# Graftech International Ltd: Form 10-Q for the period ended Jun 30, 2024

- Company: [Graftech International Ltd](/companies/eaf.md) (CIK 931148)
- Form: 10-Q
- Filed: 2024-07-26
- Accepted by EDGAR: Jul 26, 2024, 15:22 ET
- Period: 2024-06-30
- Accession: 0000931148-24-000101
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/931148/000093114824000101/gti-20240630.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/931148/000093114824000101/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2024-06-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2024-04-01 to 2024-06-30 | $137.3m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 6 months, 2024-01-01 to 2024-06-30 | $273.9m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Gross profit | 3 months, 2024-04-01 to 2024-06-30 | $4.0m | us-gaap:GrossProfit |
| Gross profit | 6 months, 2024-01-01 to 2024-06-30 | $2.7m | us-gaap:GrossProfit |
| Research and development | 3 months, 2024-04-01 to 2024-06-30 | $1.4m | us-gaap:ResearchAndDevelopmentExpense |
| Research and development | 6 months, 2024-01-01 to 2024-06-30 | $3.1m | us-gaap:ResearchAndDevelopmentExpense |
| Selling, general and administrative | 3 months, 2024-04-01 to 2024-06-30 | $5.1m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Selling, general and administrative | 6 months, 2024-01-01 to 2024-06-30 | $20.4m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2024-04-01 to 2024-06-30 | −$2.7m | us-gaap:OperatingIncomeLoss |
| Operating income | 6 months, 2024-01-01 to 2024-06-30 | −$24.0m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2024-04-01 to 2024-06-30 | $15.6m | us-gaap:InterestExpense |
| Interest expense | 6 months, 2024-01-01 to 2024-06-30 | $31.2m | us-gaap:InterestExpense |
| Income tax | 3 months, 2024-04-01 to 2024-06-30 | −$592.0k | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 6 months, 2024-01-01 to 2024-06-30 | −$4.8m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2024-04-01 to 2024-06-30 | −$14.8m | us-gaap:NetIncomeLoss |
| Net income | 6 months, 2024-01-01 to 2024-06-30 | −$45.6m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2024-04-01 to 2024-06-30 | −$0.06 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 6 months, 2024-01-01 to 2024-06-30 | −$0.18 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2024-04-01 to 2024-06-30 | −$0.06 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 6 months, 2024-01-01 to 2024-06-30 | −$0.18 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2024-04-01 to 2024-06-30 | 257,772,069 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 6 months, 2024-01-01 to 2024-06-30 | 257,587,613 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 6 months, 2024-01-01 to 2024-06-30 | −$37.4m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 6 months, 2024-01-01 to 2024-06-30 | $17.5m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Dividends paid | 6 months, 2024-01-01 to 2024-06-30 | $0 | us-gaap:PaymentsOfDividends |
| Cash and equivalents | at 2024-06-30 | $120.7m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2024-06-30 | $583.0m | us-gaap:AssetsCurrent |
| Total assets | at 2024-06-30 | $1.16bn | us-gaap:Assets |
| Current liabilities | at 2024-06-30 | $138.1m | us-gaap:LiabilitiesCurrent |
| Long-term debt | at 2024-06-30 | $928.0m | us-gaap:LongTermDebtNoncurrent |
| Current portion of debt | at 2024-06-30 | $132.0k | us-gaap:LongTermDebtCurrent |
| Shareholders' equity | at 2024-06-30 | $16.2m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 60,766 characters.

### The Company

We are a leading manufacturer of high-quality graphite electrode products essential to the production of EAF steel and other ferrous and non‑ferrous metals. We believe that we have the most competitive portfolio of low cost ultra-high power graphite electrode manufacturing facilities in the industry, with some of the highest capacity facilities in the world. We are the only large scale graphite electrode producer that is substantially vertically integrated into petroleum needle coke, our key raw material for graphite electrode manufacturing.

The environmental and economic advantages of EAF steel production position both that industry and the graphite electrode industry for continued long-term growth.

We believe GrafTech's leadership position and vertical integration are sustainable competitive advantages. The services and solutions we provide will position our customers and us for a better future.

### Operational and Commercial Update

Sales volume for the second quarter of 2024 was 25.5 thousand MT, consisting of 22.7 thousand MT of non-LTA volume and 2.8 thousand MT of LTA volume, and decreased 3% compared to the second quarter of 2023. Sales volume for the first half of 2023 was significantly impacted by the temporary suspension of our operations in Monterrey, Mexico in late 2022.

For the second quarter of 2024, the weighted-average realized price for our non-LTA volume was approximately $4,300 per MT, a decrease of 23% compared to the second quarter of 2023, with the decline reflecting the persistent challenges in the commercial environment. For our LTA volume, the weighted-average realized price was approximately $8,300 per MT for the second quarter of 2024.

Production volume was 26.8 thousand MT in the second quarter of 2024, an increase of 6% compared to the second quarter of 2023. We continue to proactively align our production volume with our evolving demand outlook.

### Cost Rationalization and Footprint Optimization Plan Announced in February 2024

In the first quarter of 2024, we announced a set of initiatives designed to reduce our cost structure and optimize our manufacturing footprint. As part of these initiatives, we indefinitely suspended production activities at our St. Marys, Pennsylvania facility, with the exception of graphite electrode and pin machining. In addition, we indefinitely idled certain assets within our remaining graphite electrode manufacturing footprint. As a result, our graphite electrode production capacity has been reduced to approximately 178 thousand metric tons (“MT”) in 2024. In parallel, we adopted measures for additional overhead reductions to reduce our selling and administrative expenses. Collectively, these initiatives resulted in a reduction of our global headcount by approximately 130 employees, or 10% of our workforce. We continue to expect these initiatives will result in annualized cost savings of approximately $25.0 million, excluding the impact of one-time costs. Of the anticipated annualized cost savings, approximately $15.0 million are expected to be realized in cost of goods sold with the remainder in selling and administrative expenses.

Rationalization charges of $3.3 million related to severance and contract terminations will be paid in cash and we expect the substantial majority to be paid by the end of the second quarter of 2025. Rationalization-related charges of $2.7 million represent the non-cash write-off of inventory and fixed assets. Substantially all charges relative to this plan were recorded during the first quarter of 2024 and wind-down activities were completed by the end of the second quarter of 2024.

### Outlook

We expect demand for graphite electrodes in the near term will remain weak, reflecting persistent challenges in the commercial environment as steel industry production remains constrained by global economic uncertainty. Given these trends, challenging pricing dynamics have persisted in most regions. As a result, we remain selective in the commercial opportunities we choose to pursue. Sales volume in the third quarter of 2024 is expected to be broadly in line with sales volume for the second quarter of 2024 and we continue to expect a modest year-over-year improvement in sales volume for the full year.

We continue to expect a mid-teen percentage point decline in our full year 2024 cash cost of goods sold per MT compared to 2023. This significant improvement in our year-over-year cost structure reflects (1) the deliberate actions we have taken to reduce our fixed manufacturing costs, (2) the benefit of additional actions we are taking to reduce our variable costs and (3) the anticipated year-over-year improvement in our sales and production volume levels. We anticipate cash cost of goods sold per MT to decline further in 2025. In addition, we continue to closely manage our working capital levels and capital expenditures. We continue to anticipate our full-year 2024 capital expenditures will be in the range of $35 million to $40 million.

