GrafTech International Ltd (EAF) Reports Net Loss of $23 Million in Q3 2023 Amid Soft ...
GrafTech International Ltd (NYSE:EAF) reported a net loss of $23 million in Q3 2023, primarily due to lower industry demand.
The company's sales volume was 24 thousand metric tons, with a production volume of 23 thousand MT.
Net cash provided by operating activities was $51 million, with an adjusted free cash flow of $43 million.
Despite the current challenges, GrafTech is confident in its strategic positioning and ability to capitalize on industry tailwinds for long-term growth.
On November 3, 2023, GrafTech International Ltd (NYSE:EAF) announced its unaudited financial results for the quarter and nine months ended September 30, 2023. The company reported a net loss of $23 million, or $0.09 per share, and an adjusted EBITDA of $1 million. The results reflect the persistent softness in the commercial environment, primarily due to lower industry demand.
Financial Performance
Net sales for Q3 2023 were $159 million, a decrease of 48% compared to $304 million in Q3 2022. The decline was attributed to industry-wide softness in demand for graphite electrodes, a shift in business mix, and a decrease in the weighted-average realized price. The net loss margin for the quarter was 14%, compared to net income of $93 million, or $0.36 per share, in Q3 2022.
Adjusted EBITDA was $1 million in Q3 2023, compared to $129 million in Q3 2022. The decline was due to lower sales volume, higher costs per MT, a shift in business mix, and lower weighted-average realized prices. Despite these challenges, the company generated $51 million in net cash from operating activities and an adjusted free cash flow of $43 million.
Operational and Commercial Update
Sales volume for Q3 2023 was 24.2 thousand MT, a decrease of 32% compared to Q3 2022. The weighted-average realized price for graphite electrodes delivered and recognized in revenue in Q3 2023 was approximately $5,400 per MT, compared to approximately $6,000 per MT in Q3 2022. Production volume was 22.7 thousand MT, a decrease of 40% compared to Q3 2022, as the company proactively reduced production volume to align with demand outlook and manage working capital levels.
Capital Structure and Outlook
As of September 30, 2023, GrafTech had liquidity of $285 million, consisting of $112 million of availability under its revolving credit facility and cash and cash equivalents of $173 million. The company's gross debt was $950 million, and net debt was approximately $777 million. GrafTech continues to make targeted investments to improve operational flexibility and support long-term growth, with full-year capital expenditures expected to be in the range of $55 million to $60 million in 2023.
Looking ahead, GrafTech expects weak demand for graphite electrodes in the near term due to persistent softness in the commercial environment. However, the company remains confident in its ability to overcome near-term challenges and is optimistic about the long-term outlook for its business.
Explore the complete 8-K earnings release (here) from GrafTech International Ltd for further details.
This article first appeared on GuruFocus.
