GrafTech International Q2 Earnings Call Highlights

GrafTech International (NYSE:EAF) reported higher graphite electrode sales volumes and improved manufacturing utilization in the second quarter of 2026, while lower realized pricing continued to weigh on sales and earnings.

Chief Executive Officer Tim Flanagan said the company made progress on its commercial, operational and cost initiatives during the period. Sales volume rose 8% from a year earlier, including a 29% increase in the United States, while production exceeded 33,000 metric tons and capacity utilization reached 74%, the company’s highest quarterly utilization rate since 2022.

“The second quarter marked another period of meaningful progress for GrafTech,” Flanagan said, citing higher volume, increased production and further manufacturing cost improvements. The company reaffirmed its full-year expectations for sales-volume growth and lower cash cost of goods sold per metric ton.

Volume Growth Offset by Lower Pricing

Second-quarter sales volume totaled about 31,000 metric tons, up 8% year over year and 10% sequentially. Chief Financial Officer Rory O’Donnell said the company’s volume performance remains consistent with its forecast for full-year sales-volume growth of 5% to 10%.

Net sales fell 3% from the prior-year period to $127 million. The increase in shipments was offset by lower weighted-average realized pricing, which was about $3,900 per metric ton. That figure was flat sequentially but 7% below the second quarter of 2025.

GrafTech said the current average realized price largely reflects customer commitments made before its late-March pricing action. The company said more than 90% of anticipated volume is already committed in its order book, mostly at prices reflecting market conditions at the end of 2025.

However, Flanagan said customer commitments secured following the price-increase announcement were, on average, more than 15% above prices achieved previously. Those commitments are expected to affect reported pricing as associated orders ship in future periods.

O’Donnell said each $100-per-metric-ton increase in average selling price, based on current utilization rates, would equate to roughly $12 million in incremental annual cash flow. He said the recent pricing progress provides a stronger starting point for 2027 contract negotiations, though the impact on 2026 reported pricing is expected to be modest.

Costs, Cash Flow and Liquidity

Cash cost of goods sold per metric ton declined about 9% sequentially and 6% from the prior-year quarter, driven by improved production efficiency, higher utilization and cost-reduction efforts. GrafTech maintained its full-year forecast for a low-single-digit percentage reduction in cash costs per metric ton.

O’Donnell said production exceeded sales volume by approximately 4,000 metric tons year to date as the company built inventory ahead of seasonal maintenance at its European plants. GrafTech expects production and sales volumes to balance on a full-year basis.

Adjusted EBITDA was $2 million, compared with $3 million in the prior-year quarter. Net cash used in operating activities was $69 million, while adjusted free cash flow was negative $75 million, compared with negative $53 million a year earlier. The company attributed the increased cash usage primarily to working-capital timing, including the planned inventory build, as well as its semiannual interest payment on second-lien notes.

GrafTech expects the second quarter to represent its highest cash usage of 2026 and expects operating cash flow to improve in the second half as inventory normalizes and working-capital investments moderate. The company maintained its forecast for approximately $35 million in capital expenditures for the year.

During June, GrafTech drew the remaining $100 million available under its delayed-draw first-lien term loan. It ended the quarter with approximately $253 million of total liquidity, including $145 million of cash and about $108 million in available revolver capacity. The company said it has substantially no debt maturities until December 2029.

The company also filed a shelf registration and established an at-the-market equity program during the quarter. O’Donnell said usage of the program has been modest but provides additional financing flexibility.

Trade Policy and Needle Coke Conditions

GrafTech continues to support trade cases targeting imports of large-diameter graphite electrodes from China and India. Flanagan noted that the U.S. International Trade Commission in April made a preliminary finding that domestic producers were materially injured by imports from those countries.

The Department of Commerce is expected to announce its preliminary countervailing-duty determination early in the third quarter, followed by a preliminary anti-dumping determination by the end of September, according to the company. The trade petition estimated dumping margins of 147% for Chinese imports and 74% for Indian imports.

Management also pointed to tightening petroleum needle coke market conditions, citing higher oil-related feedstock costs and potential disruptions in decant-oil availability amid conflict in the Middle East. In response to an analyst question, O’Donnell said the company has seen needle coke price increases of roughly $200 to $300 per ton on shipments to date and expects similar increases going forward.

GrafTech said its vertically integrated needle coke operations in Port Lavaca, Texas, reduce its exposure to third-party needle coke pricing pressures. The company also said it has diversified decant-oil sourcing and relies on American refineries for those supplies.

Steel Market Outlook

Flanagan said global steel production excluding China increased about 2% year over year in the second quarter, while U.S. steel production was up 6% year to date. U.S. steel capacity utilization reached 80% during the quarter for the first time since the second quarter of 2022, he said.

Europe remains more challenging, though GrafTech expects newer European Union trade protections and the Carbon Border Adjustment Mechanism to support regional steel production over time. Flanagan said these measures could encourage steelmakers to rebuild graphite electrode inventories toward more normalized levels.

“While the timing of broader pricing recovery remains uncertain, we are not waiting for it,” Flanagan said. “Every decision we’re making today is intended to ensure GrafTech emerges from this cycle as a stronger, more competitive company.”

About GrafTech International (NYSE:EAF)

GrafTech International (NYSE: EAF) is a leading global manufacturer of graphite electrodes and other specialty graphite products used primarily in electric arc furnaces (EAFs) for steel production. The company's core offerings include ultrahigh-power, high-power and regular power electrodes, along with related accessories such as graphite shapes and heterogeneous carbon materials. These products play a critical role in steelmaking by conducting the high electrical currents required to melt scrap steel efficiently and with reduced environmental impact compared to traditional blast furnace methods.

With a manufacturing footprint spanning North America, Europe and Asia, GrafTech serves steel producers and foundries worldwide.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected].

Where Should You Invest $1,000 Right Now?

Before you make your next trade, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis.

Our team has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and none of the big name stocks were on the list.

They believe these five stocks are the five best companies for investors to buy now...

See The Five Stocks Here

Source MarketBeat