Q3 2020 Results November 3, 2020 NYSE: EAF www.graftech.com
Q3 2020 Results November 3, 2020
NYSE: EAFwww.graftech.com
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 statements by the use of forward-looking words such as “will,” “may,” “plan,” “estimate,” “project,” “believe,” “anticipate,”“expect,” “intend,” “should,” “would,” “could,” “target,” “goal,” “continue to,” “positioned to,” "are confident", "remain solid", "remain positive", "remain optimistic" or the negative versions of those words orother comparable words. Any forward-looking statements contained in this presentation are based upon our historical performance and on our current plans, estimates and expectations in light ofinformation currently available to us. The inclusion of this forward-looking information should not be regarded as a representation by us that the future plans, estimates or expectations contemplated by uswill be achieved. Our expectations and targets are not predictions of actual performance and historically our performance has deviated, often significantly, from our expectations and targets. Theseforward-looking statements are subject to various risks and uncertainties and assumptions relating to our operations, financial results, financial condition, business, prospects, growth strategy and liquidity.Accordingly, there are or will be important factors that could cause our actual results to differ materially from those indicated in these statements. We believe that these factors include, but are not limited to:the ultimate impact that the COVID-19 pandemic has on our business, results of operations, financial condition and cash flows; the cyclical nature of our business and the selling prices of our products maylead to periods of reduced profitability and net losses in the future; the possibility that we may be unable to implement our business strategies, including our ability to secure and maintain longer-termcustomer contracts, in an effective manner; the risks and uncertainties associated with litigation, arbitration, and like disputes, including the recently filed stockholder litigation and disputes related tocontractual commitments; the possibility that global graphite electrode overcapacity may adversely affect graphite electrode prices; pricing for graphite electrodes has historically been cyclical and the priceof graphite electrodes may continue to decline in the future; the sensitivity of our business and operating results to economic conditions and the possibility others may not be able to fulfill their obligations tous in a timely fashion or at all; our dependence on the global steel industry generally and the electric arc furnace ("EAF") steel industry in particular; the competitiveness of the graphite electrode industry;our dependence on the supply of petroleum needle coke; our dependence on supplies of raw materials (in addition to petroleum needle coke) and energy; the possibility that our manufacturing operationsare subject to hazards; changes in, or more stringent enforcement of, health, safety and environmental regulations applicable to our manufacturing operations and facilities; the legal, compliance,economic, social and political risks associated with our substantial operations in multiple countries; the possibility that fluctuation of foreign currency exchange rates could materially harm our financialresults; the possibility that our results of operations could deteriorate if our manufacturing operations were substantially disrupted for an extended period, including as a result of equipment failure, climatechange, regulatory issues, natural disasters, public health crises, such as the COVID-19 pandemic, political crises or other catastrophic events; our dependence on third parties for certain construction,maintenance, engineering, transportation, warehousing and logistics services; the possibility that we are unable to recruit or retain key management and plant operating personnel or successfully negotiatewith the representatives of our employees, including labor unions; the possibility that we may divest or acquire businesses, which could require significant management attention or disrupt our business; thesensitivity of goodwill on our balance sheet to changes in the market; the possibility that we are subject to information technology systems failures, cybersecurity attacks, network disruptions and breachesof data security; our dependence on protecting our intellectual property; the possibility that third parties may claim that our products or processes infringe their intellectual property rights; the possibility thatsignificant changes in our jurisdictional earnings mix or in the tax laws of those jurisdictions could adversely affect our business; the possibility that our indebtedness could limit our financial and operatingactivities or that our cash flows may not be sufficient to service our indebtedness; the possibility that restrictive covenants in our financing agreements could restrict or limit our operations; the fact thatborrowings under certain of our existing financing agreements subject us to interest rate risk; the possibility of a lowering or withdrawal of the ratings assigned to our debt; the possibility that disruptions inthe capital and credit markets could adversely affect our results of operations, cash flows and financial condition, or those of our customers and suppliers; the possibility that highly concentrated ownershipof our common stock may prevent minority stockholders from influencing significant corporate decisions; the possibility that we may not pay cash dividends on our common stock in the future; the fact thatcertain of our stockholders have the right to engage or invest in the same or similar businesses as us; the possibility that the market price of our common stock could be negatively affected by sales ofsubstantial amounts of our common stock in the public markets, including by Brookfield Asset Management Inc. and its affiliates; the fact that certain provisions of our Amended and Restated Certificate ofIncorporation and our Amended and Restated By-Laws could hinder, delay or prevent a change of control; the fact that the Court of Chancery of the State of Delaware will be the exclusive forum forsubstantially all disputes between us and our stockholders; and our status as a "controlled company" within the meaning of the New York Stock Exchange (“NYSE”) corporate governance standards, whichallows us to qualify for exemptions from certain corporate governance requirements.
These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements, including the Risk Factors sections that are included in our most recent AnnualReport on Form 10-K, our Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2020 and June 30, 2020, and other filings with the SEC. The forward-looking statements made in thispresentation relate only to events as of the date on which the statements are made. We do not undertake any obligation to publicly update or review any forward-looking statement, except as required bylaw, whether as a result of new information, future developments or otherwise.
