GRAFTECH INTERNATIONAL LTD Q1 FY2025 earnings call

• Proactive strategic initiatives: Outlined initiatives to increase sales volume, regain market share, right-size capacity, reduce costs, etc. - Cost improvement: Achieved 23% YOY reduction in cash COGS per metric ton in 2024, on track for mid-single-digit decline in 2025. - Safety: On track for third consecutive year of lowering total recordable incident rate. - Commercial: Grew sales volume in US and EU, production volume 28,000 tons with 63% capacity utilization, inventory build due to level loading. - Value proposition: Extended product portfolio, world-class technical services, reliable supply, customer-first mentality.

In the first quarter, production volume was 28,000 tons with a capacity utilization rate of 63%, a more than 500 basis point increase from the prior year. Sales volume was 25,000 metric tons, a 2% year-over-year increase. US sales volume grew nearly 25% YOY. Average selling price was $4,100 per metric ton, a 20% YOY decline. Cash COGS per metric ton was approximately $3,650 for Q1 2025. Revenue contribution: Significant growth in US and EU markets, with US being a key region showing strong volume growth.

• Expect low-double-digit sales volume growth in 2025 compared to 2024. - On track for mid-single-digit decline in cash COGS per metric ton in 2025. - Total liquidity of $421 million at end of Q1 2025. - Anticipate growth in US and EU markets, long-term outlook for EAF steel production driving graphite electrode demand.

• Macro uncertainty and challenging market conditions. - Tariff impacts on product flows and steel industry trends. - Uncertainty around global trade and its impact on supply chain and pricing.

Q: In the past, you've talked about the U.S. market having the highest pricing, but also facing the most downward pressure. I guess I'm wondering with India material now facing at least 10% tariffs, has that changed the pace of declines at all?

A: Yeah. So maybe as a little bit of a backdrop. So historically, we have not seen any sort of trade protection around the U.S. market from imports coming out of India. We have seen it from the Chinese. And certainly, I think over the last two years, we've seen an influx of material coming from India into the U.S. market, albeit a relatively small share still compared to some of the Tier 1 suppliers, but that percentage certainly has increased. Now, I would suspect that as we look out into the future to the extent that those tariffs remain in place, whether they're at the 10% or the announced 26% level that, that will dramatically impact the availability of this market to the Indian competitors, just given the incremental cost as well as the freight disadvantage. And I think that's where we look to capitalize the most in terms of our proximity to the U.S. and the service that we provide to our customers here. So, ultimately, that is something that could be a bit of a landscape changer for us in the U.S. market.

Q: Yeah. Thanks. Good morning. I guess a couple of things. I'm not sure if you're willing to, but could you quantify what percentage of sales are now coming from U.S. and Western Europe? Is that north of 50% now for you guys, closer to 75%? Just trying to get some sense of the big market share gains that you've seen in the first quarter.

A: Yeah, sure. I mean we'll disclose as we do on an annual basis. But certainly now, if you look at Europe and the U.S., from a volume and revenue perspective, we're well over 50% in both of those markets combined.

Q: Great. Good morning. Thanks for taking my questions. I hope you guys are well. Yeah. I guess maybe first question would just be a quick update on the progress that you guys have achieved on some of the share recovery. Is there any way we can -- you can kind of frame that opportunity as far as maybe tonnage or volumes and what you expect kind of over the next year or so?

A: Yeah. I think probably the important metrics or data points to keep in mind, we're reiterating our belief that we'll have low double-digit growth in volume year-over-year. So, we continue to have good visibility into our order book and think that we have a strong path forward to continue to increase sales broadly. We've also grown our sales volume in North America or U.S. in particular, but North America as well and Europe as well. We always talk about our two most strategic markets and the two markets that historically have been the best end markets for our products that also very much mirror our operating footprint have been North America and Europe. And I think the team has done a fantastic job of growing sales in both of those regions, and we'll continue to see that mix. I think we'll be much heavier weighted into the Americas. If you think about our historic sales mix between the Americas versus Europe and the Middle East versus Asia Pacific, we've pretty much been 45%, 45% and 10%. I think you can expect us to be much more heavy weighted to the Americas, north of 50%. And Europe and the Middle East will hold drop a few points, but we'll also see a decline in Asia Pacific, again, just given the competitive nature of that market on an export basis.