GrafTech Reports Second Quarter 2023 Results
Solid Execution in a Challenging Environment Leads to Sequential Improvement in Key Metrics
Second Quarter 2023 Highlights
-
Net loss of
, or$8 million per share(1)$0.03 -
Adjusted EBITDA(2) of
$26 million - Sales volume of 26 thousand metric tons ("MT")
- Production volume of 25 thousand MT
-
Extended debt maturity profile by completing a private offering of
senior secured notes due 2028$450 million - Net proceeds of offering were used to repay debt outstanding under the Company's secured term loan due 2025
CEO Comments
"During the second quarter, we achieved sequential improvement in key operating and financial metrics, as the business began to recover from the impact of the suspension of our operations in
"We remain pleased with the execution of our plans to navigate the current market uncertainties while further improving our strategic position to capitalize on sustainable industry tailwinds," said Mr. Kessler. "Key initiatives included the successful restart of production activities at our
Second Quarter 2023 Financial Performance
(dollars in thousands, except per share amounts) |
|
|
Six Months Ended |
|||||||||||
|
|
June 30, |
||||||||||||
Q2 2023 |
Q1 2023 |
Q2 2022 |
|
|
2023 |
|
|
2022 |
||||||
Net sales |
$ |
185,561 |
|
$ |
138,802 |
|
$ |
363,646 |
|
$ |
324,363 |
|
$ |
729,891 |
Net (loss) income |
$ |
(7,851 |
) |
$ |
(7,369 |
) |
$ |
114,997 |
|
$ |
(15,220 |
) |
$ |
239,180 |
(Loss) earnings per share(1) |
$ |
(0.03 |
) |
$ |
(0.03 |
) |
$ |
0.44 |
|
$ |
(0.06 |
) |
$ |
0.92 |
Net cash (used in) provided by operating activities |
$ |
(9,024 |
) |
$ |
24,798 |
|
$ |
60,123 |
|
$ |
15,774 |
|
$ |
206,439 |
|
|
|
|
|
|
|
||||||||
Adjusted net (loss) income(2) |
$ |
(5,768 |
) |
$ |
(5,549 |
) |
$ |
115,102 |
|
$ |
(11,317 |
) |
$ |
241,022 |
Adjusted (loss) earnings per share(1)(2) |
$ |
(0.02 |
) |
$ |
(0.02 |
) |
$ |
0.44 |
|
$ |
(0.04 |
) |
$ |
0.92 |
Adjusted EBITDA(2) |
$ |
26,022 |
|
$ |
15,115 |
|
$ |
158,196 |
|
$ |
41,137 |
|
$ |
327,796 |
Adjusted free cash flow(2) |
$ |
281 |
|
$ |
3,157 |
|
$ |
47,084 |
|
$ |
3,438 |
|
$ |
176,101 |
Net sales for the second quarter of 2023 were
Net loss for the second quarter of 2023 was
In the second quarter of 2023, net cash used in operating activities was
Operational and Commercial Update
Key operating metrics |
|
|
|
|
Six Months Ended |
||||||
|
|
|
|
|
June 30, |
||||||
(in thousands, except percentages) |
Q2 2023 |
Q1 2023 |
Q2 2022 |
|
2023 |
|
2022 |
|
|||
Sales volume (MT) |
26.4 |
|
16.9 |
|
42.3 |
|
|
43.3 |
|
85.6 |
|
Production volume (MT)(4) |
25.2 |
|
15.8 |
|
43.9 |
|
|
41.0 |
|
90.0 |
|
Total production capacity (MT)(5)(6) |
58.0 |
|
58.0 |
|
58.0 |
|
|
116.0 |
|
116.0 |
|
Total capacity utilization(6)(7) |
43 |
% |
27 |
% |
76 |
% |
|
35 |
% |
78 |
% |
Production capacity excluding |
51.0 |
|
51.0 |
|
51.0 |
|
|
102.0 |
|
102.0 |
|
Capacity utilization excluding |
49 |
% |
31 |
% |
86 |
% |
|
40 |
% |
88 |
% |
Sales volume for the second quarter of 2023 was 26.4 thousand MT, consisting of 8.5 thousand MT of LTA volume and 17.9 thousand MT of non-LTA volume, and decreased
For the second quarter of 2023, the weighted-average realized price for our LTA volume was
Production volume was 25.2 thousand MT in the second quarter of 2023, a decrease of
The table of estimated shipments of graphite electrodes under existing LTAs remains as follows, reflecting our current expectations for the full years of 2023 and 2024:
|
|
2023 |
|
2024 |
Estimated LTA volume (in thousands of MT) |
|
27 - 31 |
|
13 - 16 |
Estimated LTA revenue (in millions) |
|
|
|
|
Capital Structure and Capital Allocation
During the second quarter of 2023, we completed a
As of June 30, 2023, we had cash and cash equivalents of
Outlook
While we continue to move past the
