Graftech International Ltd. · NYSE:EAF
Graftech International — BofAML Global Metals, Mining & Steel Conference 2019
21 slides from Graftech International's conference presentation, May 13, 2019
Slide 1: BofAML Global Metals, Mining & Steel Conference
BofAML Global Metals, Mining & Steel Conference May 14 - 16, 2019
Slide 2: Forward-looking Statements
Forward-looking Statements NOTE ON FORWARD-LOOKING STATEMENTS: This presentation and related discussions may contain forward-looking statements that reflect our current views with respect to, among other things, future events and financial performance. You can identify these forward-looking statemen
Slide 3: An Industry Leading Graphite Electrode Manufacturer
An Industry Leading Graphite Electrode Manufacturer Graphite electrodes are a highly engineered, mission critical industrial consumable Vertical integration into petroleum needle coke provides sustainable competitive advantage Commercial strategy focused on stable, long-term agreements Expan
Slide 4: Solid Quarterly Results; Progressing Long-term Strategy
Solid Quarterly Results; Progressing Long-term Strategy Market fundamentals • Q1/19 weighted average realized price of $9,954 per MT1, in line with prior year quarter • Graphite electrode market is more balanced with recent spot pricing moving off historic highs • Steel production and graphite ele
Slide 5: Vertical Integration Provides Secure, Low Cost Raw Materials
Vertical Integration Provides Secure, Low Cost Raw Materials Tightness in petroleum needle coke – our primary raw material – due to competing electric vehicle (EV) battery demand Wholly owned Seadrift facility meets ~2/3 of long-term needle coke needs; providing our operations with high quality,
Slide 6: Long-term Contracts Provide Profitability and Visibility
Long-term Contracts Provide Profitability and Visibility Vertical integration supports commercial strategy to sell majority of volumes on long-term (3- to 5-year), take-or- pay, fixed price and volume contracts Long-term agreements (LTAs) with >100 customers; ~675,000 MT contracted at a weighted
Slide 7: Steel Industry Trends
Steel Industry Trends 1 U.S. EAF Steel Capacity (MMT)1 12 Announced U.S. EAF capacity additions 88 support graphite electrode demand 76 2018 Announced Additions 2022E 2 Steel Production Growth (ex-China)2 Near-term steel production growth 2.2% 2.8% moderating in some key markets 1.7% 4% 2018A 2019F
Slide 8: Global Shift to EAF Steel Production
Global Shift to EAF Steel Production 2017 EAF as a % of Total Steel Production 67% The Chinese government targets 20% EAF market share by 20201 46% 41% 40% 9% 2017 % of World Steel Production North America All other Asia (ex-China) European Union China EAF steelmaking continues to take market share
Slide 9: Continued Strong Financial Results
Continued Strong Financial Results Financial results benefited from increased net sales offset by higher cost of sales; cost of sales continue to be impacted by higher third party needle coke costs Q1/19 Free cash flow3 was up 12% from the prior year period ‒ Q1/18 Free cash flow was impacted pr
Slide 10: Strong Track Record of Shareholder Returns
Strong Track Record of Shareholder Returns Capital Allocation Since IPO1 4% of free cash flow retained Debt repayment 181 25% of free cash flow to pay debt Quarterly dividends 94 737 Share repurchases 225 71% of free cash flow returned to shareholders Special dividends 203 2 Post IPO Free Cash Flow
Slide 11: Balance reinvestment, debt repayment, shareholder returns
Balance reinvestment, debt repayment, shareholder returns Solid financial results As of 3/31/19, total liquidity was approximately $288M1 including $42M in cash and equivalents Trailing 12-month free cash flow2 of $784M Reinvest in the business to maintain productive, high quality, low cost oper
Slide 12: Key Investment Highlights
Key Investment Highlights Mission critical, highly engineered consumable for the high growth EAF market Market leading high capacity, low cost, high quality production Vertical integration provides sustainable competitive advantage Long-term contracts provide profitability, stability and vis
Slide 13: Appendix
Appendix GRaF /ec!; 13
Slide 14: Supply Chain Overview
Supply Chain Overview Raw materials End markets Needle coke Non-GE sources of demand Graphite electrodes GE industry process flow ~10% Lithium ion BOF steel batteries 7% 100% Petroleum needle ~10% Oil coke 90% 5% Graphite 90% electrodes1 EAF steel 5% Pitch needle 90% Coal tar pitch coke 90% 3% Non s
Slide 15: Graphite Electrodes – Mission Critical for EAF Steelmaking
Graphite Electrodes – Mission Critical for EAF Steelmaking Conducts electricity to melt scrap metal Highly engineered ‒ 130+ years of R&D and technical know-how Electrode Clamp/ ‒ ~200 granted patents and patents pending Power Supply ‒ Dedicated team of scientists The graphite electrode market
Slide 16: Graphite Electrode Manufacturing Process
Graphite Electrode Manufacturing Process 16
Slide 17: China EAF Growth Provides a Tailwind for Graphite Electrodes
China EAF Growth Provides a Tailwind for Graphite Electrodes The Chinese Government had previously targeted a 20% market share for EAF steel production by 20201, and remains focused on mitigating the environmental impact of its steel industry — favoring more environmentally friendly EAF steel prod
Slide 18: Disclosures
Disclosures GRaF /ec!; 18
Slide 19: Non-GAAP financial measures
Non-GAAP financial measures Investors are encouraged to read the information contained in this presentation in conjunction with the following information, the Forward-looking statements information on slide 1 and the factors described under the “Risk Factors” section of the Company’s annual report o
Slide 20: Reconciliation to Adjusted EBITDA from Cont’g Operations
Reconciliation to Adjusted EBITDA from Cont’g Operations For the Three Months Ended March 31, (in thousands) 2019 2018 Net income (loss) 197,436 223,673 Add: Discontinued operations - (1,626) Depreciation and amortization 15,585 16,328 Interest expense 33,700 37,865 Interest income (414) (115) Incom
Slide 21: Reconciliation to Free Cash Flow
Reconciliation to Free Cash Flow For the Three Months Ended March 31, (in thousands) 2019 2018 Net cash provided by operating activities 156,817 140,553 Capital expenditures (14,569) (14,025) Free cash flow 142,248 126,528 For the Three Months Ended For the Twelve Months Ended June 30, September 30,
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