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 ...

PART I [Presentation of Financial, Market and Industry Data](index=4&type=section&id=Presentation%20of%20Financial%2C%20Market%20and%20Industry%20Data) Financial information is presented on a consolidated basis in U.S. dollars, with market and industry data from third-party sources whose accuracy is not guaranteed - Financial information is presented on a consolidated basis in **U.S. dollars**[10](index=10&type=chunk) - Market and industry data are obtained from third-party sources, but their accuracy or completeness is **not guaranteed**[11](index=11&type=chunk) [Cautionary Note Regarding Forward-Looking Statements](index=4&type=section&id=Cautionary%20Note%20Regarding%20Forward-Looking%20Statements) The report contains forward-looking statements on financial projections and operations, subject to risks like industry cycles and raw material supply, where actual results may differ materially - The report contains **forward-looking statements** regarding financial projections, future operations, and economic performance[12](index=12&type=chunk) - **Key risks** include dependence on the global steel industry, cyclical business nature, economic conditions, graphite electrode overcapacity, raw material supply disruptions, manufacturing hazards, and international operational risks[13](index=13&type=chunk)[17](index=17&type=chunk) - Actual results may **vary materially** from forward-looking statements due to various risks and uncertainties[15](index=15&type=chunk) [Item 1. Business](index=6&type=section&id=Item%201.%20Business) GrafTech is a leading vertically integrated manufacturer of high-quality graphite electrodes for EAF steel, serving global producers with reduced 2024 capacity, emphasizing R&D, IP, and human capital [Introduction](index=6&type=section&id=Introduction) GrafTech is a leading vertically integrated manufacturer of high-quality graphite electrodes, reducing 2024 production capacity due to market softness - GrafTech International Ltd. is a **leading manufacturer** of **high-quality graphite electrode products** essential to **EAF steel production**[19](index=19&type=chunk) - The company is substantially **vertically integrated** into **petroleum needle coke**, a key raw material, providing **competitive advantages** in product quality and cost[19](index=19&type=chunk) Stated Production Capacity | Year | Capacity (thousand MT) | | :--- | :--- | | As of Dec 31, 2023 | 202 | | Beginning 2024 | 178 | - The **reduction in production capacity** for 2024 is a result of a **cost rationalization and footprint optimization plan**, including an **indefinite suspension** of production activities at the St. Marys facility, in response to **persistent softness** in the commercial environment[21](index=21&type=chunk) [Products and Raw Materials](index=6&type=section&id=Products%20and%20Raw%20Materials) Graphite electrodes are essential for EAF steel, with UHP segment growth and increasing petroleum needle coke demand driven by EVs - Graphite electrodes are essential industrial consumables for EAF steel production, representing less than **5% of total steel production cost**[23](index=23&type=chunk) - The company primarily competes in the **Ultra-High Power (UHP) segment**, which requires extensive proprietary manufacturing processes and high-quality needle coke[24](index=24&type=chunk)[30](index=30&type=chunk) - EAF steelmaking is more energy-efficient and environmentally advantaged, producing **75% fewer carbon dioxide emissions** compared to BOF steelmaking[33](index=33&type=chunk) - Global (excluding China) UHP graphite electrode demand is estimated to grow at a compound annual growth rate of approximately **3% to 4% through 2028**[35](index=35&type=chunk) - Petroleum needle coke is a **key raw material** for graphite electrodes and synthetic graphite used in lithium-ion batteries for **electric vehicles (EVs)**[36](index=36&type=chunk) - GrafTech's **Seadrift facility** provides the majority of its petroleum needle coke requirements, offering **superior quality** for graphite electrode production[38](index=38&type=chunk) - Global (excluding China) petroleum needle coke capacity was approximately **750 thousand MT** at the end of 2023, with Seadrift representing nearly **one-fifth (140 thousand MT)**[40](index=40&type=chunk) - Global needle coke demand for EV applications is expected to increase at a **20% or more compound annual growth rate through 2028**, potentially leading to regional supply-demand imbalances[46](index=46&type=chunk) [Contracts and Customers](index=9&type=section&id=Contracts%20and%20Customers) GrafTech sells products through diverse agreements, with a recent shift from multi-year LTAs towards short-term and spot sales - GrafTech sells products under **short-term purchase agreements**, **multi-year purchase agreements** (including take-or-pay LTAs), and **spot sales**[49](index=49&type=chunk) LTA Sales as Percentage of Net Sales | Year | % of Net Sales | | :--- | :--- | | 2023 | 41% | | 2022 | 68% | | 2021 | 77% | - As LTAs near their terms, the business mix has **shifted towards short-term purchase agreements and spot orders**, and multi-year agreements are **not anticipated to make up the majority** of the portfolio moving forward[53](index=53&type=chunk) [2023 Revenue and Production By Region](index=9&type=section&id=2023%20Revenue%20and%20Production%20By%20Region) EAF steel producers purchased most graphite electrodes, with a significant portion of net sales generated outside the United States - Approximately **89% of graphite electrodes** were purchased by EAF steel producers in 2023[55](index=55&type=chunk) Sales Outside the United States as Percentage of Net Sales | Year | % of Net Sales | | :--- | :--- | | 2023 | 67% | | 2022 | 73% | | 2021 | 79% | - In 2023, Europe, the Middle East, Africa (EMEA) and the Americas collectively generated **89% of net sales**[56](index=56&type=chunk) [Sales and Customer Service](index=10&type=section&id=Sales%20and%20Customer%20Service) The company differentiates through product quality, reliability, and technical service, offering the ArchiTech Furnace Productivity System for EAF operators - The company differentiates its graphite electrodes based on price, **product quality and performance**, **delivery reliability**, and **customer technical service**[58](index=58&type=chunk) - GrafTech offers the **ArchiTech Furnace Productivity System 6.0**, an advanced support and technical service platform for EAF operators, enabling **real-time diagnostics and troubleshooting**[61](index=61&type=chunk) [Distribution](index=10&type=section&id=Distribution) The company uses demand and inventory management to meet delivery needs, storing finished products at global facilities and warehouses - The company employs **demand and inventory management techniques** to meet customer delivery requirements and maximize production capacity utilization[63](index=63&type=chunk) - Finished products are stored at **manufacturing facilities and local warehouses globally**[64](index=64&type=chunk) [Research and Development](index=11&type=section&id=Research%20and%20Development) GrafTech leverages over 135 years of R&D experience to improve graphite electrode quality, petroleum needle coke production, and explore adjacent markets - GrafTech has over **135 years of experience** in R&D of graphite- and carbon-based solutions[66](index=66&type=chunk) - R&D focuses on **improving graphite electrode quality** and **petroleum needle coke production**, and evaluating technology in adjacent markets[66](index=66&type=chunk) [Intellectual Property](index=11&type=section&id=Intellectual%20Property) The company protects its intellectual property, including approximately 100 patents and the UCAR trademark, through various legal means and confidentiality agreements - The company's intellectual property portfolio includes approximately **100 U.S. and foreign patents** and pending patent applications[68](index=68&type=chunk) - Protection relies on **patent, trademark, copyright, and