We expect our cash cost of goods sold per MT in the second half of 2023 will be below the level recognized for the first half of the year. However, for the full year of 2023, we expect a significant year-over-year increase in our cash cost of goods sold per MT as (1) fixed costs are recognized over a smaller volume base, (2) excess fixed costs that would have otherwise been inventoried are recognized when incurred due to reduced production levels and (3) reflecting the full-year impact of higher raw material costs that increased throughout 2022. We continue to closely manage our operating costs and capital expenditures, as well as our working capital levels.
Looking ahead, we remain confident in our ability to overcome near-term challenges and are optimistic about the long-term outlook for our business. We anticipate the steel industry’s accelerating 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 actions we are taking, supported by a distinct set of capabilities, including our substantial vertical integration into petroleum needle coke via our Seadrift facility, will optimally position GrafTech to benefit from these sustainable industry tailwinds.
Conference Call Information
In connection with this earnings release, you are invited to listen to our earnings call being held on August 4, 2023 at 10:00 a.m. (EDT). 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 (888) 886-7786 toll-free in
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, 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, our key raw material for graphite electrode manufacturing. This unique position provides us with competitive advantages in product quality and cost.
________________________ |
||
(1) |
(Loss) earnings per share represents diluted (loss) earnings per share. Adjusted (loss) earnings per share represents diluted adjusted (loss) earnings 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 |
|
(3) |
A non-GAAP financial measure, adjusted EBITDA margin is calculated as adjusted EBITDA divided by net sales (Q2 2023 adjusted EBITDA of |
|
(4) |
Production volume reflects graphite electrodes we produced during the period. |
|
(5) |
Production capacity reflects expected maximum production volume during the period depending on product mix and expected maintenance outage. Actual production may vary. |
|
(6) |
Includes graphite electrode facilities in Calais, |
|
(7) |
Capacity utilization reflects production volume as a percentage of production capacity. |
|
(8) |
Our |
|
(9) |
Includes expected termination fees from a few customers that have failed to meet certain obligations under their LTAs. |
|
(10) |
Gross debt reflects the notional value of our outstanding debt and excludes unamortized debt discount and issuance costs. |
|
(11) |
A non-GAAP financial measure, net debt is calculated as gross debt minus cash and cash equivalents (June 30, 2023 gross debt of |
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
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 EBITDA margin, adjusted net (loss) income, adjusted (loss) earnings 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 income or 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") plan expenses or benefits, adjustments for public offerings and 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
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.
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 or benefits relating to our pension and OPEB plans;
- adjusted EBITDA does not reflect public offerings and 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 related party payable - Tax Receivable Agreement adjustments; 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.
We define adjusted net (loss) income, a non‑GAAP financial measure, as net income or loss, excluding the items used to calculate adjusted EBITDA, less the tax effect of those adjustments. We define adjusted (loss) earnings per share, a non‑GAAP financial measure, as adjusted net (loss) income divided by the weighted average diluted common shares outstanding during the period. We believe adjusted net (loss) income and adjusted (loss) earnings per share are useful to present to investors because we believe that they assist investors’ understanding of the underlying operational profitability of the Company.