Longer term, we remain confident that the steel industry’s accelerating efforts to decarbonize will lead to increased adoption of the electric arc furnace method of steelmaking, driving long-term demand growth for graphite electrodes. We also anticipate the demand for petroleum needle coke, the key raw material we use to produce graphite electrodes, to accelerate driven by its utilization in producing synthetic graphite for use in lithium-ion batteries for the growing electric vehicle market. We believe that the near-term actions we are taking, supported by an industry-leading position and our sustainable competitive advantages, including our substantial vertical integration into petroleum needle coke via our Seadrift facility, will optimally position GrafTech to benefit from that long-term growth.

The table of estimated shipments of graphite electrodes under existing LTAs has been updated as follows, reflecting our current expectations for the full year 2024:

|  |  |
| --- | --- |
|  | 2024 Outlook |
| Estimated LTA volume(1) | 13-14 |
| Estimated LTA revenue(2) | $110-$120(3) |

(1) In thousands of MT

(2) In millions

(3) Estimated LTA revenue includes payments from customers that failed to meet certain obligations under their LTAs

We recorded 6.9 thousand MT of LTA volume and $62.7 million of LTA revenue in the first six months of 2024 and we expect to record six thousand to seven thousand MT of LTA volume and approximately $47.3 million to $57.3 million of LTA revenue for the remainder of 2024.

The remaining LTAs are defined as pre-determined fixed annual volume contracts. The actual revenue realized from these contracted volumes may vary in timing and total due to contract non-performance, force majeure notices, arbitrations and credit risk associated with certain customers facing financial challenges.

### Capital Structure and Liquidity

As of June 30, 2024, we had liquidity of $231.8 million, consisting of cash and cash equivalents of $120.7 million and $111.1 million of availability under our 2018 Revolving Credit Facility. As of June 30, 2024, we had gross debt of $950.1 million.

### Key metrics used by management to measure performance

In addition to measures of financial performance presented in our Condensed Consolidated Financial Statements in accordance with generally accepted accounting principles in the United States (“GAAP”), we use certain other financial measures and operating metrics to analyze the performance of our Company. Our “non-GAAP” financial measures consist of EBITDA, adjusted EBITDA, adjusted net loss and adjusted loss per share, which help us evaluate growth trends, establish budgets, assess operational efficiencies and evaluate our overall financial performance. Our key operating metrics consist of sales volume, production volume, production capacity and capacity utilization.

### Key financial measures

*(in thousands, except per share data)*

|  | Three Months Ended June 30, 2024 | 2023 | Six Months Ended June 30, 2024 | 2023 |
| --- | ---: | ---: | ---: | ---: |
| Net sales | $137,327 | $185,561 | $273,911 | $324,363 |
| Net loss | (14,752) | (7,851) | (45,621) | (15,220) |
| Loss per share(1) | (0.06) | (0.03) | (0.18) | (0.06) |
| EBITDA(2) | 12,731 | 23,465 | 5,646 | 36,403 |
| Adjusted net loss(2) | (13,564) | (5,768) | (38,725) | (11,317) |
| Adjusted loss per share(1)(2) | (0.05) | (0.02) | (0.15) | (0.04) |
| Adjusted EBITDA(2) | 14,493 | 26,022 | 14,687 | 41,137 |

(1) Loss per share represents diluted loss per share. Adjusted loss per share represents adjusted diluted loss per share.

(2) Non-GAAP financial measure; see below for information and reconciliations of EBITDA, adjusted EBITDA and adjusted net loss to net loss and adjusted loss per share to loss per share, the most directly comparable financial measures calculated and presented in accordance with GAAP.

### Key operating measures

In addition to measures of financial performance presented in accordance with GAAP, we use certain operating metrics to analyze the performance of our Company. These metrics align with management's assessment of our revenue performance and profit margin, and will help investors understand the factors that drive our profitability.

Sales volume reflects the total volume of graphite electrodes sold for which revenue has been recognized during the period. For a discussion of our revenue recognition policy, see “—Critical accounting policies—Revenue recognition” in our Annual Report on Form 10-K. Sales volume helps investors understand the factors that drive our net sales.

Production volume, production capacity and capacity utilization help us understand the efficiency of our production, evaluate cost of goods sold and consider how to approach our sales contract initiative.

*(in thousands, except utilization)*

|  | Three Months Ended June 30, 2024 | 2023 | Six Months Ended June 30, 2024 | 2023 |
| --- | ---: | ---: | ---: | ---: |
| Sales volume (MT) | 25.5 | 26.4 | 49.6 | 43.3 |
| Production volume (MT)(1) | 26.8 | 25.2 | 52.8 | 41.0 |
| Production capacity (MT)(2)(3) | 45.0 | 51.0 | 90.0 | 102.0 |
| Capacity utilization(4) | 60% | 49% | 59% | 40% |

(1) Production volume reflects graphite electrodes we produced during the period.

(2) Production capacity reflects expected maximum production volume during the period depending on product mix and expected maintenance outage. Actual production may vary.

(3) Includes graphite electrode facilities in Calais, France; Monterrey, Mexico; and Pamplona, Spain. While maintaining the capability to produce up to 28,000 MT of graphite electrodes and pins on an annual basis at our St. Marys, Pennsylvania facility, most production activities at St. Marys have been suspended. The wind down of these production activities was completed during the second quarter of 2024. Remaining activities at St. Marys are limited to machining graphite electrodes and pins sourced from our other plants.

(4) Capacity utilization reflects production volume as a percentage of production capacity.

### Results of Operations

### The Three Months Ended June 30, 2024 Compared to the Three Months Ended June 30, 2023

The table presented in our period-over-period comparisons summarizes our Condensed Consolidated Statements of Operations and illustrates key financial indicators used to assess the consolidated financial results. Throughout this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Report (“MD&A”), insignificant changes may be deemed not meaningful and are generally excluded from the discussion.

*(Dollars in thousands)*

|  | Three Months Ended June 30, 2024 | 2023 | Increase/ Decrease | % Change |
| --- | ---: | ---: | ---: | ---: |
| Net sales | $137,327 | $185,561 | $(48,234) | (26)% |
| Cost of goods sold | 131,970 | 157,216 | (25,246) | (16)% |
| Lower of cost or market inventory valuation adjustment | 1,381 | — | 1,381 | NM |
| Gross profit | 3,976 | 28,345 | (24,369) | (86)% |
| Research and development | 1,447 | 1,196 | 251 | 21% |
| Selling and administrative expenses | 5,098 | 18,551 | (13,453) | (73)% |
| Rationalization expenses | 110 | — | 110 | NM |
| Operating (loss) income | (2,679) | 8,598 | (11,277) | (131)% |
| Other (income) expense, net | (1,091) | 455 | (1,546) | (340)% |
| Interest expense | 15,609 | 13,907 | 1,702 | 12% |
| Interest income | (1,853) | (242) | (1,611) | 666% |
| Loss before (benefit) provision for income taxes | (15,344) | (5,522) | (9,822) | 178% |
| (Benefit) provision for income taxes | (592) | 2,329 | (2,921) | (125)% |
| Net loss | $(14,752) | $(7,851) | $(6,901) | 88% |

NM = Not Meaningful.

***Net sales*** decreased $48.2 million, or 26%, compared to the second quarter of 2023. The decline primarily reflected a decrease in the weighted-average realized price for volume derived from non-LTAs and a shift in the mix of our business from volume derived from LTAs to volume derived from non-LTAs.