trade secret laws**, as well as confidentiality agreements[70](index=70&type=chunk) - The **UCAR trademark** is licensed exclusively to GrafTech on a worldwide, royalty-free basis until **January 2035**[69](index=69&type=chunk) [Insurance](index=11&type=section&id=Insurance) GrafTech maintains insurance for civil liabilities, property damage, business interruptions, and environmental matters, though losses may exceed coverage limits - GrafTech maintains insurance for **civil liabilities, property damage, business interruptions, and environmental matters**[72](index=72&type=chunk) - There is **no assurance that losses will not be incurred** beyond the limits or outside the coverage of the insurance policies[72](index=72&type=chunk) [Regulatory Matters](index=11&type=section&id=Regulatory%20Matters) As a global company, GrafTech is subject to various environmental, data protection, and anti-corruption regulations, operating in material compliance with established accruals for liabilities - As a global company, GrafTech is subject to **various federal, state, local, and foreign environmental, data protection (e.g., GDPR), anti-corruption, import/export, and safety regulations**[74](index=74&type=chunk) - The company believes it operates in **material compliance**, and compliance costs and environmental liabilities are **not expected to materially affect its financial position** over the next several years[74](index=74&type=chunk) - Accruals for environmental liabilities are established when a liability is **probable and can be reasonably estimated**[74](index=74&type=chunk) [Human Capital Resources](index=12&type=section&id=Human%20Capital%20Resources) GrafTech manages human capital with 1,249 employees, focusing on health, safety, diversity, competitive compensation, and continuous development - As of December 31, 2023, GrafTech had **1,249 employees**, with approximately **35% covered by collective bargaining agreements**[77](index=77&type=chunk)[78](index=78&type=chunk) - The company reported **no material work stoppages or strikes** by employees during the past year[78](index=78&type=chunk) Total Recordable Incident Rate | Year | Rate per 200,000 work hours | | :--- | :--- | | 2023 | 0.61 | | 2022 | 0.94 | - Diversity and inclusion are foundational to the company's culture, with **40% of senior leadership** and **14% of Board members being female** as of December 31, 2023[80](index=80&type=chunk)[81](index=81&type=chunk) - GrafTech offers **competitive compensation and benefits**, including performance bonuses and tuition reimbursement, to attract and retain talent[82](index=82&type=chunk)[83](index=83&type=chunk) - The company conducts employee engagement surveys every other year, with the last one in October 2022 (**56% participation**) and the next expected in 2024[84](index=84&type=chunk) - Employee **training and development** are supported through detailed job profiles, a performance management system, and regular performance reviews[85](index=85&type=chunk)[86](index=86&type=chunk) [Available Information](index=13&type=section&id=Available%20Information) GrafTech makes its annual, quarterly, and current reports freely available on its corporate website - GrafTech makes its **annual, quarterly, and current reports** (Forms 10-K, 10-Q, 8-K) available **free of charge on its website**[88](index=88&type=chunk) [Item 1A. Risk Factors](index=13&type=section&id=Item%201A.%20Risk%20Factors) GrafTech faces significant risks from the cyclical steel industry, volatile pricing, overcapacity, supply disruptions, operational hazards, geopolitical events, substantial indebtedness, and legal/regulatory challenges - The company is **highly dependent on the global steel industry**, particularly the EAF steel industry, which is **cyclical** and can lead to periods of reduced profitability or net losses[90](index=90&type=chunk) - Graphite electrode pricing is **cyclical** and has **declined from 2018 highs**, with spot prices **decreasing in 2023** due to a softer commercial environment[93](index=93&type=chunk)[95](index=95&type=chunk) - Global graphite electrode **overcapacity** and **intense competition** could **adversely affect prices, sales, margins, and profitability**[96](index=96&type=chunk)[97](index=97&type=chunk) - **Dependence on petroleum needle coke** and other raw materials, along with reliance on a **single facility (Monterrey, Mexico)** for connecting pins, poses risks of **supply disruptions or increased costs**[98](index=98&type=chunk)[99](index=99&type=chunk)[101](index=101&type=chunk) - **Substantial international operations** expose the company to **legal, economic, social, and political risks**, including currency fluctuations, tariffs, and trade restrictions[106](index=106&type=chunk) - The company's **indebtedness could limit financial and operating activities**, and **restrictive covenants** in financing agreements could hinder adaptability to market conditions[125](index=125&type=chunk)[129](index=129&type=chunk) - **Stringent health, safety, and environmental laws**, as well as **global data and privacy protection laws**, could result in **substantial compliance costs, sanctions, or material liabilities**[137](index=137&type=chunk)[140](index=140&type=chunk) - **Ongoing arbitrations** with customers regarding non-performance under long-term agreements (LTAs) could have a **material adverse effect** on results[142](index=142&type=chunk) [Item 1B. Unresolved Staff Comments](index=24&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) There are no unresolved staff comments from the SEC - There are **no unresolved staff comments**[149](index=149&type=chunk) [Item 1C. Cybersecurity](index=24&type=section&id=Item%201C.%20Cybersecurity) GrafTech maintains a comprehensive cybersecurity program with Board oversight, integrating risks into enterprise management, and has reported no material incidents to date - GrafTech has an **overarching cybersecurity program** with documented policies, **layered defenses**, third-party penetration tests, and employee training[149](index=149&type=chunk) - The **Board oversees cybersecurity risks**, which are incorporated into the enterprise risk management processes[151](index=151&type=chunk) - As of the filing date, **no material cybersecurity incidents have occurred** that have materially affected the company's business strategy, results of operations, or financial condition[150](index=150&type=chunk) [Item 2. Properties](index=25&type=section&id=Item%202.%20Properties) GrafTech operates global manufacturing facilities for its Industrial Materials segment, including key sites in Mexico, France, Spain, and Texas, with capacity utilization significantly decreasing to 44% in 2023 - GrafTech's principal physical properties serve its **Industrial Materials segment** for manufacturing, sales, and services[153](index=153&type=chunk) Graphite Electrode Manufacturing Facilities Capacity Utilization | Year | Capacity Utilization | | :--- | :--- | | 2023 | 44% | | 2022 | 78% | - Key owned facilities include graphite electrode and pin manufacturing in **Monterrey, Mexico**; graphite electrode manufacturing in **St. Marys, Pennsylvania** (production indefinitely suspended except machining); petroleum needle coke manufacturing (Seadrift) in **Port Lavaca, Texas**; and graphite electrode manufacturing in **Calais, France** and **Pamplona, Spain**[154](index=154&type=chunk)[21](index=21&type=chunk) [Item 3. Legal Proceedings](index=25&type=section&id=Item%203.