GRAFTECH INTERNATIONAL LTD Q3 FY2024 earnings call

Safety: Year-to-date recordable incident rate improved but still needs further improvement. ### Commercial: - Sales volume increased 9% year-over-year and 13% year-to-date in Q3, with low double-digit sales volume growth expected in 2025. - Entered new strategic multiyear electrode sales agreements. - Initial trials of new 800-millimeter electrodes conducted by a key customer in North America. ### Operations: - Achieved 28% year-over-year decrease in cash COGS per metric ton in Q3, exceeding expectations; increased full-year guidance for cash COGS improvement. - Generated $20 million of free cash flow in Q3. - Announced a financing transaction to strengthen financial foundation, including new capital, debt maturity extension, and revolver replacement.

No detailed breakdown of product segments with revenue contribution provided in the transcript.

Sales Volume: Expect low double-digit sales volume growth in 2025. ### Cash COGS: - Anticipate approximately 20% year-over-year decline in cash COGS per metric ton for 2024, resulting in cash COGS per metric ton of approximately $4,400; further decline expected in 2025. ### Liquidity: - Ended Q3 with total liquidity of approximately $254 million. - New financing includes a $275 million delayed draw term loan, debt maturity extension for existing notes, and replacement of the revolving credit facility.

Industry Cyclicality: Current down cycle in the industry poses challenges. ### Geopolitical Factors: Impact of trade tariffs and geopolitical conflicts on steel and electrode markets. ### Pricing Volatility: Fluctuations in spot pricing for electrodes and stability/volatility of needle coke pricing.

Q: Bill Peterson on near-term pricing and needle coke pricing A: Tim and Rory discuss spot pricing decline, noting it's fallen to about $4,150 on a weighted average basis, while needle coke prices remain relatively stable in the $1,000 to $1,300 range, expecting future pricing rebound as demand picks up Q: Alex Hacking on contracting season and competitor price increase A: Tim talks about ongoing negotiations for Q1 and first half 2025 deliveries, noting a competitor's 20% price increase is a supportive step for industry health, with ongoing active dialogues with customers Q: Arun Viswanathan on steel utilization and market trends A: Tim discusses sales volume growth expectations, regional market outlooks including Europe's hand-to-mouth market and U.S. steel production expectations, expecting slight recovery in demand heading into 2025 Q: Kirk Ludtke on pricing stabilization and debt covenants A: Tim and Rory discuss longer-term agreements being used for strategic customer partnerships, and Rory comments on customary covenants in the delayed draw term loan with no surprise restrictions preventing access Q: Matt Vittorioso on debt transaction and leverage A: Tim and Rory discuss the debt transaction as a means to improve liquidity and strategic flexibility, with Tim stating the deal provides cost-competitive capital, maturity extension, and strategic flexibility, and Rory noting customary leverage covenants Q: Abe Landa on debt transaction details and tariffs A: Rory discusses inclusion of majority foreign assets in collateral, and Tim comments on geopolitical factors like trade tariffs, noting impact on markets but expecting support for domestic steel markets