***Cost of goods sold*** decreased $25.2 million, or 16%, compared to the second quarter of 2023. The decrease was primarily due to reduced manufacturing costs. Additionally, due to reduced production levels, we recorded fixed manufacturing costs of $1.7 million (which includes $1.1 million of depreciation and amortization) and $12.8 million (which includes $2.5 million of depreciation and amortization) that would have otherwise been inventoried for the second quarter of 2024 and 2023, respectively. Also, the LCM inventory valuation adjustments recorded at December 31, 2023 and in the first quarter of 2024 generated a $6.0 million favorable impact to cost of goods sold in the second quarter of 2024.

***LCM inventory valuation adjustment*** represents a write-down of inventory recorded in the second quarter of 2024. The net realizable value of certain of our inventories fell below their carrying amounts as of June 30, 2024, and as a result, we recorded a LCM inventory valuation adjustment of $1.4 million in order to state our inventories at market.

***Selling and administrative expenses*** decreased $13.5 million, or 73%, compared to the second quarter of 2023, primarily due to the $9.2 million reimbursement of legal fees in connection with the favorable outcome of an arbitration, reduced selling expenses and a decrease in variable compensation expenses. See Note 7, “Commitments and Contingencies” in the Notes to the Condensed Consolidated Financial Statements for further discussion.

***Interest expense*** increased $1.7 million, or 12%, compared to the second quarter of 2023 primarily due to higher interest incurred on debt associated with our 2023 Senior Secured Notes that carry a fixed interest rate of 9.875%, partially offset by an increase in net gains recognized related to our interest rate swaps that were terminated in the second quarter of 2023. See Note 6, “Interest Expense” in the Notes to the Condensed Consolidated Financial Statements for further discussion.

The following table summarizes the (benefit) provision for income taxes:

*(Dollars in thousands)*

|  | Three Months Ended June 30, 2024 | 2023 |
| --- | ---: | ---: |
| (Benefit) provision for income taxes | $(592) | $2,329 |
| Pre-tax loss | (15,344) | (5,522) |
| Effective tax rate | 3.9% | (42.2)% |

The effective tax rate for the second quarter of 2024 and 2023 was different than the U.S. statutory tax rate of 21% primarily due to the mix of U.S. and foreign earnings, tax incentives and provisions of the Tax Cuts and Jobs Act of 2017 (the “Tax Cuts and Jobs Act”).

### The Six Months Ended June 30, 2024 Compared to the Six Months Ended June 30, 2023

The table presented in our period-over-period comparisons summarize our Consolidated Statements of Operations and illustrate key financial indicators used to assess the consolidated financial results. Throughout this MD&A, insignificant changes may be deemed not meaningful and are generally excluded from the discussion.

*(Dollars in thousands)*

|  | Six Months Ended June 30, 2024 | 2023 | Increase/ Decrease | % Change |
| --- | ---: | ---: | ---: | ---: |
| Net sales | $273,911 | $324,363 | $(50,452) | (16)% |
| Cost of goods sold | 267,174 | 269,861 | (2,687) | (1)% |
| Lower of cost or market inventory valuation adjustment | 4,073 | — | 4,073 | NM |
| Gross profit | 2,664 | 54,502 | (51,838) | (95)% |
| Research and development | 3,074 | 2,388 | 686 | 29% |
| Selling and administrative expenses | 20,375 | 40,702 | (20,327) | (50)% |
| Rationalization expenses | 3,255 | — | 3,255 | NM |
| Operating (loss) income | (24,040) | 11,412 | (35,452) | (311)% |
| Other (income) expense, net | (1,484) | 1,108 | (2,592) | (234)% |
| Interest expense | 31,235 | 26,713 | 4,522 | 17% |
| Interest income | (3,377) | (614) | 2,763 | (450)% |
| Loss before benefit for income taxes | (50,414) | (15,795) | (34,619) | 219% |
| Benefit for income taxes | (4,793) | (575) | (4,218) | 734% |
| Net loss | $(45,621) | $(15,220) | $(30,401) | 200% |

NM = Not Meaningful.

***Net sales*** decreased $50.5 million, or 16%, compared to the first six months of 2023. The decline primarily reflected a decrease in the weighted-average realized price for volume derived from non-LTAs and a shift in the mix of our business from volume derived from LTAs to volume derived from non-LTAs. These factors were partially offset by a 15% increase in sales volume in the first six months of 2024, compared to the same period in 2023.

***Cost of goods sold*** decreased $2.7 million, or 1%, compared to the first six months of 2023, primarily reflecting a decrease in our manufacturing costs. Additionally, due to reduced production levels, we recorded excess fixed manufacturing costs of $11.5 million (which includes $4.6 million of depreciation and amortization) and $25.4 million (which includes $5.3 million of depreciation and amortization) that would have otherwise been inventoried in the first six months of 2024 and 2023, respectively. Also, the LCM inventory valuation adjustment recorded at December 31, 2023 and in the first quarter of 2024 generated an $11.1 million favorable impact to cost of goods sold in the first six months of 2024. These decreases were partially offset by the impact of increased volume.

***LCM inventory valuation adjustment*** represents a write-down of inventory recorded in the first six months of 2024. The net realizable value of certain of our inventories fell below their carrying amounts in the first six months of 2024, and as a result, we recorded a LCM inventory valuation adjustment of $4.1 million in order to state our inventories at market.

***Selling and administrative expenses*** decreased $20.3 million, or 50%, compared to the first six months of 2023, primarily due to the $9.2 million reimbursement of legal fees in connection with the favorable outcome of an arbitration, decreased variable compensation expenses and reduced selling expenses. See Note 7, “Commitments and Contingencies” in the Notes to the Condensed Consolidated Financial Statements for further discussion.

***Rationalization expenses*** represent severance and contract termination costs related to the cost rationalization and footprint optimization plan announced in February 2024. See Note 14, “Rationalization Expenses” in the Notes to the Condensed Consolidated Financial Statements for further discussion.

***Interest expense*** increased $4.5 million, or 17%, compared to the first six months of 2023 primarily due to higher interest incurred on debt associated with our 2023 Senior Secured Notes that carry a fixed interest rate of 9.875%, partially offset by an increase of net gains recognized related to our interest rate swaps that were terminated in the second quarter of 2023. See Note 6, “Interest Expense” in the Notes to the Condensed Consolidated Financial Statements for further discussion.

The following table summarizes the benefit for income taxes:

*(Dollars in thousands)*

|  | Six Months Ended June 30, 2024 | 2023 |
| --- | ---: | ---: |
| Benefit for income taxes | $(4,793) | $(575) |
| Pre-tax loss | (50,414) | (15,795) |
| Effective tax rate | 9.5% | 3.6% |

The benefit for income taxes increased in the first six months of 2024 compared to the first six months of 2023 due to the mix of U.S. and foreign earnings, tax incentives and provisions of the Tax Cuts and Jobs Act.

### Effects of Changes in Currency Exchange Rates

When the currencies of non-U.S. countries in which we have a manufacturing facility decline (or increase) in value relative to the U.S. dollar, this has the effect of reducing (or increasing) the U.S. dollar equivalent cost of goods sold and other expenses with respect to those facilities. In certain countries in which we have manufacturing facilities, and in certain export markets, we sell in currencies other than the U.S. dollar. Accordingly, when these currencies increase (or decline) in value relative to the U.S. dollar, this has the effect of increasing (or reducing) net sales. The result of these effects is to increase (or decrease) operating and net loss.

Many of the non-U.S. countries in which we have a manufacturing facility have been subject to significant economic and political changes, which have significantly impacted currency exchange rates. We cannot predict changes in currency exchange rates in the future or whether those changes will have net positive or negative impacts on our net sales, cost of goods sold or net loss.

