BROOKLYN HEIGHTS, Ohio--(BUSINESS WIRE)--Nov. 2, 2018--
GrafTech International Ltd. (NYSE: EAF)(GrafTech or the Company) today
announced strong financial results for the quarter ended September 30,
2018, including net income of $199 million, or $0.67 per share, and
Adjusted EBITDA from continuing operations of $277 million.
“GrafTech delivered another solid quarterly result. We also continued to
make progress on the debottlenecking projects at our graphite electrode
plants.” said David Rintoul, President and CEO of GrafTech. "Our
vertical integration and ongoing operational improvements allow us to
provide reliable, high-quality supply to our customers and stable
long-term cash flows for our investors."
Key Financial Measures
|
|
For the Three Months Ended September 30,
|
|
For the Nine Months Ended September 30,
|
(dollars in thousands, except per share amounts)
|
|
2018
|
2017
|
|
2018
|
2017
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
454,890
|
|
$
|
137,245
|
|
|
$
|
1,363,121
|
|
$
|
358,298
|
|
Net income (loss)
|
|
$
|
199,466
|
|
$
|
(3,919
|
)
|
|
$
|
624,587
|
|
$
|
(47,646
|
)
|
Earnings per share (1)
|
|
$
|
0.67
|
|
$
|
(0.01
|
)
|
|
$
|
2.08
|
|
$
|
(0.16
|
)
|
Adjusted EBITDA from continuing operations (2)
|
|
$
|
276,812
|
|
$
|
22,202
|
|
|
$
|
879,108
|
|
$
|
38,655
|
|
(1) Earnings per share represents diluted earnings per share
after giving effect to the stock split effected on April 12, 2018 and
the share repurchase effected on August 13, 2018, resulting in
290,537,612 shares outstanding.
(2) See below for more information and a reconciliation of
EBITDA from continuing operations and adjusted EBITDA from continuing
operations to net income (loss), the most directly comparable financial
measure calculated and presented in accordance with GAAP.
Net sales for the quarter ended September 30, 2018 increased to $455
million, compared to $137 million in the third quarter of 2017. The
improvement was primarily due to an increase in the weighted average
realized price for graphite electrodes, which rose to $9,744 per metric
ton (MT) in the third quarter of 2018, compared to $2,903 per MT in the
prior year period. Graphite electrode demand and pricing remains strong
due to a combination of growth in electric arc furnace steel
manufacturing, long-term reductions in electrode manufacturing capacity,
and limited supply of petroleum needle coke, the primary raw material
for graphite electrodes.
Net income increased to $199 million, or $0.67 per share, in the third
quarter of 2018, compared to a loss of $(4) million, or $(0.01) per
share, in the third quarter of 2017. Adjusted EBITDA from continuing
operations also climbed to $277 million in the third quarter compared to
$22 million in the prior year period. Higher graphite electrode revenues
were the primary driver of higher net income and Adjusted EBITDA from
continuing operations.
Cash flow from operations increased to $235 million in the quarter up
from $30 million in the prior period. This increase was primarily due to
higher net income. Capital expenditures in the quarter were $(19)
million, in line with full-year expectations of approximately $70
million.
Key operating metrics
|
|
For the Three Months Ended September 30,
|
|
For the Nine Months Ended September 30,
|
(in thousands, except price data)
|
|
2018
|
2017
|
|
2018
|
2017
|
Sales volume (MT)(1)
|
|
45
|
|
44
|
|
|
133
|
|
129
|
|
Weighted average realized price(2)
|
|
$
|
9,744
|
|
$
|
2,903
|
|
|
$
|
9,932
|
|
$
|
2,547
|
|
Production volume (MT)(3)
|
|
39
|
|
38
|
|
|
127
|
|
122
|
|
Production capacity excluding St. Marys during idle period (MT)(4)(5)
|
|
39
|
|
38
|
|
|
128
|
|
123
|
|
Capacity utilization excluding St. Marys during idle period(4)(6)
|
|
100
|
%
|
100
|
%
|
|
99
|
%
|
99
|
%
|
Total production capacity (MT)(5)
|
|
46
|
|
45
|
|
|
149
|
|
144
|
|
Total capacity utilization(6)
|
|
85
|
%
|
84
|
%
|
|
85
|
%
|
85
|
%
|
(1) Sales volume reflects the total volume of graphite
electrodes sold for which revenue has been recognized during the period.
