What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-02-13 compared with 2025-02-14 · 170 added, 191 removed, 392 unchanged (48% of the section changed)

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See “Cautionary Note Regarding Forward-Looking Statements.” Our actual results could differ materially from those forward-looking statements as a result of many factors, including those discussed in “Risk Factors” and elsewhere in this Annual Report.

Reverse Stock Split

On August 29, 2025 (the “Effective Date”), we effected a reverse stock split of our issued and outstanding shares of common stock at a ratio of 1-for-10 (the “Reverse Stock Split”).

As a result of the Reverse Stock Split, every 10 shares of common stock issued and outstanding, or held by the Company as treasury stock, immediately prior to the Effective Date were automatically combined and converted into one new share of common stock.

The Reverse Stock Split was implemented primarily to maintain compliance with the NYSE’s minimum bid price requirement.

In addition, the number of authorized shares of the Company’s common stock and preferred stock were proportionally reduced.

The Reverse Stock Split is retroactively reflected in the consolidated financial statements for all periods presented in the accompanying financial statements, including all share and per share amounts.

The Reverse Stock Split did not effect the total dollar amount of common stock or total stockholders’ deficit.

Operational and Commercial Update

Sales volume for 2024 was approximately 103 thousand MT, consisting of LTA volume of 13 thousand MT and non-LTA volume of 90 thousand MT, representing an increase of 13% compared to 92 thousand MT in 2023, consisting of LTA volume of 29 thousand MT and non-LTA volume of 63 thousand MT.

In 2024, our weighted-average realized price from LTAs was approximately $8,100 per MT and our weighted-average realized price for non-LTA sales of graphite electrodes was approximately $4,200 per MT.

Our weighted-average realized non-LTA price decreased 22% compared to 2023, with the decline reflecting the persistent competitive pressures in the regions in which we operate.

In 2023, our weighted-average realized price from LTAs was approximately $8,800 per MT and our weighted-average realized price for non-LTA sales of graphite electrodes was approximately $5,400 per MT.

Sales volume for 2025 was approximately 109 thousand MT and increased 6% compared to 2024.

In 2025, our weighted-average realized price was approximately $4,100 per MT and decreased approximately 13% compared to 2024.

The year-over-year decline reflected the substantial completion in 2024 of our LTAs, as well as persistent competitive pressures across all of our principal commercial regions.

These impacts were partially mitigated by our initiative to actively shift more sales volume to the United States, which remains the strongest region for graphite electrode pricing.

Production volume for 2025 was approximately 112 thousand MT, increasing 15% compared to 2024.

We continue to proactively reduced our graphite electrode production volume to align with our evolving demand outlook and to manage our inventory levels to meet our requirements.

Capital Structure and Liquidity

As of December 31, 2024, we had liquidity of $464.2 million, consisting of $108.0 million of availability under our 2018 Revolving Credit Facility, $100.0 million of availability under our Initial First Lien Term Loan Facility (with respect to the Delayed Draw Commitments thereunder) and cash and cash equivalents of $256.2 million.

As of December 31, 2025, we had liquidity of $340.0 million, consisting of $101.6 million of availability under our 2018 Revolving Credit Facility, $100.0 million of availability under our Initial First Lien Term Loan Facility (with respect to the Delayed Draw Commitments thereunder, which we intend to draw in full prior to its expiration in July 2026) and cash and cash equivalents of $138.4 million.

As of December 31, 2025, we had total debt of approximately $1.1 billion.

In 2024, steel industry production remained constrained by global economic and geopolitical uncertainty.

As we enter 2025, industry analyst projections indicate a modest recovery in global steel demand is expected for the year.

However, significant geopolitical uncertainty remains, including the potential impact of policymaking on the interest rate environment, global trade and decarbonization policies.

As we closely monitor all of these developments and assess their potential impact on the commercial environment for graphite electrodes, our current outlook is that demand for graphite electrodes in the near term will remain relatively flat in the key regions in which we operate.

For GrafTech, despite the industry-wide headwinds, we anticipate a low double-digit percentage point year-over-year increase in our sales volume for 2025 on a full-year basis as we continue to regain market share.

This reflects our compelling customer value proposition and our ongoing focus on delivering on the needs of our customers.

Of our anticipated 2025 sales volume, to date, we have over 60% committed in our order book following the successful completion of the customer negotiations that occur in the fourth quarter of each year.

As it relates to price, challenging pricing dynamics have persisted in most regions and the pricing environment remains unsustainably low.

As a result, we are taking further actions to accelerate our path to normalized levels of profitability and support our ability to invest in our business.

These include initiatives to optimize our order book and actively shift the geographic mix of our business to regions where there is an opportunity to capture higher average selling prices.

In addition, we have informed our customers of our intention to increase prices by 15% on volume that is not yet committed for 2025.

As it relates to costs, we will continue to execute our initiatives to improve our cost structure.

Reflecting these actions and the benefit of the anticipated increase in our sales and production volume levels, we expect a mid-single digit percentage

point decline in our cash cost of goods sold per MT for 2025 compared to 2024 and is expected to continue to trend toward our long-term expectation of approximately $3,700 per MT.

In addition, we will continue to closely manage our working capital levels and capital expenditures.

For 2025, we expect the net impact of working capital will be favorable to our full year cash flow performance, although to a lesser extent than in each of the previous two years which reflected our efforts to align inventory levels with our view on demand.

We anticipate our full year 2025 capital expenditures will be approximately $40 million.

In 2025, global (excluding China) steel production was relatively flat compared to 2024, as geopolitical uncertainty, particularly as it relates to global trade and tariffs, had a significant impact on broader steel industry trends.

In addition, steel exports from China reached a record high in 2025, further constraining steel production in the rest of the world.

As we enter 2026, industry analyst projections indicate a modest recovery in global (excluding China) steel demand is expected for the year.

In the United States, where the steel industry has experienced relative stability, steel production is expected to increase further in the near-term, supported by favorable domestic trade policies.

In the European Union, where the steel industry has been relatively challenged, we continue to see signs of a potential recovery.

In addition to the anticipated growth in steel demand within the European Union in 2026, steel production in Europe is expected to be further supported by increased trade protections as we proceed through the year.

Reflecting these dynamics, hot-rolled coil steel pricing is expected to increase in 2026 in most regions.

As we closely monitor these developments and assess their potential impact on the commercial environment for graphite electrodes, we currently project that global (excluding China) demand for graphite electrodes will increase slightly in 2026, compared to 2025, including projected demand increases within all of the key regions in which we operate.

For GrafTech, we expect to achieve a 5-10% year-over-year increase in our sales volume for 2026 on a full-year basis, as we continue to gain market share reflecting our compelling customer value proposition and our ongoing focus on delivering on the needs of our customers.

Of our anticipated 2026 sales volume, to date, we have approximately 65% committed in our order book following the completion of the customer negotiations that occur in the fourth quarter of each year.

Specific to the first quarter of 2026, we expect a year-over-year increase in our sales volume of approximately 10%.

