[Report Overview](index=1&type=section&id=Report%20Overview) [Highlights](index=1&type=section&id=Highlights) GrafTech achieved strong Q2 2025 results with 12% YoY sales volume growth, 13% YoY cash cost reduction, positive EBITDA, and robust liquidity Second Quarter 2025 Summary | Metric | Q2 2025 Value | | :------------------------------------ | :------------ | | Sales volume (thousand MT) | 28.6 | | Net sales (in thousands) | $132,000 | | Net loss (in thousands) | $(87,000) | | Loss per share | $0.34 | | Adjusted EBITDA (in thousands) | $3,000 | | Net cash used in operating activities (in thousands) | $(53,000) | | Adjusted free cash flow (in thousands) | $(53,000) | | Total liquidity (in thousands) | $367,000 | - Sales volume grew **12% year-over-year** for Q2 2025, reaching GrafTech's highest sales volume performance since Q3 2022[4](index=4&type=chunk) - Sales volume in the United States grew **38% year-over-year** for Q2 2025, reflecting a strategic shift towards this key region[4](index=4&type=chunk) - Achieved a **13% year-over-year reduction** in cash costs per metric ton (MT) for Q2 2025[4](index=4&type=chunk) - Generated **positive EBITDA** in Q2 2025, indicating continued progress towards normalized profitability[4](index=4&type=chunk) [CEO Comments](index=2&type=section&id=CEO%20Comments) CEO Timothy Flanagan highlighted strong execution, driving volume growth and market share, and expressed confidence in long-term graphite electrode demand from steel decarbonization - The Company continues to deliver on key commercial, operational, and financial objectives, reflecting strong execution of strategic initiatives and focus on managing controllable areas[5](index=5&type=chunk) - Driving strong volume growth and expanding market share in key regions, despite a challenging commercial environment, demonstrates the strength of the customer value proposition[5](index=5&type=chunk) - Longer term, decarbonization efforts will continue to reshape steelmaking, driving long-term demand growth for graphite electrodes due to the shift toward electric arc furnace steelmaking[5](index=5&type=chunk) [Financial and Operational Review](index=3&type=section&id=Financial%20and%20Operational%20Review) [Second Quarter 2025 Financial Performance](index=3&type=section&id=Second%20Quarter%202025%20Financial%20Performance) Net sales decreased 4% YoY to $132 million due to lower prices. Net loss widened to $87 million, impacted by a $43 million non-cash tax expense. Adjusted EBITDA declined to $3 million Key Financials (Q2 2025 vs Q2 2024) | Metric | Q2 2025 (in thousands) | Q2 2024 (in thousands) | Change (YoY) | | :-------------------------------- | :--------------------- | :--------------------- | :----------- | | Net sales | $131,840 | $137,327 | -4.0% | | Net loss | $(86,886) | $(14,752) | -489.0% | | Loss per share | $(0.34) | $(0.06) | -466.7% | | Adjusted EBITDA | $3,471 | $14,493 | -76.0% | | Net cash used in operating activities | $(53,236) | $(36,855) | -44.4% | | Adjusted free cash flow | $(53,337) | $(43,834) | -21.7% | - Net sales decline primarily reflected a year-over-year decrease in weighted-average realized price, partially offset by higher sales volume[6](index=6&type=chunk) - Net loss for Q2 2025 included a **$43 million non-cash income tax expense** related to the establishment of a full valuation allowance against the Company's United States and Switzerland deferred tax assets[7](index=7&type=chunk) - Adjusted EBITDA decline primarily reflected lower weighted-average realized prices, partially offset by a **13% reduction** in cash costs on a per MT basis[8](index=8&type=chunk) [Operational and Commercial Update](index=4&type=section&id=Operational%20and%20Commercial%20Update) Sales volume increased 12% YoY to 28.6 thousand MT, the highest since Q3 2022, driven by a strategic shift towards the US market, with production volume also growing 10% YoY Key Operating Metrics (Q2 2025 vs Q2 2024) | Metric | Q2 2025 (in thousands) | Q2 2024 (in thousands) | Change (YoY) | | :-------------------- | :--------------------- | :--------------------- | :----------- | | Sales volume (MT) | 28.6 | 25.5 | +12.2% | | Production volume (MT) | 29.4 | 26.8 | +9.7% | | Production capacity (MT) | 45.0 | 45.0 | 0.0% | | Capacity utilization | 65 % | 60 % | +5 ppts | - Weighted-average realized price was approximately **$4,200 per MT** in Q2 2025, a **12% decrease** compared to Q2 2024 but a sequential increase of **2%** compared to Q1 2025[9](index=9&type=chunk) - The year-over-year decline in realized price was partially mitigated by the initiative to actively shift more sales volume to the United States, which remains the strongest region for graphite electrode pricing[9](index=9&type=chunk) [Capital Structure and Liquidity](index=4&type=section&id=Capital%20Structure%20and%20Liquidity) GrafTech maintained a strong liquidity position of $367 million as of June 30, 2025, with gross debt at $1,125 million and no substantial maturities until December 2029 Liquidity and Debt (as of June 30, 2025) | Metric | Amount ($ millions) | | :------------------------------------------ | :------------------ | | Total liquidity | $367 | | Cash and cash equivalents | $159 | | Availability under revolving credit facility | $108 | | Availability under senior secured first lien delayed draw term loans | $100 | | Gross debt | $1,125 | | Net debt | $966 | - The strong liquidity position continues to support the Company's ability to manage through near-term, industry-wide challenges[11](index=11&type=chunk) - Gross debt was **$1,125 million** with substantially no maturities until December 2029[11](index=11&type=chunk) [Outlook](index=5&type=section&id=Outlook) GrafTech anticipates a 10% YoY sales volume increase for 2025, driven by market share regain and US demand, alongside a 7-9% YoY decline in cash costs per MT, while managing challenging pricing dynamics - Expect an approximate **10% year-over-year increase** in sales volume for 2025 on a full-year basis, continuing to regain market share[13](index=13&type=chunk) - Project a **7-9% year-over-year decline** in cash costs per MT for 2025 on a full-year basis, exceeding previous guidance of a mid-single digit percentage point decline[15](index=15&type=chunk) - Challenging pricing dynamics persist, leading to actions to optimize the order book and actively shift sales volume to regions with higher average selling prices, particularly the United States[14](index=14&type=chunk) - Longer term, decarbonization efforts in the steel industry are expected to increase adoption of electric arc furnace steelmaking, driving long-term demand growth for graphite electrodes[17](index=17&type=chunk) - Anticipate full year 2025 capital expenditures to be approximately **$40 million**[16](index=16&type=chunk) [Company Information](index=6&type=section&id=Company%20Information) [About GrafTech](index=6&type=section&id=About%20GrafTech) GrafTech International Ltd. is a leading manufacturer of high-quality graphite electrode products essential for electric arc furnace steel production, uniquely vertically integrated into petroleum needle coke - GrafTech International Ltd. is a leading manufacturer of high-quality graphite electrode products essential to the production of electric arc furnace steel and other ferrous and non-ferrous metals[20](index=20&type=chunk) - The Company is the only large-scale graphite electrode producer substantially vertically integrated into petroleum needle coke, its key raw material, providing competitive advantages in product quality and cost[20](index=20&type=chunk) [Conference Call Information](index=6&type=section&id=Conference%20Call%20Information) Information for the Q2 2025 earnings call held on July 25, 2025, including webcast and dial-in details, and where to find archived replays and SEC filings - Earnings call held on **July 25, 2025, at 10:00 a.m. (EDT)**[19](index=19&type=chunk) - Webcast and accompanying slide presentation available on the investor relations website: http://ir.graftech.com[19](index=19&type=chunk) - Complete financial reports filed with the SEC and other information available at: www.GrafTech.com[19](index=19&type=chunk) [Non-GAAP Financial Measures](index=10&type=section&id=Non-GAAP%20Financial%20Measures) [Non-GAAP Definitions and Limitations](index=10&type=section&id=Non-GAAP%20Definitions%20and%20Limitations) This section defines various non-GAAP financial measures used by GrafTech and outlines their limitations as analytical tools, emphasizing they should not be considered in isolation from GAAP results - Non-GAAP financial measures include EBITDA, adjusted EBITDA, adjusted net loss, adjusted loss per share, free cash flow, adjusted free cash flow, net debt, and cash cost of goods sold per MT[30](index=30&type=chunk) - Adjusted EBITDA is the primary metric used by management and the Board of Directors to establish budgets and operational goals for managing the business and evaluating performance[31](index=31&type=chunk) - Non-GAAP measures have limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of results reported under GAAP[33](index=33&type=chunk)[38](index=38&type=chunk) [NON-GAAP RECONCILIATIONS](index=15&type=section&id=NON-GAAP%20RECONCILIATIONS) Provides detailed tables reconciling non-GAAP financial measures to their most directly comparable GAAP measures for Q2 2025, Q1 2025, Q2 2024, and the six months ended June 30, 2025 and 2024 Reconciliation