Good morning. My name is Lisa, and I will be your conference operator today. At this time, I would like to welcome everyone to the GrafTech Full-Year and Fourth Quarter 2018 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] Thank you. Meredith Bandy, Vice President of Investor Relations, you may begin your conference.

Alright. Thank you, Lisa. Good morning, and welcome to GrafTech’s fourth quarter conference call. On the call with me today is Chief Executive Officer, David Rintoul; and Chief Financial Officer, Quinn Coburn. Turning to our first Slide. As a reminder, some of the matters discussed on this call may include Forward-Looking Statements regarding among other things results, performance and strategy. 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, for which you will find reconciliations in these slides. These slides are posted on our website at www.graftech.com in the Investor Relations section. For your reference, a replay of the call will also be available on our website. And with that, I'm pleased to turn the call over to Dave.

Thank you, Meredith, and good morning, everyone. I will begin the call with the discussion of our safety performance in 2018 highlights. Quinn Coburn will then cover the financial aspects of our business. I will conclude our prepared remarks with the discussion on the overall in steel market after which we will open the call for questions. Without exception, our safe plant is an efficient plant. We furnished 2018 with a total injury rate of 1.49 near GrafTech's all time lows. We recognize that our focus must remain on continuous improvement of our safety performance that drive toward our ultimate goal of zero injuries. That means every worker going home safely every day. I would like to take this opportunity to thank our team for their focus on our safety mission while attending excellent 2018 financial results. Turning over to Slide 3 for an update of our 2018 results in the current business environment. GrafTech's delivered record of operational and financial results in 2018. Our operations ran at extremely high levels throughout the year producing hundred 179,000 tons of graphite electrodes and 111,000 tons of needle coke. In 2018, GrafTech earned net income of $854 million, adjusted EBITDA from continuing operations of $1.2 billion and generated free cash flow of $768 million. We also delivered on our promise to return cash to shareholders, introducing a quarterly dividend buying back $225 million of shares and paying a $204 million special dividend at year-end. Market fundamentals for our business remains solid, our Q4 weighted average price was approximately $9,950 per metric ton. During the fourth quarter, we sold spot business at prices that averaged approximately $15,000 per metric ton. Currently were receiving spot and short-term contract prices of approximately $12,000 per metric ton, while off reaching the highs, the market for graphite…

Okay, thanks Dave. As Dave mentioned, we are pleased to report another strong quarter of financial performance. Fourth quarter revenues of $533 million were more than double the prior year quarter, reflecting higher sales volumes and higher pricing. During the quarter, we sold 53,000 tons of graphite electrodes, up from the prior year period due to inventory changes and benefits from our debottlenecking. Historically, Q4 tends to be our highest volume quarter, while Q1 tends to be our lightest. Therefore, we would expect Q1 sales volumes to be sequentially lower due to typical seasonality. As Dave mentioned, GrafTech's fourth quarter average realized price was $9950 per metric ton. As a reminder, the average realized price reflects a combination of long-term contract pricing, carryover short-term contracts from last year and spot volumes. Approximately 68% of our fourth quarter net sales were to customers with long-term agreements. Now turning to Slide 5. Our higher revenues translated into higher earnings and cash flows in the quarter. Fourth quarter net income totaled $230 million or $0.79 per diluted share, more than four times the prior year period results. During the fourth quarter of 2018 net cash provided by operating activities increased to $224 million, and free cash flow increased to $204 million, that's the third consecutive quarter with free cash flow in excess of $200 million. Compared to the prior year, earnings, adjusted EBITDA from continuing operations and free cash flow all benefited from higher sales volumes and pricing. This more than offset higher raw materials cost specifically related to third-party needle coke costs. These higher third-party needle coke cost will continue to impact our cost of goods sold, we estimate that increased third-party needle coke cost will impact our Q1 of 2019, EBITDA by approximately $13 million, compared to Q4 of 2018. Now…

