GrafTech International Ltd. (NYSE:EAF) Q1 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call reveals mixed signals: a slight EPS beat but a net loss, and negative EBITDA. Sales volume increased, but average selling price declined. The Q&A highlighted cautious optimism, but management avoided specifics. No shareholder return plans were announced, which may concern investors. Despite challenges like competitive pressures and regulatory issues, the company maintains liquidity and cost control. Given these factors, the stock is likely to stay neutral, with no significant catalysts for a strong move in either direction.
Key Financial Performance
EPS Reported EPS is $-0.13, compared to expectations of $-0.15.
Sales Volume Sales volume increased by 2% year-over-year in Q1 2025, with a notable 25% increase in the US market.
Average Selling Price Average selling price for Q1 2025 was $4,100 per metric ton, a 20% year-over-year decline due to the completion of higher-priced LTAs and ongoing pricing challenges.
Production Volume Production volume was 28,000 tons, with a capacity utilization rate of 63%, a more than 500 basis point increase from the prior year.
Net Loss Net loss of $39 million or $0.15 per share.
Adjusted EBITDA Adjusted EBITDA was negative $4 million, compared to flat in Q1 2024.
Cash COGS per Metric Ton Cash COGS per metric ton was approximately $3,650, reflecting a 21% year-over-year reduction due to cost-saving initiatives and favorable accounting items.
Cash Used in Operating Activities Cash used in operating activities was $32 million.
Adjusted Free Cash Flow Adjusted free cash flow was negative $40 million, compared to negative $11 million in Q1 2024.
Total Liquidity Total liquidity at the end of Q1 was $421 million, consisting of $214 million in cash and $207 million in available credit.
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Operating Highlights
New Product Introduction: GrafTech introduced a new 800 millimeter graphite electrode product, expanding its product portfolio.
Market Expansion in the US: Sales volume in the US increased by nearly 25% year-over-year in Q1 2025, with expectations to outpace this growth for the full year.
Market Expansion in Western Europe: Sales volume in Western Europe increased by more than 40% year-over-year in Q1 2025, positioning GrafTech for long-term growth in this strategic market.
Cost Reduction: Achieved a 23% year-over-year reduction in cash COGS per metric ton in 2024, with a target of mid-single-digit percentage decline for 2025.
Production Efficiency: Production volume in Q1 2025 was 28,000 tons, with a capacity utilization rate of 63%, a 500 basis point increase from the prior year.
Pricing Strategy: GrafTech plans to increase prices by 15% on uncommitted volumes for 2025 to restore pricing and profitability levels.
Geographical Business Shift: GrafTech is shifting its geographical mix to regions with higher selling prices, focusing on the US market.
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Risk or Challenges
Competitive Pressures: Weak demand and excess capacity have led to challenging pricing dynamics, with current graphite electrode pricing remaining unsustainable.
Regulatory Issues: Ongoing assessment of global trade policies and tariffs, particularly US tariffs and potential retaliatory tariffs, which could impact pricing and supply.
Supply Chain Challenges: The need for a reliable supply of high-quality graphite electrodes is critical for EAF steel production, and the company is managing inventory levels to mitigate risks.
Economic Factors: The steel production outside of China has declined, with specific regions like the EU experiencing significant drops in output, affecting overall demand for graphite electrodes.
Market Recovery: While the company is positioned for growth, the current market conditions remain challenging, and the recovery of the steel industry is uncertain.
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Guidance & Outlook
Sales Volume Growth: GrafTech aims to increase sales volume by a low-double-digit percentage for 2025, resulting in cumulative growth of approximately 25% since 2023.
Price Increase: GrafTech plans to increase prices by 15% on uncommitted volumes for 2025 to restore pricing and profitability levels.
Cost Structure Improvement: GrafTech achieved a 23% year-over-year reduction in cash COGS per metric ton in 2024 and aims for a mid-single-digit percentage decline in 2025.
Geographic Mix Shift: GrafTech is shifting its business to regions with higher selling prices, particularly increasing sales volume in the US by nearly 25% year-over-year.
Inventory Management: GrafTech is staging additional inventory in anticipation of tariff impacts, providing flexibility in operations.
Revenue Expectations: GrafTech expects to achieve a low-double-digit percentage increase in annual steel demand within the EU in the coming years.
Cash COGS Projections: For 2025, GrafTech projects cash COGS per metric ton to be approximately $4,100.
Liquidity Position: GrafTech ended Q1 2025 with total liquidity of $421 million, supporting its ability to manage through industry challenges.
Long-term Outlook: GrafTech is confident in generating long-term value due to favorable trends in decarbonization and electric arc furnace adoption.
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Shareholder Return Plan
Shareholder Return Plan: GrafTech International Ltd. has not announced any specific share buyback program or dividend program during the Q1 2025 earnings call. The focus remains on improving financial performance and managing costs.
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Key Q&A
Q:Has the 10% tariffs on Indian material changed the pace of declines in the U.S. market?
A:Historically, there has been no trade protection for the U.S. market from Indian imports. The tariffs could impact the availability of Indian competitors in the U.S. market, potentially changing the landscape for us.
Q:How much more room is there for growth in the U.S. market?
A:While specific numbers won't be disclosed, we are ahead of where we were previously and expect to continue growing our share throughout the year.
Q:What percentage of sales are now coming from the U.S. and Western Europe?
A:We are well over 50% in both of those markets combined.
Q:What is the balance of supplying the U.S. from Monterrey versus Europe?
A:A substantial portion of material for the U.S. market comes from Monterrey, but we also bring in material from Europe.
Q:What impact will tariffs have on COGS?
A:There will be less than 1% impact on COGS from tariffs, inclusive of non-U.S. material.
Q:How successful has the 15% price hike on non-contract customers been?
A:We are optimistic about driving pricing in the back half of the year, but some customers may push back.
Q:What is the outlook for steel utilization rates over the next 6 to 12 months?
A:There is cautious optimism, but uncertainty remains regarding global industrial production and steel utilization.
Q:What guidance can you provide on pricing for electrodes and needle coke?
A:We won't provide specifics, but we see potential for better needle coke pricing and some price stability for electrodes.
Q:How much of the U.S. graphite electrodes are sourced from outside the U.S.?
A:Roughly half of the production coming into the U.S. is from Monterrey, with the balance from European facilities.
Q:What is the pricing outlook in Europe?
A:There is price stability in Europe, with potential support from government actions to promote domestic steel production.
Q:Review of Unclear Management Responses
A:Management avoided giving specific numbers on market share growth and the exact percentage of sales from the U.S. and Western Europe. Additionally, they did not provide clear guidance on future pricing for electrodes and needle coke.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Commission
EU steel
GrafTech position
Rory
Section tariff
St Marys
United States
Western Europe
ability customer
capital level
completion LTAs
cost structure
decline cash
development capability
digit percentage
disruption
facility Mexico
impact point
inventory build
level steel
market confidence
policymaking
quality graphite
recovery region
selling price
share EU
steel aluminum
success
tariff steel
thesis
timing
track digit
trade
uncertainty tariff
volume market
world class
EAF Transcript
GrafTech International Ltd. (EAF) Q4 2025 Earnings Call Transcript
Unknown2-6
The earnings call reveals several concerning factors: declining ASP, increased net loss, negative adjusted EBITDA, and unclear guidance on pricing for 2026. Although cost reductions and U.S. volume growth are positives, global pricing pressures and competition from China and India are significant challenges. The Q&A session highlights management's reluctance to provide specific guidance and uncertainty in market recovery. These factors, coupled with the lack of a market cap, suggest a negative sentiment with potential stock price decline in the short term.
GrafTech International Ltd. (EAF) Q3 2025 Earnings Call Transcript
Positive10-24
The earnings call reveals strong financial performance, particularly in sales volume growth and cost reductions. The Q&A section indicates challenges in the electrode market, but optimism exists due to steel industry momentum and supportive tariffs. Despite flat pricing, the company's strategic market positioning and improved liquidity signal positive sentiment. The lack of new partnerships and cautious guidance are minor concerns, but overall, the positive financial metrics and strategic positioning outweigh these, suggesting a positive stock price movement.
GrafTech International Ltd. (EAF) Q2 2025 Earnings Call Transcript
Positive7-25
The earnings call reveals strong sales volume growth, particularly in the U.S., cost reductions, and a positive EBITDA turnaround. Despite a net loss, the company shows improved cash flow and strategic pricing. The Q&A highlights optimistic U.S. market demand and potential partnerships, despite some uncertainties. Overall, the strategic focus on profitable regions and improved financial metrics suggest a positive stock price movement.
GrafTech International Ltd. (NYSE:EAF) Q1 2025 Earnings Call Transcript
Unknown4-29
The earnings call reveals mixed signals: a slight EPS beat but a net loss, and negative EBITDA. Sales volume increased, but average selling price declined. The Q&A highlighted cautious optimism, but management avoided specifics. No shareholder return plans were announced, which may concern investors. Despite challenges like competitive pressures and regulatory issues, the company maintains liquidity and cost control. Given these factors, the stock is likely to stay neutral, with no significant catalysts for a strong move in either direction.
EAF Slides
EAF Report
Frequently Asked Questions
Where does this earnings call transcript come from?
All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.
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No material content is ever changed or summarized in the “Full Transcript” section. We only correct obvious spoken typos (e.g., “um”, “ah”, repeated 10 times”, or clear misspoken ticker symbols) and add speaker names/titles for readability. Every substantive sentence remains 100% as spoken.
Why do some answers appear as “Unclear” or “Inaudible”?
When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.
Who creates the AI Summary and Key Q&A highlights shown above the transcript?
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