(2) Weighted average realized price reflects the total
revenues from sales of graphite electrodes for the period divided by the
graphite electrode sales volume for that period.
(3) Production volume reflects graphite electrodes produced
during the period.
(4) The St. Marys, Pennsylvania facility was temporarily
idled effective the second quarter of 2016 except for the machining of
semi-finished products sourced from other plants. In the first quarter
of 2018, our St. Marys facility began graphitizing a limited amount of
electrodes sourced from our Monterrey, Mexico facility.
(5) Production capacity reflects expected maximum production
volume during the period under normal operating conditions, standard
product mix and expected maintenance outage. Actual production may vary.
(6) Capacity utilization reflects production volume as a
percentage of production capacity.
Operational Update
Our graphite electrode manufacturing plants operated at high levels
during the third quarter of 2018, with production of 39,000 MT, up from
38,000 MT in the prior year period. We are on target to increase annual
production capacity by 21% to 202,000 MT by year end. St. Marys is
graphitizing and machining some semi-finished electrodes sourced from
Monterrey in order to leverage existing infrastructure.
Commercial Strategy
GrafTech has successfully sold approximately two-thirds of its
cumulative long-term production through three- to five-year,
fixed-volume, fixed-price take or pay contracts. These contracts provide
reliability of long-term graphite electrode supply for customers and
stability of future operating results for shareholders. Substantially
all of our 2018 production is contracted or committed through these
long-term contracts and short-term purchase orders.
Capital Structure
As of September 30, 2018, GrafTech has cash and equivalents of $103
million and total debt of $2.2 billion. The Company's target maximum
gross leverage ratio is between 2.0 and 2.5 times total debt to Adjusted
EBITDA from continuing operations compared to current leverage of 1.9
times.(1)
On August 13, 2018, the Company repurchased 11.7 million shares directly
from Brookfield at $19.25 per share for a total of $225 million. These
shares were purchased with available cash on hand and retired upon
purchase. The share repurchase was accretive to all shareholders while
helping to minimize potential equity overhang and maintain liquidity in
the secondary market.
(1) Leverage is defined as total debt divided by adjusted
EBITDA from continuing operations. Current leverage is calculated
using annualized adjusted EBITDA from continuing operations for the
nine months ended September 30, 2018 of $879 million and total debt
of $2,183 million.
|
Distribution
The Board has declared a dividend of $0.085 per share, payable on
December 31, 2018. The dividend will be payable to stockholders of
record as of the close of business on November 30, 2018.
Conference Call
In conjunction with this earnings release, you are invited to listen to
our earnings call being held on November 2, 2018 at 10:00 a.m. Eastern
Time. The webcast and accompanying slide presentation will be available
at www.GrafTech.com,
in the Investor Relations section. The earnings call dial-in number is
+1 (866) 521-4909 in the U.S. and Canada or +1 (647) 427-2311 for
international. A rebroadcast of the webcast will be available following
the call until February 2, 2018, at www.GrafTech.com,
in the Investor Relations section. GrafTech also makes its complete
financial reports that have been filed with the Securities and Exchange
Commission (SEC) and other information available at www.GrafTech.com.
The information in our website is not part of this release or any report
we file or furnish to the SEC. Upon request, GrafTech will provide its
stockholders with a hard copy of its complete audited financial
statement, free of charge.
About GrafTech
GrafTech International Ltd. is a leading manufacturer of high quality
graphite electrode products essential to the production of electric arc
furnace steel and other ferrous and non-ferrous metals. The Company has
a competitive portfolio of low-cost graphite electrode manufacturing
facilities, including three of the highest capacity facilities in the
world. GrafTech is also the only large scale graphite electrode producer
that is substantially vertically integrated into petroleum needle coke,
the primary raw material for graphite electrode manufacturing, which is
currently in limited supply. This unique position provides competitive
advantages in product quality and cost.
Special note regarding forward-looking statements
This news release and related discussions may contain forward-looking
statements that reflect our current views with respect to, among other
things, future events and financial performance. You can identify these
forward-looking statements by the use of forward-looking
words such as “will,” “may,” “plan,” “estimate,” “project,” “believe,”
“anticipate,” “expect,” “intend,” “should,” “would,” “could,” “target,”
“goal,” “continue to,” “positioned to,” "are confident", "remain
optimistic" or the negative version of those words or other comparable
words. Any forward-looking statements contained in this news
release are based upon our historical performance and on our current
plans, estimates and expectations in light of information currently
available to us. The inclusion of this forward-looking
information should not be regarded as a representation by us that the
future plans, estimates or expectations contemplated by us will be
achieved. Our expectations and targets are not predictions of
actual performance and historically our performance has deviated, often
significantly, from our expectations and targets. These forward-looking
statements are subject to various risks and uncertainties and
assumptions relating to our operations, financial results, financial
condition, business, prospects, growth strategy and liquidity.
Accordingly, there are or will be important factors that could cause our
actual results to differ materially from those indicated in these
statements. We believe that these factors include, but are not limited
to: our history of net losses and the possibility that we may not
maintain profitability in the future; the possibility that we may be
unable to implement our business strategies, including our initiative to
secure and maintain longer-term customer contracts, in an effective
manner; the possibility that recent tax legislation could adversely
affect us or our stockholders; the fact that pricing for graphite
electrodes has historically been cyclical and, in the future, the price
of graphite electrodes will likely decline from recent record highs; the
sensitivity of our business and operating results to economic
conditions; our dependence on the global steel industry generally and
the EAF steel industry in particular; the possibility that global
graphite electrode overcapacity may adversely affect graphite electrode
prices; the competitiveness of the graphite electrode industry; our
dependence on the supply of petroleum needle coke; our dependence on
supplies of raw materials (in addition to petroleum needle coke) and
energy; the legal, economic, social and political risks associated with
our substantial operations in multiple countries; the possibility that
fluctuation of foreign currency exchange rates could materially harm our
financial results; the possibility that our results of operations could
deteriorate if our manufacturing operations were substantially disrupted
for an extended period, including as a result of equipment failure,
climate change, natural disasters, public health crises, political
crises or other catastrophic events; the possibility that plant capacity
expansions may be delayed or may not achieve the expected benefits; our
dependence on third parties for certain construction, maintenance,
engineering, transportation, warehousing and logistics services; the
possibility that we are unable to recruit or retain key management and
plant operating personnel or successfully negotiate with the
representatives of our employees, including labor unions; the
possibility that we may divest or acquire businesses, which could
require significant management attention or disrupt our business; the
sensitivity of goodwill on our balance sheet to changes in the market;
the possibility that we are subject to information technology systems
failures, cybersecurity attacks, network disruptions and breaches of
data security; our dependence on protecting our intellectual property;
the possibility that third parties may claim that our products or
processes infringe their intellectual property rights; the possibility
that our manufacturing operations are subject to hazards; changes in, or
more stringent enforcement of, health, safety and environmental
regulations applicable to our manufacturing operations and facilities;
the possibility that significant changes in our jurisdictional earnings
mix or in the tax laws of those jurisdictions could adversely affect our
business; the possibility that our indebtedness could limit our
financial and operating activities or that our cash flows may not be
sufficient to service our indebtedness; the possibility that restrictive
covenants in our financing agreements could restrict or limit our
operations; the fact that borrowings under certain of our existing
financing agreements subjects us to interest rate risk; the possibility
of a lowering or withdrawal of the ratings assigned to our debt; the
possibility that disruptions in the capital and credit markets could
adversely affect our results of operations, cash flows and financial
condition, or those of our customers and suppliers; the possibility that
highly concentrated ownership of our common stock may prevent minority
stockholders from influencing significant corporate decisions; the fact
that certain of our stockholders have the right to engage or invest in
the same or similar businesses as us; the fact that certain provisions
of our Amended and Restated Certificate of Incorporation and our Amended
and Restated By-Laws could hinder, delay or prevent a change of
control; the fact that the Court of Chancery of the State of Delaware
will be the exclusive forum for substantially all disputes between us
and our stockholders; our status as a “controlled company” within the
meaning of the NYSE corporate governance standards, which allows us to
qualify for exemptions from certain corporate governance requirements;
and other risks described in the “Risk Factors” section of our quarterly
reports on Form 10-Q and other filings with the SEC.
