Importantly, we continue to build our research and development capabilities to capitalize on our core competency of carbon and graphite material science and drive new product innovation and quality improvements across the organization, which provide us with sustainable competitive advantages that are difficult to replicate. Our annual research and development spend will be unaffected by these initiatives and is expected to be approximately $12 million to $15 million over the near term.
Mr. Shular commented, “We remain focused on strategically positioning for long-term growth and delivering sustainable value to our shareholders, and these initiatives, which are supported by a strong balance sheet, will drive improved profitability and competitiveness.”
In its October 8, 2013 report, the International Monetary Fund (IMF) reduced its estimate for 2013 global GDP growth to 2.9 percent, representing the fourth consecutive downward revision this year. The IMF noted that global growth remains slow and downside risks remain high. The IMF also noted that financial conditions in the EU are stabilizing and the region is expected to gradually emerge from the recession and return to growth in 2014.On October 21, 2013, the World Steel Association (WSA) cited that global steel production, excluding China, declined 2.0 percent in the first nine months of 2013 as compared to the same period in the prior year. Looking into 2014, the WSA expects global steel consumption, excluding China, to rise 3.5 percent year-over-year. We are targeting EBITDA for the full year 2013 to be in the range of $145 million to $155 million (a $5 million reduction from the prior guidance mid-point) and fourth quarter EBITDA to be in the range of $35 million to $45 million. As a result, we are targeting operating cash flow guidance to be in the range of $100 million to $120 million. Given the difficult operating environment, and in addition to the plan outlined above, we are reducing our targeted overhead expense ** to approximately $130 million in 2013. Mr. Shular concluded, “Market conditions for our global steel customers continue to be challenging; however, there are leading indicators that point to an improvement in U.S. non-residential construction and that the EU recession is in a bottoming process. Some of our U.S. steel customers are cautiously optimistic and are seeing improvement in their non-residential construction business.”