Graftech International Ltd. · NYSE:EAF
Graftech International — BMO Capital Markets 29th Global Metals & Mining Conference 2020
20 slides from Graftech International's conference presentation, Feb 25, 2020
Slide 1: BMO Capital Markets 29th Global Metals & Mining Conference
BMO Capital Markets 29th Global Metals & Mining Conference February 24 - 25, 2020
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: A Leading Supplier of Graphite Electrodes to EAF Steelmakers
A Leading Supplier of Graphite Electrodes to EAF Steelmakers Graphite Electrodes are a mission critical, highly engineered consumable for the growing EAF market High capacity, low cost, high quality production Substantial vertical integration provides security of supply and sustainable competi
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
Slide 5: Recent Market Trends
Recent Market Trends Market Conditions Global crude steel production (ex-China) down ~2% in 20191 Customers are destocking graphite electrodes; expect conditions to improve in H2/20 Long-term EAF outlook remains strong Vertical Integration Provides Competitive Advantage Wholly-owned Seadrift
Slide 6: Global Shift to EAF Steel Production
Global Shift to EAF Steel Production EAF steelmakers continue to take market share from integrated steelmakers due to better cost structure and lower environmental footprint EAF accounts from 47% of the global steel production outside of China, up from 37% in 19841 In 2018, Chinese steel produ
Slide 7: Growing Needle Coke Use in Electric Vehicles
Growing Needle Coke Use in Electric Vehicles Graphite is a key material in anodes for lithium-ion Increasing electric vehicle sales1… batteries EV Sales (M vehicles) CAGR 33 Two types of graphite are used in anodes: synthetic +26% (e.g. needle coke) and natural 18 Synthetic graphite is advanta
Slide 8: Long-Term Contracts Provide Profitability and Visibility
Long-Term Contracts Provide Profitability and Visibility Substantial vertical integration supports long-term, Estimated Take-or-Pay Shipments1 take-or-pay contracts ‒ Minimal customer concentration; >100 global ~ $9,600 ~$9,700 ~ $9,700 customers ‒ On average, customers are strong credit counterpa
Slide 9: 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 $741 million represents more than 20% of market capitalization as of December 31, 20192 Ear
Slide 10: Shareholder Returns and Debt Repayment
Shareholder Returns and Debt Repayment Shares Outstanding (M) Total Debt ($M) $2,210 -18% -11% 302 270 $1,813 6/30/2018 12/31/2019 6/30/2018 12/31/2019 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 ba
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
Slide 12: Key Investment Highlights
Key Investment Highlights 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 competitive advantage Com
Slide 13: Appendix
Appendix GRAF! cl) 13 Internatio
Slide 14: 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 15: Graphite Electrode Manufacturing Process
Graphite Electrode Manufacturing Process 15
Slide 16: 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 17: Disclosures
Disclosures GRAF! cl) 17 Internatio
Slide 18: 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 19: 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
Slide 20: 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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