%20Legal%20Proceedings) GrafTech faces multiple legal proceedings, including arbitrations for $188.2 million in damages, environmental permit issues in Mexico, wage litigation in Brazil, and a stockholder class action, which it intends to vigorously defend - GrafTech is involved in arbitrations with customers (e.g., Aperam, ArcelorMittal) who have failed to perform under LTAs, with claimants seeking approximately **$188.2 million in damages**[156](index=156&type=chunk) - The Monterrey, Mexico facility experienced a **temporary suspension** in September 2022 due to **environmental permit issues**, which was lifted in November 2022, but an **administrative proceeding is ongoing**[157](index=157&type=chunk)[158](index=158&type=chunk) - The company is involved in **pending wage litigation in Brazil**, where employees seek additional amounts under collective bargaining agreements; the **potential loss is currently unassessable**[159](index=159&type=chunk) - Mexican Tax Authority (MTA) audits for 2019 and 2018 VAT filings allege improper use of VAT exemption rules; the 2019 assessment of **~$28.8 million** was annulled by court in January 2024 (MTA appealed), and the 2018 proposed assessment of **~$51.0 million** is being challenged[160](index=160&type=chunk)[161](index=161&type=chunk)[162](index=162&type=chunk)[163](index=163&type=chunk) - A **stockholder class action** was filed on January 25, 2024, alleging material misrepresentations related to the Monterrey facility suspension, seeking **unquantified compensatory damages**[164](index=164&type=chunk) [Item 4. Mine Safety Disclosures](index=27&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Mine safety disclosures are not applicable to GrafTech International Ltd - Mine safety disclosures are **not applicable**[165](index=165&type=chunk) [Information About Our Executive Officers](index=27&type=section&id=Information%20About%20Our%20Executive%20Officers) This section provides biographical information for GrafTech's current executive officers, including the Interim CEO, Interim CFO, COO, Chief Legal Officer, and SVP Commercial - Timothy K. Flanagan serves as **Interim Chief Executive Officer and President**, appointed in November 2023, previously Chief Financial Officer[168](index=168&type=chunk) - Catherine Hedoux-Delgado serves as **Interim Chief Financial Officer and Treasurer**, appointed in November 2023, previously Vice President, Corporate Controller[169](index=169&type=chunk) - Jeremy S. Halford is the **Executive Vice President, Chief Operating Officer**, appointed in October 2021[170](index=170&type=chunk) - Gina K. Gunning is the **Chief Legal Officer and Corporate Secretary**, joining in July 2018[171](index=171&type=chunk) - Iñigo Perez Ortiz is the **Senior Vice President, Commercial and CTS**, joining in February 2020[172](index=172&type=chunk) PART II [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=29&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) GrafTech's common stock trades on the NYSE, with its quarterly cash dividend suspended and $99.0 million remaining in its stock repurchase program, which saw no Q4 2023 activity - GrafTech's common stock is listed on the **NYSE** under the trading symbol **'EAF'**[173](index=173&type=chunk) - As of December 31, 2023, there were **seven registered holders** of common stock[173](index=173&type=chunk) - The quarterly cash dividend of **$0.01 per common share** was **suspended on August 2, 2023**[174](index=174&type=chunk) - Approximately **$99.0 million** of the total **$250.0 million** authorized stock repurchase program remained available as of December 31, 2023, with **no repurchase activity during Q4 2023**[177](index=177&type=chunk) [Item 6. [Reserved]](index=29&type=section&id=Item%206.%20%5BReserved%5D) This item is intentionally reserved and contains no information - This item is **reserved**[178](index=178&type=chunk) [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=30&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) GrafTech experienced a significant 2023 downturn with decreased sales and production volumes, resulting in a $(255.3) million net loss and a $171.1 million goodwill impairment, despite maintaining $289.3 million liquidity and implementing cost savings [Operational and Commercial Update](index=30&type=section&id=Operational%20and%20Commercial%20Update) Sales and production volumes significantly decreased in 2023 due to market softness and proactive production cuts, impacting non-LTA graphite electrode prices Sales and Production Volume (2023 vs. 2022) | Metric | 2023 (thousand MT) | 2022 (thousand MT) | Change YoY | | :--- | :--- | :--- | :--- | | Sales volume | 92 | 149 | -39% | | Production volume | 88 | 157 | -44% | Weighted-Average Realized Price for Non-LTA Graphite Electrodes | Year | Price per MT | | :--- | :--- | | 2023 | ~$5,400 | | 2022 | ~$6,000 | - Production volume was **proactively reduced** to align with evolving demand outlook and **manage working capital levels**[182](index=182&type=chunk) [Capital Structure and Liquidity](index=30&type=section&id=Capital%20Structure%20and%20Liquidity) As of December 31, 2023, GrafTech maintained **$289.3 million** in liquidity, with total debt at approximately **$950.1 million** - As of December 31, 2023, liquidity was **$289.3 million**, consisting of **$112.4 million** availability under the 2018 Revolving Credit Facility and **$176.9 million** in cash and cash equivalents[183](index=183&type=chunk) - Total debt as of December 31, 2023, was approximately **$950.1 million**[183](index=183&type=chunk) [Outlook](index=30&type=section&id=Outlook) Near-term demand for graphite electrodes is expected to remain weak in 2024, but cost rationalization and long-term growth drivers from EAF steel decarbonization and EV market are positive - Near-term demand for graphite electrodes is expected to **remain weak in 2024** due to global economic uncertainty, but a **modest year-over-year improvement in sales volume** is anticipated[184](index=184&type=chunk) - The company announced a **cost rationalization and footprint optimization plan**, including **indefinitely suspending production** at its St. Marys facility and idling other assets[186](index=186&type=chunk)[187](index=187&type=chunk) - These initiatives are expected to result in annualized cost savings of approximately **$25.0 million**, with **$15.0 million** in cost of goods sold and the remainder in selling and administrative expenses[188](index=188&type=chunk) - Stated production capacity will be reduced by **12% to approximately 178 thousand MT** beginning in 2024[190](index=190&type=chunk) - Anticipated capital expenditures for 2024 are in the range of **$35.0 million to $40.0 million**, down from **$54.0 million in 2023**[191](index=191&type=chunk) - Longer term, the company is confident in **demand growth for graphite electrodes** due to **EAF steel decarbonization** and for petroleum needle coke from the **growing EV market**[192](index=192&type=chunk) Estimated LTA Shipments and Revenue for 2024 | Metric | 2024 (Estimated) | | :--- | :--- | | LTA volume (thousands of MT) | 13-16 | | LTA revenue (millions) | $100-$135 | [Key metrics used by management to measure performance](index=31&type=section&id=Key%20metrics%20used%20by%20management%20to%20measure%20performance) GrafTech utilizes both GAAP and non-GAAP financial measures, alongside operating metrics, to assess performance and analyze business trends - GrafTech uses both **GAAP and non-GAAP financial measures** (EBITDA, adjusted EBITDA, adjusted net income/loss, adjusted EPS, free cash flow, adjusted free cash flow, cash cost of goods sold per MT) and **operating metrics** (sales volume, production volume, production capacity, capacity utilization) to analyze performance[194](index=194&type=chunk)[204](index=204&type=chunk)[208](index=208&type=chunk)[209](index=209&type=chunk) Key Financial Measures (2023 vs. 2022) | Metric | 2023 (thousands) | 2022 (thousands) | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Net sales | $620,500 | $1,281,250 | $(660,750) | -52% | | Net (loss) income | $(255,250) | $382,962 | $(638,212) | -167% | | (Loss) earnings per share | $(0.99) | $1.48 | $(2.47) | -167% | | Adjusted EBITDA | $20,484 | $536,464 | $(515,980) | -96% | Key Operating Measures (2023 vs. 2022) | Metric | 2023 | 2022 | Change | | :--- | :--- | :--- | :--- | | Sales volume (MT) | 91.6 thousand | 149.1 thousand | -39% | | Production volume (MT) | 88.1 thousand | 157.1 thousand | -44% | | Total capacity utilization | 38% | 68% | -30 pp | | Capacity utilization excluding