Good morning my name is Koliya Young and I will be your conference operator. At this time and I would like to welcome everyone to the GrafTech Second Quarter Earnings Conference Call. All lines have been placed on you to prevent any background noise. After this because remarks there will be a question and answer session. [Operator Instructions]. Thank you. I would now like to turn the call over to our host Kelly Taylor. Please go ahead.

Thank you, Koliya. Good morning and welcome to GrafTech International's second quarter 2015 conference call. On the call with me today its GrafTech's Chief Executive Officer Joel Hawthorne and our Interim Chief Financial Officer Quinn Coburn. We issued an earnings release today. If you didn't receive a copy please contact Marie Noar at 216-676-2160 and she'll 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 releases. 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.

Thank you, Kelly. Good morning everyone and thanks for taking the time joining GrafTech's call today. I will review the company's second quarter results provide an update and color on current business conditions and give you the overview of our second half 2015 outlook. As you probably saw in our press release this morning the expiration date for the tender offer by Brookfield has been extended until August thirteenth to allow for the final regulatory approval. Additionally, anticipation of the closing of the convertible preferred investment and tender offer, we have amended our principal credit facility to accommodate an expected change in control. Turning to our results for Q2 total company sales were 165 million a decrease of 42% year-over-year and a decrease of 20% compared to first quarter this year. EBITDA excluding special charges came in a 13 million compared to 28 million in the second quarter of last year. This compares to EBITDA in the first quarter in 2015 of 70 million in spite of successful execution on the previously announced cost savings initiatives EBITDA declined due to significant lower shipment volumes and pricing pressure in both of our operating segments. Operating cash flow for the quarter was 2 million compared to 34 million in the second quarter of 2014. Turning to our Industrial Material segment, sales were 125 million in the second quarter a decrease of 40% year-over-year and 24% reduction versus the first quarter of 2015. Adjusted operating income for the segment was 4 million as compared to 10 million in the second quarter of 2014 and 11 million in our first quarter of this year. The decline in that operating income was largely driven by lower graphite electrode volumes in response to the weaker customer utilization rates were seen and lower realized graphite electrode pricing.…

[Operator Instructions]. Your first question comes from the line of Edward Marshall of Sidoti.

So my question is on the volume you have taken down utilization rates and presumably the industry as well we've just seen the stocking in the channels. My question is you know you talked about managing over the next six months, are we saying out for a pretty good inventory situation as we move into 2016 as far as the markets are concerned and the majority that's in the channel, do you have any clarity or any insight into that.

Yes, Ed. Obviously our customer base squeezing their working capital which is graphite electrode inventory, they manage through this. I think there's some way still to go here and that's why we're reducing our operating rate in the back half of the year even at some of our customers. I think possibly dependent on again how our customers operate and how we operated in the back half, we have skew back to I would say normal levels of inventory heading into 2016. But again that will depend on how the customers operate and again based on the order commitments they take through the back half of the year.

And then as we look at the cost savings that you planned to recognize this year the $50 million or so, is that supposedly even across the quarters, is it weighted first half to second half? Can you kind of talk about maybe what's already been reflected in the P&L today that we can't see because of the pricing and volume declines?

Yes, I would say the 50 million is pretty even that we're seeing throughout the quarters about 25 million here in the first half we've seen. We'll probably see another 25 million and as I said, the volume reductions that we're seeing in the market and then our decision obviously to lower our production rates causing some constant efficiencies are offsetting that along with obviously the price declines. So we are seeing the benefits of the rationalization efforts that we've taken last year.

Your next question comes from the line of Phil Gibbs of KeyBanc Capital Markets.

I think Ed asked the crux of my question. It was just essentially related to the aggressive reduction in your operates for the electrode business in the second half of the year and it sounds like it's based on inventory adjustments at the customer levels at this point.

Our inventory levels we want to bring down and obviously at the customer base, yes.

