GrafTech International Ltd. — Third Quarter 2026 Earnings Summary

Financial Performance:

• Net sales for Q3 2026 were $140.2 million, a 3% decrease year-over-year compared to $144.0 million in Q3 2025.
• Net loss for Q3 2026 was $46.8 million ($1.76 per share), compared to a net loss of $28.5 million ($1.10 per share) in Q3 2025.
• Adjusted EBITDA for Q3 2026 was $8.6 million, down from $13.0 million in Q3 2025.
• Net cash used in operating activities for Q3 2026 was $8.4 million, compared to net cash provided of $24.7 million in Q3 2025.
• Adjusted free cash flow for Q3 2026 was negative $16.1 million, compared to positive $18.4 million in Q3 2025.
• For the nine months ended September 30, 2026, net sales were $392.6 million (up 1% from $387.7 million in 2025), and net loss was $130.5 million.
• Gross debt was $1,225 million as of September 30, 2026, with net debt of approximately $1,091 million.
• Total liquidity was $242 million as of September 30, 2026, consisting of $134 million in cash and cash equivalents and $108 million available under the revolving credit facility.
• Cash cost of goods sold per MT for Q3 2026 was $3,653, down from $3,795 in Q3 2025.

Guidance and Future Outlook:

• GrafTech expects higher realized pricing in the fourth quarter of 2026 and in 2027, anticipating a mid-single-digit percentage increase in weighted-average realized pricing in Q4 compared to Q3.
• The company reaffirmed full-year 2026 expectations for a 5–10% year-over-year increase in graphite electrode sales volume and a low-single-digit percentage decline in cash cost of goods sold per MT.
• Full-year 2026 capital expenditures are expected to be approximately $35 million.
• The company anticipates a modest increase in working capital for 2026 to support higher sales volume, with a reduction in working capital expected in the fourth quarter.
• Global steel demand outside of China is projected to grow modestly in 2026, with steel production in the U.S. up 6% year-to-date through August.
• Long-term structural drivers include the transition to electric arc furnace steelmaking and opportunities for petroleum needle coke in battery applications.

Business Segments and Product Lines:

• Sales volume for Q3 2026 was 28.8 thousand metric tons (MT), flat year-over-year; for the first nine months of 2026, sales volume increased 7% year-over-year to 87.7 thousand MT.
• Production volume for Q3 2026 was 27.0 thousand MT, resulting in a capacity utilization rate of 64%.
• Weighted-average realized price for Q3 2026 was approximately $3,900 per MT, a 7% decrease year-over-year.
• In September 2026, the company announced the planned closure of its Monterrey, Mexico manufacturing facility.
• Following the closure, customer requirements served by Monterrey will transition to facilities in Calais, France, and Pamplona, Spain, with connecting pin production capacity transferring to Pamplona.
• Upon completion of the Monterrey closure, annual graphite electrode production capacity is expected to be approximately 127 thousand MT.
• The Monterrey closure is expected to generate $20 million to $25 million in annual cash cost savings, with full annual benefits expected in 2028.

Market and Competitive Landscape:

• The company is gaining market share, maintaining expectations for 5–10% year-over-year sales volume growth for 2026.
• Pricing trends are improving across key commercial regions, with the company securing customer commitments at higher price levels in Q3 and early Q4 compared to earlier periods.
• Steel market outlook in Europe is improving due to recently approved increases in trade protections.
• GrafTech remains the only major graphite electrode producer vertically integrated into petroleum needle coke, its key raw material.

Risks and Challenges:

• The company faces continued cost pressures from oil-based raw materials, energy, and logistics, though cost reduction initiatives are expected to offset these headwinds.
• Risks include dependence on the global steel industry, cyclical selling prices, and potential prolonged periods of reduced profitability.
• The company relies on the successful execution of the Monterrey facility closure and the ability to produce connecting pins at the Pamplona facility.
• Significant risks include fluctuations in foreign currency exchange rates, supply chain disruptions, and the impact of macroeconomic and geopolitical events.
• The company has substantial indebtedness with maturities not due until December 2029, which could limit financial and operating activities.

Management Commentary and Tone:

• CEO Timothy Flanagan stated that pricing momentum reinforces confidence that realized pricing has reached an inflection point, positioning the company for meaningfully higher pricing in 2027.
• Management views the Monterrey closure as a significant step toward improving long-term competitiveness and financial performance by aligning production capacity with market demand.
• The tone reflects confidence in the company's strategic initiatives, including cost structure optimization and commercial discipline, to deliver stronger financial performance as market conditions improve.

Other Key Points:

• The Q3 2026 net loss included $14 million of restructuring and other exit charges, primarily non-cash, associated with the Monterrey facility closure.
• The company issued common stock with proceeds of $4.7 million in Q3 2026 and $5.1 million for the nine months ended September 30, 2026.
• A $100 million Delayed Draw First Lien Term Loan due 2029 was drawn in the first nine months of 2026.
• Inventory levels increased in Q3 2026, consistent with company expectations, contributing to net cash used in operating activities.
• The company operates 140 years of experience in carbon science and manufacturing, with facilities in Calais, France; Monterrey, Mexico; and Pamplona, Spain.