Graftech International Ltd. · NYSE:EAF
Graftech International — Q2 2020 Earnings Presentation
18 slides from Graftech International's earnings presentation, Aug 7, 2020
Slide 1: Q2 2020 Results
Q2 2020 Results August 6, 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: Building Safe and Efficient Operations
Building Safe and Efficient Operations Total Recordable Injury Rates1 1.74 1.63 1.55 1.49 0.95 - 56% 0.42 2015 2016 2017 2018 2019 Q2 YTD 2020 1 Total recordable injury rates measured per 200,000 hours worked. 3
Slide 4: Response to COVID-19 Pandemic
Response to COVID-19 Pandemic Taking Careful Actions to Keep Employees Safe ▪ COVID-19 Response Team continues to meets 3 times per week ▪ Travel still heavily restricted ▪ Temperature measurements at entrances to facilities and offices ▪ Personal protective equipment ▪ Mandatory use of gloves by 10
Slide 5: Our Response to COVID-19 Has Produced Favorable Results
Our Response to COVID-19 Has Produced Favorable Results Plants are running safely and efficiently ▪ Operations team has remained resilient and flexible, quickly adapting to the new environment ▪ European plants transitioning to a new normal ▪ North American plants remain diligent, particularly in li
Slide 6: Industry Conditions
Industry Conditions ▪ COVID-19 has significantly impacted steel demand ▪ Global steel production down 24% in Q2 excluding China1 ▪ Steel manufacturing utilization rates down ▪ Steel prices have generally been lower with more variability since the COVID-19 crisis began ▪ Customer destocking progress
Slide 7: Commercial Update
Commercial Update ▪ Customers are being notably impacted by the current environment ▪ ~35 customers with force majeure claims ▪ Some customers struggling to take committed volumes ▪ Working with customers to develop mutually beneficial solutions ▪ Taking measures to ensure contractual commitments ar
Slide 8: Production and Sales
Production and Sales ▪ Managed production levels in-line with sales volumes ▪ Sales volumes were down due to lower steel production levels and the impact of COVID-19 Production (000 MT) Sales Volumes (000 MT) Net Sales ($M) 95 $955 90 66 65 $599 48 $480 45 33 31 $281 0 Q2/19 Q2/20 YTD/19 YTD/20 Q2/1
Slide 9: Earnings and Cash Flow
Earnings and Cash Flow ▪ Delivered solid results in a challenging environment ▪ EPS of $0.35 represents 20%+ annualized return on current share price2 ▪ Majority of Adjusted EBITDA1 converts to Free Cash Flow3 Earnings Per Share Adjusted EBITDA ($M)1 Free Cash Flow ($M)3 $1.36 $568 $330 $263 $0.80 $
Slide 10: Implemented Decisive Financial Measures
Implemented Decisive Financial Measures Implemented a “Financial Action Plan” to address the impact of this pandemic 1. Eliminated discretionary spending 2. Reduced 2020 capital expenditures plan by roughly 50% 3. Rightsized workforce – down by 15% at electrode plants 4. Achieved 15% reduction in fi
Slide 11: Strong Financial Position
Strong Financial Position Prioritizing Balance Sheet Strength and Financial Flexibility ▪ Reduced debt by over $100 million in Q2 ▪ Majority of free cash flow in 2020 will be targeted to reduce debt ▪ Liquidity of $435 million as of June 30, 2020 ▪ No near-term debt maturities Liquidity ($M) Debt Ma
Slide 12: EAF Steelmaking is Advantaged for the Long-Term
EAF Steelmaking is Advantaged for the Long-Term Mini-Mill Advantages (MT millions) EAF Steelmaking 600 Rest of World (ROW) China ✓ Long-term growth rate of ~3% 500 Total CAGR of 3.4% ✓ Environmentally advantageous 400 ✓ 75% less carbon emissions 300 ✓ Among the world’s largest recycling 200 industri
Slide 13: Graphite Electrode Sustainable Strengths
Graphite Electrode Sustainable Strengths Graphite Electrode Advantages ✓ Mission critical ✓ No known alternative ✓ Sustainable long-term growth ✓ Consumed every 8-10 hours ✓ Only 1-5% of EAF production costs ✓ Highly engineered - extensive product and process knowledge required 13
Slide 14: GrafTech - A Leading Supplier of Graphite Electrodes
GrafTech - A Leading Supplier of Graphite Electrodes ✓ High quality, low cost, global leader ✓ Substantial vertical integration provides security of supply and sustainable competitive advantage ✓ Long-term contracts provide profitability, stability and visibility ✓ Generating significant cash flows
Slide 15: Disclosures
Disclosures GraF ec 15 International
Slide 16: 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 17: Reconciliation to Adjusted EBITDA
Reconciliation to Adjusted EBITDA For the Three Months For the Six Months Ended June 30, Ended June 30, (in thousands) 2020 2019 2020 2019 Net income 92,776 196,368 215,044 393,804 Add: Depreciation and amortization 14,549 15,445 28,833 31,030 Interest expense 20,880 32,969 46,552 66,669 Interest in
Slide 18: 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) 2020 2019 2020 2019 Net cash provided by operating activities 148,373 202,206 287,656 359,023 Capital expenditures (10,454) (14,630) (24,355) (29,199) Free cash flow 137,919 187,576
GrafTech International — Q2 2020 Earnings Presentation on 6ix