Notice of Fraudulent Job Offers

GrafTech is aware of fraudulent offers of employment made by people who claim to be employees of GrafTech’s Human Resources department, but who are not affiliated with GrafTech. This kind of fraud is normally done through unsolicited e-mails, online third-party employment websites, and instant messenger programs. These individuals will often request recipients to provide personal information, send checks to the recipient with the request that the checks be deposited into the recipient’s personal bank account, and request that the recipient purchase training materials and office equipment as part of the fake recruiting process. GrafTech takes recruitment fraud very seriously, and by making you aware of this, we hope to prevent victims from falling for these scams. GrafTech does not accept responsibility for this recruitment fraud and recommends that all job-seekers educate themselves on these fraudulent practices so that they do not become a victim.

Learn More

How to Protect Yourself from Fraudulent Job Offers

  • Positions posted on https://career4.successfactors.com/career?company=GTI are legitimate.
  • Do not respond to unsolicited offers of employment from people with whom you are unfamiliar with.
  • GrafTech will never pre-wire money to an applicant or request financial information from an applicant.
  • GrafTech will never request that an applicant purchase training materials or office equipment as part of our recruiting process.
  • GrafTech does not use instant messaging programs to interview candidates for a job or extend a job offer.
  • If you are concerned about the legitimacy of a message received from GrafTech, please do not hesitate to call GrafTech at 216.676.2000, select HR and provide details about the message. Your call will be returned.
  • Do not communicate further with an individual if you suspect the communications may be fraudulent and consider contacting your local law enforcement.

News Details

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GrafTech Reports Unaudited Fourth Quarter and Full Year 2020 Results

Feb 5, 2021

Generates sequential fourth quarter improvement across key financial metrics

BROOKLYN HEIGHTS, Ohio--(BUSINESS WIRE)-- GrafTech International Ltd. (NYSE: EAF) (GrafTech or the Company) today announced unaudited financial results for the fourth quarter and full year ended December 31, 2020.

2020 Highlights

  • Reported net income of $434 million, or $1.62 per share
  • Adjusted EBITDA1 of $659 million, for a 54% margin2
  • Generated cash flow from operating activities of $564 million
  • Strengthened the balance sheet with debt reduction of $400 million
  • Extended our debt maturity profile to further de-risk the balance sheet
  • Maintained excellent customer service levels with 97% on-time delivery rate
  • Significantly improved safety track record with 46% reduction in recordable injury rates

CEO Comments

“We are pleased with our overall performance during a challenging year for the industry,” said David Rintoul, President and Chief Executive Officer. “We made good progress managing our business through the pandemic as we adjusted our production to changes in demand, while being highly responsive to our customers’ needs and maintaining excellent service levels. During the fourth quarter, we achieved sequential quarterly improvement in key metrics such as production, sales volumes, net sales, earnings per share, adjusted EBITDA, and cash from operating activities.”

“As we look forward, the environmental and economic advantages of electric arc furnace steel production position both that industry and the graphite electrode industry for long-term growth. We believe GrafTech’s leadership position, strong cash flows, and advantaged low-cost structure and vertical integration are sustainable competitive advantages. The services and solutions we provide will position our customers and our company for a better future. As we move through 2021, we believe that the improvement in steel industry metrics will subsequently result in improved demand for graphite electrodes,” Mr. Rintoul concluded.

Key Financial Measures

(dollars in thousands, except
per share amounts)

 

 

For the Year Ended

 

 

December 31,

Q4 2020

Q3 2020

Q4 2019

 

2020

2019

Net sales

$

338,010

 

$

286,987

 

$

414,612

 

 

$

1,224,361

 

$

1,790,793

 

Net income

$

125,096

 

$

94,234

 

$

174,922

 

 

$

434,374

 

$

744,602

 

Earnings per share (a)

$

0.47

 

$

0.35

 

$

0.61

 

 

$

1.62

 

$

2.58

 

Adjusted EBITDA(b)

$

175,538

 

$

153,105

 

$

234,586

 

 

$

658,946

 

$

1,048,259

 

(a)

 

Earnings per share represents diluted earnings per share.

(b)

 

A non-GAAP financial measure, see below for more information and a reconciliation of EBITDA and Adjusted EBITDA to Net income, the most directly comparable financial measure calculated and presented in accordance with GAAP.

Full Year and Fourth Quarter 2020 Financial Performance

Net sales for the year ended December 31, 2020 totaled $1.2 billion compared to $1.8 billion in the prior year. Net sales for the quarter ended December 31, 2020 were $338 million compared to $415 million in the fourth quarter of 2019. Lower net sales were driven primarily by lower sales volumes.

Net income for 2020 was $434 million, or $1.62 per share, compared to $745 million, or $2.58 per share, in the prior year. Net income for the fourth quarter of 2020 was $125 million, or $0.47 per share, compared to $94 million, or $0.35 per share in the third quarter of 2020 and $175 million, or $0.61 per share in the fourth quarter of 2019.

Adjusted EBITDA was $659 million in 2020 compared to $1,048 million in the prior year. Adjusted EBITDA was $176 million in the fourth quarter of 2020, a 15% sequential increase from $153 million in the third quarter of 2020. Fourth quarter 2019 adjusted EBITDA was $235 million. Year-over-year financial results for the fourth quarter and full year 2020 were primarily impacted by lower net sales.

Full year cash flow from operating activities was $564 million in 2020 compared to $805 million in 2019. Cash flow from operating activities was $147 million in the fourth quarter of 2020, a 14% sequential increase from $129 million in the third quarter of 2020. Fourth quarter 2019 cash flow from operating activities was $221 million.

COVID-19 and Operational Update

GrafTech continues to proactively manage through the COVID-19 crisis to support the health and safety of our team. Our plants have remained operational and maintained a 97% on-time delivery rate in the fourth quarter. Our global footprint gives us the flexibility to move or adjust production as needed going forward.

In 2020, production volume of 134 thousand MT decreased from 177 thousand MT in 2019. Production volume of 36 thousand MT in the fourth quarter of 2020 decreased from 41 thousand MT in the fourth quarter of 2019 and was a sequential improvement over 32 thousand MT in the third quarter of 2020. Capacity utilization was lower as we aligned production with reduced year-over-year sales volumes.

Commercial Update

Late in 2020, we began seeing a measured recovery in the global steel markets with improvement in steel pricing and capacity utilization rates. In the fourth quarter of 2020, both the global (ex-China) and U.S. steel market capacity utilization rates improved to over 72%3,4.

The commercial team reported solid results in the fourth quarter of 2020, with sales volumes of 37 thousand MT, consisting of long term agreement (LTA) volumes of 31 thousand MT and non-LTA volumes of 6 thousand MT. Full year 2020 sales volumes were 135 thousand MT, consisting of LTA volumes of 113 thousand MT and non-LTA volumes of 22 thousand MT.

During the fourth quarter, our average price from LTAs was approximately $9,600 per MT and our average price for non-LTA business was approximately $4,900 per MT.

During the challenging market conditions in 2020, we were able to work with our valued customers to develop mutually beneficial solutions to their challenges, including volume commitments. We are pleased to have successfully negotiated LTA modifications with many of these customers. We also continue to work to preserve our rights under the LTAs in a few arbitrations that arose from some LTA non-performance and other disputes during the year. The estimated shipments of graphite electrodes for the final two years of the initial term under our LTAs and for the years 2023 through 2024 are as follows:

 

2021

 

2022

 

2023 through 2024

Estimated LTA volume(c)

98-108

 

95-105

 

35-45

Estimated LTA revenue(d)

$925-$1,025

 

$910-$1,010

 

$350-$450(e)

(c)

 

In thousands of MT

(d)

 

In millions

(e)

 

Includes expected termination fees from a few customers that have failed to meet certain obligations under their LTAs

Capital Structure and Capital Allocation

As of December 31, 2020, GrafTech had cash and cash equivalents of $145 million and total debt of approximately $1.4 billion.

During 2020, capital allocation included $400 million of debt repayment, $36 million of capital expenditures, $31 million of dividend payments, and $30 million for share repurchases. In 2021, we expect capital expenditures to range between $55 and $65 million and our primary use of cash to continue to be debt repayment.

On December 22, 2020, we issued $500 million aggregate principal amount of 4.625% senior secured notes due December 2028 (Notes). The proceeds of the Notes were used to repay a portion of our secured term loans due February 2025 under our existing credit agreement.

Outlook

Mr. Rintoul continued, “The current market for graphite electrodes continues to be competitive, as our industry lags the improving fundamentals in the steel industry. If the strength in the steel industry continues, we would expect the graphite electrode market to improve as we move further into 2021. We remain encouraged with the long-term growth opportunity given the benefits of electric arc furnace steel production, and we believe GrafTech is well positioned for success.”

