Kirk Ludtke

Kirk Ludtke from Imperial Capital asked if GrafTech International can price its products at a premium due to quality and service, or if these factors primarily help win ties. He also inquired about the percentage of market demand sensitive to quality and service, whether the $12 billion critical material fund is sufficient to influence pricing in GrafTech's end markets, and if the company anticipates competitors reducing capacity.

Answer

Timothy Flanagan, CEO, explained that pricing depends on the market; GrafTech's superior value proposition helps them price competitively against top-tier producers and differentiate from Tier Two/Three. He asserted that 100% of demand is sensitive to quality, but the willingness to pay for incremental quality varies. Regarding the $12 billion fund, Mr. Flanagan noted it's hard to quantify its exact impact but believes the totality of government and financial initiatives, recognizing synthetic graphite as a critical mineral, will have a positive uplift. He stated that he only knows publicly announced capacity reductions but broadly expects capacity surplus to come offline eventually in an unrewarding market.

Kirk Ludtke asked for details on the volume of graphite electrodes imported into the U.S. by country of origin, the potential for foreign producers to mitigate tariffs using U.S. needle coke, and whether pricing outlooks have changed in Europe.

Answer

CEO Timothy Flanagan detailed the U.S. market composition, noting the largest shares are held by GrafTech and two Japanese competitors, with Indian producers holding a mid-teens percentage. He explained that competitors could mitigate tariffs by using U.S.-sourced needle coke but emphasized that 100% of GrafTech's product uses its own domestically produced needle coke, creating a significant opportunity. He concluded that pricing has stabilized in Europe, but the backdrop is becoming more supportive for future increases.

Kirk Ludtke of Imperial Capital, LLC asked if there has been an increase in conversations about long-term agreements compared to last year. He also sought details on a competitor's price increase and inquired about any financial covenants in the new delayed draw term loan that could restrict access to the facility.

Answer

CEO Timothy Flanagan noted that while long-term agreements remain a small, strategic part of the order book, conversations are ongoing with key partners, but he did not confirm a significant increase in such talks. He declined to speculate on the competitor's pricing strategy. CFO Rory O'Donnell clarified that the new term loan has customary covenants but no unusual restrictions that would prevent GrafTech from accessing the delayed draw portion.

Kirk Ludtke of Imperial Capital LLC asked for the detention rate required to justify 100,000 beds, the percentage of ICE contracts with minimum guarantees, and how to characterize the current ISAP population and its potential size without funding limits.

Answer

Executive Chairman George Zoley explained the theoretical model for 100,000 beds is based on deporting one million people a year, which would require processing approximately 100,000 people per month. He also noted most of their ICE contracts now have some form of fixed pricing or guarantee. He described the current 183,000 ISAP participants as a small part of a much larger non-detained docket of 17-18 million people who could potentially be monitored.

Kirk Ludtke of Imperial Capital asked for perspective on the ramp-up of interior enforcement, whether an ATD contract resolution is a prerequisite for share buybacks, the disparity in credit ratings, the product mix shift in electronic monitoring, and details on the potential Oklahoma facility sale.

Answer

CEO Dave Donahue expressed that he is 'extremely impressed' with ICE's focus on its mission, with progress contingent on congressional funding. CFO Mark Suchinski indicated that having 'line of sight' on the ATD contract would be important before launching a buyback. Donahue added they expect an extension 'in short order.' Suchinski stated Fitch's rating is appropriate and the monitoring product mix has stabilized. Donahue confirmed the $312 million Oklahoma sale requires legislative approval, with a target closing in July.

Kirk Ludtke of Imperial Capital asked for an estimate of the criminal alien population in the U.S. and whether housing them would alter security needs. He also inquired about the potential impact of reversing current executive orders and the expected timeline for the existing ISAP contract, including potential extensions.

Answer

Executive Chairman George Zoley and CEO Brian Evans cited public information suggesting over 600,000 criminal aliens subject to removal. Zoley stated this would require a triage approach, with higher-security individuals in secure facilities, likely increasing the length of stay. He expects a new administration to reverse prior executive orders on 'day 1,' making opportunities immediate, with ICE getting priority for bed space. He also noted the ISAP contract could be extended for 6 to 18 months or longer.

