GrafTech International Ltd. (NYSE:EAF) Q3 2020 Results Earnings Conference Call November 3, 2020 10:00 AM ET Company Participants Wendy Watson - VP President of IR Dave Rintoul - President and CEO Quinn Coburn - VP and CFO Conference Call Participants Curt Woodworth - Credit Suisse Arun Viswanathan - RBC Capital Markets Alex Hacking - Citi Operator Ladies and gentlemen, thank you for standing-by and welcome to the GrafTech’s Third Quarter 2020 Earnings Conference Call and Webcast. At this time all participa ...

GrafTech International Ltd. (NYSE:EAF) Q2 2020 Results Conference Call August 7, 2020 4:00 PM ET Company Participants Dave Rintoul - President and Chief Executive Officer Wendy Watson - Vice President of Investor Relations Quinn Coburn - Vice President and Chief Financial Office Conference Call Participants David Gagliano - BMO Capital Market Arun Viswanathan - RBC Operator Good afternoon, everyone, and welcome to the GrafTech International's Second Quarter 2020 Earnings Results Conference Call and Webcas ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Title of each class Trading Symbol(s) Name of each exchange on which registered Common stock, $0.01 par value per share EAF New York Stock Exchange FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the quarterly period ended June 30, 2020 OR ☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the transition period ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Title of each class Trading Symbol(s) Name of each exchange on which registered Common stock, $0.01 par value per share EAF New York Stock Exchange FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the quarterly period ended March 31, 2020 OR ☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the transition perio ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K Title of each class Trading Symbol(s) Name of each exchange on which registered Common Stock, $0.01 par value per share EAF New York Stock Exchange (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the fiscal year ended December 31, 2019 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the transition period from to Commission f ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Title of each class Trading Symbol(s) Name of each exchange on which registered Common stock, $0.01 par value per share EAF New York Stock Exchange FORM 10-Q (Mark One) ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the quarterly period ended September 30, 2019 OR ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the transition ...

[PART I. FINANCIAL INFORMATION](index=7&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=7&type=section&id=Item%201.%20Financial%20Statements) Unaudited H1 2019 financials show net sales growth and a strengthened balance sheet, with strong operating cash flow despite a net income decline [Condensed Consolidated Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2019, total assets grew to **$1.73 billion**, liabilities decreased, and stockholders' deficit improved to **$(709.8) million** Condensed Consolidated Balance Sheet Highlights (in millions) | Account | June 30, 2019 (million) | December 31, 2018 (million) | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $205.3 | $49.9 | | Total current assets | $881.3 | $638.1 | | **Total assets** | **$1,726.4** | **$1,505.5** | | **Liabilities & Equity** | | | | Total current liabilities | $260.1 | $327.1 | | Long-term debt | $1,991.3 | $2,050.3 | | Total liabilities | $2,436.2 | $2,582.3 | | Total stockholders' (deficit) | **$(709.8)** | **$(1,076.8)** | [Condensed Consolidated Statements of Operations and Comprehensive Income](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income) Q2 2019 net sales grew **5%** to **$480.4 million**, but net income decreased to **$196.4 million** due to higher cost of sales, with similar trends for the six-month period Q2 2019 vs Q2 2018 Performance (in millions, except EPS) | Metric | Three Months Ended June 30, 2019 (million) | Three Months Ended June 30, 2018 (million) | | :--- | :--- | :--- | | Net sales | $480.4 | $456.3 | | Gross profit | $283.3 | $290.4 | | Operating profit | $267.2 | $273.6 | | Net income | $196.4 | $201.4 | | Diluted EPS | $0.68 | $0.67 | H1 2019 vs H1 2018 Performance (in millions, except EPS) | Metric | Six Months Ended June 30, 2019 (million) | Six Months Ended