Conference Call Information

In conjunction with this earnings release, you are invited to listen to our earnings call being held on February 5, 2021 at 10:00 a.m. Eastern Standard Time. The webcast and accompanying slide presentation will be available at www.graftech.com, in the Investors section. The earnings call dial-in number is +1 (866) 521-4909 toll-free in the U.S. and Canada or +1 (647) 427-2311 for overseas calls, conference ID: 8956898. A replay of the Conference Call will be available until May 5, 2021 by dialing +1 (800) 585-8367 toll-free in the U.S. and Canada or +1 (416) 621-4642 for overseas calls, conference ID: 8956898. A replay of the webcast will also be available on our website until May 5, 2021, at www.graftech.com, in the Investors 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.

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. We are the only large-scale graphite electrode producer that is substantially vertically integrated into petroleum needle coke, the primary raw material for graphite electrode manufacturing. This unique position provides competitive advantages in product quality and cost.

_____________________________________________

1

 

A non-GAAP financial measure, see below for more information and a reconciliation of EBITDA and Adjusted EBITDA to net income, the most directly comparable financial measure calculated and presented in accordance with GAAP.

2

 

Adjusted EBITDA margin is calculated as Adjusted EBITDA divided by net sales (2020 Adjusted EBITDA of $659 million/2020 net sales of $1.224 billion).

3

 

Source: World Steel Association and Metal Expert

4

 

Source: American Iron and Steel Institute

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,” “foresee”, “intend,” “should,” “would,” “could,” “target,” “goal,” “continue to,” “positioned to,” “are confident”, or the negative versions of those words or other comparable words. Any forward-looking statements contained in this release are based upon our historical performance and on our current plans, estimates and expectations considering 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: the finalization of our financial statements as of and for the year ended December 31, 2020, which may differ from our current expectations and the preliminary financial information provided in this release; the ultimate impact that the COVID-19 pandemic has on our business, results of operations, financial condition and cash flows; the cyclical nature of our business and the selling prices of our products may lead to periods of reduced profitability and net losses in the future; the possibility that we may be unable to implement our business strategies, including our ability to secure and maintain longer-term customer contracts, in an effective manner; the risks and uncertainties associated with litigation, arbitration, and like disputes, including the recently filed stockholder litigation and disputes related to contractual commitments; the possibility that global graphite electrode overcapacity may adversely affect graphite electrode prices; pricing for graphite electrodes has historically been cyclical and the price of graphite electrodes may continue to decline in the future; the sensitivity of our business and operating results to economic conditions and the possibility others may not be able to fulfill their obligations to us in a timely fashion or at all; our dependence on the global steel industry generally and the electric arc furnace steel industry in particular; 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 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 legal, compliance, 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, regulatory issues, natural disasters, public health crises, such as the COVID-19 pandemic, political crises or other catastrophic events; 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 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 subject 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 possibility that we may not pay cash dividends on our common stock in the future; the fact that certain of our stockholders have the right to engage or invest in the same or similar businesses as us; the possibility that the market price of our common stock could be negatively affected by sales of substantial amounts of our common stock in the public markets, including by Brookfield Asset Management Inc. and its affiliates; 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; and the loss of our status as a “controlled company” within the meaning of the New York Stock Exchange corporate governance standards, which will result in us no longer qualifying for exemptions from certain corporate governance requirements.

These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements, including the Risk Factors sections included in our most recent Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2020, June 30, 2020 and September 30, 2020, 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 and Adjusted EBITDA are non-GAAP financial measures. We define EBITDA, 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. We define adjusted EBITDA as EBITDA plus any pension and other post-employment benefit ("OPEB") plan expenses, initial and follow-on 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, stock-based compensation and non-cash fixed asset write-offs. 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.

We monitor adjusted EBITDA 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. Adjusted EBITDA margin is also a non-GAAP financial measure used by our management and our board of directors as supplemental information to assess the Company’s operational performance and is calculated as adjusted EBITDA divided by net sales. In addition, we believe adjusted EBITDA, adjusted EBITDA margin 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 the ratio of total debt to adjusted EBITDA, because we believe it is a useful and widely used way to assess our leverage.

Our use of adjusted EBITDA 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 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 the interest expense or the cash requirements necessary to service interest or principal payments on our indebtedness;
  • adjusted EBITDA does not reflect tax payments that may represent a reduction in cash available to us;
  • adjusted EBITDA does not reflect expenses relating to our pension and OPEB plans;
  • adjusted EBITDA 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 does not reflect initial and follow-on public offering expenses;
  • adjusted EBITDA does not reflect related party Tax Receivable Agreement expense;
  • adjusted EBITDA does not reflect stock-based compensation or the non-cash write-off of fixed assets; and
  • other companies, including companies in our industry, may calculate EBITDA, adjusted EBITDA and adjusted EBITDA margin differently, which reduces its usefulness as a comparative measure.

In evaluating EBITDA, adjusted EBITDA and adjusted EBITDA margin, 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, adjusted EBITDA and adjusted EBITDA margin 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, adjusted EBITDA and adjusted EBITDA margin 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

December 31,

2020

 

As of

December 31,

2019

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

145,442

 

 

$

80,935

 

Accounts and notes receivable, net of allowance for doubtful accounts of $8,243 as of December 31, 2020 and $5,474 as of December 31, 2019

 

182,647

 

 

 

247,051

 

Inventories

 

265,964

 

 

 

313,648

 

Prepaid expenses and other current assets

 

35,114

 

 

 

40,946

 

Total current assets

 

629,167

 

 

 

682,580

 

Property, plant and equipment

 

784,902

 

 

 

733,417

 

Less: accumulated depreciation

 

278,685

 

 

 

220,397

 

Net property, plant and equipment

 

506,217

 

 

 

513,020

 

Deferred income taxes

 

32,551

 

 

 

55,217

 

Goodwill

 

171,117

 

 

 

171,117

 

Other assets

 

93,660

 

 

 

104,230

 

Total assets

$

1,432,712

 

 

$

1,526,164

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

70,989

 

 

$

78,697

 

Short-term debt

 

131

 

 

 

141

 

Accrued income and other taxes

 

48,720

 

 

 

65,176

 

Other accrued liabilities

 

56,501

 

 

 

48,335

 

Related party payable - tax receivable agreement

 

21,752

 

 

 

27,857

 

Total current liabilities

 

198,093

 

 

 

220,206

 

 

 

 

 

Long-term debt

 

1,420,000

 

 

 

1,812,682

 

Other long-term obligations

 

81,478

 

 

 

72,562

 

Deferred income taxes

 

43,428

 

 

 

49,773

 

Related party payable - tax receivable agreement long-term

 

19,098

 

 

 

62,014

 

Stockholders’ equity:

 

 

 

Preferred stock, par value $0.01, 300,000,000 shares authorized, none issued

 

 

 

 

 

Common stock, par value $0.01, 3,000,000,000 shares authorized, 267,188,547 and 270,485,308 shares issued and outstanding as of December 31, 2020 and December 31, 2019, respectively

 

2,672

 

 

 

2,705

 

Additional paid-in capital

 

758,354

 

 

 

765,419

 

Accumulated other comprehensive loss

 

(19,641

)

 

 

(7,361

)

Accumulated deficit

 

(1,070,770

)

 

 

(1,451,836

)

Total stockholders’ deficit

 

(329,385

)

 

 

(691,073

)

 

 

 

 

Total liabilities and stockholders’ equity

$

1,432,712

 

 

$

1,526,164

 

GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in thousands, except per share data)

Unaudited

 

 

 

 

 

For the Three Months

Ended December 31,

 

For the Year

Ended December 31,

 

2020

 

2019

 

2020

 

2019

CONSOLIDATED STATEMENTS OF OPERATIONS

 

 

 

 

 

 

 

Net sales

$

338,010

 

 

$

414,612

 

 

$

1,224,361

 

 

$

1,790,793

 

Cost of sales

162,485

 

 

179,322

 

 

563,864

 

 

750,390

 

Gross profit

175,525

 

 

235,290

 

 

660,497

 

 

1,040,403

 

Research and development

1,903

 

 

723

 

 

3,975

 

 

2,684

 

Selling and administrative expenses

17,918

 

 

17,346

 

 

67,913

 

 

63,674

 

Operating profit

155,704

 

 

217,221

 

 

588,609

 

 

974,045

 

 

 

 

 

 

 

 

 

Other expense

5,639

 

 

4,561

 

 

3,330

 

 

5,203

 

Related party Tax Receivable Agreement (benefit) expense

(17,744

)

 

3,393

 

 

(21,090

)

 

3,393

 

Interest expense

29,048

 

 

28,859

 

 

98,074

 

 

127,331

 

Interest income

(168

)

 

(1,799

)

 

(1,750

)

 

(4,709

)

Income before provision for income taxes

138,929

 

 

182,207

 

 

510,045

 

 

842,827

 

Provision for income taxes

13,833

 

 

7,285

 

 

75,671

 

 

98,225

 

Net income

$

125,096

 

 

$

174,922

 

 

$

434,374

 

 

$

744,602

 

 

 

 

 

 

 

 

 

Basic income per common share:

 

 

 

 

 

 

 

Net income per share

$

0.47

 

 

$

0.61

 

 

$

1.62

 

 

$

2.58

 

Weighted average common shares outstanding

267,285,677

 

 

285,040,356

 

 

267,916,483

 

 

289,057,356

 

Diluted income per common share:

 

 

 

 

 

 

 

Income per share

$

0.47

 

 

$

0.61

 

 

$

1.62

 

 

$

2.58

 

Weighted average common shares outstanding

267,321,380

 

 

285,079,866

 

 

267,930,644

 

 

289,074,601

 

GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

Unaudited

 

 

 

 

 

For the Three Months

Ended December 31,

 

For the Year

Ended December 31,

 

2020

 

2019

 

2020

 

2019

Cash flow from operating activities:

 

 

 

 

 

 

 

Net income

$

125,096

 

 

$

174,922

 

 

$

434,374

 

 

$

744,602

 

Adjustments to reconcile net income to cash provided by operations:

 

 

 

 

 

 

 

Depreciation and amortization

17,889

 

 

15,432

 

 

62,963

 

 

61,819

 

Related party Tax Receivable Agreement (benefit) expense

(17,744

)

 

3,393

 

 

(21,090

)

 

3,393

 

Deferred income tax provision

4,004

 

 

(11,193

)

 

20,241

 

 

17,503

 

Non-cash interest expense

9,753

 

 

1,580

 

 

14,521

 

 

6,344

 

Other charges, net

8,191

 

 

4,142

 

 

10,526

 

 

21,831

 

Net change in working capital*

1,340

 

 

32,624

 

 

86,438

 

 

(47,687

)

Change in related party Tax Receivable Agreement

 

 

 

 

(27,857

)

 

 

Change in long-term assets and liabilities

(1,548

)

 

(356

)

 

(16,470

)

 

(2,489

)

Net cash provided by operating activities

146,981

 

 

220,544

 

 

563,646

 

 

805,316

 

Cash flow from investing activities:

 

 

 

 

 

 

 

Capital expenditures

(5,387

)

 

(20,050

)

 

(36,075

)

 

(64,103

)

Proceeds from the sale of assets

301

 

 

121

 

 

379

 

 

219

 

Net cash used in investing activities

(5,086

)

 

(19,929

)

 

(35,696

)

 

(63,884

)

Cash flow from financing activities:

 

 

 

 

 

 

 

Short-term debt reductions, net

(146

)

 

 

 

(146

)

 

 

Refinancing fees and debt issuance costs

(6,278

)

 

 

 

(6,278

)

 

 

Proceeds from the issuance of long-term debt

500,000

 

 

 

 

500,000

 

 

 

Repurchase of common stock - related party

 

 

(250,000

)

 

 

 

(250,000

)

Repurchase of common stock - non-related party

 

 

(1,384

)

 

(30,099

)

 

(10,868

)

Payment of tax withholdings related to net share settlement of equity awards

 

 

 

 

(71

)

 

 

Principal repayments on long-term debt

(647,000

)

 

(225,140

)

 

(896,214

)

 

(350,140

)

Dividends paid to non-related party

(1,050

)

 

(5,108

)

 

(8,603

)

 

(20,613

)

Dividends paid to related party

(1,622

)

 

(19,503

)

 

(22,272

)

 

(78,010

)

Net cash used in financing activities

(156,096

)

 

(501,135

)

 

(463,683

)

 

(709,631

)

Net change in cash and cash equivalents

(14,201

)

 

(300,520

)

 

64,267

 

 

31,801

 

Effect of exchange rate changes on cash and cash equivalents

802

 

 

291

 

 

240

 

 

(746

)

Cash and cash equivalents at beginning of period

158,841

 

 

381,164

 

 

80,935

 

 

49,880

 

Cash and cash equivalents at end of period

$

145,442

 

 

$

80,935

 

 

$

145,442

 

 

$

80,935

 

 

 

 

 

 

 

 

 

* Net change in working capital due to changes in the following components:

 

 

 

 

 

 

Accounts and notes receivable, net

$

(14,851

)

 

$

20,323

 

 

$

63,557

 

 

$

(404

)

Inventories

34,262

 

 

(1,641

)

 

44,633

 

 

(21,549

)

Prepaid expenses and other current assets

(2,409

)

 

(1,774

)

 

3,028

 

 

3,929

 

Income taxes payable

(28,452

)

 

9,978

 

 

(12,420

)

 

(18,174

)

Accounts payable and accruals

12,288

 

 

5,785

 

 

(12,790

)

 

(11,551

)

Interest payable

502

 

 

(47

)

 

430

 

 

62

 

Net change in working capital

$

1,340

 

 

$

32,624

 

 

$

86,438

 

 

$

(47,687

)

NON-GAAP RECONCILIATION
(Dollars in thousands)

The following table reconciles our non-GAAP key financial measures to the most directly comparable GAAP measures:

 

 

 

For the Year Ended

 

 

 

 

 

December 31,

 

Q4 2020

Q3 2020

Q4 2019

 

2020

2019

 

 

 

 

 

 

 

Net income

$

125,096

 

$

94,234

 

$

174,922

 

 

$

434,374

 

$

744,602

 

Add:

 

 

 

 

 

 

Depreciation and amortization

17,889

 

16,241

 

15,432

 

 

62,963

 

61,819

 

Interest expense

29,048

 

22,474

 

28,859

 

 

98,074

 

127,331

 

Interest income

(168

)

(93

)

(1,799

)

 

(1,750

)

(4,709

)

Income taxes

13,833

 

18,104

 

7,285

 

 

75,671

 

98,225

 

EBITDA

$

185,698

 

$

150,960

 

$

224,699

 

 

$

669,332

 

$

1,027,268

 

Adjustments:

 

 

 

 

 

 

Pension and OPEB plan expenses (1)

4,430

 

583

 

4,330

 

 

6,096

 

6,727

 

Initial and follow-on public offering and related expenses (2)

260

 

 

647

 

 

264

 

2,056

 

Non-cash loss on foreign

currency remeasurement (3)

1,738

 

798

 

942

 

 

1,297

 

1,784

 

Stock-based compensation (4)

778

 

764

 

575

 

 

2,669

 

2,143

 

Non-cash fixed asset write-off (5)

378

 

 

 

 

378

 

4,888

 

Related party Tax Receivable Agreement adjustment (6)

(17,744

)

 

3,393

 

 

(21,090

)

3,393

 

Adjusted EBITDA

$

175,538

 

$

153,105

 

$

234,586

 

 

$

658,946

 

$

1,048,259

 

(1)

 

Service and interest cost of our OPEB plans. Also includes a mark-to-market loss (gain) for plan assets as of December of each year.

(2)

 

Legal, accounting, printing and registration fees associated with the initial and follow-on public offering and related expenses.

(3)

 

Non-cash gains and losses from foreign currency remeasurement of non-operating assets and liabilities of our non-U.S. subsidiaries where the functional currency is the U.S. dollar.

(4)

 

Non-cash expense for stock-based compensation grants.

(5)

 

Non-cash fixed asset write-off recorded for obsolete assets.

(6)

 

Non-cash expense adjustment for future payment to our sole pre-IPO stockholder for tax assets that are expected to be utilized.

Key operating metrics

 

 

For the Year Ended

 

 

 

 

 

December 31,

(in thousands)

Q4 2020

Q3 2020

Q4 2019

 

2020

2019

Sales volume (MT) (1)

37

 

33

 

41

 

 

135

 

171

 

Production volume (MT) (2)

36

 

32

 

41

 

 

134

 

177

 

Production capacity excluding St. Marys (MT) (3)(4)

52

 

48

 

52

 

 

202

 

202

 

Capacity utilization excluding St. Marys (3)(5)

69

%

67

%

79

%

 

66

%

88

%

Total production capacity (MT) (4)(6)

59

 

55

 

59

 

 

230

 

230

 

Total capacity utilization (5)(6)

61

%

58

%

69

%

 

58

%

77

%

(1)

 

Sales volume reflects only graphite electrodes manufactured by GrafTech.

(2)

 

Production volume reflects graphite electrodes we produced during the period.

(3)

 

In the first quarter of 2018, our St. Marys facility began graphitizing a limited number of electrodes sourced from our Monterrey, Mexico facility.

(4)

 

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.

(5)

 

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

(6)

 

Includes graphite electrode facilities in Calais, France; Monterrey, Mexico; Pamplona, Spain; and St. Marys, Pennsylvania.

 

Wendy Watson
216-676-2699

Source: GrafTech International Ltd.

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