Graftech International Ltd.
10/23/2026 | Press release | Distributed by Public on 10/23/2026 09:59
Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)
Management's Discussion and Analysis of Financial Condition and Results of Operations
The Company
We are a leading global manufacturer of high-quality graphite electrode products essential to the production of EAF steel and other ferrous and non-ferrous metals. With 140 years of experience in carbon science and manufacturing, we believe that we have a competitive portfolio of large-scale, low-cost, ultra-high power graphite electrode manufacturing facilities, and we are the only major graphite electrode producer vertically integrated into petroleum needle coke, our key raw material for graphite electrode manufacturing.
The environmental and economic advantages of EAF steel production position both that industry and the graphite electrode industry for long-term growth.
We believe GrafTech's leadership position and vertical integration provide important advantages in product quality, supply reliability and cost competitiveness. We believe the services and solutions we provide will position our customers and us for a better future.
Operational and Commercial Update
Sales volume for the third quarter of 2026 was 28.8 thousand metric tons ("MT"), which was consistent with the third quarter of 2025.
For the third quarter of 2026, our weighted-average realized price was approximately $3,900 per MT. This represented a decrease of 7% compared to the third quarter of 2025. The year-over-year pricing decline reflected persistent competitive pressures across most of our principal commercial regions.
Production volume was 27.0 thousand MT for the third quarter of 2026, resulting in a capacity utilization rate of 64%, up from 63% for the third quarter of 2025. While production volume has exceeded sales volume for the first nine months of 2026, our expectation remains to balance our production and sales volume levels on a full-year basis.
Outlook
Global steel demand, outside of China, is projected to grow modestly in 2026, with anticipated growth in many of our key commercial regions. In the United States, modest demand growth, coupled with favorable trade policies, has driven a 6% increase in steel production year-to-date through August. In Europe, while steel production is flat over this period, the steel market outlook is improving, reflecting recently approved increases in trade protections.
Based on current steel market conditions, we continue to expect modest growth in graphite electrode demand for the full year of 2026. For GrafTech, we are maintaining our expectation for a 5-10% year-over-year increase in graphite electrode sales volume as we continue to gain market share.
We are encouraged by improving pricing trends across our key commercial regions and believe we have reached an inflection point in our realized pricing. During the third quarter and early in the fourth quarter, we have secured customer commitments at higher price levels than comparable commitments secured in earlier periods. We expect these higher-priced commitments to contribute to improved realized graphite electrode pricing as they begin to flow through our results. For the fourth quarter, we anticipate a mid-single-digit percentage increase in our weighted-average realized pricing compared to the third quarter. We believe this momentum, together with our disciplined commercial approach and ongoing efforts to optimize our product and customer mix, positions us for meaningfully higher realized pricing in 2027. We remain focused on supporting sustainable pricing improvement through our previously announced price increases, trade enforcement efforts in key jurisdictions and strategic actions to better align industry supply with market demand, including our recently announced Mexico Facility Closure.
Despite continued cost pressures from oil-based raw materials, energy and logistics, our ongoing cost reduction and operational efficiency initiatives are expected to offset these headwinds. Accordingly, we continue to expect a low-single-digit percentage decline in our cash cost of goods sold per MT for 2026 compared to 2025.
We remain focused on disciplined capital spending and working capital management. For 2026, we continue to expect a modest increase in working capital to support higher sales volume. We also continue to anticipate full-year capital expenditures of approximately $35 million.
PART I (CONT'D)
GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES
Longer term, we remain confident in the structural drivers of demand growth for graphite electrodes, including the ongoing transition toward electric arc furnace steelmaking, as well as opportunities for petroleum needle coke in battery applications. We believe our strategic initiatives to improve our cost structure, optimize our manufacturing footprint and strengthen our commercial position, combined with our vertical integration and differentiated capabilities, position GrafTech to deliver stronger financial performance as market conditions improve.
Capital Structure and Liquidity
As of September 30, 2026, we had liquidity of $241.9 million, consisting of cash and cash equivalents of $134.3 million and $107.6 million of availability under our 2018 Revolving Credit Facility (after giving effect to the financial covenant and letters of credit described herein). As of September 30, 2026, we had total debt of approximately $1.2 billion.
Key metrics used by management to measure performance
In addition to measures of financial performance presented in our Condensed Consolidated Financial Statements in accordance with generally accepted accounting principles in the United States ("GAAP"), we use certain other financial measures and operating metrics to analyze the performance of our Company. Our "non-GAAP" financial measures consist of EBITDA, adjusted EBITDA, adjusted net loss, adjusted loss per share, free cash flow, adjusted free cash flow and cash cost of goods sold per MT which help us evaluate growth trends, establish budgets, assess operational efficiencies and evaluate our overall financial performance. Our key operating metrics consist of sales volume, production volume, production capacity and capacity utilization.
PART I (CONT'D)
GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES
Key financial measures
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||||||||
| (in thousands, except per share data) | 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Net sales | $ | 140,163 | $ | 143,998 | $ | 392,626 | $ | 387,677 | |||||||||
| Net loss | (46,768) | (28,482) | (130,516) | (154,719) | |||||||||||||
|
Loss per share(1)
|
(1.76) | (1.10) | (4.96) | (5.97) | |||||||||||||
|
EBITDA(2)
|
(6,621) | 11,241 | (10,384) | 9,802 | |||||||||||||
|
Adjusted net loss(2)
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(32,109) | (26,788) | (124,218) | (103,190) | |||||||||||||
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Adjusted loss per share(1)(2)
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(1.21) | (1.03) | (4.73) | (3.98) | |||||||||||||
|
Adjusted EBITDA(2)
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8,626 | 13,013 | (3,026) | 12,812 | |||||||||||||
(1) Loss per share represents diluted loss per share. Adjusted loss per share represents adjusted diluted loss per share.
(2) Non-GAAP financial measure; see below for information and reconciliations of EBITDA, adjusted EBITDA and adjusted net loss to net loss and adjusted loss per share to loss per share, the most directly comparable financial measures calculated and presented in accordance with GAAP.
Key operating measures
In addition to measures of financial performance presented in accordance with GAAP, we use certain operating metrics to analyze the performance of our Company. These metrics align with management's assessment of our revenue performance and profit margin and will help investors understand the factors that drive our profitability.
Sales volume reflects the total volume of graphite electrodes sold for which revenue has been recognized during the period. For a discussion of our revenue recognition policy, see "-Critical accounting policies-Revenue recognition" in our Annual Report on Form 10-K. Sales volume helps management and investors understand the factors that drive our net sales.
Production volume, production capacity and capacity utilization help us understand the efficiency of our production, evaluate cost of goods sold and consider how to approach our sales contract initiative.