These factors should not be construed as exhaustive and should be
read in conjunction with the other cautionary statements that are
included in our quarterly reports on Form 10-Q and other filings with
the SEC. The forward-looking statements made in this press
release relate only to events as of the date on which the statements are
made. We do not undertake any obligation to publicly update or review
any forward-looking statement, except as required by law, whether
as a result of new information, future developments or otherwise.
Non-GAAP financial measures
In addition to providing results that are determined in accordance with
GAAP, we have provided certain financial measures that are not in
accordance with GAAP. EBITDA from continuing operations and adjusted
EBITDA from continuing operations are non-GAAP financial measures. We
define EBITDA from continuing operations, a non-GAAP financial measure,
as net income or loss plus interest expense, minus interest income, plus
income taxes, discontinued operations and depreciation and amortization
from continuing operations. We define adjusted EBITDA from continuing
operations as EBITDA from continuing operations plus any pension and
other post-employment benefit ("OPEB") plan expenses, impairments,
rationalization-related charges, initial public offering expenses,
non-cash gains or losses from foreign currency remeasurement of
non-operating liabilities in our foreign subsidiaries where the
functional currency is the U.S. dollar, Related party Tax Receivable
Agreement expense and non-cash fixed asset write-offs. Adjusted EBITDA
from continuing operations 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.
We monitor adjusted EBITDA from continuing operations as a supplement to
our GAAP measures, and believe it is useful to present to investors,
because we believe that it facilitates evaluation of our
period-to-period operating performance by eliminating items that are not
operational in nature, allowing comparison of our recurring core
business operating results over multiple periods unaffected by
differences in capital structure, capital investment cycles and fixed
asset base. In addition, we believe adjusted EBITDA from continuing
operations and similar measures are widely used by investors, securities
analysts, ratings agencies, and other parties in evaluating companies in
our industry as a measure of financial performance and debt-service
capabilities. We also monitor, and present to investors, the ratio of
total debt to adjusted EBITDA from continuing operations, because we
believe it is a useful and widely used way to assess our leverage.
Our use of adjusted EBITDA from continuing operations has limitations as
an analytical tool, and you should not consider it in isolation or as a
substitute for analysis of our results as reported under GAAP. Some of
these limitations are:
-
adjusted EBITDA from continuing operations does not reflect changes
in, or cash requirements for, our working capital needs;
-
adjusted EBITDA from continuing operations does not reflect our cash
expenditures for capital equipment or other contractual commitments,
including any capital expenditures to augment or replace our capital
assets;
-
adjusted EBITDA from continuing operations does not reflect the
interest expense or the cash requirements necessary to service
interest or principal payments on our indebtedness;
-
adjusted EBITDA from continuing operations does not reflect tax
payments that may represent a reduction in cash available to us;
-
adjusted EBITDA from continuing operations does not reflect expenses
relating to our pension and OPEB plans;
-
adjusted EBITDA from continuing operations does not reflect impairment
of long-lived assets and goodwill;
-
adjusted EBITDA from continuing operations does not reflect the
non-cash gains or losses from foreign currency remeasurement of
non-operating liabilities in our foreign subsidiaries where the
functional currency is the U.S. dollar;
-
adjusted EBITDA from continuing operations does not reflect initial
public offering expenses;
-
adjusted EBITDA from continuing operations does not reflect Related
party Tax Receivable Agreement expenses;
-
adjusted EBITDA from continuing operations does not reflect
rationalization-related charges, stock-based compensation or the
non-cash write-off of fixed assets; and
-
other companies, including companies in our industry, may calculate
EBITDA from continuing operations and adjusted EBITDA from continuing
operations differently, which reduces its usefulness as a comparative
measure.
