Kelly Taylor - Director, IR and Corporate Communications Joel Hawthorne - Chief Executive Officer Erick Asmussen - Chief Financial Officer.

Edward Marshall - Sidoti & Company Sal Tharani - Goldman Sachs Luke Folta - Jefferies Charles Bradford - Bradford Research Phil Gibbs - KeyBanc Capital Markets Justin Bergner - Gabelli & Company Brett Levy - Jefferies.

Good morning, my name is Kimberly and I will be your conference operator today. At this time I would like to welcome everyone to GrafTech Fourth Quarter and Year End 2014 Earnings 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 Ms. Kelly Taylor..

Thank you, Kimberly. Good morning and welcome to GrafTech International's fourth quarter and year-ended 2014 conference call. On the call with me today is GrafTech’s Chief Executive Officer, Joel Hawthorne; and our Chief Financial Officer, Erick Asmussen. We issued our earnings release this morning.

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 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 Web site 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. As noted in our Press Release we have updated the segment operating income presentation based on the new management and operating structure.

We have revised the allocation of corporate R&D and other expenses to present them separately. For your reference, a replay of the call will be available on our Web site. At this time, I’d like to turn the call over to Joel..

Thanks, Kelly. Good morning everyone and thank you for joining us on the call today. Today I will review the company’s fourth quarter, full year 2014 financial and operational highlights provide an update on the rationalization initiatives and provide commentary on our 2015 outlook. And then open the call for questions after that.

Looking at our 4Q results, total company sales are 260 million, a decrease of 16% year-over-year but flat with the third quarter of 2014. EBITDA excluding the special charges came in at 37 million, an increase of 13% year-over-year and a more than 55% increase over the third quarter of 2014.

The significant EBITDA improvement was driven by the actions the team has taken and we have implemented and are executing on to improve the cost structure and increase efficiency across our global platform. Operating cash flow from the quarter was 38 million and available liquidity on our credit facility year-end was more than 300 million.

This excludes the announcement we made this morning on the credit facility amendment in the new term-loan. Turning to our segments. In our Industrial Materials segment, sales are 206 million in the fourth quarter, a decrease of 13% and essentially flat with the third quarter of this year.

In the fourth quarter we recorded a 76 million non-cash impairment charge against the goodwill associated with the 2010 acquisition of Seadrift as explained in the press release.

We continue to believe needle coke serves as a valuable differentiator in determining electrode quality and the backward integration of Seadrift provides supply chain synergies and economic advantages which we will continue to optimize.

Adjusted operating income for the segment was 22 million as compared to 14 million in the fourth quarter of '13 and 12 million in the third quarter of 2014. Graphite electrode volumes were 47,000 metric tons in the fourth quarter of '14 as compared to 50,000 metric tons in the fourth quarter of '13.

Down 4% year-over-year and essentially flat with the third quarter of 2014. Our graphite electrode facilities ran an average operating rate of 86% in the fourth quarter. As we have reduced production rates to efficiently work down and reduce our inventory. Our needle coke facility continues to run in excess of 95% of capacity essentially full.

As you know graphite electrode sales have been significantly impacted by pricing decline we experienced in 2014. In the fourth quarter of 2014 average graphite electrode prices excluding currency were down 8% year-over-year.

Despite this very challenging global steel and graphite electrode market, our team increased industrial material's adjusted operating income by more than 50% year-over-year due to the rationalization initiatives and business model improvement. Turning to our Engineered Solutions segment.

Sales in the fourth quarter declined 26% to 54 million compared to prior year. Adjusted operating income was 4 million as compared to adjusted operating income of 7 million in the third quarter 2013, but higher than the third quarter of 2014.

Weak demand from one of our major customers for product in our advanced material electronics business persisted into the fourth quarter, however aggressive cost reductions efforts led to improve profitability as I mentioned compared to third quarter of 2014.

Turning to the full year 2014, we achieved sales of 1.1 billion about 7% or 81 million below 2013, primarily driven by lower pricing in both our segments.

EBITDA after special charges came in at 120 million compared to 144 million in 2013, a drop of slightly over 20 million despite the steep revenue decline of more than 80 million on price as we increase volumes. Operating cash flow for the year was $120 million compared to 117 reflecting the effect of working capital management.

Looking at Industrial Material segment for the full year, revenue for the full year was 909 million down approximately 8% compared to 2013 driven primarily by lower graphite electrode pricing which on average declined approximately 10% excluding currency.