The impact of these changes in the average exchange rates of other currencies against the U.S. dollar on our net sales was an increase of less than $0.1 million for the second quarter of 2024 and a decrease of $0.1 million for the first six months of 2024, compared to the same periods of 2023. The impact of these changes on our cost of goods sold was decreases of $0.2 million and $1.7 million for the second quarter of 2024 and first six months of 2024, respectively, compared to the same periods of 2023.

We have in the past and may in the future use various financial instruments to manage certain exposures to risks caused by currency exchange rate changes, as described under Part I, Item 3., Quantitative and Qualitative Disclosures about Market Risk.

### Liquidity and Capital Resources

Our sources of funds have consisted principally of cash flow from operations and debt, including our credit facilities (subject to continued compliance with the financial covenants and representations). Our uses of those funds (other than for operations) have consisted principally of capital expenditures, debt repayment, dividends, share repurchases and other general purposes. On an ongoing basis, we expect to evaluate and consider strategic transactions, including acquisitions, divestitures, joint ventures, equity investments, debt issuances, refinancing our existing debt or repurchases of our outstanding debt obligations in open market or privately negotiated transactions, as well as other strategic transactions. These transactions may require cash expenditures, which may be funded through a combination of cash on hand, proceeds from the issuance of debt or from equity offerings. Disruptions in the U.S. and international financial markets could adversely affect our liquidity and the cost and availability of financing to us in the future.

We believe that we have adequate liquidity to meet our needs for at least the next twelve months. As of June 30, 2024, we had liquidity of $231.8 million, consisting of $111.1 million of availability under our 2018 Revolving Credit Facility, after giving effect to $4.4 million of letters of credit, and cash and cash equivalents of $120.7 million. As any borrowings under the 2018 Revolving Credit Facility remain subject to compliance with the financial covenants thereunder (see below and Note 4, “Debt and Liquidity”), our operating performance as of June 30, 2024 resulted in a reduction of the availability under the facility. We do not anticipate the need to borrow against our 2018 Revolving Credit Facility in 2024. We had gross long-term debt of $950.0 million and gross short-term debt of $0.1 million as of each of June 30, 2024 and December 31, 2023. As of December 31, 2023, we had liquidity of $289.3 million consisting of $112.4 million available under our 2018 Revolving Credit Facility and cash and cash equivalents of $176.9 million.

As of June 30, 2024 and December 31, 2023, $56.8 million and $77.6 million, respectively, of our cash and cash equivalents were located outside of the U.S. We repatriate funds from our foreign subsidiaries through dividends. All of our subsidiaries face the customary statutory limitation that distributed dividends cannot exceed the amount of retained and current earnings. Upon repatriation to the U.S., the foreign source portion of dividends we receive from our foreign subsidiaries are not subject to U.S. federal income tax because the amounts were either previously taxed or are exempted from tax by Section 245A of the Internal Revenue Service Code (the “Code”).

Our continued access to capital resources and the cost of financing depends on multiple factors, including global economic conditions, the condition of global financial markets, the availability of sufficient amounts of financing, our ability to meet debt covenant requirements, our operating performance, financial outlook, demand for our products and our credit ratings. Global economic disruptions or declines could lead to further market disruption and potential increases to our funding costs. While the terms of our outstanding indebtedness allow us to incur additional debt, as described herein, we are subject to covenants that limit, among other things, our ability, and the ability of certain of our subsidiaries, to incur additional indebtedness, including secured indebtedness. If our credit ratings were to be downgraded, or financing sources were to become more limited or to ascribe higher risk to our rating levels or our industry, our access to capital and the cost of any financing would be negatively impacted. There is no guarantee that additional debt financing will be available in the future to fund our expenditures or obligations, or that it will be available on commercially reasonable terms, in which case we may need to seek other sources of funding. In addition, the terms of future debt agreements could include more restrictive covenants than those we are currently subject to, which could restrict our business operations.

***Cash flow.*** Our cash flow typically fluctuates significantly between quarters due to various factors. These factors include customer order patterns, fluctuations in working capital requirements, timing of tax and interest payments and other factors.

#### Debt Structure

### 2018 Term Loan and 2018 Revolving Credit Facility

In February 2018, the Company entered into the 2018 Credit Agreement, which provided for (i) the $2,250 million 2018 Term Loan Facility after giving effect to the First Amendment that increased the aggregate principal amount of the 2018 Term Loan Facility from $1,500 million to $2,250 million and (ii) the $330 million 2018 Revolving Credit Facility after giving effect to the May 2022 amendment that increased the revolving commitments under the 2018 Credit Agreement by $80 million from $250 million. GrafTech Finance is the sole borrower under the 2018 Term Loan Facility while GrafTech Finance, Swissco and GrafTech Luxembourg II S.à r.l. (“Luxembourg Holdco” and, together with GrafTech Finance and Swissco, the “Co-Borrowers”) are co-borrowers under the 2018 Revolving Credit Facility. The 2018 Revolving Credit Facility matures on May 31, 2027. The net proceeds from the 2023 Senior Secured Notes were used to repay outstanding borrowings under our 2018 Term Loan Facility. As of June 30, 2024 and December 31, 2023, the availability under our 2018 Revolving Credit Facility was $111.1 million and $112.4 million, respectively. As any borrowings under the 2018 Revolving Credit Facility remain subject to compliance with the financial covenants thereunder, our operating performance as of June 30, 2024 and December 31, 2023 resulted in a reduction of the availability under the facility. As of June 30, 2024 and December 31, 2023, there were no borrowings outstanding on the 2018 Revolving Credit Facility and there was $4.4 million and $3.1 million of letters of credit drawn against the 2018 Revolving Credit Facility as of each date, respectively.

The 2018 Revolving Credit Facility bears interest, at our option, at a rate equal to either (i) the Adjusted Term SOFR Rate and Adjusted EURIBOR Rate (each, as defined in the 2018 Credit Agreement), plus an applicable margin initially equal to 3.00% per annum or (ii) the ABR Rate, plus an applicable margin initially equal to 2.00% per annum, in each case with two 25 basis point step downs based on achievement of certain senior secured first lien net leverage ratios. In addition, we are required to pay a quarterly commitment fee on the unused commitments under the 2018 Revolving Credit Facility in an amount equal to 0.25% per annum.

The 2018 Revolving Credit Facility is guaranteed by each of our domestic subsidiaries, subject to certain customary exceptions, and by GrafTech Luxembourg I S.à r.l., a Luxembourg *société à responsabilité limitée* and an indirect wholly owned subsidiary of GrafTech, Luxembourg HoldCo, and Swissco (collectively, the “Guarantors”) with respect to all obligations under the 2018 Revolving Credit Facility of each of our foreign subsidiaries that is a Controlled Foreign Corporation (within the meaning of Section 956 of the Code).

Any obligations under the 2018 Revolving Credit Facility are secured, subject to certain exceptions, by: (i) a pledge of all of the equity securities of each domestic Guarantor and of each other direct, wholly owned domestic subsidiary of GrafTech and any Guarantor, (ii) a pledge on no more than 65% of the equity interests of each subsidiary that is a Controlled Foreign Corporation (within the meaning of Section 956 of the Code), and (iii) security interests in, and mortgages on, personal property and material real property of each domestic Guarantor, subject to permitted liens and certain exceptions specified in the 2018 Revolving Credit Facility. The obligations of each foreign subsidiary of GrafTech that is a Controlled Foreign Corporation under the 2018 Revolving Credit Facility are secured by (i) a pledge of no more than 65% of the equity securities of each Guarantor that is a Controlled Foreign Corporation and of each direct, wholly owned subsidiary of any Guarantor that is a Controlled Foreign Corporation, and (ii) security interests in certain receivables and personal property of each Guarantor that is a Controlled Foreign Corporation, subject to permitted liens and certain exceptions specified in the 2018 Revolving Credit Facility.

