What changed in this filing

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Item 1. Business

2021-02-23 compared with 2020-02-21 · 158 added, 172 removed, 249 unchanged (57% of the section changed)

GrafTech International Ltd.

is a leading manufacturer of high quality graphite electrode products essential to the production of electric arc furnace (or EAF) steel and other ferrous and non‑ferrous metals.

We believe that we have the most competitive portfolio of low‑cost graphite electrode manufacturing facilities in the industry, including three of the highest capacity facilities in the world.

is a leading manufacturer of high-quality graphite electrode products essential to the production of electric arc furnace ("EAF") steel and other ferrous and non-ferrous metals.

We believe that we have the most competitive portfolio of low-cost ultra-high power (“UHP”) graphite electrode manufacturing facilities in the industry, including three of the highest capacity facilities in the world.

We are the only large scale graphite electrode producer that is substantially vertically integrated into petroleum needle coke, a key raw material for graphite electrode manufacturing.

This unique position provides us with competitive advantages in product quality and cost.

Founded in 1886, we have over 130 years of experience in the research and development (or R&D) of graphite- and carbon‑based solutions, and our intellectual property portfolio is extensive.

Founded in 1886, we have 135 years of experience in the research and development (“R&D”) of graphite- and carbon-based solutions, and our intellectual property portfolio is extensive.

We currently have graphite electrode manufacturing facilities in Calais, France, Pamplona, Spain, Monterrey, Mexico and St.

Marys, Pennsylvania.

Our customers include major steel producers and other ferrous and non‑ferrous metal producers in Europe, the Middle East and Africa (or EMEA), the Americas and Asia‑Pacific (or APAC), which sell their products into the automotive, construction, appliance, machinery, equipment and transportation industries.

Our customers include major steel producers and other ferrous and non-ferrous metal producers in Europe, Russia and other Commonwealth of Independent States countries, the Middle East and Africa (collectively, “EMEA”), the Americas and Asia-Pacific (“APAC”), which sell their products into the automotive, construction, appliance, machinery, equipment and transportation industries.

Our vision is to provide highly engineered graphite electrode services, solutions and products to EAF operators.

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Graphite electrodes are currently the only known commercially available products that have the high levels of electrical conductivity and the capability to sustain the high levels of heat generated in EAF steel production.

As a result, EAF steel manufacturers have been willing to pay a premium for a reliable supply of high quality graphite electrodes.

As a result, EAF steel manufacturers require a reliable supply of high-quality graphite electrodes.

Graphite electrodes are also used in steel refining in ladle furnaces and in other processes, such as the production of titanium dioxide, stainless steel, aluminum, silicon metals and other ferrous and non‑ferrous metals.

Electrode production globally is focused on the manufacture of ultra-high power (or "UHP") electrodes for EAFs.

With the growth of EAF production, electrode production has become focused on the manufacture of UHP electrodes.

The production of UHP electrodes requires an extensive proprietary manufacturing process and material science knowledge, including the use of higher quality needle coke blends.

We primarily compete in the UHP graphite electrode market.

Petroleum needle coke, a crystalline form of carbon derived from decant oil, is a key raw material used in the production of graphite electrodes.

We achieved substantial vertical integration with this critical raw material source through our acquisition of Seadrift Coke LP (or Seadrift) in November 2010, significantly reducing our reliance on other suppliers.

Petroleum needle coke, a crystalline form of carbon derived from decant oil, is the key raw material we use in the production of graphite electrodes.

We achieved substantial vertical integration with this critical raw material source through our acquisition of Seadrift Coke L.P.

(“Seadrift”) in November 2010, significantly reducing our reliance on other suppliers.

The petroleum needle coke industry is highly concentrated.

We believe Seadrift is one of the largest petroleum needle coke producers in the world.

We also believe that the quality of Seadrift’s petroleum needle coke is superior for graphite electrode production compared to most of the petroleum needle coke available to our peers on the open market, allowing us to produce higher quality electrodes in a cost‑efficient manner.

Additionally, we believe that this vertical integration provides a significant cost advantage relative to our competitors.

We believe this cost advantage will persist as demand for petroleum needle coke increases for use in lithium‑ion batteries in electric vehicles.

The demand for petroleum needle coke in lithium‑ion batteries is growing rapidly.

This alternative source of demand is a significant development for the petroleum needle coke industry and has disrupted global supply chains for petroleum needle coke.

As a leading producer of graphite electrodes, we believe we are well-positioned to be a key provider to the EAF steel making industry.

In 2018, we completed an operational improvement and debottlenecking initiative to increase production capacity at our three primary operating facilities by approximately 20% to a total of 202,000 metric tons ("MT").

We have recently begun a series of projects at our Monterrey and St.

In 2018, we completed an operational improvement and debottlenecking initiative to increase production capacity at our three primary operating facilities in Calais, France, Pamplona, Spain, and Monterrey, Mexico, by approximately

20% to a total of 202,000 metric tons (“MT”).

1 We have begun a series of projects at our Monterrey and St.

Marys facilities that will shift graphitization and machining of additional volume of semi-finished product from Monterrey to St.

We expect these projects will further optimize our manufacturing footprint

by improving environmental performance and production flexibility at both facilities and also leverage cost efficiencies at our St.

these projects will further optimize our manufacturing footprint by improving environmental performance and production flexibility at both facilities and also leverage cost efficiencies at our St.

Marys facility.

Graphite electrodes are an essential consumable in the EAF steel production process and require a long lead time to manufacture, and our strategic customers are highly focused on securing certainty of supply of reliable, high-quality graphite electrodes.

Therefore, beginning in the fourth quarter of 2017, we executed three- to five‑year take‑or‑pay sales contracts for approximately 60% to 65% of our cumulative expected production capacity from 2018 through 2022.

We believe we are uniquely capable among graphite electrode producers to pursue our three‑ to five‑year take‑or‑pay contracting strategy due to our substantial vertical integration into petroleum needle coke production.

We believe we are uniquely capable among graphite electrode producers to pursue our long-term take‑or‑pay contracting strategy due to our substantial vertical integration into petroleum needle coke production.

On August 15, 2015, we became an indirect wholly owned subsidiary of Brookfield Asset Management Inc.

(together with its affiliates, "Brookfield").

In April 2018, we completed our initial public offering (or IPO) of 38,097,525 shares of our common stock held by Brookfield at a price of $15.00 per share.

We did not receive any proceeds related to the IPO.

Our common stock is listed on the NYSE under the symbol “EAF.” Brookfield owns approximately 74% of our common stock as of December 31, 2019 .

In April 2018, we completed our initial public offering ("IPO").

Our common stock is listed on the NYSE under the symbol “EAF.” Brookfield owned approximately 55.3% of our common stock as of December 31, 2020 and 47.8% as of February 16, 2021.

