Graftech International Ltd. · NYSE:EAF

Graftech International — Q4 2019 Earnings Presentation

16 slides from Graftech International's earnings presentation, Feb 6, 2020

  1. Slide 1: Q4 2019 Results (Unaudited)

    Q4 2019 Results (Unaudited) February 6, 2020

  2. 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

  3. Slide 3: Key Investment Highlights

    Key Investment Highlights  Mission critical, highly engineered consumable for the growing EAF market  High capacity, low cost, high quality production  Vertical integration provides security of supply and sustainable competitive advantage  Long-term contracts provide profitability, stability and

  4. Slide 4: Building Safe and Efficient Operations

    Building Safe and Efficient Operations Total Recordable Injury Rates1 1.89 1.91 1.74 1.63 1.55 1.49 -39% 0.95 2013 2014 2015 2016 2017 2018 2019 1 Total recordable injury rates measured per 200,000 hours worked. 4

  5. Slide 5: Market Positioning

    Market Positioning Market Conditions • Global crude steel production (ex-China) down in 2019; key regions including Europe and South America are particularly weak • Customers are destocking graphite electrodes; we continue to expect conditions to improve in H2/20 • Long-term EAF growth story remains

  6. Slide 6: Long-Term Contracts Provide Profitability and Visibility

    Long-Term Contracts Provide Profitability and Visibility  Vertical integration supports commercial strategy to sell two-thirds of cumulative production on long-term (2018 – 2022), take-or-pay, fixed price and volume contracts  Long-term agreements (LTAs) with >100 customers including 2019 shipment

  7. Slide 7: Production and Sales

    Production and Sales  Q4/19 graphite electrode production volumes of 41 thousand MT were in-line with sales volumes  Q4/19 production and sales volumes were down from the prior year period, but roughly in-line with Q3/19  2019 net sales down from the prior year primarily due to lower volumes Prod

  8. Slide 8: Strong Cash Flow Generation

    Strong Cash Flow Generation  Q4/19 Free cash flow (FCF)1 was similar to the prior year period as favorable working capital changes partially offset lower volumes and higher costs  FY 2019 Free Cash Flow1 of $741 million represents more than 20% of market capitalization as of December 31, 20192 Ear

  9. Slide 9: Strong Cash Flow Generation

    Strong Cash Flow Generation 2019 Free Cash Flow 1 Generation and Uses of Cash 200 350 $350M or 47% debt repayment 211 741 188 261 $360M or 49% Shareholder returns 142 99 Q1/19 Q2/19 Q3/19 Q4/19 FY 2019 Uses of Cash Free Cash Flow Debt Repayment Share Repurchases Dividends 1 Non-GAAP measure, see pag

  10. Slide 10: Shareholder Returns and Debt Repayment

    Shareholder Returns and Debt Repayment Shares Outstanding (M) Total Debt (M$) -11% $2,210 -18% 302 270 $1,813 6/30/2018 12/31/2019 Q2/18 Q4/19  Shareholder returns and debt repayment continue to be the key priorities  In 2020, we expect to use 50-60% of cash for debt repayment with the balance for

  11. Slide 11: Shareholder Returns and Debt Repayment Remain Key Priorities

    Shareholder Returns and Debt Repayment Remain Key Priorities Generate meaningful cash flows and preserve liquidity  As of 12/31/19, total liquidity was approximately $328M1 including $81M in cash and cash equivalents  2019 Free cash flow2 of $741M Reinvest in the business to maintain productive, h

  12. Slide 12: An Industry Leading Graphite Electrode Manufacturer

    An Industry Leading Graphite Electrode Manufacturer  Graphite electrodes are a highly engineered, mission critical industrial consumable  Operating three of the largest graphite electrode manufacturing facilities in the world  Vertical integration into petroleum needle coke provides sustainable c

  13. Slide 13: Disclosures

    Disclosures Disclosures 13

  14. Slide 14: 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 2 and the factors described under the “Risk Factors” section of the Company’s annual report o

  15. Slide 15: Reconciliation to Adjusted EBITDA from Cont'g Operations

    Reconciliation to Adjusted EBITDA from Cont’g Operations For the Three Months Ended For the Year Ended December 31, December 31, 2019 2018 2019 2018 Net income 174,922 229,632 744,602 854,219 Add: Discontinued operations — 254 — (331) Depreciation and amortization 15,432 18,667 61,819 66,413 Interes

  16. Slide 16: Reconciliation to Free Cash Flow

    Reconciliation to Free Cash Flow For the Three Months Ended For the Year Ended December 31, December 31, (in thousands) 2019 2018 2019 2018 Net cash provided by operating activities 220,544 224,359 805,316 836,603 Capital expenditures (20,050) (20,589) (64,103) (68,221) Free cash flow 200,494 203,77

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