On July 26, 2024, GrafTech International Ltd (EAF, Financial) released its 8-K filing detailing the financial results for the second quarter of 2024. GrafTech International Ltd is a manufacturer of high-quality graphite electrode products essential to the production of electric arc furnace (EAF) steel and other ferrous and non-ferrous metals. The company operates in the Industrial Materials segment, which includes graphite electrodes and petroleum needle coke products.
Performance Overview
GrafTech International Ltd reported net sales of $137 million for Q2 2024, surpassing the analyst estimate of $126.32 million. However, the company posted a net loss of $15 million, or $0.06 per share, beating the estimated earnings per share (EPS) of -$0.11. This performance reflects a sequential improvement in sales volume by 6% and an increase in capacity utilization to 60%.
Financial Achievements and Challenges
Despite the challenging commercial environment, GrafTech managed to achieve significant cost improvements. The company reported an 18% reduction in cash costs per metric ton (MT) compared to Q2 2023. Adjusted EBITDA for Q2 2024 was $14 million, down from $26 million in Q2 2023, primarily due to lower weighted-average realized prices and a shift from long-term agreements (LTA) to non-LTA volume.
Our actions to aggressively address our cost structure led to a sequential improvement in cash costs on a per metric ton basis, as well as an 18% improvement compared to the second quarter of 2023," said Timothy Flanagan, Chief Executive Officer and President.
Income Statement Highlights
| Metric | Q2 2024 | Q1 2024 | Q2 2023 |
|---|---|---|---|
| Net Sales | $137 million | $136.6 million | $185.6 million |
| Net Loss | -$15 million | -$30.9 million | -$7.9 million |
| Adjusted EBITDA | $14 million | $0.2 million | $26 million |
Balance Sheet and Cash Flow
As of June 30, 2024, GrafTech had liquidity of $232 million, including $121 million in cash and cash equivalents and $111 million available under its revolving credit facility. The company reported net cash used in operating activities of $37 million and adjusted free cash flow of negative $44 million, impacted by a $34 million semi-annual interest payment on senior secured notes.
Operational Metrics
Sales volume for Q2 2024 was 25.5 thousand MT, a 3% decrease compared to Q2 2023. Production volume increased by 6% to 26.8 thousand MT. The weighted-average realized price for non-LTA volume was approximately $4,300 per MT, a 23% decrease from Q2 2023, reflecting ongoing commercial challenges.
Capital Structure and Liquidity
GrafTech's gross debt stood at $950 million, with net debt at approximately $829 million. The company believes it has adequate liquidity to navigate the persistent challenges in the commercial environment.
Outlook
GrafTech anticipates continued weak demand for graphite electrodes in the near term due to global economic uncertainty affecting steel industry production. The company expects sales volume in Q3 2024 to be in line with Q2 2024 and foresees a modest year-over-year improvement in sales volume for the full year. GrafTech also projects a mid-teen percentage point decline in full-year 2024 cash cost of goods sold per MT compared to 2023.
For more detailed insights and the complete financial report, visit the 8-K filing.
Explore the complete 8-K earnings release (here) from GrafTech International Ltd for further details.
