GrafTech Stock Tanks Post Q2 Earnings Miss; Warns On Demand Softness, Suspends Dividend

GrafTech International Ltd. EAF reported a second-quarter sales decline of 49% year-over-year to $185.56 million, beating the consensus of $179.54 million.

The revenue dip was driven by the lower sales volume owing to the residual impact of the suspension of operations in Monterrey, Mexico, that began near the end of the third quarter of 2022.

The company also attributed the lower sales volume to industry-wide softness in demand for graphite electrodes.

Adjusted EPS loss was $(0.02), missing the consensus of $(0.01).

Gross profit slumped 82.5% to $28.35 million while operating income slumped 94% to $8.60 million.

As of June 30, 2023, EAF had cash and equivalents of $132 million and gross debt of $950 million. 

"As we proceed through the second half of 2023, we are seeing ongoing softness in the commercial environment as steel industry production remains constrained by global economic uncertainty. As a result, we have tempered our outlook for the last six months of 2023," said Marcel Kessler, Chief Executive Officer and President.

Suspends Dividend: On August 2, 2023, the company's Board elected to suspend the quarterly cash dividend of $0.01 per share.

Outlook: The company reduced its 2023 sales volume outlook as it expects demand for graphite electrodes in the second half of the year to be impacted by ongoing softness in the commercial environment.

EAF foresees Q3 sales volume to be broadly in line sequentially. The company continues to anticipate full-year capital expenditures to be $55 million-$60 million in 2023.

Price Action: EAF shares are trading lower by 23.54% at $3.99 on the last check Friday.