Graftech International Ltd. · NYSE:EAF
Graftech International — Q2 2019 Earnings Presentation
17 slides from Graftech International's earnings presentation, Jul 31, 2019
Slide 1: Q2 2019 Results
aaa GraFlech ey ae ‘ = International SI i, Q2 2019 Results July 31, 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: Building Safer and More Efficient Operations
Building Safer and More Efficient Operations Total Recordable Injury Rates1 1.89 1.91 1.74 1.63 1.49 1.51 1.07 2013 2014 2015 2016 2017 2018 2019 YTD 1 Year-to-date 2019 as of July 22, 2019. Total recordable injury rates measured per 200,000 hours worked 3
Slide 4: Solid Quarterly Results; Progressing Long-term Strategy
Solid Quarterly Results; Progressing Long-term Strategy Solid Q2/19 Results • Q2/19 net sales up 5% from Q2/18 on higher volumes and prices • Costs increased in-line with expectations due to increased third party needle coke pricing Market Conditions • Steel production, and graphite electrode consum
Slide 5: Long-Term Global Shift to EAF Steel Production
Long-Term Global Shift to EAF Steel Production 2018 EAF as a % of Total Steel Production 67% 48% The Chinese government 42% 42% targets 20% EAF market share by 20201 12% % of 2018 World Steel Production North America All other Asia (ex-China) European Union China EAF steelmaking is expected to conti
Slide 6: Industry Trends
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% Moderating in some regions 1.7% 2018A 2019F 3 60 Global EV Dep
Slide 7: 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 8: Higher Net Sales Driven by Higher Volumes and Pricing
Higher Net Sales Driven by Higher Volumes and Pricing Q2/19 sales volumes up 7% from the prior year quarter with completion of debottlenecking projects Q2/19 weighted average realized price up 2% from prior year quarter Weighted Avg. Realized Price Sales Volumes (000 MT)1,2 Net Sales ($M) ($/MT)
Slide 9: Continued Strong Financial Results
Continued Strong Financial Results Financial results benefitted from increased net sales offset by higher cost of sales compared to 2018 Cost of sales continue to be impacted by higher third party needle coke costs Q2/19 Free cash flow (FCF)3 was down 16% from the prior year period due to timi
Slide 10: $284M Q2 2019 Adjusted EBITDA from Continuing Operations
$284M Q2 2019 Adjusted EBITDA from Continuing Operations $38 $3 $32 $15 $284 $196 Net Income D&A Net interest Income taxes Net adjustments* Adj. EBITDA from Cont'g Operations *Includes Pension and OPEB plan expenses, Public offering expenses, Non-cash loss on foreign currency remeasurement, Stock-ba
Slide 11: Strong Track Record of Shareholder Returns
Strong Track Record of Shareholder Returns Trailing Twelve-Month (TTM) Capital Allocation Cash retained / 6% of FCF retained Debt repayment 181 24% of FCF to pay debt Quarterly dividends 99 749 Share repurchases 225 70% of FCF returned to shareholders Special dividends 203 TTM Free Cash Flow 1 TTM C
Slide 12: Balance reinvestment, debt repayment, shareholder returns
Balance reinvestment, debt repayment, shareholder returns Solid financial results As of 6/30/19, total liquidity was approximately $452M1 including $205M in cash and equivalents Trailing 12-month free cash flow2 of $749M Reinvest in the business to maintain productive, high quality, low cost ope
Slide 13: 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
Slide 14: Disclosures
Disclosures Grar 2) "
Slide 15: 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
Slide 16: Reconciliation to Adjusted EBITDA from Cont'g Operations
Reconciliation to Adjusted EBITDA from Cont’g Operations For the Three Months For the Six Months Ended June 30, Ended June 30, (in thousands) 2019 2018 2019 2018 Net income 196,368 201,448 393,804 425,121 Add: Discontinued operations — 315 — (1,311) Depreciation and amortization 15,445 15,368 31,030
Slide 17: Reconciliation to Free Cash Flow
Reconciliation to Free Cash Flow For the Three Months For the Six Months Ended June 30, Ended June 30, (in thousands) 2019 2018 2019 2018 Net cash provided by operating activities 202,206 237,122 359,023 377,675 Capital expenditures (14,630) (14,710) (29,199) (28,735) Free cash flow 187,576 222,412
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