While we are encouraged by our ongoing strong volume performance, industry-wide pricing levels remain unsustainably low.

Challenging pricing dynamics, most notably aggressive competitor pricing behavior, increased further during the fourth quarter of 2025 and we expect that pressure to continue into 2026.

As a result, we will continue to execute actions to accelerate our path to normalized levels of profitability and support our ability to invest in our business.

This includes further optimizing our order book by continuing to shift the geographic mix of our sales volume to regions where there is an opportunity to capture higher average selling prices, particularly in the United States, while also maintaining our disciplined approach of foregoing volume opportunities where margins are unacceptably low.

We estimate that the higher mix of United States volume in 2025 compared to the prior year boosted our weighted-average selling price approximately $135 per MT on a full-year basis.

As it relates to costs, we will continue to expand on our initiatives to improve our cost structure.

With our 2025 cost performance, we have achieved a cumulative decline in our cash cost of goods sold per metric ton of 31% since the end of 2023.

As we look to implement additional measures to enhance the efficiency of our production schedules and further optimize production costs, we expect to build on this achievement with a low single-digit percentage-point decline in our cash cost of goods sold per MT for 2026 compared to 2025.

Further, we will continue to prudently manage our working capital levels and capital expenditures.

For 2026, reflecting our anticipated volume growth, we expect a modest increase in our net working capital levels for the full year, most notably in the first half of the year reflecting the timing of planned plant maintenance and other timing factors.

We anticipate our full-year 2026 capital expenditures will be approximately $35 million, which we believe is an adequate level to maintain our assets at current utilization levels.

Longer term, we remain confident that the steel industry’s efforts to decarbonize will lead to increased adoption of the electric arc furnace method of steelmaking, driving long-term demand growth for graphite electrodes.

We also anticipate the demand for petroleum needle coke, the key raw material we use to produce graphite electrodes, to accelerate driven by its utilization in producing synthetic graphite for use in lithium-ion batteries for the growing electric vehicle market.

We also anticipate the demand for petroleum needle coke, the key raw material we use to produce graphite electrodes, to accelerate driven by its utilization in producing synthetic graphite used in anodes for lithium-ion batteries that power electric vehicles and energy storage systems.

We believe that the near-term actions we are taking, supported by an industry-leading position and our sustainable competitive advantages, including our substantial vertical integration into petroleum needle coke via our Seadrift facility, will optimally position GrafTech to benefit from that long-term growth.

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In addition to measures of financial performance presented in our Consolidated Financial Statements in accordance with generally accepted accounting principles in the United States (“GAAP”), we use certain other financial measures and operating metrics to analyze the performance of our Company.

The “non‑GAAP” financial measures consist of EBITDA, adjusted EBITDA, adjusted net (loss) income and adjusted (loss) earnings per share, which help us evaluate growth trends, establish budgets, assess operational efficiencies and evaluate our overall financial performance.

The “non‑GAAP” financial measures consist of EBITDA, adjusted EBITDA, adjusted net loss, adjusted loss per share, free cash flow, adjusted free cash flow and cash cost of goods sold per MT, which help us evaluate growth trends, establish budgets, assess operational efficiencies and evaluate our overall financial performance.

The key operating metrics consist of sales volume, production volume, production capacity and capacity utilization.

Key financial measures

Year ended December 31,

(in thousands, except per share amounts) 2025 2024

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(167,076) (106,144)

Adjusted loss (1)(2)

Adjusted loss per share (1)(2)(3)

(6.42) (4.12)

Adjusted EBITDA (3)

(9,088) 1,632

(1) All share and per share data for all periods presented reflect the 1-for-10 reverse stock split, which became effective on August 29, 2025.

See Note 1, “Business and Summary of Significant Accounting Policies” in the Notes to the Consolidated Financial Statements for further discussion.

(2) Loss per share represents diluted loss per share.

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Production capacity reflects expected maximum production volume during the period depending on product mix and expected maintenance outage.

Actual production

Actual production may vary.

Capacity utilization reflects production volume as a percentage of production capacity.

Production volume, production capacity and capacity utilization help us understand the efficiency of our production and evaluate cost of goods sold.

Year ended December 31,

(in thousands, except percentages) 2025 2024

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Capacity utilization (3)

(1) Production volume reflects graphite electrodes we produced during the period.

(1) Production capacity reflects expected maximum production volume during the period depending on product mix and expected maintenance outage.

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and Pamplona, Spain.

While maintaining the capability to produce up to 28,000 MT of graphite electrodes and pins on an annual basis at our St.

Marys, Pennsylvania facility, most production activities at St.

Marys have been suspended.

The wind down of these production activities was completed during the second quarter of 2024.

Remaining activities at St.

Marys are limited to machining graphite electrodes and pins sourced from our other plants.

(3) Capacity utilization reflects production volume as a percentage of production capacity.

As of December 31, 2023, our stated production capacity was approximately 202 thousand MT through our primary manufacturing facilities in Calais, Pamplona and Monterrey.

On February 14, 2024, the Company announced a cost rationalization and footprint optimization plan, in response to persistent softness in the commercial environment.

This included an indefinite suspension of production activities at our St.

Marys facility, with the exception of graphite electrode and pin machining.

We also indefinitely idled certain assets within our remaining graphite electrode manufacturing footprint.

As a result of these initiatives, our stated production capacity was reduced from approximately 202 thousand MT in 2023 to approximately 178 thousand MT in 2024.

Non-GAAP financial measures

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We define adjusted EBITDA, a non-GAAP financial measure, as EBITDA adjusted by any pension and other post-employment benefit (“OPEB”) expenses, rationalization and rationalization-related expenses, non‑cash gains or losses from foreign currency remeasurement of non‑operating assets and liabilities in our foreign subsidiaries where the functional currency is the U.S.

dollar, stock-based compensation expense, proxy contest expenses, Tax Receivable Agreement adjustments and goodwill impairment charges.

dollar, stock-based compensation expense, proxy contest expenses and Tax Receivable Agreement adjustments.

Adjusted EBITDA is the primary metric used by our management and our Board of Directors to establish budgets and operational goals for managing our business and evaluating our performance.

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• adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs;

• adjusted EBITDA does not reflect our cash expenditures for capital equipment or other contractual commitments, including any capital expenditure requirements to augment or replace our capital assets;

• adjusted EBITDA does not reflect our cash expenditures for capital equipment or other contractual commitments,

including any capital expenditure requirements to augment or replace our capital assets;

• adjusted EBITDA does not reflect the interest expense or the cash requirements necessary to service interest or principal payments on our indebtedness;

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• adjusted EBITDA does not reflect rationalization or rationalization-related expenses;

• adjusted EBITDA does not reflect the non‑cash gains or losses from foreign currency remeasurement of non‑operating assets and liabilities in our foreign subsidiaries where the functional currency is the U.S.

