Graftech International Ltd. · NYSE:EAF
Graftech International — Q1 2020 Earnings Presentation
19 slides from Graftech International's earnings presentation, May 6, 2020
Slide 1: Q1 2020 Results
GraFlech International Q1 2020 Results May 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 1.91 1.74 1.63 1.49 1.55 -39% -43% 0.95 0.54 2014 2015 2016 2017 2018 2019 Q1 2020 1 Total recordable injury rates measured per 200,000 hours worked. 3
Slide 4: Health & Safety - Response to COVID-19 Pandemic
Health & Safety - Response to COVID-19 Pandemic Actions were implemented early to protect the Safety & Health of our employees Created COVID-19 Response Team; meets 3 – 5 times per week All travel and in-person employee meetings cancelled Work-from-home protocol implemented for office based em
Slide 5: Operational Response to COVID-19 Pandemic
Operational Response to COVID-19 Pandemic Immediate actions implemented to keep plants running efficiently and safely Proactively navigated and implemented governmental controls and guidelines in eight different locations Rapidly implemented protective measures to keep our employees and work env
Slide 6: Industry Conditions
Industry Conditions COVID-19 is significantly impacting steel demand ‒ Global steel production down 1.4% in the first quarter compared to prior year first quarter and down 4.1% excluding China1 ‒ Steel prices have decreased significantly since March ‒ A number of our customers have had to temporar
Slide 7: Revised Outlook for Long-Term Contracts in Current Environment
Revised Outlook for Long-Term Contracts in Current Environment Customers are being significantly impacted by the current environment We are starting to experience increased pressure and being challenged by customers on long-term contracts LTA shipments are being impacted by the following: ‒ Fi
Slide 8: Production and Sales
Production and Sales Graphite electrode production volumes of 33 thousand MT were in-line with sales volumes Sales volumes were down due to customer destocking and the impact of COVID-19 in the latter part of the quarter Net sales were down from the prior year primarily due to lower volumes al
Slide 9: Earnings and Cash Flow
Earnings and Cash Flow Earnings Per Share (EPS) and Adjusted EBITDA1 declines due primarily to lower sales volumes EPS of $0.45 represents 20%+ annualized return on current share price2 Majority of Adjusted EBITDA converts to Free Cash Flow3 Earnings Per Share Adjusted EBITDA ($M)1 Free Cash F
Slide 10: Liquidity & Debt Maturity Profile
Liquidity & Debt Maturity Profile Liquidity of ~$400 million as of March 31, 2020 No near-term debt maturities ‒ Cash Balance of $152 million ‒ Term Loan matures in February 2025 ‒ Revolver Availability of $247 million ‒ Prepaid ~2 years of amortization payments in 2019 ‒ Favorable revolver cove
Slide 11: COVID-19 Financial Action Plan
COVID-19 Financial Action Plan Implemented a “Financial Action Plan” to address the impact of this pandemic 1. Eliminated discretionary spending 2. Reduced 2020 capital expenditures plan by 50% Performed detail review of all 2020 capex projects 3. Rightsizing workforce – down by 15% at electrode p
Slide 12: Proactive Measures to Increase Financial Flexibility
Proactive Measures to Increase Financial Flexibility Adjusting 2020 Capital Allocation Strategy During Q1 $53 million was returned to stockholders ($30 million of share repurchases and $23 of dividends) For the balance of 2020 our strategy will be reprioritized to focus on liquidity and debt rep
Slide 13: 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 14: 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 14
Slide 15: 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 16: Disclosures
Disclosures GraF ec 16 International
Slide 17: 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 18: Reconciliation to Adjusted EBITDA
Reconciliation to Adjusted EBITDA For the Three Months Ended March 31, (in thousands) 2020 2019 Net income 122,268 197,436 Add: Depreciation and amortization 14,284 15,585 Interest expense 25,672 33,700 Interest income (1,141) (414) Income taxes 23,946 32,418 EBITDA 185,029 278,725 Adjustments: Pens
Slide 19: Reconciliation to Free Cash Flow
Reconciliation to Free Cash Flow For the Three Months Ended March 31, (in thousands) 2020 2019 Net cash provided by operating activities 139,283 156,817 Capital expenditures (13,901) (14,569) Free cash flow 125,382 142,248 19
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