2
Building Safe and Efficient Operations
3
Total Recordable Injury Rates1
1 Total recordable injury rates measured per 200,000 hours worked.
1.74
1.491.63
1.55
0.95
0.57
2015 2016 2017 2018 2019 Q3 YTD 2020
- 40%
Proactive Focus on COVID-19
4
Taking Actions to Keep Employees Safe
Senior Executive COVID-19 Response Team meets three times per week
Use of “check-sheets” to ensure highest priority and focus on safe COVID-19 practices
Employing “Safe-work Playbook”
Comprehensive document outlining exact protocols for safe operations in COVID-19 environment
Adapting as necessary to ensure employee and customer safety
Plants running safely, efficiently and successfully serving our customers
Operations team focused on safety, controls, education and communication
Focus on exceeding customer expectations
Maintained strong 98% on-time delivery performance in Q3
First Annual Sustainability Report
Launched Inaugural Sustainability Report in September
Advancing our ESG efforts
Tracking and monitoring our ESG data
Producing report annually
Available at www.GrafTech.com
EAF Steelmaking Advantages
75% less carbon emissions
Among the world’s largest recycling industries
5
http://www.graftech.com/
Industry Conditions
6
Q3 saw steel industry demand trends improving
Global steel production at ~187 million tons in Q3, excluding China1; up 12% sequentially vs. Q2
Global steel manufacturing utilization rates (ex-China) improved to just over 60% in Q32, from ~57% in Q2
Steel prices have been increasing globally; optimistic that current trends suggest continued market improvement
Customer inventories of graphite electrodes remain elevated and destocking continues
Generally, spot prices for graphite electrodes trended lower in Q3
1Source: World Steel Association, October 23, 20202Source: World Steel Association and Metal Expert
7
While customers have been notably impacted by the current environment, conditions are improving
Developing mutually beneficial solutions with customers struggling to take committed volumes
Substantial progress in completing several “blend and extend” contract modifications
Provides customers with near-term relief in exchange for additional volume commitments in future years
Will continue to work to ensure contractual commitments are fulfilled
We estimate approximate LTA sales volumes and revenues:
Commercial Outlook
2020 2021 2022 2023 through 2024
Estimated LTA volume(thousands of MT’s) above midpoint
100-115 98-108 95-105 35-45
Estimated LTA revenue(millions of $’s)
$1,000-$1,080 $925-$1025 $910-$1,010 $350-$450(1)
(1) Includes expected termination fees from a few customers that have failed to meet certain obligations under their LTAs.
Production and Sales
8
Sales Volumes (000 MT) Net Sales ($M)Production (000 MT)
Aligned production levels with sales volumes
Sales volumes down due to graphite electrode inventory overhang and COVID-related lower steel production levels
136
98
YTD/19 YTD/20
40
33
Q3/19 Q3/20
130
98
YTD/19 YTD/20
$421
$287
Q3/19 Q3/20
$1,376
$886
YTD/19 YTD/20
40
32
Q3/19 Q3/20
Earnings and Cash Flow
91Non-GAAP measure, see page 14 for reconciliation. 2Non-GAAP measure, see page 15 for reconciliation.
Earnings Per Share Adjusted EBITDA ($M)1 Free Cash Flow ($M)2
Continuing to deliver solid results in a challenging environment
Majority of Adjusted EBITDA1 converts to Free Cash Flow2
$0.61
$0.35
Q3/19 Q3/20
$1.96
$1.15
YTD/19 YTD/20
$245$153
Q3/19 Q3/20
$814
$483
YTD/19 YTD/20
$211
$123
Q3/19 Q3/20
$541
$386
YTD/19 YTD/20
Maintaining Financial Discipline
10
Liquidity ($M) Debt Maturity Profile ($M)
$159
$247 RevolverAvailability
Cash Balance
$406
0 0 0 40 113
1,439
2020 2021 2022 2023 2024 2025
Prioritizing Balance Sheet Strength and Financial Flexibility
Continued emphasis on reducing debt, lower by ~$150 million in Q3, ~$60 million in October and ~$313 million YTD
Expect full year 2020 capital expenditures of ~$35 million, a ~50% decrease y/y
Managing working capital and controlling costs, aligned workforce with demand – down >15% y/y at electrode plants
Majority of free cash flow in 2020 used for debt reduction
Liquidity of $406 million as of September 30, 2020 and no near-term debt maturities
GrafTech – An Industry Leading Producer of Graphite Electrodes
11
Graphite electrodes are a highly engineered, mission critical industrial consumable for electric arc furnace steel production, that constitute only 1-5% of customer COGS
• EAF steelmaking long-term growth rate of ~3%(1), low capital and cost structure and flexible to operate
Sharp focus on providing services and solutions for electric arc furnace steel producers
Sustainable competitive advantage from our low coststructure:
• Substantial vertical integration into petroleum needle coke
• Efficient operation of three of the largest graphite electrode manufacturing facilities in the world
Consistent cash flow generation and commitment to strong balance sheet
(1) Source: World Steel Association
Disclosures
12
Disclosures
Non-GAAP Financial Measures
13
Investors are encouraged to read the information contained in this presentation in conjunction with the following information, the Forward-looking statements information on page 2 and the factors described under the “Risk Factors” section of the Company’s most recent Annual Report on Form 10-K and disclosure in the Company’s other SEC filings.
Adjusted EBITDA is a non-GAAP financial measure and the primary metric used by our management and our board of directors to establish budgets and operational goals for managing our business and evaluating our performance. We define Adjusted EBITDA as EBITDA plus any pension and other post-employment benefit plan expenses, initial and follow-on public offering expenses, non-cash gains or losses from foreign currency remeasurement of non-operating assets and liabilities in our foreign subsidiaries where the functional currency is the U.S. dollar, related party Tax Receivable Agreement expense, stock-based compensation and non-cash fixed asset write-offs. We define EBITDA, a non-GAAP financial measure, as net income or loss plus interest expense, minus interest income, plus income taxes, and depreciation and amortization. We monitor Adjusted EBITDA as a supplement to our GAAP measures, and believe it is useful to present to investors because we believe that it facilitates evaluation of our period to period operating performance by eliminating items that are not operational in nature, allowing comparison of our recurring core business operating results over multiple periods unaffected by differences in capital structure, capital investment cycles and fixed asset base. In addition, we believe Adjusted EBITDA and similar measures are widely used by investors, securities analysts, ratings agencies, and other parties in evaluating companies in our industry as a measure of financial performance and debt service capabilities.
Free cash flow, a non-GAAP financial measure, is a metric used by our management and our board of directors to analyze cash flows generated from operations. We define free cash flow as net cash provided by operating activities less capital expenditures. We believe free cash flow is useful to present to investors because we believe that it facilitates comparison of the Company’s performance with its competitors.
Although Adjusted EBITDA, free cash flow and similar measures are frequently used by other companies, our calculation of these measures is not necessarily comparable to such other similarly titled measures of other companies. The non-GAAP presentations of Adjusted EBITDA and free cash flow are not meant to be considered in isolation or as a substitute for analysis of our results as reported under GAAP. When evaluating our performance, you should consider these measures alongside other measures of financial performance and liquidity, including our net income (loss) and cash flow from operating activities, respectively, and other GAAP measures.
Reconciliation to Adjusted EBITDA
14
(1) Service and interest cost of our OPEB plans. Also includes a mark-to-market loss (gain) for plan assets as of December of each year. (2) Legal, accounting, printing and registration fees associated with the initial and follow-on public offering and related expenses.(3) Non-cash gains and losses from foreign currency remeasurement of non-operating assets and liabilities of our non-U.S. subsidiaries where the functional currency is the U.S. dollar.(4) Non-cash expense for stock-based compensation grants.(5) Non-cash fixed asset write-off recorded for obsolete assets.(6) Non-cash expense for future payment to our sole pre-IPO stockholder for tax assets that are expected to be utilized.
(in thousands) 2020 2019 2020 2019
Net income $ 94,234 $ 175,876 $ 309,278 $ 569,680 Add:Depreciation and amortization 16,241 15,357 45,074 46,387 Interest expense 22,474 31,803 69,026 98,472 Interest income (93) (1,765) (1,582) (2,910)Income taxes 18,104 20,755 61,838 90,940 EBITDA from continuing operations $ 150,960 $ 242,026 $ 483,634 $ 802,569 Adjustments:Pension and OPEB plan expenses (1) 583 800 1,666 2,397 Initial and follow-on public offering expenses (2) - 160 4 1,409 Non-cash loss on foreign currency remeasurement (3) 798 (185) (441) 842 Stock-based compensation (4) 764 706 1,891 1,568 Non-cash fixed asset write-off (5) - 1,947 - 4,888 Related party Tax Receivable Agreement adjustment (6) - - (3,346) - Adjusted EBITDA from continuing operations $ 153,105 $ 245,454 $ 483,408 $ 813,673
For the Three Months Ended September 30,
For the Nine Months Ended September 30,
% EAF
2018 Crude Steel Production2017 EAF as a % of Crude Steel Production
North America12067%7%
ROW25048%14%
Asia (ex-China)34142%19%
European Union16842%9%
China92812%51%
World1,80729%
EAF as a % of Total Steel Production
North America67%
North America67%
North America67%
North America67%
North America67%
North America67%
North America67%
ROW48%
ROW48%
ROW48%
ROW48%
ROW48%
ROW48%
ROW48%
ROW48%
ROW48%
ROW48%
ROW48%
ROW48%
ROW48%
ROW48%
Asia (ex-China)42%
Asia (ex-China)42%
Asia (ex-China)42%
Asia (ex-China)42%
Asia (ex-China)42%
Asia (ex-China)42%
Asia (ex-China)42%
Asia (ex-China)42%
Asia (ex-China)42%
Asia (ex-China)42%
Asia (ex-China)42%
Asia (ex-China)42%
Asia (ex-China)42%
Asia (ex-China)42%
Asia (ex-China)42%
Asia (ex-China)42%
Asia (ex-China)42%
Asia (ex-China)42%
Asia (ex-China)42%
European Union42%
European Union42%
European Union42%
European Union42%
European Union42%
European Union42%
European Union42%
European Union42%
European Union42%
European Union42%
China12%
China12%
China12%
China12%
China12%
China12%
China12%
China12%
China12%
China12%
China12%
China12%
China12%
China12%
China12%
China12%
China12%
China12%
China12%
China12%
China12%
China12%
China12%
China12%
China12%
China12%
China12%
China12%
China12%
China12%
China12%
China12%
China12%
China12%
China12%
China12%
China12%
China12%
China12%
China12%
China12%
China12%
China12%
China12%
China12%
China12%
China12%
China12%
China12%
China12%
China12%
EAF as a % of Total Steel Production
North AmericaNorth AmericaNorth AmericaNorth AmericaNorth AmericaNorth AmericaNorth AmericaROWROWROWROWROWROWROWROWROWROWROWROWROWROWAsia (ex-China)Asia (ex-China)Asia (ex-China)Asia (ex-China)Asia (ex-China)Asia (ex-China)Asia (ex-China)Asia (ex-China)Asia (ex-China)Asia (ex-China)Asia (ex-China)Asia (ex-China)Asia (ex-China)Asia (ex-China)Asia (ex-China)Asia (ex-China)Asia (ex-China)Asia (ex-China)Asia (ex-China)European UnionEuropean UnionEuropean UnionEuropean UnionEuropean UnionEuropean UnionEuropean UnionEuropean UnionEuropean UnionEuropean UnionChinaChinaChinaChinaChinaChinaChinaChinaChinaChinaChinaChinaChinaChinaChinaChinaChinaChinaChinaChinaChinaChinaChinaChinaChinaChinaChinaChinaChinaChinaChinaChinaChinaChinaChinaChinaChinaChinaChinaChinaChinaChinaChinaChinaChinaChinaChinaChinaChinaChinaChina0.670.670.670.670.670.670.670.477987220447284420.477987220447284420.477987220447284420.477987220447284420.477987220447284420.477987220447284420.477987220447284420.477987220447284420.477987220447284420.477987220447284420.477987220447284420.477987220447284420.477987220447284420.477987220447284420.421227565982404630.421227565982404630.421227565982404630.421227565982404630.421227565982404630.421227565982404630.421227565982404630.421227565982404630.421227565982404630.421227565982404630.421227565982404630.421227565982404630.421227565982404630.421227565982404630.421227565982404630.421227565982404630.421227565982404630.421227565982404630.421227565982404630.414999999999999980.414999999999999980.414999999999999980.414999999999999980.414999999999999980.414999999999999980.414999999999999980.414999999999999980.414999999999999980.414999999999999980.116000000000000010.116000000000000010.116000000000000010.116000000000000010.116000000000000010.116000000000000010.116000000000000010.116000000000000010.116000000000000010.116000000000000010.116000000000000010.116000000000000010.116000000000000010.116000000000000010.116000000000000010.116000000000000010.116000000000000010.116000000000000010.116000000000000010.116000000000000010.116000000000000010.116000000000000010.116000000000000010.116000000000000010.116000000000000010.116000000000000010.116000000000000010.116000000000000010.116000000000000010.116000000000000010.116000000000000010.116000000000000010.116000000000000010.116000000000000010.116000000000000010.116000000000000010.116000000000000010.116000000000000010.116000000000000010.116000000000000010.116000000000000010.116000000000000010.116000000000000010.116000000000000010.116000000000000010.116000000000000010.116000000000000010.116000000000000010.116000000000000010.116000000000000010.11600000000000001
TRIR
20151.74
20161.49
20171.63
20181.51
20190.95
Q1 20200.54
Q2 20200.42
Q3 20200.57
* As of 12/31/19
-0.2222222222
-0.40000
20152016201720182019Q1 2020Q2 2020Q3 20201.741.491.631.510.950.540.420.56999999999999995
4 growth (2)
FY 2017FY 2018FY201917-18 Ch18-19 Ch
Sales volumes1721858%
Production1661798%
Capacity1671802028%12%
99%99%95%
111.5
22.3
Sales volumes
FY 2017FY 2018172185
FY 2017FY 2018
Production
FY 2017FY 2018166179
Capacity
FY 2017FY 2018FY2019167180202
FY 2017FY 2018FY2019ProductionFY 2017FY 2018FY2019166179CapacityFY 2017FY 2018FY2019167180202Sales volumesFY 2017FY 2018FY2019172185FY 2017FY 2018FY2019
4 growth
2017 Capacity*Debottlenecking projects2019 Forecast Capacity*
167167202
35
2017 Capacity*Debottlenecking projects2019 Forecast Capacity*000
2017 Capacity*Debottlenecking projects2019 Forecast Capacity*167000167000202000
2017 Capacity*Debottlenecking projects2019 Forecast Capacity*35000
5 LTA
2018A2019A2020E2021E2022E2023E2018E2019E2020E2021E2022E2023E
Expected new take-or-pay agreements1418282722
Current three-year agreements (to be negotiated)19.519.5
Estimated take-or-pay shipments (000 MT)1331451301251170Current take-or-pay agreements 132138135118113
Weighted Average Realized Price$ 10,100$ 9,900$ 9,600$ 9,700$ 9,700
9730.9477756286
9665.0537634409
Q4/18 Earnings SlidesAugust Prospectus p
115IncrementalPerfomance obligation
Bandy, Meredith: Bandy, Meredith:see note 2, page 10
$/MTMM MT$/MTMM MT$/MTMM MTBack calc test
2018$10,100133$10,061132
2019$9,800148$9,729138$10,780101,462,362
Bandy, Meredith: Bandy, Meredith:remaining 9 mos plus
Q1A
Bandy, Meredith: Bandy, Meredith:see note 2, page 10$ 9,881
2020$9,600145$9,424135$11,976101,392,966$ 9,607
2021$9,700128$9,475118$12,355101,237,952$ 9,672
92022$9,700120$9,618113$11,02471,172,028$ 9,767
2023$12,0002$12,0002.429,461$ 12,275
Total$9,787676$9,666636$11,60139
Total Revenue (US$B)$ 6.6$ 6.1$ 0.457
Remaining revenue (US$B)$ 5.3$ 4.8$ 0.457
% LTA67%2019-22
% LTA73%2019
Estimated take-or-pay shipments (000 MT)
2018A2019A2020E2021E2022E132.67500000000001145130125117Weighted Average Realized Price
2018A2019A2020E2021E2022E101009900960097009700
Current take-or-pay agreements 2018E2019E2020E2021E2022E132138135118113Current three-year agreements (to be negotiated)2018E2019E2020E2021E2022E19.519.5Expected new take-or-pay agreements2018E2019E2020E2021E2022E14.4317.85000000000000127.8526.55
Estimated take-or-pay shipments (000 MT)
2020E2021E2022E130125117Weighted Average Realized Price
2020E2021E2022E960097009700
key stats
Q3/19Q3/20YTD/19YTD/20Q % ChYTD % ChQ3/19Q2/19
Production403213698(20%)(28%)40(20%)48
Sales volumes403313098(18%)(25%)40(18%)45
price$9,960$9,283$9,977$9,421(7%)(6%)$9,960(7%)$1
sales $421$287$1,376$886(32%)(36%)$421(32%)$480
EPS$0.61$0.35$1.96$1.15(43%)(41%)$0.61(43%)$0.68
Adj. EBITDA$245$153$814$483(38%)(41%)$245(38%)$284
OCF226129359417226(43%)202
capex-15-6-44-31-15(57%)-15
FCF$211$123$541$386(42%)(29%)$211(42%)$187
Sales VolumesWeighted Avg Real. PriceNet SalesProduction
EPSAdj EBITDAFCF
Q1/18Q2/18Q3/18Q4/18FY 2018Q1/19QoQYoYQ1/20QoQYoYQ3/19QoQYoYQ4/19QoQYoYFY 2019YoY
Sales volumes4345455318546-13%7%34-26%-24%-1-100%ERROR:#DIV/0!-100%-100%
price10,1249,9339,7449,9509,937$9,803-1%-3%9,030-8%-9%-100%-100%ERROR:#DIV/0!-100%-100%
sales 4524564555331,896$463-13%2%319-31%-30%-100%-100%ERROR:#DIV/0!-100%-100%
EPS$0.74$0.67$0.67$0.79$2.87$0.70-11%-5%$0.45-36%-33%-100%-100%ERROR:#DIV/0!-100%-100%
Adj. EBITDA3102922773261,205$269-17%-13%179-33%-39%-100%-100%ERROR:#DIV/0!-100%-100%
OCF141237235224837146-35%4%139-5%-41%-100%-100%ERROR:#DIV/0!-100%-100%
capex141519216815-27%7%-14-193%-195%-100%-100%ERROR:#DIV/0!-100%-100%
FCF127222216204768$131-36%4%$125-5%-44%-100%-100%ERROR:#DIV/0!-100%-100%
Sales volumesQ3/19Q3/204033
EPSYTD/19YTD/201.961.1499999999999999
Adj. EBITDAYTD/19YTD/20813.673483.40699999999998
FCFYTD/19YTD/20541385.976
Q3/19Q3/19Q3/200ProductionQ3/19Q3/204032
ProductionYTD/19YTD/2013698
priceQ3/19Q3/2099609283
sales Q3/19Q3/20420.79700000000003286.98700000000002
EPSQ3/19Q3/200.610.35
Adj. EBITDAQ3/19Q3/20245.45400000000001153.10400000000001
FCFQ3/19Q3/20210.89499999999998122.67600000000002
Sales volumesYTD/19YTD/2013098
priceYTD/19YTD/2099779421
sales YTD/19YTD/201376.181886.351
ebitda waterfall
Net IncomeD&ANet interestIncome taxesNet adjustments*Adj. EBITDA from Cont'g Operations
175.87615.35730.03820.7753.428245.474
175.876191.233221.271242.046
Net IncomeD&ANet interestIncome taxesNet adjustments*Adj. EBITDA from Cont'g Operations175.876191.233221.27100000000002242.04600000000002
Net IncomeD&ANet interestIncome taxesNet adjustments*Adj. EBITDA from Cont'g Operations175.87615.35699999999999930.03820.7749999999999993.4279999999999999245.47400000000002
vertical integration
200est capacity - 202 rounded
0.95yield
190coke needs
17anode
173needle coke needed
127Seadrift production no outage
116.4166666667Seadrift production w/ outage
121.7083333333average Seadrift produciton
70%Seadrift
industry
Global Industrial Production
1181256%
Source: IPECPRWO Index
As of 10/31/18
Chinese Steel Exports
2015201620172018H1/19 Annualized
112405108990756306955068800
Source:CNXVSPRM Index
data thru 12/31/18
Steel Production Growth
2018A2019F2020F
World ex-China2.2%1.7%2.8%
China8.2%6.0%0.0%
Source:World Steel Association Short Range Outlook October 2018
% EAF
North America
Asia (ex-China)
EU
China
All other
World
Source: World Steel in Figures, June 2019
EAF Growth
2015201620172018
404415472520
Source: World Steel Association Steel Statistical Yearbook 2018 and Short Range Outlook October 2018 w/mgmt est
118
125
World ex-China
2018A2019F2020F2.1999999999999999E-21.7000000000000001E-22.8000000000000001E-2
112405
108990
World ex-China
2015201620172018404415472520.44479999999999
Chinese Steel Exports
2015201620172018H1/19 Annualized112405108990756306955068800
EV
Sourcehttps://www.iea.org/gevo2018/
20172018201920202021202220232024202520262027202820292030
Passenger Light Duty Vehicles - Battery Electric VehiclePLDVs-BEV1.92.73.95.57.49.411.714.317.220.223.827.932.838.5
Passenger Light Duty Vehicles - Plug-in Hybrid Electric VehiclePLDVs-PHEV02.645.48.612.216.321.227.133.240.649.860.974.6
Total Vehicles - new policieesTotal1.95.37.910.91621.62835.544.353.464.477.793.7113.1
Total Vehicles - new policiees10.944.3
14.847.8
10.637.4
1.44.6
1.24.6
0.10.7
28.195.1
Total Vehicles - [email protected]
15.257.0
201720182019202020212022202320242025
EV Stock3.1
Bandy, Meredith: Bandy, Meredith:actual st5.18.916.023.732.041.050.761.3
EV Delivery1.12.03.87.17.78.39.09.710.6
86%
Bandy, Meredith: Bandy, Meredith:goal seek to make 2020 stock = average of new policies and 30@30 estimates86%86%8%8%8%8%8%
424.4880542789633.1013814708
ASUMPTIONS
kg/vehicle40
% synthetic0.5
yield0.5
Estimated NC needs44,000
Bandy, Meredith: Bandy, Meredith:previous estimate ~60kt
assuming 75% synthetic81,826152,172282,992
Bandy, Meredith: Bandy, Meredith:matches Didier's estimate
250-300kt
Bandy, Meredith: Bandy, Meredith:actual st306,546332,061359,699389,637422,068
Source: ICC News (email from Lisa Chen to Meredith Bandy dated 2/18/19 9:44pm)PREVIOUS
2016201720182019E2020E
Installed capacity of consumer batteryGWh21.122.923.624.325.0
% growth9%3%3%3%
Power battery (EV)GWh28.043.560.586.5124.6
% growth56%39%43%44%
Energy storage lithium batteryGWh12.213.113.814.515.2
% growth7%5%5%5%
Total installed capacity of lithium batteryGWh61.379.597.9125.3164.8
% growth30%23%28%32%
Needle coke demand from anode materialsMT140,000218,000279,000354,300
% growth56%28%27%
Needle coke demand from Power batteriesMT76,636134,750192,628267,821
% growth76%43%39%
Total2017201820192020202120222023202420251.95.30000000000000077.910.91621.62835.544.3Passenger Light Duty Vehicles - Battery Electric Vehicle2017201820192020202120222023202420251.92.73.95.57.49.411.714.317.2Passenger Light Duty Vehicles - Plug-in Hybrid Electric Vehicle20172018201920202021202220232024202502.645.48.612.216.321.227.1
Needle coke demand from anode materialsMT
201720182019E2020E140000218000279000354300Needle coke demand from anode materials% growth201720182019E2020E0.557142857142857160.279816513761467880.26989247311827946
Needle coke demand from Power batteriesMT
201720182019E2020E76635.655016343982134749.8723317332192628.01276935355267821.38609054498Needle coke demand from Power batteries% growth201720182019E2020E0.758318269779194590.429522784965119530.39035533949688572
https://www.iea.org/gevo2018/
US EAF
550000000.001793500
170000000.001728900
17000000000122400
0.3090909091
Source: Bank of America Merrill Lynch, "Investing in Advance of Steelmageddon" datated Mary 18, 2019
0.350.35Q2/182017A U.S. EAF production from WSA56Source: SSY 2018
0.10.125Q2/182018E Capacity additions3
0.750.75H2/182018Announced Additions2022E
0.240.24Q4/1876
Bandy, Meredith: Bandy, Meredith:wood mac14
Bandy, Meredith: Bandy, Meredith:BAML9019%
1.53Q4/1876
2.944.465
11Q4/19
0.350.35H2/20
0.160.16H2/20
1.651.65H2/20
11H1/20
0.350.35H1/20
1.61.6H2/20
33H2/21
1.41.42021
1.21.22022
0.530.532021
0.912022
1.653.3?
1517
2018Announced Additions2022E 76
2018Announced Additions2022E 7614.21119477456227890.211194774562273
ebitda rec
For the Three Months Ended September 30,For the Three Months Ended September 30,For the Nine Months Ended September 30,For the Six Months Ended June 30,
(in thousands)201820202019202020192019
Net income199,466$ 94,234$ 175,876$ 309,278$ 569,680227,636
Add:- 0
Depreciation and amortization16,05016,24115,35745,07446,38745,958
Interest expense33,85522,47431,80369,02698,47259,697
Interest income(562)(93)(1,765)(1,582)(2,910)90
Income taxes24,87118,10420,75561,83890,94059,187
EBITDA from continuing operations273,680$ 150,960$ 242,026$ 483,634$ 802,569392,568
Adjustments:
Pension and OPEB plan expenses (1)4835838001,6662,3971,449
Initial and follow-on public offering expenses (2)1,404- 016041,409(156)
Non-cash loss on foreign currency remeasurement (3)476798(185)(441)842542
Stock-based compensation (4)—7647061,8911,5681,949
Non-cash fixed asset write-off (5)—- 01,947- 04,888(1,947)
Related party Tax Receivable Agreement adjustment (6)276,043--(3,346)-394,405
Adjusted EBITDA from continuing operations$ 153,105$ 245,454$ 483,408$ 813,673
uses of cash
Post IPO Free Cash FlowCash Uses Since IPOQ2Q3/18Q4/18Q1/19Q2/19Q3/19
FCF114033%OCF237.122234.569224.359156.817202.206225.749
Debt Repayment18116%
Quarterly Dividends143Capex-14.71-18.897-20.589-14.569-14.630-14.854
Share Repurchases235FCF222.412215.672203.77142.248$188$211
Special Dividends20358151%
Cash Retained378Debt repayment28.12528.247125153.247
Special Dividends203.38203.38
TTM Free Cash FlowTTM Cash UsesShare repurchases2259.59.5
FCF74438%Quarterly Dividends19.64324.69524.69624.69624.69624.69698.784
Debt repayment15321%
Quarterly Dividends99
Share Repurchases10
Special Dividends20331242%
Cash retained280
Special DividendsRegular DividendsShare RepurchasesDebt RepaymentTotal Cash UsesFree Cash Flow
203.3898.7849.5153.247279.578
203.38302.164311.664464.911464.911744.489
311.6640.4186280791
0.2058418593
FCF
Post IPO Free Cash FlowCash Uses Since IPO1140.3147200000001Debt Repayment
Post IPO Free Cash FlowCash Uses Since IPO181.37200000000001Quarterly Dividends
Post IPO Free Cash FlowCash Uses Since IPO143.12200000000001Share Repurchases
Post IPO Free Cash FlowCash Uses Since IPO234.5Special Dividends
Post IPO Free Cash FlowCash Uses Since IPO203.38000000000002Cash RetainedPost IPO Free Cash FlowCash Uses Since IPO377.94072000000006
FCF
TTM Free Cash FlowTTM Cash Uses744.48900000000003Special Dividends
TTM Free Cash FlowTTM Cash Uses203.38000000000002Share Repurchases
TTM Free Cash FlowTTM Cash Uses9.5Quarterly Dividends
TTM Free Cash FlowTTM Cash Uses98.784000000000006Debt repayment
TTM Free Cash FlowTTM Cash Uses153.24700000000001Cash retainedTTM Free Cash FlowTTM Cash Uses279.57799999999997
Special DividendsRegular DividendsShare RepurchasesDebt RepaymentTotal Cash UsesFree Cash Flow203.38000000000002302.16400000000004311.66400000000004464.91100000000006464.91100000000006744.48900000000003
Special DividendsRegular DividendsShare RepurchasesDebt RepaymentTotal Cash UsesFree Cash Flow203.3800000000000298.7840000000000069.5153.24700000000001279.57799999999997
fcf rec
For the Three MonthsFor the Nine MonthsFor the Three MonthsFor the Nine Months For the Three Months EndedPro Forma for the Three Months EndedFor the Three Months EndedEstimated Post IPO
Ended September 30,Ended September 30,Ended September 30,Ended September 30,June 30,Adjustment*June 30,September 30,December 31,April 19 to December 31,
(in thousands)2020201920202019(in thousands)2020201920202019(in thousands)20182018201820182018
Net cash provided by operating activities $ 129,009$ 225,749$ 416,665$ 584,772Net cash provided by operating activities 202,206225,749220,544129,009Net cash provided by operating activities 237,122(49,509)187,613234,569224,359646,541
Capital expenditures(6,333)(14,854)(30,688)(44,053)Capital expenditures(14,630)(14,854)(20,050)(13,901)Capital expenditures(14,710)3,071(11,639)(18,897)(20,589)(51,125)
Free cash flow$ 122,676$ 210,895$ 385,977$ 540,719Free cash flow187,576210,895200,494115,108Free cash flow222,412(46,438)175,974215,672203,770595,416
0.2087912088
Q4/18Q1/19Q2/19Q3/19TTM 2019Uses of Cash
1882112001150
188398599
Q1/19Q2/19Q3/19Q4/19FY 2019Uses of Cash
142188211200741
014233054135047%
26149%
99
Q4/18Q1/19Q2/19Q3/19TTM 2019187.57599999999999398.471598.96500000000003
Q4/18Q1/19Q2/19Q3/19TTM 2019187.57599999999999210.89500000000001200.494115.1080
99
Q1/19Q2/19Q3/19Q4/19FY 2019Uses of Cash261
Q1/19Q2/19Q3/19Q4/19FY 2019Uses of Cash0142330541350
Q1/19Q2/19Q3/19Q4/19FY 2019Uses of Cash142188211200741
Q4/18Q1/19Q2/19Q3/19TTM 2019187.57599999999999398.471598.96500000000003
Q4/18Q1/19Q2/19Q3/19TTM 2019187.57599999999999210.89500000000001200.494115.1080
leverage
Total debt1,813
Adjusted EBITDA1,050
1.7
Q&A
Cost per ton
ESTIMATEExternalInternal
LTA70%9800COS179
Spot30%9300DA15
Total100%$9,650Other revenue24
Estimated cash cost graftech manu sales ($M)139
graftech manu sales (MT)0.041
Estimated cash cost graftech manu sales ($/MT)$3,397
using Seadrift2600
using 3rd party5600
% Seadrift0.75
$3,350
RevenueQ4/19
FY199mo19Q4/19TonsPrice
LTA$1,437,354$1,107,742$329,61233$9,900
Bandy, Meredith: Bandy, Meredith:given in slides
STA$260,979$191,249$69,7308$9,049
Other$92,459$77,190$15,2690
Total$1,790,792$1,376,181$414,61141$9,740Note: actual $9,724 due to rounding of sales tonnage
LTA % of revenue80%80%79%
LTA % of volumes 81%
0.1613043757
Q2/19Q4/18
Current Assets881.339638.051-243.288
Current Liabilities260.093327.12767.034
621.246310.924
debt levels
431906/30/2018433734346543555436464373812/31/2019
Brookfield264264229229229229229199-25%
Public Float383861616161607186%
Shares outstanding302302291291291291290270-11%
Q2/18Q4/19
STD52,394106,378106,325106,32315,49243,46270,861(561)
LTD1,421,2642,103,6282,077,0032,050,3112,017,7161,991,3451,965,5011,813,384
Total Debt1,473,6582,210,0062,183,3282,156,6342,033,2082,034,8072,036,3621,812,823-18%
Brookfield
6/30/2018433734346543555436464373812/31/2019264128398229440087229440087229440087229440087229440087199240087Public Float
6/30/2018433734346543555436464373812/31/201938097525610975256109752561097525610975256019752571000000Shares outstanding
6/30/2018433734346543555436464373812/31/2019302225923290537612290537612290537612290537612289637612270240087
Shares outstanding
6/30/201812/31/2019302225923270240087Brookfield
6/30/201812/31/2019264128398199240087Public Float
6/30/201812/31/20193809752571000000
Total Debt
Q2/18Q4/1922100061812823STDQ2/18Q4/19106378-561LTDQ2/18Q4/1921036281813384
Reconciliation to Free Cash Flow
15
For the Three Months For the Nine MonthsEnded September 30, Ended September 30,
(in thousands) 2020 2019 2020 2019
Net cash provided by operating activities $ 129,009 $ 225,749 $ 416,665 $ 584,772 Capital expenditures (6,333) (14,854) (30,688) (44,053)Free cash flow $ 122,676 $ 210,895 $ 385,977 $ 540,719
Q3 2020 Results Forward-looking StatementsBuilding Safe and Efficient OperationsProactive Focus on COVID-19First Annual Sustainability Report Industry ConditionsSlide Number 7Production and SalesEarnings and Cash FlowMaintaining Financial DisciplineGrafTech – An Industry Leading Producer of Graphite ElectrodesSlide Number 12Non-GAAP Financial MeasuresReconciliation to Adjusted EBITDAReconciliation to Free Cash Flow