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Three Months Ended September 30, |
Nine Months Ended September 30, |
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| (in thousands, except utilization) | 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Sales volume (MT) | 28.8 | 28.8 | 87.7 | 82.1 | |||||||||||||
| Production volume (MT) | 27.0 | 26.6 | 89.8 | 84.5 | |||||||||||||
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Production capacity (MT)(1)(2)
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42.0 | 42.0 | 132.0 | 132.0 | |||||||||||||
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Capacity utilization(3)
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64 | % | 63 | % | 68 | % | 64 | % | |||||||||
(1) Production capacity reflects expected maximum production volume during the period depending on product mix and expected maintenance outage. Actual production may vary.
(2) Includes graphite electrode facilities in Calais, France; Monterrey, Mexico; and Pamplona, Spain.
(3) Capacity utilization reflects production volume as a percentage of production capacity.
PART I (CONT'D)
GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES
Results of Operations
The Three Months Ended September 30, 2026 Compared to the Three Months Ended September 30, 2025
The table presented in our period-over-period comparisons summarizes our Condensed Consolidated Statements of Operations and illustrates key financial indicators used to assess the consolidated financial results. Throughout this "Management's Discussion and Analysis of Financial Condition and Results of Operations" in this Report, insignificant changes may be deemed not meaningful and are generally excluded from the discussion.
|
Three Months Ended September 30, |
Increase/ (Decrease) | % Change | ||||||||||||||||||||||||
| (Dollars in thousands) | 2026 | 2025 | ||||||||||||||||||||||||
| Net sales | $ | 140,163 | $ | 143,998 | $ | (3,835) | (3) | % | ||||||||||||||||||
| Cost of goods sold | 132,526 | 132,041 | 485 | - | % | |||||||||||||||||||||
| Lower of cost or market inventory valuation adjustment | 2,013 | 1,650 | 363 | 22 | % | |||||||||||||||||||||
| Gross profit | 5,624 | 10,307 | (4,683) | (45) | % | |||||||||||||||||||||
| Research and development | 1,458 | 1,639 | (181) | (11) | % | |||||||||||||||||||||
| Selling and administrative expenses | 12,964 | 13,784 | (820) | (6) | % | |||||||||||||||||||||
| Restructuring and other exit charges | 13,874 | - | 13,874 | NM | ||||||||||||||||||||||
| Operating loss | (22,672) | (5,116) | (17,556) | 343 | % | |||||||||||||||||||||
| Other (income) expense, net | (774) | 142 | (916) | (645) | % | |||||||||||||||||||||
| Interest expense | 25,916 | 24,517 | 1,399 | 6 | % | |||||||||||||||||||||
| Interest income | (1,151) | (1,383) | 232 | (17) | % | |||||||||||||||||||||
| Loss before income taxes | (46,663) | (28,392) | (18,271) | 64 | % | |||||||||||||||||||||
| Income tax expense | 105 | 90 | 15 | 17 | % | |||||||||||||||||||||
| Net loss | $ | (46,768) | $ | (28,482) | $ | (18,286) | 64 | % | ||||||||||||||||||
NM = Not Meaningful.
Net sales decreased $3.8 million, or 3%, compared to the third quarter of 2025, reflecting a year-over-year decrease in our weighted-average realized price. For the third quarter of 2026 and 2025, net sales included the recognition of $8.5 million and $11.2 million, respectively, of revenue following resolutions of long-standing commercial matters.
Cost of goods sold increased $0.5 million compared to the third quarter of 2025, primarily due to $1.7 million of accelerated depreciation associated with the Mexico Facility Closure. This increase was substantially offset by $1.1 million of fixed manufacturing costs, including depreciation, recognized in the prior-year period due to lower production levels.
Selling and administrative expenses decreased $0.8 million, or 6%, compared to the third quarter of 2025. The decrease is primarily due to reduced variable compensation expenses, a reduction in bad debt expense and lower legal spend.
Restructuring and other exit charges includes $12.3 million of fixed asset write-offs and $1.6 million of severance related to the Mexico Facility Closure.
Other (income) expense, net represented income of $0.8 million in the third quarter of 2026, compared to expense of $0.1 million in the third quarter of 2025. The third quarter of 2026 included a gain of $0.5 million related to the sale of assets associated with previously divested operations.
Interest expense increased $1.4 million, or 6%, compared to the third quarter of 2025, reflecting incremental interest expense incurred on the $100 million drawn on our Delayed Draw Term Loan during the second quarter of 2026. See Note 7, "Interest Expense" in the Notes to the Condensed Consolidated Financial Statements for further discussion.
PART I (CONT'D)
GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES
The following table summarizes income tax expense:
|
Three Months Ended September 30, |
|||||||||||
| (Dollars in thousands) | 2026 | 2025 | |||||||||
| Income tax expense | $ | 105 | $ | 90 | |||||||
| Loss before income taxes | (46,663) | (28,392) | |||||||||
| Effective tax rate | 0.2 | % | 0.3 | % | |||||||
The effective tax rate for the third quarter of 2026 and 2025 was different than the U.S. statutory tax rate of 21% primarily due to no tax benefit being recorded on U.S. and Switzerland losses with a valuation allowance. In the second quarter of 2025, the Company recognized a valuation allowance on the net tax assets carried in the United States and Switzerland of $34.2 million and $8.4 million, respectively. Tax benefits associated with losses realized after June 30, 2025 in the United States and Switzerland are not reflected in the effective tax rate, resulting in a tax expense recognized in the current period, despite the loss incurred on a consolidated basis. Therefore, the effective tax rate for the third quarter of 2026 and 2025 was different than the U.S. statutory rate of 21% primarily due to our valuation allowance position and, to a lesser extent, the mix of U.S. and foreign earnings, tax incentives and provisions of the Tax Cuts and Jobs Act. See Note 9, "Income Taxes" in the Notes to the Condensed Consolidated Financial Statements for further discussion.
The Nine Months Ended September 30, 2026 Compared to the Nine Months Ended September 30, 2025
The table presented in our period-over-period comparisons summarizes our Consolidated Statements of Operations and illustrates key financial indicators used to assess the consolidated financial results. Throughout this "Management's Discussion and Analysis of Financial Condition and Results of Operations", insignificant changes may be deemed not meaningful and are generally excluded from the discussion.
|
Nine Months Ended September 30, |
Increase/ (Decrease) | % Change | |||||||||||||||||||||
| (Dollars in thousands) | 2026 | 2025 | |||||||||||||||||||||
| Net sales | $ | 392,626 | $ | 387,677 | $ | 4,949 | 1 | % | |||||||||||||||
| Cost of goods sold | 392,622 | 372,691 | 19,931 | 5 | % | ||||||||||||||||||
| Lower of cost or market inventory valuation adjustment | 9,792 | 6,326 | 3,466 | 55 | % | ||||||||||||||||||
| Gross (loss) profit | (9,788) | 8,660 | (18,448) | (213) | % | ||||||||||||||||||
| Research and development | 4,440 | 4,866 | (426) | (9) | % | ||||||||||||||||||
| Selling and administrative expenses | 39,808 | 41,673 | (1,865) | (4) | % | ||||||||||||||||||
| Restructuring and other exit charges | 13,874 | - | 13,874 | NM | |||||||||||||||||||
| Operating loss | (67,910) | (37,879) | (30,031) | 79 | % | ||||||||||||||||||
| Other income, net | (12,288) | (1,837) | (10,451) | 569 | % | ||||||||||||||||||
| Interest expense | 74,482 | 79,776 | (5,294) | (7) | % | ||||||||||||||||||
| Interest income | (2,705) | (5,184) | (2,479) | 48 | % | ||||||||||||||||||
| Loss before income taxes | (127,399) | (110,634) | (16,765) | 15 | % | ||||||||||||||||||
| Income tax expense | 3,117 | 44,085 | (40,968) | (93) | % | ||||||||||||||||||
| Net loss | $ | (130,516) | $ | (154,719) | $ | 24,203 | (16) | % | |||||||||||||||
NM = Not Meaningful.
Net sales increased $4.9 million, or 1%, compared to the first nine months of 2025, reflecting higher sales volume partially offset by a year-over-year decrease in our weighted-average realized price.
Cost of goods sold increased $19.9 million, or 5%, compared to the first nine months of 2025, reflecting increased sales volume. In addition, we recorded $1.7 million of accelerated depreciation associated with the Mexico Facility Closure in the current year period.
PART I (CONT'D)
GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES
Selling and administrative expenses decreased $1.9 million, or 4%, compared to the first nine months of 2025. The decrease is primarily due to lower legal spend and reduced variable compensation-related expenses, partially offset by an increase in stock-based compensation expense due to forfeitures recorded in the prior year period.
Restructuring and other exit charges includes $12.3 million of fixed asset write-offs and $1.6 million of severance related to the Mexico Facility Closure.
Other income, net represented income of $12.3 million in the first nine months of 2026, compared to $1.8 million in the first nine months of 2025. In the first nine months of 2026, we recognized a $12.8 million gain related to the sale of assets associated with previously divested operations, consisting of $9.7 million of cash proceeds in excess of the carrying value of the assets, net of fees and the derecognition of $3.1 million of liabilities associated with the sites.
Interest expense decreased $5.3 million, or 7%, compared to the first nine months of 2025. Interest expense for the first nine months of 2025 included $6.3 million of debt modification costs due to post-closure costs related to our debt transaction consummated in the fourth quarter of 2024 and were primarily legal, advisory and other administrative costs. See Note 7, "Interest Expense" in the Notes to the Condensed Consolidated Financial Statements for further discussion.
The following table summarizes income tax expense:
|
Nine Months Ended September 30, |
|||||||||||
| (Dollars in thousands) | 2026 | 2025 | |||||||||
| Income tax expense | $ | 3,117 | $ | 44,085 | |||||||
| Loss before income taxes | (127,399) | (110,634) | |||||||||
| Effective tax rate | 2.4 | % | 39.8 | % | |||||||
The effective tax rate for the first nine months of 2026 was different than the U.S. statutory tax rate of 21% primarily due to no tax benefit being recorded on U.S. and Switzerland losses with a valuation allowance. In the second quarter of 2025, the Company recognized a valuation allowance on the net tax assets carried in the United States and Switzerland of $34.2 million and $8.4 million, respectively. Tax benefits associated with losses realized after June 30, 2025 in the United States and Switzerland are not reflected in the effective tax rate, resulting in a tax expense recognized in the current period, despite the loss incurred on a consolidated basis. Therefore, the effective tax rate for each of the first nine months of 2026 and 2025 was different than the U.S. statutory rate of 21% primarily due to our valuation allowance position. See Note 9, "Income Taxes" in the Notes to the Condensed Consolidated Financial Statements for further discussion.
Effects of Changes in Currency Exchange Rates
When the currencies of non-U.S. countries in which we have a manufacturing facility decline (or increase) in value relative to the U.S. dollar, this has the effect of reducing (or increasing) the U.S. dollar equivalent cost of goods sold and other expenses with respect to those facilities. In certain countries in which we have manufacturing facilities, and in certain export markets, we sell in currencies other than the U.S. dollar. Accordingly, when these currencies increase (or decline) in value relative to the U.S. dollar, this has the effect of increasing (or reducing) net sales. The result of these effects is to increase (or decrease) operating and net loss.
Many of the countries in which we have a manufacturing facility or commercial activities have been subject to significant economic and political changes, which have significantly impacted currency exchange rates. We cannot predict changes in currency exchange rates in the future or whether those changes will have net positive or negative impacts on our net sales, cost of goods sold or net loss.
The impact of these changes in the average exchange rates of other currencies against the U.S. dollar on our net sales was a decrease of $0.9 million for the third quarter and an increase of $2.5 million for the first nine months of 2026 compared to the same periods of 2025. The impact of these changes on our cost of goods sold was a decrease of $0.9 million and $9.1 million for the third quarter and first nine months of 2026, respectively, compared to the same periods of 2025.
We have in the past and may in the future use various financial instruments to manage certain exposures to risks caused by currency exchange rate changes, as described under Part I, Item 3., Quantitative and Qualitative Disclosures About Market Risk.
PART I (CONT'D)
GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES
Liquidity and Capital Resources
Our sources of funds have consisted principally of cash flow from operations and debt, including our credit facilities (subject to continued compliance with the financial covenants and representations), as well as sales of equity and assets from time to time. Our uses of those funds (other than for operations) have consisted principally of capital expenditures, debt repayment and other general purposes. On an ongoing basis, we expect to evaluate and consider strategic transactions, including acquisitions, divestitures, joint ventures, equity investments, equity and debt issuances, refinancing our existing debt or repurchases of our outstanding debt obligations in open market or privately negotiated transactions, as well as other strategic transactions. These transactions may require cash expenditures, which may be funded through a combination of cash on hand, proceeds from the issuance of debt or from equity offerings. Disruptions in the U.S. and international financial markets could adversely affect our liquidity and the cost and availability of financing to us in the future.
We believe that we have adequate liquidity to meet our needs for at least the next twelve months. As of September 30, 2026, we had liquidity of $241.9 million, consisting of cash and cash equivalents of $134.3 million and $107.6 million of availability under our 2018 Revolving Credit Facility (after giving effect to the financial covenant described herein and $7.9 million of letters of credit). As any borrowings under the 2018 Revolving Credit Facility remain subject to compliance with the financial covenants thereunder (see below and Note 5, "Debt and Liquidity"), our operating performance as of September 30, 2026 and December 31, 2025 resulted in a restriction of the availability under the 2018 Revolving Credit Facility. We had long-term debt of $1.2 billion and $1.1 billion as of September 30, 2026 and December 31, 2025, respectively. As of December 31, 2025, we had liquidity of $340.0 million, consisting of cash and cash equivalents of $138.4 million, $101.6 million of availability under our 2018 Revolving Credit Facility (after giving effect to the financial covenant described herein and $13.8 million of letters of credit) and $100.0 million of availability under our Initial First Lien Term Loan Facility (with respect to the Delayed Draw Commitments thereunder).
