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GRAFTECH INTERNATIONAL LTD (EAF)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered sequential volume growth and cost reduction, but remained loss-making: net sales $134.2M, diluted EPS -$0.19, adjusted EBITDA -$6.9M; gross margin improved to -7.8% from -14.4% YoY as cash COGS/MT fell 25% YoY in the quarter .
  • Management announced a 15% price increase on uncommitted 2025 volumes and plans to shift geographic mix to higher ASP regions; >60% of anticipated 2025 volume is already committed in the order book .
  • Liquidity strengthened to $464M with maturities largely pushed to December 2029 via new first-lien term loans and note exchanges; gross debt $1.125B, cash $256M at year-end .
  • 2025 outlook: low double-digit YoY volume increase, mid-single-digit decline in cash COGS/MT, capex ~$40M, and favorable (but smaller) working capital benefit; non-LTA pricing remains “unsustainably low” near ~$3,900/MT in Q4 .
  • Potential catalysts: price-hike execution beginning in Q2 deliveries, tariff developments (Mexico/U.S.), continued share recovery in U.S. and Europe, and normalization of pricing as Western supply rationalizes .

What Went Well and What Went Wrong

What Went Well

  • Delivered cost-out ahead of guidance: cash COGS/MT down 25% YoY in Q4 and 23% for FY 2024; adjusted EBITDA improved YoY (-$6.9M vs -$21.6M) despite weak pricing .
  • Volume execution: fourth consecutive quarter of sequential volume growth; Q4 sales volume +13% YoY to 27.2k MT; capacity utilization rose to 55% .
  • Liquidity and maturity extension: ended 2024 with $464M liquidity; substantially no funded debt maturities until Dec 2029 after exchange offers and new first-lien term loans .
  • Quote: “We successfully delivered on our stated initiatives for 2024 to grow volume and market share, to cut costs and to manage our working capital and capital expenditure levels.” — CEO Timothy Flanagan .

What Went Wrong

  • Pricing and mix pressure: non-LTA weighted-average realized price fell ~19% YoY to ~$3,900/MT; mix shifted from higher-priced LTA to non-LTA, depressing net sales (-2% YoY) despite higher volumes .
  • Loss-making quarter: diluted EPS -$0.19; net loss margin -36.8% in Q4 (vs -27.6% in Q3 and -158.6% in Q4’23 due to goodwill impairment) .
  • Working capital tailwind moderated: Q4 operating cash flow -$26.4M vs +$9.3M in Q4’23; FY 2024 adjusted FCF -$56.2M vs +$50.0M in FY 2023; 2025 expected to be favorable but less than last two years .

Financial Results

MetricQ4 2023Q3 2024Q4 2024
Revenue ($USD Millions)$137.1 $130.7 $134.2
Diluted EPS ($USD)-$0.85 -$0.14 -$0.19
Adjusted EBITDA ($USD Millions)-$21.6 -$6.2 -$6.9
Gross Margin %-14.4% (=-$19.7M/$137.1M) -9.2% (=-$12.1M/$130.7M) -7.8% (=-$10.4M/$134.2M)
Net Income Margin %-158.6% (=-$217.4M/$137.1M; goodwill impairment) -27.6% (=-$36.1M/$130.7M) -36.8% (=-$49.5M/$134.2M)
Adjusted EBITDA Margin %-15.7% (=-$21.6M/$137.1M) -4.7% (=-$6.2M/$130.7M) -5.1% (=-$6.9M/$134.2M)

Segment/Mix KPIs (Volumes and Prices):

MetricQ4 2023Q3 2024Q4 2024
Sales Volume (k MT)24.1 26.4 27.2
Production Volume (k MT)24.4 19.4 25.1
Capacity Utilization (%)47% 46% 55%
Non-LTA Volume (k MT)n/a23.4 23.9
LTA Volume (k MT)n/a3.0 3.2
Non-LTA Avg Price ($/MT)n/a~$4,100 ~$3,900
LTA Avg Price ($/MT)n/a~$7,700 ~$7,700
Cash COGS per MT ($/MT)$5,454 $4,197 $4,086

Cash flow and liquidity highlights:

  • Q4 operating cash flow -$26.4M; adjusted FCF -$21.0M; ending cash $256.2M .
  • Liquidity $464M; gross debt $1.125B; net debt ~$869M .

Estimates comparison:

  • Wall Street consensus (S&P Global) unavailable for this recap due to data access limits; estimate beats/misses cannot be determined reliably at this time.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Cash COGS per MTFY 2024Mid-teen % decline vs 2023 (Q2) ~20% decline (Q3); delivered -23% YoY (actual) Raised, then exceeded
Cash COGS per MTFY 2025n/aMid-single-digit % decline vs 2024 New
Sales VolumeFY 2024Modest YoY improvement (Q2) Low double-digit % YoY increase; Q4 broadly in line with Q3 Maintained/clarified
Sales VolumeFY 2025n/aLow double-digit % YoY increase New
Order BookFY 2025n/a>60% of anticipated 2025 volume committed New
PricingFY 2025n/aIntend +15% price on uncommitted 2025 volume New
CapexFY 2024$35–$40M Actual $34.3M Achieved
CapexFY 2025n/a~$40M New
Working CapitalFY 2024Neutral impact (Q2) Favorable impact (Q3/Q4) Raised
Working CapitalFY 2025n/aFavorable to cash flow, but less than prior two years New
Debt MaturitiesMulti-yearn/aSubstantially no funded maturities until Dec 2029 New structure