of Net Loss to Adjusted Net Loss (in thousands) | Metric | Q2 2025 | Q1 2025 | Q2 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------ | :------ | :------ | :------ | :--------------------------- | :--------------------------- | | Net loss | $(86,886) | $(39,351) | $(14,752) | $(126,237) | $(45,621) | | Total non-GAAP adjustments pre-tax | $968 | $6,563 | $1,762 | $7,531 | $9,041 | | Income tax non-GAAP adjustment | $(42,624) | — | — | $(42,624) | — | | Income tax impact on non-GAAP adjustments | $(1,047) | $1,367 | $574 | $320 | $2,145 | | Adjusted net loss | $(42,247) | $(34,155) | $(13,564) | $(76,402) | $(38,725) | Reconciliation of Net Loss to Adjusted EBITDA (in thousands) | Metric | Q2 2025 | Q1 2025 | Q2 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------ | :------ | :------ | :------ | :--------------------------- | :--------------------------- | | Net loss | $(86,886) | $(39,351) | $(14,752) | $(126,237) | $(45,621) | | EBITDA | $3,435 | $(4,874) | $12,731 | $(1,439) | $5,646 | | Adjustments | $37 | $1,202 | $1,762 | $1,238 | $9,041 | | Adjusted EBITDA | $3,471 | $(3,672) | $14,493 | $(201) | $14,687 | Reconciliation of Cash Cost of Goods Sold per MT (in thousands, except per MT data) | Metric | Q2 2025 | Q1 2025 | Q2 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------ | :------ | :------ | :------ | :--------------------------- | :--------------------------- | | Cost of goods sold | $129,885 | $110,765 | $131,970 | $240,650 | $267,174 | | Cash cost of goods sold | $107,354 | $90,206 | $110,021 | $197,560 | $220,763 | | Sales volume (in thousands of MT) | 28.6 | 24.7 | 25.5 | 53.3 | 49.6 | | Cash cost of goods sold per MT | $3,754 | $3,652 | $4,315 | $3,707 | $4,451 | [Condensed Consolidated Financial Statements](index=12&type=section&id=Condensed%20Consolidated%20Financial%20Statements) [CONDENSED CONSOLIDATED BALANCE SHEETS](index=12&type=section&id=CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) Total assets decreased from $1,224.3 million at December 31, 2024, to $1,112.0 million at June 30, 2025, primarily due to reduced cash, while stockholders' deficit significantly increased Condensed Consolidated Balance Sheets (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :------------ | :---------------- | | Cash and cash equivalents | $158,543 | $256,248 | | Total current assets | $566,451 | $636,797 | | Net property, plant and equipment | $488,354 | $482,699 | | Total assets | $1,112,026 | $1,224,274 | | Total current liabilities | $114,426 | $139,929 | | Long-term debt | $1,090,811 | $1,086,915 | | Total stockholders' deficit | $(168,435) | $(78,902) | | Total liabilities and stockholders' deficit | $1,112,026 | $1,224,274 | [CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS](index=13&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) For Q2 2025, net sales were $131.8 million, a 4% decrease YoY, with gross profit significantly down to $62 thousand, and net loss widening to $86.9 million, or $0.34 per share Condensed Consolidated Statements of Operations (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change (YoY) | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------- | | Net sales | $131,840 | $137,327 | -4.0% | | Cost of goods sold | $129,885 | $131,970 | -1.6% | | Gross profit (loss) | $62 | $3,976 | -98.4% | | Operating loss | $(14,553) | $(2,679) | -443.2% | | Interest expense | $25,418 | $15,609 | +62.8% | | Loss before income taxes | $(35,679) | $(15,344) | -132.5% | | Income tax expense (benefit) | $51,207 | $(592) | N/A | | Net loss | $(86,886) | $(14,752) | -489.0% | | Basic loss per common share | $(0.34) | $(0.06) | -466.7% | [CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS](index=14&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) Net cash used in operating activities increased to $53.2 million in Q2 2025, while net cash used in investing activities decreased to $3.9 million, resulting in a $57.2 million net decrease in cash and cash equivalents Condensed Consolidated Statements of Cash Flows (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change (YoY) | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------- | | Net cash used in operating activities | $(53,236) | $(36,855) | -44.4% | | Net cash used in investing activities | $(3,905) | $(6,902) | +43.4% | | Net cash used in financing activities | $(27) | $(19) | -42.1% | | Net change in cash and cash equivalents | $(57,168) | $(43,776) | -30.6% | | Cash and cash equivalents at end of period | $158,543 | $120,726 | +31.3% | - Capital expenditures for Q2 2025 were **$3.9 million**, a decrease from **$7.0 million** in Q2 2024[45](index=45&type=chunk) - Net change in working capital resulted in a cash outflow