Kirk Ludtke from Imperial Capital LLC inquired about Cooper-Standard's 2030 financial targets, seeking clarification on the revenue growth drivers for the Sealing and Fluid Handling segments, specifically the breakdown between booked new business and other factors like production volume assumptions. He also asked about the drivers for the significant margin expansion and confirmed the implied total adjusted EBITDA target for 2030.

Answer

Chairman & CEO Jeffrey Edwards confirmed that approximately 80% of the projected $1 billion in incremental revenue by 2030 is from already booked business. He clarified that the underlying production volume assumptions are conservative, based on S&P forecasts without factoring in a significant market rebound, meaning any volume upside would be incremental to the plan. Edwards attributed the expected margin expansion to disciplined pricing on new business, ongoing cost optimization, and improved forecasting accuracy, noting that the profitability of newly awarded programs already meets the future hurdle rates. EVP & CFO Jonathan Banas concurred with the revenue calculations.

Kirk Ludtke asked about the $2 million in duties and tariffs, questioning if it was a timing issue that would be recovered. He also inquired about the growth trajectory of hybrid vehicles and whether it was coming at the expense of EVs. Finally, he sought clarification on the company's guidance, asking if it was being withdrawn and if a double-digit EBITDA margin was still achievable by year-end.

Answer

EVP and CFO Jonathan Banas confirmed the tariff cost was a minor, temporary impact that the company expects to recover. Chairman and CEO Jeff Edwards added that their robust systems allow for real-time tracking and recovery of most tariff costs, minimizing the overall impact. Regarding hybrids, Edwards explained that consumer preference is driving the trend, which is highly favorable for the company due to significantly higher content per vehicle. He also affirmed that guidance is not being withdrawn and that achieving a double-digit EBITDA margin run rate by year-end is still possible.

Kirk Ludtke inquired about the business conditions in Europe and whether the company was EBITDA positive in both North America and Europe. He also asked for quantification of the impact of new products recognized by the PACE Pilot Award and the rationale behind the lower capital expenditure run rate.

Answer

Chairman and CEO Jeffrey Edwards confirmed that the company was EBITDA positive in both North America and Europe, noting similar macroeconomic headwinds in both regions. He highlighted success with Chinese domestic OEMs as a key growth area. Regarding new products, Edwards explained that innovations like eCoFlow and FlexiCore increase content per vehicle and profitability by meeting customer demand for system efficiency and premium aesthetics. He attributed the lower CapEx rate, which he expects to be sustainable, to innovative product design and the effective reuse of existing capital.

Kirk Ludtke sought to confirm the math behind achieving a 10% EBITDA margin by the end of 2025, asking for the drivers behind the projected $80 million increase from 2024 guidance. He also inquired about the company's organic growth rate and confirmed the plan for cash interest payments on both bonds in December.

Answer

CEO Jeff Edwards confirmed the math and detailed the drivers for margin improvement. He clarified that cost savings are expected to be $40-$45 million on an annualized basis, not just $20 million. Other key drivers include improved margins on new program launches with innovative technology, the returning profitability of the fluid handling business, and effective price management. Edwards noted that organic growth continues to outpace the market and expects the rise of hybrid vehicles, which have 80% more fluid product content, to be a significant tailwind. CFO Jon Banas confirmed the plan to make cash payments on both the first and third lien notes in December.

Kirk Ludtke of Imperial Capital, LLC followed up on the Roderos investment, asking if the capital was needed for their operations, when the deal might materially impact results, and the ownership percentage. He also inquired if U.S. customers are discussing 2026 capacity with Titan due to the tariff situation.

Answer

CEO & President Paul Reitz clarified that Roderos is already well-capitalized and the deal is strategic, not a capital injection. He stated the initial investment is for a 20% stake and that a material financial impact would occur upon potential future consolidation. Strategically, it strengthens their "one-stop shop" offering in Brazil. Reitz confirmed that customers are indeed asking about 2026 capacity, signaling they view Titan as well-positioned for a potential shift in sourcing.

Kirk Ludtke of Imperial Capital inquired about the company's initiative to source products from third parties and sought clarity on the potential impact of tariffs on steel products and tires, including the primary sources of U.S. imports.

