GrafTech International Ltd. Q1 2024 10-Q Filing

Ticker: EAF · Form: 10-Q · Filed: Apr 26, 2024 · CIK: 931148

Sentiment: neutral

Topics: 10-Q, financials, sec-filing

Related Tickers: EAF

TL;DR

GrafTech's Q1 2024 10-Q is in. Common stock trades on NYSE as EAF.

AI Summary

GrafTech International Ltd. reported its quarterly period ended March 31, 2024. The company is incorporated in Delaware and its principal executive offices are located at 982 Keynote Circle, Brooklyn Heights, OH. GrafTech's common stock trades on the New York Stock Exchange under the symbol EAF.

Why It Matters

This filing provides investors with the latest financial performance and operational details for GrafTech International Ltd. during the first quarter of 2024.

Risk Assessment

Risk Level: low — This is a standard quarterly report (10-Q) that provides routine financial disclosures and does not contain unusual or high-risk information.

Key Players & Entities

FAQ

What is the trading symbol for GrafTech International Ltd.'s common stock?

The trading symbol for GrafTech International Ltd.'s common stock is EAF.

On which exchange is GrafTech International Ltd.'s common stock traded?

GrafTech International Ltd.'s common stock is traded on the New York Stock Exchange.

What is the par value of GrafTech International Ltd.'s common stock?

The par value of GrafTech International Ltd.'s common stock is $0.01 per share.

In which state was GrafTech International Ltd. incorporated?

GrafTech International Ltd. was incorporated in Delaware.

What is the address of GrafTech International Ltd.'s principal executive offices?

The address of GrafTech International Ltd.'s principal executive offices is 982 Keynote Circle, Brooklyn Heights, OH.

Filing Stats: 4,563 words · 18 min read · ~15 pages · Grade level 18.9 · Accepted 2024-04-26 12:25:45

Key Financial Figures

Filing Documents

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION:

Financial Statements

Item 1. Financial Statements Condensed Consolidated Balance Sheets (unaudited) 5 Condensed Consolidated Statements of Operations and Comprehensive Loss (unaudited) 6 Condensed Consolidated Statements of Cash Flows (unaudited) 7 Condensed Consolidated Statements of Stockholders' Equity (unaudited) 8 Notes to the Condensed Consolidated Financial Statements (unaudited) 9

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 24

Quantitative and Qualitative Disclosures About Market Risk

Item 3. Quantitative and Qualitative Disclosures About Market Risk 37

Controls and Procedures

Item 4. Controls and Procedures 38

OTHER INFORMATION

PART II. OTHER INFORMATION:

Legal Proceedings

Item 1. Legal Proceedings 39

Risk Factors

Item 1A. Risk Factors 41

Other Information

Item 5. Other Information 41

Exhibits

Item 6. Exhibits 42 SIGNATURE 43 Presentation of Financial, Market and Industry Data We present our financial information on a consolidated basis. Unless otherwise noted, when we refer to dollars, we mean U.S. dollars. Certain market and industry data included in this Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2024 (the "Report") has been obtained or derived from third-party sources that we believe to be reliable. Market estimates are calculated by using independent industry publications, government publications and third-party forecasts in conjunction with our assumptions about our markets. We cannot guarantee the accuracy or completeness of this market and market share data and have not independently verified it. None of the sources consented to the disclosure or use of data in this Report. While we are not aware of any misstatements regarding any market, industry or similar data presented herein, such data involves risks and uncertainties and is subject to change based on various factors, including those discussed under the headings "Cautionary Note Regarding Forward-Looking Statements" in this Report and "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2023 ("Annual Report on Form 10-K") filed on February 14, 2024. Cautionary Note Regarding Forward-Looking Statements This Report 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, and future economic performance. 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, anticipated reduction in our costs resulting from our cost rationaliz

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Dollars in thousands, except per share data) (Unaudited) March 31, 2024 December 31, 2023 ASSETS Current assets: Cash and cash equivalents $ 165,190 $ 176,878 Accounts and notes receivable, net of allowance for doubtful accounts of $ 8,076 as of March 31, 2024 and $ 7,708 as of December 31, 2023 91,591 101,387 Inventories 302,873 330,146 Prepaid expenses and other current assets 60,376 66,382 Total current assets 620,030 674,793 Property, plant and equipment 915,148 920,444 Less: accumulated depreciation 407,973 398,330 Net property, plant and equipment 507,175 522,114 Deferred income taxes 31,308 31,542 Other assets 57,361 60,440 Total assets $ 1,215,874 $ 1,288,889 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 60,331 $ 83,268 Long-term debt, current maturities 132 134 Accrued income and other taxes 10,638 10,022 Other accrued liabilities 93,381 91,702 Tax Receivable Agreement 1,949 5,417 Total current liabilities 166,431 190,543 Long-term debt 926,779 925,511 Other long-term obligations 54,151 55,645 Deferred income taxes 27,107 33,206 Tax Receivable Agreement long-term 3,788 5,737 Commitments and contingencies - Note 7 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, 257,161,175 and 256,831,870 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively 2,572 2,568 Additional paid-in capital 750,397 749,527 Accumulated other comprehensive loss ( 22,183 ) ( 11,458 ) Accumulated deficit ( 693,168 ) ( 662,390 ) Total stockholders' equity 37,618 78,247 Total liabilities and stockholders' equity $ 1,215,874 $ 1,288,889 See accompanying Notes to the Condensed Consolidated Financial Statements 5 Table of Contents GRAFTECH INTERNAT