June 30, 2018 (million) | | :--- | :--- | :--- | | Net sales | $955.4 | $908.2 | | Gross profit | $562.8 | $597.2 | | Operating profit | $530.8 | $564.0 | | Net income | $393.8 | $425.1 | | Diluted EPS | $1.36 | $1.41 | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) H1 2019 operating activities generated **$359.0 million** in cash, with net cash outflow from financing activities primarily due to debt repayments and dividends Cash Flow Summary for Six Months Ended June 30 (in millions) | Cash Flow Activity | 2019 (million) | 2018 (million) | | :--- | :--- | :--- | | Net cash provided by operating activities | $359.0 | $377.7 | | Net cash used in investing activities | $(29.1) | $(27.9) | | Net cash used in financing activities | $(174.4) | $(195.8) | | **Net change in cash and cash equivalents** | **$155.5** | **$154.0** | - The net change in working capital resulted in a cash outflow of **$102.5 million** in the first half of 2019, compared to an outflow of **$158.6 million** in the prior year period[26](index=26&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail accounting policies, revenue disaggregation, debt structure, contingent liabilities, and a post-quarter **$100 million** share repurchase program Disaggregated Revenue for Six Months Ended June 30 (in millions) | Revenue Source | 2019 (million) | 2018 (million) | | :--- | :--- | :--- | | Graphite Electrodes - Long-term contracts | $773.6 | $617.4 | | Graphite Electrodes - Short-term/spot | $123.5 | $210.5 | | By-products and other | $58.2 | $80.3 | | **Total Revenues** | **$955.4** | **$908.2** | - The company estimates **$4.5 billion** in future revenue from remaining performance obligations under its three-to-five-year take-or-pay contracts as of June 30, 2019[49](index=49&type=chunk)[50](index=50&type=chunk) - Total debt as of June 30, 2019 was approximately **$2.03 billion**. The company made a **$125 million** repayment on its 2018 Term Loan Facility in February 2019[68](index=68&type=chunk) - Subsequent to the quarter end, on July 30, 2019, the Board of Directors authorized a **$100 million** share repurchase program and declared a regular quarterly dividend of **$0.085 per share**[148](index=148&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=34&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management highlights stability from long-term contracts, with Q2 2019 net sales up **5%** to **$480.4 million** despite gross profit decline, maintaining strong liquidity - The company's commercial strategy relies on three-to-five-year take-or-pay contracts, which have secured approximately **65-70%** of its production capacity[151](index=151&type=chunk) Key Operating Metrics - Q2 2019 vs Q2 2018 | Metric | Q2 2019 | Q2 2018 | | :--- | :--- | :--- | | Sales volume (MT, in thousands) | 45 | 42 | | Weighted average realized price ($/MT) | $10,014 | $9,783 | | Production volume (MT, in thousands) | 48 | 45 | | Capacity utilization | 83% | 87% | Reconciliation to Adjusted EBITDA (in millions) | Metric | Q2 2019 (million) | Q2 2018 (million) | | :--- | :--- | :--- | | Net income | $196.4 | $201.4 | | EBITDA from continuing operations | $281.8 | $228.1 | | Adjusted EBITDA from continuing operations | **$284.4** | **$292.0** | [Results of Operations](index=38&type=section&id=Results%20of%20Operations) Q2 2019 net sales increased **5%** to **$480.4 million** due to higher volume, but cost of sales surged **19%** to **$197.0 million**, leading to a **2%** gross profit decline - Q2 2019 net sales increased by **$24.1 million (5%)** YoY, driven by a **6%** increase in sales volume of graphite electrodes and a higher weighted average realized price of **$10,014 per MT**[180](index=180&type=chunk) - Q2 2019 cost of sales increased by **$31.1 million (19%)** YoY, primarily due to sales of inventory manufactured with higher-priced needle coke[180](index=180&type=chunk)[181](index=181&type=chunk) - The effective tax rate for Q2 2019 was **16.1%**, a significant shift from a benefit of **(9.4%)** in Q2 2018, impacted by a valuation allowance release[187](index=187&type=chunk)[188](index=188&type=chunk)[189](index=189&type=chunk) [Liquidity and Capital Resources](index=41&type=section&id=Liquidity%20and%20Capital%20Resources) As of June 30, 2019, total liquidity was strong at **$452.2 million**, with a **$125 million** debt repayment and a **$100 million** share repurchase program authorized - As of June 30, 2019, total liquidity was **$452.2 million**, consisting of **$205.3 million** in cash and **$246.9 million** available under the 2018 Revolving Facility[209](index=209&type=chunk) - On February 13, 2019, the company repaid **$125 million** on its 2018 Term Loan Facility[222](index=222&type=chunk) - A program to repurchase up to **$100 million** of outstanding common stock was authorized by the Board of Directors on July 30, 2019[220](index=220&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=44&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces market risks from interest rates, currency, and energy prices, with a **100 basis point** interest rate increase impacting interest expense by **$10.5 million** for H1 2019 - A hypothetical **100 basis point** increase in interest rates would have increased interest expense by **$10.5 million** for the six months ended June 30, 2019, due to floating-rate debt[253](index=253&type=chunk) - The company uses commodity derivative contracts to manage exposure to refined oil products, which had a net unrealized pre-tax gain of **$14.2 million** as of June 30, 2019[251](index=251&type=chunk) [Controls and Procedures](index=45&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including CEO and CFO, deemed disclosure controls and procedures effective as of June 30, 2019, with no material changes to internal controls - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level as of June 30, 2019[260](index=260&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, these controls[261](index=261&type=chunk) [PART II. OTHER INFORMATION](index=47&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Legal Proceedings](index=47&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings, including long-pending litigation in Brazil regarding wage increases, with potential loss currently not estimable - The company is defending against litigation in Brazil brought by employees concerning wage increase provisions from 1989 and 1990, with the potential loss not estimable as of June 30, 2019[265](index=265&type=chunk) [Risk Factors](index=47&type=section&id=Item%201A.%20Risk%20Factors) No material changes have occurred to the risk factors previously disclosed in the Annual Report on Form 10-K filed on February 22, 2019 - No material changes to the Risk Factors disclosed in the Annual Report on Form 10-K filed on February 22, 2019 have occurred[267](index=267&type=chunk) [Exhibits](index=48&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including certifications from the Principal Executive Officer and Principal Financial Officer - The report includes certifications from the CEO and CFO pursuant to Rules 13a-14(a) and Section 906 of the Sarbanes-Oxley Act of 2002[271](index=271&type=chunk)

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the quarterly period ended March 31, 2019 OR ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the transition period from to | --- | --- | |-------------------------------------------------------------------|-----------------------------------------| | | | | Com ...

Financial Performance - For the year ended December 31, 2018, net sales reached $1,895,910,000, a significant increase from $550,771,000 in 2017 and $437,963,000 in 2016[337] - Net income for 2018 was $854,219,000, compared to $7,983,000 in 2017 and a loss of $235,843,000 in 2016[337] - EBITDA from continuing operations for 2018 was $1,102,625,000, up from $97,884,000 in 2017 and a loss of $12,251,000 in 2016[337] - Adjusted EBITDA from continuing operations for 2018 was $1,205,021,000, compared to $95,806,000 in 2017 and a loss of $2,898,000 in 2016[337] - Gross profit surged to $1,190.2 million in 2018, a 1,257% increase from $87.7 million in 2017[356] - Operating income reached $1,126.1 million in 2018, reflecting a 3,446% increase from $31.8 million in 2017[356] - Net income from continuing operations increased to $853.9 million in 2018, a 5,908% rise from $14.2 million in 2017[356] Sales and Production - Sales volume for 2018 was 185,000 metric tons, an increase from 172,000 metric tons in 2017 and 163,000 metric tons in 2016[340] - The weighted average realized price for graphite electrodes in 2018 was $9,937 per metric ton, significantly higher than $2,945 in 2017 and $2,459 in 