We define free cash flow, a non-GAAP financial measure, as net cash provided by operating activities less capital expenditures. We define adjusted free cash flow, a non-GAAP financial measure, as free cash flow adjusted by payments made or received from the settlement of interest rate swap contracts and payments of the Change in Control charges that were triggered as a result of the ownership of our largest stockholder falling below
We define net debt as gross debt (the most directly comparable GAAP measure) 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 as cost of goods sold less depreciation and amortization and less cost of goods sold associated with the portion of our sales that consists of deliveries of by-products of the manufacturing processes, 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 EBITDA, adjusted EBITDA, adjusted EBITDA margin, adjusted net (loss) income, adjusted (loss) earnings per share, free cash flow and adjusted free cash flow, you should be aware that in the future, we will incur expenses similar to the adjustments in the reconciliations presented below. Our presentations of EBITDA, adjusted EBITDA, adjusted EBITDA margin, adjusted net (loss) income, adjusted (loss) earnings per share, free cash flow and adjusted free cash flow 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, adjusted EBITDA margin, adjusted net (loss) income, adjusted (loss) earnings per share, free cash flow and adjusted free cash flow alongside other measures of financial performance and liquidity, including our net (loss) income, (loss) earnings per share and cash flow from operating activities, respectively, and other GAAP measures.
GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES |
|||||||
CONDENSED CONSOLIDATED BALANCE SHEETS |
|||||||
(Dollars in thousands, except per share data) |
|||||||
(Unaudited) |
|||||||
|
June 30, 2023 |
|
December 31, 2022 |
||||
ASSETS |
|
|
|
||||
Current assets: |
|
|
|
||||
Cash and cash equivalents |
$ |
132,160 |
|
|
$ |
134,641 |
|
Accounts and notes receivable, net of allowance for doubtful accounts of
|
|
111,339 |
|
|
|
145,574 |
|
Inventories |
|
433,107 |
|
|
|
447,741 |
|
Prepaid expenses and other current assets |
|
62,950 |
|
|
|
87,272 |
|
Total current assets |
|
739,556 |
|
|
|
815,228 |
|
Property, plant and equipment |
|
899,724 |
|
|
|
869,168 |
|
Less: accumulated depreciation |
|
375,110 |
|
|
|
350,022 |
|
Net property, plant and equipment |
|
524,614 |
|
|
|
519,146 |
|
Deferred income taxes |
|
20,977 |
|
|
|
11,960 |
|
Goodwill |
|
171,117 |
|
|
|
171,117 |
|
Other assets |
|
69,410 |
|
|
|
86,727 |
|
Total assets |
$ |
1,525,674 |
|
|
$ |
1,604,178 |
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
||||
Current liabilities: |
|
|
|
||||
Accounts payable |
$ |
77,691 |
|
|
$ |
103,156 |
|
Long-term debt, current maturities |
|
130 |
|
|
|
124 |
|
