EAF — GrafTech International Ltd.

GrafTech International (EAF) Q1 2026 Earnings Call Summary

1. Key Financial Results and Metrics

• Net Loss: $43 million, or $1.66 per share.
• Adjusted EBITDA: Negative $14 million, compared to negative $4 million in Q1 2025.
• Sales Volume: 28,000 metric tons, a 14% increase year-over-year.
• Production Volume: 29,000 metric tons, with a capacity utilization rate of 65%.
• Average Selling Price: Approximately $3,900 per metric ton, down 5% year-over-year and 2% sequentially.
• Cash Costs: $3,848 per metric ton, a 4% sequential decline from Q4 2025, but higher than Q1 2025.
• Liquidity: Total liquidity of $329 million, including $120 million in cash and $108 million available under the revolving credit facility.

2. Strategic Updates and Business Highlights

• GrafTech is increasing graphite electrode prices by $600 to $1,200 per metric ton to align with rising steel prices and improve margins.
• Over 85% of anticipated 2026 volume is committed in the order book, indicating strong demand visibility.
• The company is actively involved in trade cases against unfair imports from China and India, which could bolster domestic pricing and market share.
• GrafTech's vertical integration with Seadrift for needle coke supply enhances its competitive position amidst rising input costs.
• Safety performance improved, with a total Recordable Incident Rate of 0.35.

3. Forward Guidance and Outlook

• The company maintains a full-year sales volume growth guidance of 5% to 10%.
• Anticipates modest year-over-year cash cost reductions, targeting $3,600 to $3,700 per metric ton by year-end.
• Positive pricing momentum is expected to materialize in the second half of 2026, particularly during the 2027 price negotiations.
• Global steel demand is projected to grow, with the U.S. expected to see a 1.7% increase in 2026.

4. Bad News, Challenges, or Points of Concern

• The company reported a net loss and negative adjusted EBITDA, indicating ongoing financial challenges.
• Average selling prices have declined, impacting revenue and profitability.
• Geopolitical tensions and energy market volatility pose risks to input costs and overall operational stability.
• The extended conflict in the Middle East could disrupt supply chains and increase costs further.
• There are concerns regarding oversupply in the electrode market, which could pressure pricing despite recent increases.

5. Notable Q&A Insights

• Cost Inflation: Decant oil constitutes about 25% of production costs, with electricity and natural gas adding another 10-15%. The company is largely hedged against energy price fluctuations for 2026.
• Needle Coke Pricing: Anticipated increases in needle coke prices are expected in the second half of 2026 due to rising oil prices and supply disruptions.
• Market Dynamics: Steelmakers are shortening supply lines in response to geopolitical risks and rising costs, which may lead to increased regional sourcing.
• Trade Case Timing: Preliminary rulings on trade cases against imports from China and India are expected by mid-2026, potentially influencing pricing negotiations for 2027.
• Competitive Landscape: GrafTech is successfully winning tenders despite potential oversupply, indicating strong customer recognition of the value of their products.

Overall, GrafTech is navigating a challenging environment with strategic pricing initiatives and a focus on operational efficiency, while also preparing for potential market improvements in the latter half of 2026.