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 and Q3)Current Period (Q4)Trend
Pricing & ASPsNon-LTA ASP fell; spot down; industry overcapacity; competitors announced price hikes Pricing “unsustainably low”; plan +15% on uncommitted 2025; shift mix to higher ASP regions Seeking inflection via actions
Cost-outGuided mid-teen decline; detailed drivers (variable procurement, fixed absorption) Delivered -23% FY; expect mid-single-digit decline in 2025 Sustained improvement
Volume/ShareModest growth; 800mm initial trials; regain share Fourth straight sequential growth; 2025 low double-digit growth, concentrated U.S./EU Improving
Liquidity & Capital StructureProactive financing discussions $275M delayed draw term loan; exchanges; liquidity $464M; maturities to 2029 Strengthened
Tariffs & Supply ChainMonitoring; policy environment Mexico/U.S. tariff scenarios; flexible production reallocation; impact manageable but non-zero Key risk; mitigations
Needle Coke & EVPrices flat $1,100–$1,300/MT; longer-term EV tailwinds Prices ~$1,000–$1,300; expect tightening; EV supply chain opportunity; Seadrift integration Building optionality
Product/TechArchitect system; 800mm expansion; CTS team 800mm qualification continuing in 2025; investments in technical capabilities Strategic differentiator

Management Commentary

  • Strategic focus and 2024 delivery: “We successfully delivered on our stated initiatives for 2024 to grow volume and market share, to cut costs and to manage our working capital and capital expenditure levels.” — CEO Timothy Flanagan .
  • Pricing stance: “The pricing environment remains unsustainably low… we have informed our customers of our intention to increase prices by 15% on volume that is not yet committed for 2025.” — CEO Timothy Flanagan .
  • Outlook and commitments: “We anticipate a low double-digit percentage point year-over-year increase in our sales volume for 2025… we have over 60% committed in our order book.” — Company Statement .
  • Liquidity progress: “We ended the year with $464 million of liquidity… substantially no maturities of our funded debt until December of 2029.” — CFO Rory O’Donnell .
  • Cost trajectory: “We anticipate a mid-single-digit percentage point decline in our cash COGS per metric ton in 2025.” — CFO Rory O’Donnell .

Q&A Highlights

  • LCM inventory valuation benefit: ~$16–17M expected to benefit 2025 cash COGS; Q4 benefit ~$2–3M implied .
  • Tariff risk management: Company has plans to reallocate production among Monterrey, Calais, Pamplona to minimize U.S. tariff impacts; 2025 commitments (~60%) will be honored .
  • Price hike rationale and timing: 15% hike equates to ~$600/ton at ~$4,000 spot, <0.1% of a ~$700 steel ton; expected to begin impacting Q2 deliveries in quarterly/semis annual contracting regions .
  • Order book and mix: 60% of 2025 volume committed on price and volume; legacy LTAs largely fulfilled at end-2024 .
  • Liquidity/draw plans: No plan to draw remaining $100M delayed-term loan in 2025; minimum operating cash could be “below $50M” if needed .
  • Needle coke: Pricing remains ~$1,000–$1,300/MT; expected tightening as EV/anode supply chains develop .

Estimates Context

  • Attempts to retrieve S&P Global consensus estimates for EPS, revenue, and EBITDA for Q2–Q4 2024 were unsuccessful due to data access limits; as a result, formal beat/miss vs consensus cannot be determined for this recap at this time.
  • Given estimate unavailability, investors should focus on sequential/YoY trends and management’s price/volume actions until consensus comparisons can be updated.

Key Takeaways for Investors

  • Execution is working: four consecutive quarters of volume growth and material cost reductions improved gross margin despite pricing headwinds .
  • Price normalization is the swing factor: 15% hike on uncommitted 2025 volume and mix shift to higher ASP regions are central to restoring profitability; watch Q2 deliveries for initial impact .
  • Strengthened liquidity/maturity profile reduces near-term solvency risk, enabling inventory rebuild and commercial flexibility into a recovery .
  • 2025 setup: low double-digit volume growth, mid-single-digit COGS/MT decline, capex ~$40M, favorable—though smaller—working capital; ASP recovery is needed for margin expansion .
  • Regional strategy: emphasis on U.S. and EU customers (annual contracting in U.S.) with >60% of 2025 volume already committed; continued share recovery .
  • Monitor macro and policy: tariffs (Mexico/U.S.), EU demand stabilization, Chinese exports; Western supply rationalization and EV supply-chain build-out could catalyze pricing .
  • Near-term trading implications: stock likely sensitive to evidence of price realization (customer acceptance, contract renewals), ASP stabilization, and incremental cost wins; medium term thesis hinges on EAF transition and EV/needle coke tailwinds .

Citations:
Press release and 8-K Q4 2024:
Earnings call Q4 2024:
Q3 materials:
Q2 materials:
Debt/exchange releases: