GrafTech International Ltd. (NYSE:GTI) today announced
preliminary financial results for the second quarter ended June 30,
2014. The results are based on the company's preliminary second
quarter earnings and are subject to adjustment as the impact of the
previously announced impairment in the Engineered Solutions segment
is finalized.
Joel Hawthorne, Chief Executive Officer of GrafTech, commented,
“In a challenging environment, our team remains focused on
executing our plan to increase global competitiveness, reduce cost
and improve profitability while simultaneously delivering the world
class products our customers expect. The previously announced
Industrial Materials rationalization actions have been
substantially completed and we are now moving forward with
additional actions to improve the quality of earnings in our
Engineered Solutions segment to drive further value for our
shareholders."
Please refer to GrafTech's earlier announcement today regarding
an impairment charge in the Engineered Solutions segment, other
charges, and additional actions being taken to improve
profitability.
2014 Second Quarter
Review
- Net sales were $284 million, a decrease
of six percent, compared to $301 million in the same period of the
prior year.
- Industrial Materials segment revenue
declined 11 percent primarily due to weaker graphite electrode
realized pricing and lower needle coke sales volume.
- Engineered Solutions segment revenue
increased 11 percent primarily due to higher sales volumes in
advanced consumer electronics and high temperature furnace
applications.
- Preliminary earnings were a net loss of
$(160) million, or $(1.18) per diluted share, versus net income of
$4 million, or $0.03 per diluted share in the same period of the
prior year. The preliminary net loss in the second quarter of 2014
includes an estimated $154 million, net of tax, of special charges.
Excluding these charges, adjusted net loss* was $(6) million, or
$(0.05) per diluted share.
- EBITDA* (which excludes special
charges) was $28 million as compared to $40 million in the same
period of the prior year.
- Net cash provided by operating
activities was $34 million versus a net cash use of $(6) million in
the second quarter of 2013. Operating cash flow in the second
quarter of 2014 includes approximately $9 million of
rationalization and related cash costs.
- Net debt* was $531 million as compared
to $540 million at the end of 2013.
Mr. Hawthorne, commented, “Our team has made solid progress in
reducing working capital requirements and improving operating cash
flow. Operating cash flow in the first half of 2014 was $56
million, an improvement of $44 million year-over-year. We expect to
continue to reduce net debt levels as we move throughout the year
and further decrease working capital requirements.”
Industrial Materials
SegmentNet sales for Industrial Materials decreased 11
percent to $207 million in the second quarter of 2014, as compared
to $231 million in the second quarter of 2013. The decline in
revenue was driven primarily by lower realized graphite electrode
pricing than previously anticipated, which was partially offset by
higher graphite electrode volumes. Weaker needle coke sales volume
also contributed to the revenue decline.
The Industrial Materials segment had an operating loss of $(11)
million in the second quarter of 2014, largely driven by charges in
the quarter related to the rationalization initiatives announced in
2013. Operating income was $8 million in the second quarter of
2013. Adjusted segment operating income* (which excludes the impact
of $11 million of rationalization and related charges) was
approximately breakeven in the second quarter of 2014. The
reduction in adjusted segment operating income* is primarily due to
weaker graphite electrode realized selling prices and lower needle
coke sales volume and costs associated with the regularly scheduled
five-year maintenance down time at the Seadrift facility.
The 2014 second quarter five-year planned maintenance down time
at Seadrift was completed on time and under budget. However,
several weeks following the restart of operations, Seadrift
experienced an unplanned outage in July lasting approximately three
weeks. This resulted in minimal disruption to customer orders due
to the current inventory position but will negatively impact costs
in the third quarter of 2014.
Mr. Hawthorne commented, “Our previously announced
rationalization initiatives in Industrial Materials will
significantly improve GrafTech's competitiveness by reducing cost
and increasing operating efficiencies and position us well to
capitalize on the recovery in global steel demand. These
initiatives are expected to generate $75 million in annual cost
savings, and we expect to recognize approximately half of these
savings in the second half of the year."
Engineered Solutions
SegmentNet sales for Engineered Solutions increased 11
percent to $78 million in the second quarter of 2014 compared to
$70 million in the second quarter of 2013. The increase in revenue
was primarily driven by new product sales of high temperature
furnace systems and thermal solutions serving the advanced consumer
electronics market.
The recent deterioration of the outlook of profitability related
to production of graphite and related products primarily servicing
the solar industry and the migration of the supply chain to a very
competitive China market caused the company to re-evaluate its
participation in those product lines. This product line
reassessment resulted in an estimated charge of $137 million,
primarily related to the impairment of long-lived assets and
inventory in our advanced graphite materials business. Related
initiatives are expected to yield approximately $18 million of
annual cost savings and the actions are targeted to be
substantially complete by the end of the year. The initiatives are
expected to contribute approximately $1 million in savings in
2014.
Largely due to these charges, operating income for the
Engineered Solutions segment was $(133) million in the second
quarter of 2014 versus $8 million in the same period in 2013.
Adjusted segment operating income* (which excludes the impact of
$138 million of charges, including the above estimated $137
million) was $6 million in the second quarter of 2014.
Mr. Hawthorne commented, "We are pleased with the over 20
percent Engineered Solutions revenue growth in the first half of
the year. However, looking forward, we expect that the temporary
delays in high temperature furnace customer orders and weaker
consumer electronic product launches will drive lower sales in the
third quarter, resulting in the lowering of 2014 revenue growth
expectations and related operating margins."
For the full year, the company expects segment revenue to
increase five to ten percent and operating income margins to be in
the range of eight to ten percent.
CorporateTotal Company
selling and administrative expenses and research and development
expenses were $35 million for the second quarter of 2014, compared
to $33 million in the second quarter of 2013. Excluding the
incremental costs associated with our proxy contest, overhead
expense in the current quarter was $33 million.
Interest expense was $9 million in the second quarter of 2014,
which was flat compared to the second quarter of 2013.
GrafTech also recorded a $59 million non-cash charge in the
second quarter of 2014 to increase the valuation allowance against
certain U.S. deferred income tax assets. The non-cash tax expense
is a result of near-term reduced profit expectations but does not
result in or limit the company's ability to utilize tax losses
carried forward in the future.
OutlookAccording to the
World Steel Association, 2014 global steel production increased two
percent, excluding China, through the end of June 2014. For the
same period, the European Union and the Middle East continued to
recover with year-over-year steel production growth rates of four
and nine percent, respectively. North America steel production and
operating rates continue to show improvement as well. GrafTech's
global steel customers remain cautiously optimistic as trends
indicate stable to improving conditions for the remainder of this
year.
Mr. Hawthorne commented, “Our Industrial Materials business
continues to see volume recover and we expect to operate our
graphite electrode facilities at full capacity in the second half
of the year. Our Engineered Solutions segment continues to execute
on its plan; however, the timing of product launches and customer
orders are expected to unfavorably impact sales and margins in the
third quarter.”
GrafTech targets 2014 EBITDA* to be in the range of $135 million
to $150 million, a reduction in the company’s prior estimate that
reflects unanticipated delays in Engineered Solutions customer
orders, weaker graphite electrode pricing expectations and costs
associated with an unplanned outage at Seadrift in July 2014. The
Company targets third quarter EBITDA* to be in the range of $30
million to $40 million. The implied improvement in fourth quarter
EBITDA* is expected to be largely driven by the recovery of
Engineered Solutions sales, normalized operations at Seadrift and
the benefits of the company-wide rationalization initiatives.
In summary, the company’s expectations for 2014 (excluding the
impact of all rationalization and related charges) are as
follows:
($ millions except as noted)
Annual EBITDA* $135 - $150 (previously $150 - $180)
Third quarter 2014 EBITDA* $30 - $40 Depreciation and
amortization expense ~ $90 Overhead expense (selling
and administrative, and research and development expenses)
$125 - $130 Interest expense ~ $36 (previously
~$37) Second half 2014 effective tax rate ~ 35%
For operating cash flow and capital expenditures, GrafTech
anticipates the following:
($ millions)
Cash flow from operations $125 - $140,
including cash rationalization charges (previously $150 - $180)
Capital expenditures $85 - $95 (previously
$100 - $110)
In conjunction with this earnings release, you are invited to
listen to our earnings call being held today at 11:00 a.m. Eastern.
The call will be webcast and available at www.GrafTech.com, in the
investor relations section. The earnings call dial-in number is
877-736-7716 for domestic and 706-501-7465 for international. A
rebroadcast webcast will be available following the call, and for
30 days thereafter, at www.GrafTech.com, in the investor relations
section. GrafTech also makes its complete financial reports that
have been filed with the Securities and Exchange Commission (SEC)
and other information available at www.GrafTech.com. This includes
its interim report on Form 10-Q for the period reported. The
information in our website is not part of this release or any
report we file or furnish to the SEC. Upon request, GrafTech will
provide its stockholders with a hard copy of its complete audited
financial statement, free of charge.
GrafTech International is a global company that has been
redefining limits for more than 125 years. We offer innovative
graphite material solutions for our customers in a wide range of
industries and end markets, including steel manufacturing, advanced
energy applications and latest generation electronics. GrafTech
operates 20 principal manufacturing facilities on four continents
and sells products in over 70 countries. Headquartered in Parma,
Ohio, GrafTech employs approximately 2,600 people. For more
information, call 216-676-2000 or visit www.GrafTech.com.
NOTE ON FORWARD-LOOKING STATEMENTS: This news release and
related discussions may contain forward-looking statements about
such matters as: our outlook for 2014; future or targeted
operational and financial performance; growth prospects and rates;
actual costs related to Seadrift Coke outage; the markets we serve;
future or targeted profitability, cash flow, liquidity, sales,
costs and expenses, tax rates, working capital, inventory levels,
debt levels, capital expenditures, EBITDA, cost savings and
business opportunities and positioning; strategic plans; stock
repurchase plans; cost, inventory and supply chain management;
rationalization and related activities; the impact of
rationalization, product line changes, cost competitiveness and
liquidity initiatives; expected or targeted changes in production
capacity or levels, operating rates or efficiency in our operations
or our competitors' or customers' operations; future prices and
demand for our products and changes therein; product quality;
diversification, new products, and product improvements and their
impact on our business; the integration or impact of acquired
businesses; investments and acquisitions that we may make in the
future; possible financing (including factoring and supply chain
financing) activities; our customers' operations, order patterns
and demand for their products; our position in markets we serve;
regional and global economic and industry market conditions and
changes therein, including our expectations concerning their impact
on us and our customers and suppliers; conditions and changes in
the global financial and credit markets; tax rates and the effects
of jurisdictional mix; the impact of accounting changes; and
currency exchange and interest rates and changes therein.
We have no duty to update these statements. Our expectations and
targets are not predictions of actual performance and historically
our performance has deviated, often significantly, from our
expectations and targets. Actual future events, circumstances,
performance and trends could differ materially, positively or
negatively, due to various factors, including: adjustments to our
preliminary 2014 second quarter results; actual timing of the
filing of our Form 10-Q with the SEC and potential effects of
delays in such filing; failure to achieve cost savings, EBITDA or
other estimates; actual outcome of uncertainties associated with
assumptions and estimates used when applying critical accounting
policies and preparing financial statements; failure to
successfully develop and commercialize new or improved products;
adverse changes in cost, inventory or supply chain management;
limitations or delays on capital expenditures; business
interruptions including those caused by weather, natural disaster,
or other causes; delays or changes in, or non-consummation of
proposed investments or acquisitions; failure to successfully
integrate or achieve expected synergies, performance or returns
expected from any completed investments or acquisitions; inability
to protect our intellectual property rights or infringement of
intellectual property rights of others; changes in market prices of
our securities; changes in our ability to obtain financing on
acceptable terms; adverse changes in labor relations; adverse
developments in legal proceedings or investigations;
non-realization of anticipated benefits from, or variances in the
cost or timing of, organizational changes, rationalizations and
restructurings; loss of market share or sales due to
rationalization, product line changes, or pricing activities;
negative developments relating to health, safety or environmental
compliance, remediation or liabilities; downturns, production
reductions or suspensions, or other changes in steel, electronics
and other markets we or our customers serve; customer or supplier
bankruptcy or insolvency events; political unrest which adversely
impacts us or our customers' businesses; declines in demand;
intensified competition and price or margin decreases; graphite
electrode and needle coke manufacturing capacity increases;
fluctuating market prices for our products, including adverse
differences between actual graphite electrode prices and spot or
announced prices; consolidation of steel producers; mismatches
between manufacturing capacity and demand; significant changes in
our provision for income taxes and effective income tax rate;
changes in the availability or cost of key inputs, including
petroleum-based coke or energy; changes in interest or currency
exchange rates; inflation or deflation; failure to satisfy
conditions to government grants; continuing uncertainty over U.S.
fiscal policy or condition; European sovereign debt issues; changes
in government fiscal and monetary policy; a protracted regional or
global financial or economic crisis; and other risks and
uncertainties, including those detailed in our SEC filings, as well
as future decisions by us. This news release does not constitute an
offer or solicitation as to any securities. References to street or
analyst earnings estimates mean those published by First Call.
* Non-GAAP financial measures. See attached reconciliations.
GRAFTECH INTERNATIONAL LTD. AND
SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except share
data)
(Preliminary and Unaudited)
As of
As of December 31, June 30, 2013
2014
ASSETS
Current assets: Cash and cash equivalents $ 11,888 $ 20,728
Accounts and notes receivable, net of
allowance for doubtful accounts of $6,718 as of December 31, 2013
and $8,563 as of June 30, 2014
199,566 177,541 Inventories 490,414 450,421 Prepaid expenses and
other current assets 73,790 93,588 Total current
assets 775,658 742,278 Property, plant and equipment
1,588,880 1,621,461 Less: accumulated depreciation 767,895
943,314 Net property, plant and equipment 820,985 678,147
Deferred income taxes 10,334 12,079 Goodwill 496,810 496,335 Other
assets 114,061 110,348 Total assets $ 2,217,848
$ 2,039,187
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities: Accounts payable $ 115,212 $ 122,428
Short-term debt 1,161 142 Accrued income and other taxes 30,687
22,731 Rationalizations 18,421 3,592 Supply chain financing
liability 9,455 — Other accrued liabilities 40,939 38,447
Total current liabilities 215,875 187,340
Long-term debt 541,593 551,533 Other long-term obligations
97,947 95,892 Deferred income taxes 41,684 44,574
Stockholders’ equity: Preferred stock, par value $.01, 10,000,000
shares authorized, none issued — —
Common stock, par value $.01, 225,000,000
shares authorized, 151,929,565 shares issued as of December 31,
2013 and 152,450,629 shares issued as of June 30, 2014
1,519 1,529 Additional paid-in capital 1,820,451 1,826,771
Accumulated other comprehensive loss (292,624 ) (290,313 ) Retained
earnings 39,625 (131,858 )
Less: cost of common stock held in
treasury, 16,341,311 shares as of December 31, 2013 and 16,223,318
shares as of June 30, 2014
(247,190 ) (245,221 )
Less: common stock held in employee
benefit and compensation trusts, 87,206 shares as of December 31,
2013 and 89,703 shares as of June 30, 2014
(1,032 ) (1,060 ) Total stockholders’ equity 1,320,749
1,159,848 Total liabilities and stockholders’ equity $
2,217,848 $ 2,039,187
GRAFTECH INTERNATIONAL LTD. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
INCOME
(Dollars in thousands, except per share
amounts)
(Preliminary and Unaudited)
For the Three Months Ended For the Six
Months Ended June 30, June 30, 2013
2014 2013 2014 Net sales $
301,361 $ 284,184 $ 555,088 $ 564,975 Cost of sales 252,440
266,231 457,617 521,328 Gross profit 48,921
17,953 97,471 43,647 Research and development 2,787 2,903
5,880 5,673 Selling and administrative expenses 30,161 32,137
59,874 62,044 Rationalizations — 831 — 917 Impairment of long-lived
assets — 126,137 — 126,137 Operating
income (loss) 15,973 (144,055 ) 31,717 (151,124 ) Other
expense, net 975 (41 ) 1,525 753 Interest expense 8,947 9,155
17,955 18,154 Interest income (49 ) (55 ) (113 ) (113 ) Income
(loss) before provision for income taxes 6,100 (153,114 ) 12,350
(169,918 ) Provision for income taxes 1,718 6,853
3,758 1,566 Net income (loss) $ 4,382 $
(159,967 ) $ 8,592 $ (171,484 ) Basic income (loss)
per common share: Net income (loss) per share $ 0.03 $ (1.18
) $ 0.06 $ (1.26 ) Weighted average common shares
outstanding 134,854 135,963 134,816 135,713 Diluted income
(loss) per common share: Net income (loss) per share $ 0.03
$ (1.18 ) $ 0.06 $ (1.26 ) Weighted average common shares
outstanding 135,056 135,963 134,988 135,713
GRAFTECH INTERNATIONAL LTD. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH
FLOWS
(Dollars in thousands)
(Preliminary and Unaudited)
For the Three Months For the Six Months
Ended June 30, Ended June 30,
2013
2014 2013 2014 Cash flow from
operating activities: Net income (loss) $ 4,382 $ (159,967 ) $
