Graftech International Ltd. · NYSE:EAF
Graftech International — Credit Suisse 31st Annual Basic Materials Conference 2018
26 slides from Graftech International's conference presentation, Sep 11, 2018
Slide 1: Credit Suisse 31st Annual Basic Materials Conference
Credit Suisse 31st Annual Basic Materials Conference September 12 – 13, 2018
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: Leading Manufacturer of the Critical Consumable for the EAF Steel Industry
We are a Leading Manufacturer of the Critical Consumable for the EAF Steel Industry Industry leading manufacturer of graphite electrodes for Electric Arc Furnace (“EAF”) steelmakers Only graphite electrode producer substantially vertically integrated into petroleum needle coke New commercial strateg
Slide 4: 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/ Power Supply ‒ >180 granted patents and patents pending ‒ Dedicated team of scientists Water Cooled Roof The graphit
Slide 5: EAFs are the Fastest Growing Segment of the Steel Market
EAFs are the Fastest Growing Segment of the Steel Market EAF accounts for 46% of the global steel production outside of China Growth of EAF steel production continues to outpace other steel production due to: ‒ Low fixed cost structure – low capital requirements ‒ Environmental friendliness – ~7
Slide 6: Global Shift to EAF Steel Production
Global Shift to EAF Steel Production 67% 47% 42% 40% 9% 2017 EAF % of a asEAF Total ProductionSteel 2017 2017 % of World Steel Production North America All other Asia (ex-China) European Union China Estimated EAF steel production growth implies approximately 60,000-70,000 MT additional graphite elec
Slide 7: Market Leading High Capacity Plants Drive Low Cost Production
Market Leading High Capacity Plants Drive Low Cost Production GrafTech operates 3 of the largest production capacity facilities in the world – Expect to produce more graphite electrodes from 3 facilities in 2018 than from 6 facilities in 2012 – High production capacity plants can have significantl
Slide 8: Premier Provider of Solutions and Services to the EAF Steel Industry
GrafTech is a Premier Provider of Solutions and Services to the EAF Steel Industry Vertical integration and 130 years of R&D experience allows us to produce the highest quality graphite electrode (“GE”) products, services and solutions for our customers For example, our ArchiTechTM software: – 2
Slide 9: Vertical Integration Provides Security of Supply and Cost Advantage
Vertical Integration Provides Security of Supply and Cost Advantage Seadrift expected to meet ~2/3 of our future petroleum needle coke needs; provides low cost and certain supply – Needle coke represents 25% - 45% of the cost to produce a GE with Seadrift petroleum needle coke New petroleum need
Slide 10: Unique Long Term Contracts Provide Profitability and Visibility
Unique Long Term Contracts Provide Profitability and Visibility Vertical integration supports our commercial strategy Executed long-term agreements (LTAs) >100 3 - 5 year take-or-pay fixed price and volume contracts with a diverse global customer base ~636,000 MT contracted at a weighted avera
Slide 11: Debottlenecking Initiative on Track to Deliver 21% Production Growth
Debottlenecking Initiative on Track to Deliver 21% Production Growth by Year-end GrafTech is increasing graphite electrode production capacity to meet demand at structurally higher pricing Spot volumes are expected to increase post-2018 as lower priced, legacy contracts roll-off and the debottle
Slide 12: Delivering Value Through Strategic Execution
Delivering Value Through Strategic Execution Weighted Avg. Realized Price Sales Volumes (000 MT)1 Net Sales ($MM) ($/MT)2 88 908 85 $10,027 $2,362 221 1H 17 1H 18 1H 17 1H 18 1H 17 1H 18 Earnings Per Share3 Adj. EBITDA Cont’g Ops ($MM)4 Free Cash Flow ($MM)5 602 349 $1.41 16 ($0.14) (10) 1H 17 1H 18
Slide 13: Responsible and Shareholder Friendly Financial Policy
Committed to a Responsible and Shareholder Friendly Financial Policy Strong liquidity and cash flows 1H 2018 Adjusted EBITDA from continuing operations1 of $602MM and free cash flow2 of $349MM Undrawn revolving credit facility of $250MM Manage the business in a responsible manner Continued foc
Slide 14: Key Investment Highlights
Key Investment Highlights 1 Mission critical, highly engineered consumable for the high growth EAF market 2 Market leading high capacity plants and vertical integration drive low cost production 3 Unique long-term contracts provide profitability and visibility 4 Expanding production capacity to targ
Slide 15: Appendix
Appendix Grarlecl
Slide 16: Strong Management Team with Deep Industry Experience
Strong Management Team with Deep Industry Experience Key Management Commentary David J. Rintoul Seasoned management with experience through President & Chief Executive Officer many industry cycles Joined GrafTech as President & CEO on March 1, 2018 Focused on providing leadership to achieve sa
Slide 17: GrafTech Delivers $602M 1H 2018 Adjusted EBITDA from Continuing Operations
GrafTech Delivers $602M 1H 2018 Adjusted EBITDA from Continuing Operations1 As disclosed during our IPO, we entered into a tax receivable agreement (TRA) with Brookfield Under the TRA, Brookfield will receive 85% of the benefit of realized pre-IPO tax assets (e.g. NOLs) In Q2, we recognized a
Slide 18: Supply Chain Overview
Supply Chain Overview Raw materials End markets Needle coke Non-GE sources of demand Graphite electrodes GE industry process flow Lithium ion batteries 10% Blast furnace steel 100% 10% Petroleum needle Oil coke 90% 7% 90% Graphite electrodes1 5% EAF steel 5% 90% Coal tar pitch Pitch needle coke 3% 9
Slide 19: Electric Arc Furnace Overview
Electric Arc Furnace Overview EAF steelmakers are the primary consumers of graphite electrodes – used to conduct electricity, generating an electric arc of sufficient heat to melt scrap metal, iron ore or other raw materials – Alternating electric current (AC) EAFs typically use Electrode Clamp/ n
Slide 20: Graphite Electrode Manufacturing Process
Graphite Electrode Manufacturing Process 19
Slide 21: Market Leading High Capacity Plants Drive Low Cost Production
Market Leading High Capacity Plants Drive Low Cost Production Approximately 200,000 MT (20%) of global production capacity was closed or repurposed since the beginning of 2014 – With the exception of our warm idled St. Marys plant, which benefits from logistical and energy cost advantages, capacit
Slide 22: Disclosures
Disclosures Grarlecl
Slide 23: Non-GAAP financial measures
Non-GAAP financial measures Investors are encouraged to read the information contained in this presentation in conjunction with the following information, the Forward-looking statements information on slide 1 and the factors described under the “Risk Factors” section of the Company’s quarterly repor
Slide 24: Reconciliation to Adjusted EBITDA from Continuing Operations
Reconciliation to Adjusted EBITDA from Continuing Operations Six Months ended June 30 ($ in thousands) 2018 2017 Net Income (Loss) 425,121 (43,727) Plus: Discontinued operations (1,311) 8,116 Depreciation and amortization 31,696 30,983 Interest expense 66,532 15,448 Interest income (506) (262) Incom
Slide 25: Reconciliation to Free Cash Flow
Reconciliation to Free Cash Flow Six Months ended June 30 ($ in thousands) 2018 2017 Net cash provided by operating activities 377,675 3,473 Capital expenditures (28,735) (13,445) Free cash flow 348,940 (9,972) 24
Slide 26: GraFlecii
GraFlecii Internationa
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