GrafTech International (EAF) Q4 2023 earnings summary

Executive summary

• Weak industry demand, the lingering impact of the Monterrey suspension and higher costs pressured 2023 results; inventory fell by more than $100m, supporting positive free cash flow.

• Q4 net sales were $137.1m and adjusted EBITDA was negative $21.6m; FY net sales were $620.5m and adjusted EBITDA was $20.5m.

Financial highlights

• Q4 net sales fell 45% YoY to $137.1m; FY net sales fell 52% to $620.5m.

• Q4 net loss was $217.4m, or $0.85/share, versus net income of $50.3m, or $0.20/share, in Q4 2022; FY net loss was $255.3m, or $0.99/share.

• Adjusted EBITDA was negative $21.6m in Q4 versus $80.1m in Q4 2022; FY adjusted EBITDA was $20.5m versus $536.5m in 2022.

• Q4 operating cash flow was $9.3m and adjusted free cash flow was $3.5m; FY figures were $76.6m and $50.0m, respectively.

Outlook and guidance

• 2024 sales volume is expected to improve modestly YoY, most notably in Q1, against a weak near-term demand and pricing backdrop.

• Cost actions, lower raw-material and energy prices, and anticipated volume improvement are expected to drive a significant YoY decline in cash cost of goods sold per MT.

• 2024 capital expenditures are forecast at $35m–$40m, versus $54m in 2023.

• Existing LTAs are expected to ship 13–16 thousand MT in 2024, with estimated revenue of $100m–$135m, including expected termination fees from certain customers.