2016[340] - Production volume for 2018 was 179,000 metric tons, compared to 166,000 metric tons in 2017 and 151,000 metric tons in 2016[340] - Total production capacity for 2018 was 208,000 metric tons, up from 195,000 metric tons in 2017 and 195,000 metric tons in 2016[340] - Capacity utilization for 2018 was 86%, compared to 85% in 2017 and 77% in 2016[340] - Sales to international customers accounted for approximately 78% of net sales in 2018, with significant contributions from Europe and other regions[352] Expenses and Costs - Interest expense rose by $104.2 million, or 338%, from $30.8 million in 2017 to $135.1 million in 2018, primarily due to increased borrowings[363] - Research and development expenses decreased by $1.3 million, or 38%, from $3.5 million in 2017 to $2.1 million in 2018[359] - Cost of sales increased by $12.3 million, or 3%, from $449.2 million in 2016 to $461.5 million in 2017, primarily due to increased sales volume of graphite electrodes[370] - Selling and administrative expenses decreased by $6.0 million, or 10%, from $58.5 million in 2016 to $52.5 million in 2017, attributed to cost reduction efforts[373] Tax and Valuation - The effective tax rate for 2018 was 5.4%, compared to a benefit of (314.2)% in 2017, primarily due to increased earnings and a partial release of a valuation allowance[366] - The effective tax rate for 2017 was (314.2)%, primarily due to the release of a $16 million valuation allowance reserve against deferred tax assets[378] - The company has a valuation allowance of $58.4 million against certain deferred tax assets as of December 31, 2018, due to insufficient taxable income in certain jurisdictions[466] Cash Flow and Financing - Cash flow provided by operating activities was $836.6 million for the year ended December 31, 2018, reflecting strong operational performance[410] - Net cash used in financing activities was $731.0 million for the year ended December 31, 2018, primarily due to debt repayments and dividend payments to Brookfield[422] - The company expects to continue debt repayments of approximately $125 million in future quarters of 2019[400] - The company declared a cash dividend of $160 million payable to Brookfield, contingent upon meeting specific financial ratios and conditions, which were satisfied, and the dividend was paid on May 8, 2018[395] Debt and Credit Agreements - The company entered into an amendment to its 2018 Credit Agreement, increasing the aggregate principal amount of term loans from $1,500 million to $2,250 million, with the Incremental Term Loans maturing on February 12, 2025[395] - The 2018 Credit Agreement established a $1,500 million senior secured term facility and a $250 million senior secured revolving credit facility[433] - The 2018 Term Loans amortize at a rate of 5% per annum, with the remainder due at maturity on February 12, 2025[441] - As of December 31, 2018, all of the Company's debt was based on variable interest rates, compared to 83% being fixed or zero interest rate obligations as of December 31, 2017[449] Environmental and Capital Expenditures - Environmental protection expenses increased to $12.355 million in 2018 from $7.973 million in 2017, reflecting a commitment to environmental standards[456] - Capital expenditures for the year ended December 31, 2018, amounted to $68.2 million, contributing to the net cash used in investing activities of $67.3 million[418] - Capital expenditures related to environmental protection rose to $4.080 million in 2018, up from $2.080 million in 2017[456] Accounting Changes - Revenue recognition is based on ASC 606, with revenue recognized when control of goods is transferred to customers, primarily through three- to five-year take-or-pay contracts[467][470] - The adoption of ASU 2016-15 on January 1, 2018 did not have a material impact on the consolidated financial statements[474] - The adoption of ASU No. 2017-07 on January 1, 2018 changed the presentation of benefit expenses but did not have a material impact on the consolidated financial statements[475] - The company anticipates additional assets and liabilities of approximately $10 million to be recorded due to the adoption of ASU No. 2016-02 on January 1, 2019[479] - The adoption of ASU No. 2017-04 on January 1, 2020 is not expected to have a material effect on the company's financial position or results of operations[480]