Thanks for Quinn. Graphite electrodes are vital to our customers operations and the EAFs steel making trends remain positive. Demand for steel remains strong in our key markets. Capacity utilization in steel plants is high and steel consuming end markets are growing in our key markets. Global steel production growth also remains robust particularly outside of China where EAFs have picked-up the slack from falling Chinese exports. Chinese steel exports remains subdued as China reduces blast furnace steel making and EAFs continue to take share particularly in China due to the more resilient and environmentally friendly EAF steel making business model. In summary, GrafTech is a leading provider of highly engineered graphite electrodes services, solutions and products to the growing electric arc furnace steel market. We delivered strong 2018 results and we continue to execute our strategy to deliver long-term sustainable value. Ongoing operational improvements and vertical integration give GrafTech economies of scale and a competitive cost structure. This in turn enables us to offer secure long-term contracts to our customers and strong earnings visibilities. This now concludes our prepared remarks, and we will now open the call up for questions.

Thank you. [Operator Instructions] And our first question comes from the line of David Gagliano from BMO capital markets. Your line is open.

Okay, great. Thanks for taking my questions and thank you for the increased visibility on the current market. It’s very helpful. In terms of my questions, first of all, I didn’t get - is there - a 2019 expected CapEx, I didn’t quite pick-up that number.

Yes, sure Dave. We would expect 2019 CapEx to be roughly the same as 2018.

Okay, great. And then in terms of the contract signings to 40,000 time from 2019 to 2023, I haven’t had a chance to try to tease out the average price versus comparing old prices. Can you just tell us what was the average price for that 40,000 metric tons signed during the quarter?

Yes, sure Dave. I mean for competitive reasons we are not giving the exact price, but we did update that table, they were attractive prices, they were definitely higher than the current LTAs, and like we said, we have updated the table just to try to give you the current view and I'm sure you can kind of back into an approximation of that. The bottom line is we were very pleased with the outcome of that initiative and those were good attractive prices.

Okay, no worries, I will do this as I said in second. And then just real quick, last two quarters, we did get a special dividend and a buyback after earnings, one quarter was buyback, one was special whatever. This quarter it looks like free cash flow is even higher, any reason we should not expect another special and/or buyback this quarter?

Yes. So as mentioned, we will absolutely continue to focus on cash returns to shareholders, but this quarter, we are initiating the increase debt repayment. So the additional $100 million on top of the $28 million required repayment and then of course, we have the normal quarterly dividend that we paid. And going forward, like I said we will continue to have a mix of both, we would continue to expect future debt repayments probably roughly in the same amounts in future quarters as this quarter.

Okay. that’s helpful. Thanks.

Our next question comes from the line of Arun Viswanathan from RBC Capital Markets. Your line is open.

Hey guys, good morning. Just wanted to get a little bit more understanding on both long-term contracts, as well as the spot market price development. What do you think is driving the reduction in the spot price to that $12,000 level or the near-term contracts. And I guess, are you still seeing good acceptance of your longer term contracts. I know you signed up the 40,000 tons, but do you sense a willingness amongst customers to accept that say 10,000 average price, because the sense is that spot prices will remain well above that. I'm just asking, because we have seen this decline in the last couple months? Thanks.

Well look, in regards to the spot market I think it’s been important to always recognize that 70% of our product is in the long-term contract business, a smaller portion of what we do is actually in this spot market and we think that's a good strategy. In terms of commenting, I think all market ebb and flow based upon where particular supply and demand dynamics might be. We are on this call this morning recognizing what we are aware of at this point in time, it's not for us to try and predict where that might go into the future. Obviously as on our side of the financial equation, we would hope that things will remain prospers that is some big surprise. And regarding the LTAs and we have a nice match that we try to maintain in terms of our vertical integration and we are happy with the outcome of where the LTAs have taken us with a slight increase that matches our increase in needle coke capacity. And every customer has to judge for themselves at any point in time, whether that arrangement makes sense for them. But again, to reiterate we are pleased with where we have ended-up in that front, because it matches up nicely with our vertical integration.