The 2018 Revolving Credit Facility contains customary representations and warranties and customary affirmative and negative covenants applicable to GrafTech and restricted subsidiaries, including, among other things, restrictions on indebtedness, liens, investments, fundamental changes, dispositions, and dividends and other distributions. The 2018 Revolving Credit Facility contains a financial covenant that requires GrafTech to maintain a senior secured first lien net leverage ratio not greater than 4.00 to 1.00 when the aggregate principal amount of borrowings under the 2018 Revolving Credit Facility and outstanding letters of credit issued under the 2018 Revolving Credit Facility (except for undrawn letters of credit in an aggregate amount equal to or less than $35.0 million), taken together, exceed 35% of the total amount of commitments under the 2018 Revolving Credit Facility. The 2018 Revolving Credit Facility also contains customary events of default. We were in compliance with all of our debt covenants as of June 30, 2024 and December 31, 2023.

### 2020 Senior Secured Notes

In December 2020, GrafTech Finance issued $500 million aggregate principal amount of the 2020 Senior Secured Notes at an issue price of 100% of the principal amount thereof in a private offering to qualified institutional buyers in accordance with Rule 144A under the Securities Act of 1933 (the "Securities Act") and to non-U.S. persons outside the United States under Regulation S under the Securities Act.

The 2020 Senior Secured Notes are guaranteed on a senior secured basis by the Company and all of its existing and future direct and indirect U.S. subsidiaries that guarantee, or borrow under, the 2018 Revolving Credit Facility, other than GrafTech Finance. The 2020 Senior Secured Notes are secured on a pari passu basis by the collateral securing the term loans under the 2018 Credit Agreement and the 2023 Senior Secured Notes. GrafTech Finance, the Company and the other guarantors granted a security interest in such collateral, consisting of substantially all of their respective assets, as security for the obligations of GrafTech Finance, the Company and the other guarantors under the 2020 Senior Secured Notes and the Indenture pursuant to a collateral agreement, dated as of December 22, 2020 (the “Collateral Agreement”), among GrafTech Finance, the Company, the other subsidiaries of the Company named therein as grantors and U.S. Bank National Association, as collateral agent.

The 2020 Senior Secured Notes bear interest at the rate of 4.625% per annum, which accrued from December 22, 2020 and is payable in arrears on June 15 and December 15 of each year, commencing on June 15, 2021. The 2020 Senior Secured Notes will mature on December 15, 2028, unless earlier redeemed or repurchased, and are subject to the terms and conditions set forth in the Indenture.

GrafTech Finance may redeem some or all of the 2020 Senior Secured Notes at the redemption prices and on the terms specified in the Indenture. If the Company or GrafTech Finance experiences specific kinds of changes in control or the Company or any of its restricted subsidiaries sells certain of its assets, then GrafTech Finance must offer to repurchase the 2020 Senior Secured Notes on the terms set forth in the Indenture.

The Indenture contains certain covenants that, among other things, limit the Company’s ability, and the ability of certain of its subsidiaries, to incur or guarantee additional indebtedness or issue preferred stock, pay distributions on, redeem or repurchase capital stock or redeem or repurchase subordinated debt, incur or suffer to exist liens securing indebtedness, make certain investments, engage in certain transactions with affiliates, consummate certain asset sales and effect a consolidation or merger, or sell, transfer, lease or otherwise dispose of all or substantially all assets. The Indenture contains events of default customary for agreements of its type (with customary grace periods, as applicable) and provides that, upon the occurrence of an event of default arising from certain events of bankruptcy or insolvency with respect to the Company or GrafTech Finance, all outstanding 2020 Senior Secured Notes will become due and payable immediately without further action or notice. If any other type of event of default occurs and is continuing, then the trustee or the holders of at least 30% in principal amount of the then outstanding 2020 Senior Secured Notes may declare all of the 2020 Senior Secured Notes to be due and payable immediately. We were in compliance with all of our debt covenants as of June 30, 2024 and December 31, 2023.

### 2023 Senior Secured Notes

In June 2023, GrafTech Global Enterprises Inc. issued $450 million aggregate principal amount of 2023 Senior Secured Notes, including $11.4 million of original issue discount. The 2023 Senior Secured Notes were issued at an issue price of 97.456% of the principal amount thereof in a private offering to qualified institutional buyers in accordance with Rule 144A under the Securities Act and to non-U.S. persons outside the United States under Regulation S under the Securities Act.

The 2023 Senior Secured Notes are or will be, as applicable, guaranteed on a senior secured basis by (i) GrafTech Finance, (ii) the Company and all of its direct and indirect U.S. subsidiaries that, as of the date of the 2023 Senior Secured Notes, guarantee (or are borrowers of) the debt under the 2018 Term Loan Facility and the 2018 Revolving Credit Facility, other than GrafTech Global Enterprises Inc., and (iii) all of the Company’s future direct and indirect subsidiaries that guarantee (or are borrowers of) debt under the 2018 Term Loan Facility and the 2018 Revolving Credit Facility, the 2020 Senior Secured Notes and certain other future indebtedness, in each case, other than certain excluded foreign subsidiaries and GrafTech Global Enterprises Inc. The 2023 Senior Secured Notes and the note guarantees are secured on a first-priority basis by liens on the collateral of GrafTech Global Enterprises Inc. and the guarantors securing the debt under the 2018 Revolving Credit Facility and the 2020 Senior Secured Notes, on an equal and ratable basis with the debt under the 2018 Revolving Credit Facility and 2020 Senior Secured Notes, in each case subject to permitted liens and certain exceptions, pursuant to a collateral agreement, dated as of June 26, 2023 among GrafTech Global Enterprises Inc., the Company, the other subsidiaries of the Company named therein as grantors and U.S. Bank Trust Company, National Association, as collateral agent.

The 2023 Senior Secured Notes bear interest at a rate of 9.875% per annum which accrued from June 26, 2023 and is payable in arrears on June 15 and December 15 of each year, commencing on December 15, 2023. The 2023 Senior Secured Notes will mature on December 15, 2028, unless earlier redeemed or repurchased, and are subject to the terms of the indenture governing the 2023 Senior Secured Notes (the “2023 Indenture”).

GrafTech Global Enterprises Inc. may redeem some or all of the 2023 Senior Secured Notes at the redemption prices and on the terms specified in the 2023 Indenture. If the Company or GrafTech Global Enterprises experiences specific kinds of changes in control or the Company or any of its restricted subsidiaries sells certain of its assets, then GrafTech Global Enterprises Inc. must offer to repurchase the 2023 Senior Secured Notes on the terms set forth in the 2023 Indenture.

The 2023 Indenture contains certain covenants that, among other things, limit the Company’s ability, and the ability of certain of its subsidiaries, to incur or guarantee additional indebtedness or issue preferred stock, pay distributions on, redeem or repurchase capital stock or redeem or repurchase subordinated debt, incur or suffer to exist liens securing indebtedness, make certain investments, engage in certain transactions with affiliates, consummate certain asset sales and effect a consolidation or merger, or sell, transfer, lease or otherwise dispose of all or substantially all assets. The 2023 Indenture contains events of default customary for agreements of its type (with customary grace periods, as applicable) and provides that, upon the occurrence of an event of default arising from certain events of bankruptcy or insolvency with respect to the Company or GrafTech Global Enterprises Inc., all outstanding 2023 Senior Secured Notes will become due and payable immediately without further action or notice. If any other type of event of default occurs and is continuing, then the trustee or the holders of at least 30% in principal amount of the then outstanding 2023 Senior Secured Notes may declare all of the 2023 Senior Secured Notes to be due and payable immediately. We were in compliance with all of our debt covenants as of June 30, 2024 and December 31, 2023.

#### Uses of Liquidity

In July 2019, our Board of Directors authorized a program to repurchase up to $100.0 million of our outstanding common stock. In November 2021, our Board of Directors authorized the repurchase of an additional $150.0 million of stock repurchases under this program. We may purchase shares from time to time on the open market, including under Rule 10b5-1 and/or Rule 10b-18 plans. The amount and timing of repurchases are subject to a variety of factors including liquidity, stock price, applicable legal requirements, other business objectives and market conditions. In the first six months of 2024, we did not repurchase any shares of our common stock. As of June 30, 2024, we had $99.0 million remaining under our stock repurchase authorization.

Throughout 2022 and through the second quarter of 2023, we paid a quarterly dividend of $0.01 per share. On August 2, 2023, the Company’s Board of Directors elected to suspend the quarterly cash dividend of $0.01 per share. There can be no assurance that we will resume paying dividends in the future in these amounts or at all. Our Board of Directors may change the timing and amount of any future dividend payments, if reinstated, or eliminate the payment of future dividends in its sole discretion, without any prior notice to our stockholders. Our ability to pay dividends will depend upon many factors, including our financial position and liquidity, results of operations, legal requirements, restrictions that may be imposed by the terms of our current and future credit facilities and other debt obligations and other factors deemed relevant by our Board of Directors.

Potential uses of our liquidity (other than operations) include capital expenditures, debt repayments, dividends, share repurchases, and other general purposes. Any such potential uses of our liquidity may be funded by existing available liquidity, the incurrence of new secured or unsecured loans, capital market issuances, divestitures, joint ventures or equity investments. An improving economy, while resulting in improved results of operations, could increase our cash requirements to purchase inventories, make capital expenditures and fund payables and other obligations until increased accounts receivable are converted into cash. A downturn, including any recession or potential resurgence of a global pandemic, could significantly and negatively impact our results of operations and cash flows, which, coupled with increased borrowings, could negatively impact our credit ratings, our ability to comply with debt covenants, our ability to secure additional financing and the cost and availability of such financing.

In order to seek to minimize our credit risks, we may reduce our sales of, or refuse to sell (except for prepayment, cash on delivery or under letters of credit or parent guarantees), our products to some customers and potential customers. Our unrecovered trade receivables worldwide have not been material during the last two years individually or in the aggregate.

We manage our capital expenditures by taking into account quality, plant reliability, safety, environmental and regulatory requirements, prudent or essential maintenance requirements, global economic conditions, available capital resources, liquidity, long-term business strategy and return on invested capital for the relevant expenditures, cost of capital and return on invested capital of the Company as a whole and other factors. Capital expenditures totaled $17.5 million in the six months ended June 30, 2024. We continue to expect full-year capital expenditures to be in the range of $35.0 million to $40.0 million for 2024.

In the event that operating cash flows fail to provide sufficient liquidity to meet our business needs, including capital expenditures, any such shortfall would need to be made up by increased borrowings under our 2018 Revolving Credit Facility, to the extent available, or other liquidity options described above. The Company also maintains access to credit and capital markets and may incur additional debt or issue equity securities from time to time, which may provide an additional source of liquidity. However, there can be no guarantee that we would be able to access the credit or capital markets on commercially satisfactory terms or at all.

### Cash Flow

The following table summarizes our cash flow activities:

*(in thousands)*

| Net cash (used in) provided by: | Six Months Ended June 30, 2024 | 2023 |
| --- | ---: | ---: |
| Operating activities | $(37,385) | $15,774 |
| Investing activities | (17,410) | (39,575) |
| Financing activities | (117) | 20,700 |
| Net change in cash and cash equivalents | $(54,912) | $(3,101) |

***Net cash (used in) provided by operating activities*** represented a $37.4 million use of cash in the first six months of 2024 compared to $15.8 million source of cash in the prior-year period. The decrease in operating cash flow was primarily due to the $30.4 million increased net loss in the first six months of 2024 versus the first six months of 2023. In addition, cash used for working capital increased $19.7 million. Cash flow provided by accounts receivable decreased $30.3 million in the first six months of 2024, compared to the first six months of 2023 primarily due to the reduction in sales. Cash flow used for accounts payable and accruals increased $7.3 million in the first six months of 2024 compared to the first six months of 2023 primarily due to the timing of payments in the first six months of 2024 versus the first six months of 2023. Cash flow used for income taxes decreased $19.5 million in the first six months of 2024 compared to the first six months of 2023 driven by reduced federal tax payments made in the first six months of 2024.

***Net cash used in investing activities*** was $17.4 million in the six months ended June 30, 2024 compared to $39.6 million in the six months ended June 30, 2023. The decrease is primarily due to reduced capital expenditures.

***Net cash (used in) provided by financing activities*** represented a $0.1 million use of cash for the first six months of 2024 compared to a $20.7 million source of cash in the first six months of 2023. Cash flow provided by financing activities in the first six months of 2023 included $27.5 million cash received from the settlement of interest rate swaps partially offset by $6.3 million of cash used for debt issuance costs

### Description of Our Financing Structure

We discuss our financing structure in more detail in Note 4, “Debt and Liquidity” in the Notes to the Condensed Consolidated Financial Statements.

### Non-GAAP financial measures

In addition to providing results that are determined in accordance with GAAP, we have provided certain financial measures that are not in accordance with GAAP. EBITDA, adjusted EBITDA, adjusted net loss, adjusted loss per share, free cash flow, adjusted free cash flow and cash cost of goods sold per MT are non-GAAP financial measures.

We define EBITDA, a non‑GAAP financial measure, as net loss plus interest expense, minus interest income, plus income taxes and depreciation and amortization. We define adjusted EBITDA, a non-GAAP financial measure, as EBITDA adjusted by any pension and other post-employment benefit ("OPEB") plan expenses or benefits, rationalization and rationalization-related 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, stock-based compensation expense, proxy contest expenses, and Tax Receivable Agreement adjustments. Adjusted EBITDA is 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 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.

Our use of adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are:

- adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs;
- adjusted EBITDA does not reflect our cash expenditures for capital equipment or other contractual commitments, including any capital expenditure requirements to augment or replace our capital assets;
- adjusted EBITDA does not reflect the interest expense or the cash requirements necessary to service interest or principal payments on our indebtedness;
- adjusted EBITDA does not reflect tax payments that may represent a reduction in cash available to us;
- adjusted EBITDA does not reflect expenses or benefits relating to our pension and OPEB plans;
- adjusted EBITDA does not reflect rationalization or rationalization-related expenses;
- adjusted EBITDA does not reflect the 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;
- adjusted EBITDA does not reflect stock-based compensation expense;
- adjusted EBITDA does not reflect proxy contest expenses;
- adjusted EBITDA does not reflect Tax Receivable Agreement adjustments; and
- other companies, including companies in our industry, may calculate EBITDA and adjusted EBITDA differently, which reduces its usefulness as a comparative measure.