8,592 $ (171,484 )
Adjustments to reconcile net income to
cash provided by operations:
Depreciation and amortization 24,492 26,846 44,868 66,507
Impairment of long-lived assets — 126,137 — 126,137 Deferred income
tax provision 1,937 (502 ) 277 (1,724 ) Post-retirement and pension
plan changes 1,101 2,081 2,242 3,093 Stock-based compensation 1,379
2,230 3,745 2,752 Interest expense 3,486 3,826 6,919 7,471 Other
charges, net 1,135 4,376 1,420 2,783
(Increase) decrease in working
capital(1)
(42,082 ) 37,048 (51,016 ) 30,383 Increase in long-term assets and
liabilities (2,183 ) (8,265 ) (5,401 ) (10,018 ) Net cash (used in)
provided by operating activities (6,353 ) 33,810 11,646 55,900 Cash
flow from investing activities: Capital expenditures (25,362 )
(24,736 ) (38,518 ) (46,464 ) Proceeds from the sale of assets —
628 — 2,523 (Payments for) proceeds from derivative instruments
(709 ) 173 1,472 (194 ) Insurance recoveries 284 (223 ) 284
2,834 Net cash used in investing activities (25,787 )
(24,158 ) (36,762 ) (41,301 ) Cash flow from financing activities:
Short-term debt reductions, net 675 (25 ) (5,649 ) (1,019 )
Revolving Facility borrowings 45,000 134,000 111,000 209,000
Revolving Facility reductions (18,000 ) (140,000 ) (70,500 )
(205,000 ) Principal payments on long-term debt (41 ) (34 ) (140 )
(126 ) Supply chain financing 5,935 — (8,369 ) (9,455 ) Proceeds
from exercise of stock options 43 2,731 175 2,813 Purchase of
treasury shares (528 ) (294 ) (709 ) (435 ) Revolver facility
refinancing (2,636 ) — (2,636 ) Other (793 ) — (6,440 ) 918
Net cash provided by (used in) financing activities 32,291
(6,258 ) 19,368 (5,940 ) Net increase (decrease) in cash and cash
equivalents 151 3,394 (5,748 ) 8,659 Effect of exchange rate
changes on cash and cash equivalents (469 ) 10 (583 ) 181 Cash and
cash equivalents at beginning of period 11,304 17,324
17,317 11,888 Cash and cash equivalents at end of
period $ 10,986 $ 20,728 $ 10,986 $ 20,728
(1) Net change in working capital due to
the following components:
Change in current assets: Accounts and notes receivable, net $
(19,691 ) $ 27,842 $ 28,076 $ 22,158 Inventories (9,595 ) 41,343
(33,384 ) 42,298 Prepaid expenses and other current assets (15,176
) (13,990 ) (16,362 ) (18,660 ) Decrease in accounts payable and
accruals 6,855 (6,823 ) (29,741 ) (317 ) Rationalizations — (6,496
) — (15,076 ) (Decrease) Increase in interest payable (4,475 )
(4,828 ) 395 (20 ) (Increase) decrease in working capital $
(42,082 ) $ 37,048 $ (51,016 ) $ 30,383
GRAFTECH INTERNATIONAL LTD. AND
SUBSIDIARIES
SEGMENT DATA SUMMARY AND RECONCILIATION
(Dollars in thousands)
(Preliminary and Unaudited)
For the three Months
For the Six Months Ended June 30, Ended June
30, 2013 2014 2013
2014
Net sales:
Industrial Materials $ 231,339 $ 206,655 $ 440,116 $ 425,431
Engineered Solutions 70,022 77,529 114,972
139,544 Total net sales $ 301,361 $ 284,184 $
555,088 $ 564,975 Segment operating income:
Industrial Materials 7,530 (11,366 ) 23,608 (20,790 ) Engineered
Solutions 8,443 (132,689 ) 8,109 (130,334 ) Total
segment operating income $ 15,973 $ (144,055 ) $ 31,717
$ (151,124 ) Reconciling Items:
Rationalizations - Industrial Materials — 832 — 946
Rationalizations - Engineered Solutions — — — (28 ) Impairments -
Engineered Solutions — 126,137 — 126,137
Total Rationalizations and impairments — 126,969 — 127,055
Rationalization and impairment related Industrial Materials
(recorded in Cost of sales) 8,087 — 25,428 Industrial Materials
(recorded in Selling and Administrative) — 53 — 78 Engineered
Solutions (recorded in Cost of sales) 11,601 — 12,005 Engineered
Solutions (recorded in Selling and Administrative) — —
— — Total Rationalization and impairment