• adjusted EBITDA does not reflect stock-based compensation expense;

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• adjusted EBITDA does not reflect Tax Receivable Agreement adjustments;

• adjusted EBITDA does not reflect goodwill impairment charges;

• other companies, including companies in our industry, may calculate EBITDA and adjusted EBITDA differently, which reduces its usefulness as a comparative measure.

We define adjusted net loss, a non‑GAAP financial measure, as net loss, excluding the items used to calculate adjusted EBITDA and further excluding debt modification costs, less the tax effect of those adjustments and non-cash income tax expense related to the establishment of a deferred tax valuation allowance.

We define adjusted loss per share, a non‑GAAP financial measure, as adjusted net loss divided by the weighted average diluted common shares outstanding during the period.

We believe adjusted net loss and adjusted loss per share are useful to present to investors because we believe that they assist investors’ understanding of the underlying operational profitability of the Company.

We define free cash flow, a non-GAAP financial measure, as net cash provided by operating activities less capital expenditures.

We define adjusted free cash flow, a non-GAAP financial measure, as free cash flow adjusted by payments made or received from the settlement of interest rate swap contracts and payments made for debt modification costs.

We define free cash flow, a non-GAAP financial measure, as net cash provided by or used in operating activities less capital expenditures.

We define adjusted free cash flow, a non-GAAP financial measure, as free cash flow adjusted by payments made for debt modification costs.

We use free cash flow and adjusted free cash flow as critical measures in the evaluation of liquidity in conjunction with related GAAP amounts.

We also use these measures when considering available cash, including for decision-making purposes related to dividends, debt servicing and discretionary investments.

We also use these measures when considering available cash, including for decision-making purposes related to dividends and discretionary investments.

Further, these measures help management, the Board of Directors, and investors evaluate the Company's ability to generate liquidity from operating activities.

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The following tables reconcile our non-GAAP key financial measures to the most directly comparable GAAP measures:

Reconciliation of Net Loss to Adjusted Net Loss Year Ended December 31,

(Dollars in thousands, except per share data)

Reconciliation of Net Loss to Adjusted Net Loss

(dollars in thousands;

except per share data) 2025 2024

Net loss $ (219,835) $ (131,165)

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Net loss per share (1)

$ (8.45) $ (5.09)

Weighted average common shares outstanding (1)

26,004,964 25,766,825

Net loss $ (219,835) $ (131,165)

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Pension and OPEB expenses (2)

(1,129) 2,270

Rationalization expenses (3)

Rationalization-related expenses (4)

Non‑cash (gains) losses on foreign currency remeasurement (4)

Foreign currency remeasurement (5)

2,254 (1,949)

Stock-based compensation expense (6)

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Debt modification costs (9)

Goodwill impairment charges (9)

Total non-GAAP adjustments pre-tax $ 8,579 $ 31,412

Valuation allowance adjustment 10)

Income tax impact on non-GAAP adjustments (11)

(1,556) 6,391

Adjusted net loss $ (167,076) $ (106,144)

(1) All share and per share data for all periods presented reflect the 1-for-10 reverse stock split, which became effective on August 29, 2025.

See Note 1, “Business and Summary of Significant Accounting Policies” in the Notes to the Consolidated Financial Statements for further discussion.

(2) Net periodic benefit cost for our pension and OPEB plans, including a mark-to-market adjustment, representing actuarial gains and losses that result from the remeasurement of plan assets and obligations due to changes in assumptions or experience.

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(4) Other non-cash costs, primarily inventory and fixed asset write-offs, associated with the cost rationalization and footprint optimization plan announced in February 2024.

(4) Non-cash (gains) losses from foreign currency remeasurement of non-operating assets and liabilities of our non-U.S.

(5) Non-cash losses (gains) from foreign currency remeasurement of non-operating assets and liabilities of our non-U.S.

subsidiaries where the functional currency is the U.S.

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(7) Expenses associated with our proxy contest.

(7) Non-cash expense adjustment for future payment to our sole pre-IPO stockholder for tax assets that have been utilized.

(8) Prior to 2025, represents expense adjustment for future payment to our sole pre-IPO stockholder for tax assets that have been utilized.

In 2025, represents the write-off of the remaining liability for pre-IPO tax assets that are not expected to be realized.

(9) Debt modification costs related to the December 2024 debt transactions, which are recognized in interest expense on the Consolidated Statements of Operations.

(9) Non-cash goodwill impairment charges.

(10) The tax impact on the non-GAAP adjustments is affected by their tax deductibility and the applicable jurisdictional tax rates.

(10) Represents non-cash income tax expense recorded in the second quarter of 2025 related to the establishment of a full valuation allowance against the Company’s U.S.

and Switzerland deferred tax assets.

(11) The tax impact on the non-GAAP adjustments.

Reconciliation of Loss Per Share to Adjusted Loss Per Share

Year Ended December 31,

Loss per share (1)

$ (8.45) $ (5.09)

Adjustments per share:

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Rationalization-related expenses (4)

Non‑cash (gains) losses on foreign currency remeasurement (4)

Foreign currency remeasurement (5)

Stock-based compensation expense (6)

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Debt modification costs (9)

Goodwill impairment charges (9)

Total non-GAAP adjustments pre-tax per share 0.33 1.21

Valuation allowance adjustment (10)

Income tax impact on non-GAAP adjustments per share (11)

Adjusted loss per share $ (6.42) $ (4.12)

(1) All share and per share data for all periods presented reflect the 1-for-10 reverse stock split, which became effective on August 29, 2025.

See Note 1, “Business and Summary of Significant Accounting Policies” in the Notes to the Consolidated Financial Statements for further discussion.

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(4) Other non-cash costs, primarily inventory and fixed asset write-offs, associated with the cost rationalization and footprint optimization plan announced in February 2024.

(4) Non-cash (gains) losses from foreign currency remeasurement of non-operating assets and liabilities of our non-U.S.

(5) Non-cash losses (gains) from foreign currency remeasurement of non-operating assets and liabilities of our non-U.S.

subsidiaries where the functional currency is the U.S.

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(7) Expenses associated with our proxy contest.

(7) Non-cash expense adjustment for future payment to our sole pre-IPO stockholder for tax assets that have been utilized.

(8) Prior to 2025, represents expense adjustment for future payment to our sole pre-IPO stockholder for tax assets that have been utilized.

In 2025, represents the write-off of the remaining liability for pre-IPO tax assets that are not expected to be realized.

(9) Debt modification costs related to the December 2024 debt transactions, which are recognized in interest expense on the Consolidated Statements of Operations.

(9) Non-cash goodwill impairment charges.

(10) The tax impact on the non-GAAP adjustments is affected by their tax deductibility and the applicable jurisdictional tax rates.

Reconciliation of Net Loss to Adjusted EBITDA Year Ended December 31,

(Dollars in thousands)

(10) Represents non-cash income tax expense recorded in the second quarter of 2025 related to the establishment of a full valuation allowance against the Company’s U.S.

and Switzerland deferred tax assets.