Adjusted operating income in this segment was 63 million or 7.5% of sales down from 76 million or 8.4% of sales in 2013. Global and EAF steel production excluding China was essentially flat compared to 2013 while when comparing the first half of 2014 to the second half we saw a weakening of production.

Global steep capacity utilization rates declined to 76% from 78% in 2013 and exited the year at approximately 73%. Our estimated global graphite electrode demand was roughly flat year-over-year, but we experienced a similar demand softening during the course of the year. Our graphite electrode volumes rose 4% to 188,000 metric ton shipped.

Our graphite electrode facilities ran at an average operating rate of 89% in 2014 as we reduced production of work off inventory and reacted to weaker demand in the second half of the year. In our Engineered Solution segment, sales declined 5% to 245 million versus last year.

2014 as we've mentioned many times throughout the year was negatively impacted by a slowdown in demand of our advanced consumer electronics products. Adjusted operating income was 19 million or 7.9% of sales as compared to 26 million or 10.2% of sales in '13.

This reduction was largely due to lower than expected demand and pricing pressure in our advanced consumer electronic product line.

Despite the lower than expected demand, impact on our recent results it's important to note that we've a strong customer relationships in our advanced consumer electronics market that we serve and we will continue to as we move forward. We continue to diversify our customer base and the product offerings to other end markets.

Other top ten advanced consumer electronic vendors we've provided product solutions to all them in the path and currently supply to over half of them.

Moving forward, we will work to leverage our core competencies in the graphite material science in our new innovation and technology center whereas currently today we've more than 20 projects in active development that will provide us with sustainable long-term growth opportunities in diverse hi-tech markets.

I'm extremely pleased with the progress our team continues to make on our cost savings programs and our ability to generate and increase positive cash flow as we navigate through these industry challenging times. During 2014 we took numerous actions to further strengthen our business.

We delivered approximately 50 million in cash savings ahead of plan during the year as part of our now and ongoing company-wide cost savings program.

This enabled GrafTech to achieve total annual cost savings of more than 120 million approximately 100 million of which are cash savings which represents 10% of annual sales which directly improve EBITDA.

We also optimized the graphite electrode manufacturing platform by rationalizing the two highest cost manufacturing sites including significant manufacturing headcount reductions of 20% which we also reduced annual maintenance expenditures by approximately 10 million for these two plants.

We simplified the operating and management structure to decentralize the organization, accelerate decision making and improve responsiveness to changes in customer demand and we're seeing the benefits of that.

We redesigned the research and development functions to accelerate innovation for new product development and commercialize introduction and to maximize the efficiency of development cost. We downsized corporate functions including headcount and other SG&A achieving a reduction of approximately 20%.

We've rationalized and streamlined underperforming product lines. Also during the year we increased borrowing capacity by 125 million in the past 12 months excluding the further impacts of the financing initiative that we announced this morning. We reduced inventory significantly generating approximately 80 million in cash in 2014.

And lastly, we continued to develop new innovative products in engineered solutions which contribute to approximately 30% of the revenue in that segment in 2014 and we will continue to do so with the incentive providing long-term value creation for GrafTech and its stockholders. Looking at our balance sheet, our financial position remains solid.

Our debt to capital ratio in 2014 was 35%. However, due to lower EBITDA over the past year, our debt to EBITDA ratio is 4.4 times which is higher than our targeted level. This will continue to be a focus for us in 2015. We're very focused on driving cash flow and lowering our debt to EBITDA ratio to our target of less than three times.

To that end, we made excellent progress to our goal of reducing working capital. At the end of the year, we'd reduced inventory by nearly 80 million. We expect to continue to decrease working capital requirements as we reduce inventory levels in 2015 providing additional liquidity as we move throughout the year.

In addition to lowering working capital, we expect to meaningfully reduce our capital expenditures in 2015 from 2014. With the successful closure of the two graphite electrode facilities I mentioned, our maintenance capital in 2015 will be reduced by 10 million.

We continue to reduce capital expenditures to minimal levels targeting 60 million to 70 million in 2015 and focusing on maintenance and safety requirements.

At the end of 2014 with approximately 345 million of availability on the revolving credit facility of which we utilized approximately 45 million leaving approximately 300 million of unused borrowing capacity.