We define adjusted net loss, a non‑GAAP financial measure, as net loss, excluding the items used to calculate adjusted EBITDA, less the tax effect of those adjustments. We define adjusted loss per share, a non‑GAAP financial measure, as adjusted net loss divided by the weighted average diluted common shares outstanding during the period. We believe adjusted net loss and adjusted loss per share are useful to present to investors because we believe that they assist investors’ understanding of the underlying operational profitability of the Company.

We define free cash flow, a non-GAAP financial measure, as net cash provided by operating activities less capital expenditures. We define adjusted free cash flow, a non-GAAP financial measure, as free cash flow adjusted by payments made or received from the settlement of interest rate swap contracts. We use free cash flow and adjusted free cash flow as critical measures in the evaluation of liquidity in conjunction with related GAAP amounts. We also use these measures when considering available cash, including for decision-making purposes related to dividends and discretionary investments. Further, these measures help management, the audit committee, and investors evaluate the Company's ability to generate liquidity from operating activities.

We define cash cost of goods sold per MT, a non-GAAP financial measure, as cost of goods sold less depreciation and amortization, less cost of goods sold associated with the portion of our sales that consists of deliveries of by-products of the manufacturing processes and less rationalization-related expenses, with this total divided by our sales volume measured in MT. We believe this is an important measure as it is used by our management and Board of Directors to evaluate our costs on a per MT basis.

In evaluating these non-GAAP financial measures, you should be aware that in the future, we may incur expenses similar to the adjustments in the reconciliations presented below. Our presentations of these non-GAAP financial measures should not be construed as suggesting that our future results will be unaffected by these expenses or any unusual or non‑recurring items. When evaluating our performance, you should consider these non-GAAP financial measures alongside other measures of financial performance and liquidity, including our net loss, loss per share, cash flow from operating activities, cost of goods sold, and other GAAP measures.

The following tables reconcile our non-GAAP financial measures to the most directly comparable GAAP measures:

*(Dollars in thousands, except per share data)*

| Reconciliation of Net Loss to Adjusted Net Loss | Three Months Ended June 30, 2024 | 2023 | Six Months Ended June 30, 2024 | 2023 |
| --- | ---: | ---: | ---: | ---: |
| **Net loss** | $(14,752) | $(7,851) | $(45,621) | $(15,220) |
| **Diluted loss per common share:** |  |  |  |  |
| Net loss per share | $(0.06) | $(0.03) | $(0.18) | $(0.06) |
| Weighted average shares outstanding | 257,772,069 | 257,003,691 | 257,587,613 | 256,935,763 |
| Adjustments, pre-tax: |  |  |  |  |
| Pension and OPEB plan expenses(1) | 477 | 899 | 824 | 1,817 |
| Rationalization expenses(2) | 110 | — | 3,255 | — |
| Rationalization-related expenses(3) | — | — | 2,655 | — |
| Non-cash (gains) losses on foreign currency remeasurement(4) | (928) | 273 | (1,090) | 720 |
| Stock-based compensation expense(5) | 1,561 | 1,385 | 2,608 | 2,181 |
| Proxy contest expenses(6) | 542 | — | 752 | — |
| Tax Receivable Agreement adjustment(7) | — | — | 37 | 16 |
| Total non-GAAP adjustments pre-tax | 1,762 | 2,557 | 9,041 | 4,734 |
| Income tax impact on non-GAAP adjustments(8) | 574 | 474 | 2,145 | 831 |
| **Adjusted net loss** | $(13,564) | $(5,768) | $(38,725) | $(11,317) |

(1) Net periodic benefit cost for our pension and OPEB plans.

(2) Severance and contract termination costs associated with the cost rationalization and footprint optimization plan announced in February 2024.

(3) Other non-cash costs, primarily inventory and fixed asset write-offs, associated with the cost rationalization and footprint optimization plan announced in February 2024.

(4) Non-cash (gains) 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.

(5) Non-cash expense for stock-based compensation grants.

(6) Expenses associated with our proxy contest.

(7) Expense adjustment for future payment to our sole pre-IPO stockholder for tax assets that are expected to be utilized.

(8) The tax impact on the non-GAAP adjustments is affected by their tax deductibility and the applicable jurisdictional tax rates.

### GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES

| Reconciliation of Loss per share to Adjusted Loss per Share | Three Months Ended June 30, 2024 | 2023 | Six Months Ended June 30, 2024 | 2023 |
| --- | ---: | ---: | ---: | ---: |
| **Loss per share** | $(0.06) | $(0.03) | $(0.18) | $(0.06) |
| Adjustments per share: |  |  |  |  |
| Pension and OPEB plan expenses(1) | — | — | — | 0.01 |
| Rationalization expenses(2) | — | — | 0.01 | — |
| Rationalization-related expenses(3) | — | — | 0.01 | — |
| Non-cash (gains) losses on foreign currency remeasurement(4) | — | — | — | — |
| Stock-based compensation expense(5) | 0.01 | 0.01 | 0.01 | 0.01 |
| Proxy contest expenses(6) | — | — | — | — |
| Tax Receivable Agreement adjustment(7) | — | — | — | — |
| **Total non-GAAP adjustments pre-tax per share** | 0.01 | 0.01 | 0.03 | 0.02 |
| Income tax impact on non-GAAP adjustments per share(8) | — | — | — | — |
| **Adjusted loss per share** | $(0.05) | $(0.02) | $(0.15) | $(0.04) |

(1) Net periodic benefit cost for our pension and OPEB plans.

(2) Severance and contract termination costs associated with the cost rationalization and footprint optimization plan announced in February 2024.

(3) Other non-cash costs, primarily inventory and fixed asset write-offs, associated with the cost rationalization and footprint optimization plan announced in February 2024.

(4) Non-cash (gains) 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.

(5) Non-cash expense for stock-based compensation grants.

(6) Expenses associated with our proxy contest.

(7) Expense adjustment for future payment to our sole pre-IPO stockholder for tax assets that are expected to be utilized.

(8) The tax impact on the non-GAAP adjustments is affected by their tax deductibility and the applicable jurisdictional tax rates.

### GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES

*(Dollars in thousands)*

| Reconciliation of Net Loss to Adjusted EBITDA | Three Months Ended June 30, 2024 | 2023 | Six Months Ended June 30, 2024 | 2023 |
| --- | ---: | ---: | ---: | ---: |
| **Net loss** | $(14,752) | $(7,851) | $(45,621) | $(15,220) |
| Add: |  |  |  |  |
| Depreciation and amortization | 14,319 | 15,322 | 28,202 | 26,099 |
| Interest expense | 15,609 | 13,907 | 31,235 | 26,713 |
| Interest income | (1,853) | (242) | (3,377) | (614) |
| Income taxes | (592) | 2,329 | (4,793) | (575) |
| **EBITDA** | 12,731 | 23,465 | 5,646 | 36,403 |
| Adjustments: |  |  |  |  |
| Pension and OPEB plan expenses(1) | 477 | 899 | 824 | 1,817 |
| Rationalization expenses(2) | 110 | — | 3,255 | — |
| Rationalization-related expenses(3) | — | — | 2,655 | — |
| Non-cash (gains) losses on foreign currency remeasurement(4) | (928) | 273 | (1,090) | 720 |
| Stock-based compensation expense(5) | 1,561 | 1,385 | 2,608 | 2,181 |
| Proxy contest expenses(6) | 542 | — | 752 | — |
| Tax Receivable Agreement adjustment(7) | — | — | 37 | 16 |
| **Adjusted EBITDA** | $14,493 | $26,022 | $14,687 | $41,137 |

(1) Net periodic benefit cost for our pension and OPEB plans.