Accrued income and other taxes |
|
19,158 |
|
|
|
40,592 |
|
Other accrued liabilities |
|
78,186 |
|
|
|
89,349 |
|
Related party payable - Tax Receivable Agreement |
|
5,137 |
|
|
|
4,631 |
|
Total current liabilities |
|
180,302 |
|
|
|
237,852 |
|
|
|
|
|
||||
Long-term debt |
|
923,394 |
|
|
|
921,803 |
|
Other long-term obligations |
|
49,289 |
|
|
|
50,822 |
|
Deferred income taxes |
|
46,093 |
|
|
|
45,065 |
|
Related party payable - Tax Receivable Agreement long-term |
|
5,784 |
|
|
|
10,921 |
|
Stockholders’ equity: |
|
|
|
||||
Preferred stock, par value |
|
— |
|
|
|
— |
|
Common stock, par value |
|
2,568 |
|
|
|
2,566 |
|
Additional paid-in capital |
|
747,275 |
|
|
|
745,164 |
|
Accumulated other comprehensive loss |
|
(6,671 |
) |
|
|
(8,070 |
) |
Accumulated deficit |
|
(422,360 |
) |
|
|
(401,945 |
) |
Total stockholders’ equity |
|
320,812 |
|
|
|
337,715 |
|
|
|
|
|
||||
Total liabilities and stockholders’ equity |
$ |
1,525,674 |
|
|
$ |
1,604,178 |
|
GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES |
|||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
|||||||||||||||
(Dollars in thousands, except per share data) |
|||||||||||||||
(Unaudited) |
|||||||||||||||
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
||||||||||||
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
|
|
|
|
||||||||
Net sales |
$ |
185,561 |
|
|
$ |
363,646 |
|
|
$ |
324,363 |
|
|
$ |
729,891 |
|
Cost of goods sold |
|
157,216 |
|
|
|
201,496 |
|
|
|
269,861 |
|
|
|
392,710 |
|
Gross profit |
|
28,345 |
|
|
|
162,150 |
|
|
|
54,502 |
|
|
|
337,181 |
|
Research and development |
|
1,196 |
|
|
|
723 |
|
|
|
2,388 |
|
|
|
1,603 |
|
Selling and administrative expenses |
|
18,551 |
|
|
|
18,030 |
|
|
|
40,702 |
|
|
|
39,284 |
|
Operating income |
|
8,598 |
|
|
|
143,397 |
|
|
|
11,412 |
|
|
|
296,294 |
|
|
|
|
|
|
|
|
|
||||||||
Other expense (income), net |
|
455 |
|
|
|
(563 |
) |
|
|
1,108 |
|
|
|
(760 |
) |
Interest expense |
|
13,907 |
|
|
|
9,399 |
|
|
|
26,713 |
|
|
|
18,611 |
|
Interest income |
|
(242 |
) |
|
|
(1,858 |
) |
|
|
(614 |
) |
|
|
(1,956 |
) |
(Loss) income before provision (benefit) for income taxes |
|
(5,522 |
) |
|
|
136,419 |
|
|
|
(15,795 |
) |
|
|
280,399 |
|
Provision (benefit) for income taxes |
|
2,329 |
|
|
|
21,422 |
|
|
|
(575 |
) |
|
|
41,219 |
|
Net (loss) income |
$ |
(7,851 |
) |
|
$ |
114,997 |
|
|
$ |
(15,220 |
) |
|
$ |
239,180 |
|
|
|
|
|
|
|
|
|
||||||||
Basic (loss) income per common share: |
|
|
|
|
|
|
|
||||||||
Net (loss) income per share |
$ |
(0.03 |
) |
|
$ |
0.44 |
|
|
$ |
(0.06 |
) |
|
$ |
0.92 |
|
Weighted average common shares outstanding |
|
257,003,691 |
|
|
|
258,845,588 |
|
|
|
256,935,763 |
|
|
|
260,719,446 |
|
Diluted (loss) income per common share: |
|
|
|
|
|
|
|
||||||||
Net (loss) income per share |
$ |
(0.03 |
) |
|
$ |
0.44 |
|
|
$ |
(0.06 |
) |
|
$ |
0.92 |
|