related — 19,741 — 37,511 Proxy contest expenses - allocated
to Industrial Materials — 1,888 — 1,888 Proxy contest expenses -
allocated to Engineered Solutions — 550 — 550
Total proxy contest expenses — 2,438 — 2,438 Segment
adjusted operating income: Industrial Materials 7,530 (506 ) 23,608
7,550 Engineered Solutions 8,443 5,599 8,109
8,330 Total adjusted segment operating income $ 15,973
$ 5,093 $ 31,717 $ 15,880
Adjusted operating income margin: Industrial Materials 3.3
%
(0.2
)%
5.4
%
1.8
%
Engineered Solutions 12.1
%
7.2
%
7.1
%
6.0
%
Total adjusted operating income margin 5.3
%
1.8
%
5.7
%
2.8
%
NOTE ON RECONCILIATION OF OPERATING INCOME DATA: Adjusted
segment operating income is a non-GAAP financial measure that
GrafTech calculates according to the schedule above, using GAAP
amounts from the Consolidated Financial Statements. GrafTech
believes that the excluded items are not primarily related to core
operational activities. GrafTech believes that adjusted segment
operating income is generally viewed as providing useful
information regarding a segment's operating profitability.
Management uses adjusted segment operating income as well as other
financial measures in connection with its decision-making
activities. Adjusted segment operating income should not be
considered in isolation or as a substitute for segment operating
income or other consolidated income data prepared in accordance
with GAAP. GrafTech's method for calculating adjusted segment
operating income may not be comparable to methods used by other
companies.
GRAFTECH INTERNATIONAL LTD. AND
SUBSIDIARIES
RECONCILIATION OF OTHER NON-GAAP
FINANCIAL MEASURES
(Dollars in thousands)
(Preliminary and Unaudited)
EBITDA
Reconciliation
For the Three Months
For the Six Months
Third Quarter
Ended June 30,
Ended June 30,
Target
Full Year Target 2013 2014 2013
2014 2014
2014
EBITDA
$ 40,465 $ 27,694 $
76,585 $ 60,707 $30,000 - $40,000
$135,000 - $150,000
Adjustments
Depreciation
and amortization
(24,492 ) (22,600 ) (44,868 ) (44,828 )
(22,000)
(90,000)
Rationalization related
depreciation
— (4,246 ) — (21,679 ) — (21,679) Rationalizations
—
(832 ) — (917 ) (4,000) (4,917) Impairments
—
(126,137 )
—
(126,137 ) — (126,137)
Rationalizations and impairments -
other
— (15,496 ) — (15,832 ) (10,000) (25,829) Proxy contest expenses —
(2,438 )
—
(2,438 ) — (2,438) Operating income 15,973 (144,055 ) 31,717
(151,124 ) (6,000) - 4,000 (136,000) - (121,000) Other (expense)
income, net (975 ) 41 (1,525 ) (753 ) (1,000) (2,000) Interest
expense (8,947 ) (9,155 ) (17,955 ) (18,154 ) (9,000) (36,000)
Interest income 49 55 113 113 — — Income taxes (1,718 ) (6,853 )
(3,758 ) (1,566 ) 2,000 - 500 0 - (4,000)
Net income (loss)
$ 4,382 $ (159,967 )
$ 8,592 $ (171,484 )
$(14,000) - $(5,500) $(174,000) - $(163,000)
NOTE ON EBITDA RECONCILIATION: EBITDA is a non-GAAP financial
measure that GrafTech currently calculates according to the
schedule above, using historical or estimated target GAAP amounts
as indicated above. GrafTech believes that EBITDA measures are
generally accepted as providing useful information regarding a
company’s ability to incur and service debt as well as productivity
and cash generation. Management uses EBITDA measures as well as
other financial measures in connection with its decision-making
activities. EBITDA measures should not be considered in isolation
or as a substitute for net income (loss), cash flows from
operations or other consolidated income or cash flow data prepared
in accordance with GAAP. GrafTech’s method for calculating EBITDA
measures may not be comparable to methods used by other companies
and is not the same as the method for calculating EBITDA measures
under its senior secured revolving credit facility or other debt
instruments.
GRAFTECH INTERNATIONAL LTD. AND
SUBSIDIARIES
RECONCILIATION OF OTHER NON-GAAP
FINANCIAL MEASURES
(Dollars in thousands)
(Preliminary and Unaudited)
Adjusted Net
Income and Earnings Per Share Reconciliation
For the Three Months Ended
For the Three Months Ended June 30, 2013 June 30,
2014 Income (Loss)
EPS
Income (Loss) EPS
Total Company
Net income (loss) $ 4,382 $ 0.03 $ (159,967 ) $ (1.18 )
Rationalizations, net of tax — — 562 — Impairment of long-lived
assets, net of tax — — 79,506 0.58 Rationalization and impairment
related, net of tax — — 12,956 0.10 Valuation allowance — — 58,929
0.44
Proxy contest expenses, net of tax — — 1,521
0.01 Adjusted net income (loss) $ 4,382 $ 0.03
$ (6,493 ) $
(0.05
)
For the Six Months Ended For the Six
Months Ended June 30, 2013 June 30, 2014
Income (Loss) EPS Income (Loss) EPS
Total Company
Net income (loss) $ 8,592 $ 0.06 $ (171,484 ) $ (1.26 )
Rationalizations, net of tax — — 636 — Rationalization and
impairment related, net of tax — — 79,506 0.59 Rationalization
related, net of tax — — 25,257 0.19 Valuation allowance — — 58,929
0.43 Proxy contest expenses, net of tax — — 1,521
0.01
Adjusted net income (loss) $ 8,592 $ 0.06 $
(5,635 ) $ (0.04 )
NOTE ON RECONCILIATION OF EARNINGS DATA: Adjusted net income and
adjusted earnings per share are non-GAAP financial measures that
GrafTech calculates according to the schedule above, using
historical GAAP amounts. GrafTech believes that the excluded items
are not primarily related to core operational activities. GrafTech
believes that adjusted net income and adjusted earnings per share
are generally viewed as providing useful information regarding a
company's operating profitability. Management uses adjusted net
income and adjusted earnings per share as well as other financial
measures in connection with its decision-making activities.
Adjusted net income and adjusted earnings per share should not be
considered in isolation or as a substitute for net income or other
consolidated income data prepared in accordance with GAAP.
GrafTech's method for calculating adjusted net income and adjusted
earnings per share may not be comparable to methods used by other
companies.
GRAFTECH INTERNATIONAL LTD. AND
SUBSIDIARIES
RECONCILIATION OF OTHER NON-GAAP
FINANCIAL MEASURES
(Dollars in thousands)
(Preliminary and Unaudited)
Net Debt
Reconciliation
As of As of December
31, 2013 June 30, 2014 Long-term debt $ 541,593 $
551,533 Short-term debt 1,161 142 Supply chain financing 9,455
— Total debt 552,209 551,675
Less:
Cash and cash equivalents 11,888 20,728
Net Debt
$ 540,321 $ 530,947
NOTE ON NET DEBT RECONCILIATION: Net debt is a non-GAAP
financial measure that GrafTech calculates according to the
schedule above, using GAAP amounts from the Consolidated Financial
Statements. GrafTech believes that net debt is generally accepted
as providing useful information regarding a company’s indebtedness
and that net debt provides meaningful information to investors to
assist them to analyze leverage. Management uses net debt as well
as other financial measures in connection with its decision-making
activities. Net debt should not be considered in isolation or as a
substitute for total debt or total debt and other long-term
obligations calculated in accordance with GAAP. GrafTech’s method
for calculating net debt may not be comparable to methods used by
other companies and is not the same as the method for calculating
net debt under its senior secured revolving credit facility or
other debt instruments.
GTI-G
GrafTech International Ltd.Kelly Taylor, Director, Investor
Relations, 216-676-2000