(11) The tax impact on the non-GAAP adjustments.

Reconciliation of Net Loss to Adjusted EBITDA

(in thousands) 2025 2024

Net loss $ (219,835) $ (131,165)

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Pension and OPEB expenses (1)

(1,129) 2,270

Rationalization expenses (2)

Rationalization-related expenses (3)

Non‑cash (gains) losses on foreign currency remeasurement (4)

Foreign currency remeasurement (4)

2,254 (1,949)

Stock-based compensation expense (5)

1 unchanged sentence

Tax Receivable Agreement adjustment (7)

Goodwill impairment charges (8)

Adjusted EBITDA $ (9,088) $ 1,632

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(3) Other non-cash costs, primarily inventory and fixed asset write-offs, associated with the cost rationalization and footprint optimization plan announced in February 2024.

(4) Non-cash (gains) losses from foreign currency remeasurement of non-operating assets and liabilities of our non-U.S.

(4) Non-cash losses (gains) from foreign currency remeasurement of non-operating assets and liabilities of our non-U.S.

subsidiaries where the functional currency is the U.S.

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(6) Expenses associated with our proxy contest.

(7) Non-cash expense adjustment for future payment to our sole pre-IPO stockholder for tax assets that have been utilized.

(8) Non-cash goodwill impairment charges.

Reconciliation of Net Cash (Used in) Provided by Operating Activities to Free Cash Flow and Adjusted Free Cash Flow

Year Ended December 31,

(Dollars in thousands)

Net cash (used in) provided by operating activities $ (40,093) $ 76,561

(7) Prior to 2025, represents expense adjustment for future payment to our sole pre-IPO stockholder for tax assets that have been utilized.

In 2025, represents the write-off of the remaining liability for pre-IPO tax assets that are not expected to be realized.

Reconciliation of Net Cash Used in Operating Activities to Free Cash Flow and Adjusted Free Cash Flow

(in thousands) 2025 2024

Net cash used in operating activities $ (81,616) $ (40,093)

Capital expenditures (38,885) (34,309)

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Debt modification costs (1)

Interest rate swap settlements (2)

Adjusted free cash flow $ (114,500) $ (56,153)

(1) Cash payments of debt modification costs related to the December 2024 debt transactions, which are recognized in interest expense on the Consolidated Statements of Operations and recognized in net cash (used in) provided by operating activities on the Consolidated Statements of Cash Flows.

(2) Receipt of cash related to the monthly settlement of our interest rate swap contracts prior to their termination in the second quarter of 2023, as well as receipt of cash related to the termination of the interest rate swap contracts.

(1) Cash payments of debt modification costs related to the December 2024 debt transactions, which are recognized in interest expense on the Consolidated Statements of Operations and recognized in net cash used in operating activities on the Consolidated Statements of Cash Flows.

Reconciliation of Cost of Goods Sold to Cash Cost of Goods Sold per MT

Year Ended December 31,

(dollars in thousands) 2025 2024

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Throughout our Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”), insignificant changes may be deemed not meaningful and are generally excluded from the discussion.

Year Ended December 31, Increase/ Decrease % Change

Increase/ Decrease % Change

(in thousands) 2025 2024

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Lower of cost or market inventory valuation adjustment 18,315 24,878 (6,563) (26) %

Gross (loss) profit (19,853) 36,212 (56,065) (155) %

Gross loss (15,677) (19,853) 4,176 (21) %

Research and development 6,475 5,706 769 13 %

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Rationalization expenses — 3,156 (3,156) NM

Goodwill impairment charges — 171,117 (171,117) NM

Operating loss (77,066) (75,225) (1,841) 2 %

Other (income) expense, net (1,569) 4,679 (6,248) (134) %

Other income, net (4,049) (1,569) (2,480) 158 %

Interest expense 104,057 85,313 18,744 22 %

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Loss before income taxes (170,442) (153,268) (17,174) 11 %

Income tax benefit (22,103) (18,514) (3,589) 19 %

Income tax expense (benefit) 49,393 (22,103) 71,496 (323) %

Net loss $ (219,835) $ (131,165) $ (88,670) 68 %

NM = Not Meaningful.

Net sales decreased $81.7 million, or 13%, compared to 2023.

The decline primarily reflected a decrease in the weighted-average realized price for volume derived from non-LTAs and a shift in the mix of our business from volume derived

from LTAs to volume derived from non-LTAs.

These factors were partially offset by a 13% increase in total sales volume in 2024, compared to 2023.

Cost of goods sold decreased $38.1 million, or 7%, in 2024 compared to 2023, primarily due to decreased costs as a result of our cost rationalization and footprint optimization plan announced in February 2024.

In addition, we experienced a $40.3 million reduction of fixed manufacturing costs recorded in 2024, compared to 2023, that would have otherwise been inventoried.

Also, the lower of cost or market (“LCM”) inventory valuation adjustments recorded in 2024 and 2023 generated a $19.7 million favorable impact to cost of goods sold in 2024.

Net sales decreased $34.6 million, or 6%, in 2025 compared to 2024.

The decline primarily reflected a 13% decrease in our weighted-average realized price, partially offset by a 6% increase in sales volume.

Cost of goods sold decreased $32.3 million, or 6%, in 2025 compared to 2024.

Our ongoing initiatives to reduce our production costs resulted in an 11% reduction in our cash costs on a per MT basis for the year ended December 31, 2025 compared to 2024.

The prior year included the recognition of an incremental $18.8 million of fixed manufacturing costs (including depreciation) related to low production levels.

In addition, inventory written down in prior periods due to the lower of cost or

market (“LCM”) inventory valuation adjustments had a $3.2 million favorable impact on cost of goods sold in 2025 compared to 2024.

These decreases were partially offset by the impact of increased volume.

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The net realizable value of certain of our inventories fell below their carrying amounts as of December 31, 2025 and 2024, and as a result, we recorded LCM inventory valuation adjustments of $18.3 million and $24.9 million, respectively, in order to state our inventories at market.

Selling and administrative expenses decreased $27.5 million, or 37%, in 2024 compared to 2023, primarily due to the $9.2 million reimbursement of legal fees in connection with the favorable outcome of an arbitration (See Note 12, “Commitments and Contingencies” in the Notes to the Consolidated Financial Statements for further discussion), decreased employee-related expenses driven by our cost rationalization and footprint optimization plan announced in February 2024, as well as decreased variable compensation expenses.

Rationalization expenses represent severance and contract termination costs related to the cost rationalization and footprint optimization plan announced in February 2024.

See Note 17, “Rationalization Expenses” in the Notes to the Consolidated Financial Statements for further discussion.

Goodwill impairment charges includes non-recurring charges relating to goodwill.

Refer to Note 6, “Other Intangible Assets and Goodwill,” to the Consolidated Financial Statements for additional discussion.

Other (income) expense, net was income of $1.6 million in 2024, compared to expense of $4.7 million in 2023.