As you likely read this morning in our announcement, we just completed an amendment of our credit facility which provides additional liquidity and flexibility. In addition to that flexibility, we issued a new $40 million term loan, we used in connection with the repayment of our senior subordinated notes which is laid until the October period.

As a result with almost 400 million of unused borrowing capacity providing ample liquidity to repay our current debt maturities and comfortably fund our ongoing operations and initiatives. Now let me turn to 2015, the overall economic environment is expected to improve moderately in 2015, the IMF projects global GDP growth of 3.5%.

GDP has a historical tie to steel production. This translates in the modest growth of global steel production of 1% to 2%. The global steel industry is suffering from over capacity which combined with slow demand growth to put pressure on steel industry profitability resulting in supply chain pressures.

In North America our steel customers are cautiously optimistic about a second half recovery in 2015. However, there are concerns about the current high level of imports reduced demand from the oil and gas related service sectors and the instability of global growth in certain sectors.

Outside of North America customers are generally less optimistic as weakness has continued in basic material sectors. Our 2015 graphite electrode order book continuous to build, we’re approximately 60% of our targeted 2015 order volumes confirm.

Based on our current order bookings, customer demand expectations are a weak first quarter due to customer destocking and lower utilization rates due to demand fall off. We expect graphite electrode volumes to be down for the full year of 2015. We expect that average prices in 2015 will be down from the exit price levels we saw in 2014.

Based on our current order bookings, we’d expect average graphite electrode prices to decline approximately 7% to 8% in the first-half of 2015 excluding currency, compared to the first-half of last year. Foreign exchange rates especially you all have experienced weakening against U.S. dollar facing further pressure on our revenues in the short-term.

Overtime and as we move into the second half for the year, the negative impact of the exchange rate fluctuation on revenue was offset by a positive impact of operating cost due to a significant force of our manufacturing cost being euro denominated. It's the timing that you’ll see flow through first half to second half results.

Also pricing for products in our Engineered Solution segment are under pressure and were down year-over-year offsetting the volume growth we expect.

The company's previously announced cost savings programs remain on track and we are anticipating to deliver 50 million in cash savings to benefit 2015 EBITDA results which will offset the lower pricing I just mentioned. We do expect to benefit from the following oil prices in our needle coke in graphite electrode business.

Lower graphite electrode operating rates driven by plants reduced inventory are expect to largely offset that benefit over the near-term. To put this in perspective, we expect to purchase approximately 1 million barrels of decant oil this year on a net basis after byproduct sales.

Given our current inventory position and the time it takes to produce needle coke and graphite electrodes, we do not anticipate the benefit of the lower cost to impact the results until the second half of 2015.

Largely offsetting this benefit in 2015 will be the one-time negative impact of running our plants at lower operating rates which will be slightly below the fourth quarter rate in order to reduce inventories. In 2015, we will focus on five key initiatives.

First, as always customer focus, we continue to believe that delivering differentiated products through our quality, service and reliability are key in all our product lines and businesses. Second, we will continue leveraging the backward integration and capacity optimization of Seadrift and our graphite electrode facilities.

We plan to use 85% of Seadrift’s production internally representing about two-thirds of our internal requirements. Third, portfolio optimization, we will continue to rationalize underperforming product lines to focus on higher margin business.

As an example, we are reviewing plans to further optimize the production platform of our advance graphite material business. As a part of this review we expect that the optimization to improve operating income by approximately 5 million annually and result in a charge up to $10 million in the first half of this year.

Fourth, innovation was more than 20 projects in active development, we will continue developing collaborating and executing a new product building on our past successes. This will provide us with sustainable long-term growth opportunities in inherent solutions. Fifth, fiscal discipline, de-levering and improving liquidity.

We will continue reducing capital expenditures to levels I mentioned as plan by approximately 20 million in 2015; we will also reduce inventories by approximately 50 million in 2015.

We will continue to reduce debt and maximize liquidity to position the company for growth as evident by the earlier announcement today regarding the new term loan and full availability of the 400 million revolver.

No doubt 2014 has been a difficult year given the continued market headwinds and unfortunately early indications are that 2015 will not improve materially.

As we continue to work to the temporary market dislocation in global graphite electrode and needle coke, our team remains as focused as ever on executing on our strategy and controlling what is within our control.

Looking forward I am confident that GrafTech is best positioned to capitalize on future growth of the electric arc furnace steel demand which [heavily] returns and we are positioned in a great place to generate significant value from stockholders.