Answer

CEO Paul Reitz explained that third-party sourcing is a key part of the 'one-stop shop' strategy, enhanced by the Carlstar acquisition, which leverages Titan's distribution, branding, and technical services. Regarding tariffs, Reitz stated that a detailed analysis shows a minimal short-term impact. Long-term, he views tariffs as a positive for U.S. manufacturing and an opportunity for Titan to use its global footprint to mitigate supply chain risks for customers, noting that large ag wheels are already predominantly made in the U.S.

Kirk Ludtke requested specifics on the magnitude of cost and revenue synergies from the Carlstar acquisition, the role of Carlstar's China facility in sourcing smaller tires, and guidance for Q4 working capital and CapEx. He also asked about the primary drivers of agricultural commodity prices, particularly the balance between supply and demand.

Answer

CFO David Martin confirmed Titan is on track for its initial cost synergy targets for the year and believes the longer-term $25-30 million goal is conservative, with upside in commercial opportunities. He noted the China facility provides production flexibility. For Q4, Martin guided for working capital to be a positive cash flow driver. CEO Paul Reitz attributed current Ag price weakness to several years of good global crops but expressed long-term confidence based on structural demand drivers like global protein consumption.

Kirk Ludtke from Imperial Capital, LLC asked about the relationship between the administration's goal of 1 million annual deportations and the stated need for 100,000 detention beds, the timeline to achieve that deportation rate, and how to view foreign detention locations as potential competition.

Answer

CEO Damon Hininger confirmed the direct relationship, stating the 100,000-bed capacity goal is linked to enabling 1 million annual deportations. He noted he has not heard a specific ramp-up plan for the deportation rate. Hininger stated that CoreCivic does not view foreign locations as direct competition due to its significant advantages in quality, logistics, cost-effectiveness, and lower legal risk.

Kirk Ludtke inquired about how ICE deportations might ramp up and how CoreCivic protects itself contractually with features like minimum bed guarantees. He also asked about the new administration's view on alternatives to detention like ISAP and the nature of potential M&A activity.

Answer

CEO Damon Hininger stated that he expects new ICE contracts to have structures similar to past agreements, including fixed payments to cover fixed costs. He also noted that the administration's focus has been almost exclusively on detention, with little discussion about ISAP. Regarding M&A, Hininger and CFO David Garfinkle clarified they are looking at tuck-in acquisitions of core assets, including idle facilities from other operators, and will remain disciplined in their approach.

Kirk Ludtke sought clarification on U.S. Marshals population figures, asked if CoreCivic would re-engage with the Bureau of Prisons (BOP) if the executive order is reversed, and inquired how an increase in deportations might change the business and the ATD program.

Answer

CEO Damon T. Hininger clarified the USMS population was ~47,000 at the end of the Obama administration, peaked near 67,000 under Trump, and is currently 55,000. He stated that any re-engagement with the BOP would be demand-driven, noting the BOP's challenges with aging facilities. Regarding deportations, Hininger and CFO David Garfinkle explained their facilities are flexible enough to handle changes in length of stay. Hininger concluded it's hard to say how deportation focus would impact the ATD program, but the administration would likely use all available tools.

Asked about demand trends in the core North American market, market share gains, the reasons for the adverse shift in the parts business mix, and the current percentage of the installed base that is electric.

Answer

North American demand is in a dip as customers digest a wave of deliveries from overbooking in 2021-2023; the market is expected to normalize in H2 2025. The company is gaining market share in North America and plans to continue. The parts mix shift is due to a short-term cycle of service vs. repair parts and a long-term shift to electric trucks, which have fewer parts. The installed base in North America is about 40% electric by unit, but closer to 50% by value.

Kirk Ludtke of Imperial Capital asked about underlying demand themes in the core North American market, the company's ability to continue gaining market share, the reasons for the adverse mix shift in the parts business, and the current electric vehicle penetration in the installed base.

Answer

President and CEO Rajiv Prasad responded, explaining that the current demand dip in North America is an industry-specific cycle of digesting significant over-booking from 2021-2023, rather than a broader economic issue, with normalization expected in H2 2025. He affirmed the company's strategy and expectation to continue gaining market share. Prasad described the parts mix shift as having two components: a short-term cycle between service and repair parts, and a long-term structural shift toward electric trucks, which have a different parts profile. He estimated that for North America, the installed base is roughly 40% electric by unit volume but closer to 50% by value.