of **$39.7 million** in Q2 2025, compared to an outflow of **$36.4 million** in Q2 2024[45](index=45&type=chunk) [Legal Disclosures](index=7&type=section&id=Legal%20Disclosures) [Cautionary Note Regarding Forward-Looking Statements](index=7&type=section&id=Cautionary%20Note%20Regarding%20Forward-Looking%20Statements) This section advises that the press release contains forward-looking statements subject to risks and uncertainties, cautioning against undue reliance as actual results may differ materially due to various factors - The press release contains forward-looking statements reflecting current views on financial projections, future operations, economic performance, and liquidity[24](index=24&type=chunk) - These statements are subject to various risks and uncertainties, including dependence on the global steel industry, cyclical business nature, economic conditions, and supply chain disruptions[24](index=24&type=chunk) - Readers are cautioned not to place undue reliance on forward-looking statements, as actual results may differ materially from expectations[27](index=27&type=chunk)

Core Viewpoint - Momentum investing focuses on "buying high and selling higher" rather than traditional strategies of "buying low and selling high" [1] Group 1: Momentum Investing Strategy - Momentum investors often face challenges in determining the right entry point, as stocks may lose momentum when their valuations exceed future growth potential [2] - A safer approach involves investing in bargain stocks that exhibit recent price momentum, utilizing tools like the Zacks Momentum Style Score to identify such opportunities [3] Group 2: GrafTech International (EAF) Analysis - GrafTech International (EAF) has shown significant recent price momentum, with a four-week price change of 28.1%, indicating growing investor interest [4] - EAF has gained 107.3% over the past 12 weeks, demonstrating its ability to deliver positive returns over a longer timeframe [5] - The stock has a beta of 1.51, suggesting it moves 51% more than the market in either direction, indicating fast-paced momentum [5] - EAF holds a Momentum Score of A, suggesting it is an opportune time to invest in the stock [6] - The stock has a Zacks Rank 2 (Buy) due to upward trends in earnings estimate revisions, which attract more investor interest [7] - EAF is trading at a Price-to-Sales ratio of 0.73, indicating it is reasonably valued at 73 cents for each dollar of sales [7] Group 3: Additional Investment Opportunities - Besides EAF, there are other stocks that meet the criteria of the 'Fast-Paced Momentum at a Bargain' screen, presenting further investment opportunities [8] - The Zacks Premium Screens offer over 45 different strategies tailored to help investors find winning stock picks [9]

Core Viewpoint - GrafTech International Ltd. is facing a class action lawsuit alleging serious environmental violations and misleading statements regarding its operations in Monterrey, Mexico, which may have significant implications for the company's financial health and reputation [1][2]. Group 1: Allegations and Legal Context - A class action complaint was filed against GrafTech on January 25, 2024, covering a Class Period from February 8, 2019, to August 3, 2023 [1]. - The lawsuit claims that GrafTech's manufacturing operations have chronically contaminated neighboring communities with harmful carcinogenic gases and particulate matter for decades [2]. - GrafTech allegedly failed to honor commitments made to local authorities to improve environmental performance at its Monterrey facility [2]. - The company has been warned over a 30-year period about its disregard for environmental and public health concerns [2]. Group 2: Compliance and Environmental Issues - GrafTech's operations in Monterrey are claimed to be non-compliant with applicable environmental laws and regulations [2]. - The company reportedly did not adequately remediate environmental issues following a 2019 administrative proceeding by the Department of Sustainable Development of the State of Nuevo León [2]. - Local government authorities sought intervention to address the adverse environmental impacts caused by GrafTech's operations [2]. Group 3: Financial and Operational Risks - GrafTech's cost leadership is alleged to have been achieved by neglecting necessary environmental safeguards at its Monterrey facility [2]. - The company's capital expenditures and operational projects were deemed insufficient to address the environmental harm caused by its operations [2]. - As a result of these issues, GrafTech is exposed to undisclosed material risks that could disrupt its manufacturing operations and harm its business, operations, reputation, and financial results [2].

