Successfully Executed Initiatives to Grow
Volume, Reduce Costs and Manage Working Capital Levels
Completed Financing Transactions to Bolster
Liquidity and Extend Debt Maturities
Announcing Further Initiatives to Improve
Profitability Levels
GrafTech International Ltd. (NYSE: EAF) ("GrafTech," the
"Company," "we," or "our") today announced financial results for
the quarter and year ended December 31, 2024.
Fourth Quarter 2024 Highlights
- Exceeded cost reduction guidance, achieving a 25%
year-over-year reduction in cash costs per metric ton ("MT") for
the fourth quarter and a 23% reduction on a full-year basis
- Grew sales volume 13% year-over-year to 27.2 thousand MT
- Achieved fourth consecutive quarter of sequential sales volume
growth
- Completed financing transactions, ending 2024 with total
liquidity of $464 million
Fourth Quarter 2024 Summary
- Net sales of $134 million
- Net loss of $49 million, or $0.19 per share(1)
- Adjusted EBITDA(2) of negative $7 million
- Net cash used in operating activities of $26 million
- Adjusted free cash flow(2) of negative $21 million
CEO Comments
"We successfully delivered on our stated initiatives for 2024 to
grow volume and market share, to cut costs and to manage our
working capital and capital expenditure levels," said Timothy
Flanagan, Chief Executive Officer and President. “For the full
year, we grew sales volume 13% and reduced our cash costs on a per
metric ton basis by 23%. In addition, with the successful
completion of our previously announced financing transactions, we
ended the year with $464 million of liquidity, which will support
our ability to manage through the near-term, industry-wide
challenges facing GrafTech."
"As we enter 2025, we remain relentlessly focused on managing
what is within our control," continued Mr. Flanagan. "However, as
graphite electrode demand remains muted and competitive pressures
have persisted in many of our key regions, 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. These actions reflect our ongoing commitment to protect
GrafTech's position as the steel industry's preeminent supplier of
graphite electrodes, leading-edge technical support and
high-quality petroleum needle coke."
Fourth Quarter and Full Year 2024
Financial Performance
(dollars in thousands, except per share
amounts)
Year Ended
December 31,
Q4 2024
Q3 2024
Q4 2023
2024
2023
Net sales
$
134,217
$
130,654
$
137,145
$
538,782
$
620,500
Net loss
$
(49,476
)
$
(36,068
)
$
(217,409
)
$
(131,165
)
$
(255,250
)
Loss per share(1)
$
(0.19
)
$
(0.14
)
$
(0.85
)
$
(0.51
)
$
(0.99
)
Net cash (used in) provided by operating
activities
$
(26,417
)
$
23,709
$
9,292
$
(40,093
)
$
76,561
Adjusted net loss(2)
$
(33,143
)
$
(34,276
)
$
(68,569
)
$
(106,144
)
$
(100,752
)
Adjusted loss per share(1)(2)
$
(0.13
)
$
(0.13
)
$
(0.27
)
$
(0.41
)
$
(0.39
)
Adjusted EBITDA(2)
$
(6,859
)
$
(6,196
)
$
(21,572
)
$
1,632
$
20,484
Adjusted free cash flow(2)
$
(20,960
)
$
19,682
$
3,539
$
(56,153
)
$
49,974
For the fourth quarter of 2024, sales volume increased 13%
compared to the fourth quarter of 2023. Net sales for the fourth
quarter of 2024 were $134 million, a decrease of 2% compared to
$137 million in the fourth quarter of 2023 as the higher sales
volume was offset by a decrease in the weighted-average realized
price for volume derived from short-term agreements and spot sales
("non-LTA") and a shift in the mix of our business from volume
derived from our take-or-pay agreements that had initial terms of
three-to-five years ("LTA") to non-LTA volume.
Net loss for the fourth quarter of 2024 was $49 million, or
$0.19 per share, compared to a net loss of $217 million, or $0.85
per share, in the fourth quarter of 2023. Included in net loss for
the fourth quarter of 2023 was a goodwill impairment charge of $171
million.
