BROOKLYN HEIGHTS, Ohio--(BUSINESS WIRE)--GrafTech International Ltd. (NYSE: EAF) (“GrafTech” or the “Company”) today issued the following response to an open letter to the Company’s stockholders that was issued by Nilesh Undavia, a private investor, on March 12, 2024. Mr. Undavia, along with certain trusts and people affiliated with Mr. Undavia, have provided notice of their intent to nominate Mr. Undavia for election to GrafTech’s Board of Directors (“the Board”) at the Company’s 2024 Annual Meeting of St ...

GrafTech shareholders have lost almost 90% of value since the IPOSince 2019, Net Sales have declined 65% and Adj. EBITDA by 98%Board and Management turmoil persists with the departure of five directors since Jan. 2023, and two CEOs in three yearsCurrent board cannot be trusted to conduct a successful CEO search BOCA RATON, Fla., March 12, 2024 (GLOBE NEWSWIRE) -- Nilesh Undavia issued the following statement on March 12, 2024: An Open Letter to Shareholders of GrafTech International Ltd. Dear Fellow GrafTec ...

Financial Data and Key Metrics Changes - Net sales in Q4 2023 decreased by 45% year-over-year, primarily due to a shift from long-term agreements (LTA) to non-LTA sales, along with lower overall volume and pricing [61][94] - Adjusted EBITDA was negative $22 million in Q4 2023, compared to positive adjusted EBITDA of $80 million in Q4 2022, reflecting the impact of lower sales volume and pricing [64][94] - The company reported a net loss of $217 million or $0.85 per share, which included a goodwill impairment charge of $171 million and a lower of cost or market inventory valuation adjustment of $12 million [94] Business Line Data and Key Metrics Changes - Production and sales volume for Q4 2023 were approximately 24,000 metric tons, with 5,000 metric tons sold under LTAs at a weighted average realized price of $8,500 per metric ton, and 19,000 metric tons of non-LTA sales at approximately $4,800 per metric ton [38][61] - The company anticipates a modest year-over-year improvement in sales and production volume in 2024, which is expected to positively impact cash costs per metric ton [68][97] Market Data and Key Metrics Changes - Steel production in the Americas was down 3% in 2023, with the U.S. steel production remaining flat year-over-year [37][59] - Capacity utilization in Europe ended the year at approximately 50% to 53%, indicating a more challenging economic environment compared to the U.S. [11][12] - The weighted average price for non-LTA sales represented a more than 20% year-over-year decline, reflecting ongoing pricing pressures in the market [92] Company Strategy and Development Direction - The company is implementing a cost rationalization and footprint optimization plan, which includes suspending production at the St. Marys facility and reducing corporate overhead, expected to drive $25 million in annualized cost savings [33][54] - The company remains optimistic about long-term prospects, driven by decarbonization efforts in the steel industry and anticipated growth in electric arc furnace (EAF) steel production, which is expected to increase graphite electrode demand [34][70][102] Management's Comments on Operating Environment and Future Outlook - Management noted that the current economic environment is characterized by uncertainty and geopolitical conflicts, impacting industrial production and demand for graphite electrodes [27][50] - The company expects continued softness in the commercial environment into 2024, but remains confident in its ability to navigate these challenges and capitalize on future market recoveries [30][70] Other Important Information - The company ended the year with a liquidity position of $289 million, consisting of $170 million in cash and $112 million available under its revolving credit facility, with no anticipated need to borrow in 2024 [69][99] - The company has proactively reduced inventory by over $100 million in 2023, resulting in positive free cash flow for the year [30][99] Q&A Session Summary Question: What is the outlook for cash costs and realized pricing in 2024? - Management indicated that cash costs are expected to decline towards the lower $4,000 range as volumes pick up, aligning with current spot pricing [80][111] Question: How is the company managing working capital and inventory in 2024? - The company anticipates a balanced approach to working capital, with opportunities to further reduce inventory levels, although some negative impact is expected as sales and production volumes increase [112][132] Question: What is the status of customer relationships following the transition from long-term agreements? - Management expressed satisfaction with customer relationships and engagement during the negotiation process, emphasizing the value proposition offered to customers [114][134] Question: How does the company view its market share in the U.S.? - While specific market share figures were not provided, management noted successful negotiations with customers and a positive outlook for the U.S. market [148] Question: Are there plans to shut down additional plants beyond St. Marys? - Management stated that the current actions taken are deemed sufficient to navigate the market conditions, with no immediate plans to shut down other plants [150][124]

GrafTech International (EAF) came out with a quarterly loss of $0.27 per share versus the Zacks Consensus Estimate of a loss of $0.21. This compares to earnings of $0.17 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of -28.57%. A quarter ago, it was expected that this maker of graphite products would post a loss of $0.05 per share when it actually produced a loss of $0.08, delivering a surprise of -60%.Over the last four quarte ...