As of September 30, 2026 and December 31, 2025, $57.5 million and $45.6 million, respectively, of our cash and cash equivalents were located outside of the U.S. We repatriate funds from our foreign subsidiaries through dividends or repayment of intercompany obligations. All of our subsidiaries face the customary statutory limitation that distributed dividends cannot exceed the amount of retained and current earnings. Upon repatriation to the U.S., the foreign source portion of dividends we receive from our foreign subsidiaries is not subject to U.S. federal income tax because the amounts were either previously taxed or are exempted from tax by Section 245A of the Internal Revenue Code of 1986, as amended.
Cash flow. Our cash flow typically fluctuates significantly between quarters due to various factors. These factors include customer order patterns, production cadence, seasonal fluctuations in working capital requirements, timing of tax and interest payments and other factors.
Debt Structure
New Notes due 2029
On December 23, 2024 (the "Settlement Date"), GrafTech Finance Inc. ("GrafTech Finance") issued new 4.625% second lien notes due 2029 (the "New 4.625% Notes") in an aggregate principal amount of $498.2 million and GrafTech Global Enterprises Inc. ("GrafTech Global") issued new 9.875% second lien notes (the "New 9.875% Notes" and, together with the New 4.625% Notes, the "New Notes") in an aggregate principal amount of $446.2 million in exchange for $498.2 million of GrafTech Finance's 4.625% senior secured notes due 2028 (the "Existing 4.625% Notes") and $446.2 million of GrafTech Global's 9.875% senior secured notes due 2028 (the "Existing 9.875% Notes"), respectively, validly tendered and accepted in connection with exchange offers.
The New 4.625% Notes were issued pursuant to an indenture, dated as of the Settlement Date (the "New 4.625% Notes Indenture"), by and among GrafTech Finance, the Company, each subsidiary guarantor from time to time party thereto (collectively, the "Subsidiary Guarantors," and, together with the Company, the "Guarantors"), and U.S. Bank Trust Company, National Association, as trustee (the "New Trustee") and collateral agent (the "New Notes Collateral Agent"). The New 4.625% Notes pay interest of 4.625% semiannually per annum.
The New 9.875% Notes were issued pursuant to an indenture, dated as of the Settlement Date (the "New 9.875% Notes Indenture" and, together with the New 4.625% Notes Indenture, the "New Notes Indentures"), by and among GrafTech Global, the Guarantors, GrafTech Finance, the New Trustee and the New Notes Collateral Agent. The New 9.875% Notes pay interest of 9.875% semiannually per annum.
PART I (CONT'D)
GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES
GrafTech Finance may redeem some or all of the New 4.625% Notes at the redemption prices and on the terms specified in the New 4.625% Notes Indenture. If, at any time prior to December 23, 2026, all or a portion of the outstanding principal amount of the New 4.625% Notes are prepaid, repaid, redeemed or accelerated (or deemed accelerated), including as a result of GrafTech Finance filing for bankruptcy or becoming subject to any other insolvency proceeding, GrafTech Finance will be required to pay the applicable New 4.625% Notes Prepayment Premium (as defined in the New 4.625% Notes Indenture). If the Company or GrafTech Finance experiences specific kinds of changes in control or the Company or any of the restricted subsidiaries sells certain of its assets, then GrafTech Finance must offer to repurchase the New 4.625% Notes on the terms set forth in the New 4.625% Notes Indenture.
On and after December 23, 2026, GrafTech Global may redeem some or all of the New 9.875% Notes at the redemption prices and on the terms specified in the New 9.875% Notes Indenture. At any time prior to December 23, 2026, GrafTech Global may also at its option and on one or more occasions redeem up to 40% of the aggregate principal amount of the notes issued with the proceeds from certain equity offerings, at a redemption price of 109.875% of the aggregate principal amount of the notes, together with accrued and unpaid interest, if any, to, but not including, the date of redemption. In addition, at any time prior to December 23, 2026, GrafTech Global may at its option on one or more occasions redeem all or a part of the notes, at a redemption price equal to 100% of the principal amount of the notes redeemed, plus a "make-whole" premium, together with accrued and unpaid interest, if any, to, but not including, the date of redemption. If, at any time prior to December 23, 2028, all or a portion of the outstanding principal amount of the New 9.875% Notes are prepaid, repaid, redeemed or accelerated (or deemed accelerated), including as a result of GrafTech Global filing for bankruptcy or becoming subject to any other insolvency proceeding, GrafTech Global will be required to pay the applicable New 9.875% Notes Prepayment Premium or the Applicable Premium (each, as defined in the New 9.875% Notes Indenture), as applicable. If the Company or GrafTech Global experiences specific kinds of changes in control or the Company or any of the restricted subsidiaries sells certain of its assets, then GrafTech Global must offer to repurchase the New 9.875% Notes on the terms set forth in the New 9.875% Notes Indenture.
The New Notes Indentures contain certain covenants that, among other things, limit the Company's ability, and the ability of certain of its subsidiaries, to incur or guarantee additional indebtedness or issue preferred stock, pay distributions on, redeem or repurchase capital stock or redeem or repurchase subordinated debt, incur or suffer to exist liens securing indebtedness, make certain investments, engage in certain transactions with affiliates, consummate certain asset sales and effect a consolidation or merger, or sell, transfer, lease or otherwise dispose of all or substantially all assets. Pursuant to the New Notes Indentures, if our pro forma consolidated total net leverage ratio is no greater than 2.50 to 1.00, we can make restricted payments so long as no default or event of default has occurred and is continuing. If our pro forma consolidated total net leverage ratio is greater than 2.50 to 1.00, we can make restricted payments pursuant to certain baskets. We were in compliance with all of our debt covenants in the New Notes Indentures as of September 30, 2026 and December 31, 2025.
The New 4.625% Notes are guaranteed, jointly and severally, on a senior secured second-priority basis by the domestic Guarantors (the "U.S. Guarantors") that guarantee the Existing 4.625% Notes and certain other foreign subsidiary Guarantors of the Company (the "Foreign Guarantors"). The New 9.875% Notes are guaranteed, jointly and severally, on a senior secured second-priority basis by the U.S. Guarantors that guarantee the Existing 9.875% Notes and the Foreign Guarantors. In accordance with the terms of the New Notes Indentures, the New Trustee is obligated to first enforce the guarantees of the U.S. Guarantors prior to any guarantees of the Foreign Guarantors, subject to certain terms described therein. The New Notes are secured by a perfected second-priority security interest in all of the assets and property of the Issuers and the Guarantors that secured the Existing Notes, and certain other assets and property of the Foreign Guarantors as set forth in the New Notes Indentures (the "Collateral").
