GRAFTECH INTERNATIONAL LTD Q4 FY2024 earnings call

• Safety: Ended 2024 with a recordable incident rate comparable to prior year, but safety performance in Q4 2024 was not acceptable; goal is zero injuries.
• Commercial environment: Global steel production outside China was flat in 2024. North America steel production was down 4% in 2024, while EU steel output increased 3%.
• 2024 performance: Grew sales volume by 13% despite industry challenges; introduced 800-millimeter product, executed cost rationalization plan, reduced working capital by $40 million, and improved liquidity with a financing transaction.
• 2025 outlook: Over 60% of 2025 volume already committed; expects low-double-digit sales volume growth in 2025, focusing on shifting geographic mix to regions with higher pricing; recently informed customers of a 15% price increase on uncommitted 2025 volume.

In 2024, GrafTech grew sales volume by 13% year-over-year despite a cyclical downturn in the graphite electrode industry. For the fourth quarter of 2024, production volume was 25,000 metric tons with a 55% capacity utilization rate. Sales volume was 27,000 metric tons, a 13% year-over-year increase. Net sales in the fourth quarter decreased 2% compared to the same period in 2023 due to lower pricing and a shift in the mix of business from LTA to non-LTA volume. The fourth quarter non-LTA sales had a weighted average realized price of approximately $3,900 per metric ton, while LTA sales had a weighted average realized price of approximately $7,700 per metric ton.

• In 2024, cash COGS per metric ton decreased 23% year-over-year, exceeding initial guidance. For 2025, expects cash COGS per metric ton to continue trending down with a mid-single-digit percentage point decline.
• 2025 sales volume is expected to be a low-double-digit percentage point increase on top of the 13% growth achieved in 2024, with over 60% of 2025 volume already committed in the order book.

• Geopolitical uncertainty, including potential tariffs (e.g., 25% tariffs on imports from Mexico) and their impact on the North American supply chain; need to evaluate various scenarios and adjust supply chain accordingly.

Q: About LCM inventory adjustment and 2025 cash COGS benefit A: Rory O'Donnell discusses that the full year benefit for 2025 from LCM inventory adjustments will be around $16 million to $17 million Q: About tariffs and production redirection A: Rory O'Donnell states the situation is fluid, and GrafTech is prepared to adjust supply chain to minimize tariff impact Q: About price hike feedback and flow-through A: Tim Flanagan explains the rationale for the 15% price increase, noting it's a first step to restore pricing, and customers generally understand the need for GrafTech to be profitable Q: About share recovery and market share journey A: Tim Flanagan discusses regaining market share through customer engagement, providing service and solutions, and making tough choices with customers only focused on price Q: About 60% committed volume and pricing trend A: Tim Flanagan and Rory O'Donnell provide details on the committed volume being both price and volume committed, and discuss ongoing pricing challenges and stabilization in some regions