Great, thanks. And I also wanted understand a little bit more on your comments around new capacity, I guess you noted that the debottlenecking cost you have about $1200 a ton that's 10% of the actual kind of Greenfield additions or maybe in that $10,000 to $12,000 per ton range. I guess is that range right for Greenfield and then maybe you can just comment and just give us a little bit more detail on your thinking St. Mary's, I guess we have seen some other additions come into market, including your debottlenecking and then STK Ridgefield addition, as well as [SandGraf] (Ph). So how are you thinking about the supply, demand and as well as replacement cost and when would it make sense to potentially restart the idled St. Mary’s plant? Thanks.

So on the Greenfield, Arun, yes we think $10,000 per metric ton is about the right number, the last two big Greenfield and Brownfield expansion that were done by STK and SJL were approximately actually a little bit more than $10,000 per ton. So we see that as the right number.

On the St. Mary's question, we try to use a bit of an analogy in the script to assist your thinking on that front. That of a peaking plan state we will St. Mary's to allow us flexibility and variability, we expect the degree to which we run that will move-up and down based upon the market dynamics, not unlike that of - again in the analogy of our peaking plan.

Great, thanks. And if I may ask one more just on needle coke, it appears that there is still some constraints there that's resulting in a relatively tight market and higher pricing there. Any developments that you would want to touch upon there, do you see any additions coming in needle coke on the petroleum side that would add capacity there and potentially lose some things up or do you see a continued tight market on needle coke. And if so, are there any options to increase your vertical integration or at least secure more needle coke at attractive prices or how should we think about needle coke going forward?

Well, look we are pretty comfortable with our strategic position on needle coke where we can with the changes were and improvement we are going to make in 2019, where we can produce our 70% of our needle coke needs that matches even at the nil debottlenecking, higher debottlenecking laid on our graphite electrode side. Relative to increases in the marketplace, what I can tell you is I can only tell you what know and that is we have secured the needle coke that we need for 2019 and comfortable with that from the supply and reliability perspective. Beyond that, others in the business would have to comment on whether they are brining on more capacity or not, we are not aware of anything beyond what is in the public media at this point.

Okay. thanks guys.

Our next question comes from the line of Michael Gambardella from JPMorgan. Your line is open.

Yes, good morning. Just wanted to ask about the incremental 40,000 tons that you put on long-term contracts that just wanted to be there, all of that is being sourced with your captive needle coke?

So, Mike the majority I would say would be sourced with captive needle coke, yes. As we mentioned in the script, we were able to increase the - needle coke production from 111 this year to 125 and part of that - a good portion of that increase was due to our little bit of debottlenecking at Seadrift and so that matched- up nicely then with the increase in the long-term contracts.

Some of the long-term contracts are kind of exposed on the needle coke side now?

Sorry, could you repeat the question Mike? You were breaking up a little bit there.

Yes. Just in the past you said match your long-term contract following on this with what you could supply with captive petroleum needle coke. Is that the case anymore?

No, that's correct. You see the tons we repot at a little bit higher than that, on the Seadrift production we did a little bit of regular coke in the two supply the LTAs, and then there is just maybe a little bit of more LTAs than there is captive just a little bit, but largely speaking it matches-up.

Okay. In the past you have commented on your margin petroleum needle coke general pricing and how much needle coke do you have for 2019 captive and merchant and what kind of production numbers of electrodes does that allow you to produce in 2019?

Yes, so again you are breaking up a little bit. But let me - I think I got the question right. So I will just repeat the question I believe you asked. How much needle coke do we have between our captive needle coke what we have procured and how much would that allow us to produce in 2019? So a couple of things we mentioned that our capacity is now around 200,000, we would expect to run that capacity in the mid-90% range. And Dave mentioned that we have a procured adequate needle coke for that level of production for 2019.

Okay. And the procurement needle cook pricing you mentioned that?