BROOKLYN HEIGHTS, Ohio--(BUSINESS WIRE)--GrafTech International Ltd. (NYSE: EAF) ("GrafTech" or the "Company") today announced financial results for the quarter and year ended December 31, 2023. Fourth Quarter 2023 Highlights Net loss of $217 million, or $0.85 per share(1) Includes a goodwill impairment charge of $171 million and a lower of cost or market ("LCM") inventory valuation adjustment of $12 million Adjusted EBITDA(2) of negative $22 million, including the LCM inventory valuation adjustmen ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (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, 2023 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to . Commission file number: 1-13888 GRAFTECH INTERNATIONAL LTD. (Exact name of registrant as specified in its charter) Delaware 27-2496053 (State or other jurisdi ...

Financial Data and Key Metrics Changes - The company reported a net loss of $23 million, or $0.9 per share, with adjusted EBITDA of $1 million compared to $129 million in Q3 2022, reflecting lower sales volume and higher costs [47][40] - Cash costs per metric ton were approximately $5,860 for Q3 2023, exceeding projections due to lower sales volume and fixed costs from idled production [48][30] - The company generated $51 million in cash from operating activities and adjusted free cash flow of $43 million, supported by a $50 million reduction in inventory during the quarter [49][50] Business Line Data and Key Metrics Changes - Production volume for Q3 was approximately 23,000 metric tons, with a capacity utilization rate of 47%, down from 49% in Q2 [25][16] - Sales volume was approximately 24,000 metric tons, a modest decline compared to Q2, with net sales decreasing 48% year-over-year [26][25] - The shift in business mix from long-term agreements (LTA) to non-LTA sales contributed to the decline, with LTA sales averaging $8,650 per metric ton and non-LTA sales at $5,400 per metric ton [45][26] Market Data and Key Metrics Changes - Global steel production outside of China was approximately 201 million tons in Q3 2023, a 4% sequential decline, with capacity utilization rates outside of China at 65% [16][23] - In the U.S., steel industry utilization rates ticked down to 76%, with a forecasted 1% decline in year-over-year steel demand for 2023 [24][23] - Export prices from China have fallen below $3,000 per metric ton, impacting pricing in non-tariff protected regions [17][16] Company Strategy and Development Direction - The company remains focused on managing near-term market disruptions while positioning for long-term opportunities, particularly in the graphite electrode market and the EV battery supply chain [21][14] - GrafTech is exploring participation in the development of a Western EV battery supply chain, leveraging its assets and technical know-how [35][63] - The company anticipates a 30% increase in global annual graphite electrode demand outside of China by 2030, driven by planned electric arc furnace (EAF) capacity additions [61][62] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing global economic uncertainty impacting steel industry demand and graphite electrode pricing, with expectations of continued market weakness [40][44] - The company expressed optimism about long-term growth opportunities in the graphite electrode market, despite current challenges [14][64] - Management highlighted the importance of maintaining liquidity and managing costs to navigate the current market environment [50][51] Other Important Information - The company has idled its Seadrift facility for the entire third quarter, with plans to restart it in Q4 [31][115] - The net debt to adjusted EBITDA ratio increased to 6.4 times as of September 30, reflecting a year-over-year decline in EBITDA [51][40] - The company is developing a carbon-neutral graphite electrode offering, aimed at meeting the growing demand for environmentally responsible steelmaking [110][96] Q&A Session Summary Question: What is the electrode market outlook? - Management noted continued price pressure in the electrode market, with spot pricing around $3,000 per ton, primarily due to weak seasonality and market conditions in China [53][67] Question: Update on needle coke prices? - Recent spot pricing for super premium needle coke is around $1,700 per ton, reflecting further softening, but long-term demand is expected to tighten as EV demand grows [55][67] Question: How much production could be diverted to the EV market? - The company has dual-use assets that can produce needle coke for both graphite electrodes and battery anodes, allowing flexibility in production based on market conditions [75][67] Question: How does utilization compare across regions? - Utilization rates in North America are higher than in Europe, with customer inventory levels varying significantly between regions [81][78] Question: Competitive landscape in the U.S. and EU markets? - The company maintains confidence in its value proposition despite competition from lower-priced imports, emphasizing quality and ancillary services [83][82] Question: What is the outlook for working capital in 2024? - Management anticipates some use of working capital as production ramps up, but aims to maintain manageable inventory levels [91][90]

15 Add: Unamortized debt discount and issuance costs (25,764) (12,049) | --- | --- | |----------------------------------|-------| | | | | | | | | | | | | | | | | | | | Q3 2023 Results November 3, 2023 | | | NYSE: EAF www.graftech.com | | Today's Presenters Marcel Kessler Chief Executive Officer and President Jeremy Halford Executive Vice President, Chief Operating Officer Forward-Looking Statements 2 GrafTech is well-equipped to manage the current environment 4 Tim Flanagan Chief Financial Officer, Senior V ...

```python import urllib.parse def generate_report_outline(outline_data): """ Generates a professionally structured financial report outline in Markdown format. Args: outline_data (list): A list of dictionaries representing the report outline structure. Returns: str: The report outline in Markdown format. """ Pre-defined condensed summaries to ensure conciseness and avoid periods condensed_summary_map = { "PART I. FINANCIAL INFORMATION": "Presents the company's financial statements and management's analysis for Q3 2023", "Financial Statements": "Presents unaudited condensed consolidated financial statements for Q3 2023, showing a significant decline in profitability", "Note 2: Revenue from Contracts with Customers": "Details revenue disaggregation by contract type, showing a significant shift from LTAs and providing future LTA revenue outlook", "Note 4: Debt and Liquidity": "Outlines changes in debt structure, including new notes issuance and reduced revolving credit facility availability", "Note 7: Commitments and Contingencies": "Details significant legal and tax proceedings, including customer arbitrations and Mexican VAT audits", "Management's Discussion and Analysis of Financial Condition and Results of Operations": "Management discusses the significant Q3 2023 performance downturn, weak outlook, and liquidity preservation measures", "Results of Operations": "Analyzes Q3 2023 and nine-month operational results, highlighting significant declines in sales and profitability", "Liquidity and Capital Resources": "Assesses the company's liquidity position, cash flow from operations, and capital expenditure outlook", "Non-GAAP Financial Measures": "Presents and reconciles non-GAAP financial measures, including Adjusted EBITDA and Adjusted Free Cash Flow", "Quantitative and Qualitative Disclosures About Market Risk": "Discusses market risks from currency exchange rates and energy prices, noting elimination of interest rate risk", "Controls and Procedures": "Management concluded that disclosure controls and procedures were effective with no material changes in Q3 2023", "PART II. OTHER INFORMATION": "This section covers legal proceedings, updated risk factors, and other required disclosures", "Legal Proceedings": "Details significant ongoing legal matters, including customer arbitrations and Mexican tax assessments", "Risk Factors": "Updates risk factors, emphasizing significant risks from indebtedness and restrictive debt covenants", "Other Information": "Confirms no director or officer trading plans were adopted, modified, or terminated during Q3 2023", "Exhibits": "Lists all exhibits filed with the Form 10-Q, including CEO/CFO certifications and XBRL financial data" } Manual mapping for bolding key metrics within insight sentences bolding_map = { "Q3 2023 net sales decreased by $144.8 million (48%) YoY, reflecting soft demand, a shift from LTA to non-LTA volume, and lower average prices for both.": "Q3 2023 net sales decreased by **$144.8 million (48%) YoY**, reflecting soft demand, a shift from LTA to non-LTA volume, and lower average prices for both", "Q3 2023 cost of goods sold included approximately $23.3 million of excess fixed manufacturing costs that were expensed immediately due to reduced production levels.": "Q3 2023 cost of goods sold included approximately **$23.3 million** of excess fixed manufacturing costs that were expensed immediately due to reduced production levels", "For the first nine months of 2023, net sales decreased by $550.4 million (53%) YoY, primarily due to lower sales volume from the 2022 Monterrey suspension and ongoing soft demand.": "For the first nine months of 2023, net sales decreased by **$550.4 million (53%) YoY**, primarily due to lower sales volume from the 2022 Monterrey suspension and ongoing soft demand", "The effective tax rate for the first nine months of 2023 was 22.2%, compared to 14.5% for the same period in 2022, with the change driven by the shift from pre-tax income to a pre-tax loss and a different jurisdictional mix of earnings.": "The effective tax rate for the first nine months of 2023 was **22.2%**, compared to **14.5%** for the same period in 2022, with the change driven by the shift from pre-tax income to a pre-tax loss and a different jurisdictional mix of earnings", "Total liquidity was $285.1 million as of September 30, 2023, consisting of $172.8 million in cash and $112.3 million in revolver availability.": "Total liquidity was **$285.1 million** as of September 30, 2023, consisting of **$172.8 million** in cash and **$112.3 million** in revolver availability", "Net cash provided by operating activities decreased to $67.3 million in the first nine months of 2023 from $274.6 million in the same period of 2022, primarily due to a $370.5 million