And is any of that a function of newer competition in the market or is it basically just a function of the operates at the customers?

Yes it is -- we have analyzed very closely our customer base around the world and it is really a function of that operating rate of our customer base, it's driving it. We see from our perspective that's the main driver.

Across your business, when you look at the electrode side and the refractories business and the industrial graphite business, is there anything that stands out here in terms of a bright spot right now and where you may be seeing a little bit of light here in this marketplace?

Definitely from the actions we've taken in the cost side, very pleased of where our cost is relative so that when the markets do improve, we will have a very good cost structure. So obviously the actions we've been talking about and our plans, the way our plans have been operating and juggling through this has been real good. So we feel very good about again the plans, the cost structure they're providing longer term. I think looking for the bright spot, Phil, again on a global basis clearly EAF production is under a lot of pressure globally but there are pockets that are decent though we are seeing signs in a non-residential construction that give us some indications for future benefit. The challenge is when is that going to happen and right now that's really had not played out like I think a lot of the stocks recovery of non-residential to a greater extent than we thought on a global basis. And again I think that we think that we'll help the EAF industry. We've seen a lot of our customer base with the trade duties against some of the imports and as those take effect in various regions both in the EU and in North America that obviously will benefit our customer base.

[Operator Instructions] Your next question comes from the line of Luke Folta of Jefferies.

So if I look at your operating cash flow it was a bit light of expectations clearly on earnings, but I think if I recall your guidance last quarter included I think it was $10 million to $50 million of cash restructuring charges in there, were those realized or is that still to come in the second half? And I guess anything else you could say in terms of the second half operating cash flow outlook. You mentioned the $50 million inventory piece, but any other moving parts there would be helpful?

Yes, look and the restructuring charges are there in 2Q as we talked about and you are right the difference in the second quarter from our what we guided is the inventory that inventory number you said is we just think it out, because of how fast the market changed on us throughout 2Q as we keep trying to adjust production with what are the sales were going and FY again we’ve adjusted pretty dramatically in the second half to make sure we get that cash flow out in the second half of the year.

Okay. No further restructuring cash items in the second half?

Yes, Quinn, any second half?

Yes, our total year should be about 20 to 25 million of restructuring in the first half just as you settle it was about 10 to 15 million was in that range that's correct.

Okay. All right and then on the CapEx, so you have meet some reduction 50 to 55 now would you consider that sort of that absolute bare bones level at this point now?

We're getting a loop from a maintenance standpoint again we could probably squeeze it's a little bit more out of that. If we felt we needed to but you're right we're getting down to low end bare bones of maintenance capital. So [indiscernible] of the most we can try to squeeze out I'd say is 5 million more and then that's were at rock bottom.

Okay, okay I guess may be splitting here is a bit here, but when you say no improvement in the second half are you talking about from the second quarter run-rate or the first half run-rate?

At the first half overall run-rate.

And then just a question I had during the go shop period, when you're looking at the tender offer from Brookfield. I guess is there anything you could say about what played out during that timeframe and was there a significant interest you thought that was actually real interest that maybe you guys didn’t agree on a price but there was still like some genuine lookers there, people looking at or is it you think you were just kicking the tires to the heavy opportunity to do so? Just trying to get a sense of what the appetite who would be for consolidation if the price was right?

Yes, I guess look I what I can say about obviously the go shop process we reached out obviously to three different groups, right. The industry itself people who may have been forward or backward or other type of investors and went through that process and as we disclosed there was some interest that came through the process I can't speak to what their interest was or what -- why they were looking, but there was interest and went through that process. But as we've obviously announced that it ended without any real tangible offers.

Okay. All right and then I guess it's a really tough, thing to get your arms around but just as we think about next year about the benefit you may be getting from lower oil prices starting to flow through, any sense of what that drag or if you took a look at this year's consumed decant price [indiscernible] spot like what sort of a magnitude that would have represented in terms of a drag on margins? Just to help us think about next year's starting run-rate?