In evaluating EBITDA from continuing operations and adjusted EBITDA from
continuing operations, you should be aware that in the future, we will
incur expenses similar to the adjustments in the reconciliation
presented below. Our presentations of EBITDA from continuing operations
and adjusted EBITDA from continuing operations should not be construed
as suggesting that our future results will be unaffected by these
expenses or any unusual or non-recurring items. When evaluating our
performance, you should consider EBITDA from continuing operations and
adjusted EBITDA from continuing operations alongside other financial
performance measures, including our net income (loss) and other GAAP
measures.
GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES
|
CONDENSED CONSOLIDATED BALANCE SHEETS
|
(Dollars in thousands)
|
Unaudited
|
|
|
|
|
|
|
|
As of September 30, 2018
|
|
As of December 31, 2017
|
ASSETS
|
|
|
|
|
Current assets:
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
102,507
|
|
|
$
|
13,365
|
|
Accounts and notes receivable, net of allowance for doubtful
accounts of $965 as of September 30, 2018 and $1,097 as of
December 31, 2017
|
|
204,704
|
|
|
116,841
|
|
Inventories
|
|
261,984
|
|
|
174,151
|
|
Prepaid expenses and other current assets
|
|
60,368
|
|
|
44,872
|
|
Current assets of discontinued operations
|
|
1,078
|
|
|
5,313
|
|
Total current assets
|
|
630,641
|
|
|
354,542
|
|
Property, plant and equipment
|
|
685,352
|
|
|
642,651
|
|
Less: accumulated depreciation
|
|
165,711
|
|
|
129,810
|
|
Net property, plant and equipment
|
|
519,641
|
|
|
512,841
|
|
Deferred income taxes
|
|
46,145
|
|
|
30,768
|
|
Goodwill
|
|
171,117
|
|
|
171,117
|
|
Other assets
|
|
135,163
|
|
|
129,835
|
|
Total assets
|
|
$
|
1,502,707
|
|
|
$
|
1,199,103
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
Current liabilities:
|
|
|
|
|
Accounts payable
|
|
$
|
80,620
|
|
|
$
|
69,110
|
|
Short-term debt
|
|
106,325
|
|
|
16,474
|
|
Accrued income and other taxes
|
|
51,043
|
|
|
9,737
|
|
Other accrued liabilities
|
|
41,007
|
|
|
53,226
|
|
Current liabilities of discontinued operations
|
|
3,687
|
|
|
3,412
|
|
Total current liabilities
|
|
282,682
|
|
|
151,959
|
|
Long-term debt
|
|
2,077,003
|
|
|
322,900
|
|
Other long-term obligations
|
|
68,455
|
|
|
68,907
|
|
Deferred income taxes
|
|
50,614
|
|
|
41,746
|
|
Related party payable
|
|
61,801
|
|
|
—
|
|
Long-term liabilities of discontinued operations
|
|
636
|
|
|
376
|
|
|
|
|
|
|
Stockholders’ equity:
|
|
|
|
|
Preferred stock, par value $.01, 300,000,000 shares authorized, none
issued
|
|
—
|
|
|
—
|
|
Common stock, par value $.01, 3,000,000,000 shares authorized,
290,537,612 and 302,225,923 shares issued and outstanding as
of September 30, 2018 and December 31, 2017*, respectively
|
|
2,905
|
|
|
3,022
|
|
Additional paid-in capital
|
|
819,127
|
|
|
851,315
|
|
Accumulated other comprehensive income
|
|
34,539
|
|
|
20,289
|
|
Accumulated deficit
|
|
(1,895,055
|
)
|
|
(261,411
|
)
|
Total stockholders’ (deficit) equity
|
|
(1,038,484
|
)
|
|
613,215