reduction in net income.": "Net cash provided by operating activities decreased to **$67.3 million** in the first nine months of 2023 from **$274.6 million** in the same period of 2022, primarily due to a $370.5 million reduction in net income", "In Q2 2023, the company issued $450 million of 2023 Senior Secured Notes to repay its 2018 Term Loan Facility, extending its debt maturity profile to 2028.": "In Q2 2023, the company issued **$450 million** of 2023 Senior Secured Notes to repay its 2018 Term Loan Facility, extending its debt maturity profile to 2028", "The company expects full-year 2023 capital expenditures to be in the range of $55.0 million to $60.0 million.": "The company expects full-year 2023 capital expenditures to be in the range of **$55.0 million to $60.0 million**", "The company is in arbitration with customers, including Aperam and ArcelorMittal, who are challenging their LTA commitments. As of June 2023, the claimants are seeking approximately $188.2 million in damages.": "The company is in arbitration with customers, including Aperam and ArcelorMittal, who are challenging their LTA commitments. As of June 2023, the claimants are seeking approximately **$188.2 million** in damages", "The Mexican Tax Authority (MTA) has opened two audits of GrafTech Commercial Mexico's VAT filings for periods in 2019 and 2018, with potential assessments totaling approximately $26.5 million and $51.0 million, respectively.": "The Mexican Tax Authority (MTA) has opened two audits of GrafTech Commercial Mexico's VAT filings for periods in 2019 and 2018, with potential assessments totaling approximately **$26.5 million** and **$51.0 million**, respectively", "The company entered into a Tax Receivable Agreement with its pre-IPO stockholder, Brookfield. As of September 30, 2023, the total liability under this agreement was $10.9 million.": "The company entered into a Tax Receivable Agreement with its pre-IPO stockholder, Brookfield. As of September 30, 2023, the total liability under this agreement was **$10.9 million**", "Primary market risks include changes in interest rates, currency exchange rates, and energy commodity prices.": "Primary market risks include changes in interest rates, currency exchange rates, and energy commodity prices", "As of September 30, 2023, the company no longer had any variable-rate debt outstanding, thus eliminating its exposure to interest rate risk.": "As of September 30, 2023, the company no longer had any variable-rate debt outstanding, thus eliminating its exposure to interest rate risk", "A sensitivity analysis indicates that a 10% appreciation or depreciation of the U.S. dollar would change the fair value of the foreign currency hedge portfolio by approximately $2.9 million.": "A sensitivity analysis indicates that a **10%** appreciation or depreciation of the U.S. dollar would change the fair value of the foreign currency hedge portfolio by approximately **$2.9 million**", "The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of September 30, 2023.": "The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of September 30, 2023", "There were no material changes to the company's internal control over financial reporting during the third quarter of 2023.": "There were no material changes to the company's internal control over financial reporting during the third quarter of 2023", "The company is in arbitration with customers, including Aperam and ArcelorMittal, over LTA disputes. The claimants are seeking approximately $188.2 million in damages as of June 2023.": "The company is in arbitration with customers, including Aperam and ArcelorMittal, over LTA disputes. The claimants are seeking approximately **$188.2 million** in damages as of June 2023", "Legal proceedings related to the temporary suspension of the Monterrey, Mexico facility in 2022 are ongoing, even though operations have resumed.": "Legal proceedings related to the temporary suspension of the Monterrey, Mexico facility in 2022 are ongoing, even though operations have resumed", "The company is contesting two VAT assessments from the Mexican Tax Authority (MTA) for periods in 2019 and 2018, amounting to potential liabilities of approximately $26.5 million and $51.0 million, respectively.": "The company is contesting two VAT assessments from the Mexican Tax Authority (MTA) for periods in 2019 and 2018, amounting to potential liabilities of approximately **$26.5 million** and **$51.0 million**, respectively", "The company's substantial indebtedness ($924.5 million as of Sep 30, 2023) could limit its financial and operating activities and its ability to fund future needs.": "The company's substantial indebtedness (**$924.5 million** as of Sep 30, 2023) could limit its financial and operating activities