Yes again when you look at the benefit of oil we talked in the past that roughly we buy call net a million tons, million barrels of oil. So you take that time, the change in price now I can give you a benefit to that. So could be in a range of 30 to 35 million of which unfortunately a lot of that's been passed on into the customer base and electrode pricing. We are seeing some of that benefit as I mentioned we will see some this year. But again some of them passed on and some we will not see because of the slower rate of our production throughout the year.

That's going to factor into ’16 as well. You’ll have excess inventory into the first half of ‘16?

Potentially, again that's depend on where the market is and our customer base, order patterns are potentially.

Okay. All right Quinn. Thanks one last question. I’m not sure if you have color on the shelf but the tender offer period has been pushed out a couple times to allow for the regulatory proceedings to go through. But do you have any color insight as to how the offer is gaining traction among folks so far. Like if you had to take, if you had to guess whether or not you hit the threshold like, if you hit the top threshold in terms of the full acquisition you think we’re there?

Yes I would say Brookfield announced this morning in their announcement, they did disclose the number of shares Luke and it was, yeah I know. A 102 million shares have been tender out of what we currently have outstanding that we report about 137, that’s about 74% of our shareholder base that is tender. Now again they can’t withdraw all others various things they can do. And again Brookfield is the one that reports that and they did report when they announced the extension again about 74% of our shareholder base as tender. So I think it gives you a pretty good color, doesn’t it?

Yeah, it does. Alright, great. That’s all I have.

Your next question comes from the line of Justin Burdener of Gabelli & Company [ph].

Most of my questions have been answered. Just a quick one on the, I guess revolver being amended the 25% Brookfield ownership that qualifies as a changing control. That’s 25% of the share has been tendered in the tender offer or does it include any consideration for the convertible instruments?

Either way.

Or is that kind of fully diluted basis?

Correct.

The change in control amendment, okay. The second question I had was just as you look at the second half versus the first half given that you expect to be operating and a much lower utilization rate in terms of electrode production. What sort of the offset from EBITDA point of view to sort of keep EBITDA in the second half and first half levels?

Well again some of the benefit I mentioned and oil coming through late year will be some of the assets, some of the assets would be, some of the great the plans done a great job controlling costs at a plan level and managing the variable efficiency, other variable cost. And then the third bucket would be obviously SG&A as we continue with our SG&A initiatives that we announced last year will be some from there. So those three buckets will offset the production penalties to maintain the level.

And just as a reminder, the senior subordinating notes come due the end of November?

Correct.

Okay, so the timeline for the regulatory approval process should be complete at least as regards 150 million convertible preferred by then?

Correct. As I mentioned our expectation, again you never know that August 10th, has been told that we’ll get approval. And as we said on the $200 million notes once we do get that approval the 150 million convertible preferred proceeds the term loan draw and probably again a little revolver of what we’ll use to repay back the 200 million.

Your next question comes from the line of Charles Bradford of Bradford Research.

Couple of questions, first of all as I’m sure you’re aware they have been three electric furnace melt shops announced for the U.S. to starting next year one the year after. For the first part of the question is when do new melt shops typically purchase their first electrodes. Is it right before start up or is there any time period earlier?

Typically Chuck I’ll say no expect livery month to two months in advance of the start up. And then any negotiations typically can be anywhere from three to six months in advance of that, dependent on who the customer is and where they are in the world.

Outside the U.S., what have you seen as far as new electric furnace -- jobs being announced?

Yes, I'd say obviously new have slowed down a little bit. You still do see obviously the normal upgrades to current EAS with obviously for our standpoint use the higher performing electrodes. We do see a little bit our track and we do see still few projects around the world, but clearly it has slowed down from what we've seen two three years ago and of course we are aware of the ones here in the U.S. And again Chuck I think again longer term we're still very comfortable that EAF has a strong position in the global steel production. Right now we're just going through these temporary dislocation of the market conditions of which one of them being imbalance between scrap price and iron ore.