St. Marys | 44% | 78% | -34 pp | Cash Cost of Goods Sold per MT | Year | Cost per MT | | :--- | :--- | | 2023 | $5,537 | | 2022 | $4,266 | [Results of Operations](index=37&type=section&id=Results%20of%20Operations) Net sales decreased by **52%** in 2023, leading to an operating loss of **$(214.4) million** and a net loss of **$(255.3) million**, primarily due to lower sales volume and a **$171.1 million** goodwill impairment - Net sales decreased by **$660.8 million (52%)** in 2023 compared to 2022, primarily due to lower sales volume, the residual impact of the Monterrey facility suspension, and a shift to non-LTA volume with lower prices[226](index=226&type=chunk) - Cost of goods sold decreased by **$154.5 million (21%)** but increased on a per MT basis due to higher-priced inventory and **$62.4 million** in fixed manufacturing costs expensed (vs. **$16.0 million in 2022**) due to reduced production levels[227](index=227&type=chunk)[228](index=228&type=chunk) - A **$12.4 million** Lower of Cost or Market (LCM) inventory valuation adjustment was recorded in 2023[229](index=229&type=chunk) - Operating (loss) income shifted from **$474.3 million income in 2022 to $(214.4) million loss in 2023**, largely due to a **$171.1 million goodwill impairment charge**[226](index=226&type=chunk)[230](index=230&type=chunk) - Interest expense increased by **$21.5 million (59%)** in 2023, driven by higher interest on the 2023 Senior Secured Notes and a **$6.4 million** reduction in net gains from interest rate swaps[232](index=232&type=chunk) - Net (loss) income was **$(255.3) million in 2023**, a **167% decrease** from **$383.0 million in 2022**[226](index=226&type=chunk) [Effects of Changes in Currency Exchange Rates](index=38&type=section&id=Effects%20of%20Changes%20in%20Currency%20Exchange%20Rates) Fluctuations in foreign currency exchange rates impact both net sales and cost of goods sold - **Fluctuations in foreign currency exchange rates** impact net sales and cost of goods sold[237](index=237&type=chunk)[238](index=238&type=chunk) Impact of Currency Exchange Rate Changes on Net Sales (millions) | Year | Impact | | :--- | :--- | | 2023 | +$1.5 | | 2022 | -$11.7 | | 2021 | +$5.5 | Impact of Currency Exchange Rate Changes on Cost of Goods Sold (millions) | Year | Impact | | :--- | :--- | | 2023 | +$12.4 | | 2022 | -$20.6 | | 2021 | +$10.1 | [Liquidity and Capital Resources](index=39&type=section&id=Liquidity%20and%20Capital%20Resources) GrafTech maintained **$289.3 million** in liquidity, issued **$450 million** in new notes to extend debt maturities, suspended its dividend, and anticipates **$35.0-$40.0 million** in 2024 capital expenditures - As of December 31, 2023, GrafTech had **$289.3 million** in liquidity, comprising **$112.4 million** in 2018 Revolving Credit Facility availability and **$176.9 million** in cash and cash equivalents[243](index=243&type=chunk) - The company issued **$450 million** of 2023 Senior Secured Notes to repay the 2018 Term Loan Facility, extending debt maturities to 2028[245](index=245&type=chunk) - The stock repurchase authorization had **$99.0 million** remaining as of December 31, 2023[247](index=247&type=chunk) - The quarterly cash dividend of **$0.01 per share** was **suspended on August 2, 2023**[248](index=248&type=chunk) Capital Expenditures (millions) | Year | Amount | | :--- | :--- | | 2023 | $54.0 | | 2024 (anticipated) | $35.0 - $40.0 | [Cash flows](index=40&type=section&id=Cash%20flows) Operating cash flow significantly decreased in 2023 due to lower net income, while financing activities shifted to a net cash inflow from new debt issuance Cash Flow from Operating Activities (thousands) | Year | Amount | | :--- | :--- | | 2023 | $76,561 | | 2022 | $324,628 | | 2021 | $443,040 | - The decrease in operating cash flow in 2023 was primarily due to a **$638.2 million decrease in net income**, partially offset by a **$207.1 million increase in cash provided by working capital** (mainly from reduced inventories)[255](index=255&type=chunk)[256](index=256&type=chunk) Net Cash Used in Investing Activities (thousands) | Year | Amount | | :--- | :--- | | 2023 | $(53,820) | | 2022 | $(71,970) | | 2021 | $(57,860) | Net Cash Provided by (Used in) Financing Activities (thousands) | Year | Amount | | :--- | :--- | | 2023 | $18,713 | | 2022 | $(176,267) | | 2021 | $(471,792) | - The shift in financing cash flow in 2023 was primarily due to the issuance of **$450.0 million in 2023 Senior Secured Notes** and increased cash from interest rate swap settlements, partially offset by a **$323.7 million increase in cash used to repay the 2018 Term Loan Facility**[258](index=258&type=chunk) [Financing transactions](index=41&type=section&id=Financing%20transactions) GrafTech's financing includes a **$330 million** revolving credit facility, **$500.0 million** in 2020 Senior Secured Notes, and **$450.0 million** in 2023 Senior Secured Notes, with all debt covenants in compliance - The 2018 Revolving Credit Facility has a **$330 million commitment**, matures on **May 31, 2027**, and had **$112.4 million** available for borrowing as of December 31, 2023[259](index=259&type=chunk) - The 2020 Senior Secured Notes have an aggregate principal amount of **$500.0 million**, bear interest at **4.625% per annum**, and mature on **December 15, 2028**[265](index=265&type=chunk)[267](index=267&type=chunk) - The 2023 Senior Secured Notes have an aggregate principal amount of **$450.0 million**, bear interest at **9.875% per annum**, and mature on **December 15, 2028**; proceeds were used to repay the 2018 Term Loan Facility[270](index=270&type=chunk)[273](index=273&type=chunk) - All debt instruments contain restrictive covenants, and GrafTech was in **compliance with all debt covenants** as of December 31, 2023[264](index=264&type=chunk)[269](index=269&type=chunk)[275](index=275&type=chunk) [Material Cash Requirements](index=43&type=section&id=Material%20Cash%20Requirements) Total contractual and other obligations amounted to **$1.32 billion** as of December 31, 2023, with the majority of long-term debt due in 2028 Total Contractual and Other Obligations (Dec 31, 2023) | Category | Total (thousands) | | :--- | :--- | | Long-term debt | $950,139 | | Interest on long-term debt | $334,999 | | Pension plan contributions | $5,386 | | Committed purchase obligations | $21,000 | | Related party Tax Receivable Agreement | $11,154 | | **Total contractual and other obligations** | **$1,322,678** | - The majority of long-term debt (**$950.0 million**) is due in 2028[276](index=276&type=chunk) [Costs Relating to Protection of the Environment](index=44&type=section&id=Costs%20Relating%20to%20Protection%20of%20the%20Environment) Environmental expenses were **$12.1 million** in 2023, with capital expenditures for environmental protection at **$7.6 million** Environmental Expenses (thousands) | Year | Amount | | :--- | :--- | | 2023 | $12,085 | | 2022 | $22,395 | | 2021 | $16,914 | Capital Expenditures Related to Environmental Protection (thousands) | Year | Amount | | :--- | :--- | | 2023 | $7,588 | | 2022 | $6,012 | | 2021 | $7,014 | [Critical accounting policies](index=44&type=section&id=Critical%20accounting%20policies) Critical accounting policies, including goodwill, employee benefits, and income taxes, require significant management judgment, with a **$171.1 million** goodwill impairment recorded in 2023 - A full goodwill impairment charge of **$171.1 million** was recorded in 2023 for the Graphite Electrode reporting unit, primarily due to reduced sales from softening demand and deteriorating electrode spot pricing[290](index=290&type=chunk) - **No goodwill impairment** resulted from annual tests in 2022 and 2021[291](index=291&type=chunk) - **Critical accounting policies** include goodwill, employee benefit plans, impairments of long-lived assets, income taxes, related-party Tax Receivable Agreement, and revenue recognition, all requiring **significant management judgment and