GrafTech International(EAF) - 2025 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - GrafTech International achieved a 9% year-over-year increase in sales volume, reaching nearly 29,000 metric tons in Q3 2025 [4][14] - The company generated positive adjusted EBITDA of $13 million for the quarter, compared to a negative $6 million in the prior year [24] - Net cash from operating activities was $25 million, with adjusted free cash flow of $18 million, strengthening liquidity to $384 million as of the end of September [6][26] Business Line Data and Key Metrics Changes - Sales volume in the U.S. grew by 53% year-over-year in Q3, contributing to a cumulative sales volume growth of over 20% since the end of 2023 [5][15] - The average selling price for the third quarter was approximately $4,200 per metric ton, representing a 7% decline compared to the prior year [16][24] - Cash costs per metric ton were $3,795, reflecting a 10% year-over-year decline, with expectations for a full-year decline of approximately 10% in cash COGS per metric ton for 2025 [19][24] Market Data and Key Metrics Changes - Global steel production outside of China was approximately 206 million tons in Q3 2025, up nearly 2% year-over-year [7] - In the U.S., steel production grew 2% year-to-date compared to 2024, while EU steel output decreased by 4% year-to-date [8][9] - World Steel projects a 1.8% growth in U.S. steel demand for 2026 and a 3.2% growth in Europe, driven by infrastructure investment and defense spending [9][10] Company Strategy and Development Direction - The company is focused on increasing sales volume and market share, improving average pricing by shifting geographic sales mix to higher price regions, and reducing costs [29][30] - GrafTech is committed to serving customers with excellence and building long-term partnerships based on performance and reliability [11][30] - The company is well-positioned to capitalize on the expected growth in electric arc furnace (EAF) steel production, particularly in the U.S. and EU [30][31] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the potential recovery in the steel market, citing early signs of rebound and positive momentum in steel production and demand [7][29] - The company remains bullish on the structural tailwinds supporting the shift towards EAF steelmaking, with significant new capacity planned in the U.S. [30][31] - Management highlighted the importance of trade protection measures and their potential positive impact on the steel industry and graphite electrode demand [10][32] Other Important Information - The company reported a net loss of $28 million for the third quarter, an improvement from a net loss of $36 million in the prior year [24] - GrafTech's liquidity position includes $178 million in cash and $107 million available under its revolving credit facility, with no borrowings outstanding [26][27] - The company is committed to maintaining a culture of safety, aiming for zero injuries and strong safety performance [12] Q&A Session Summary Question: Should we expect any other kind of deferred revenue benefits? - Management indicated that no further deferred revenue is expected, as the recent recognition was a one-time event related to a long-standing receivable [39] Question: What are the current demand and price environment dynamics? - Management noted that the market is oversupplied, making it challenging to push pricing, but expressed optimism for future pricing improvements due to positive momentum in the steel industry [41][42] Question: What is the status of GrafTech's engagement in the battery-related materials market? - Management stated that while there is excess capacity, the market is still developing, and they are positioned to support partners in the battery supply chain [44][45] Question: Have the tariffs on Indian material impacted imports into the U.S.? - Management believes the tariffs present an opportunity for GrafTech, as they expect to continue gaining market share in the U.S. [47][48] Question: Any updates on public-private partnerships? - Management emphasized the importance of a healthy electrode industry to support the steel sector and expressed confidence in GrafTech's role in the domestic supply chain [51][54]