2024 included $1.9 million of foreign currency remeasurement gains, while $0.7 million of foreign currency remeasurement losses were recognized in 2023.

In addition, in 2024, we recognized mark-to-market losses of $0.7 million on our pension and OPEB plans compared to $3.0 million in 2023.

Selling and administrative expenses increased $8.4 million, or 18%, in 2025 compared to 2024.

In 2024, this included $9.2 million for the reimbursement of legal fees in connection with the favorable outcome of an arbitration, which was recorded as a reduction in selling and administrative expenses.

Excluding this one-time reimbursement, selling and administrative expenses decreased approximately $1.2 million.

Rationalization expenses represent severance and contract termination costs, incurred in 2024, related to the cost rationalization and footprint optimization plan announced in February 2024.

Other income, net increased $2.5 million, or 158% in 2025, compared to 2024.

In 2025, we recognized $2.9 million of mark-to-market gains on our pension and OPEB plans compared to mark-to-market losses of $0.7 million in 2024.

In addition, 2025 included a $3.8 million gain related to the write-off of the remaining Tax Receivable Agreement liability.

These items were partially offset by the recognition of $2.3 million of foreign currency remeasurement losses in 2025 compared to $1.9 million of foreign currency remeasurement gains recognized in 2024.

Interest expense increased $18.7 million, or 22%, in 2025 compared to 2024.

The increase was due to $18.4 million of debt modification costs recognized in 2024 related to our financing transactions completed in 2024, as well as the effect of full year interest incurred in 2024 on debt associated with our Existing 9.875% Notes issued in June 2023.

Interest expense for 2025 included a full year of interest expense incurred on our Initial First Lien Term Loan Facility and our Delayed Draw First Lien Term Loan Facility which was issued in December 2024.

In addition, interest expense in 2024 included $7.4 million of gains amortized out of accumulated other comprehensive income related to interest rate swaps that matured in 2024.

These increases were partially offset by a $12.1 million reduction in debt modification costs in 2025 compared to 2024.

See Note 7, “Interest Expense,” to the Consolidated Financial Statements for additional details.

Income Tax Benefit .

The following table summarizes the income tax benefit in 2024 and 2023:

Year Ended December 31, 2024 Year Ended December 31, 2023

Income tax benefit $ (22,103) $ (18,514)

Income Tax Expense (Benefit).

The following table summarizes the income tax expense (benefit) in 2025 and 2024:

(dollars in thousands) 2025 2024

Income tax expense (benefit) $ 49,393 $ (22,103)

Loss before income taxes $ (170,442) $ (153,268)

Effective income tax rate (29.0) % 14.4 %

The difference in effective income tax rate from 2024 to 2023 is primarily due to the jurisdictional mix of worldwide earnings taxed at different rates and the impact of a 2023 goodwill impairment charge that was not-tax deductible.

The difference in effective income tax rate from 2025 to 2024 is primarily due to the recording deferred income tax expense of $42.6 million relating to establishing full valuation allowances against the Company’s previously realizable U.S.

and Switzerland deferred tax assets in 2025.

Currency Translation and Transactions

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dollars for consolidation and reporting purposes in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 830 , Foreign Currency Matters .

Foreign currency translation adjustments are generally recorded as part of stockholders’ (deficit) equity and identified as part of accumulated other comprehensive loss on the Consolidated Balance Sheets until such time as their operations are sold or substantially or completely liquidated.

Foreign currency translation adjustments are generally recorded as part of stockholders’ deficit and identified as part of accumulated other comprehensive loss on the Consolidated Balance Sheets until such time as their operations are sold or substantially or completely liquidated.

We account for our Russian, Swiss, Luxembourg, United Kingdom and Mexican subsidiaries using the U.S.

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The result of these effects is to increase (or decrease) operating and net loss.

Many of the non-U.S.

countries in which we have a manufacturing facility have been subject to significant economic and political changes, which have significantly impacted currency exchange rates.

We cannot predict changes in currency exchange rates in the future or whether those changes will have net positive or negative impacts on our net sales, cost of goods sold or net (loss) income.

The impact of these changes in the average exchange rates of other currencies against the U.S.

dollar on our net sales was a decrease of $1.1 million in 2024, an increase of $1.5 million in 2023 and a decrease of $11.7 million in 2022.

Many of the countries in which we have a manufacturing facility or commercial activities have been subject to significant economic and political changes, which have significantly impacted currency exchange rates.

We cannot predict changes in currency exchange rates in the future or whether those changes will have net positive or negative impacts on our net sales, cost of goods sold or net loss.

The impact of these changes in the average exchange rates of other currencies against the U.S.

dollar on our cost of goods sold was a decrease of $8.5 million in 2024, an increase of $12.4 million in 2023 and a decrease of $20.6 million in 2022.

dollar on our net sales was an increase of $5.6 million in 2025, a decrease of $1.1 million in 2024 and an increase of $1.5 million in 2023, compared to the prior years.

The impact of these changes on our cost of goods sold was an increase of $3.6 million in 2025, a decrease of $8.5 million in 2024 and an increase of $12.4 million in 2023.

As part of our cash management, we also have intercompany loans between our subsidiaries.

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These transactions may require cash expenditures, which may be funded through a combination of cash on hand, proceeds from the issuance of debt or from equity offerings.

An improving economy, while resulting in improved results of operations, could increase our cash requirements to purchase inventories, make capital expenditures and fund payables and other obligations until increased accounts receivable are converted into cash.

A downturn, including any recession or deterioration of the steel or graphite electrode markets, could significantly and negatively impact our results of operations and cash flows, which, coupled with increased borrowings, could negatively impact our credit ratings, our ability to comply with debt covenants, our ability to secure additional financing and the cost and availability of such financing.

Disruptions in the U.S.

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As of December 31, 2025, we had liquidity of $340.0 million, consisting of $101.6 million of availability under our 2018 Revolving Credit Facility (after giving effect to $13.8 million of letters of credit), $100.0 million of availability under our Initial First Lien Term Loan Facility (with respect to the Delayed Draw Commitments thereunder) and cash and cash equivalents of $138.4 million.

As any borrowings under the 2018 Revolving Credit Facility remain subject to compliance with the financial covenant thereunder (see below and Note 5, “Debt and Liquidity”), our operating performance as of December 31, 2024 and 2023 resulted in a reduction of the availability under the facility.

We had gross long-term debt of $1.1 billion as of December 31, 2024.

As of December 31, 2023, we had liquidity of $289.3 million, consisting of $112.4 million available under our 2018 Revolving Credit Facility, after giving effect to $3.1 million of letters of credit, and cash and cash equivalents of $176.9 million.

We had gross long-term debt of $950.0 million and short-term debt of $0.1 million as of December 31, 2023.

As any borrowings under the 2018 Revolving Credit Facility remain subject to compliance with the financial covenant thereunder (see below and Note 5, “Debt and Liquidity”), our operating performance as of December 31, 2025 and 2024 resulted in a reduction of the availability under the 2018 Revolving Credit Facility.