estimates**[280](index=280&type=chunk)[293](index=293&type=chunk)[294](index=294&type=chunk)[295](index=295&type=chunk)[297](index=297&type=chunk)[298](index=298&type=chunk) [Item 7A. Quantitative and Qualitative Disclosures About Market Risk](index=47&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) GrafTech manages market risks from interest rates, currency, and commodity prices using non-trading derivative instruments, with a 10% USD fluctuation impacting the foreign currency hedge portfolio by **$2.0 million** - GrafTech is exposed to **market risks** from changes in **interest rates, currency exchange rates, and energy commodity prices**[302](index=302&type=chunk) - The company uses **derivative financial instruments**, primarily **foreign currency derivatives**, to manage these risks, but **not for trading purposes**[302](index=302&type=chunk)[306](index=306&type=chunk) - As of December 31, 2023, there were **no outstanding interest rate swaps or commodity derivative contracts**[305](index=305&type=chunk)[307](index=307&type=chunk) - Foreign currency derivatives showed a net unrealized pre-tax gain of **$0.1 million** at December 31, 2023, compared to a net unrealized pre-tax loss of **$0.2 million** at December 31, 2022[307](index=307&type=chunk) - A **10% appreciation or depreciation** in the U.S. dollar against foreign currencies would result in a corresponding **$2.0 million decrease or increase**, respectively, in the fair value of the foreign currency hedge portfolio[309](index=309&type=chunk) [Item 8. Financial Statements and Supplementary Data](index=48&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents GrafTech's audited consolidated financial statements, including a **$(255.3) million** net loss in 2023 and a significant decrease in assets due to goodwill impairment, with an unqualified opinion from Deloitte & Touche LLP [Report of Independent Registered Public Accounting Firm](index=49&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) Deloitte & Touche LLP issued an unqualified opinion on GrafTech's financial statements and internal controls, identifying goodwill impairment as a critical audit matter - Deloitte & Touche LLP issued an **unqualified opinion** on GrafTech's consolidated financial statements as of December 31, 2023 and 2022, and on the **effectiveness of internal control over financial reporting** as of December 31, 2023[315](index=315&type=chunk) - The **critical audit matter** identified was the **goodwill impairment evaluation**, which involved challenging judgments regarding forecasts of future revenues, EBITDA, capital expenditures, discount rates, and market multiples for the Graphite Electrode reporting unit[322](index=322&type=chunk)[323](index=323&type=chunk) [Consolidated Balance Sheets](index=51&type=section&id=Consolidated%20Balance%20Sheets) Total assets decreased to **$1.29 billion** in 2023, primarily due to the full impairment of goodwill, leading to a significant reduction in stockholders' equity Consolidated Balance Sheet Highlights (thousands) | Metric | Dec 31, 2023 | Dec 31, 2022 | Change | | :--- | :--- | :--- | :--- | | Total assets | $1,288,889 | $1,604,178 | $(315,289) | | Goodwill | $0 | $171,117 | $(171,117) | | Total current assets | $674,793 | $815,228 | $(140,435) | | Total liabilities | $1,210,642 | $1,266,461 | $(55,819) | | Total stockholders' equity | $78,247 | $337,715 | $(259,468) | - The significant decrease in total assets and stockholders' equity in 2023 was primarily due to the **full impairment of goodwill**[326](index=326&type=chunk) [Consolidated Statements of Operations and Comprehensive (Loss) Income](index=52&type=section&id=Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20%28Loss%29%20Income) GrafTech reported a **$(255.3) million** net loss in 2023, a **167% decline** from 2022, driven by a **52% decrease in net sales** and a **$171.1 million** goodwill impairment Consolidated Statements of Operations Highlights (thousands) | Metric | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | Net sales | $620,500 | $1,281,250 | $1,345,788 | | Gross profit | $36,212 | $554,877 | $644,453 | | Operating (loss) income | $(214,437) | $474,259 | $508,074 | | Net (loss) income | $(255,250) | $382,962 | $388,330 | | Diluted (loss) income per common share | $(0.99) | $1.48 | $1.46 | - The company reported a net loss of **$(255.3) million in 2023**, a significant decline from net income in prior years, primarily driven by a **52% decrease in net sales** and a **$171.1 million goodwill impairment charge**[328](index=328&type=chunk) - A **$12.4 million** Lower of Cost or Market (LCM) inventory valuation adjustment was recorded in 2023[328](index=328&type=chunk) [Consolidated Statements of Cash Flows](index=53&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow decreased significantly in 2023 due to lower net income, while financing activities provided cash from new debt issuance and swap settlements Consolidated Statements of Cash Flows Highlights (thousands) | Activity | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | Net cash provided by operating activities | $76,561 | $324,628 | $443,040 | | Net cash used in investing activities | $(53,820) | $(71,970) | $(57,860) | | Net cash provided by (used in) financing activities | $18,713 | $(176,267) | $(471,792) | | Net change in cash and cash equivalents | $41,454 | $76,391 | $(86,612) | - Cash flow from operating activities **decreased significantly** in 2023 due to **lower net income**, partially offset by **increased cash from working capital**[255](index=255&type=chunk)[256](index=256&type=chunk) - Net cash provided by financing activities in 2023 was primarily driven by the **issuance of 2023 Senior Secured Notes** and **interest rate swap settlements**, partially offset by debt repayments[258](index=258&type=chunk) [Consolidated Statements of Stockholders' Equity (Deficit)](index=55&type=section&id=Consolidated%20Statements%20of%20Stockholders%27%20Equity%20%28Deficit%29) Total stockholders' equity decreased significantly in 2023 to **$78.2 million**, primarily due to the **$(255.3) million** net loss, increasing the accumulated deficit Total Stockholders' Equity (thousands) | Year | Amount | | :--- | :--- | | Dec 31, 2023 | $78,247 | | Dec 31, 2022 | $337,715 | | Dec 31, 2021 | $23,402 | - Total stockholders' equity decreased significantly in 2023, primarily due to the net loss of **$(255.3) million**[335](index=335&type=chunk) - Accumulated deficit increased from **$(401.9) million** at December 31, 2022, to **$(662.4) million** at December 31, 2023[335](index=335&type=chunk) [Notes to the Consolidated Financial Statements](index=56&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) This section provides detailed disclosures and accounting policies supporting the consolidated financial statements, including revenue recognition, debt, equity, and significant estimates [Note 1. Business and Summary of Significant Accounting Policies](index=56&type=section&id=Note%201.%20Business%20and%20Summary%20of%20Significant%20Accounting%20Policies) This note details GrafTech's Industrial Materials segment, revenue recognition, inventory valuation, the **$171.1 million** goodwill impairment in 2023, and the Tax Receivable Agreement - GrafTech's only reportable segment is **Industrial Materials**, comprising graphite electrodes and petroleum needle coke products[338](index=338&type=chunk) - Revenue is recognized when a customer obtains control of promised goods, typically at the delivery point[341](index=341&type=chunk)[345](index=345&type=chunk) - Inventories are stated at the **lower of cost or net realizable value**, with a **$12.4 million** LCM adjustment recorded in 2023[351](index=351&type=chunk) - Goodwill of **$171.1 million**, allocated to the Graphite Electrode reporting unit, was **fully impaired in 2023** due to softening demand and deteriorating spot pricing[382](index=382&type=chunk)[290](index=290&type=chunk) - The company **defers major maintenance costs** and amortizes them over the period until the next scheduled overhaul[386](index=386&type=chunk) - The **Tax Receivable Agreement** provides Brookfield the right to receive **85% of future cash savings** from U.S. federal and Swiss tax utilization of pre-IPO tax assets[370](index=370&type=chunk) [Note 2. Revenue from Contracts with Customers](index=63&type=section&id=Note%202.%20Revenue%20from%20Contracts%20with%20Customers) This note disaggregates revenue by type, showing **$620.5 million** in total revenues for 2023, and details **$31.6 million** in current deferred revenue Disaggregated Revenue by Type (thousands) | Type | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | Graphite Electrodes - LTAs | $253,262 | $870,287 | $1,040,214 | | Graphite Electrodes - Non-LTAs | $338,746 | $351,140 | $258,426 | | By-products and other | $28,492 | $59,823 | $47,148 | | **Total Revenues** | **$620,500** | **$1,281,250** | **$1,345,788** | - Estimated LTA revenue for 2024 is **$100-$135 million**, including expected termination fees[402](index=402&type=chunk) - Current deferred revenue was **$31.6 million** as of December 31, 2023, an increase from **$27.9 million in 2022**[400](index=400&type=chunk) [Note 3. Stock-Based Compensation](index=65&type=section&id=Note%203.%20Stock-Based%20Compensation) This note details stock-based compensation expense of **$4.4 million** in 2023, with **9.5 million** shares available for future issuance under the Omnibus Equity Incentive Plan Stock-Based Compensation Expense (thousands) | Year | Amount | | :--- | :--- | | 2023 | $4,433 | | 2022 | $2,311 | | 2021 | $16,631 | - The 2021 expense included **$14.7 million** due to Change in Control accelerated vesting provisions[405](index=405&type=chunk) - As of December 31, 2023, **9.5 million common stock shares** were available for future issuance under the Omnibus Equity Incentive Plan[404](index=404&type=chunk) - The company grants **stock options, Restricted Stock Units (RSUs), Performance-Based Restricted Stock Units (PSUs), and Deferred Share Units (DSUs)**[404](index=404&type=chunk)[407](index=407&type=chunk)[413](index=413&type=chunk)[416](index=416&type=chunk)[417](index=417&type=chunk)[418](index=418&type=chunk) [Note 4. Segment Reporting](index=68&type=section&id=Note%204.%20Segment%20Reporting) GrafTech's sole reportable segment is Industrial Materials, with **95% of external revenues** from graphite electrodes, and this note provides geographic breakdowns of net sales and long-lived assets - GrafTech's only reportable segment is Industrial Materials, with approximately **95% of external revenues** derived from graphite electrodes[421](index=421&type=chunk) Net Sales by Geographic Region (thousands) | Region | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | United States | $206,263 | $340,793 | $285,710 | | Americas (excluding the United States) | $100,364 | $256,253 | $241,442 | | Asia Pacific | $66,214 | $116,849 | $154,084 | | Europe, Middle East, Africa | $247,659 | $567,355 | $664,552 | | **Total** | **$620,500** | **$1,281,250** | **$1,345,788** | Long-Lived Assets by Geographic Region (thousands, Dec 31, 2023) | Region | Amount | | :--- | :--- | | United States | $196,847 | | Mexico | $117,414 | | France | $93,660 | | Spain | $109,127 | | Brazil | $4,424 | | Other countries | $642 | | **Total** | **$522,114** | [Note 5. Debt and Liquidity](index=69&type=section&id=Note%205.%20Debt%20and%20Liquidity) This note details GrafTech's long-term debt, including **$500.0 million** in 2020 Senior Secured Notes and **$450.0 million** in 2023 Senior Secured Notes, and confirms compliance with all debt covenants Long-Term Debt (thousands) | Debt Instrument | Dec 31, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | 2018 Term Loan Facility | $0 | $433,708 | | 2020 Senior Secured Notes | $500,000 | $500,000 | | 2023 Senior Secured Notes | $450,000 | $0 | | Other debt | $139 | $268 | | Unamortized debt discount and issuance costs | $(24,494) | $(12,049) | | **Total debt** | **$925,645** | **$921,927** | - The 2018 Revolving Credit Facility has **$112.4 million** in availability as of December 31, 2023, and matures on **May 31, 2027**[426](index=426&type=chunk) - The 2020 Senior Secured Notes bear interest at **4.625%** and mature on **December 15, 2028**[433](index=433&type=chunk)[434](index=434&type=chunk) - The 2023 Senior Secured Notes bear interest at **9.875%** and mature on **December 15, 2028**; proceeds were used to repay the 2018 Term Loan Facility[437](index=437&type=chunk)[438](index=438&type=chunk) - GrafTech was in **compliance with all debt covenants** as of December 31, 2023 and 2022[432](index=432&type=chunk)[436](index=436&type=chunk)[442](index=442&type=chunk) Maturities on Long-Term Debt (thousands, Dec 31, 2023) | Year | Amount | | :--- | :--- | | 2024 | $139 | | 2025 | $0 | | 2026 | $0 | | 2027 | $0 | | 2028 | $950,000 | | 2029 and thereafter | $0 | | **Total** | **$950,139** | [Note 6. Goodwill and Other Intangible Assets](index=71&type=section&id=Note%206.%20Goodwill%20and%20Other%20Intangible%20Assets) Goodwill of **$171.1 million** was fully impaired in 2023 due to market conditions, with estimated annual amortization expense for intangible assets around **$8.0 million** in 2024 - Goodwill of **$171.1 million**, allocated entirely to the Graphite Electrode reporting unit, was **fully impaired in 2023** due to reduced sales and deteriorating spot pricing[444](index=444&type=chunk)[452](index=452&type=chunk) - **No goodwill impairment** was recorded in 2022 and 2021[453](index=453&type=chunk) Amortization Expense of Intangible Assets (thousands) | Year | Amount | | :--- | :--- | | 2023 | $9,200 | | 2022 | $10,100 | | 2021 | $10,700 | - Estimated annual amortization expense for the next five years will approximate **$8.0 million in 2024**, **$7.3 million in 2025**, **$6.7 million in 2026**, **$6.1 million in 2027**, and **$5.5 million in 2028**[454](index=454&type=chunk) [Note 7. Interest Expense](index=73&type=section&id=Note%207.%20Interest%20Expense) Total interest expense increased to **$58.1 million** in 2023, primarily due to higher interest on the 2023 Senior Secured Notes and changes in interest rate swap gains Total Interest Expense (thousands) | Year | Amount | | :--- | :--- | | 2023 | $58,087 | | 2022 | $36,568 | | 2021 | $68,760 | - Interest expense **increased in 2023** primarily due to **higher interest on the 2023 Senior Secured Notes** and changes in interest rate swap gains/losses[457](index=457&type=chunk)[459](index=459&type=chunk) - The repayment of the 2018 Term Loan Facility in June 2023 triggered **$1.2 million** of accelerated original issue discount accretion and **$1.9 million** of accelerated debt issuance cost amortization[457](index=457&type=chunk) - Termination of interest rate swap contracts in June 2023 resulted in **$6.9 million realized gains** recorded in interest expense[458](index=458&type=chunk) [Note 8. Fair Value Measurements and Derivative Instruments](index=73&type=section&id=Note%208.%20Fair%20Value%20Measurements%20and%20Derivative%20Instruments) GrafTech uses non-trading foreign currency derivatives to manage market risks, with no outstanding interest rate or commodity derivatives, and the fair value of its debt was **$676.6 million** in 2023 - GrafTech uses **derivative financial instruments**, primarily **foreign currency derivatives**, to manage exposure to changes in currency exchange rates, but **not for trading purposes**[467](index=467&type=chunk)[469](index=469&type=chunk) - As of December 31, 2023, there were **no outstanding interest rate swaps or commodity derivative contracts**[473](index=473&type=chunk)[472](index=472&type=chunk) - Foreign currency derivatives showed a net unrealized pre-tax gain of **$0.1 million** at December 31, 2023, compared to a net unrealized pre-tax loss of **$0.2 million** at December 31, 2022[307](index=307&type=chunk) - The fair value of the company's debt was **$676.6 million** as of December 31, 2023, down from **$843.2 million in 2022**[467](index=467&type=chunk) [Note 9. Supplementary Balance Sheet Detail](index=78&type=section&id=Note%209.%20Supplementary%20Balance%20Sheet%20Detail) This note provides detailed balance sheet information, including **$330.1 million** in inventories, a **$7.7 million** allowance for doubtful accounts, and **$4.6 million** in Supplier Finance Program obligations Inventories (thousands) | Category | Dec 31, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | Raw materials and supplies | $109,084 | $216,761 | | Work in process | $186,473 | $192,821 | | Finished goods | $34,589 | $38,159 | | **Total** | **$330,146** | **$447,741** | - Allowance for doubtful accounts was **$7.7 million** as of December 31, 2023[485](index=485&type=chunk) - Supplier Finance Program (SFP) obligations outstanding were **$4.6 million** as of December 31, 2023[488](index=488&type=chunk) [Note 10. Leases](index=80&type=section&id=Note%2010.%20Leases) Total lease cost was **$5.8 million** in 2023, with weighted-average remaining lease terms of **2.4 years** for operating leases and **4.1 years** for finance leases Total Lease Cost (thousands) | Year | Amount | | :--- | :--- | | 2023 | $5,814 | | 2022 | $6,360 | | 2021 | $6,260 | - The weighted-average remaining lease term for operating leases was **2.4 years** and for finance leases was **4.1 years** as of December 31, 2023[491](index=491&type=chunk) [Note 11. Retirement Plans and Post-Employment Benefits](index=82&type=section&id=Note%2011.%20Retirement%20Plans%20and%20Post-Employment%20Benefits) This note details pension plan costs, an underfunded status of **$(26.4) million**, and an estimated **$14.3 million** liability for unfunded post-employment benefits Net Periodic Benefit (Credit) Cost for Pension Plans (thousands) | Plan Type | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | U.S. | $(661) | $491 | $(2,351) | | Foreign | $5,173 | $(6,994) | $(412) | - The total underfunded status for all defined benefit pension plans was **$(26.4) million** as of December 31, 2023[501](index=501&type=chunk) - The estimated liability for unfunded post-employment benefit plans was **$14.3 million** as of December 31, 2023[516](index=516&type=chunk) - Expected employer contributions to pension plans in 2024 are **$4.7 million** for U.S. plans and **$0.7 million** for foreign plans[514](index=514&type=chunk) [Note 12. Commitments and Contingencies](index=87&type=section&id=Note%2012.%20Commitments%20and%20Contingencies) GrafTech faces arbitrations seeking **$188.2 million** in damages, ongoing Mexican VAT assessments, a **$77 thousand** product warranty liability, and an **$11.1 million** Tax Receivable Agreement liability - GrafTech is involved in arbitrations with customers seeking approximately **$188.2 million in damages** for alleged non-performance under LTAs[520](index=520&type=chunk) - The 2019 Mexico VAT assessment of **~$28.8 million** was annulled by court in January 2024, but the MTA filed an appeal; a 2018 proposed assessment of **~$51.0 million** is also being challenged[529](index=529&type=chunk)[530](index=530&type=chunk)[531](index=531&type=chunk) - The product warranty liability was **$77 thousand** as of December 31, 2023[522](index=522&type=chunk) - The total Tax Receivable Agreement liability was **$11.1 million** as of December 31, 2023[524](index=524&type=chunk) [Note 13. Income Taxes](index=90&type=section&id=Note%2013.%20Income%20Taxes) The company recorded a **$(18.5) million** tax benefit in 2023, with an effective tax rate of **6.8%**, and maintains a **$9.0 million** valuation allowance against deferred tax assets (Benefit) Provision for Income Taxes (thousands) | Year | Amount | | :--- | :--- | | 2023 | $(18,514) | | 2022 | $69,356 | | 2021 | $68,076 | - The company recorded a tax benefit of **$(18.5) million in 2023**, compared to an expense in 2022, primarily due to a shift from pre-tax profit to loss and a non-tax deductible goodwill impairment charge[534](index=534&type=chunk) - The effective income tax rate was **6.8% in 2023**, down from **15.3% in 2022**[233](index=233&type=chunk) - A valuation allowance of **$9.0 million** was maintained against certain deferred tax assets as of December 31, 2023[537](index=537&type=chunk) - The company intends to indefinitely reinvest its accumulated undistributed foreign earnings of approximately **$1.0 billion**[544](index=544&type=chunk) - There were **no unrecognized tax benefits** as of December 31, 2023[542](index=542&type=chunk) [Note 14. Stockholders' Equity](index=92&type=section&id=Note%2014.%20Stockholders%27%20Equity) GrafTech did not repurchase common stock in 2023, with **$99.0 million** remaining in its authorization, and suspended its quarterly dividend, leading to an increased accumulated other comprehensive loss - GrafTech **did not repurchase any common stock in 2023**, but repurchased **$60.0 million in 2022** and **$50.0 million in 2021**[547](index=547&type=chunk) - Approximately **$99.0 million** remained available under the stock repurchase authorization as of December 31, 2023[548](index=548&type=chunk) - The quarterly cash dividend of **$0.01 per share** was **suspended on August 2, 2023**[549](index=549&type=chunk) - Accumulated other comprehensive loss (AOCL) increased from **$(8.1) million in 2022 to $(11.5) million in 2023**[550](index=550&type=chunk) [Note 15. (Loss) Earnings per Share](index=93&type=section&id=Note%2015.%20%28Loss%29%20Earnings%20per%20Share) Diluted loss per common share was **$(0.99)** in 2023, with approximately **41,198 shares** excluded from the calculation due to their anti-dilutive effect Basic and Diluted (Loss) Earnings per Share | Year | EPS | | :--- | :--- | | 2023 | $(0.99) | | 2022 | $1.48 | | 2021 | $1.46 | - The calculation for 2023 excludes the dilutive effect of approximately **41,198 shares**, primarily related to restricted stock units, as their inclusion would have been **anti-dilutive due to the net loss**[552](index=552&type=chunk) [Note 16. Other Expense (Income), net](index=94&type=section&id=Note%2016.%20Other%20Expense%20%28Income%29%2C%20net) Other expense (income), net, shifted to a **$4.7 million expense** in 2023, primarily due to **$3.0 million** in mark-to-market losses on pension and OPEB plans Other Expense (Income), net (thousands) | Year | Amount | | :--- | :--- | | 2023 | $4,679 (expense) | | 2022 | $(10,147) (income) | | 2021 | $(16,220) (income) | - The shift to an expense in 2023 was primarily due to mark-to-market losses on pension and other post-employment benefit (OPEB) plans of **$3.0 million**, compared to gains of **$9.6 million in 2022**[556](index=556&type=chunk) [Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=95&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) There have been no changes in or disagreements with the company's accountants regarding accounting or financial disclosure - There are **no changes in or disagreements** with accountants on accounting and financial disclosure[558](index=558&type=chunk) [Item 9A. Controls and Procedures](index=95&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management and Deloitte & Touche LLP concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2023, with no material changes in the recent quarter - Management concluded that disclosure controls and procedures were **effective** as of December 31, 2023[560](index=560&type=chunk) - Management concluded that internal control over financial reporting was **effective** as of December 31, 2023, based on COSO criteria[563](index=563&type=chunk) - Deloitte & Touche LLP, the independent registered public accounting firm, **audited and confirmed the effectiveness** of the company's internal control over financial reporting[563](index=563&type=chunk) - **No material changes** in internal control over financial reporting occurred during the most recent fiscal quarter[564](index=564&type=chunk) [Item 9B. Other Information](index=95&type=section&id=Item%209B.%20Other%20Information) This section details adjustments to executive officer compensatory arrangements, including increased salaries and STIP opportunities for the Interim CEO and CFO, effective April 1, 2024, with no Rule 10b5-1 trading arrangement changes in Q4 2023 - The Interim Chief Financial Officer's annualized base salary increased from **$305,500 to $353,500**, effective **April 1, 2024**[566](index=566&type=chunk) - The Interim CEO, Interim CFO, and COO will continue to receive **monthly stipends** for their interim service and increased responsibilities in 2024[566](index=566&type=chunk) - Short-Term Incentive Plan (STIP) target award opportunities for the Interim CEO and Interim CFO increased to **100% and 65% of base salary and monthly stipend**, respectively, for 2024[566](index=566&type=chunk) - **No Rule 10b5-1 trading arrangements** were adopted, modified, or terminated during the fiscal quarter ended December 31, 2023[567](index=567&type=chunk) [Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=96&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) Disclosure regarding foreign jurisdictions that prevent inspections is not applicable to GrafTech International Ltd - Disclosure regarding foreign jurisdictions that prevent inspections is **not applicable**[568](index=568&type=chunk) PART III [Item 10. Directors, Executive Officers and Corporate Governance](index=96&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Executive officer information is incorporated from Part I, and the company maintains a public Code of Conduct and Ethics, with other governance details referenced from the Proxy Statement - Information regarding executive officers is **incorporated from the Supplemental Item to Part I** of this Report[569](index=569&type=chunk) - A **Code of Conduct and Ethics** applies to employees, directors, and officers, and is **available on the company's website**[570](index=570&type=chunk) - Other information is **incorporated by reference from the Proxy Statement** for the 2024 Annual Meeting of Stockholders[571](index=571&type=chunk) [Item 11. Executive Compensation](index=96&type=section&id=Item%2011.%20Executive%20Compensation) Information concerning executive compensation is incorporated by reference from various sections of the company's Proxy Statement - Information on executive compensation is **incorporated by reference from the Proxy Statement**, including Compensation Discussion and Analysis, Compensation Tables, CEO Pay Ratio, Pay Versus Performance, Director Compensation Program, Risk Oversight, and Compensation Committee Report[573](index=573&type=chunk) [Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=97&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Security ownership information is incorporated from the Proxy Statement, with **4.1 million** securities to be issued under equity plans at a **$11.27** weighted-average exercise price, and **9.5 million** available for future issuance - Information regarding security ownership of certain beneficial owners and management is **incorporated by reference from the Proxy Statement**[575](index=575&type=chunk) Equity Compensation Plan Information (Dec 31, 2023) | Metric | Amount | | :--- | :--- | | Number of securities to be issued upon exercise of outstanding options, warrants and rights | 4,117,469 | | Weighted-average exercise price of outstanding options, warrants and rights | $11.27 | | Number of securities remaining available for future issuance under equity compensation plans | 9,512,574 | [Item 13. Certain Relationships and Related Transactions, and Director Independence](index=97&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information on certain relationships and related party transactions, and director independence is incorporated by reference from the company's Proxy Statement - Information on certain relationships and related party transactions, and director independence is **incorporated by reference from the Proxy Statement**[579](index=579&type=chunk) [Item 14. Principal Accountant Fees and Services](index=97&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information regarding principal accountant fees and services is incorporated by reference from the company's Proxy Statement - Information on principal accountant fees and services is **incorporated by reference from the Proxy Statement**[580](index=580&type=chunk) PART IV [Item 15. Exhibit and Financial Statement Schedules](index=97&type=section&id=Item%2015.%20Exhibit%20and%20Financial%20Statement%20Schedules) This section lists the financial statements and notes included in Part II, Item 8, omits financial statement schedules due to information being in the consolidated statements, and provides a comprehensive list of exhibits - The report includes the **Report of Independent Registered Public Accounting Firm**, **Consolidated Balance Sheets**, **Consolidated Statements of Operations and Comprehensive (Loss) Income**, **Consolidated Statements of Cash Flows**, **Consolidated Statements of Stockholders' Equity (Deficit)**, and **Notes to the Consolidated Financial Statements**[581](index=581&type=chunk) - **All financial statement schedules have been omitted** because the required information is included in the consolidated financial statements or their notes[582](index=582&type=chunk) - A **detailed list of exhibits** filed or incorporated by reference is provided[583](index=583&type=chunk) [Item 16. Form 10-K Summary](index=102&type=section&id=Item%2016.%20Form%2010-K%20Summary) There is no Form 10-K Summary included in this report - There is **no Form 10-K Summary**[588](index=588&type=chunk) [Signatures](index=103&type=section&id=Signatures) The report is duly signed by GrafTech International Ltd.'s Interim CEO, Interim CFO, and Board of Directors, with all signatures dated February 14, 2024 - The report is signed by **Timothy K. Flanagan (Interim Chief Executive Officer and President)** and **Catherine Hedoux-Delgado (Interim Chief Financial Officer and Treasurer)**[592](index=592&type=chunk) - The report is also signed by the **Chairman and other Directors**[593](index=593&type=chunk) - All signatures are dated **February 14, 2024**[592](index=592&type=chunk)[593](index=593&type=chunk)

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 ...

Financial Performance - GrafTech reported a net loss of $8 million, resulting in a net loss margin of 4%[27] - Adjusted EBITDA was $26 million, leading to an adjusted EBITDA margin of 14%[34] - The company used $9 million in net cash for operating activities, with adjusted free cash flow at $0.3 million[27] - Q2 2023 production volume was 42.3 thousand metric tons, a 43% decrease compared to Q2 2022[25,33] - Net sales reached $186 million, a 49% decrease compared to Q2 2022[25,33] - Adjusted loss per share was $0.02[34] Liquidity and Debt - As of June 30, 2023, GrafTech's liquidity stood at $337 million[28] - The company completed a private offering of $450 million in senior secured notes due in 2028[36] - Gross debt to adjusted EBITDA was 3.8x, while net debt to adjusted EBITDA was 3.3x[36] Market and Industry Trends - Global steel production, excluding China, was 208 million tons in Q2 2023, compared to 213 million tons in Q2 2022[18] - The company noted near-term softness in graphite electrode demand[5] - Steel capacity utilization rates varied, with the U S at 77% and Global (ex-China) at 66% in Q2 2023[8]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 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, 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 o ...

GrafTech International Ltd. (NYSE:EAF) Q1 2023 Earnings Conference Call April 28, 2023 10:00 AM ET Company Participants Michael Dillon - Vice President of Investor Relations Marcel Kessler - President & Chief Executive Officer Jeremy Halford - Executive Vice President & Chief Operating Officer Timothy Flanagan - Chief Financial Officer, Vice President of Finance & Treasurer Conference Call Participants Operator Good day, ladies and gentlemen, and welcome to the GrafTech First Quarter 2023 Earnings Conferenc ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 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, 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 ...