The New Notes and each guarantee constitute: senior obligations that rank pari passu in right of payment with all of our and the Guarantors' existing and future senior indebtedness, including the First Lien Term Loans (as defined below) and the 2018 Revolving Credit Facility; provided, that the First Lien Term Loans and the 2018 Revolving Credit Facility are senior in right of payment to the New Notes with respect to proceeds of the Foreign Guarantor facility located in Calais, France (the "Calais Facility") solely to the extent that such facility does not constitute Collateral; secured on a second-priority basis, subject to certain exceptions and permitted liens, on the Collateral that secures the First Lien Term Loans and the 2018 Revolving Credit Facility on a first-priority basis; effectively junior to all of our and the Guarantors' obligations under the First Lien Term Loans and the 2018 Revolving Credit Facility (and other indebtedness secured on a first-priority basis on the Collateral pari passu with the liens securing the First Lien Term Loans and the 2018 Revolving Credit Facility) to the extent of the value of the Collateral securing the First Lien Term Loans and the 2018 Revolving Credit Facility (and such other indebtedness secured on a first-priority basis on the Collateral); effectively senior to all of our and the Guarantors' future debt that is secured by liens on the Collateral securing the New Notes that are junior to those securing the New Notes and to any of our and the Guarantors'
PART I (CONT'D)
GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES
unsecured indebtedness, in each case, to the extent of the value of the Collateral securing the New Notes and the guarantees; and structurally subordinated to all of our existing and future indebtedness and other liabilities, including trade payables, of each of our subsidiaries that do not issue or guarantee the New Notes.
Existing 4.625% Notes due 2028
In December 2020, GrafTech Finance issued $500.0 million aggregate principal amount of Existing 4.625% Notes in a private offering. All of the net proceeds from the Existing 4.625% Notes were used to partially repay borrowings under our 2018 Term Loan Facility (as defined below).
GrafTech Finance may redeem some or all of the Existing 4.625% Notes at the redemption prices and on the terms specified in the Existing 4.625% Notes Indenture. Prior to the Settlement Date, if the Company or GrafTech Finance experienced specific kinds of changes in control or the Company or any of its restricted subsidiaries sold certain of its assets, then GrafTech Finance was required to offer to repurchase the Existing 4.625% Notes on the terms set forth in the Existing 4.625% Notes Indenture.
In connection with the consummation of the solicitation of consents, substantially all of the restrictive covenants and related provisions and definitions in the Existing 4.625% Notes Indenture were removed, effective as of the Settlement Date.
The Existing 4.625% Notes Indenture contains certain events of default customary for agreements of its type (with customary grace periods, as applicable) and provides that, upon the occurrence of an event of default arising from certain events of bankruptcy or insolvency with respect to the Company or GrafTech Finance, all outstanding Existing 4.625% Notes will become due and payable immediately without further action or notice. If any other type of event of default occurs and is continuing, then the trustee or the holders of at least 30% in principal amount of the then outstanding Existing 4.625% Notes may declare all of the Existing 4.625% Notes to be due and payable immediately. We were in compliance with all of our debt covenants as of September 30, 2026 and December 31, 2025.
Immediately following the Settlement Date, approximately $1.8 million aggregate principal amount of Existing 4.625% Notes remained outstanding.
Existing 9.875% Notes due 2028
In June 2023, GrafTech Global issued $450 million aggregate principal amount of Existing 9.875% Notes, including $11.4 million of original issue discount. The Existing 9.875% Notes were issued at an issue price of 97.456% of the principal amount thereof in a private offering. The net proceeds from the Existing 9.875% Notes were used to repay borrowings under our 2018 Term Loan Facility (as defined below).
GrafTech Global may redeem some or all of the Existing 9.875% Notes at the redemption prices and on the terms specified in the Existing 9.875% Notes Indenture. Prior to the Settlement Date, if the Company or GrafTech Global experienced specific kinds of changes in control or the Company or any of its restricted subsidiaries sold certain of its assets, then GrafTech Global was required to offer to repurchase the Existing 9.875% Notes on the terms set forth in the Existing 9.875% Notes Indenture.
In connection with the consummation of the solicitation of consents, substantially all of the restrictive covenants and related provisions and definitions in the Existing 9.875% Notes Indenture were removed, effective as of the Settlement Date.
The Existing 9.875% Notes Indenture contains certain events of default customary for agreements of its type (with customary grace periods, as applicable) and provides that, upon the occurrence of an event of default arising from certain events of bankruptcy or insolvency with respect to the Company or GrafTech Global, all outstanding Existing 9.875% Notes will become due and payable immediately without further action or notice. If any other type of event of default occurs and is continuing, then the trustee or the holders of at least 30% in principal amount of the then outstanding Existing 9.875% Notes may declare all of the Existing 9.875% Notes to be due and payable immediately. We were in compliance with all of our debt covenants as of September 30, 2026 and December 31, 2025.
Immediately following the Settlement Date, approximately $3.8 million aggregate principal amount of Existing 9.875% Notes remained outstanding.
Initial First Lien Term Loan Facility; Delayed Draw First Lien Term Loan Facility
On the Settlement Date, Barclays Bank plc agreed to provide GrafTech Global $175 million of new senior secured first lien term loans (the "Initial First Lien Term Loans") and provided commitments (the "Delayed Draw Commitments") with respect to $100 million of new senior secured first lien delayed draw term loans (together with the Initial First Lien Term Loans, the
PART I (CONT'D)
GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES
"First Lien Term Loans"). The First Lien Term Loans are governed by a new credit agreement, dated as of the Settlement Date, by and among GrafTech, as holdings, GrafTech Global, as borrower, GLAS USA LLC, as administrative agent, GLAS Americas LLC, as collateral agent, and the lenders from time to time party thereto (the "First Lien Term Loan Credit Agreement"). The Initial First Lien Term Loans were drawn in a single drawing on the Settlement Date. In June 2026, the Company drew the $100 million of available Delayed Draw Commitments.
The First Lien Term Loans will mature on December 23, 2029, and are guaranteed by the Guarantors. The First Lien Term Loans are pari passu in right of payment with the 2018 Revolving Credit Facility and the New Notes, but the First Lien Term Loans and the 2018 Revolving Credit Facility are senior in right of payment to the New Notes with respect to the proceeds of the Calais Facility. The First Lien Term Loans and the 2018 Revolving Credit Facility are secured on a pari passu basis by perfected first-priority security interests in the Collateral.
The First Lien Term Loans bear interest at the option of GrafTech Global, at a rate equal to (i) Term SOFR (as defined in the First Lien Term Loan Credit Agreement) (subject to a 2.00% floor) plus 6.00% per annum or (ii) the ABR (as defined in the First Lien Term Loan Credit Agreement) plus 5.00% per annum.