Now for some guidance, as I mentioned on our Q3 call we reviewed our guidance practices and will now provide guidance on a shorter-term basis reflecting current volatility of market conditions.

We are targeting first half EBITDA to be in the range of 45 million to 55 million and operating cash flow in the first half of the year to be in a range of 40 million to 50 million. After approximately 15 million to 20 million cash rationalization charges in the first half.

We anticipate that the first quarter of 2015 will be the weakest of the year given the industry headwinds and usual seasonality in both of our segments. Also first quarter profitability will be further negatively impacted by the timing of currency impacts and inventory flow of cost to our profitability.

As we move through the year we expect an improvement in profitability in the second half of 2015. We will continue to optimize working capital and expect to further reduce inventory levels by approximately 50 million in 2015 and lastly we are targeting capital expenditures to be in the range of 60 million to 70 million from the full year.

And we'll continue to focus on improving the quality of the business model and make sure we deliver exceptional service and quality for our customers. Our team has had a proven track record of successfully managing through steel market and graphite electrode industry cycles.

We have doubled revenues in Engineered Solution in recent years of new product introductions. We will not be [determined] by the short-term volatility but we'll remain focused on creating opportunities to refine our product lines and leveraging our business model.

That concludes my prepared remarks, and so Kimberly I will now open the call up for questions..

[Operator Instructions]. Your first question is from the line of Edward Marshall with Sidoti & Company..

So as we look at the cadence maybe of the inventory reductions.

How do you see that playing out? I assume it’s probably more second half weighted than it is first half?.

Great view Ed, we'll obviously through the first half continue to work on it, but you will see the benefit of it more in the second half Q3, Q4..

Do you have a D&A target for the full year? Maybe around like 26 million a quarter or something like that?.

Should be lower..

We haven’t provided that, but it should be a little bit lower than 26 a quarter, quite closer to….

I would say if you wanted to shoot a quarterly run rate it’s probably more of the 20 to 25 run rate. .

20 to 25.

And when I look at the guidance for the first half of the year, are there costs associated with the new credit facility in the term loan which you kind of bake into that guidance? And equally as important on the P&L as you look and I guess as you exit maybe '15 going into '16, is it about anywhere between $7 million and $9 million of a tailwind on interest expense..

Two questions, one is how we factored in the guidance the cost or the revolver and the question there is that we factored into our guidance for the first half, for the amendment, so factored in.

Tailwind in the second half of the year going to 2016, obviously you'll get definitely the push of the cost benefits of oil that we'll see in the second half that we'll continue to carry over 2016. And the other one you'll begin to see a little bit is as you start ramping the plans back up dependent on where you think 2016 volumes would go.

We'll start to see that tailwind late in the years we move into '16 the benefit..

Do you anticipate second half volumes are going to be up over second half 2015 over '14?.

I would say based on what we see flattish second half to second half..

And going back to the cost if I could for just a second it's in your guidance. You mentioned the restructuring charge roughly $10 million that you plan on taking.

You talk about the credit facility charges, what is included in the guidance that maybe are more one-time in nature?.

What's included in the guidance especially in Q1 obviously as I mentioned is the currency impact for Q1 that we'll see where you just mismatched timing, currency typically to us is a net impact over a 12 month period, both the rapid fall of the euro coming out of 4Q into 1Q that you'll see will correct itself definitely as you move into the second half as the cost flow benefits catch up with it.

The other which again from a timing standpoint is as we talked about the flow of oil benefits. Again the timing of that obviously today on a cash basis we're seeing the benefits for what we pay but from a P&L the timing of that working off through the balance season for the P&L will take us six months to nine months..

But I guess I'm asking, are there any rationalization charges that you're including in that guidance?.

No..

And what about the charges for the renewal of the credit facility?.

That would be included in the guidance..

And how much dollar amount would that be? The dollar amount..

We didn’t disclose the dollar amount..

Most of those Ed would be capitalized and amortized..

Your next question is from the line of Sal Tharani with Goldman Sachs..

Also again on same line the guidance, the 10 million charge you have is that also in the guidance or is it excluded in that? The optimization charge of $10 million..

Yes it would be a special item that we would call out, so it'd be excluded from the guidance and we'd call that out like we've done with all the charges through 2014. So as the team firms up the decisions there, then that would be called out..

When did you start building your 2015 order book?.

Sal I talked before as you back up the order book typically starts around October, November.