Weighted average common shares outstanding |
|
257,003,691 |
|
|
|
258,845,588 |
|
|
|
256,935,763 |
|
|
|
260,734,273 |
|
|
|
|
|
|
|
|
|
GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES |
|||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
|||||||||||||||
(Dollars in thousands) |
|||||||||||||||
(Unaudited) |
|||||||||||||||
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
||||||||||||
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Cash flow from operating activities: |
|
|
|
|
|
|
|
||||||||
Net (loss) income |
$ |
(7,851 |
) |
|
$ |
114,997 |
|
|
$ |
(15,220 |
) |
|
$ |
239,180 |
|
Adjustments to reconcile net (loss) income to cash (used in) provided by operations: |
|
|
|
|
|
|
|
||||||||
Depreciation and amortization |
|
15,322 |
|
|
|
14,012 |
|
|
|
26,099 |
|
|
|
28,446 |
|
Deferred income tax (benefit) provision |
|
(2,674 |
) |
|
|
5,162 |
|
|
|
(6,424 |
) |
|
|
6,557 |
|
Non-cash stock-based compensation expense |
|
1,385 |
|
|
|
573 |
|
|
|
2,181 |
|
|
|
1,038 |
|
Non-cash interest expense |
|
9,500 |
|
|
|
(1,528 |
) |
|
|
11,684 |
|
|
|
(3,674 |
) |
Other adjustments |
|
(6,521 |
) |
|
|
3,008 |
|
|
|
(6,416 |
) |
|
|
3,411 |
|
Net change in working capital* |
|
(19,257 |
) |
|
|
(74,579 |
) |
|
|
6,400 |
|
|
|
(61,989 |
) |
Change in related party Tax Receivable Agreement |
|
— |
|
|
|
— |
|
|
|
(4,631 |
) |
|
|
(3,828 |
) |
Change in long-term assets and liabilities |
|
1,072 |
|
|
|
(1,522 |
) |
|
|
2,101 |
|
|
|
(2,702 |
) |
Net cash (used in) provided by operating activities |
|
(9,024 |
) |
|
|
60,123 |
|
|
|
15,774 |
|
|
|
206,439 |
|
Cash flow from investing activities: |
|
|
|
|
|
|
|
||||||||
Capital expenditures |
|
(14,518 |
) |
|
|
(12,493 |
) |
|
|
(39,789 |
) |
|
|
(29,348 |
) |
Proceeds from the sale of fixed assets |
|
122 |
|
|
|
66 |
|
|
|
214 |
|
|
|
139 |
|
Net cash used in investing activities |
|
(14,396 |
) |
|
|
(12,427 |
) |
|
|
(39,575 |
) |
|
|
(29,209 |
) |
Cash flow from financing activities: |
|
|
|
|
|
|
|
||||||||
Interest rate swap settlements |
|
23,823 |
|
|
|
(546 |
) |
|
|
27,453 |
|
|
|
(1,433 |
) |
Debt issuance and modification costs |
|
(6,196 |
) |
|
|
(2,232 |
) |
|
|
(6,324 |
) |
|
|
(2,232 |
) |
Proceeds from the issuance of long-term debt, net of original issuance discount |
|
438,552 |
|
|
|
— |
|
|
|
438,552 |
|
|
|
— |
|
Principal payments on long-term debt |
|
(433,708 |
) |
|
|
(40,000 |
) |
|
|
(433,708 |
) |
|
|
(110,000 |
) |
Repurchase of common stock |
|
— |
|
|
|
(30,000 |
) |
|
|
— |
|
|
|
(60,000 |
) |
Payments for taxes related to net share settlement of equity awards |
|
— |
|
|
|
— |
|
|
|
(129 |
) |
|
|
(230 |
) |
Proceeds from exercise of stock options |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
225 |
|
Dividends paid to non-related party |
|
(1,928 |
) |
|
|
(1,932 |
) |
|
|
(3,854 |
) |
|
|
(3,917 |
) |
Dividends paid to related party |