Adjusted EBITDA(2) was negative $7 million in the fourth quarter
of 2024, compared to negative $22 million in the fourth quarter of
2023. The year-over-year improvement reflected a 25% reduction in
cash costs on a per MT basis for the fourth quarter of 2024,
compared to the same period in 2023. This was partially offset by
the impact of lower weighted-average realized prices and a shift in
the mix of our business from LTA volume to non-LTA volume.
In the fourth quarter of 2024, net cash used in operating
activities was $26 million and adjusted free cash flow(2) was a use
of $21 million, compared to net cash provided by operating
activities of $9 million and adjusted free cash flow(2) of $4
million in the fourth quarter of 2023. The year-over-year change
primarily reflected a lower benefit from the net change in working
capital in the fourth quarter of 2024 compared to the same period
in 2023.
For the year ended December 31, 2024, sales volume increased 13%
compared to the prior year. Net sales for the year ended December
31, 2024 decreased 13% compared to the prior year as the higher
sales volume was offset by a decrease in the weighted-average
realized price for non-LTA volume and a shift in the mix of our
business from LTA volume to non-LTA volume.
Net loss for the year ended December 31, 2024 was $131 million,
or $0.51 per share, compared to a net loss of $255 million, or
$0.99 per share, for the year ended December 31, 2023. Included in
net loss for the year ended December 31, 2023 was a goodwill
impairment charge of $171 million.
Adjusted EBITDA(2) for 2024 was $2 million, compared to adjusted
EBITDA of $20 million in the prior year. The year-over-year decline
primarily reflected the impact of lower weighted-average realized
prices and a shift in the mix of our business from LTA volume to
non-LTA volume, with these factors partially offset by a 23%
reduction in cash costs on a per MT basis for the year ended
December 31, 2024 compared to 2023.
Net cash used in operating activities for the year ended
December 31, 2024 was $40 million and adjusted free cash flow(2)
was a use of $56 million, compared to net cash provided by
operating activities of $77 million and adjusted free cash flow(2)
of $50 million for the year ended December 31, 2023. The
year-over-year change primarily reflected a lower benefit from the
net change in working capital for the year ended December 31, 2024
compared to 2023. Adjusted free cash flow(2) for the year ended
December 31, 2023 also included a $27 million benefit from the
settlement of interest rate swaps.
Operational and Commercial
Update
Key Operating Metrics
Year Ended
December 31,
(in thousands, except
percentages)
Q4 2024
Q3 2024
Q4 2023
2024
2023
Sales volume (MT)
27.2
26.4
24.1
103.2
91.6
Production volume (MT)(3)
25.1
19.4
24.4
97.3
88.1
Production capacity (MT)(4)(5)
46.0
42.0
52.0
178.0
202.0
Capacity utilization(6)
55
%
46
%
47
%
55
%
44
%
Sales volume for the fourth quarter of 2024 was 27.2 thousand
MT, consisting of 23.9 thousand MT of non-LTA volume and 3.2
thousand MT of LTA volume.
For the fourth quarter of 2024, the weighted-average realized
price for our non-LTA volume was approximately $3,900 per MT, a
decrease of approximately 19% compared to the fourth quarter of
2023, with the decline reflecting the persistent competitive
pressures in our principal commercial regions. For our LTA volume,
the weighted-average realized price was approximately $7,700 per MT
for the fourth quarter of 2024.
Production volume was 25.1 thousand MT in the fourth quarter of
2024, an increase of 3% compared to the fourth quarter of 2023.
Capital Structure and Liquidity
During the fourth quarter of 2024, we completed the previously
announced capital transactions which provided incremental liquidity
and extended our debt maturities. As of December 31, 2024, we had
liquidity of $464 million, consisting of cash and cash equivalents
of $256 million, $108 million of availability under our amended
revolving credit facility and $100 million of availability under
our new senior secured first lien delayed draw term loans. As of
December 31, 2024, we had gross debt(7) of $1,125 million and net
debt(8) of approximately $869 million.
Outlook
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.
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.
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 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.
Conference Call Information
In connection with this earnings release, you are invited to
listen to our earnings call being held on February 7, 2025 at 10:00
a.m. (EST). The webcast and accompanying slide presentation will be
available on our investor relations website at:
http://ir.graftech.com. The earnings call dial-in number is +1
(800) 717-1738 toll-free in North America or +1 (289) 514-5100 for
overseas calls, conference ID: 51544. Archived replays of the
conference call and webcast will be made available on our investor
relations website at: http://ir.graftech.com. 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 on our website is
not part of this release or any report we file with 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, ultra-high power graphite electrode manufacturing
facilities, with some 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,
our key raw material for graphite electrode manufacturing. This
unique position provides us with competitive advantages in product
quality and cost.
________________________
(1)
Loss per share represents diluted loss per
share. Adjusted loss per share represents diluted adjusted loss per
share.
(2)
A non-GAAP financial measure, see below
for more information and reconciliations to the most directly
comparable financial measures calculated and presented in
accordance with accounting principles generally accepted in the
United States of America ("GAAP").
(3)
Production volume reflects graphite
electrodes we produced during the period.
(4)
Production capacity reflects expected
maximum production volume during the period depending on product
mix and expected maintenance outage. Actual production may
vary.
(5)
Includes graphite electrode facilities in
Calais, France; Monterrey, Mexico; 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 in the second quarter of 2024. Remaining activities at
St. Marys are limited to machining graphite electrodes and pins
sourced from our other plants.
(6)
Capacity utilization reflects production
volume as a percentage of production capacity.
(7)
Gross debt reflects the notional value of
our outstanding debt and excludes unamortized debt discount and
issuance costs.
(8)
A non-GAAP financial measure, net debt is
calculated as gross debt minus cash and cash equivalents (December
31, 2024 gross debt of $1.1 billion less December 31, 2024 cash and
cash equivalents of $256 million).
Cautionary Note Regarding Forward-Looking Statements
This press release and related discussions may contain
forward-looking statements within the meaning of the safe harbor
provisions of the U.S. Private Securities Litigation Reform Act of
1995. Forward-looking statements reflect our current views with
respect to, among other things, financial projections, plans and
objectives of management for future operations, future economic
performance and short-term and long-term liquidity. Examples of
forward-looking statements include, among others, statements we
make regarding future estimated volume, pricing and revenue,
anticipated levels of capital expenditures and cost of goods sold.
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 press 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: our dependence on the global steel industry generally
and the electric arc furnace steel industry, in particular; the
cyclical nature of our business and the selling prices of our
products, which may continue to decline in the future, and may lead
to prolonged periods of reduced profitability and net losses or
adversely impact liquidity; the sensitivity of our business and
operating results to economic conditions, including any recession,
and the possibility others may not be able to fulfill their
obligations to us in a timely fashion or at all; the possibility
that we may be unable to implement our business strategies in an
effective manner; 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 raw materials, including decant oil and petroleum
needle coke, and disruptions in supply chains for these materials;
our primary reliance on one facility in Monterrey, Mexico for the
manufacturing of connecting pins; the cost of electric power and
natural gas, particularly in Europe; our manufacturing operations
are subject to hazards; 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
further 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 a global pandemic,
political crises or other catastrophic events; the risks and
uncertainties associated with litigation, arbitration, and like
disputes, including disputes related to contractual commitments;
our dependence on third parties for certain construction,
maintenance, engineering, transportation, warehousing and logistics
services; the possibility that we are subject to information
technology systems failures, cybersecurity incidents, network
disruptions and breaches of data security, including with respect
to our third-party suppliers and business partners; 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
sensitivity of long-lived assets on our balance sheet to changes in
the market; our dependence on protecting our intellectual property
and the possibility that third parties may claim that our products
or processes infringe their intellectual property rights; the
impact of inflation and our ability to mitigate the effect on our
costs; the impact of macroeconomic and geopolitical events on our
business, results of operations, financial condition and cash
flows, and the disruptions and inefficiencies in our supply chain
that may occur as a result of such events; the possibility that the
imposition of new or increase of existing custom duties and other
tariffs in the countries in which we, our customers and our
suppliers operate could adversely affect our operations; 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; past increases in benchmark interest
rates and the fact that any future borrowings may subject us to
interest rate risk; risks and uncertainties associated with our
ability to access the capital and credit markets could adversely
affect our results of operations, cash flows and financial
condition; the possibility that disruptions in the capital and
credit markets could adversely affect our customers and suppliers;
the possibility that restrictive covenants in our financing
agreements could restrict or limit our operations; changes in, or
more stringent enforcement of, health, safety and environmental
regulations applicable to our manufacturing operations and
facilities; and our ability to continue to meet the New York Stock
Exchange listing standards.
These factors should not be construed as exhaustive and should
be read in conjunction with the Risk Factors and other cautionary
statements that are included in our most recent Annual Report on
Form 10-K 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. Except as required by
law, we do not undertake any obligation to publicly update or
review any forward-looking statement, whether as a result of new
information, future developments or otherwise.
If one or more of these or other risks or uncertainties
materialize, or if our underlying assumptions prove to be
incorrect, our actual results may vary materially from what we may
have expressed or implied by these forward-looking statements. We
caution that you should not place undue reliance on any of our
forward-looking statements. You should specifically consider the
factors identified in this press release that could cause actual
results to differ before making an investment decision to purchase
our common stock. Furthermore, new risks and uncertainties arise
from time to time, and it is impossible for us to predict those
events or how they may affect us.
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, adjusted EBITDA,
adjusted net loss, adjusted loss per share, free cash flow,
adjusted free cash flow, net debt and cash cost of goods sold per
MT are non-GAAP financial measures.
We define EBITDA, a non‑GAAP financial measure, as net loss plus
interest expense, minus interest income, plus income taxes and
depreciation and amortization. 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. 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. In addition, we believe adjusted EBITDA 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.
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 or the income tax
benefit 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 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. dollar;
- adjusted EBITDA does not reflect stock-based compensation
expense;
- adjusted EBITDA does not reflect proxy contest expenses;
- adjusted EBITDA does not reflect Tax Receivable Agreement
adjustments;
- adjusted EBITDA does not reflect goodwill impairment charges;
and
- 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. 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 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 or
received from the settlement of interest rate swap contracts and
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. Further, these measures help management,
the Board of Directors, and investors evaluate the Company's
ability to generate liquidity from operating activities.
We define net debt, a non-GAAP financial measure, as gross debt
minus cash and cash equivalents. We believe this is an important
measure as it is more representative of our financial position.
We define cash cost of goods sold per MT, a non-GAAP financial
measure, as cost of goods sold less depreciation and amortization,
less cost of goods sold associated with the portion of our sales
that consists of deliveries of by-products of the manufacturing
processes and less rationalization-related expenses, with this
total divided by our sales volume measured in MT. We believe this
is an important measure as it is used by our management and Board
of Directors to evaluate our costs on a per MT basis.
In evaluating these non-GAAP financial measures, you should be
aware that in the future, we may incur expenses similar to the
adjustments in the reconciliations presented below. Our
presentations of these non-GAAP financial measures 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 these non-GAAP
financial measures alongside other measures of financial
performance and liquidity, including our net loss, loss per share,
cash flow from operating activities, cost of goods sold and other
GAAP measures.
GRAFTECH INTERNATIONAL LTD.
AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Dollars in
thousands, except per share data) (Unaudited)
December 31,
2024
December 31,
2023
ASSETS
Current assets:
Cash and cash equivalents
$
256,248
$
176,878
Accounts and notes receivable, net of
allowance for doubtful accounts of $7,114 as of December 31, 2024
and $7,708 as of December 31, 2023
93,576
101,387
Inventories
231,241
330,146
Prepaid expenses and other current
assets
55,732
66,382
Total current assets
636,797
674,793
Property, plant and equipment
910,247
920,444
Less: accumulated depreciation
427,548
398,330
Net property, plant and equipment
482,699
522,114
Deferred income taxes
53,139
31,542
Other assets
51,639
60,440
Total assets
$
1,224,274
$
1,288,889
LIABILITIES AND STOCKHOLDERS’
(DEFICIT) EQUITY
Current liabilities:
Accounts payable
$
72,833
$
83,268
Long-term debt, current maturities
—
134
Accrued income and other taxes
9,642
10,022
Other accrued liabilities
55,432
91,702
Tax Receivable Agreement
2,022
5,417
Total current liabilities
139,929
190,543
Long-term debt
1,086,915
925,511
Other long-term obligations
48,559
55,645
Deferred income taxes
23,971
33,206
Tax Receivable Agreement long-term
3,802
5,737
Stockholders’ (deficit) 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, 257,263,710 and 256,831,870 shares
issued and outstanding as of December 31, 2024 and December 31,
2023, respectively
2,572
2,568
Additional paid-in capital
755,338
749,527
Accumulated other comprehensive loss
(43,359
)
(11,458
)
Accumulated deficit
(793,453
)
(662,390
)
Total stockholders’ (deficit) equity
(78,902
)
78,247
Total liabilities and stockholders’
(deficit) equity
$
1,224,274
$
1,288,889
GRAFTECH INTERNATIONAL LTD.
AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars
in thousands, except per share data) (Unaudited)
Three Months Ended
December 31,
Year Ended
December 31,
2024
2023
2024
2023
Net sales
$
134,217
$
137,145
$
538,782
$
620,500
Cost of goods sold
131,698
144,393
533,757
571,857
Lower of cost or market inventory
valuation adjustment
12,962
12,431
24,878
12,431
Gross (loss) profit
(10,443
)
(19,679
)
(19,853
)
36,212
Research and development
1,387
1,837
5,706
5,520
Selling and administrative expenses
13,075
15,079
46,510
74,012
Rationalization expenses
—
—
3,156
—
Goodwill impairment charges
—
171,117
—
171,117
Operating loss
(24,905
)
(207,712
)
(75,225
)
(214,437
)
Other expense (income), net
200
3,418
(1,569
)
4,679
Interest expense
37,575
15,655
85,313
58,087
Interest income
(1,226
)
(1,681
)
(5,701
)
(3,439
)
Loss before income taxes
(61,454
)
(225,104
)
(153,268
)
(273,764
)
Income tax benefit
(11,978
)
(7,695
)
(22,103
)
(18,514
)
Net loss
$
(49,476
)
$
(217,409
)
$
(131,165
)
$
(255,250
)
Basic loss per common share:
Net loss per share
$
(0.19
)
$
(0.85
)
$
(0.51
)
$
(0.99
)
Weighted average common shares
outstanding
257,967,374
257,205,583
257,667,125
257,042,843
Diluted loss per common share:
Net loss per share
$
(0.19
)
$
(0.85
)
$
(0.51
)
$
(0.99
)
Weighted average common shares
outstanding
257,967,374
257,205,583
257,667,125
257,042,843
GRAFTECH INTERNATIONAL LTD.
AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars
in thousands) (Unaudited)
Three Months Ended
December 31,
Year Ended
December 31,
2024
2023
2024
2023
Cash flow from operating activities:
Net loss
$
(49,476
)
$
(217,409
)
$
(131,165
)
$
(255,250
)
Adjustments to reconcile net loss to cash
(used in) provided by operations:
Depreciation and amortization
16,110
13,836
62,245
56,889
Deferred income tax benefit
(15,891
)
(17,826
)
(27,634
)
(28,123
)
Non-cash stock-based compensation
expense
1,589
624
6,035
4,433
Non-cash interest expense
1,550
(1,463
)
(2,028
)
8,786
Goodwill impairment charges
—
171,117
—
171,117
Lower of cost or market inventory
valuation adjustment
12,962
12,431
24,878
12,431
Other adjustments
1,302
8,355
6,283
5,077
Net change in working capital*
10,543
42,729
40,254
107,562
Change in Tax Receivable Agreement
87
233
(5,330
)
(4,398
)
Change in long-term assets and
liabilities
(5,193
)
(3,335
)
(13,631
)
(1,963
)
Net cash (used in) provided by operating
activities
(26,417
)
9,292
(40,093
)
76,561
Cash flow from investing activities:
Capital expenditures
(12,792
)
(5,753
)
(34,309
)
(54,040
)
Proceeds from the sale of fixed assets
—
—
100
220
Net cash used in investing activities
(12,792
)
(5,753
)
(34,209
)
(53,820
)
Cash flow from financing activities:
Proceeds from term loan
175,000
—
175,000
—
Proceeds from issuance of long-term debt,
net of original issuance discount
—
—
—
438,552
Principal payments on long-term debt
(137
)
(133
)
(137
)
(433,841
)
Debt issuance costs
(18,945
)
(19
)
(18,945
)
(8,152
)
Interest rate swap settlements
—
—
—
27,453
Payments for taxes related to net share
settlement of equity awards
(36
)
—
(118
)
(129
)
Dividends paid
—
—
—
(5,134
)
Principal payments under finance lease
obligations
(24
)
(16
)
(82
)
(36
)
Net cash provided by (used in) financing
activities
155,858
(168
)
155,718
18,713
Net change in cash and cash
equivalents
116,649
3,371
81,416
41,454
Effect of exchange rate changes on cash
and cash equivalents
(1,807
)
700
(2,046
)
783
Cash and cash equivalents at beginning of
period
141,406
172,807
176,878
134,641
Cash and cash equivalents at end of
period
$
256,248
$
176,878
$
256,248
$
176,878
* Net change in working capital due to
changes in the following components:
Accounts and notes receivable, net
$
(6,682
)
$
(2,327
)
$
4,519
$
45,680
Inventories
18,727
38,538
68,832
107,796
Prepaid expenses and other current
assets
6,296
(1,622
)
9,106
3,352
Income taxes payable
1,067
4,158
(1,549
)
(27,198
)
Accounts payable and accruals
9,165
19,515
(39,501
)
(23,876
)
Interest payable
(18,030
)
(15,533
)
(1,153
)
1,808
Net change in working capital
$
10,543
$
42,729
$
40,254
$
107,562
NON-GAAP RECONCILIATIONS
(Dollars in thousands, except per share and per MT data)
(Unaudited) The following tables reconcile our non-GAAP financial
measures to the most directly comparable GAAP measures:
Reconciliation of Net Loss to Adjusted
Net Loss
Year Ended
December 31,
Q4 2024
Q3 2024
Q4 2023
2024
2023
Net loss
$
(49,476
)
$
(36,068
)
$
(217,409
)
$
(131,165
)
$
(255,250
)
Diluted loss per common share:
Net loss per share
$
(0.19
)
$
(0.14
)
$
(0.85
)
$
(0.51
)
$
(0.99
)
Weighted average shares outstanding
257,967,374
257,694,799
257,205,583
257,667,125
257,042,843
Adjustments, pre-tax:
Pension and OPEB expenses(1)
967
479
3,578
2,270
6,309
Rationalization expenses(2)
—
(99
)
—
3,156
—
Rationalization-related expenses(3)
—
—
—
2,655
—
Non-cash (gains) losses on foreign
currency remeasurement(4)
(507
)
(352
)
170
(1,949
)
603
Stock-based compensation expense(5)
1,589
1,838
624
6,035
4,433
Proxy contest expenses(6)
—
—
—
752
—
Tax Receivable Agreement adjustment(7)
87
—
233
124
249
Debt modification costs(8)
18,369
—
—
18,369
—
Goodwill impairment charges(9)
—
—
171,117
—
171,117
Total non-GAAP adjustments pre-tax
20,505
1,866
175,722
31,412
182,711
Income tax impact on non-GAAP
adjustments(10)
4,172
74
26,882
6,391
28,213
Adjusted net loss
$
(33,143
)
$
(34,276
)
$
(68,569
)
$
(106,144
)
$
(100,752
)
Reconciliation of Loss Per Share to
Adjusted Loss Per Share
Year Ended
December 31,
Q4 2024
Q3 2024
Q4 2023
2024
2023
Loss per share
$
(0.19
)
$
(0.14
)
$
(0.85
)
$
(0.51
)
$
(0.99
)
Adjustments per share:
Pension and OPEB expenses(1)
—
—
0.01
0.01
0.02
Rationalization expenses(2)
—
—
—
0.01
—
Rationalization-related expenses(3)
—
—
—
0.01
—
Non-cash (gains) losses on foreign
currency remeasurement(4)
—
—
—
—
—
Stock-based compensation expense(5)
0.01
0.01
—
0.02
0.02
Proxy contest expenses(6)
—
—
—
—
—
Tax Receivable Agreement adjustment(7)
—
—
—
—
—
Debt modification costs(8)
0.07
—
—
0.07
—
Goodwill impairment charges(9)
—
—
0.67
—
0.67
Total non-GAAP adjustments pre-tax per
share
0.08
0.01
0.68
0.12
0.71
Income tax impact on non-GAAP adjustments
per share(10)
0.02
—
0.10
0.02
0.11
Adjusted loss per share
$
(0.13
)
$
(0.13
)
$
(0.27
)
$
(0.41
)
$
(0.39
)
Reconciliation of Net Loss to Adjusted
EBITDA
Year Ended
December 31,
Q4 2024
Q3 2024
Q4 2023
2024
2023
Net loss
$
(49,476
)
$
(36,068
)
$
(217,409
)
$
(131,165
)
$
(255,250
)
Add:
Depreciation and amortization
16,110
17,933
13,836
62,245
56,889
Interest expense
37,575
16,503
15,655
85,313
58,087
Interest income
(1,226
)
(1,098
)
(1,681
)
(5,701
)
(3,439
)
Income taxes
(11,978
)
(5,332
)
(7,695
)
(22,103
)
(18,514
)
EBITDA
(8,995
)
(8,062
)
(197,294
)
(11,411
)
(162,227
)
Adjustments:
Pension and OPEB expenses(1)
967
479
3,578
2,270
6,309
Rationalization expenses(2)
—
(99
)
—
3,156
—
Rationalization-related expenses(3)
—
—
—
2,655
—
Non-cash (gains) losses on foreign
currency remeasurement(4)
(507
)
(352
)
170
(1,949
)
603
Stock-based compensation expense(5)
1,589
1,838
624
6,035
4,433
Proxy contest expenses(6)
—
—
—
752
—
Tax Receivable Agreement adjustment(7)
87
—
233
124
249
Goodwill impairment charges(9)
—
—
171,117
—
171,117
Adjusted EBITDA
$
(6,859
)
$
(6,196
)
$
(21,572
)
$
1,632
$
20,484
Reconciliation of
Net Cash (Used in) Provided by Operating Activities to Free Cash
Flow and Adjusted Free Cash Flow
Year Ended
December 31,
Q4 2024
Q3 2024
Q4 2023
2024
2023
Net cash (used in) provided by
operating activities
$
(26,417
)
$
23,709
$
9,292
$
(40,093
)
$
76,561
Capital expenditures
(12,792
)
(4,027
)
(5,753
)
(34,309
)
(54,040
)
Free cash flow
(39,209
)
19,682
3,539
(74,402
)
22,521
Debt modification costs(11)
18,249
—
—
18,249
—
Interest rate swap settlements(12)
—
—
—
—
27,453
Adjusted free cash flow
$
(20,960
)
$
19,682
$
3,539
$
(56,153
)
$
49,974
Reconciliation of
Cost of Goods Sold to Cash Cost of Goods Sold per MT
Year Ended
December 31,
Q4 2024
Q3 2024
Q4 2023
2024
2023
Cost of goods sold
$
131,698
$
134,885
$
144,393
$
533,757
$
571,857
Less:
Depreciation and amortization(13)
14,466
16,281
12,163
55,602
50,124
Cost of goods sold - by-products and
other(14)
6,094
7,806
780
32,801
14,500
Rationalization-related expenses(3)
—
—
—
2,655
—
Cash cost of goods sold
111,138
110,798
131,450
442,699
507,233
Sales volume (in thousands of MT)
27.2
26.4
24.1
103.2
91.6
Cash cost of goods sold per MT
$
4,086
$
4,197
$
5,454
$
4,290
$
5,537
(1)
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. We recognize the actuarial gains and losses in
connection with the annual remeasurement in earnings in the fourth
quarter of each year.
(2)
Severance and contract termination costs
associated with the cost rationalization and footprint optimization
plan announced in February 2024.
(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. subsidiaries where the functional currency is the U.S.
dollar.
(5)
Non-cash expense for stock-based
compensation awards.
(6)
Expenses associated with our proxy
contest.
(7)
Non-cash expense adjustment for future
payment to our sole pre-initial public offering stockholder for tax
assets that have been utilized.
(8)
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.
(11)
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.
(12)
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.
(13)
Reflects the portion of depreciation and
amortization that is recognized in cost of goods sold.
(14)
Primarily reflects cost of goods sold
associated with the portion of our sales that consists of
deliveries of by-products of the manufacturing processes.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20250206173148/en/
Michael Dillon 216-676-2000 investor.relations@graftech.com
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