(2) Severance and contract termination costs associated with the cost rationalization and footprint optimization plan announced in February 2024.

(3) Other non-cash costs, primarily inventory and fixed asset write-offs, associated with the cost rationalization and footprint optimization plan announced in February 2024.

(4) Non-cash (gains) 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.

(5) Non-cash expense for stock-based compensation grants.

(6) Expenses associated with our proxy contest.

(7) Expense adjustment for future payment to our sole pre-IPO stockholder for tax assets that are expected to be utilized.

### GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES

*Reconciliation of Net Cash (Used in) Provided by Operating Activities to Free Cash Flow and Adjusted Free Cash Flow*

*(Dollars in thousands)*

|  | Three Months Ended June 30, 2024 | 2023 | Six Months Ended June 30, 2024 | 2023 |
| --- | ---: | ---: | ---: | ---: |
| **Net cash (used in) provided by operating activities** | $(36,855) | $(9,024) | $(37,385) | $15,774 |
| Capital expenditures | (6,979) | (14,518) | (17,490) | (39,789) |
| **Free cash flow** | (43,834) | (23,542) | (54,875) | (24,015) |
| Interest rate swap settlements(1) | — | 23,823 | — | 27,453 |
| **Adjusted free cash flow** | $(43,834) | $281 | $(54,875) | $3,438 |

(1) Receipt of cash related to the monthly settlement of our interest rate swap contracts prior to their termination in the second quarter of 2023, as well as receipt of cash related to the termination of the interest rate swap contracts.

*(Dollars in thousands, except per MT amounts)*

| Reconciliation of Cost of Goods Sold to Cash Cost of Goods Sold per MT | Three Months Ended June 30, 2024 | 2023 | Six Months Ended June 30, 2024 | 2023 |
| --- | ---: | ---: | ---: | ---: |
| **Cost of goods sold** | $131,970 | $157,216 | $267,174 | $269,861 |
| Less: |  |  |  |  |
| Depreciation and amortization(1) | 12,648 | 13,605 | 24,855 | 22,670 |
| Cost of goods sold - by-products and other(2) | 9,301 | 4,958 | 18,901 | 13,290 |
| Rationalization-related expenses(3) | — | — | 2,655 | — |
| Cash cost of goods sold | 110,021 | 138,653 | 220,763 | 233,901 |
| Sales volume (in thousands of MT) | 25.5 | 26.4 | 49.6 | 43.3 |
| **Cash cost of goods sold per MT** | $4,315 | $5,252 | $4,451 | $5,402 |

(1) Reflects the portion of depreciation and amortization that is recognized in cost of goods sold.

(2) Primarily reflects cost of goods sold associated with the portion of our sales that consists of deliveries of by-products of the manufacturing processes.

(3) Other non-cash costs, primarily inventory and fixed asset write-offs, associated with the cost rationalization and footprint optimization plan announced in February 2024.

## Market risk

As filed, 3,755 characters.

We are exposed to market risks, primarily from changes in interest rates, currency exchange rates, energy commodity prices and commercial energy rates. From time to time, we enter into transactions that have been authorized according to documented policies and procedures in order to manage these risks. These transactions primarily relate to financial instruments described below. Since the counterparties to these financial instruments are large commercial banks and similar financial institutions, we do not believe that we are exposed to material counterparty credit risk. We do not use financial instruments for trading purposes.

If we utilized our 2018 Revolving Credit Facility, we would be exposed to changes in interest rates. Our 2018 Revolving Credit Facility bears interest, at our option, at a rate to either (i) the Adjusted Term SOFR Rate and Adjusted EURIBOR Rate (each, as defined in the 2018 Credit Agreement), plus an applicable margin initially equal to 3.00% per annum or (ii) the ABR Rate, plus an applicable margin initially equal to 2.00% per annum, in each case with two 25 basis point step downs based on achievement of certain senior secured first lien net leverage ratios.

Our exposure to changes in currency exchange rates results primarily from:

- sales made by our subsidiaries in currencies other than local currencies;
- raw material purchases made by our foreign subsidiaries in currencies other than local currencies; and
- investments in and intercompany loans to our foreign subsidiaries and our share of the earnings of those subsidiaries, to the extent denominated in currencies other than the U.S. dollar.

Our exposure to changes in energy commodity prices and commercial energy rates results primarily from the purchase or sale of refined oil products and the purchase of natural gas and electricity for use in our manufacturing operations.

*Currency rate management.* We enter into foreign currency derivatives from time to time to attempt to manage exposure to changes in currency exchange rates. These foreign currency derivatives, which include, but are not limited to, forward exchange contracts and purchased currency options, attempt to hedge global currency exposures. Forward exchange contracts are agreements to exchange different currencies at a specified future date and at a specified rate. Purchased currency options are instruments which give the holder the right, but not the obligation, to exchange different currencies at a specified rate at a specified date or over a range of specified dates. Forward exchange contracts and purchased currency options are carried at fair value.

The outstanding foreign currency derivatives represented unrealized pre-tax net gains of $0.2 million and $0.1 million as of June 30, 2024 and December 31, 2023, respectively.

*Sensitivity analysis.* We use sensitivity analysis to quantify potential impacts that market rate changes may have on the underlying exposures as well as on the fair values of our derivatives. The sensitivity analysis for the derivatives represents the hypothetical changes in value of the hedge position and does not reflect the related gain or loss on the forecasted underlying transaction.

As of June 30, 2024, a 10% appreciation or depreciation in the value of the U.S. dollar against foreign currencies from the prevailing market rates would have resulted in a corresponding decrease of $2.0 million or a corresponding increase of $2.0 million, respectively, in the fair value of the foreign currency hedge portfolio.

For further information related to the financial instruments described above, see Note 9, “Fair Value Measurements and Derivative Instruments” in the Notes to the Condensed Consolidated Financial Statements.

## Controls and procedures

As filed, 1,683 characters.

*Evaluation of Disclosure Controls and Procedures.* Management is responsible for establishing and maintaining adequate disclosure controls and procedures. Disclosure controls and procedures are designed to ensure that information required to be disclosed by a reporting company in the reports that it files or submits under Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by it in the reports that it files under the Exchange Act is accumulated and communicated to management, including the Chief Executive Officer and Interim Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Under the supervision and with the participation of our management, including our Chief Executive Officer and Interim Chief Financial Officer, we have evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of June 30, 2024. Based on that evaluation, our Chief Executive Officer and Interim Chief Financial Officer concluded that these controls and procedures were effective as of June 30, 2024.

*Changes in Internal Control over Financial Reporting*. There have been no changes in our internal control over financial reporting that occurred during the three months ended June 30, 2024 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 276 characters.

There have been no material changes to the Risk Factors disclosed in Part 1, Item 1A., “Risk Factors,” in our Annual Report on Form 10-K filed on February 14, 2024. You should not interpret the disclosure of any risk factor to imply that the risk has not already materialized.

Filed Jul 26, 2024.
Source: SEC EDGAR, the filing index for accession 0000931148-24-000101. Last ingested by Listed: Nov 10, 2026, 00:15 ET. No prices; not investment advice.