|
(640 |
) |
|
|
(639 |
) |
|
|
(1,280 |
) |
|
|
(1,279 |
) |
Principal payments under finance lease obligations |
|
(10 |
) |
|
|
— |
|
|
|
(10 |
) |
|
|
— |
|
Net cash provided by (used in) financing activities |
|
19,893 |
|
|
|
(75,349 |
) |
|
|
20,700 |
|
|
|
(178,866 |
) |
Net change in cash and cash equivalents |
|
(3,527 |
) |
|
|
(27,653 |
) |
|
|
(3,101 |
) |
|
|
(1,636 |
) |
Effect of exchange rate changes on cash and cash equivalents |
|
247 |
|
|
|
(1,565 |
) |
|
|
620 |
|
|
|
(43 |
) |
Cash and cash equivalents at beginning of period |
|
135,440 |
|
|
|
85,053 |
|
|
|
134,641 |
|
|
|
57,514 |
|
Cash and cash equivalents at end of period |
$ |
132,160 |
|
|
$ |
55,835 |
|
|
$ |
132,160 |
|
|
$ |
55,835 |
|
|
|
|
|
|
|
|
|
||||||||
* Net change in working capital due to changes in the following components: |
|
|
|
|
|
|
|||||||||
Accounts and notes receivable, net |
$ |
(27,630 |
) |
|
$ |
102 |
|
|
$ |
34,720 |
|
|
$ |
(1,119 |
) |
Inventories |
|
35,629 |
|
|
|
(80,502 |
) |
|
|
18,732 |
|
|
|
(104,717 |
) |
Prepaid expenses and other current assets |
|
(8,455 |
) |
|
|
(8,730 |
) |
|
|
4,133 |
|
|
|
(14,028 |
) |
Income taxes payable |
|
3,198 |
|
|
|
2,983 |
|
|
|
(22,396 |
) |
|
|
(16,436 |
) |
Accounts payable and accruals |
|
(16,646 |
) |
|
|
17,428 |
|
|
|
(29,141 |
) |
|
|
74,386 |
|
Interest payable |
|
(5,353 |
) |
|
|
(5,860 |
) |
|
|
352 |
|
|
|
(75 |
) |
Net change in working capital |
$ |
(19,257 |
) |
|
$ |
(74,579 |
) |
|
$ |
6,400 |
|
|
$ |
(61,989 |
) |
NON-GAAP RECONCILIATIONS
(Dollars in thousands, except per share and per MT data)
(Unaudited)
The following tables reconcile our non-GAAP key financial measures to the most directly comparable GAAP measures:
Reconciliation of Net (Loss) Income to Adjusted Net (Loss) Income |
|
||||||||||||||
|
|
|
|
Six Months Ended
|
|||||||||||
|
Q2 2023 |
Q1 2023 |
Q2 2022 |
|
2023 |
|
|
2022 |
|
||||||
|
|
|
|
|
|
||||||||||
Net (loss) income |
$ |
(7,851 |
) |
$ |
(7,369 |
) |
$ |
114,997 |
|
$ |
(15,220 |
) |
$ |
239,180 |
|
|
|
|
|
|
|
||||||||||
Diluted (loss) income per common share: |
|
|
|
|
|
||||||||||
Net (loss) income per share |
$ |
(0.03 |
) |
$ |
(0.03 |
) |
$ |
0.44 |
|
$ |
(0.06 |
) |
$ |
0.92 |
|
Weighted average shares outstanding |
|
257,003,691 |
|
|
256,974,904 |
|
|
258,845,588 |
|
|
256,935,763 |
|
|
260,734,273 |
|
|
|
|
|
|
|
||||||||||
Adjustments, pre-tax: |
|
|
|
|
|
||||||||||
Pension and OPEB plan expenses(1) |
|
899 |
|
|
918 |
|
|
553 |
|
|
1,817 |
|
|
1,104 |
|
Public offerings and related expenses(2) |
|
— |
|
|
— |
|
|
100 |
|
|
— |
|
|
100 |
|
Non-cash losses (gains) on foreign currency remeasurement(3) |
|
273 |
|
|
447 |
|
|
(1,002 |
) |
|
720 |
|
|
234 |
|
Stock-based compensation expense(4) |
|
1,385 |
|
|
796 |
|
|
573 |
|
|
2,181 |
|
|
1,038 |
|
Related party payable - Tax Receivable Agreement adjustment(5) |
|
— |
|
|
16 |
|
|
— |
|
|
16 |
|
|
(180 |
) |
Total non-GAAP adjustments pre-tax |
|
2,557 |
|
|
2,177 |
|
|
224 |
|
|
4,734 |
|
|
2,296 |
|
Income tax impact on non-GAAP adjustments(6) |
|
474 |
|
|
357 |
|
|
119 |
|
|
831 |
|
|
454 |
|
Adjusted net (loss) income |
$ |
(5,768 |
) |
$ |
(5,549 |
) |
$ |
115,102 |
|
$ |
(11,317 |
) |
$ |
241,022 |
|
Reconciliation of (Loss) Earnings Per Share to Adjusted (Loss) Earnings Per Share |
|||||||||||||
|
|
|
|
Six Months Ended
|
|||||||||
|
Q2 2023 |
Q1 2023 |
Q2 2022 |
|
2023 |
|
|
2022 |
|||||
|
|
|
|
|
|
||||||||
(Loss) earnings per share |
$ |
(0.03 |
) |
$ |
(0.03 |
) |
$ |
0.44 |
$ |
(0.06 |
) |
$ |
0.92 |
Adjustments per share: |
|
|
|
|
|
||||||||
Pension and OPEB plan expenses(1) |
|
— |
|
|
0.01 |
|
|
— |
|
0.01 |
|
|
— |
Public offerings and related expenses(2) |
|
— |
|
|
— |
|
|
— |
|
— |
|
|
— |
Non-cash losses (gains) on foreign currency remeasurement(3) |
|
— |
|
|
— |
|
|
— |
|
— |
|
|
— |
Stock-based compensation expense(4) |
|
0.01 |
|
|
— |
|
|
— |
|
0.01 |
|
|
— |
Related party payable - Tax Receivable Agreement adjustment(5) |
|
— |
|
|
— |
|
|
— |
|
— |
|
|
— |
Total non-GAAP adjustments pre-tax per share |
|
0.01 |
|
|
0.01 |
|
|
— |
|
0.02 |
|
|
— |
Income tax impact on non-GAAP adjustments per share(6) |
|
— |
|
|
— |
|
|
— |
|
— |
|
|
— |
Adjusted (loss) earnings per share |
$ |
(0.02 |
) |
$ |
(0.02 |
) |
$ |
0.44 |
$ |
(0.04 |
) |
$ |
0.92 |
Reconciliation of Net (Loss) Income to Adjusted EBITDA |
|||||||||||||||
|
|
|
|
Six Months Ended
|
|||||||||||
|
Q2 2023 |
Q1 2023 |
Q2 2022 |
|
2023 |
|
|
2022 |
|
||||||
|
|
|
|
|
|
||||||||||
Net (loss) income |
$ |
(7,851 |
) |
$ |
(7,369 |
) |
$ |
114,997 |
|
$ |
(15,220 |
) |
$ |
239,180 |
|
Add: |
|
|
|
|
|
||||||||||
Depreciation and amortization |
|
15,322 |
|
|
10,777 |
|
|
14,012 |
|
|
26,099 |
|
|
28,446 |
|
Interest expense |
|
13,907 |
|
|
12,806 |
|
|
9,399 |
|
|
26,713 |
|
|
18,611 |
|
Interest income |
|
(242 |
) |
|
(372 |
) |
|
(1,858 |
) |
|
(614 |
) |
|
(1,956 |
) |
Income taxes |
|
2,329 |
|
|
(2,904 |
) |
|
21,422 |
|
|
(575 |
) |
|
41,219 |
|
EBITDA |
|
23,465 |
|
|
12,938 |
|
|
157,972 |
|
|
36,403 |
|
|
325,500 |
|
Adjustments: |
|
|
|
|
|
||||||||||
Pension and OPEB plan expenses(1) |
|
899 |
|
|
918 |
|
|
553 |
|
|
1,817 |
|
|
1,104 |
|
Public offerings and related expenses(2) |
|
— |
|
|
— |
|
|
100 |
|
|
— |
|
|
100 |
|
Non-cash losses (gains) on foreign currency remeasurement(3) |
|
273 |
|
|
447 |
|
|
(1,002 |
) |
|
720 |
|
|
234 |
|
Stock-based compensation expense(4) |
|
1,385 |
|
|
796 |
|
|
573 |
|
|
2,181 |
|
|
1,038 |
|
Related party payable - Tax Receivable Agreement adjustment(5) |
|
— |
|
|
16 |
|
|
— |
|
|
16 |
|
|
(180 |
) |
Adjusted EBITDA |
$ |
26,022 |
|
$ |
15,115 |
|
$ |
158,196 |
|
$ |
41,137 |
|
$ |
327,796 |
|
|
Reconciliation of Net Cash (Used in) Provided by Operating Activities to Free Cash Flow and Adjusted Free Cash Flow |