|
|
|
|
|
|
|
Total liabilities and stockholders’ equity
|
|
$
|
1,502,707
|
|
|
$
|
1,199,103
|
|
* Based on the number of common shares outstanding after giving effect
to the stock split that became effective on April 12, 2018
GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|
(Dollars in thousands)
|
(Unaudited)
|
|
|
|
For the Three Months Ended September 30,
|
|
For the Nine Months Ended September 30,
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
454,890
|
|
|
$
|
137,245
|
|
|
$
|
1,363,121
|
|
|
$
|
358,298
|
|
Cost of sales
|
|
180,280
|
|
|
120,483
|
|
|
491,339
|
|
|
330,370
|
|
Gross profit
|
|
274,610
|
|
|
16,762
|
|
|
871,782
|
|
|
27,928
|
|
Research and development
|
|
518
|
|
|
1,329
|
|
|
1,528
|
|
|
3,083
|
|
Selling and administrative expenses
|
|
14,234
|
|
|
13,293
|
|
|
46,349
|
|
|
37,118
|
|
Operating profit (loss)
|
|
259,858
|
|
|
2,140
|
|
|
823,905
|
|
|
(12,273
|
)
|
|
|
|
|
|
|
|
|
|
Other expense (income), net
|
|
1,502
|
|
|
(404
|
)
|
|
2,533
|
|
|
4,322
|
|
Related party Tax Receivable Agreement expense
|
|
—
|
|
|
—
|
|
|
61,801
|
|
|
—
|
|
Interest expense
|
|
33,855
|
|
|
7,792
|
|
|
100,387
|
|
|
23,240
|
|
Interest income
|
|
(562
|
)
|
|
(58
|
)
|
|
(1,068
|
)
|
|
(320
|
)
|
Income (loss) from continuing operations before provision for
income taxes
|
|
225,063
|
|
|
(5,190
|
)
|
|
660,252
|
|
|
(39,515
|
)
|
|
|
|
|
|
|
|
|
|
Provision for income taxes
|
|
24,871
|
|
|
1,963
|
|
|
36,250
|
|
|
3,249
|
|
Net income (loss) from continuing operations
|
|
200,192
|
|
|
(7,153
|
)
|
|
624,002
|
|
|
(42,764
|
)
|
|
|
|
|
|
|
|
|
|
(Loss) income from discontinued operations, net of tax
|
|
(726
|
)
|
|
3,234
|
|
|
585
|
|
|
(4,882
|
)
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
199,466
|
|
|
$
|
(3,919
|
)
|
|
$
|
624,587
|
|
|
$
|
(47,646
|
)
|
|
|
|
|
|
|
|
|
|
Basic income (loss) per common share:
|
|
|
|
|
|
|
|
|
Net income (loss) per share
|
|
$
|
0.67
|
|
|
$
|
(0.01
|
)
|
|
$
|
2.08
|
|
|
$
|
(0.16
|
)
|
Net income (loss) from continuing operations per share
|
|
$
|
0.68
|
|
|
$
|
(0.02
|
)
|
|
$
|
2.08
|
|
|
$
|
(0.14
|
)
|
Weighted average common shares outstanding
|
|
296,136,564
|
|
|
302,225,923
|
|
|
300,173,831
|
|
|
302,225,923
|
|
Diluted income (loss) per common share:
|
|
|
|
|
|
|
|
|
Income (loss) per share
|
|
$
|
0.67
|
|
|
$
|
(0.01
|
)
|
|
$
|
2.08
|
|
|
$
|
(0.16
|
)
|
Diluted income (loss) from continuing operations per share
|
|
$
|
0.68
|
|
|
$
|
(0.02
|
)
|
|
$
|
2.08
|
|
|
$
|
(0.14
|
)
|
Weighted average common shares outstanding
|
|
296,145,453
|
|
|
302,225,923
|
|
|
300,178,704
|
|
|
302,225,923
|
|
* Based on the number of common shares outstanding after giving effect
to the stock split that became effective on April 12, 2018
GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(Dollars in thousands, unaudited)
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended September 30,
|
|
For the Nine Months Ended September 30,
|
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Cash flow from operating activities:
