384313102 Filings — Graftech International Ltd - FilingSpy
384313102
Graftech International Ltd
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A maker of graphite electrodes—the giant carbon rods that recycle scrap steel in electric arc furnaces—plus the petroleum needle coke that feeds them, produced at its Seadrift, Texas plant. Its roots reach back to 1886, when Cleveland's National Carbon Company supplied the arc carbon that lit the world's first electric street lamps. Renamed GrafTech in 2002, it once won an Academy Award for the carbon used in cinema projectors.
GrafTech's Q2 gross loss narrowed to near breakeven as cost cuts offset a 7% price decline, but the non-LTA electrode price fell to ~$3,900/MT.
The non-LTA graphite electrode price fell to approximately $3,900 per metric ton, the lowest level in the periods shown. declined 3% to $125.1 million and was -12.0%, as an 8% volume increase was more than offset by the 7% price decline and a $4.8 million unfavorable swing from lower prior-period benefits. The company is now implementing price increases of $600 to $1,200 per metric ton on uncommitted 2026 volume to restore pricing.
Key takeaways
The weighted-average non-LTA realized price fell 7% to approximately $3,900 per metric ton, the primary driver of the 3% decline to $125.1 million, as competitive pressure continued to outweigh a favorable shift in regional sales mix.
was -12.0%, down from 0.0% a year ago, as a $4.8 million unfavorable swing from lower prior-period benefits and the price decline more than offset a 6% reduction in cash cost of goods sold per metric ton to $3,517.
Section summaries
Management's Discussion and Analysis
Q2 2026 net loss narrowed to $40.5M on 3% lower net sales of $127.4M, as 8% volume growth partially offset a 7% price decline.
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fell 3% to $127.4M as a 7% drop in to ~$3,900/MT was partly offset by an 8% increase in sales volume to 30.8 thousand MT.
Sales volume rose 8% to 30.8 thousand metric tons, which management attributed to market share gains, though the volume growth was more than offset by the price decline and the reduced benefit.
The net loss narrowed to $43.3 million from $86.9 million a year ago, entirely because the prior-year period included a $42.6 million non-cash valuation allowance against deferred tax assets; excluding that item, the operating loss widened.
Liquidity stood at $253.0 million at quarter-end, including $120.2 million in cash, $108.5 million available under the , and $100.0 million in undrawn delayed-draw term loan commitments, which were fully drawn after the quarter closed.
Management is implementing price increases of $600 to $1,200 per metric ton on uncommitted 2026 volume and projects a 5–10% increase in full-year sales volume alongside a low single-digit percentage decline in cash cost of goods sold per metric ton.
What changed
The non-LTA price fell to approximately $3,900 per metric ton, down from $4,200 in Q2 2025 and $3,900 in Q1 2026, confirming that the $600–$1,200 per metric ton price increase on uncommitted 2026 volume, flagged last quarter, had not yet taken hold in Q2.
fell to -12.0% from 0.0% a year ago, reversing the breakeven achieved in Q2 2025, as the $4.8 million unfavorable swing from lower prior-period benefits—a dynamic flagged in Q1 2026—materialized as expected.
The net loss narrowed to $43.3 million from $86.9 million, but the improvement was entirely due to the absence of the $42.6 million non-cash tax valuation allowance recorded in Q2 2025; the underlying operating loss widened.
The 6% decline in cash cost of goods sold per metric ton to $3,517 keeps the company on track toward the low single-digit full-year decline projected in Q1 2026, though it was not enough to offset the price decline and reduced benefit.
What to watch
Whether the $600–$1,200 per metric ton price increase on uncommitted 2026 volume translates into a higher realized non-LTA price in Q3 2026, or whether the Q2 price of approximately $3,900 per metric ton persists.
Whether the 5–10% full-year sales volume growth target is met without further price erosion, and whether the volume gains continue to come at the expense of margin.
Whether the low single-digit percentage decline in cash cost of goods sold per metric ton projected for 2026 is enough to return to positive territory, given the Q2 gross loss of $15.0 million.
The trajectory of , which was a use of $14.9 million in Q2, and whether the $100.0 million in delayed-draw term loan commitments drawn after the quarter provides sufficient runway if cash burn persists.
Gross loss was $0.4M, pressured by competitive pricing, though decreased 6% to $3,517, aided by a $3.7M favorable impact from prior-period write-downs.
Net loss improved to $40.5M from $86.9M, primarily because the prior-year period included a $42.6M non-cash charge against deferred tax assets.
Liquidity stood at $253.0M as of June 30, 2026, after drawing the remaining $100M delayed-draw term loan; total debt was approximately $1.2B.
Management expects a 5–10% increase in full-year 2026 sales volume and a low single-digit decline in , while implementing price increases of $600–$1,200/MT on uncommitted volume.
Quantitative and Qualitative Disclosures About Market Risk
Market risk arises from interest rates on term loans and credit facility borrowings and from currency exposures, managed with derivatives.
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Interest rate exposure stems from First Lien Term Loans and the 2018 , with rates tied to Term SOFR, Adjusted Term SOFR, ABR, or Adjusted EURIBOR plus spreads.
First Lien Term Loans use Term SOFR (2.00% floor) plus 6.00% or ABR plus 5.00%; borrowings use Adjusted Term SOFR plus 3.50%, ABR plus 2.50%, or Adjusted EURIBOR plus 3.50%.
Currency exposure comes from subsidiary sales and raw-material purchases in non-local currencies, plus intercompany loans and investments denominated outside the U.S. dollar.
The company uses foreign-currency derivatives such as forward exchange contracts and purchased currency options to hedge global currency exposures.
A 10% move in the U.S. dollar against foreign currencies would change the of the currency hedge portfolio by $3.2 million; a 100-basis-point rate shift would alter quarterly by $0.5 million.
Outstanding currency derivatives had a pre-tax net unrealized loss of $0.4 million at June 30, 2026, versus a $0.2 million gain at December 31, 2025.
GrafTech faces a material wage claim in Brazil remanded for further adjudication, with no loss estimable as of June 30, 2026.
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The company states that, aside from the Brazil Clause IV matter, no pending proceedings are expected to materially affect its financial position, results, or cash flows.
The Brazil case involves current and former employees suing GrafTech’s Brazilian subsidiary for additional wages and interest under 1989–1990 collective bargaining provisions.
The Brazilian Supreme Court ruled in favor of the employees union in 2019, and the employers union will not seek annulment.
On March 19, 2026, the SDI-I at the TST granted the employees’ appeal, rejecting one statute-of-limitations defense and remanding the case to the 5th Panel for further adjudication.
GrafTech Brazil filed a motion for clarification on May 8, 2026, and the Labor Union has applied for to quantify compensation, though no quantification has occurred.
As of June 30, 2026, the company cannot estimate a potential loss because the claims do not specify the number of employees or the amount of damages sought.
There have been no material changes to the Risk Factors disclosed in Part 1, Item 1A., “Risk Factors,” in our Annual Report on Form 10-K filed on February 13, 2026.
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There have been no material changes to the Risk Factors disclosed in Part 1, Item 1A., “Risk Factors,” in our Annual Report on Form 10-K filed on February 13, 2026.