|
|
|||||||||||||
|
|
|
|
|
Six Months Ended
|
|||||||||||
|
|
Q2 2023 |
Q1 2023 |
Q2 2022 |
|
2023 |
|
|
2022 |
|
||||||
|
|
|
|
|
|
|
||||||||||
|
Net cash (used in) provided by operating activities |
$ |
(9,024 |
) |
$ |
24,798 |
|
$ |
60,123 |
|
$ |
15,774 |
|
$ |
206,439 |
|
|
Capital expenditures |
|
(14,518 |
) |
|
(25,271 |
) |
|
(12,493 |
) |
|
(39,789 |
) |
|
(29,348 |
) |
|
Free cash flow |
|
(23,542 |
) |
|
(473 |
) |
|
47,630 |
|
|
(24,015 |
) |
|
177,091 |
|
|
|
|
|
|
|
|
||||||||||
|
Interest rate swap settlements(7)(8) |
|
23,823 |
|
|
3,630 |
|
|
(546 |
) |
|
27,453 |
|
|
(1,433 |
) |
|
Change in Control payment(9) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
443 |
|
|
Adjusted free cash flow |
$ |
281 |
|
$ |
3,157 |
|
$ |
47,084 |
|
$ |
3,438 |
|
$ |
176,101 |
|
Reconciliation of Cost of Goods Sold to Cash Cost of Goods Sold per MT |
||||||||||
|
|
Six Months Ended
|
||||||||
|
Q2 2023 |
Q1 2023 |
Q2 2022 |
|
2023 |
|
2022 |
|||
|
|
|
|
|
|
|||||
Cost of goods sold |
$ |
157,216 |
$ |
112,645 |
$ |
201,496 |
$ |
269,861 |
$ |
392,710 |
Less: |
|
|
|
|
|
|||||
Depreciation and amortization(10) |
|
13,605 |
|
9,065 |
|
12,303 |
|
22,670 |
|
25,036 |
Cost of goods sold - by-products and other(11) |
|
4,958 |
|
8,332 |
|
15,974 |
|
13,290 |
|
28,443 |
Cash cost of goods sold |
|
138,653 |
|
95,248 |
|
173,219 |
|
233,901 |
|
339,231 |
Sales volume (in thousands of MT) |
|
26.4 |
|
16.9 |
|
42.3 |
|
43.3 |
|
85.6 |
Cash cost of goods sold per MT |
$ |
5,252 |
$ |
5,636 |
$ |
4,095 |
$ |
5,402 |
$ |
3,963 |
(1) |
Net periodic benefit cost for our pension and OPEB plans. |
|
(2) |
Legal, accounting, printing and registration fees associated with the public offerings and related expenses. |
|
(3) |
Non-cash losses (gains) from foreign currency remeasurement of non-operating assets and liabilities of our non- |
|
(4) |
Non-cash expense for stock-based compensation grants. |
|
(5) |
Non-cash expense adjustment for future payment to our sole pre-IPO stockholder for tax assets that are expected to be utilized. |
|
(6) |
The tax impact on the non-GAAP adjustments is affected by their tax deductibility and the applicable jurisdictional tax rates. |
|
(7) |
Receipt (payment) of cash related to the monthly settlement of our outstanding interest rate swap contracts. |
|
(8) |
The three and six months ended June 30, 2023 include cash received from the termination of our interest rate swap contracts. |
|
(9) |
In the second quarter of 2021, we incurred pre-tax Change in Control charges of |
|
(10) |
Reflects the portion of depreciation and amortization that is recognized in cost of goods sold. |
|
(11) |
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/20230803121135/en/
Michael Dillon
216-676-2000
investor.relations@graftech.com
Source: GrafTech International Ltd.