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
|
$
|
199,466
|
|
|
$
|
(3,919
|
)
|
|
$
|
624,587
|
|
|
$
|
(47,646
|
)
|
Adjustments to reconcile net income (loss) to cash provided by
operations:
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
16,050
|
|
|
17,688
|
|
|
47,746
|
|
|
50,982
|
|
Impairments
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,300
|
|
Related party Tax Receivable Agreement expense
|
|
|
—
|
|
|
—
|
|
|
61,801
|
|
|
—
|
|
Deferred income tax provision
|
|
|
3,827
|
|
|
(2,057
|
)
|
|
(18,184
|
)
|
|
(3,049
|
)
|
Loss on extinguishment of debt
|
|
|
—
|
|
|
—
|
|
|
23,827
|
|
|
—
|
|
Interest expense
|
|
|
1,586
|
|
|
1,706
|
|
|
3,747
|
|
|
5,089
|
|
Other charges, net
|
|
|
2,773
|
|
|
(2,997
|
)
|
|
9,652
|
|
|
1,849
|
|
Net change in working capital*
|
|
|
14,893
|
|
|
22,040
|
|
|
(143,695
|
)
|
|
22,197
|
|
Change in long-term assets and liabilities
|
|
|
(4,026
|
)
|
|
(2,355
|
)
|
|
2,763
|
|
|
(1,141
|
)
|
Net cash provided by operating activities
|
|
|
234,569
|
|
|
30,106
|
|
|
612,244
|
|
|
33,581
|
|
Cash flow from investing activities:
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
|
(18,897
|
)
|
|
(9,582
|
)
|
|
(47,632
|
)
|
|
(23,028
|
)
|
Proceeds from the sale of assets
|
|
|
25
|
|
|
882
|
|
|
866
|
|
|
4,038
|
|
Proceeds from divestitures
|
|
|
—
|
|
|
26,818
|
|
|
—
|
|
|
26,818
|
|
Net cash (used in) provided by investing activities
|
|
|
(18,872
|
)
|
|
18,118
|
|
|
(46,766
|
)
|
|
7,828
|
|
Cash flow from financing activities:
|
|
|
|
|
|
|
|
|
|
Short-term debt, net
|
|
|
(36
|
)
|
|
10,801
|
|
|
(12,607
|
)
|
|
5,945
|
|
Revolving Facility borrowings
|
|
|
—
|
|
|
5,000
|
|
|
—
|
|
|
35,000
|
|
Revolving Facility reductions
|
|
|
—
|
|
|
(59,755
|
)
|
|
(45,692
|
)
|
|
(77,755
|
)
|
Debt issuance costs
|
|
|
(1,043
|
)
|
|
—
|
|
|
(27,326
|
)
|
|
—
|
|
Proceeds from the issuance of long-term debt, net of original
issuance discount
|
|
|
—
|
|
|
—
|
|
|
2,235,000
|
|
|
—
|
|
Repayment of Senior Notes
|
|
|
—
|
|
|
—
|
|
|
(304,782
|
)
|
|
—
|
|
Related party Promissory Note repayment
|
|
|
—
|
|
|
—
|
|
|
(750,000
|
)
|
|
—
|
|
Principal repayments on long-term debt
|
|
|
(28,125
|
)
|
|
(36
|
)
|
|
(28,125
|
)
|
|
(107
|
)
|
Repurchase of common stock
|
|
|
(225,000
|
)
|
|
—
|
|
|
(225,000
|
)
|
|
—
|
|
Dividends paid
|
|
|
(24,695
|
)
|
|
—
|
|
|
(1,316,189
|
)
|
|
—
|
|
Net cash (used in) provided by financing activities
|
|
|
(278,899
|
)
|
|
(43,990
|
)
|
|
(474,721
|
)
|
|
(36,917
|
)
|
Net change in cash and cash equivalents
|
|
|
(63,202
|
)
|
|
4,234
|
|
|
90,757
|
|
|
4,492
|
|
Effect of exchange rate changes on cash and cash equivalents
|
|
|
(431
|
)
|
|
215
|
|
|
(1,615
|
)
|
|
274
|
|
Cash and cash equivalents at beginning of period
|
|
|
166,140
|
|
|
11,930
|
|
|
13,365
|
|
|
11,610
|
|
Cash and cash equivalents at end of period
|
|
|
$
|
102,507
|
|
|
$
|
16,379
|
|
|
$
|
102,507
|
|
|
$
|
16,376
|
|
|
|
|
|
|
|
|
|
|
|
* Net change in working capital due to changes in the following
components:
|
|
|
|
|
|
|
|
Accounts and notes receivable, net