Well, it looks like scrap's going to be down another twenty dollars next month, so that should address some of it. But thank you very much.

You bet. Yeah. Thanks Chuck.

Your next question is coming from the line of Phil Gibbs of KeyBanc Capital Markets.

Hey, Joel. When you talk to some of your customers globally, obviously there's been an influx of Chinese steel across the world right now in both semi-finished and finished products. Any science in your discussions with them whether or not you expect those customers and countries outside the US to pursue trade remediation relative to China or maybe some other countries to protect their steel industries?

Again obviously our dialogue with the customers how we do discuss that issue. I'd say you're seeing some of the customers already started to take those actions in some regions. I think again this is not my opinion, you'll continue to see that based on what you're seeing of those exports and the impact it is having in some of the geographic regions. And again what we're seeing from our customer base, them having to shut down to try to manage on a global basis, we've seen in the second quarter here a lot of our customer base start idling or shutting down their capacity as they try to bounce through this. So again Phil, my opinion is you will continue to see some actions as the exports out of China continue to flood the global market.

So is it your opinion then that the Chinese are dumping steel around the world.

Well I'll equate it what we've done in graphite electrodes. In graphite electrodes which has happened a few years back and close to this last downturn there was duties put in place here in the U.S., in Mexico, Brazil. We've been working in the E.U. So again I would say it's a similar situation that we saw on the electrode side years back when put those duties in.

Your next question from the line of Brian Chan of Bank of America.

Just had a few questions, apologies if you discussed already, but are there any update you can provide on discussion with the rating agencies?

Nothing that I can provide. We always stay in touch with the rating agencies, keep them informed with ongoing discussions and those will continue obviously like we always do.

Okay. And are those discussions being and helping in discussion any concert with Brookfield and trying to manage the outcome that I guess that you guys are both looking for.

Well, again we thought that rating agencies about everything going on which is a big advantage is the Brookfield investment and the tender offer process. So obviously we keep like we do all constituents the rating agencies informed of the impact and what that means for the company.

And is the Brookfield part of those discussions like are they discussing? Are they there with you guys and making those and having those conversations are there more -- you just kind of update them afterwards.

Again I would say obviously Brookfield has a interest in the company. We still unfortunately the transactions have not all closed as it has been announced, but we do communicate with them and they do communicate with us to keep abreast of what the things are.

And your final question comes from the line of Frank Duplak of Prudential.

Good morning guys had a couple quick questions. I thought -- maybe earlier in the year you talked about maybe having some excess property that could be potential asset sales maybe up as much as 10 million any update progress or is that not likely to happen now?

Well, you are correct; we do have the property that we had in Brazil and South Africa from our facilities. We currently are can staging, so we are staging it making sure it's ready for sale. It took us through the first half to get the facilities ready. So again we will again start marketing those in the second half. So again depends on the appetite of the market in those locations. If we’ll -- we get it sale in second half we will actively continue to try to promote those and if can sell here by the end of the year but we’ll see.

Okay and then can you talk about what your current revolver availability is and then what would be pro forma for this amendment?

Obviously because we reported at the end of the quarter we had 258 million available under the revolver and I’ll just say working with the bank group who has been very supportive, the objective was to make sure we had a lot of the availability of the new facility available and so again we reduced at the 375 and I would say -- again depending on the market and conditions a lot of that would be available for the company.

And then my last question I mean you talked about have an exercise a change in control of the bank do you think that would be necessary with the notes that are outstanding, or I think you want to sort of change in control option there?

Well again it depends on how things proceed with the tender offer and the convertible preferred closing and obviously then rating agencies and how they do the business, but was have to wait and see how plays out over the next month. End of Q&A

And there are no further questions. Thank you.

Okay. Thanks Kayla and again thanks for joining our call today and behalf of the men and women of GrafTech thanks for your interest and participation. Have a great day.