GrafTech International (EAF) Q2 2024 earnings summary

Executive summary

• Q2 2024 net sales were $137.3 million, down 26% year-over-year, with a net loss of $15 million ($0.06 per share) and adjusted EBITDA of $14–$14.5 million, reflecting weak demand and lower prices.

• Sales volume decreased 3% year-over-year to 25.5k–26k MT, while production volume increased 6% to 26.8k–27k MT; capacity utilization improved to 60%.

• Cost rationalization and operational efficiency actions led to an 18% year-over-year reduction in cash costs per metric ton.

• Favorable arbitration outcome resulted in a $9–$9.2 million benefit, reducing Q2 selling and administrative expenses.

• Long-term optimism is driven by the shift to EAF steelmaking and anticipated growth in graphite electrode and needle coke demand.

Financial highlights

• Q2 2024 net sales: $137–$137.3 million (down from $185.6–$186 million in Q2 2023); net loss: $14.8–$15 million (vs. $7.9–$8 million loss in Q2 2023).

• Adjusted EBITDA for Q2 2024: $14–$14.5 million, down from $26 million in Q2 2023.

• Adjusted loss per share: $(0.05) in Q2 2024.

• Net cash used in operating activities was $37–$37.4 million in Q2 2024; adjusted free cash flow was negative $44 million.

• Liquidity at quarter-end: $231.8–$232 million ($120.7–$121 million cash, $111–$111.1 million revolver availability).

Outlook and guidance

• Near-term demand and pricing for graphite electrodes expected to remain weak due to global steel industry constraints and economic uncertainty.

• Q3 2024 sales volume expected to be in line with Q2; modest year-over-year improvement anticipated for full-year sales volume.

• Full-year 2024 capital expenditures expected in the $35–$40 million range.

• Full-year 2024 cash cost of goods sold per MT expected to decline by mid-teen percentage points year-over-year.

• Long-term demand outlook positive, driven by steel decarbonization and EV battery growth.