Financial Performance - Net sales decreased by $24.7 million, or 18%, to $111.8 million for the first quarter of 2025 compared to the same period in 2024[113] - Operating loss improved by $3.2 million, or 15%, to $18.2 million in the first quarter of 2025 compared to the first quarter of 2024[113] - Net loss increased by $8.5 million, or 27%, to $39.4 million for the first quarter of 2025 compared to the same period in 2024[113] - Adjusted EBITDA for Q1 2025 was $(3,672) thousand, a decrease from $194 thousand in Q1 2024[191] - Net loss for the three months ended March 31, 2025, was $(39,351) thousand, compared to $(30,869) thousand in Q1 2024[191] - Free cash flow for the three months ended March 31, 2025, was $(42,467) thousand, compared to $(11,041) thousand in Q1 2024[195] Cost of Goods Sold - Cost of goods sold also decreased by $24.4 million, or 18%, to $110.8 million, with a favorable impact of $7.2 million from prior inventory write-downs[114] - Cost of goods sold decreased from $135,204 thousand in Q1 2024 to $110,765 thousand in Q1 2025, representing a reduction of approximately 18.1%[196] - Cash cost of goods sold per metric ton (MT) improved from $4,595 in Q1 2024 to $3,652 in Q1 2025, a decrease of about 20.6%[196] - Cash cost of goods sold totaled $90,206 thousand in Q1 2025, down from $110,742 thousand in Q1 2024, indicating a reduction in production costs[196] Debt and Liquidity - As of March 31, 2025, the company had liquidity of $420.9 million, consisting of cash and cash equivalents of $214.3 million[126] - Long-term debt remained stable at $1.1 billion as of March 31, 2025, consistent with the previous quarter[126] - The company was in compliance with all debt covenants as of March 31, 2025, and December 31, 2024[143][148] - The 2018 Revolving Credit Facility has a financial covenant requiring a Senior Secured First Lien Net Leverage Ratio of no more than 4.00 to 1.00[162] - The company may incur additional debt or issue equity securities to provide liquidity, but there is no guarantee of access to credit or capital markets on satisfactory terms[168] Capital Expenditures - Capital expenditures totaled $10.3 million for the three months ended March 31, 2025, with an expectation of approximately $40.0 million for the full year 2025[167] - Capital expenditures for Q1 2025 were $10,281 thousand, slightly down from $10,511 thousand in Q1 2024, showing a stable investment approach[195] Interest and Tax Expenses - Interest expense surged by $14.2 million, or 91%, to $29.8 million due to new debt facilities and associated costs[117] - The effective tax rate for the first quarter of 2025 was 15.5%, compared to 12.0% in the first quarter of 2024[118] Stock and Dividends - The company suspended its quarterly cash dividend of $0.01 per share, with no assurance of future resumption[164] - The company has $99 million remaining under its stock repurchase authorization as of March 31, 2025, with no shares repurchased in Q1 2025[163] Strategic Outlook - The company expects to evaluate strategic transactions, including acquisitions and joint ventures, to enhance growth opportunities[123] - The company believes it has adequate liquidity to meet its needs for at least the next twelve months[126] - The cash flow is expected to fluctuate significantly between quarters due to various factors, including customer order patterns and working capital requirements[128]

Q1 2025 Results April 25, 2025 NYSE: EAF www.graftech.com Forward-Looking Statements If one or more of these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, our actual results may vary materially from what we may have expressed or implied by these forward-looking statements. We caution that you should not place undue reliance on any of our forward-looking statements. You should specifically consider the factors identified in this presentation and in our A ...

