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    EAF
    Earnings call· Jun 2026(Q2 FY26)

    GRAFTECH INTERNATIONAL LTD EAF

    Jul 24, 2026 Source

    Executive summary

    GrafTech Q2 FY26 — Strong Volume Growth, Cost Reduction, and Strategic Pricing Traction

    GrafTech reported a quarter of operational improvements and strategic advancements, marked by strong sales volume growth and enhanced manufacturing efficiency. While current realized pricing continues to reflect prior commitments, the company is seeing traction with new pricing actions and is well-positioned to benefit from improving steel market fundamentals and trade policies, particularly in the U.S. and Europe. The company is actively exploring opportunities in emerging synthetic graphite applications and remains focused on disciplined execution to strengthen its long-term competitive position.

    Highlights

    4

    • Delivered 8% year-over-year sales volume growth, including a 29% increase in the U.S.

    • Secured customer commitments at prices averaging over 15% above prior levels for uncommitted volume.

    • Achieved 74% capacity utilization, the highest since 2022, and a 9% sequential reduction in cash COGS per metric ton.

    • Improved total recordable incident rate to 0.35 year-to-date.

    Concerns

    3

    • Net sales decreased 3% year-over-year to $127 million due to lower weighted average realized pricing of $3,900 per metric ton.

    • Adjusted EBITDA declined to $2 million from $3 million in the prior year period.

    • Adjusted free cash flow was negative $75 million, compared to negative $53 million in the prior year, primarily due to working capital timing.

    Guidance & targets

    8
    CategoryTargetConfidence
    Cash COGS per metric ton
    modest year-over-year reduction
    medium materiality
    High
    Cash COGS per metric ton
    low single-digit percentage reduction
    medium materiality
    High
    Sales volume growth
    between 5% and 10%
    high materiality
    High
    Capital expenditures
    approximately $35 million
    medium materiality
    High
    Steel demand outlook (ex-China)
    modest growth in 2026, followed by a more meaningful acceleration in 2027
    high materiality
    Medium
    EU steel capacity utilization
    increase from just over 60% to potentially 75% or higher
    high materiality
    Medium
    Operating cash flow
    improve
    medium materiality
    High
    Working capital
    modest increase
    low materiality
    High

    Segment performance

    1
    SegmentRevenueYoYQoQMargin
    United States
    Reflects ongoing focus on value over volume and expanding presence in higher value regions. Customers operating well with over 80% utilization.
    Sales volume growth: 29% YoY
    		—29%——

    Operational metrics

    24
    Cash COGS per metric ton
    $3,500down 9% sequentially, down 6% YoY
    Q2 FY26

    Achieved due to improved production efficiency, higher utilization, and cost improvement initiatives.

    Long-term Cash COGS per metric ton target
    $3,600-$3,700
    Long-term

    Company's long-term view for cash costs per ton.

    Production volume
    33,000
    Q2 FY26

    Exceeded sales volume by approximately 4,000 metric tons year-to-date, planned for inventory build ahead of summer maintenance.

    Capacity utilization
    74%highest quarterly level since 2022
    Q2 FY26

    Reflects increased production and improved operating discipline.

    Sales volume
    31,000up 8% YoY, up 10% sequentially
    Q2 FY26

    Consistent with full year sales volume growth expectation of 5-10%.

    Net sales
    $127Mdown 3% YoY
    Q2 FY26

    Benefits of higher sales volume offset by lower weighted average realized pricing.

    Weighted average realized pricing
    $3,900flat sequentially, down 7% YoY
    Q2 FY26

    Reflects commitments secured prior to announced price increase.

    Incremental annual cash flow per $100 ASP improvement
    $12M
    Annual

    Based on current utilization rates, potential impact of average selling price improvement.

    Adjusted EBITDA
    $2Mvs $3M prior year
    Q2 FY26

    Pricing continued to pressure earnings, partially offset by improved operating performance and cost management.

    Net cash used in operating activities
    $69M
    Q2 FY26

    Includes semiannual interest payments of $34M and planned inventory build.

    Second lien notes interest payments
    $34M
    Semiannual

    Made in Q2 and Q4 each year.

    Delayed draw first lien term loan drawn
    $100M
    Q2 FY26

    Remaining available amount drawn prior to expiration of commitment.

    Total liquidity
    $253M
    Q2 FY26

    Consisting of cash and available borrowing capacity.

    Cash balance
    $145M
    Q2 FY26

    Component of total liquidity.

    Available revolving credit facility capacity
    $108M
    Q2 FY26

    Component of total liquidity.

    Total recordable incident rate (TRIR)
    0.35improved
    YTD FY26

    Reflects continued focus on safety across global operations.

    Needle coke cost as % of total costs
    40%
    Current

    Highlighting the impact of vertical integration.

    Energy contract coverage (EU)
    70%
    H2 FY26

    Provides cushion against volatility in European energy markets.

    Estimated energy cost advantage (EU)
    10-25%below market
    Q2 FY26

    Estimate of how much below market electricity costs are due to contracts.

    Chinese electrode export decline
    10%
    Recent

    Decline in Chinese exports, contributing to market dynamics.

    US steel price increase
    50%
    Since February 2025

    Result of effective trade policy and tariff actions.

    Europe steel price increase
    25%
    Since February 2025

    Result of effective trade policy and tariff actions.

    US import volume (electrode)
    15-20%
    Current

    Percentage of U.S. electrode volume coming from imports.

    Customer commitments at higher prices
    15%above prior prices
    Since Q1 FY26 announcement

    Average increase on new customer commitments following pricing actions.

    Industry KPIs

    2
    MetricValueDetails
    Orders bookings growth8%%
    Backlog by segment end market90%%

    Orderbook & backlog

    2
    Anticipated 2026 volume committed80%Late March FY26

    Committed at time of pricing action announcement.

    Anticipated volume committed in order book90%Q2 FY26

    Mostly at price points reflecting market pricing at end of Q4 FY25.

    Risks & headwinds

    3
    Geopolitical conflicts and inflationary pressurescurrent

    ongoing geopolitical conflicts

    Mitigation: Reconfirming guidance of a modest year-over-year reduction in cash COGS; operations teams identifying opportunities to improve productivity and offset external pressures.

    Higher oil-related feedstock costs and decant oil disruptionscurrent, ongoing

    placing upward pressure on petroleum needle coke pricing

    Mitigation: Vertical integration provides captive supply; diversified sourcing of decant oil from American refineries.

    Oversupplied graphite electrode marketcurrent

    still a market that is oversupplied

    Mitigation: Prepared to take actions to align supply with sustainable industry economics and support long-term viability; disciplined execution and trade policy, including above-quota duties of 50% on steel imports into the EU.

    What to watch in Q3 FY26

    5

    U.S. steel market demand

    Q3 FY26, Q4 FY26
    CurrentStrong, with Q2 pull-forward and new orders for Q3/Q4.
    TargetContinued strength in Q3/Q4.

    Why it matters

    Sustained U.S. demand is a key driver for GrafTech's sales volume and pricing power.

    we are seeing some pull into the second quarter for volumes in the U.S., which to us is a sign of a strengthening demand, but we're also seeing new orders come in for additional volumes needed in the third and fourth quarter. So we expect kind of the back half of the year to continue with strength in the U.S. as we look forward.

    Q&A highlights

    5

    Can you unpack the 29% U.S. sales volume growth? Was it pull-forward, and will it persist through the balance of the year?

    The U.S. market is strong with over 80% utilization. There was some pull-forward into Q2, but new orders for Q3 and Q4 indicate continued strength for the back half of the year.

    “we are seeing some pull into the second quarter for volumes in the U.S., which to us is a sign of a strengthening demand, but we're also seeing new orders come in for additional volumes needed in the third and fourth quarter. So we expect kind of the back half of the year to continue with strength in the U.S. as we look forward.”

    asked by Bennett Moore · answered by Timothy Flanagan

    2 min read5 chapters

    Detailed Narrative

    01

    Strategic Initiatives & Pricing Actions

    GrafTech is implementing strategic initiatives to improve profitability and strengthen its business, including price increases on uncommitted volume. New customer commitments are averaging over 15% above prior prices, though these will impact financial results over time⏳ as shipments occur. The company believes this acceptance indicates customer recognition of the importance of securing a reliable supply of high-quality graphite electrodes.

    02

    Trade Policy & Market Conditions

    The company continues to advocate for fair trade, supporting U.S. trade cases against graphite electrode imports from China and India. Preliminary determinations indicate material injury, with estimated dumping margins of 147% for Chinese and 74% for Indian electrode imports. Preliminary countervailing duties are expected early next week, and anti-dumping duties by the end of September. Global steel production ex-China grew approximately 2% YoY, with U.S. steel production up 6% YTD and capacity utilization reaching 80%. European conditions are improving with new trade protections and CBAM implementation expected to boost domestic steel production to 75% or higher over time⏳.

    03

    Operational Efficiency & Cost Structure

    GrafTech increased production to over 33,000 metric tons, achieving 74% capacity utilization, the highest since 2022. Cash COGS per metric ton declined 9% sequentially and 6% YoY, reaching $3,500 per metric ton in Q2. The company reconfirmed guidance for a low single-digit percentage reduction in cash COGS for the full year, despite geopolitical cost headwinds. The long-term cash COGS per ton target remains $3,600-$3,700.

    04

    Needle Coke Market & Vertical Integration

    Higher decant oil costs and Middle East supply disruptions are creating upward pressure on petroleum needle coke pricing, with market intelligence indicating $200-$300 per ton increases. GrafTech's vertical integration provides a strategic advantage, enhancing supply reliability and positioning the company to benefit from improving needle coke market fundamentals, which historically correlate with electrode pricing. Needle coke represents approximately 40% of GrafTech's total costs.

    05

    Emerging Opportunities & Policy Engagement

    GrafTech is positioning itself to capitalize on the growing strategic importance of synthetic graphite for EAF steelmaking, defense applications, and battery anode materials. The company is engaging with the U.S. administration and the EU on critical mineral policies and exploring leveraging existing assets for energy storage collaborations. This includes supporting efforts by the European Carbon and Graphite Association for a stronger European steel and graphite electrode industry.

    AI-generated summary of the company’s earnings call. Not investment advice.