Right. Good question, we have given out in the past, for competitive reasons we are choosing not to do that going forward. But I did try to quantify for you the impact on our cost of goods sold quarter-over-quarter of what that increased pricing will do. Keep in mind that the price of needle coke has been increasing quarter-over-quarter for or year and a half now there is about a three to six months lag from the time of the increase to when it rolls to cost of goods sold. So we will continue to see cost of goods sold gain impacted for few quarters here. Yes, so I would try to give a guidance on that, but for competitive reasons we have backed away from given the exact price.

So the $13 million impact in the first quarter, we should not assume that's equal over the four quarters of the year?

I think you will see it increase a little bit more Q2 versus Q1. And then it will depends, we will give additional insight after that.

Okay. alright. Thanks a lot.

Our final question today will come from the line of David Gagliano from BMO Capital Markets. Your line is open.

Alright, great. I just have three quick follow-ups hopefully. Just first of all near-term any - should we be expecting any sales from inventories in the first quarter like we saw in the fourth quarter?

No, I wouldn’t expect that David and as I mentioned on the call, typically Q1 is our - if you go back and look over the past 10 years Q4 is about 27% of our total year, Q1 tends to be about 23% of our total year. There is no absolute reason for that, it's just a typical buying patterns of our customers. And so we would expect to see that typical seasonality on like I said Q4, we had a nice demand, we did drawdown on inventories, we would not expect to drawdown on inventories in Q1.

Okay, that’s helpful. Thank you. And then just a couple of bigger picture questions. First of all there had been some talk of graphite electrodes in India kind of looking for a home, excessive inventories that kind of thing. Is that at all affecting your business or have you seen that anywhere here in North America?

So certainly there is a number of producers in the world that bring electrodes to the market and then Indians are among those. We are seeing a little bit of their presence beyond say Q4, some of the impacts of that we think are related to sanctions issues and tariff issues. The sanction issues are in the Middle-East areas as well as tariff issues within India is our belief. Now, what we do think the net-net of all of that is a temporary dislocation of the work itself out in the coming quarters, because we think it's close to a net zero gain. So there is some momentary we think near-term dislocation, but believe that it will settle out over the longer term, because in places they left will be supplied by somebody.

Okay, just within that context we are in the February now, so the prepared remarks commentary spot market prices are holding around $12,000 I think it was the comment and that is still the case even with this inventory challenge. Is that correct?

The maximum pricing that we transacted at in recent weeks, if you will. To Quinn's earlier point we are going to be very careful not to be speculative or try and to predict where the future is going. So we are communicating upon the best information that we have on that with the limited amount of spot that we in fact put into the marketplace.

Okay. That is helpful. Thank you. And then just last question I think for me, just wanted to get your thoughts over the last six months, obviously there has been quite a bit of minimal still making Greenfield expansion announces in the U.S. and our numbers adds up to over 20% growth in minimal than looking over the next three years. When did you expect to start to see some of that potential benefit in your business and have you had any very early discussions with anybody regarding that longer-term opportunity?

Well the folks didn’t initiated or announced those expansions, which is all good for us in our industry particularly [SDI NewCore] (Ph) have a track record of bringing these assets online pretty expeditiously. I believe I read something this past week out of SDI, you know they were talking we have done this before in 18 to 24 months, we don’t see any reason why we wouldn't do that kind of thing again, and we have a track record of that. So they strike an arc in 18 to 24 months, they would need electrodes to do so and in some cases we have had discussions about supply and then I shouldn’t leave off my friends and BlueScope because they have got some plans as well. So look, all of those are good for us and as I said, in some case - needs if they would have for those new plants.

Okay, great. That is helpful. Thank you very much.

I will now turn the call back to Mr. Rintoul for closing remarks.

Thank you Lisa. In conclusion, GrafTech is well positioned to leverage our unique competitive position and execute our strategy in a structurally improved industry. We will continue to maximize the value of our vertical integration and low-cost production base to provide industry-leading services, solutions and products to our customers. Thank you for your interest in GrafTech and we look forward to speaking with you next quarter. Have a good day.

Thank you for joining. This concludes today's conference call. You may now disconnect.