(CONT'D)

PART I (CONT'D) GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (1) Organization and Summary of Significant Accounting Policies A. Organization GrafTech International Ltd. (the "Company" or "GrafTech") is a leading manufacturer of high-quality graphite electrode products essential to the production of electric arc furnace ("EAF") steel and other ferrous and non-ferrous metals. References herein to "GTI," "we," "our," or "us" refer collectively to the Company and its subsidiaries. The Company's common stock is listed on the New York Stock Exchange under the symbol "EAF." The Company's only reportable segment, Industrial Materials, is comprised of its two major product categories: graphite electrodes and petroleum needle coke products. Petroleum needle coke is our key raw material used in the production of graphite electrodes. The Company's vision is to provide highly engineered graphite electrode products, services and solutions to EAF operators. B. Basis of Presentation The interim condensed consolidated financial statements are unaudited; however, in the opinion of management, they have been prepared in accordance with Rule 10-01 of Regulation S-X and in accordance with accounting principles generally accepted in the United States of America ("GAAP"). The December 31, 2023 Consolidated Balance Sheet data included herein was derived from the audited consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2023, filed on February 14, 2024, but does not include all disclosures required by GAAP in audited financial statements. These interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements, including the accompanying notes, contained in the Company's Annual Report on Form 10-K. The unaudited condensed consolidated financial statements reflect all adjustments

(CONT'D)

PART I (CONT'D) GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (2) Revenue from Contracts with Customers Disaggregation of Revenue The following table provides information about disaggregated revenue by type of product and contract, including our take or pay contracts with initial terms of three to five years ("LTA") and short-term agreements and spot sales ("non-LTA"): Three Months Ended March 31, 2024 2023 (Dollars in thousands) Graphite Electrodes - LTAs $ 36,094 $ 69,866 Graphite Electrodes - Non-LTAs 87,893 56,960 By-products and other 12,597 11,976 Total Revenues $ 136,584 $ 138,802 Contract Balances Substantially all of the Company's receivables relate to contracts with customers. Accounts receivables are recorded when the right to consideration becomes unconditional. Payment terms on invoices range from 30 to 120 days depending on the customary business practices of the jurisdictions in which we do business. Certain short-term and longer-term sales contracts require up-front payments prior to the Company's fulfillment of any performance obligation. These contract liabilities are recorded as current or long-term deferred revenue, depending on the lag between the pre-payment and the expected delivery of the related products. Additionally, deferred revenue or contract assets originate from contracts where the allocation of the transaction price to the performance obligations based on their relative stand-alone selling prices results in the timing of revenue recognition being different from the timing of the invoicing. In this case, deferred revenue is amortized into revenue based on the transaction price allocated to the remaining performance obligations and contract assets are realized through the contract invoicing. We did not have any contract asset balances as of March 31, 2024 or December 31, 2023. Current deferred revenue is included in "Other accrued liabilities" on t

(CONT'D)

PART I (CONT'D) GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) We recorded $ 36.1 million of LTA revenue in the three months ended March 31, 2024, and we expect to record approximately $ 64.0 million to $ 99.0 million of LTA revenue for the remainder of 2024. The remaining LTAs are defined as pre-determined fixed annual volume contracts. The actual revenue realized from these contracted volumes may vary in timing and total due to contract non-performance, force majeure notices, arbitrations and credit risk associated with certain customers facing financial challenges. (3) Intangible Assets The following table summarizes intangible assets with determinable useful lives by major category, which are included in "Other assets" on our Condensed Consolidated Balance Sheets: March 31, 2024 December 31, 2023 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount (Dollars in thousands) Trade names $ 22,500 $ ( 17,597 ) $ 4,903 $ 22,500 $ ( 17,379 ) $ 5,121 Technology and know-how 55,300 ( 46,511 ) 8,789 55,300 ( 45,746 ) 9,554 Customer-related intangibles 64,500 ( 37,870 ) 26,630 64,500 ( 36,802 ) 27,698 Total finite-lived intangible assets $ 142,300 $ ( 101,978 ) $ 40,322 $ 142,300 $ ( 99,927 ) $ 42,373 Amortization expense for intangible assets was $ 2.1 million and $ 2.4 million in the three months ended March 31, 2024 and 2023, respectively. Amortization expense is expected to be approximately $ 5.9 million for the remainder of 2024, $ 7.3 million in 2025, $ 6.7 million in 2026, $ 6.1 million in 2027, $ 5.5 million in 2028 and $ 4.9 million in 2029. (4) Debt and Liquidity The following table presents our long-term debt:

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