and its ability to fund future needs", "Operating performance has resulted in a reduction of the availability under the 2018 Revolving Credit Facility, which stood at $112.3 million as of September 30, 2023.": "Operating performance has resulted in a reduction of the availability under the 2018 Revolving Credit Facility, which stood at **$112.3 million** as of September 30, 2023", "Debt agreements contain restrictive covenants that limit the company's ability to, among other things, incur more debt, sell assets, pay dividends, and make acquisitions. Failure to comply could result in default.": "Debt agreements contain restrictive covenants that limit the company's ability to, among other things, incur more debt, sell assets, pay dividends, and make acquisitions. Failure to comply could result in default", "No director or officer trading plans under Rule 10b5-1 or other arrangements were adopted, modified, or terminated during Q3 2023.": "No director or officer trading plans under Rule 10b5-1 or other arrangements were adopted, modified, or terminated during Q3 2023", "The filing includes certifications from the CEO and CFO as required by Sarbanes-Oxley Act Rules 13a-14(a) and Section 906.": "The filing includes certifications from the CEO and CFO as required by Sarbanes-Oxley Act Rules 13a-14(a) and Section 906", "Financial data is provided in Inline XBRL format as per SEC requirements.": "Financial data is provided in Inline XBRL format as per SEC requirements", "The near-term outlook is weak, with sales volume in Q4 2023 expected to decline modestly compared to Q3 2023, reflecting persistent softness in the commercial environment and constrained steel industry production.": "The near-term outlook is weak, with sales volume in Q4 2023 expected to decline modestly compared to Q3 2023, reflecting persistent softness in the commercial environment and constrained steel industry production", "To maintain liquidity, the company suspended its quarterly cash dividend of $0.01 per share, effective August 2, 2023.": "To maintain liquidity, the company suspended its quarterly cash dividend of **$0.01 per share**, effective August 2, 2023", "Cash cost of goods sold per MT increased to $5,863 in Q3 2023 from $4,290 in Q3 2022, driven by the recognition of excess fixed costs over a smaller production base and the impact of higher raw material costs from 2022.": "Cash cost of goods sold per MT increased to **$5,863** in Q3 2023 from **$4,290** in Q3 2022, driven by the recognition of excess fixed costs over a smaller production base and the impact of higher raw material costs from 2022" } all_content_lines = [] def collect_all_content(node): """Recursively collects all content lines (headings, summaries, key points) without blank lines.""" level = node['level'] title = node['title'] item_id = node['item_id'] start_page = node['start_page'] encoded_item_id = urllib.parse.quote(item_id) heading_prefix = '' * level current_summary = condensed_summary_map.get(title, node['summary']) all_content_lines.append(f"{heading_prefix} [{title}](index={start_page}&type=section&id={encoded_item_id})") all_content_lines.append(current_summary) if 'key_points' in node and node['key_points']: for kp in node['key_points']: if kp['type'] == 'insight': original_content = kp['content'] bolded_content = bolding_map.get(original_content, original_content) refs = "".join([f"[{cn}](index={cn}&type=chunk)" for cn in kp['chunk_num']]) all_content_lines.append(f"- {bolded_content}{refs}") elif kp['type'] == 'table': all_content_lines.append(f" {kp['title']}") all_content_lines.extend(kp['content'].split('\n')) if 'children' in node and node['children']: for child in node['children']: collect_all_content(child) Collect all content lines for top_level_item in outline_data: collect_all_content(top_level_item) Post-process to insert blank lines according to rules final_output_lines = [] for i, line in enumerate(all_content_lines): final_output_lines.append(line) next_line_exists = (i + 1 < len(all_content_lines)) next_line = all_content_lines[i+1] if next_line_exists else None Rule: Add blank line after a summary (a non-heading line following a heading) This identifies a summary line by checking if the previous line was a heading and the current is not a heading, bullet, or table. is_summary_line = ( i > 0 and all_content_lines[i-1].startswith('') and not line.startswith('') and not line.startswith('-') and not line.startswith('|') and not line.startswith('') ) if is_summary_line: final_output_lines.append("") Rule: Add blank line after the last bullet point in a list If current line is an insight and next line is NOT an insight AND NOT a table heading if line.startswith('-') and (not next_line_exists or (not next_line.startswith('-') and not