And I've said this before, if it starts earlier that's a good sign, here it's kind of been delayed and drawn out over the last three months, four months, but we were starting to build it right around November, December and obviously early into the year and as I mentioned we're only about 60% of the order book has booked..

I'm just wondering because there has been a significant decline in steel prices since then, and also oil prices have gone down which means that people understand that your cost is going down.

Are you concerned that there may be renegotiation? Are companies coming back to you or are the price set in there or price is going to be floating through the year?.

Well what I could tell you is from what we booked and that's why we gave our guidance only for the first half is for the expectation unless in the book that would be the price for the first half..

And the last thing I want to ask you is that how does the -- you mentioned that you have some benefit of lower oil prices will come in the second half.

How does that impact your Seadrift sale or the price of needle coke externally and internally? Does that impact negatively on Seadrift side or what is the time lag between that and the needle coke price?.

Again needle coke prices are negotiated on a contractual basis and as I've said 85% of that coke procedures will be consumed internally. So to us third-party sales not a material impact to us as we're consuming 85% of it..

Your next question is from the line of Luke Folta with Jefferies..

Pretty nice cost improvements 3Q to 4Q when we think about the additional $50 million of cost savings that flows through in 2015.

Is this essentially just a continuation of the fourth quarter run-rate in terms of the cost structure or if we're modeling it sequentially do we model any further step down?.

I would say the fourth quarter is kind of the run-rate you'd see from a cost perspective, on IM there's still some other cost benefits to come on the SG&A line as we said before and we announced the 30 million savings related to SG&A and the corporate reduction, that still has to flow through.

And as I said that will start, we feel -- we're done here at the end of Q1 and we'll see more of the benefit 2Q and beyond. But from an IM perspective, yes those cost initiatives are there done other than the normal things from a lean perspective we do..

And then when we think about the impact of inventories, so you've done a decent job of removing a lot of the excess this year obviously more to comment into '15.

But with oil, coke and prices stepping down a decent amount this year, anyway to handicap what that impact is as you destock through the first quarter like if you were to look at your inventory cost relative to well like say replacement cost will be currently, any sense for what the drag is?.

You're right there is going to be a drag, and I think you can see that and again what we gave in our first half of guidance versus where our fourth quarter run rate cost structure looks like, that could kind of give you a comparable of what the drag in the quarter looks like as cost of the benefit of the decant oil versus the cost loans for the P&L.

So it's -- I say the best way to look at, look at the fourth quarter and you can see what the first-half looks like and a lot of that is again timing and drag of the cost matching the revenue..

So production rates were expected to decline.

Do you have a target for the first quarter and how that progresses throughout the course of the year and in terms of your current outlook?.

Yes, as I said in my comments fourth quarter were 86% utilization rate in the fourth quarter, we would expect in 2015 it will be slightly below that, and pretty much run that consistently in the four quarters throughout the year, so it'll be in the low 80s..

So there isn’t a big step down and then gradual come back, it's kind of flat throughout the course of the year?.

The best way to run the plant, is running smooth and evenly throughout the year instead of a step down and step back up..

And then on, I mean FX impact it's another one, I guess it could be the same answer as the inventory impact. But any sense of what -- would that -- if we had to look at the step down in profitability in the first half versus 4Q run rate.

How much of that FX impact versus inventory?.

Yes, I guess the best way to say it's going to be the impact on the revenue line, but revenue will drop and we haven’t disclosed how much that’s going to be, I guess one way to look at it is to try look at what the change in euro has been and then look at what roughly we disclose what my sales in euros are in that region and that kind of gives you rough idea of the revenue impact.

And again short-term it hits us but then throughout the year we gain it back on the cost side at this time, so we’ll see that in Q1..

And then on EAF, are we looking for -- I mean there seems like there is some pricing pressure there. Are we looking for growth in revenues year-on-year in your current plan and how should we think about margin, last year there was a quite a bit of noise in the numbers with some kind of projects -- program specific issues.

How should we be thinking about that evolution over the course of the year?.

Yes, I’d say that before EAF our focus has turned to quality of earnings and making sure we get back to that double-digit operating income, so that’s what our focus is on making sure we get there.

I would say again on the revenue line, the Galaxy 6 Samsung was launched today, it depends on how that market demand goes, it tell us if we’re going to see a big pick up or not. So was that the gaze in marketing see -- but I would say we’re focused on operating income and really the quality of earnings and getting to that double-digit..