The Company paid a ticking fee with respect to undrawn Delayed Draw Commitments in an amount equal to 3.75% per annum of the amount of such undrawn and outstanding commitments. The First Lien Term Loans are prepayable in whole or in part at the option of the Company (i) prior to the 24-month anniversary of the Settlement Date, subject to payment of a customary "make-whole" premium (which includes a 2.00% prepayment premium), (ii) on or after the 24-month anniversary of the Settlement Date through, but excluding, the 36-month anniversary of the Settlement Date, subject to a 2.00% prepayment premium, and (iii) on or after the 36-month anniversary of the Settlement Date, without a prepayment premium. If the Company sells certain of its assets, then GrafTech Global may be required to offer to prepay the First Lien Term Loans and/or other indebtedness of GrafTech Global and/or its subsidiaries.
The First Lien Term Loan Credit Agreement contains certain covenants that, among other things, limit the Company's ability to incur or guarantee additional indebtedness or issue preferred stock, pay distributions on, redeem or repurchase capital stock or redeem or repurchase certain debt, incur or suffer to exist certain liens, make certain investments, engage in certain transactions with affiliates, consummate certain asset sales and effect certain fundamental changes. The First Lien Term Loan Credit Agreement also contains certain events of default (with grace periods, as applicable) that permit the agent to accelerate the First Lien Term Loans, and provides that, upon the occurrence of certain events of default arising from bankruptcy or insolvency, all First Lien Term Loans will become due and payable immediately without further action or notice.
2018 Term Loan and 2018 Revolving Credit Facility
In February 2018, the Company entered into a credit agreement (as amended, the "2018 Credit Agreement"), which provided for (i) a $2,250 million senior secured term facility (the "2018 Term Loan Facility") after giving effect to the June 2018 amendment that increased the aggregate principal amount of the 2018 Term Loan Facility from $1,500 million to $2,250 million and (ii) a $330 million senior secured revolving credit facility after giving effect to the May 2022 amendment that increased the revolving commitments under the 2018 Credit Agreement by $80 million from $250 million (the "2018 Revolving Credit Facility"). GrafTech Finance Inc. ("GrafTech Finance") was the sole borrower under the 2018 Term Loan Facility while GrafTech Finance, GrafTech Switzerland SA ("Swissco") and GrafTech Luxembourg II S.Ã .r.l. ("Luxembourg Holdco" and, together with GrafTech Finance and Swissco, the "Co-Borrowers") were co-borrowers under the 2018 Revolving Credit Facility. In December 2024, the 2018 Credit Agreement was further amended to provide for a $225 million senior secured first lien revolving credit facility, reducing the revolving commitments under the 2018 Credit Agreement by $105 million. On June 26, 2023, GrafTech repaid the term loans under the 2018 Term Loan Facility with proceeds from the Existing 9.875% Notes issuance. As of September 30, 2026 and December 31, 2025, there were no outstanding term loans under the 2018 Term Loan Facility.
Until at least $275 million of First Lien Term Loans have been borrowed by the Company, the Company is not permitted to have more than $15 million in aggregate principal amount of revolving loans outstanding at any time under the 2018 Revolving Credit Facility. The Company's ability to borrow under the 2018 Revolving Credit Facility is subject to certain customary conditions precedent, including that the Company must not have more than $100 million of unrestricted cash and cash equivalents after giving effect to the applicable borrowing.
The 2018 Revolving Credit Facility matures on November 30, 2028, subject to a springing maturity date 91 days prior to the maturity date of certain other reference indebtedness. As of September 30, 2026 and December 31, 2025, the availability under our 2018 Revolving Credit Facility (after giving effect to the financial covenant and letters of credit described below), was
PART I (CONT'D)
GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES
$107.6 million and $101.6 million, respectively. As of September 30, 2026 and December 31, 2025, there were no borrowings outstanding on the 2018 Revolving Credit Facility and there was $7.9 million and $13.8 million, respectively, of letters of credit drawn against the 2018 Revolving Credit Facility as of each date. As any borrowings under the 2018 Revolving Credit Facility remain subject to compliance with the financial covenants thereunder, our operating performance as of September 30, 2026 and December 31, 2025 resulted in our inability to access the full amount of commitments under the facility.
Borrowings under the 2018 Revolving Credit Facility bear interest (i) with respect to new revolving loans denominated in U.S. dollars, at the option of GrafTech Finance, Adjusted Term SOFR (as defined in the 2018 Credit Agreement) plus 3.50% per annum or ABR (as defined in the 2018 Credit Agreement) plus 2.50% per annum and (ii) with respect to new revolving loans denominated in euros, the Adjusted EURIBOR Rate (as defined in the 2018 Credit Agreement) plus 3.50% per annum. Undrawn commitments under the 2018 Revolving Credit Facility bear a commitment fee of 0.25% per annum. Lenders holding all of the Company's existing revolving commitments who agreed to provide commitments under the 2018 Revolving Credit Facility were paid a customary extension fee, in connection with the December 2024 amendment.
The 2018 Revolving Credit Facility has customary negative covenants and events of default and is required to be prepaid in the case of certain mandatory prepayments of the First Lien Term Loans. The 2018 Revolving Credit Facility also includes a financial covenant requiring that the Company have a Senior Secured First Lien Net Leverage Ratio of no more than 4.00 to 1.00, tested quarterly, to the extent outstanding revolving loans and letters of credit (subject to certain exclusions) exceed 51.3% of the amount of commitments then-existing under the 2018 Revolving Credit Facility. We were in compliance with all of our debt covenants as of September 30, 2026 and December 31, 2025.
Common Stock Issuances
On May 29, 2026, the Company entered into an Equity Distribution Agreement (the "Equity Distribution Agreement") with Evercore Group L.L.C. ("Evercore"), as sales agent. Pursuant to the terms of the Equity Distribution Agreement, the Company may offer and sell through Evercore, from time to time and at its sole discretion, shares of the Company's common stock, par value $0.01 per share, having an aggregate offering price of up to $50,000,000 (the "ATM Program"). The sales, if any, may be made by any method permitted that is deemed an "at the market offering" as defined under Rule 415 under the Securities Act of 1933, as amended.
During the third quarter and first nine months of 2026, the Company issued 800,965 shares and 845,245 shares, respectively, of common stock under the Equity Distribution Agreement. The Company incurred offering costs of approximately $0.1 million and $0.8 million, in the third quarter and first nine months of 2026, respectively, which were recorded as a reduction of the gross proceeds and are reflected as a reduction of additional paid-in capital. Net proceeds received by the Company were approximately $5.1 million and $5.5 million for the third quarter and first nine months of 2026, respectively. The Company utilized the net proceeds from the ATM Program for general corporate purposes.
As of September 30, 2026, we had approximately $44.3 million remaining under this program.
