Graftech International Ltd. · NYSE:EAF
Graftech International — Citi 2018 Basic Materials Conference
27 slides from Graftech International's conference presentation, Nov 27, 2018
Slide 1: Citi 2018 Basic Materials Conference
Citi 2018 Basic Materials Conference November 27, 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: 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 Expanding prod
Slide 4: Executing Our Strategy in a Structurally Changed Industry
Executing Our Strategy in a Structurally Changed Industry Market conditions remain favorable • GrafTech’s Q3 spot volumes were minimal due to timing of contract sales and planned maintenance • Recent short-term pricing from major UHP electrode competitors in the range of $12,000 to $15,000/MT1 • S
Slide 5: Delivering Growth and Expanding Our Commercial Strategy
Delivering Growth and Expanding Our Commercial Strategy GrafTech to complete debottlenecking projects and legacy short-term purchase orders by YE 2018 2019: volumes are expected to be higher with the addition of 35,000 tons of capacity; pricing is expected to be higher as legacy short-term purch
Slide 6: Graphite Electrode Demand is Supported by Strong Steel Industry Trends
Graphite Electrode Demand is Supported by Strong Steel Industry Trends 1 Global Industrial Production Index Level – 2010=100 126 122 Steel consuming industries strong in our key markets YTD 20171 YTD 20181 2 Global Steel Production Growth World steel production growth 5% 4% remains robust 20172 2018
Slide 7: 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 47% 42% 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 8: 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 9: Expanding Production of Graphite Electrodes and Needle Coke
Expanding Production of Graphite Electrodes and Needle Coke Debottlenecking initiative on track to increase production capacity by 21% to 202,000 MT1 by 2018YE ‒ Calais: Installation of furnaces and a multipurpose crane completed in Q3 ‒ Pamplona: Forming press start-up on track for late 2018 Se
Slide 10: Unique Long Term Contracts Provide Profitability and Visibility
Unique Long Term Contracts Provide Profitability and Visibility Existing long-term agreements (LTAs) >100 3 - 5 year take-or-pay fixed price and volume contracts; ~636,000 MT contracted at a weighted average contract price of ~$9,700 / MT ($6.2BN contracted revenue1) Negotiations for additional
Slide 11: Higher Net Sales Driven by Strong Graphite Electrode Demand
Higher Net Sales Driven by Strong Graphite Electrode Demand YTD 2018* net sales +280% from prior year due to higher sales volumes and pricing ‒ YTD 2018* sales volumes +3% from prior year ‒ YTD 2018* weighted average realized price +290% from prior year ‒ Weighted average realized price -2% from 2
Slide 12: Delivering Value Through Strategic Execution
Delivering Value Through Strategic Execution Financial results benefit from increased sales volumes and weighted average realized price Cost of sales impacted by higher third party raw materials costs 3Q 2018 EPS of $0.67 inline with 2Q 2018 Free cash flow of over $200M for the second consec
Slide 13: Committed to a Responsible and Shareholder Friendly Financial Policy
Committed to a Responsible and Shareholder Friendly Financial Policy Strong liquidity and cash flows As of 9/30/18, total liquidity was approximately $346M1 including $103M in cash and equivalents Through 9/30/18, free cash flow2 of $565M Manage the business in a responsible manner Focus on op
Slide 14: GrafTech's Corporate Transformation Continues
GrafTech’s Corporate Transformation Continues 2013 2018 What’s next EAF consumer focused Diversified across 2 business Exclusively focused on graphite services, solutions and segments with 7 product groups electrode business products 6 operating 3 operating graphite electrode Economies of scale grap
Slide 15: 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 16: Appendix
Appendix GraF lec!)
Slide 17: 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 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 10% steel 100% Petroleum needle Oil 90% 7% coke 90% Graphite electrodes1 5% EAF steel 5% 90% Coal tar pitch Pitch needle coke 3% 9
Slide 19: 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 20: Graphite Electrode Manufacturing Process
Graphite Electrode Manufacturing Process 19
Slide 21: GrafTech is a 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 22: China's EAF Growth Provides a Secular Tailwind for Graphite Electrodes
China’s EAF Growth Provides a Secular Tailwind for Graphite Electrodes Rapid increase in Chinese steel production has resulted in increasing supplies of domestic scrap The Chinese Government had previously targeted a 20% market share for EAF production by 20201, and remains focused on mitigating
Slide 23: Disclosures
Disclosures GraF lec!)
Slide 24: 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 25: Reconciliation to Adjusted EBITDA from Continuing Operations
Reconciliation to Adjusted EBITDA from Continuing Operations For the Three Months Ended For the Nine Months Ended September 30, September 30, (in thousands) 2018 2017 2018 2017 Net income (loss) 199,466 (3,919) 624,587 (47,646) Add: Discontinued operations 726 (3,234) (585) 4,882 Depreciation and am
Slide 26: Reconciliation to Free Cash Flow
Reconciliation to Free Cash Flow For the Three Months Ended For the Nine Months Ended September 30, September 30, (in thousands) 2018 2017 2018 2017 Net cash provided by operating activities 234,569 30,106 612,244 33,581 Capital expenditures (18,897) (9,582) (47,632) (23,028) Free cash flow 215,672
Slide 27: GRAF /ecii
GRAF /ecii International
GrafTech International — Citi 2018 Basic Materials Conference on 6ix