GrafTech Slips After Mixed Q1 Results

  • GrafTech International Ltd EAF reported first-quarter sales growth of 20.3% year-over-year to $366.25 million, missing the consensus of $377.83 million.
  • Adjusted EPS improved to $0.48 from $0.37 in 1Q21, beating the consensus of $0.44.
  • Sales volume increased 16% Y/Y. Production volume increased 28% Y/Y.
  • The gross margin contracted 412 bps to 47.8%. The operating profit increased to $152.9 million (+11.7% Y/Y), and the margin contracted by 322 bps to 41.7%.
  • Adjusted EBITDA increased by 9.4% Y/Y to $169.6 million, and margin contracted by 460 bps to 46.3%.
  • GrafTech generated cash from operating activities for Q1 of $146.32 million, compared to $122.43 million a year ago. Adjusted free cash flow was $129.9 million.
  • The company strengthened its balance sheet by reducing debt by $70 million. It repurchased an aggregate of $30 million of common stock during the quarter.
  • “Pricing trends continued to improve in the first quarter of 2022, following a strong finish to 2021. Our average non-LTA graphite electrode price was just over $6,000 per metric ton, consistent with our expectations, and up 19% sequentially from the fourth quarter. We also experienced strong year-over-year improvement in sales volume, production volume and capacity utilization,” commented CEO David Rintoul.
  • As of March 31, 2022, GrafTech had cash and equivalents of $85 million and total debt of ~$961 million.
  • GrafTech expects FY22 capital expenditures of $70 million - $80 million.
  • Price Action: EAF shares are trading lower by 6.15% at $8.54 on the last check Friday.
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