Your next question is from the line of Charles Bradford with Bradford Research..

I mean we’ve got a lot of information on the electric furnace usage around the world, if we get like 60 countries.

But what we don’t get and what might be the most critical is what kind of inventories are there of electrodes? Pretty clearly in this kind of an environment where people expect lower prices they're going to be holding back but it's the question of how long can they not buy electrodes.

Do you have any good information?.

Yes, I’d say Chuck when we look at the inventory levels our customers around the world there and I’ll say decent position.

Some depending where you are in the world are a little bit higher because of the change of production from 4Q to 1Q, but I’d say they're not necessarily really a low levels and they are not at high levels, they are just at an average levels of inventory right now and get in certain pockets we see them working them off here especially in Q1 depending on what reason you're in.

And nothing that would tell us it's an extraordinary inventory position at this point..

And another question, what are you currently paying for decant oil?.

I don’t want to -- we won’t disclose that, but obviously you can look out there and see where oil prices are going and that tells you roughly the change that we see. As there were other factors that come into for us but that just gives you an indicator..

Well my second part of the question is what is running through your P&L in the first quarter compared to what the current market price is? Because obviously as you discussed it's going to take you six to nine months to get the benefit of all -- get the full benefit of the lower oil price.

So how bad is that spread?.

Well I'll just say the timing because it's the same time, it’s worth running through our Q1 would be what you'll see Q3 type cost that will run through Q1. So it gives you the idea if you go back and look for the oil price was now I'll tell you it's running through because there is a lead lag effect..

In the U.S. the American Iron and Steel Institute with their January data reduced capacity for the industry by 2 million tons, but they didn’t break out where that was or what that was, and U.S. Steel among others have announced some changes.

Do you know what capacity they took out?.

No, Chuck. Top of my head I don’t..

And have you gotten any more information from people like U.S.

Steel who have been talking about replacing blast furnaces with the EAF, anything more current than just the general statements they have made?.

I would say as the spread of metallic, iron ore to scrap starts to come back into not more historical levels.

As you know Chuck the iron ore price that came way off early on yet scrap price is still hung up there, and now in the last two months we have seen a tremendous drop in scrap prices as those two come back from more of historical conversion I think you will see more discussions about the EAF route and which way do we want to go.

But I don’t know if any particular ones, we obviously hear customers talk about and they are doing both, converting more to EAF than integrated and it depends obviously on their cost structure and the products they make..

So our next question is from the line of Phil Gibbs with KeyBanc Capital Markets. .

As far as the fourth quarter in engineered solutions, I think that appeared lot better than what you were looking for. I think you were looking for pretty strong negative margins in the quarter and eked out a nice gain which was really good to see.

What changed maybe relative to what you were looking just a few months ago?.

If you look at the revenue line Q3 to Q4 relatively flat up a little bit but the team is focused on cost. We put all our effort on reducing costs. The teams did a great job managing the plants and the operations to reduce the cost. And it relates the flow through of that cost that you're seeing in the fourth quarter.

Some of that you're seeing is from the initiatives we took midyear in the AGM business when we rationalized the product line there, we saw some of that benefit. So it was all cost focused which will continue to be that way here for the first half with the EAF business..

As far as your electrode order book for 2015 you say about 60% booked, I would imagine against that 85% utilization.

Anything region specific, anywhere that’s maybe bit tougher relative to some other regions, which ones look a little bit stronger from your order book standpoint versus others that could be lagging at this point?.

I would say Phil it’s a pretty typical order book from a regional perspective in timing, meaning there is the North American part of the world the South American part of the world, Europe, Asia I would say they are all on their normal patterns.

I think the challenge is we are 60% booked and we will continue to book that other 40% where the market go when we book that 40%, and that’s the question..

And just a last one here as far as some of these FX headwinds early in the year with the euro.

Is there any other currencies that provide a little bit of the challenge here for you given the fact that dollar strengthened relative to almost everything at this point in time?.

No, nothing that gives us any chance [technical difficulty] no other ones..

Do you have any new products in EAF this year that could provide a bit of a tailwind anything that you've been working on?.

Obviously our AET business consumer electronics always bring new products to the market. Again I think we'll determine there would be the end use growth of those markets for targeting.

I think the other businesses I would say were AGM is a transformation story right now based unfortunately with the [sat] fire issues with GCAC and Apple that slowed that business down.

The other ones we're working on new products but I would say not much this year, we see some opportunities in the markets we are working more down the road at this point in time..