Financial Data and Key Metrics Changes - The company reported a net loss of $39 million or $0.15 per share for Q1 2025, with adjusted EBITDA at negative $4 million compared to flat adjusted EBITDA in Q1 2024 [32] - Cash COGS per metric ton was approximately $3,650 for Q1 2025, reflecting a 21% year-over-year reduction [34] - Total liquidity at the end of Q1 2025 was $421 million, consisting of $214 million in cash and $207 million in available credit [36] Business Line Data and Key Metrics Changes - Sales volume increased by 2% year-over-year in Q1 2025, with a notable 25% increase in the U.S. market [7][10] - Average selling price for Q1 2025 was $4,100 per metric ton, representing a 20% year-over-year decline [28] - Production volume for Q1 was 28,000 tons, with a capacity utilization rate of 63%, a more than 500 basis point increase from the prior year [25][26] Market Data and Key Metrics Changes - Global steel production outside of China was approximately 209 million tons in Q1 2025, slightly below the previous year [24] - U.S. steel production saw a 1% reduction in Q1 2025, while the EU experienced a 3% decrease year-to-date [24][25] - The company increased sales volume in Western Europe by more than 40% year-over-year in Q1 2025 [30] Company Strategy and Development Direction - The company is focused on increasing sales volume, regaining market share, and improving financial performance through strategic initiatives [6][9] - A key goal is to grow volume and market share in the U.S., which is the highest-priced region in the industry [9][10] - The company plans to increase prices by 15% on uncommitted volumes for 2025 to restore pricing and profitability levels [11] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenging near-term market conditions but expressed optimism about future opportunities [6][7] - The company is well-positioned to capitalize on potential recovery in the EU market due to supportive policy changes and infrastructure investments [39][40] - Management emphasized the importance of a healthy graphite electrode industry for the steel industry and the need for improved pricing dynamics [8][10] Other Important Information - The company has made significant strides in reducing costs, achieving a 23% year-over-year reduction in cash COGS per metric ton in 2024 [13] - The company is actively managing its production and inventory levels to align with sales expectations [26][35] - Ongoing assessments of global trade policies and tariffs are being conducted to mitigate potential impacts on the business [14][18] Q&A Session Summary Question: Has the introduction of tariffs on Indian material changed the pace of pricing declines in the U.S. market? - Management indicated that tariffs on Indian imports could significantly impact the availability of competitors in the U.S. market, potentially benefiting the company [46][47] Question: What percentage of sales are now coming from the U.S. and Western Europe? - Management confirmed that over 50% of sales are now derived from the U.S. and Western Europe combined [54] Question: How much of the graphite electrodes sold in the U.S. are sourced from outside the U.S.? - Management estimated that roughly half of the production coming into the U.S. is from the Monterrey facility, with the balance from European facilities [81] Question: What is the outlook for pricing of graphite electrodes and needle coke? - Management expressed optimism for future pricing stability, citing potential support from tariffs and ongoing negotiations with customers [72][75]

Financial Data and Key Metrics Changes - The company reported a net loss of $39 million or $0.15 per share for Q1 2025, with adjusted EBITDA at negative $4 million compared to flat adjusted EBITDA in Q1 2024 [32] - Cash COGS per metric ton was approximately $3,650 for Q1 2025, reflecting a 21% year-over-year reduction [34] - Total liquidity at the end of Q1 2025 was $421 million, consisting of $214 million in cash and $107 million available under the revolving credit facility [36] Business Line Data and Key Metrics Changes - Sales volume increased by 2% year-over-year in Q1 2025, with a total of 25,000 metric tons sold [27] - The average selling price for Q1 2025 was $4,100 per metric ton, representing a 20% year-over-year decline [28] - Sales volume in the U.S. grew by nearly 25% year-over-year in Q1 2025, significantly increasing market share [10][27] Market Data and Key Metrics Changes - Global steel production outside of China was approximately 209 million tons in Q1 2025, slightly below the previous year [24] - U.S. steel production saw a 1% reduction in Q1 2025, while EU steel output decreased by 3% year-to-date [25] - The capacity utilization rate for the company was 63%, a more than 500 basis point increase from the prior year [26] Company Strategy and Development Direction - The company is focused on increasing sales volume, regaining market share, and improving financial performance through strategic initiatives [6][8] - A key goal is to grow volume and market share in the U.S., which is the highest-priced region in the industry [9] - The company plans to increase prices by 15% on uncommitted volumes for 2025 to restore pricing and profitability levels [11] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that current market conditions remain challenging, but expressed optimism about future opportunities [7] - The company is well-positioned to capitalize on potential recovery in the EU market due to supportive policy changes and infrastructure investments [39] - Management emphasized the importance of a healthy graphite electrode industry for the steel industry and the need for pricing improvements [8][10] Other Important Information - The company has made significant strides in reducing costs, achieving a 23% year-over-year reduction in cash COGS per metric ton in 2024 [13] - The company is actively assessing global trade policies and tariffs to mitigate potential impacts on its business [14][18] - The company maintains a strong focus on safety, achieving a reduction in total recordable incident rates [23] Q&A Session Summary Question: Impact of tariffs on U.S. market pricing - Management noted that tariffs on Indian materials could significantly impact their availability in the U.S. market, potentially benefiting the company [46][47] Question: Market share recovery and growth potential - Management indicated that they are ahead of previous market share levels and expect continued growth throughout the year [47][49] Question: Sales percentage from U.S. and Western Europe - Management confirmed that over 50% of sales now come from the U.S. and Western Europe combined [54] Question: Pricing acceptance for the 15% increase - Management expressed optimism about customer acceptance of the price increase, emphasizing the importance of their value proposition [58][60] Question: Long-term outlook for steel utilization rates - Management remains cautiously optimistic about steel utilization rates, citing potential opportunities for growth despite current uncertainties [68][70] Question: Pricing guidance for electrodes and needle coke - Management indicated that while there is uncertainty, they expect some price stability and potential increases in both needle coke and electrode pricing [75][76]

Core Insights - GrafTech International reported a quarterly loss of $0.13 per share, which was better than the Zacks Consensus Estimate of a loss of $0.15, representing an earnings surprise of 13.33% [1] - The company posted revenues of $111.84 million for the quarter ended March 2025, missing the Zacks Consensus Estimate by 6.28% and down from $136.58 million year-over-year [2] - GrafTech shares have declined approximately 62.2% since the beginning of the year, contrasting with the S&P 500's decline of 6.8% [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is -$0.14 on revenues of $131.4 million, and for the current fiscal year, it is -$0.57 on revenues of $535.35 million [7] - The estimate revisions trend for GrafTech is mixed, resulting in a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [6] Industry Context - The Metal Products - Procurement and Fabrication industry, to which GrafTech belongs, is currently ranked in the bottom 36% of over 250 Zacks industries, suggesting potential challenges ahead [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact GrafTech's stock performance [5]

Sales Performance - Total sales volume grew 2% year-over-year for Q1 2025, with expectations of a low-double digit percentage increase for the full year, resulting in approximately 25% cumulative growth since 2023[4] - Sales volume in the United States increased by 25% year-over-year for Q1 2025, with expectations to outpace this growth rate for the full year[4] - Net sales for Q1 2025 were $112 million, an 18% decrease from $137 million in Q1 2024, primarily due to lower weighted-average realized prices[6] - Net sales decreased to $111,839 thousand in Q1 2025 from $136,584 thousand in Q1 2024, representing a decline of approximately 18.1%[40] Financial Losses - Net loss for Q1 2025 was $39 million, or $0.15 per share, compared to a net loss of $31 million, or $0.12 per share, in Q1 2024[7] - Adjusted net loss for Q1 2025 was $(34,155) thousand, compared to $(25,161) thousand in Q1 2024, reflecting a worsening in adjusted financial performance[43] - Net loss for Q1 2025 was $(39,351) thousand, compared to $(30,869) thousand in Q1 2024, marking an increase in net loss of approximately 27.5%[40] Cost Management - Cash costs per metric ton decreased by 21% year-over-year and 11% sequentially from Q4 2024, with a projected mid-single digit percentage decline for the full year 2025[4] - Cash cost of goods sold per metric ton was $3,652 in Q1 2025, down from $4,595 in Q1 2024, indicating improved cost efficiency[46] - The cash cost of goods sold per MT is a key measure for evaluating costs on a per metric ton basis[34] Liquidity and Capital Expenditures - Total liquidity as of March 31, 2025, was $421 million, supporting the company's ability to manage near-term industry challenges[11] - Capital expenditures for 2025 are anticipated to be approximately $40 million, with a favorable net impact of working capital on cash flow performance[16] - Cash and cash equivalents decreased from $256,248,000 as of December 31, 2024, to $214,283,000 as of March 31, 2025, a decrease of about 16.4%[38] Operational Performance - Adjusted EBITDA was negative $4 million in Q1 2025, down from $0.2 million in Q1 2024, reflecting lower realized prices despite reduced cash costs[7] - Adjusted EBITDA is used as a primary metric for managing business and evaluating performance, reflecting operational profitability[28] - Operating loss improved to $(18,210) thousand in Q1 2025 from $(21,361) thousand in Q1 2024, reflecting a reduction in operational losses[40] Market Conditions - The company expects a low-double digit percentage increase in sales volume for 2025, driven by a focus on regaining market share[13] - The pricing environment remains challenging, with a planned 15% price increase for uncommitted 2025 volume[14] Asset and Liability Management - Total current assets decreased from $636,797,000 as of December 31, 2024, to $618,543,000 as of March 31, 2025, a decline of approximately 2.0%[38] - Total liabilities increased from $1,224,274,000 as of December 31, 2024, to $1,207,753,000 as of March 31, 2025, reflecting a decrease of approximately 1.3%[38] - Long-term debt remained relatively stable, increasing slightly from $1,086,915,000 to $1,088,863,000, an increase of about 0.2%[38] - The accumulated deficit increased from $793,453,000 as of December 31, 2024, to $832,452,000 as of March 31, 2025, an increase of approximately 4.9%[38] Cash Flow Analysis - Net cash used in operating activities was $(32,186) thousand in Q1 2025, significantly higher than $(530) thousand in Q1 2024, indicating increased cash outflow[42] - Free cash flow and adjusted free cash flow are critical measures for evaluating liquidity, with adjusted free cash flow accounting for debt modification costs[32] Non-GAAP Financial Measures - The company emphasizes the importance of non-GAAP financial measures for investors to assess financial performance and debt-service capabilities[29] - Total non-GAAP adjustments pre-tax for Q1 2025 amounted to $6,563 thousand, compared to $7,279 thousand in Q1 2024, showing a reduction in adjustments[43]

Liquidity and Cash Flow - As of December 31, 2024, the company had liquidity of $464.2 million, consisting of $108.0 million available under the 2018 Revolving Credit Facility, $100.0 million under the Initial First Lien Term Loan Facility, and cash and cash equivalents of $256.2 million[250]. - The company reported a net cash used in operating activities of $40.1 million for 2024, a significant decrease from a cash source of $76.6 million in 2023, primarily due to reduced cash provided by working capital[260]. - Cash flow used in investing activities was $34.2 million for 2024, compared to $53.8 million in 2023, driven by reduced capital expenditures[261]. - Net cash provided by financing activities was $155.7 million in 2024, an increase from $18.7 million in 2023, mainly due to the issuance of $175.0 million of First Lien Term Loans[262]. - The company experienced a decrease in cash flow provided by inventories and accounts receivable, primarily due to reduced sales in the fourth quarter of 2024 compared to the same period in 2023[260]. Debt and Financing - The company had gross long-term debt of $1.1 billion as of December 31, 2024, up from $950.0 million in 2023[250]. - The company completed financing transactions to extend the maturities on its outstanding debt during the fourth quarter of 2024[253]. - The company issued New 4.625% Notes and New 9.875% Notes in aggregate principal amounts of $498.2 million and $446.2 million, respectively, on December 23, 2024[265]. - The Initial First Lien Term Loans amount to $175 million, with an additional $100 million available through Delayed Draw Commitments until July 23, 2026[286]. - The First Lien Term Loans bear interest at a rate equal to Term SOFR plus 6.00% per annum or ABR plus 5.00% per annum, with a 2.00% floor[288]. - Following the Exchange Offer, approximately $1.8 million of Existing 4.625% Notes and $3.8 million of Existing 9.875% Notes remain outstanding[279][285]. - The Existing 4.625% Notes were issued at an aggregate principal amount of $500 million, with proceeds used to partially repay borrowings under the 2018 Term Loan Facility[275]. - The First Lien Term Loans mature on December 23, 2029, and are secured by perfected first-priority security interests in the collateral[287]. - GrafTech Global must offer to repurchase the New 9.875% Notes if specific changes in control occur or if certain assets are sold[281]. - The New Notes Indentures contain covenants that limit the ability to incur additional indebtedness or engage in certain transactions[271]. - The total contractual obligations as of December 31, 2024, amounted to $1,559.864 million, with long-term debt accounting for $1,125 million[297]. - The Company had no outstanding term loans under the 2018 Term Loan Facility as of December 31, 2024[294]. Dividend and Stock Repurchase - The company suspended its quarterly cash dividend of $0.01 per share on August 2, 2023, with no assurance of resuming future dividend payments[255]. - The company authorized a stock repurchase program totaling $250.0 million, with $99.0 million remaining under the authorization as of December 31, 2024[254]. Compliance and Covenants - As of December 31, 2024, GrafTech Global was in compliance with all debt covenants in the New Notes Indentures, maintaining a pro forma consolidated total net leverage ratio of no greater than 2.50 to 1.00[271]. - As of December 31, 2024, the availability under the 2018 Revolving Credit Facility was $108.0 million, down from $112.4 million in 2023[294]. - The 2018 Revolving Credit Facility matures on November 30, 2028, with a financial covenant requiring a Senior Secured First Lien Net Leverage Ratio of no more than 4.00 to 1.00[296]. - The Company must not have more than $100 million of unrestricted cash and cash equivalents after borrowing under the 2018 Revolving Credit Facility[293]. - The Company has complied with all debt covenants as of December 31, 2024[296]. Tax and Deferred Assets - As of December 31, 2024, the Company had deferred tax assets (DTAs) of $52.4 million in the U.S., with a valuation allowance of $19.3 million against certain DTAs[303][304]. - The Company is required to make estimated interest payments on its Existing 9.875% Notes and Existing 4.625% Notes through December 15, 2028, totaling $434.864 million[297]. Other Financial Details - The 2018 Revolving Credit Facility includes a commitment fee of 0.25% per annum on undrawn commitments[295]. - As of December 31, 2024, there were $7.4 million of letters of credit drawn against the 2018 Revolving Credit Facility[294].