next_line.startswith(''))): final_output_lines.append("") Rule: No blank line after a table (table content ends with '|') If current line is the last line of a table and next line is a heading, remove the blank line just added. if line.strip().endswith('|') and next_line_exists and next_line.startswith(''): if final_output_lines and not final_output_lines[-1].strip(): final_output_lines.pop() Rule: No blank line between a table heading and its content if line.startswith('') and next_line_exists and next_line.startswith('|'): if final_output_lines and not final_output_lines[-1].strip(): final_output_lines.pop() Final cleanup: remove any consecutive blank lines and trailing blank lines. cleaned_output = [] for line in final_output_lines: if not line.strip() and cleaned_output and not cleaned_output[-1].strip(): continue Skip if current line is blank and last line was also blank cleaned_output.append(line) if cleaned_output and not cleaned_output[-1].strip(): cleaned_output.pop() Remove trailing blank line if any return "\n".join(cleaned_output) The `outline` variable is provided in the prompt's context. Call the function with the provided outline data markdown_report = generate_report_outline(outline) print(markdown_report) ``` ```markdown [PART I. FINANCIAL INFORMATION](index=5&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) Presents the company's financial statements and management's analysis for Q3 2023 [Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) Presents unaudited condensed consolidated financial statements for Q3 2023, showing a significant decline in profitability Condensed Consolidated Balance Sheet Highlights (Unaudited) | Balance Sheet Item | Sep 30, 2023 ($ thousands) | Dec 31, 2022 ($ thousands) | | :--- | :--- | :--- | | **Total Current Assets** | 713,358 | 815,228 | | **Total Assets** | **1,483,145** | **1,604,178** | | **Total Current Liabilities** | 169,245 | 237,852 | | **Total Liabilities** | 1,194,267 | 1,266,463 | | **Total Stockholders' Equity** | **288,878** | **337,715** | Condensed Consolidated Statements of Operations Highlights (Unaudited) | Metric ($ thousands, except per share) | Q3 2023 | Q3 2022 | Nine Months 2023 | Nine Months 2022 | | :--- | :--- | :--- | :--- | :--- | | **Net Sales** | 158,992 | 303,840 | 483,355 | 1,033,731 | | **Gross Profit** | 1,389 | 133,669 | 55,891 | 470,850 | | **Operating (Loss) Income** | (18,137) | 114,077 | (6,725) | 410,371 | | **Net (Loss) Income** | **(22,621)** | **93,451** | **(37,841)** | **332,631** | | **Diluted (Loss) Income per Share** | **(0.09)** | **0.36** | **(0.15)** | **1.28** | Condensed Consolidated Statements of Cash Flows Highlights (Unaudited) | Cash Flow Activity ($ thousands) | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | 67,269 | 274,605 | | **Net cash used in investing activities** | (48,067) | (45,120) | | **Net cash provided by (used in) financing activities** | 18,881 | (176,237) | [Note 2: Revenue from Contracts with Customers](index=11&type=section&id=Note%202%3A%20Revenue%20from%20Contracts%20with%20Customers) Details revenue disaggregation by contract type, showing a significant shift from LTAs and providing future LTA revenue outlook Disaggregation of Revenue ($ thousands) | Revenue Type | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :--- | :--- | :--- | | Graphite Electrodes - LTAs | 212,579 | 683,858 | | Graphite Electrodes - Non-LTAs | 246,726 | 296,954 | | By-products and other | 24,050 | 52,919 | | **Total Revenues** | **483,355** | **1,033,731** | Estimated Future LTA Revenue ($ millions) | Period | Estimated LTA Revenue | | :--- | :--- | | **2023** | $245 - $255 | | **2024** | $100 - $135 | [Note 4: Debt and Liquidity](index=13&type=section&id=Note%204%3A%20Debt%20and%20Liquidity) Outlines changes in debt structure, including new notes issuance and reduced revolving credit facility availability Long-Term Debt Composition ($ thousands) | Debt Instrument | Sep 30, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | 2018 Term Loan Facility | — | 433,708 | | 2020 Senior Secured Notes | 500,000 | 500,000 | | 2023 Senior Secured Notes | 450,000 | — | | Unamortized costs | (25,764) | (12,049) | | **Total Debt** | **924,502** | **921,927** | - In June 2023, the company issued **$450 million** in 9.875% Senior Secured Notes due 2028. The net proceeds were used to repay the outstanding borrowings under the 2018 Term Loan Facility[54](index=54&type=chunk)[60](index=60&type=chunk) - As of September 30, 2023, availability under the 2018 Revolving Credit Facility was **$112.3 million**, a reduction from $327.0 million at year-end 2022, due to operating performance impacting financial covenant calculations[44](index=44&type=chunk) [Note 7: Commitments and