Uses of Liquidity
In July 2019, our Board of Directors authorized a program to repurchase up to $100.0 million of our outstanding common stock. In November 2021, our Board of Directors authorized the repurchase of an additional $150.0 million of stock repurchases under this program. We may purchase shares from time to time on the open market, including under Rule 10b5-1 and/or Rule 10b-18 plans. The amount and timing of repurchases are subject to a variety of factors including liquidity, stock price, applicable legal requirements, other business objectives and market conditions. In the first nine months of 2026, we did not repurchase any shares of our common stock. As of September 30, 2026, we had $99.0 million remaining under our stock repurchase authorization.
Potential uses of our liquidity (other than operations) include capital expenditures, debt repayments, dividends, share repurchases, and other general purposes. Any such potential uses of our liquidity may, subject to certain restrictions, be funded by existing available liquidity, the incurrence of new secured or unsecured loans, capital market issuances, including under our ATM Program, divestitures, joint ventures or equity investments. An improving economy, while resulting in improved results of operations, could increase our cash requirements to purchase inventories, make capital expenditures and fund payables and other obligations until increased accounts receivable are converted into cash. A downturn, including any recession, could significantly and negatively impact our results of operations and cash flows, which, coupled with increased borrowings, could negatively impact our credit ratings, our ability to comply with debt covenants, our ability to secure additional financing and the cost and availability of such financing.
PART I (CONT'D)
GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES
In order to seek to minimize our credit risks, we may reduce our sales of, or refuse to sell (except for prepayment, cash on delivery or under letters of credit or parent guarantees), our products to some customers and potential customers. Our unrecovered trade receivables worldwide have not been material during the last two years individually or in the aggregate.
We manage our capital expenditures by taking into account quality, plant reliability, safety, environmental and regulatory requirements, prudent or essential maintenance requirements, global economic conditions, available capital resources, liquidity, long-term business strategy and return on invested capital for the relevant expenditures, cost of capital and return on invested capital of the Company as a whole and other factors. Capital expenditures totaled $26.9 million in the nine months ended September 30, 2026. We continue to expect full-year capital expenditures to be approximately $35.0 million for 2026.
In the event that operating cash flows fail to provide sufficient liquidity to meet our business needs, including capital expenditures, any such shortfall would need to be made up by borrowings under the 2018 Revolving Credit Facility, to the extent available, or other liquidity options described above. The Company also maintains access to credit and capital markets and may incur additional debt or issue equity securities from time to time, including under our ATM Program, which may provide an additional source of liquidity. However, there can be no guarantee that we would be able to access the credit or capital markets on commercially satisfactory terms or at all.
Cash Flow
The following table summarizes our cash flow activities:
|
Nine Months Ended September 30, |
|||||||||||
| (in thousands) | 2026 | 2025 | |||||||||
| Net cash (used in) provided by: | |||||||||||
| Operating activities | $ | (91,991) | $ | (60,722) | |||||||
| Investing activities | (16,974) | (20,216) | |||||||||
| Financing activities | 104,617 | (310) | |||||||||
| Net change in cash and cash equivalents | $ | (4,348) | $ | (81,248) | |||||||
Net cash used in operating activities increased $31.3 million in the first nine months of 2026 compared to the first nine months of 2025. The increase in cash used in operating activities primarily reflected higher cash used for inventories of $16.3 million due to a planned inventory build, a $14.0 million increase in cash used for accounts receivable driven by increased sales volume, and an unfavorable change in other operating assets and liabilities. These factors were partially offset by a $24.2 million reduction in our net loss and a $26.6 million favorable change in cash used for accounts payable and other accruals.
Net cash used in investing activities was $17.0 million in the nine months ended September 30, 2026 compared to $20.2 million in the nine months ended September 30, 2025. In the first nine months of 2026, we received $9.7 million of cash from the sale of assets associated with previously divested locations.
Net cash provided by (used in) financing activities was $104.6 million in the first nine months of 2026 compared to a $0.3 million cash use in the first nine months of 2025, primarily due to drawing the remaining $100.0 million available under our Delayed Draw First Lien Term Loan.
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 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, 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, gains on asset sales, restructuring and other exit charges and Tax Receivable Agreement adjustments. 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.
PART I (CONT'D)
GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES
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.
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 and non-cash income tax expense related to the establishment of a deferred tax valuation allowance. 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 for restructuring and 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 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 cash cost of goods sold per MT, a non-GAAP financial measure, 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 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.
PART I (CONT'D)
GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES
The following tables reconcile our non-GAAP financial measures to the most directly comparable GAAP measures:
| Reconciliation of Net Loss to Adjusted Net Loss | |||||||||||||||||
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||||||||
| (dollars in thousands; except per share data) | 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Net loss | $ | (46,768) | $ | (28,482) | $ | (130,516) | $ | (154,719) | |||||||||
| Diluted loss per common share: | |||||||||||||||||
| Net loss per share | $ | (1.76) | $ | (1.10) | $ | (4.96) | $ | (5.97) | |||||||||
| Weighted average shares outstanding | 26,514,073 | 25,933,254 | 26,287,719 | 25,896,520 | |||||||||||||
| Adjustments, pre-tax: | |||||||||||||||||
|
Pension and OPEB plan expenses(1)
|
531 | 719 | 1,594 | 1,980 | |||||||||||||
|
Foreign currency remeasurement(2)
|
113 | 41 | 521 | 1,387 | |||||||||||||
| Stock-based compensation expense | 1,229 | 1,012 | 4,146 | 3,434 | |||||||||||||
|
Gain on sale of assets(3)
|
(500) | - | (12,777) | - | |||||||||||||
|
Restructuring and other exit charges(4)
|
13,874 | - | 13,874 | - | |||||||||||||
|
Tax Receivable Agreement adjustment(5)
|
- | - | - | (3,791) | |||||||||||||
|
Debt modification costs(6)
|
- | - | - | 6,293 | |||||||||||||
| Total non-GAAP adjustments pre-tax | 15,247 | 1,772 | 7,358 | 9,303 | |||||||||||||
|
Valuation allowance adjustments(7)
|
- | - | - | (42,624) | |||||||||||||
| Income tax impact on non-GAAP adjustments | 588 | 78 | 1,060 | 398 | |||||||||||||
| Adjusted net loss | $ | (32,109) | $ | (26,788) | $ | (124,218) | $ | (103,190) | |||||||||
(1)Net periodic benefit cost for our pension and OPEB plans.
(2)Non-cash 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.
(3)Gain recognized related to the sale of assets associated with previously divested operations.
(4)Severance and non-cash costs, primarily fixed asset write-offs associated with the Mexico Facility Closure.
(5)Prior to the second quarter of 2025, when the Company established a full valuation allowance, represents expense adjustment for future payment to our sole pre-IPO stockholder for tax assets that have been utilized.
(6)Debt modification costs related to the December 2024 debt transactions, which are recognized in interest expense on the Condensed Consolidated Statements of Operations.
(7)Represents non-cash income tax expense recorded in the second quarter of 2025 related to the establishment of a full valuation allowance against the Company's U.S. and Switzerland deferred tax assets.
PART I (CONT'D)
GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES
| Reconciliation of Loss per share to Adjusted Loss per Share | |||||||||||||||||
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||
| Loss per share | $ | (1.76) | $ | (1.10) | $ | (4.96) | $ | (5.97) | |||||||||
| Adjustments per share: | |||||||||||||||||
|
Pension and OPEB plan expenses(1)
|
0.02 | 0.03 | 0.06 | 0.08 | |||||||||||||
|
Foreign currency remeasurement(2)
|
- | - | 0.02 | 0.05 | |||||||||||||
| Stock-based compensation expense | 0.05 | 0.04 | 0.16 | 0.13 | |||||||||||||
|
Gain on sale of assets(3)
|
(0.02) | - | (0.49) | - | |||||||||||||
|
Restructuring and other exit charges(4)
|
0.52 | - | 0.53 | - | |||||||||||||
|
Tax Receivable Agreement adjustment(5)
|
- | - | - | (0.14) | |||||||||||||
|
Debt modification costs(6)
|
- | - | - | 0.24 | |||||||||||||
| Total non-GAAP adjustments pre-tax per share | 0.57 | 0.07 | 0.28 | 0.36 | |||||||||||||
|
Valuation allowance adjustments(7)
|
- | - | - | (1.65) | |||||||||||||
| Income tax impact on non-GAAP adjustments per share | 0.02 | - | 0.05 | 0.02 | |||||||||||||
| Adjusted loss per share | $ | (1.21) | $ | (1.03) | $ | (4.73) | $ | (3.98) | |||||||||
(1) Net periodic benefit cost for our pension and OPEB plans.
(2)Non-cash 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.
(3)Gain recognized related to the sale of assets associated with previously divested operations.
(4)Severance and non-cash costs, primarily fixed asset write-offs associated with the Mexico Facility Closure.
(5)Prior to the second quarter of 2025, when the Company established a full valuation allowance, represents expense adjustment for future payment to our sole pre-IPO stockholder for tax assets that have been utilized.
(6)Debt modification costs related to the December 2024 debt transactions, which are recognized in interest expense on the Condensed Consolidated Statements of Operations.
(7)Represents non-cash income tax expense recorded in the second quarter of 2025 related to the establishment of a full valuation allowance against the Company's U.S. and Switzerland deferred tax assets.
| Reconciliation of Net Loss to Adjusted EBITDA |
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
| (dollars in thousands) | 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Net loss | $ | (46,768) | $ | (28,482) | $ | (130,516) | $ | (154,719) | |||||||||
| Add: | |||||||||||||||||
| Depreciation and amortization | 15,277 | 16,499 | 45,238 | 45,844 | |||||||||||||
| Interest expense | 25,916 | 24,517 | 74,482 | 79,776 | |||||||||||||
| Interest income | (1,151) | (1,383) | (2,705) | (5,184) | |||||||||||||
| Income taxes | 105 | 90 | 3,117 | 44,085 | |||||||||||||
| EBITDA | (6,621) | 11,241 | (10,384) | 9,802 | |||||||||||||
| Adjustments: | |||||||||||||||||
|
Pension and OPEB plan expenses(1)
|
531 | 719 | 1,594 | 1,980 | |||||||||||||
|
Foreign currency remeasurement(2)
|
113 | 41 | 521 | 1,387 | |||||||||||||
| Stock-based compensation expense | 1,229 | 1,012 | 4,146 | 3,434 | |||||||||||||
|
Gain on sale of assets(3)
|
(500) | - | (12,777) | - | |||||||||||||
|
Restructuring and other exit charges(4)
|
13,874 | - | 13,874 | - | |||||||||||||
|
Tax Receivable Agreement adjustment(5)
|
- | - | - | (3,791) | |||||||||||||
| Adjusted EBITDA | $ | 8,626 | $ | 13,013 | $ | (3,026) | $ | 12,812 | |||||||||
(1)Net periodic benefit cost for our pension and OPEB plans.
PART I (CONT'D)
GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES
(2)Non-cash 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.
(3)Gain recognized related to the sale of assets associated with previously divested operations.
(4)Severance and non-cash costs, primarily fixed asset write-offs associated with the Mexico Facility Closure.
(5)Prior to the second quarter of 2025, when the Company established a full valuation allowance, represents expense adjustment for future payment to our sole pre-IPO stockholder for tax assets that have been utilized.
| Reconciliation of Net Cash Used in Operating Activities to Free Cash Flow and Adjusted Free Cash Flow | ||||||||||||||
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||
| (dollars in thousands) | 2026 | 2025 | 2026 | 2025 | ||||||||||
| Net cash used in operating activities | $ | (8,445) | $ | 24,700 | $ | (91,991) | $ | (60,722) | ||||||
| Capital expenditures | (7,847) | (6,324) | (26,856) | (20,514) | ||||||||||
| Free cash flow | (16,292) | 18,376 | (118,847) | (81,236) | ||||||||||
|
Restructuring and other exit charges(1)
|
188 | - | 188 | - | ||||||||||
|
Debt modification costs(2)
|
- | - | - | 6,001 | ||||||||||
| Adjusted free cash flow | $ | (16,104) | $ | 18,376 | $ | (118,659) | $ | (75,235) | ||||||
(1) Severance payments associated with the planned shutdown of our Monterrey, Mexico facility.
(2) Cash payments of debt modification costs related to the December 2024 debt transactions, which are recognized in interest expense on the Condensed Consolidated Statements of Operations and recognized in net cash used in operating activities on the Condensed Consolidated Statements of Cash Flows.
| Reconciliation of Cost of Goods Sold to Cash Cost of Goods Sold per MT | ||||||||||||||
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||
| (dollars in thousands; except per MT) | 2026 | 2025 | 2026 | 2025 | ||||||||||
| Cost of goods sold | $ | 132,526 | $ | 132,041 | $ | 392,622 | $ | 372,691 | ||||||
| Less: | ||||||||||||||
|
Depreciation and amortization(1)
|
13,739 | 14,905 | 40,572 | 40,995 | ||||||||||
|
Cost of goods sold - by-products and other(2)
|
13,567 | 7,840 | 30,390 | 24,840 | ||||||||||
| Cash cost of goods sold | 105,220 | 109,296 | 321,660 | 306,856 | ||||||||||
| Sales volume (in thousands of MT) | 28.8 | 28.8 | 87.7 | 82.1 | ||||||||||
| Cash cost of goods sold per MT | $ | 3,653 | $ | 3,795 | $ | 3,668 | $ | 3,738 | ||||||
(1) Reflects the portion of depreciation and amortization that is recognized in cost of goods sold.
(2) Primarily reflects cost of goods sold associated with the portion of our sales that consists of deliveries of by-products of the manufacturing processes.
Graftech International Ltd. published this content on October 23, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on October 23, 2026 at 15:59 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]