reacted to take cost out of the system. And again, did a good job.

And from my view, we were a little better than what we would have thought in 3Q on the ES segment. But we still stand by that for the year. Because, again, in the press release, we said in the third quarter, there was some sales related to the customer that went bankrupt that obviously won't repeat fourth quarter. So you'll see a little pressure from that.

Are you able to talk about what the annual sales to that customer have been?

Yes. The annual sales, we've disclosed, were about $17 million annually. And in the 3Q, it was about $4 million

Okay. All right, just last one, and I'll get back in line.

But in terms of Seadrift heading into next year, can you give us some sense, are you seeing -- when we look at the oil price move, we don't have as much visibility as to what the trends are in decant. Is it reasonable to suspect that decant prices have moved similarly to what we're seeing in crude oil prices?

Yes, that's a very good, reasonable assumption. The decant moves in sync with -- you see it in oil. The relationship is similar

Okay. So there's a situation next year, where even if ENaCode prices were to fall by some amount, that, that doesn't necessarily mean that it's a direct hit to profit. You could see some spread -- maybe even spread expansion, depending on how the prices move?

Right, exactly. And that's why I said in my comment, we're watching closely oil prices, and the impact that would have on input cost going into 2015.

Okay. Thanks, Joel.

Yes. No problem, Luke. Thanks.

Your next question comes from Edward Marshall of Sidoti & Company

Good morning.

So when you mention material cost headwinds in the quarter, are you referring to input materials? Or were you referring to the graphite electrodes themselves?

Yes, I'm trying to think, I just forget where I said material --

Yes, you just said it in the response to Luke's question.

We were talking about going forward beyond this year. And the headwind cost was on the GE inventory flow-through from the first half that were higher costs than what we will see here in the second half.

Okay. And we go through this exercise every year on price. And we get an indication sometime in August to September. And on this call, we get an idea where pricing is going to go.

You said you had a few orders already, but you didn't talk about maybe what the size of the book is? And how you are trending to the completion of that book prior to year end into next year? Can you give us a sense as to where we stand, as far as the percentage of completion, as we have done in prior years?

At this time of the year, we really don't have a good percentage of completion. As I said in the comments, it is only a few small customers at this point that we've concluded with.

I think what I said in the past is, typically, the order book season, if it begins early, which means if demand is stronger, it begins early -- you see it begin early in September-October time period.

When it's softening, which we reported that, if our shipments seem [slide] out, the book-building season gets pushed, as the customer has inventories to work through it. And that's what we're seeing, Ed, as the book-building season is being pushed out. And we're really not getting engaged here until probably November, December, January.

So what level of confidence does that give you surrounding what your anticipation is? Or at least what you're asking for, as far as price, for next year?

Too early to tell. As I said, we're notifying our customers, we're looking at a 10% price increase. That's based on cost inputs, market, demand and supply. And that's what we're looking for. Too early to tell how it goes.

And as far as the focus of pricing, I understand it has traditionally been global. Is there any chance for that, that deviates from that range, as a potential for some kind of regional shift, or regional focus, or anything along those lines? Or what that --

In our world, you have nine global competitors outside that are pretty global, and compete in pretty much every region. So you don't see a regional price -- and you get disparity of regional price [to do with] currency impacts. But overall, it's a global market.

Luke was alluding to this, and I guess I'll extrapolate a little bit. But you have a wide range for Q4, based on the guidance, as far as where EBIT and EBITDA might fall. And I imagine IM is pretty set for the year, given the length of lead times and so forth.

So I'm curious as to what might be going into the wide range? And why you decided not to adjust that -- or narrow that range -- as we moved into the fourth quarter? Are you preparing for any changes with maybe delays due to the restructuring? Or anything along those lines? Help me out with that?

Yes. No, Ed, our thinking was, like I said in the comments, we will look at how we guide, going forward in February, on a broader scale. We just felt comfortable with what we came out with September from a year-end range. We're very comfortable with that range we provided, and felt no reason to change the range, either tightening it or changing it. So I wouldn't read any more into it, other than we're just comfortable with the range that we have provided in September.

Okay. Fair enough. Thanks, guys.

Your next question comes from Phil Gibbs of KeyBanc Capital Market.

Morning, Joel.

Morning, Phil.

I had a question on the capacity utilization. I think you talked about 85% or so for the electrode business in the fourth quarter. What are you targeting for 2015, as far as your capacity utilization?

Again, too early to tell. We will target based on when the order book comes to a better completion, so we have an idea of what that looks like. That then will determine how we utilize our operating rates. The key thing to determine that, obviously, is going to be where the book ends up. And we still want to reduce our inventory levels.

So as I mentioned, one of our key initiatives is to bring inventory out in the balance sheet, not only this year, but in 2015. So two factors will gauge in determining final operating rates for 2015, is where the order book comes in, our total demand profile that we will supply to. And then obviously, how much inventory we want to reduce. And it's too early to tell.

Okay. Can you give us a sense of what the year-to-date utilization has been at Seadrift? And what -- because I think you had given a high level on the fourth quarter. But what has it been year to date? Because I know you said you had this idler outage in the third quarter. So I'm just trying to gauge where it has been, and how we trended?

You got it, Phil. Actually, Q3, we ran at just below 90%; so 88%, 89%, in that range for Q3. And as you mentioned, we had an unexpected outage in Q3. If you look at the full year, expect that 2014, as I said, Q4, we expect to run over 90%, or in essence, full. So the full-year average would be somewhere around 95%, call it.

That was even with -- I think you guys took some capacity downtime, right, in the second quarter?

You got it. And we adjust our effective capacity for that, right? That outage.

I just meant inclusive of all of that. Because that is your capacity on your runtime. I was just curious as to what your production was for the year?

You got -- so a series of ways to look at it. That outage was about a 45-day outage.

Okay.

You take our publicly stated capacity of around 140,000 tons. It tells you, for that 45 days, what would come out. And then you get -- recalculate what the utilization rate is.

So that was on the second quarter or the third quarter?

Second quarter, 2Q.

Okay. 2Q, okay. And then the one that you took in the third quarter was less than 45? It may have been a couple weeks or something?

Three weeks. Three weeks for 3Q. Yes.

Okay. Then, as far as the Showa Denko capacity expansion in the US, in the Carolinas, were they a competitor for business in 2014? Or is that more of a new competitor for 2015?

Yes, you'd have to ask them what their plan is for the capacity. But from what I see on the outside is that, that new capacity has not started up yet. And everything we see is that the expansion of the existing facility will probably hit the market in 2015. But you'd have to ask them directly what their plan is.

Okay. No, I was just curious as to what they were -- if they were -- I didn't know if they were running yet. So I appreciate that.

Yes.

Thanks a lot, guys.

No problem, Phil.

(Operator Instructions)

Your next question comes from Charles Bradford of Bradford Research

Hey, Chuck, good morning.

I just wanted to make -- or at least clarify -- the capacity utilization you're talking about, that 85% -- that's as of the new capacity figure? Is that correct?

Correct, Chuck.

Okay. Have you seen any pre-selling by Showa Denko, with their capacity coming on next year?

Again, what we see in the marketplace is that all the competitors, looking into 2015, starting to engage in the book-building process. If it's, again -- so I see, on a global basis, every competitor in the bids that we're currently working on. And of course, they are a part of that. So I would think they would obviously factor that into their thinking when they are -- what they are bidding next year. But again, you'd have to ask them directly. I'm just speculating.

Yes. And as far as needle coke is concerned, with the price of decant likely to be pretty significantly lower, do you have any kind of a guesstimate of what your needle coke pricing might be for next year?

Yes, no thoughts on that yet, based on the volatility you're seeing in decant oil. Again, based on where we were in the book-building process, our objective was to raise price 10% for our key inputted needle coke and graphite electrodes.

Obviously, as it changes, we will continue to watch that, and monitor what impact it had on needle coke pricing and, obviously, on graphite electrodes.

Okay. Thank you very much

Yes. Thanks, Chuck.

Okay, Paula, if there is no further questions?

There are no further questions at this time.

Perfect. Thanks, Paula.

So let me just conclude by saying thanks to all the 2,600 teammates here at GrafTech for what they do on a daily basis, and what they contribute to make our Company successful. We have an incredibly resilient team that gets the job done in the toughest environments. And my thanks goes to them.

Thanks, everyone else, for your time, questions and interest in GrafTech. I look forward to updating all of you after the fourth quarter. Have a great day. Thanks.

Thank you. This conclude your conference. You may now disconnect.