EAF

GrafTech is a highly cyclical, single-product play on graphite-electrode pricing, and the cycle has crushed it. Revenue has collapsed from $1.35B (FY2021) to $504M (FY2025, -6.4% YoY), but the deeper problem is that the company no longer makes money on the product itself: gross profit is -$15.7M for a -3.1% gross margin, meaning cost of goods exceeds sales before any SG&A. The MD&A explains why — 2025 weighted-average realized price fell ~13% to ~$4,100/MT versus a 2006-2025 average of ~$6,200/MT, driven by the substantial completion of legacy long-term agreements, record Chinese steel exports, and what management itself calls 'aggressive competitor pricing' at 'unsustainably low' levels. Operating income was -$77.1M and net income -$220M (a $-8.45 diluted EPS after a 1-for-10 reverse split done solely to hold the NYSE minimum bid).

The balance sheet turns a bad business into a distressed one. Stockholders' equity is -$260M (a deficit that worsened 229% YoY), retained earnings are -$1.01B, and long-term debt sits at $1.09B against just $138M cash — total debt ~$1.1B per the MD&A. Operating cash flow was -$81.6M while capex ran $38.9M, so the company burned roughly $120M of cash in the year and cash fell 46%. Management cites $340M of liquidity, but ~$200M of that is undrawn revolver and delayed-draw term-loan capacity (which they 'intend to draw in full' before it expires in July 2026) — i.e., taking on more debt to fund losses. With negative equity and persistent cash burn, the equity is effectively a levered option on a graphite-electrode price recovery, and the enterprise value is dominated by the debt, not the $147M market cap.