Graftech International Ltd. · NYSE:EAF
Graftech International — BMO 28th Global Metals & Mining Conference 2019
22 slides from Graftech International's conference presentation, Feb 25, 2019
Slide 1: BMO 28th Global Metals & Mining Conference
BMO 28th Global Metals & Mining Conference February 25, 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 remain solid • Q4 weighted average realized price of $9,950 per MT, up 2% from Q3/18 on higher spot volumes • Graphite electrode market is more balanced with recent spot pricing moving off historic highs • Steel production
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 ~70% of long-term needle coke needs; providing our operations with high quality,
Slide 6: Unique Long-term Contracts Provide Profitability and Visibility
Unique Long-term Contracts Provide Profitability and Visibility In aggregate, GrafTech has added ~40,000 MT of sales under long-term agreements for 2019-2023 at pricing above existing agreements Vertical integration supports commercial strategy to sell majority of volumes on long-term (3- to 5-y
Slide 7: Steel Industry Trends Support Graphite Electrode Demand
Steel Industry Trends Support Graphite Electrode Demand 1 Global Industrial Production Index Level 2010=100 Solid demand from steel consuming 123 126 industries YTD 20171 YTD 20181 2 Steel Production Growth (ex-China)2 Steel production growth in our key 2.7% 2.4% 2.1% markets remains robust 4% 2017A
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: 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 continue to be impacted by higher third party raw materials costs 4Q 2018 EPS of $0.79 up 18% from 3Q 2018 4Q 2018 Adjusted EBITDA from contin
Slide 10: Shareholder Returns and Maintaining a Strong Balance Sheet
Shareholder Returns and Maintaining a Strong Balance Sheet Capital Allocation in 2018 Since IPO1 7% of free cash flow retained Debt repayment 56 9% of free cash flow to pay debt Quarterly dividends 69 595 Share repurchases 225 84% of free cash flow returned to shareholders Special dividends 203 2 Po
Slide 11: GrafTech's Financial Policy
GrafTech’s Financial Policy Strong liquidity and cash flows As of 12/31/18, total liquidity was approximately $295M1 including $50M in cash and equivalents Full year 2018 free cash flow2 of $768M Manage the business in a responsible manner Focus on operational improvement with appropriate leve
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 Unique long-term contracts provide profitability, stability
Slide 13: Appendix
Appendix GRaF /ec!; 13
Slide 14: $1.2B FY18 Adjusted EBITDA from Continuing Operations
$1.2B FY18 Adjusted EBITDA from Continuing Operations $135 $16 $133 $66 $1,205 $854 Net Income D&A Net interest TRA & Income Net adjustments* Adj. EBITDA from taxes Cont'g Operations GrafTech reported record Net Income of $854 million and Adjusted EBITDA from Continuing Operations of $1.2 billion
Slide 15: 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 16: 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 17: Graphite Electrode Manufacturing Process
Graphite Electrode Manufacturing Process 17
Slide 18: China EAF Growth Provides a Tailwind for Graphite Electrodes
China EAF Growth Provides a Tailwind for Graphite Electrodes According to Platts, Chinese Electric Arc Furnace (EAF) steel production has almost doubled from 2016 to 2018 The Chinese Government had previously targeted a 20% market share for EAF steel production by 20201, and remains focused on m
Slide 19: Disclosures
Disclosures GRaF /ec!; 19
Slide 20: 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 21: Reconciliation to Adjusted EBITDA from Cont'g Operations
Reconciliation to Adjusted EBITDA from Cont’g Operations For the Three Months Ended For the Three Months Ended For the Year Ended September 30, December 31, December 31, (in thousands) 2018 2018 2017 2018 2017 Net income (loss) 199,466 229,632 55,628 854,219 7,983 Add: Discontinued operations 726 25
Slide 22: 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) 2018 2017 2018 2017 Net cash provided by operating activities 224,359 2,993 836,603 36,573 Capital expenditures (20,589) (11,637) (68,221) (34,664) Free cash flow 203,770 (8,644) 7
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