Contingencies](index=16&type=section&id=Note%207%3A%20Commitments%20and%20Contingencies) Details significant legal and tax proceedings, including customer arbitrations and Mexican VAT audits - The company is in arbitration with customers, including Aperam and ArcelorMittal, who are challenging their LTA commitments. As of June 2023, the claimants are seeking approximately **$188.2 million** in damages[66](index=66&type=chunk)[67](index=67&type=chunk) - The Mexican Tax Authority (MTA) has opened two audits of GrafTech Commercial Mexico's VAT filings for periods in 2019 and 2018, with potential assessments totaling approximately **$26.5 million** and **$51.0 million**, respectively. The company believes its tax position is correct and is defending it[73](index=73&type=chunk)[74](index=74&type=chunk)[75](index=75&type=chunk) - The company entered into a Tax Receivable Agreement with its pre-IPO stockholder, Brookfield. As of September 30, 2023, the total liability under this agreement was **$10.9 million**[70](index=70&type=chunk)[72](index=72&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the significant Q3 2023 performance downturn, weak outlook, and liquidity preservation measures Q3 2023 vs Q3 2022 Performance | Metric | Q3 2023 | Q3 2022 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | **Net Sales ($M)** | $159.0 | $303.8 | ($144.8) | (48)% | | **Gross Profit ($M)** | $1.4 | $133.7 | ($132.3) | (99)% | | **Net (Loss) Income ($M)** | ($22.6) | $93.5 | ($116.1) | (124)% | | **Sales Volume (kMT)** | 24.2 | 35.7 | (11.5) | (32)% | | **Production Volume (kMT)** | 22.7 | 37.7 | (15.0) | (40)% | - The near-term outlook is weak, with sales volume in Q4 2023 expected to decline modestly compared to Q3 2023, reflecting persistent softness in the commercial environment and constrained steel industry production[120](index=120&type=chunk) - To maintain liquidity, the company suspended its quarterly cash dividend of **$0.01 per share**, effective August 2, 2023[179](index=179&type=chunk) - Cash cost of goods sold per MT increased to **$5,863** in Q3 2023 from **$4,290** in Q3 2022, driven by the recognition of excess fixed costs over a smaller production base and the impact of higher raw material costs from 2022[139](index=139&type=chunk)[214](index=214&type=chunk) [Results of Operations](index=30&type=section&id=Results%20of%20Operations) Analyzes Q3 2023 and nine-month operational results, highlighting significant declines in sales and profitability - Q3 2023 net sales decreased by **$144.8 million (48%) YoY**, reflecting soft demand, a shift from LTA to non-LTA volume, and lower average prices for both[138](index=138&type=chunk) - Q3 2023 cost of goods sold included approximately **$23.3 million** of excess fixed manufacturing costs that were expensed immediately due to reduced production levels[139](index=139&type=chunk) - For the first nine months of 2023, net sales decreased by **$550.4 million (53%) YoY**, primarily due to lower sales volume from the 2022 Monterrey suspension and ongoing soft demand[146](index=146&type=chunk) - The effective tax rate for the first nine months of 2023 was **22.2%**, compared to **14.5%** for the same period in 2022, with the change driven by the shift from pre-tax income to a pre-tax loss and a different jurisdictional mix of earnings[150](index=150&type=chunk)[151](index=151&type=chunk) [Liquidity and Capital Resources](index=32&type=section&id=Liquidity%20and%20Capital%20Resources) Assesses the company's liquidity position, cash flow from operations, and capital expenditure outlook - Total liquidity was **$285.1 million** as of September 30, 2023, consisting of **$172.8 million** in cash and **$112.3 million** in revolver availability[156](index=156&type=chunk) - Net cash provided by operating activities decreased to **$67.3 million** in the first nine months of 2023 from **$274.6 million** in the same period of 2022, primarily due to a $370.5 million reduction in net income[186](index=186&type=chunk) - In Q2 2023, the company issued **$450 million** of 2023 Senior Secured Notes to repay its 2018 Term Loan Facility, extending its debt maturity profile to 2028[160](index=160&type=chunk) - The company expects full-year 2023 capital expenditures to be in the range of **$55.0 million to $60.0 million**[184](index=184&type=chunk) [Non-GAAP Financial Measures](index=37&type=section&id=Non-GAAP%20Financial%20Measures) Presents and reconciles non-GAAP financial measures, including Adjusted EBITDA and Adjusted Free Cash Flow Reconciliation of Net (Loss) Income to Adjusted EBITDA ($ thousands) | Metric | Q3 2023 | Q3 2022 | Nine Months 2023 | Nine Months 2022 | | :--- | :--- | :--- | :--- | :--- | | **Net (Loss) Income** | (22,621) | 93,451 | (37,841) | 332,631 | | **EBITDA** | (1,336) | 127,937 | 35,067 | 453,437 | | **Adjusted EBITDA** | **919** | **128,567** | **42,056** | **456,363** | Reconciliation to Adjusted Free Cash Flow ($ thousands) | Metric | Nine Months 2023 | Nine Months 2022 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | 67,269 | 274,605 | | **Free cash flow** | 18,982 | 229,324 | | **Adjusted free cash flow** | **46,435** | **233,529** | [Quantitative and Qualitative Disclosures About Market Risk](index=41&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Discusses market risks from currency exchange rates and energy prices, noting elimination of interest rate risk - Primary market risks include changes in interest rates, currency exchange rates, and energy commodity prices[217](index=217&type=chunk) - As of September 30, 2023, the company no longer had any variable-rate debt outstanding, thus eliminating its exposure to interest rate risk[220](index=220&type=chunk) - A sensitivity analysis indicates that a **10%** appreciation or depreciation of the U.S. dollar would change the fair value of the foreign currency hedge portfolio by approximately **$2.9 million**[226](index=226&type=chunk) [Controls and Procedures](index=42&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective with no material changes in Q3 2023 - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of September 30, 2023[230](index=230&type=chunk) - There were no material changes to the company's internal control over financial reporting during the third quarter of 2023[231](index=231&type=chunk) [PART II. OTHER INFORMATION](index=43&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section covers legal proceedings, updated risk factors, and other required disclosures [Legal Proceedings](index=43&type=section&id=Item%201.%20Legal%20Proceedings) Details significant ongoing legal matters, including customer arbitrations and Mexican tax assessments - The company is in arbitration with customers, including Aperam and ArcelorMittal, over LTA disputes. The claimants are seeking approximately **$188.2 million** in damages as of June 2023[234](index=234&type=chunk) - Legal proceedings related to the temporary suspension of the Monterrey, Mexico facility in 2022 are ongoing, even though operations have resumed[235](index=235&type=chunk)[236](index=236&type=chunk)[237](index=237&type=chunk) - The company is contesting two VAT assessments from the Mexican Tax Authority (MTA) for periods in 2019 and 2018, amounting to potential liabilities of approximately **$26.5 million** and **$51.0 million**, respectively[239](index=239&type=chunk)[241](index=241&type=chunk) [Risk Factors](index=45&type=section&id=Item%201A.%20Risk%20Factors) Updates risk factors, emphasizing significant risks from indebtedness and restrictive debt covenants - The company's substantial indebtedness (**$924.5 million** as of Sep 30, 2023) could limit its financial and operating activities and its ability to fund future needs[245](index=245&type=chunk)[246](index=246&type=chunk) - Operating performance has resulted in a reduction of the availability under the 2018 Revolving Credit Facility, which stood at **$112.3 million** as of September 30, 2023[245](index=245&type=chunk)[246](index=246&type=chunk) - Debt agreements contain restrictive covenants that limit the company's ability to, among other things, incur more debt, sell assets, pay dividends, and make acquisitions. Failure to comply could result in default[250](index=250&type=chunk)[251](index=251&type=chunk)[253](index=253&type=chunk) [Other Information](index=46&type=section&id=Item%205.%20Other%20Information) Confirms no director or officer trading plans were adopted, modified, or terminated during Q3 2023 - No director or officer trading plans under Rule 10b5-1 or other arrangements were adopted, modified, or terminated during Q3 2023[255](index=255&type=chunk) [Exhibits](index=47&type=section&id=Item%206.%20Exhibits) Lists all exhibits filed with the Form 10-Q, including CEO/CFO certifications and XBRL financial data - The filing includes certifications from the CEO and CFO as required by Sarbanes-Oxley Act Rules 13a-14(a) and Section 906[257](index=257&type=chunk) - Financial data is provided in Inline XBRL format as per SEC requirements[257](index=257&type=chunk) ```

GrafTech International Ltd. (NYSE:EAF) Q2 2023 Earnings Conference Call August 4, 2023 10:00 AM ET Company Participants Mike Dillon - Vice President, Investor Relations Marcel Kessler - Chief Executive Officer Jeremy Halford - Chief Operating Officer Tim Flanagan - Chief Financial Officer Conference Call Participants Katja Jancic - BMO Capital Markets Arun Viswanathan - RBC Capital Markets Bill Peterson - JPMorgan Curt Woodworth - Credit Suisse Alex Hacking - Citi Abe Landa - Bank of America Operator Good d ...