Our executive offices are located at 982 Keynote Circle, Brooklyn Heights, Ohio 44131 and our telephone number is (216) 676‑2000.

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Competitive strengths

We are one of the largest producers of graphite electrodes in the world, accounting for approximately 24% of global production capacity (excluding China), and we believe our strategically positioned global footprint provides us with competitive advantages

We are one of the largest producers of graphite electrodes in the world, accounting for approximately a quarter of global production capacity (excluding China), and we believe our strategically positioned global footprint provides us with competitive advantages.

We believe our facilities are among the most strategically located and lowest cost, large‑scale graphite electrode manufacturing plants in the world.

Of the graphite electrode manufacturing facilities currently operating, we estimate that our three primary operating manufacturing facilities represent approximately 24% of estimated production capacity for graphite electrodes outside of China, making us a critical supplier to global EAF steel manufacturers.

Of the graphite electrode manufacturing facilities currently operating, we estimate that our three primary operating manufacturing facilities represent approximately a quarter of estimated production capacity for graphite electrodes outside of China, making us a critical supplier to global EAF steel manufacturers.

Our manufacturing facilities are located in the Americas and EMEA, providing us with access to low‑cost and reliable energy sources, logistical and freight advantages in sourcing raw materials and shipping our graphite electrodes to our customers compared to our competitors, and excellent visibility into the large North American and European EAF steelmaking markets.

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We are a pure‑play provider of an essential consumable for EAF steel producers, the fastest‑growing sector of the steel industry.

According to the World Steel Association ("WSA"), EAF steelmaking grew at an annual pace of approximately 10% in 2018, compared with 5% for steelmaking overall.

According to the World Steel Association (“WSA”), since 2000, EAF steelmaking grew at an annual pace of approximately 3% , compared with 1% for steelmaking overall, excluding China.

As a result of the increasing global availability of steel scrap and the more resilient, high‑variable cost and environmentally friendly EAF model, we expect EAF steel producers to continue to grow at a faster rate than blast oxygen furnace ("BOF") producers globally.

Additionally, EAF steel producers are increasingly able to utilize higher quality scrap and iron units, their two primary raw materials, to produce higher quality steel grades and capture market share from BOF producers, while maintaining a favorable cost structure.

The EAF method produces approximately 25% of the carbon dioxide (or CO 2 ) emissions of a BOF facility and does not require the smelting of virgin iron ore or the burning of coal.

The EAF method produces approximately 25% of the carbon dioxide (“CO 2 ”) emissions of a BOF facility and does not require the smelting of virgin iron ore or the burning of coal.

Additionally, as a result of significantly increased steel production in China since 2000, the supply of Chinese scrap is expected to increase substantially, which may result in lower scrap prices and provide the Chinese steel manufacturing industry with local scrap feedstock that was not historically available.

We believe these trends will allow EAF steel producers to increase their market share and grow at a faster rate than BOF steel producers resulting in increasing demand for graphite electrodes.

We have capital‑efficient growth opportunities available to us

The graphite electrode industry responded to oversupplied markets from 2011 to 2015 with production capacity rationalization and consolidation.

Only one new greenfield graphite electrode facility outside of China has been built since the 1980s and only one significant brownfield expansion has occurred, reflecting the historical difficulty of adding further graphite electrode production capacity.

We believe the lead time from initial permitting to full production of a greenfield graphite electrode manufacturing facility would be approximately three to five years and cost approximately $10,000 per MT in developed countries.

Similarly, brownfield development is complicated by significant capital costs and space and process constraints.

Our current facilities are modern, strategically located and well‑maintained, providing us with ample operational optimization capabilities.

In 2018, we completed the expansion of our production capacity by approximately 20%, to 202,000 MT, through strategic capital investments and operational improvements.

As a result of our prior operational improvement activities, we were able to achieve this large capacity increase with specific, highly targeted capital investments.

These expansions provided an additional fixed cost absorption and drive further efficiencies of scale across our manufacturing base.

We believe we have the industry’s most efficient production platform of high production capacity assets with substantial vertical integration.

Based on our experience, high capacity manufacturing facilities can have an operating cost advantage of more than $1,000 per MT as compared to low capacity manufacturing facilities.

Over the the past decade, we have rationalized inefficient plants during the downturn and more recently completed a manufacturing footprint optimization program, which resulted in our ability to produce a greater quantity of graphite electrodes from our three primary operating facilities than we did from the six operating facilities we had in 2012.

Over the past decade, we have rationalized inefficient plants during the downturn and more recently completed a manufacturing footprint optimization program.

We believe that the optimization of our graphite electrode plant network will continue to drive improved fixed cost absorption.

Moreover, our Calais, Pamplona, Monterrey and St.

Marys facilities each provide unique cost advantages given their scale and access to low cost, reliable energy sources.

Seadrift provides a substantial portion of our petroleum needle coke supply needs internally at a competitive cost and allows us to maximize capacity utilization more efficiently than competitors, who may be more constrained by a limited or costly petroleum needle coke supply.

Marys facilities each provides unique cost advantages given its scale and access to low cost, reliable energy sources.

1 Production capacity reflects expected maximum production volume during the period under normal operating conditions, standard product mix and expected maintenance outage.

Actual production may vary.

costly petroleum needle coke supply.

Seadrift is one of only five petroleum needle coke facilities in the world outside of China, and we believe it is one of the largest petroleum needle coke producers in the world.

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Our production of petroleum needle coke specifically for graphite electrodes provides us the opportunity to produce super premium petroleum needle coke of the highest quality and allows us to tailor graphite electrodes for customer requirements.

Seadrift has 140,000 MT of petroleum needle coke production capacity, which we believe makes it one of the largest petroleum needle coke producers in the world.

The growing petroleum needle coke demand from manufacturers of lithium‑ion batteries for electric vehicles has increased demand for petroleum needle coke otherwise available to graphite electrode manufacturers.

Sourcing the majority of our petroleum needle coke internally allows us to offer our customers certainty of supply, further enhancing our competitive position and supporting our three‑ to five‑year, take‑or‑pay contracts strategy.

To align with our three‑ to five‑year contract profile, we have hedged the decant oil required to produce all of the graphite electrodes sold under these contracts, providing us with substantial visibility into our future raw material costs.

Seadrift has approximately 140,000 MT of petroleum needle coke production capacity, which we believe makes it one of the largest petroleum needle coke producers in the world.

To align with our long-term contract profile, we have hedged the decant oil required to produce substantially all of the graphite electrodes sold under these contracts, providing us with substantial visibility into our future raw material costs.

We believe our use of petroleum needle coke is a further competitive advantage, as the use of pitch needle coke, an alternative raw material, results in longer bake times during graphite electrode production.

Our graphite electrodes and petroleum needle coke are among the highest quality in the industry

Since the completion of the divestiture of our non‑core legacy Engineered Solutions businesses in 2017, we have focused on our core competency of graphite electrode production.

Our restructured and simplified business model has reduced our annual overhead expenses significantly since 2012, allowing us to redeploy the savings into our graphite electrode business.

We identified and implemented mechanical and chemical improvements to our electrodes, invested in our capability to produce super premium petroleum needle coke needed for high‑margin UHP graphite electrodes, and optimized our production of pins at our Monterrey plant, which are a critical component used to connect and fasten graphite electrodes together in a furnace.

As a result, our quality over the last three years has improved to its highest level in ten years.

We believe the quality and the consistency of our electrodes is among the highest in North America and EMEA and on par with that of any producer globally.

We believe the durability and infrequent breakage of our graphite electrodes create operating efficiencies and value opportunities for our customers.

We also believe we have a competitive advantage in offering customers our ArchiTech Furnace Productivity System (or ArchiTech), which we believe is the most advanced support and technical service platform in the graphite electrode industry.

ArchiTech, which has been installed in customer furnaces around the world, enables our engineers to work with our customers seamlessly to maximize the performance of their furnaces and provide real‑time diagnostics and troubleshooting.

We believe our customers value our high quality products and customer service, and have provided us with opportunities to expand our business with them as a result.

We provide highly engineered graphite electrode products and are competitively positioned to provide services and solutions to EAF operators.

We utilize our own R&D facility as well as process engineers located at plant sites to constantly work at process and product improvements.

This work has yielded the development of new products over the last 18 months, which have improved our competitive position.

In addition, we believe that our ArchiTech Furnace Productivity System (“ArchiTech”) continues to provide a competitive advantage.

ArchiTech, which has been installed at customer furnaces around the world, enables our engineers to work with our customers seamlessly to maximize the performance of their furnaces and provide real‑time diagnostics and troubleshooting.

This remote functionality has been particularly helpful during the COVID-19 pandemic.

We believe our customers value our high-quality products and customer service, which subsequently improves our commercial opportunities.

Our experienced executive leadership and general managers and flexible workforce have positioned us for future earnings growth.

Our seasoned leadership is committed to earnings growth.

Our executive and manufacturing leadership have led manufacturing companies through many cycles and are focused on positioning us for profitable growth in any environment.

have undertaken strategic investments to increase our production capacity in a capital‑efficient manner while reducing our cost position.

Our executiv e and manufacturing leadership have led manufacturing companies through many cycles and are focused on positioning us for profitable growth in any environment.

We have undertaken strategic investments to increase our production capacity in a capital‑efficient manner while reducing our cost position.

Graphite electrode industry

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Supply trends

We estimate that from 2014-2016, the industry closed or repurposed approximately 20% of global production capacity outside of China, consisting of smaller, higher cost facilities.

Based on our experience, high capacity manufacturing facilities can have an operating cost advantage of more than $1,000 per MT as compared to low capacity manufacturing facilities, encouraging producers to consolidate facilities in order to reduce costs.

We estimate that from 2014 to 2016, the industry closed or repurposed approximately 20% of global production capacity outside of China, consisting of smaller, higher cost facilities.

Based on our experience, high capacity manufacturing facilities can have a significant operating cost advantage as compared to low capacity manufacturing facilities, encouraging producers to consolidate facilities in order to reduce costs.

We believe the majority of the production capacity reduction was permanent due to the demolition, long-term environmental remediation and repurposing of most of these lower capacity facilities.

Notwithstanding the current market challenges, the consolidation and production capacity reductions in the graphite electrode industry, along with the EAF steel industry’s recovery since 2016, lead us to believe that the graphite electrode industry has recovered from the downturn and resumed its long‑term growth trajectory.

We believe worldwide graphite electrode supply will increase in 2020 driven by Chinese capacity additions.

Notwithstanding the current market challenges, the consolidation and production capacity reductions in the graphite electrode industry, along with the EAF steel industry’s recovery since 2016, lead us to believe that the graphite electrode industry will resume its long-term growth trajectory as the global steel industry recovers from the pandemic.

Demand trends

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World Steel Association

Industry Disruption 2011 to 2015

According to the WSA, EAF steel production declined approximately 10% from 2011 to 2015, reversing the trend of annual growth from 1984 to 2011, largely due to substantial increases in Chinese steel production.

In 1984, China produced 21 million MT of BOF steel, which by 2016 had grown to 757 million MT, representing approximately 94% of its total steel production.

Growth in production capacity surpassed growth in demand, resulting in significant excess capacity within China and increased exports into global markets.

China's net steel exports peaked at 112 million MT in 2015.

These exports negatively affected steel prices and led EAF steel producers to reduce production.

In 2011, global EAF steel production was 454 million MT, representing 30% of global steel production, but by 2015, EAF steel production had declined to 407 million MT, representing 25% of global steel production.

Declining EAF steel production significantly impacted demand for our graphite electrode products.

EAF Steel Production's Recovery and Outlook

The EAF steel industry has recovered since the downturn from 2011 to 2015.

EAF steel production started to recover in 2016 with growth of 2.8%, according to the WSA.

The WSA reported 14% growth in EAF steel production in 2017 followed by 10% growth in 2018.

This recovery has taken place since China began in 2015 to restructure its steel industry by encouraging consolidation and shutting down excess capacity.

China has also begun to implement increased environmental regulations to improve air quality, which has been impacted by CO 2 emissions associated with the burning of coal in BOF steelmaking.

Additionally, developed economies such as North America and Western Europe have implemented trade decisions against BOF steel‑producing countries to protect their domestic steel industries against imports.

These actions have resulted in a significant decrease in Chinese steel exports.

According to China Customs and Baiinfo, Chinese steel exports have declined from 112 million MT in 2015 to 64 million MT in 2019.

This reduction in exports has resulted in increased steel production outside of China, especially EAF steel production.

However, recent steel production and graphite electrode consumption has slowed in some regions, notably Europe and South America and the WSA estimated that total steel production declined approximately 2% outside of China in 2019.

EAF Steel Production's Outlook

Since 2015, the EAF steel industry has grown at a 6.4% compound annual rate according to the WSA.

This recovery has taken place since China began to restructure its steel industry, encouraging consolidation and shutting down excess capacity.

China has also begun to implement environmental regulations to improve air quality impacted by CO 2 emissions associated with the burning of coal in BOF steelmaking.

Additionally, trade remedies in developed economies such as North America and Western Europe are protecting their domestic steel industries against imports from BOF-steel producing countries, which has resulted in a significant decrease in Chinese steel exports .

According to China Customs and Baiinfo, Chinese steel exports declined from 112 million MT in 2015 to 54 million MT in 2020.

This resulted in increased steel production outside of China, benefiting EAF steel production.

We believe there is a particular opportunity for EAF steelmaking to take further market share in China as well.

China’s Ministry of Industry and Information Technology's current draft guidelines call for EAF steelmaking to constitute 20% of overall steel production by 2025, more than doubling its current share of output.

According to the WSA, in 2018, Chinese EAF steel production increased to 108 million MT, or 12%, of China’s total steel production, up from 2017 levels of 81 million MT, or 9%, of China's total steel production.

If Chinese EAF steelmaking production capacity were to reach 20%, based on 2018 production levels, that would add 78 million MT of additional EAF steel production for a total of 186 million MT, compared to 2018 EAF steel production in the next largest regions of 70 million MT in the EU, 60 million MT in India and 59 million MT in the United States, according to WSA.

While China’s 13 th Five‑Year Plan, released in March 2016, did not explicitly address the EAF steel production target, it did emphasize the importance of environmental efforts, and 10 of 25 targets in the plan were related to the environment.

The current draft guidelines further support these efforts.

The Chinese government’s increasing focus on the environment may

eventually incentivize steelmakers to convert from BOFs to EAFs in order to continue operating.

Significant BOF capacity in the country has been shuttered since 2016 due to increasing government‑mandated environmental efforts.

China’s rapid increase in BOF steel production between 2000 and 2016 has also created a significant new source of scrap.

As a result of these factors, we believe that total UHP graphite electrode demand in China will increase going forward.

China’s Ministry of Industry and Information Technology's current draft guidelines call for EAF steelmaking to constitute 20% of overall steel production by 2025, doubling its current share of output.

If Chinese EAF steelmaking production capacity were to reach 20%, based on 2019 production levels, that would add 96 million MT of additional EAF steel production for a total of 199 million MT, compared to 2019 EAF steel production in the next largest regions of 90 million MT in Europe, 81 million MT in North America and 63 million MT in India, according to WSA.

Pricing trends

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In tight demand markets, this spread has increased, resulting in higher graphite electrode prices.

We believe that the new source of demand for petroleum needle coke presented by lithium‑ion battery producers for electric vehicles will place upward pressure on petroleum needle coke pricing compared to historical levels.

There is no widely accepted graphite electrode reference price.

Historically, between 2008 and 2017, our weighted average realized price of graphite electrodes was approximately $4,500 per MT (on an inflation‑adjusted basis using constant 2018 dollars).

Historically, between 2008 and 2017, our weighted average realized price of graphite electrodes was approximately $4,800 per MT (on an inflation-adjusted basis using constant

2020 dollars).

During the last demand trough in 2016, our weighted average realized price of graphite electrodes fell to approximately $2,500 per MT in 2016.

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These record high spot prices began to retreat in 2019, falling 25% during the year.

We expect additional decreases in 2020.

Prices continued to decline throughout 2020.

During the fourth quarter of 2020, our average price from long-term agreements ("LTAs") was approximately $9,600 per MT and our average price for non-LTA business was approximately $4,900 per MT.

Market prices for graphite electrodes declined throughout 2020, including through the fourth quarter and into the early part of the first quarter of 2021.

There is a lag between the time we negotiate price for non-LTA sales and when our electrodes are delivered and recognized in revenue.

We estimate that our non-LTA price for electrodes delivered and recognized in revenue for the first six weeks of 2021 averaged approximately $4,200 per MT.

Given this impact, for the first half of 2021 we anticipate earnings per share and adjusted EBITDA will decline by high single digits, on a percentage basis, compared to the first half of 2020.

We believe market prices for graphite electrodes are now improving and expect this to positively impact our financial results beginning in the second half of 2021.

Needle coke industry

Needle coke is the primary raw material for the production of graphite electrodes used by EAF steelmakers and producers of aluminum, stainless steel, silicon metals and other ferrous and non‑ferrous metals, and is also a key raw material in the production of lithium‑ion batteries used to power electric vehicles.

Needle coke is the primary raw material for the production of graphite electrodes used by EAF steelmakers and producers of aluminum, stainless steel, silicon metals and other ferrous and non-ferrous metals, and is also a primary raw material in the production of lithium-ion batteries used to power electric vehicles.

Needle coke is derived from two carbon sources.

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The process map below shows the raw materials required to make graphite electrodes, the various consumers of these raw materials, as well as the consumers of graphite electrodes.

Graphite electrode sales represent sales outside of China

Management estimates

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Market size and major producers

The needle coke industry is highly concentrated with approximately twelve major producers of needle coke and only five major producers of petroleum needle coke.

These firms include Phillips 66 (U.S.), Seadrift (GrafTech), Petrocokes Japan Limited (Japan), JX Nippon Oil & Energy Co., Ltd.

(Japan) and Petrochina International Jinzhou Co., Ltd.

(China), which produce petroleum needle coke, and Mitsubishi Chemical Company (Japan), Baosteel Group (China), C‑Chem Co., Ltd.

(Japan), Indian Oil Company Limited (India), JX Holdings Inc.

(Japan), Petrochina International Jinzhou Co., Ltd.

(China) and Anshan Kaitan Thermo‑Energy New Materials Co.

Ltd (China), which produce pitch needle coke.

We estimate that Seadrift has approximately 19% of the petroleum needle coke production capacity outside China.

The needle coke industry is concentrated.

We estimate that Seadrift has approximately one-fifth of the petroleum needle coke production capacity outside China.

Graphite electrode manufacturers prefer petroleum needle coke because of the meaningfully longer bake and graphitizing time required for pitch needle coke.

Additionally, the demand for petroleum needle coke in lithium-ion battery manufacturing is growing rapidly.

Electric vehicle manufacturers prefer artificial graphite such as petroleum needle coke in lithium-ion batteries because of its greater energy density, providing batteries with longer driving ranges and longevity.

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Industry trends

Petroleum needle coke production capacity outside of China has remained unchanged for at least the last 10 years due to the capital intensity, technical know‑how and long lead times required to build greenfield needle coke production facilities and the stringent regulatory process associated with building new needle coke production capacity.

Petroleum needle coke production capacity outside of China has remained unchanged for at least the last ten years due to the capital intensity, technical know-how and long lead times required to build greenfield needle coke production facilities and the stringent regulatory process associated with building new needle coke production capacity.

Furthermore, we believe that brownfield expansion opportunities in developed countries are generally not available as petroleum needle coke manufacturing is a continuous process with significant costs associated with shutting down and restarting facilities for maintenance or capital investment.

Demand for petroleum needle coke is increasing due to the use of needle coke in lithium‑ion batteries used in electric vehicles.

According to the International Energy Agency ("IEA"), the global electric car fleet exceeded 5 million in 2018, up 2 million from the previous year and almost doubling the number of new electric car sales.

The IEA projects that global annual sales of electric cars may range between 5 million and 8 million in 2020, and between 12 million and 24 million in 2025.

While the vast majority of petroleum needle coke is used in the production of graphite electrodes, the use of needle coke in lithium-ion batteries for electric vehicles is growing with the increased production of these vehicles.

According to the International Energy Agency ("IEA"), the global electric car fleet exceeded seven million in 2019, as compared to 17,000 in 2010.

The IEA projects that global annual sales of electric cars may range between 13 million and 25 million by 2025.

Most electric vehicles rely on lithium-ion batteries as their key performance component.

Many manufacturers of lithium-ion batteries for electric vehicles use needle coke as a raw material for carbon anodes in their batteries due to advantages in terms of charging rate and capacity.

According to IEA, battery pack capacity has been increasing in recent years.

In the future, the observed trend towards larger battery pack sizes is expected to continue.

Based on IEA’s estimates for electric vehicle sales and battery pack size, and management estimates for needle coke used in anodes, demand for needle coke from electric vehicles could grow significantly from approximately 58,000 MT in 2018 to over 200,000 MT in 2020.

According to IEA, battery pack capacity has been increasing in recent years and is expected to continue.

Based on IEA’s estimates for electric vehicle sales and battery pack size, and management estimates for needle coke used in anodes, demand for needle coke from electric vehicles could grow significantly from over 200,000 MT in 2020 to over 700,000 MT in 2025.

Contracts and Customers

In 2017, we reoriented our commercial strategy around a three‑ to five‑year take‑or‑pay contract framework and restructured our sales force incentives.

In 2017, we reoriented our commercial strategy around a long-term take-or-pay contract framework and restructured our sales force incentives.

As graphite electrodes are an essential consumable in the EAF steel production process and require a long lead time to manufacture, we believe our strategic customers are highly focused on securing certainty of supply of reliable, high-quality graphite electrodes.

Prior to our three‑ to five‑year take‑or‑pay contract initiative, our sales of graphite electrodes were generally negotiated annually through purchase orders on an uncontracted, nonbinding basis.

Prior to our long-term take-or-pay contract initiative, our sales of graphite electrodes were generally negotiated annually through purchase orders on an uncontracted, nonbinding basis.

The majority of our customers sought to secure orders for a supply of their anticipated volume requirements each upcoming year.

The remaining, small balance of our graphite electrode customers purchased their electrodes as needed throughout the year at industry spot prices.

We believe we are uniquely capable among graphite electrode producers to pursue our long-term take-or-pay contracting strategy due to our substantial vertical integration into petroleum needle coke production.

All of our petroleum needle coke production is used internally and is not sold to external customers.

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Consequently, we expect this limited availability of petroleum needle coke will restrict new graphite electrode production.

Seadrift, our wholly owned subsidiary acquired in 2010, provides the majority of our petroleum needle coke requirements and produces sufficient needle coke to supply substantially all of the graphite electrode production that we have contracted under our take‑or‑pay contracts.

We have also hedged the decant oil required to produce all of the graphite electrodes sold under these contracts, providing us substantial visibility into our future raw material costs.

Seadrift, our wholly-owned subsidiary acquired in 2010, provides the majority of our petroleum needle coke requirements and produces sufficient needle coke to supply substantially all of the graphite electrode production that we have contracted under our long-term take-or-pay contracts.

We have also hedged the decant oil required to produce substantially all of the graphite electrodes sold under these contracts, providing us substantial visibility into our future raw material costs.

Because the market price of graphite electrodes may be based, in part, on the current or forecasted costs of key raw materials, periods of raw material price volatility may have an impact on the market price.

In particular, as petroleum needle coke represents a significant percentage of the raw material cost of graphite electrodes, the price of graphite electrodes has historically been influenced by the price of petroleum needle coke.

See “Risk Factors-Risks Related to Our Business and Industry-pricing for graphite electrodes has historically been cyclical and current prices are relatively high, however, the price of graphite electrodes may decline in the future.” The fixed prices under our contracts prevent us from passing along changes related to our costs of raw materials to our customers.

See “Risk Factors—Risks related to our business and industry—Pricing for graphite electrodes has historically been cyclical, current prices are receding from recent highs, and the price of graphite electrodes may continue to decline in the future.” The fixed prices under our contracts prevent us from passing along changes related to our costs of raw materials to our customers.

See “Risk Factors—Risks related to our business and industry—We are dependent on the supply of petroleum needle coke.

Our results of operations could deteriorate if recent disruptions in the supply of petroleum needle coke continue or worsen for an extended period.” However, as described above, we believe our ability to source all of our petroleum needle coke requirements for these contracts from our Seadrift facility and our hedging of our purchases of decant oil mitigates the impact of periodic shortages and price fluctuations of raw materials.

Beginning in the fourth quarter of 2017, we executed three‑ to five‑year take‑or‑pay contracts for approximately 60% to 65% of our cumulative expected production capacity from 2018 through 2022.

In 2018, we shipped approximately 133,000 MT under these contracts at prices averaging approximately $10,100 per MT.

In 2019, we shipped approximately 145,000 MT under these contracts at pricing averaging approximately $9,900 per MT.

We have contracted to sell approximately 142,000, 125,000 and 117,000 MT in 2020, 2021 and 2022, respectively.

Approximately 83% of these volumes are under pre‑determined fixed annual volume contracts, while approximately 17% of the volumes are under contracts with a specified volume range.

The aggregate difference between the midpoints above and the minimum or maximum volumes across our cumulative portfolio of take‑or‑pay contracts with specified volume ranges is approximately 5,000 MT per year in 2020, 2021 and 2022.

Contracted volumes may vary in timing and total due to the credit risk associated with certain customers facing financial challenges as well as customer demand related to contracted volume ranges.

In 2020, we expect to ship approximately 130,000 MT at prices averaging approximately $9,600 per MT .

All of our take‑or‑pay contracts have fixed prices.

All of our long-term take-or-pay contracts have fixed prices.

Within this contract framework, our customers agree to purchase a specified volume of product at the price under the contract.

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These fixed prices under the contracts also prevent us from passing along any changes related to the costs of raw materials to contract customers.

As a result of the take‑or‑pay obligation of the contracts, the customer must purchase the annual contracted volume (or annual volume within the specified range).

As a result of the long-term take-or-pay obligation of the contracts, the

IEA Global Electric Vehicle Outlook 2020 for electric vehicle sales and battery pack capacity.

This also assumes approximately 0.8 kilogram anode material per kilowatt-hour of battery pack capacity.

Anode material is assumed to be approximately 50% synthetic and 50% natural graphite, with a yield of 50%.

customer must purchase the annual contracted volume (or annual volume within the specified range).

In the event the customer does not take delivery of the annual volume specified in the contract, our contracts provide for a capacity payment equal to the product of the number of MTs short of the annual volume specified in the contract multiplied by the price under the contract for that contract year.

The weighted average contract price for the contracted volumes over the next three years is approximately $9,600 per MT, with the weighted average contract prices for contracts with a specified volume range computed using the volume midpoint.

In addition to defining annual volumes and prices, these three‑ to five‑year take‑or‑pay contracts include significant termination payments (typically, 50% to 70% of remaining contracted revenue) and, in certain cases, parent guarantees and collateral arrangements to manage our customer credit risk.

In addition to defining annual volumes and prices, these long-term take-or-pay contracts include significant termination payments (typically, 50% to 70% of remaining contracted revenue) and, in certain cases, parent guarantees and collateral arrangements to manage our customer credit risk.

In most cases, the customer can only terminate the contract unilaterally:

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Therefore, the likelihood that we will fail to deliver the contracted volume is significantly reduced due to our substantial vertical integration.

For a discussion of certain risks related to our take‑or‑pay contracting initiative, see “Risk Factors-Risks related to our business and industry-We may be unable to implement our business strategies, including our initiative to secure and maintain three‑ to five‑year take‑or‑pay customer contracts, in an effective manner.”

For a discussion of certain risks related to our long-term take-or-pay contracting initiative, see “Risk Factors—Risks related to our business and industry—We may be unable to implement our business strategies, including our initiative to secure and maintain long-term take-or-pay customer contracts, in an effective manner.”

2020 Revenue and production by region and end market

Approximately 94% of our graphite electrodes were purchased by EAF steel producers in 2020.

The remaining portion is primarily used in various other ferrous and non‑ferrous melting applications, BOF production, fused materials, chemical processing, and alloy metals.

In 2019, one customer accounted for 10% of our net sales.

We believe this customer does not pose a significant concentration of risk, as sales to this customer could be replaced by demand from other customers.

The remaining portion is primarily used in various other ferrous and non-ferrous melting applications, fused materials, chemical processing, and alloy metals.

We sell our products in every major geographic region globally.

Sales of our products to buyers outside the United States accounted for approximately 81% of net sales in 2017, and approximately 77% of net sales in each of 2018 and 2019.

Overall, in 2019, we generated more than 90% of our net sales from EMEA and the Americas.

We believe our three‑ to five‑year take‑or‑pay contracting strategy provides cash flow visibility and stability to our customers and, as a result, has secured a high quality customer base.

Sales of our products to buyers outside the United States accounted for approximately 79% of net sales in 2020 and 77% of net sales in each of 2018 and 2019.

Overall, in 2020, we generated 90% of our net sales from EMEA and the Americas .

We believe our long-term take-or-pay contracting strategy provides us with cash flow visibility and has secured a high-quality customer base.

We perform financial and credit reviews of all eligible potential customers prior to entering into these contracts.

Less creditworthy customers are required to post a bank guarantee, letter of credit or significant cash prepayment.

Based on total revenues over the life of the contracts, our ten largest customers represent 38% of total revenue, while the next ten customers and all other customers represent 17% and 45% of total revenue, respectively.

During 2019, approximately 80% of our sales came from our three- to five-year take-or-pay contracts.

Sales from our long-term take-or-pay contracts represented 87% and 80% of our net sales in 2020 and 2019, respectively.

Sales and customer service

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We believe that we are one of the industry leaders in providing value added technical services to our customers.

Our direct sales force currently operates from 10 sales offices located around the world.

Our direct sales force currently operates from ten sales offices located around the world.

We sell our graphite electrodes primarily through our direct sales force, independent sales representatives and distributors, all of whom are trained and experienced with our products.

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These services relate to furnace applications and operation, as well as furnace upgrades to reduce energy consumption, improve raw material costs and increase output.

We believe we have a competitive advantage in offering customers ArchiTech, which we believe is the most advanced support and technical service platform in the graphite electrode industry.

We believe we have a competitive advantage in offering customers ArchiTech, which we believe is an advanced support and technical service platform in the graphite electrode industry.

ArchiTech, which has been installed in customer furnaces worldwide, enables our engineers to work with our customers seamlessly to maximize the performance of their furnaces and provide real-time diagnostics and troubleshooting.

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Our locations allow us to serve our customers in the Americas and EMEA efficiently.

We believe that we have approximately 202,000 MT of graphite electrode production capacity at our operating sites in Calais, France, Pamplona, Spain, and Monterrey, Mexico.

3 In addition to these three facilities, we have a fourth graphite electrode manufacturing site in St.

Marys, Pennsylvania.

We have recently begun a series of projects at our Monterrey and St.

We have begun a series of projects at our Monterrey and St.

Marys facilities that will shift graphitization and machining of additional volume of semi-finished product from Monterrey to St.

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Marys facility.

We believe that we have approximately 202,000 MT of graphite electrode production capacity at our operating sites.

We believe our business has the lowest manufacturing cost structure of all of our major competitors, primarily due to the large scale of our manufacturing facilities.

We believe that our business has the lowest manufacturing cost structure of all of our major competitors, primarily due to the large scale of our manufacturing facilities.

Our manufacturing facilities significantly benefit from their size and scale, work force flexibility, access to attractively-priced sources of power and other key raw materials, and our substantial vertical integration with Seadrift.

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Our Seadrift facility currently produces the majority of our petroleum needle coke requirements for our graphite electrode production, allowing us to source our primary raw material internally and at cost, a significant advantage relative to our peers.

Seadrift also produces sufficient needle coke to supply substantially all of the graphite electrode production that we have contracted under our take‑or‑pay contracts.

Seadrift also produces sufficient needle coke to supply substantially all of the graphite electrode production that we have contracted under our long-term take-or-pay contracts.

Manufacturing

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To improve graphite electrode quality, the electrode is then impregnated with additional coal tar pitch to fill the porosities and baked a second time.

After impregnation and re‑baking, the manufacturing process continues with graphitization as the electrodes are heated at 5000°F in a special longitudinal furnace to convert the carbon into graphite.

After impregnation and re-baking, the manufacturing process continues with graphitization as the electrodes are heated at 5000° F in a special longitudinal furnace to

3 Production capacity reflects expected maximum production volume during the period under normal operating conditions, standard product mix and expected maintenance outage.

Actual production may vary.

convert the carbon into graphite.

The graphitization cycle removes additional impurities and improves the electrodes’ key qualities:

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High-quality graphite electrodes have low electrical resistivity and strong durability.

Resistivity is enhanced by removing impurities during the production process, while durability is determined by the coefficient of thermal expansion (or CTE) of the raw material used to produce the graphite electrode.

Resistivity is enhanced by removing impurities during the production process, while durability is determined by the coefficient of thermal expansion (“CTE”) of the raw material used to produce the graphite electrode.

Lower CTE needle coke produces higher quality electrodes.

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While Seadrift has purchased a substantial majority of its raw material inventory from a limited number of suppliers in recent years, we believe that there is a large supply of suitable decant oil in the United States available from a variety of sources.

In addition, we use derivatives to hedge the decant oil required to produce all of the graphite electrodes sold under our three‑ to five‑year take-or-pay contracts, providing us with substantial visibility into our future raw material costs.

In addition, we use derivatives to hedge the decant oil required to produce substantially all of the graphite electrodes sold under our long-term take-or-pay contracts, providing us with substantial visibility into our future raw material costs.

We purchase the electric power used in our manufacturing processes from local suppliers under contracts with pricing based on rate schedules or price indices.

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Research and development

We have over 130 years of experience in the R&D of graphite‑ and carbon‑based solutions.

By focusing our management’s attention and R&D spending exclusively on the graphite electrode business, we have been able to meaningfully improve the quality

of our graphite electrodes, repositioning ourselves as an industry quality leader and improving our relationships with strategic customers.

We have 135 years of experience in the R&D of graphite- and carbon-based solutions.

By focusing our management’s attention and R&D spending exclusively on the graphite electrode business, we have been able to improve the quality of our graphite electrodes, repositioning ourselves as an industry leader and improving our relationships with strategic customers.

Our focus on improving the quality of petroleum needle coke through R&D has led to our petroleum needle coke production at Seadrift being best-in-class for use in the manufacturing of highly durable UHP electrodes.

We believe that our technological and manufacturing strengths and capabilities provide us with a competitive advantage.

We believe that the above strengths and capabilities provide us with a competitive advantage.

Intellectual property

We believe that our intellectual property, consisting primarily of patents and proprietary know-how, provides us with competitive advantages and is important to our growth opportunities.

Our intellectual property portfolio is extensive, with approximately 200 carbon and graphite U.S.

Our intellectual property portfolio is extensive, with over 150 carbon and graphite U.S.

and foreign patents and published patent applications, which we believe is more than any of our major competitors in the businesses in which we operate.

We own or have obtained licenses for various trade names and trademarks used in our businesses.

We own, have the right to use or have obtained licenses for various trade names and trademarks used in our businesses.

For example, the trade name and trademark UCAR are owned by Union Carbide Corporation (which was acquired by Dow Chemical Company) and are licensed to us on a worldwide, exclusive and royalty-free basis until 2025.

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There can be no assurance that we will not incur losses beyond the limits of or outside the coverage of our insurance.

Regulatory Matters

Environmental

Our facilities and operations are subject to a wide variety of federal, state, local and foreign environmental laws and regulations.

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We have received and may in the future receive notices from the U.S.

Environmental Protection Agency (or U.S.

EPA) or state environmental protection agencies, as well as claims from other parties, alleging that we are a potentially responsible party

(or PRP) under the Superfund Act and similar state laws for past and future remediation costs at waste disposal sites and other contaminated properties.

Environmental Protection Agency (“EPA”) or state environmental protection agencies, as well as claims from other parties, alleging that we are a potentially responsible party (“PRP”) under the Comprehensive Environmental Response, Compensation and Liability Act (the “Superfund Act”) and similar state laws for past and future remediation costs at waste disposal sites and other contaminated properties.

Although Superfund Act liability is joint and several, in general, final allocation of responsibility at sites where there are multiple PRPs is made based on each PRP’s relative contribution of hazardous substances to the site.

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Certain of our U.S.

facilities have been or will be required to comply with reporting requirements under the Federal Clean Air Act and standards for air emissions that have been or may be adopted by the U.S.

EPA and state environmental protection agencies pursuant to new and revised regulations, including the possible promulgation of future maximum achievable control technology standards that apply specifically to our manufacturing sector(s), or more generally to our operation(s) or equipment.

facilities have been or will be required to comply with reporting requirements under the Federal Clean Air Act and standards for air emissions that have been or may be adopted by the EPA and state environmental protection agencies pursuant to new and revised regulations, including the possible promulgation of future maximum achievable control technology standards that apply specifically to our manufacturing sector(s), or more generally to our operation(s) or equipment.

Achieving compliance with the regulations that have been promulgated to date has resulted in the need for additional administrative and engineered controls, changes to certain manufacturing processes, and increased monitoring and reporting obligations.

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International accords, foreign laws and regulations, and U.S.

federal, state and local laws and regulations have been enacted to address concerns about the effects that CO 2 emissions and other identified greenhouse gases ("GHGs") may have on the environment and climate worldwide.

federal, state and local laws and regulations have been enacted to address concerns about the effects that CO2 emissions and other identified Green House Gases ("GHGs") may have on the environment and climate worldwide.

These effects are widely referred to as climate change.

The international community has taken actions to address climate change issues on a global basis.

In particular, in December 2015, the 21st Conference of Parties for the United Nations Framework Convention on Climate Change ("UNFCC") concluded with more than 190 countries adopting the Paris Agreement, which then came into force and was legally binding on the parties in November 2016.

In particular, in December 2015, the 21st Conference of Parties for the UNFCC concluded with more than 190 countries adopting the Paris Agreement, which then came into force and was legally binding on the parties in November 2016.

The Paris Agreement sets a goal of limiting the increase in global average temperature and consists of two elements:

a legally binding commitment by each participating country to set an emissions reduction target, referred to as “nationally determined contributions” (or NDCs), with a review of the NDCs that could lead to updates and enhancements every five years beginning in 2023, and a transparency commitment requiring participating countries to disclose in full their progress.

Our activities in the European Union ("EU") are subject to the EU Emissions Trading Scheme (or ETS), and it is likely that requirements relating to GHG emissions will become more stringent and will continue to expand to other jurisdictions in the future as NDCs under the Paris Agreement are implemented.

Although, in November 2019, the United States began the process of formally withdrawing from the Paris Agreement, the EPA currently requires reporting of GHG emissions from certain sources and, in the future, the EPA or states may impose permitting obligations on new sources or existing sources that seek to modify their operations that would otherwise result in an increase in certain GHG emissions.

a legally binding commitment by each participating country to set an emissions reduction target, referred to as “nationally determined contributions” (“NDCs”), with a review of the NDCs that could lead to updates and enhancements every five years beginning in 2023, and a transparency commitment requiring participating countries to disclose in full their progress.

Our activities in the European Union ("EU") are subject to the EU

Emissions Trading Scheme (“ETS”), and it is likely that requirements relating to GHG emissions will become more stringent and will continue to expand to other jurisdictions in the future as NDCs under the Paris Agreement are implemented.

After withdrawing from the Paris Agreement in 2019, the United States is now rejoining this global initiative.

The EPA currently requires reporting of GHG emissions from certain sources and, in the future, the EPA or states may impose permitting obligations on new sources or existing sources that seek to modify their operations that would otherwise result in an increase in certain GHG emissions.

In the EU, the ETS, which was initially enacted under the provisions of the 1997 Kyoto Protocol, requires certain listed energy-intensive industries to participate in an international “cap and trade” system of GHG emission allowances.

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Some of our products (including our raw materials) are subject to extensive environmental and industrial hygiene regulations governing the registration and safety analysis of their component substances.

For example, in connecting with the EU's Registration, Evaluation, Authorization and Restriction of Chemicals Regulation ("REACH") or the EU’s Classification, Labelling and Packaging Regulation, any key raw material, chemical or substance, including our products, could be classified as having a

toxicological or health‑related impact on the environment, users of our products, or our employees.

For example, in connecting with the EU's REACH or the EU’s Classification, Labelling and Packaging Regulation, any key raw material, chemical or substance, including our products, could be classified as having a toxicological or health-related impact on the environment, users of our products, or our employees.

Coal tar pitch, which is classified as a substance of very high concern under REACH, is used in certain of our processes, but in a manner that we believe does not require us to obtain a specific authorization under the REACH guidelines.

Similarly, the U.S.

and other countries are currently enacting new or amending existing chemical control laws.

Estimates of future costs for compliance with U.S.

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We adjust the accrual as new remedial actions or other commitments are made, as well as when new information becomes available that changes the prior estimates previously made and we believe our existing accruals are reasonable.

Employee relations

As of December 31, 2019 , we had 1,346 employees (excluding contractors).

A total of 439 employees were in Europe (including Russia), 666 were in Mexico and Brazil, 3 were in South Africa, 231 were in the United States and 7 were in the Asia Pacific region.

As of December 31, 2019 , 877 of our employees were hourly employees.

As of December 31, 2019 , approximately 774 employees, or 58%, of our worldwide employees, are covered by collective bargaining or similar agreements.

As of December 31, 2019 , approximately 627 employees, or 47%, of our worldwide employees, were covered by agreements that expire, or are subject to renegotiation, at various times through December 31, 2020.

We believe that, in general, our relationships with our employees' unions are satisfactory and that we will be able to renew or extend our collective bargaining or similar agreements on reasonable terms as they expire.

We cannot assure, however, that renewed or extended agreements will be reached without a work stoppage or strike or will be reached on terms satisfactory to us.

As of December 31, 2019 , none of the employees in our Seadrift plant or St.

Marys facility were covered by collective bargaining or similar agreements.

We are required to comply with increasingly complex and changing laws and regulations enacted to protect business and personal data in the United States and other jurisdictions.

This includes the EU’s General Data Protection Regulation ("GDPR"), which enforces rules relating to the protection of processing and movement of personal data.

The interpretation and enforcement of such regulations are continuously developing and evolving, and there may be uncertainty with respect to how to comply with them.

Foreign Corrupt Practices Act ("FCPA") prohibits bribery of public officials to benefit business interests.

We are also subject to similar anticorruption laws in other countries where we do business.

We operate and sell our products in countries that are rated as high-risk for corruption, which creates the risk of unauthorized conduct by our employees, distributors, or other third-party intermediaries that could be in violation of the FCPA or similar local regulations.

We comply with the FCPA’s requirements to make and keep books and records that accurately and fairly reflect our transactions and to devise and maintain an adequate system of internal accounting controls.

Import/Export Controls

We are subject to import/export controls, tariffs, and other trade-related regulations and restrictions in the countries in which we have operations or otherwise do business (whether directly or through resellers).

In particular, our business activities must comply with U.S.

Export Administration Regulations and sanctions administered by the Office of Foreign Asset Controls of the U.S.

Treasury Department ("OFAC").

These regulations are complex and require extensive compliance efforts and expenditures.

Furthermore, our compliance with these regulations is subject to audit or investigation by governmental authorities and, from time to time, we receive formal and informal inquiries from government agencies and regulators regarding our compliance.

These controls, regulations, and restrictions have had, and we believe may continue to have, an impact on our business.

Anticompetition Laws

We are subject to competition laws in the various jurisdictions where we operate.

In the U.S., this includes the Sherman Antitrust Act and related federal and state antitrust laws.

These laws and regulations generally prohibit competitors from fixing prices, boycotting competitors, or engaging in other conduct that unreasonably restrains competition.

In many jurisdictions, compliance with these competition laws is of special importance to us, and our operations may come under scrutiny by competition law authorities due to our competitive position in those jurisdictions.

Securities Laws

We must comply with a wide variety of federal and state securities laws and Delaware corporate law, as well as NYSE rules and regulations.

We continue to engage in collaboration with key stakeholders to adapt to changing regulatory expectations.

We are subject to a variety of regulations including work-related and community safety laws in the U.S.

and other jurisdictions where we operate.

In the U.S., the Occupational Safety and Health Act of 1970 mandates general requirements for safe workplaces for all employees and established the Occupational Safety and Health Administration ("OSHA") in the Department of Labor.

Government regulations are subject to change in the future, and accordingly we are unable to assess the possible effect of compliance with future requirements or whether or our compliance with such regulations will materially impact our business, results of operations, or financial condition.

Human Capital Resources

As of December 31, 2020, we had 1,285 employees (excluding contractors), 809 of which were hourly employees.

A total of 423 employees were in Europe (including Russia), 607 were in Mexico and Brazil, two were in South Africa, 247 were in the United States and six were in the Asia Pacific region.

As of December 31, 2020, approximately 697 employees or 54%, of our worldwide employees, were covered by collective bargaining or similar agreements that expire, or are subject to renegotiation, at various times through December 31, 2021.

We believe that, in general, our relationships with our employees' unions are good and that we will be able to renew or extend our collective bargaining or similar agreements on reasonable terms as they expire.

We have not had any material work stoppages or strikes during the past decade.

The health and safety of our global team is our highest priority and is a core value of the Company.

Our comprehensive programs strive to achieve zero injuries and no harm done.

Leading indicator metrics include training, risk identification and remediation, pre-task planning and planned job observations.

Managers report weekly on their key contacts with employees to emphasize our shared commitment to Health, Safety & Environmental performance.

In the spirit of

continuous improvement, regular inspections, internal reviews and corporate audits are conducted to foster compliance with our high standards.

Available Information

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business