We had long-term debt of $1.1 billion as of December 31, 2025 and 2024.

As of December 31, 2024, we had liquidity of $464.2 million, consisting of cash and cash equivalents of $256.2 million, $108.0 million of availability under our 2018 Revolving Credit Facility (after giving effect to $7.4 million of letters of credit) and $100.0 million of availability under our Initial First Lien Term Loan Facility (with respect to the Delayed Draw Commitments thereunder).

As of December 31, 2025 and 2024, $45.6 million and $60.0 million, respectively, of our cash and cash equivalents were located outside of the U.S.

We repatriate funds from our foreign subsidiaries through intercompany dividends.

subsidiaries face the customary statutory limitation that distributed dividends may not exceed the amount of accumulated earnings.

Upon repatriation to the United States, the foreign source portion of dividends we receive from our foreign subsidiaries is not subject to U.S.

We repatriate funds from our foreign subsidiaries through intercompany dividends and loan repayment.

All of our subsidiaries face the customary statutory limitation that distributed dividends may not exceed the amount of accumulated earnings.

Upon repatriation to the United States, the foreign source portion of dividends we receive from our

foreign subsidiaries is not subject to U.S.

federal income tax because the amounts were either previously taxed or are exempted from tax by Section 245A of the Internal Revenue Service Code (the “Code”).

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Our ability to repurchase shares is restricted by certain covenants in our debt instruments.

In the first and second quarters of 2023 , we paid a quarterly dividend of $0.01 per share.

On August 2, 2023, the Company’s Board of Directors elected to suspend the quarterly cash dividend of $0.01 per share.

There can be no assurance that we will resume paying dividends in the future in these amounts or at all.

Our Board of Directors may change the timing and amount of any future dividend payments, if reinstated, or eliminate the payment of future dividends in its sole discretion, without any prior notice to our stockholders.

Our ability to pay dividends will depend upon many factors, including our financial position and liquidity, results of operations, legal requirements, restrictions that may be imposed by the terms of our current and future credit facilities and other debt obligations and other factors deemed relevant by our Board of Directors.

Potential uses of our liquidity (other than operations) include capital expenditures, debt repayments, dividends, share repurchases and other general purposes.

Any such potential uses of our liquidity may be funded by existing available liquidity, the incurrence of new secured or unsecured loans, capital market issuances, divestitures, joint ventures or equity investments.

A downturn, including any recession, could significantly and negatively impact our results of operations and cash flows, which, coupled with increased borrowings, could negatively impact our credit ratings, our ability to comply with debt covenants, our ability to secure additional financing and the cost and availability of such financing.

In order to seek to minimize our credit risks, we may reduce our sales of, or refuse to sell (except for prepayment, cash on delivery or under letters of credit or parent guarantees), our products to some customers and potential customers.

Our unrecovered trade receivables worldwide have not been material during the last two years individually or in the aggregate.

In the event that operating cash flows fail to provide sufficient liquidity to meet our business needs, including capital expenditures, any such shortfall would be expected to be made up by borrowings under our delayed draw term loan and 2018 Revolving Credit Facility, to the extent available, or other liquidity options described above.

In the event that operating cash flows fail to provide sufficient liquidity to meet our business needs, including capital expenditures, any such shortfall would need to be made up by borrowings under the First Lien Term Loans and 2018 Revolving Credit Facility, to the extent available, or other liquidity options described above.

The Company also maintains access to credit and capital markets and may incur additional debt or issue equity securities from time to time, which may provide an additional source of liquidity.

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The following table summarizes our cash flow activities:

Year Ended December 31,

(Dollars in thousands)

(in thousands) 2025 2024

Cash flow (used in) provided by:

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Net change in cash and cash equivalents $ (120,288) $ 81,416

Net cash (used in) provided by operating activities represented a $40.1 million use of cash in 2024 versus a $76.6 million source of cash in the prior year.

The decrease in operating cash flow was primarily due to reduced cash provided by working capital $67.3 million in 2024 compared to 2023.

Cash flow provided by inventories decreased $39.0 million, compared to 2023, primarily driven by actively managing our inventory levels to meet demand.

Cash flow provided by accounts receivable decreased $41.2 million, compared to 2023, primarily due to reduced sales in the fourth quarter of 2024 compared to the fourth quarter of 2023.

Cash flow used for income taxes decreased $25.6 million in 2024 compared to 2023 due to reduced federal income tax payments made in 2024.

Cash flow used for accounts payable and accruals increased $15.6 million in 2024 compared to 2023 primarily due to the timing of payments.

Net cash used in investing activities was $34.2 million for the year ended December 31, 2024 compared to $53.8 million for the year ended December 31, 2023 primarily driven by reduced capital expenditures.

Net cash provided by financing activities was $155.7 million in 2024 compared to $18.7 million in 2023.

The increase was primarily due to the issuance of $175.0 million of our First Lien Term Loans and the absence of $5.1 million of dividend payments in 2024, partially offset by $27.5 million of cash received from interest rate swaps in 2023, as well as a $10.8 million increase in deferred financing fees, in 2024 compared to 2023, related to debt issuance.

Net cash used in operating activities increased $41.5 million in 2025 compared to 2024.

The increase was primarily due to a $40.2 million decrease in cash provided by working capital.

Cash flow used for inventories was $8.6 million in 2025, primarily due to the timing of raw material receipts near the end of the period, as well as lower than anticipated fourth quarter sales volume.

This compares to cash flow provided by inventories in 2024 of $68.8 million, which reflected the Company’s initiatives to manage working capital levels.

Cash flow used for accounts payable and accruals decreased $21.2 million in 2025, compared to 2024 primarily due to the timing of payments.

Cash flow provided by accounts receivable increased $19.3 million compared to 2024 primarily due to improved collections and less investment due to lower weighted-average selling prices in the fourth quarter of 2025 compared to the prior year.

Net cash used in investing activities increased $4.1 million in 2025 compared to 2024 primarily due to the timing of capital expenditures made in the ordinary course of business.

Net cash (used in) provided by financing activities was a cash use of $0.3 million in 2025, compared to a source of cash of $155.7 million in 2024.

The change was primarily due to the issuance of $175.0 million of our First Lien Term Loans in 2024, partially offset by the $18.9 million of cash paid for deferred financing fees in 2024 related to the issuance.

Financing Transactions

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The New Notes are the Issuers’ second lien obligations.

(collectively, the “Subsidiary Guarantors,” and, together with the Company, the “Guarantors”), and U.S.

The New 4.625% Notes were issued pursuant to an indenture, dated as of the Settlement Date (the “New 4.625% Notes Indenture”), by and among GrafTech Finance, the Company, each subsidiary guarantor from time to time party thereto (collectively, the “Subsidiary Guarantors,” and, together with the Company, the “Guarantors”), and U.S.

Bank Trust Company, National Association, as trustee (the “New Trustee”) and collateral agent (the “New Notes Collateral Agent”).

