GrafTech International(EAF)2023-02-03 17:58Financial Data and Key Metrics Changes - Net income for Q4 2022 totaled $50 million, resulting in a 20% net income margin and $0.20 earnings per share [31] - Adjusted EBITDA was $80 million, a decrease from $183 million in Q4 2021, reflecting lower sales volume and higher costs [31] - Cash costs per metric ton increased by 47% year-over-year, averaging nearly $5,200 for Q4 2022 [32][34] - Total liquidity increased by $27 million to approximately $462 million, consisting of $135 million in cash and $327 million available under the revolving credit facility [36] Business Line Data and Key Metrics Changes - Production volume in Q4 2022 was approximately 29,000 metric tons, representing a 36% year-over-year decline and a 22% sequential decline from Q3 2022 [24] - Sales volume for Q4 2022 was approximately 28,000 metric tons, a 37% decline from the same period in the prior year [26] - Fourth quarter shipments included 19,000 metric tons sold under long-term agreements (LTAs) at a weighted average realized price of $9,400 per metric ton [27] Market Data and Key Metrics Changes - Global steel production excluding China in Q4 2022 was approximately 194 million tons, an 11% decline compared to the same period in the prior year [21] - U.S. steel mill utilization rates trended higher since the end of the year, currently slightly above 73% [23] - European hot-rolled coil (HRC) prices reached $822 per ton as of the last week of Q4 2022 [22] Company Strategy and Development Direction - The company is focused on managing operating costs, capital expenditures, and working capital while reducing production volume to align with near-term demand [10][39] - GrafTech aims to capitalize on long-term demand growth driven by electric arc furnace steelmaking and the increasing demand for petroleum needle coke [11][41] - The company is making targeted investments to improve competitive positioning and support long-term growth, including the restart of operations in St. Marys, Pennsylvania [41][46] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges faced in 2022 due to geopolitical conflicts, inflation, and supply chain pressures impacting demand for graphite electrodes [6][7] - The company expects significant impacts on sales volume in the first half of 2023 but anticipates recovery in the second half as market conditions improve [15][16] - Management remains optimistic about the long-term outlook for the business and the ability to deliver shareholder value [7][51] Other Important Information - The company experienced a significant shift in sales mix from LTAs to non-LTA business, with expectations for total graphite electrode sales volume in Q1 2023 to be between 15,000 and 18,000 metric tons [28][65] - The anticipated year-over-year increase in cash costs per metric ton for 2023 is projected to be in the range of 17% to 20% compared to 2022 [35] Q&A Session Summary Question: Clarification on St. Mary's restart - Management confirmed that St. Mary's is fully restarting, focusing on establishing a second complete value stream for pin production [54][55] Question: Expected sales volume for 2023 - Management clarified that sales volume for the first half of 2023 is expected to be approximately half of the first half of 2022, with a recovery anticipated in the second half [63][64] Question: Pricing outlook for needle coke and electrodes - Management indicated that needle coke pricing is currently in the range of $2,500 to $2,600, with expectations for upward movement in pricing due to increased demand [69][74]