[Operator Instructions]. Your next question is from the line of Justin Bergner with Gabelli & Company..

Couple of quick questions.

First off, with respect to FX, are you actually getting a transaction benefit based upon sort of how your costs geographically match up with revenues or is it pretty balanced?.

Pretty balanced. So again over time the impact of FX is neutral to us, it's timing that will throw you off and especially when you see a steep decline in the currency as much as you saw the euro but throughout the year we'd expect it to be neutral..

My second question relates to pricing in engineered solutions.

Could you maybe provide a little more detail about some of the headwinds there and how you're seeking to overcome them?.

We're absolutely -- so two business lines I'll point to one is in the AGM business line our traditional industrial markets that we supply have seen, come under a little bit of pressure here in the first half of the year in typical markets, the chemical industry, oil and gas industry, so we've seen some pressure in those markets on price.

And our AET business as our partner tries to look to recover from the last year problems, we've seen a little bit of pressure on the price and how we then react that to our differentiation provide a product, to provide them with the value that they can't get anywhere else and make that comparison.

So again we're reacting to that and again we'll introduce new products in AET to compensate for that pressure. And again we'll see a transition from probably first half to second half as some of those products are more successful in the second half of the year.

But we're well positioned, just well positioned especially in AET with our customers, our offerings really we are key as I mentioned in my comments is really to diversify our customers a little bit better and then also some new markets that we're starting to look at would be our key..

And finally that's good news for GrafTech on the credit facility amendment, the increased liquidity, so good job there.

Should I interpret from the press release that there sort of no impediments towards using that amended facility towards paying off the 200 million senior subordinated notes come November 2015 sort of covenants or otherwise?.

I'll let Erick answer for you..

Justin we've spot on no impediments..

Your next question is from the line of Brett Levy with Jefferies..

Is there any reason you can't buy these notes back in the open market or I mean you got 400 of liquidity on the bank line and new more of 40 million term loan bonds at 80 and outlook for better two half results.

Can you take advantage of this?.

First thing I'll say Brett is obviously our focus is on de-leveraging whatever form that may take and we'll continue to focus on de-leveraging the balance sheet at the most economical way we can and that will be the emphasis throughout the year..

And then in terms of the whole global supply outlook, is the quality advantage that you guys have versus the rest of the world pretty much intact?.

Yes again I'd say when GrafTech strategy is clearly on differentiation and you know that Brett quality so which means the performance of the electrode the service that we provide with that and obviously the reliability we bring as we service over 500 customer locations around the world there is a value equation that goes with that and again dependent on the economic type when you're in that value equation could be smaller or bigger depending on where you're at.

And right now obviously we're probably closer to the smaller end of that differentiation between us and our competition and depending on what competitor you are. But then as things improve which we expect they will, then the gap will get wider..

And what do you think turns that dial in your direction?.

The furnace -- our customers operations and how they want to run. In different times as you see the utilization rate since my comments that we're seeing still utilization rates come down, they're more out to try other alternatives because the operating rates are low and they have time.

As they speed back up they want the higher quality electrodes, so this comes back to how an operator wants to operate..

Your next question is from the line of Edward Marshall with Sidoti & Company..

A quick follow up because there's lot of moving pieces here especially as it relates to the first half of the year, with cost, volumes, prices, inventory reductions and all of the above.

It looks like on an EBIT line you're guiding to roughly flat to $10 million, first is that correct and then secondly I assume you're looking at an operating loss for the first quarter?.

Well again Ed welcome back, I can say is we're looking at the first half pretty comfortable with our guidance for the first half of that 45 million to 55 million of EBITDA, because that's where we kind of see how order book flows with again Q1, Q1 will be the challenging quarter, no doubt about it when you look at the two half or two quarters in the first half.

Q1 will be challenging on the operating income line, I think you said it, it will be on the lock side in Q1 and then obviously for the first half we start to rebound when we see 2Q..

So much stronger in 2Q versus 1Q on the operating line?.

Yes..

There are no further questions at this time. I would like to turn the call back over to Mr. Joel Hawthorne for closing remarks..

Thank you very much, Kimberly and again thanks for joining the call, taking the time today on behalf for the 2,400 men and women of GrafTech. Thanks for your interest and participation and I look forward to talking to all of you at the end of the first quarter. Have a great day..

This will conclude today’s teleconference. You may now disconnect..