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If, at any time prior to December 23, 2028, all or a portion of the outstanding principal amount of the New 9.875% Notes are prepaid, repaid, redeemed or accelerated (or deemed accelerated), including as a result of GrafTech Global filing for bankruptcy or becoming subject to any other insolvency proceeding, GrafTech Global will be required to pay the applicable New 9.875% Notes Redemption Price or the Applicable Premium (each as defined in the New 9.875% Notes Indenture), as applicable.

If the Company or GrafTech Global experiences specific kinds of changes in control or the Company or any of the restricted subsidiaries sells certain of its assets, then GrafTech Global must offer to repurchase the New 9.875% Notes on the terms set forth in the New 9.875% Notes Indenture.

If the Company or GrafTech Global experiences specific kinds of changes in control or the Company or any of the restricted subsidiaries sells certain of its assets,

then GrafTech Global must offer to repurchase the New 9.875% Notes on the terms set forth in the New 9.875% Notes Indenture.

The New Notes Indentures contain certain covenants that, among other things, limit the Company’s ability, and the ability of certain of its subsidiaries, to incur or guarantee additional indebtedness or issue preferred stock, pay distributions on, redeem or repurchase capital stock or redeem or repurchase subordinated debt, incur or suffer to exist liens securing indebtedness, make certain investments, engage in certain transactions with affiliates, consummate certain asset sales and effect a consolidation or merger, or sell, transfer, lease or otherwise dispose of all or substantially all assets.

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If our pro forma consolidated total net leverage ratio is greater than 2.50 to 1.00, we can make restricted payments pursuant to certain baskets.

We were in compliance with all of our debt covenants in the New Notes Indentures as of December 31, 2024.

We were in compliance with all of our debt covenants in the New Notes Indentures as of December 31, 2025 and 2024.

The New 4.625% Notes are guaranteed, jointly and severally, on a senior secured second-priority basis by the domestic Guarantors (the “U.S.

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secured on a second-priority basis, subject to certain exceptions and permitted liens, on the Collateral that secures the First Lien Term Loans and the 2018 Revolving Credit Facility on a first-priority basis;

effectively junior to all of our and the Guarantors’ obligations under the First Lien Term

Loans and the 2018 Revolving Credit Facility (and other indebtedness secured on a first-priority basis on the Collateral pari passu with the liens securing the First Lien Term Loans and the 2018 Revolving Credit Facility) to the extent of the value of the Collateral securing the First Lien Term Loans and the 2018 Revolving Credit Facility (and such other indebtedness secured on a first-priority basis on the Collateral);

effectively junior to all of our and the Guarantors’ obligations under the First Lien Term Loans and the 2018 Revolving Credit Facility (and other indebtedness secured on a first-priority basis on the Collateral pari passu with the liens securing the First Lien Term Loans and the 2018 Revolving Credit Facility) to the extent of the value of the Collateral securing the First Lien Term Loans and the 2018 Revolving Credit Facility (and such other indebtedness secured on a first-priority basis on the Collateral);

effectively senior to all of our and the Guarantors’ future debt that is secured by liens on the Collateral securing the New Notes that are junior to those securing the New Notes and to any of our and the Guarantors’ unsecured indebtedness, in each case, to the extent of the value of the Collateral securing the New Notes and the guarantees;

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Prior to the Settlement Date, the Existing 9.875% Notes Indenture contained certain covenants that, among other things, limited the Company’s ability, and the ability of certain of its subsidiaries, to incur or guarantee additional indebtedness or issue preferred stock, pay distributions on, redeem or repurchase capital stock or redeem or repurchase subordinated debt, incur or suffer to exist liens securing indebtedness, make certain investments, engage in certain transactions with affiliates, consummate certain asset sales and effect a consolidation or merger, or sell, transfer, lease or otherwise dispose of all or substantially all assets.

Pursuant to the Existing 9.875% Notes Indenture, prior to the Settlement Date, if our pro forma

consolidated first lien net leverage ratio was no greater than 2.00 to 1.00, we could make restricted payments so long as no default or event of default had occurred and was continuing.

Pursuant to the Existing 9.875% Notes Indenture, prior to the Settlement Date, if our pro forma consolidated first lien net leverage ratio was no greater than 2.00 to 1.00, we could make restricted payments so long as no default or event of default had occurred and was continuing.

Prior to the Settlement Date, if our pro forma consolidated first lien net leverage ratio was greater than 2.00 to 1.00, we could make restricted payments pursuant to certain baskets.

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The Delayed Draw Commitments are available to the Company until July 23, 2026, subject to the satisfaction of customary conditions precedent thereto.

The Company expects to draw the $100 million of available Delayed Draw Commitments prior to its expiration.

The First Lien Term Loans will mature on December 23, 2029, and are guaranteed by the Guarantors.

The First Lien Term Loans are pari passu in right of payment with the 2018 Revolving Credit Facility and the New Notes, but the First Lien Term Loans and the 2018 Revolving Credit Facility are senior in right of payment to the New Notes with respect to the proceeds of the Calais Facility.

The First Lien Term Loans are pari passu in right of payment with the 2018 Revolving Credit Facility and the New Notes, but the First Lien Term

Loans and the 2018 Revolving Credit Facility are senior in right of payment to the New Notes with respect to the proceeds of the Calais Facility.

The First Lien Term Loans and the 2018 Revolving Credit Facility are secured on a pari passu basis by perfected first-priority security interests in the Collateral.

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2018 Term Loan and 2018 Revolving Credit Facility

$1,500 million to $2,250 million and (ii) a $330 million senior secured revolving credit facility after giving effect to the May 2022 amendment that increased the revolving commitments under the 2018 Credit Agreement by $80 million from $250 million (the “2018 Revolving Credit Facility”).

In February 2018, the Company entered into a credit agreement (as amended, the “2018 Credit Agreement”), which provided for (i) a $2,250 million senior secured term facility (the “2018 Term Loan Facility”) after giving effect to the June 2018 amendment (the “First Amendment”) that increased the aggregate principal amount of the 2018 Term Loan Facility from $1,500 million to $2,250 million and (ii) a $330 million senior secured revolving credit facility after giving effect to the May 2022 amendment that increased the revolving commitments under the 2018 Credit Agreement by $80 million from $250 million (the “2018 Revolving Credit Facility”).

GrafTech Finance Inc.

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Undrawn commitments under the New Revolving Credit Facility bear a commitment fee of 0.25% per annum.

Lenders holding all of the Company’s existing revolving commitments who agreed to provide commitments under the 2018 Revolving Credit Facility were paid a customary extension fee, in connection with the December 2024 amendment.

Lenders holding all of the Company’s

existing revolving commitments who agreed to provide commitments under the 2018 Revolving Credit Facility were paid a customary extension fee, in connection with the December 2024 amendment.

The 2018 Revolving Credit Facility has customary negative covenants and events of default and is required to be prepaid in the case of certain mandatory prepayments of the First Lien Term Loans.

