Jay Spencer

Jay Spencer inquired if U.S. graphite electrode pricing had improved sequentially, given the average selling price of $4,200 per ton and the $120 per ton boost from U.S. volumes. He also asked about the continued usefulness of the Bloomberg China graphite electrode pricing metric as an indicator, especially with increased tariffs on active anode material and GrafTech's U.S. focus.

Answer

CEO Tim Flanagan stated that U.S. pricing was flat to slightly up sequentially, attributing the stability to annual contract negotiations. Regarding the Bloomberg China pricing, Mr. Flanagan described it as a directional indicator, noting its volatility and greater influence in regions less focused on quality (Middle East, Turkey, Africa, South America) rather than the U.S. and EU, where existing trade protections mitigate its direct impact. He also linked it to the global overcapacity issue.

Jay Spencer from Stifel inquired whether U.S. graphite electrode pricing had improved sequentially from the prior quarter, considering GrafTech's average selling price and the reported boost from U.S. volumes. He also asked about the continued utility of the Bloomberg China graphite electrode pricing metric as a directional indicator, especially given recent tariff increases on active anode material and GrafTech's strategic focus on the U.S. market.

Answer

CEO Tim Flanagan stated that U.S. pricing was flat to slightly up sequentially, noting that U.S. contracts are typically negotiated annually. Regarding the Bloomberg China pricing, Mr. Flanagan acknowledged its directional utility for the broader market, particularly in regions less focused on quality, but clarified that it doesn't influence U.S. and EU prices to the same extent due to existing trade protections. He emphasized that Chinese export volumes put pressure on Western suppliers globally.

Jay Spencer from Stifel inquired about the current lead times for key components like engines, electric drives, and compressors, and asked about the expected pacing of the $95 million to $120 million growth CapEx throughout 2025.

Answer

CEO Justin Jacobs detailed that lead times remain long: ~9 months for engines, 6-9 months for compressor frames, and over 9 months for fabrication, which is the main bottleneck. He stated that 2025 CapEx spending will be weighted to the second half of the year but will be more ratable than unit deployments due to advance spending and some slippage from Q4 2024.

Jay Spencer sought details on the new $545 million term loan, asking about its closing timeline and effective status. He also questioned how securing a new RBL facility would affect the term loan's commitment size and whether the loan includes amortization.

Answer

CFO Michael Helm confirmed the term loan commitment was signed and is effective, with a goal to finalize all financing well before year-end. He explained that the term loan provides full liquidity, making a new RBL optional. If an RBL is secured, it would replace a $95 million liquidity component of the term loan on a dollar-for-dollar basis. Helm also confirmed the main $450 million portion of the term loan has a 10% annual amortization.