|
|
|
$
|
14,655
|
|
|
$
|
824
|
|
|
$
|
(96,045
|
)
|
|
$
|
1,961
|
|
Inventories
|
|
|
(11,190
|
)
|
|
2,590
|
|
|
(93,755
|
)
|
|
8,588
|
|
Prepaid expenses and other current assets
|
|
|
(456
|
)
|
|
1,323
|
|
|
7,828
|
|
|
(187
|
)
|
Income taxes payable
|
|
|
14,830
|
|
|
38
|
|
|
35,358
|
|
|
1,160
|
|
Accounts payable and accruals
|
|
|
3,789
|
|
|
12,594
|
|
|
4,336
|
|
|
5,975
|
|
Interest payable
|
|
|
(6,735
|
)
|
|
4,671
|
|
|
(1,417
|
)
|
|
4,700
|
|
Net change in working capital
|
|
|
$
|
14,893
|
|
|
$
|
22,040
|
|
|
$
|
(143,695
|
)
|
|
$
|
22,197
|
|
The following table reconciles our non-GAAP key financial measures to
the most directly comparable GAAP measures:
|
|
For the Three Months Ended September 30,
|
|
For the Nine Months Ended September 30,
|
(in thousands)
|
|
2018
|
2017
|
|
2018
|
2017
|
|
|
|
|
|
|
|
Net income (loss)
|
|
199,466
|
|
(3,919
|
)
|
|
624,587
|
|
(47,646
|
)
|
Add:
|
|
|
|
|
|
|
Discontinued operations
|
|
726
|
|
(3,234
|
)
|
|
(585
|
)
|
4,882
|
|
Depreciation and amortization
|
|
16,050
|
|
17,581
|
|
|
47,746
|
|
48,564
|
|
Interest expense
|
|
33,855
|
|
7,792
|
|
|
100,387
|
|
23,240
|
|
Interest income
|
|
(562
|
)
|
(58
|
)
|
|
(1,068
|
)
|
(320
|
)
|
Income taxes
|
|
24,871
|
|
1,963
|
|
|
36,250
|
|
3,249
|
|
EBITDA from continuing operations
|
|
274,406
|
|
20,125
|
|
|
807,317
|
|
31,969
|
|
Adjustments:
|
|
|
|
|
|
|
Pension and OPEB plan (gain) expenses(1)
|
|
483
|
|
768
|
|
|
1,478
|
|
2,293
|
|
Rationalization-related (gains)/charges (2)
|
|
—
|
|
1,772
|
|
|
—
|
|
994
|
|
Initial public offering ("IPO") expenses (3)
|
|
43
|
|
—
|
|
|
5,164
|
|
—
|
|
Non-cash loss (gain) on foreign currency remeasurement(4)
|
|
1,404
|
|
(463
|
)
|
|
1,629
|
|
3,399
|
|
Stock-based compensation
|
|
476
|
|
—
|
|
|
657
|
|
—
|
|
Non-cash fixed asset write-off
|
|
—
|
|
—
|
|
|
1,062
|
|
—
|
|
Related party Tax Receivable Agreement expense (5)
|
|
—
|
|
—
|
|
|
61,801
|
|
—
|
|
Adjusted EBITDA from continuing operations
|
|
276,812
|
|
22,202
|
|
|
879,108
|
|
38,655
|
|
(1) Service and interest cost of our pension and OPEB plans.
Also includes a mark-to-market loss (gain) for plan assets as of
December of each year.
(2) Costs associated with rationalizations in our graphite
electrode manufacturing operations and in the corporate structure. They
include severance charges, contract termination charges, write-off of
equipment and (gain)/loss on sale of manufacturing sites.
(3) Legal, accounting, printing and registration fees
associated with the initial public offering in April 2018.
(4) Non-cash loss from foreign currency remeasurement of
non-operating liabilities of our non-U.S. subsidiaries where the
functional currency is the U.S. dollar.
(5) Non-cash expense for future payment to our sole pre-IPO
stockholder for tax assets that are expected to be utilized.
View source version on businesswire.com: https://www.businesswire.com/news/home/20181102005083/en/
Source: GrafTech International Ltd.
GrafTech International Ltd.
Meredith Bandy, 216-676-2699
Vice
President, Investor Relations