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Payments Due by Year Ending December 31,

Total 2025 2026-2027 2028-2029 2030+

(Dollars in Thousands)

(in thousands) Total 2026 2027-2028 2029-2030 2031+

Contractual and Other Obligations

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Pension plan contributions (c) 4,027 4,027 — — —

Committed purchase obligations (d) 9,750 9,750 — — —

Related party Tax Receivable Agreement (e) 5,824 2,022 — 3,802 —

Total contractual and other obligations (f) $ 1,577,791 $ 104,324 $ 173,668 $ 1,299,799 $ —

Total contractual and other obligations (d) $ 1,470,306 $ 90,940 $ 175,743 $ 1,203,623 $ —

(a) Represents our total debt from our New and Existing 9.875% Notes, our New and Existing 4.625% Notes and our Initial First Lien Term Loans (see "Financing Transactions" in this section for full details of these obligations).

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It is not practical to estimate the required contributions beyond 2026 at the present time.

(d) Represents committed purchases of raw materials.

(e) Represents Brookfield's right to receive future payments from us for 85% of the amount of cash savings, if any, in U.S.

federal income tax and Swiss tax that we and our subsidiaries realize as a result of the utilization of certain tax assets attributable to periods prior to our IPO, including certain federal NOLs, previously taxed income under Section 959 of the Code, foreign tax credits, and certain NOLs in Swissco.

In addition, we will pay interest on the payments we will make to Brookfield with respect to the amount of these cash savings from the due date (without extensions) of our tax return where we realize these savings to the payment date at a rate equal to the one-month period SOFR plus 1.10% per annum.

The term of the Tax Receivable Agreement commenced on April 23, 2018 and will continue until there is no potential for any future tax benefit payments.

(f) In addition, letters of credit of $7.4 million were issued under the 2018 Revolving Credit Facility as of December 31, 2024.

(d) In addition, letters of credit of $13.8 million were issued under the 2018 Revolving Credit Facility as of December 31, 2025.

Critical accounting policies

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If our estimates are incorrect, our DTAs or DTLs may be overstated or understated.

As of December 31, 2024, we had a valuation allowance of $19.3 million against certain DTAs.

Our losses in certain tax jurisdictions in recent periods represented sufficient negative evidence to require a full valuation allowance.

We also have a partial valuation allowance related to certain U.S.

state net operating losses where realizability is unlikely due to discontinued operations or the ability of our U.S.

subsidiaries to generate capital gains to utilize capital loss carryforwards in these states.

Until we determine that we will generate sufficient jurisdictional taxable income to realize our net operating losses and DTAs, we continue to maintain a valuation allowance.

As of December 31, 2024, we had DTAs of $52.4 milllion in the U.S.

These DTAs consist of the previously mentioned state items with a valuation allowance and approximately $34.2 million in additional net DTAs recognized in 2024.

These additional DTAs include approximately $30.0 million related to interest limitations and U.S.

federal net operating loss carryforwards that do not expire, and which may be used to offset taxable income in future periods to reduce our income taxes payable in these future periods.

However, our U.S.

losses in recent periods and the potential for U.S.

losses in 2025 may lead to a cumulative U.S.

loss and may represent sufficient negative evidence to require a full valuation allowance on U.S.

DTAs, which would materially increase our expenses in the period the allowance is recognized and materially adversely affect our financial condition and results of operations.

If cumulative losses are realized, we will evaluate additional evidence such as our projections for growth and market recovery to determine if a valuation allowance is required, as well as other sources of future taxable income.

Related-party Tax Receivable Agreement.

On April 23, 2018, the Company entered into the Tax Receivable Agreement, which provides Brookfield, as the sole pre-IPO stockholder, the right to receive future payments from us for 85% of the amount of cash savings, if any, in U.S.

federal income tax and Swiss tax that we and our subsidiaries realize as a result of the utilization of certain tax assets attributable to periods prior to our IPO, including the pre-IPO Tax Assets.

The term of the Tax Receivable Agreement commenced on April 23, 2018 and will continue until there is no potential for any future tax benefit payments.

The calculation of the Tax Receivable Agreement liability requires significant judgment with regards to the assumptions underlying the forecast of future taxable income, in total and by jurisdiction, as well as their timing.

At each reporting period, the Company assesses the need for valuation allowances against deferred tax assets and whether it is more likely than not that deferred tax benefits will be realized in each jurisdiction.

Consideration is given to all available evidence, both positive and negative, in assessing the need for a valuation allowance.

Examples of positive evidence include a strong earnings history, an event or events that would increase the Company's taxable income or reduce expenses, or tax planning strategies that would create the ability to realize deferred tax assets.

Examples of negative evidence include cumulative losses in recent years or a history of tax attributes expiring unused.

In circumstances where the negative evidence outweighs the positive evidence, the Company has established or maintained valuation allowances on the jurisdiction’s net deferred tax assets.

However, the recognition of the valuation allowance does not limit the Company's ability to utilize these tax assets on a tax return in the future should taxable income be realized in sufficient amount to realize the assets.

At the end of the second quarter of 2025, the Company’s cumulative losses in the United States and Switzerland in recent years, when assessed with other positive and negative evidence, represented sufficient negative evidence to require full valuation allowances on its U.S.

and Switzerland previously realizable deferred tax assets.

As of December 31, 2025, we had a valuation allowance of $92.2 million against certain DTAs, including full valuation allowances of $69.9 million and $20.3 million against our U.S.

and Switzerland DTAs, respectively.

Until we determine that we will generate sufficient jurisdictional taxable income to realize our net operating losses and DTAs, we will continue to maintain a valuation allowance.

Revenue recognition.

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We then recognize as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.

Our revenue streams primarily consist of LTAs and short‑term purchase orders (deliveries within the year) directly with steel manufacturers.

Our revenue streams primarily consist of short-term purchase agreements, multi-year purchase agreements and spot sales directly with steel manufacturers.

The promises of delivery of graphite electrodes represent the distinct performance obligations to which the contract consideration is allocated, based upon the electrode stand‑alone selling prices for the class of customers at the time the agreements are executed.

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The Company has elected to treat the transportation of the electrodes from our premises to the customer’s facilities as a fulfillment activity, and outbound freight cost is accrued when the graphite electrode performance obligation is satisfied.

Any variable consideration is recognized up to its unconstrained amount (i.e., up to the amount for which it is probable that a significant reversal of the variable revenue will not happen).

Revenue recognition requires the estimation of the electrode stand-alone selling price, using a variety of inputs, from market observable information to internal pricing guidelines.

The estimate of stand-alone selling price on the various classes of contracts is the basis for the allocation of revenue amongst periods for new and modified contracts.

Historically the amount of contract assets and liabilities resulting from these estimates has been immaterial.

Any variable consideration is recognized up to its unconstrained amount (i.e., up to the amount for which it is probable that a significant reversal of the variable revenue will not occur).

See Note 2, "Revenue from Contracts with Customers," to the Consolidated Financial Statements for additional information.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis