GrafTech Reports Fourth Quarter and Year Ended 2009 Results

Feb. 23. 2010
GrafTech International Ltd. today announced financial results for the fourth quarter and year ended December 31, 2009.
2009 Fourth Quarter Highlights (Q4 2009 as compared to Q3 2009 and Q4 2008)
-- Net sales increased 23 percent to $202 million, versus the third quarter 2009, representing the strongest quarter of the year. Year-over-year fourth quarter net sales were down $63 million or 24 percent.
-- Gross profit was $67 million or 33.0 percent of sales, a $20 million improvement over the third quarter 2009. This compares to gross profit of $97 million or 36.8 percent of sales in the fourth quarter 2008.
-- Operating income was $46 million, as compared to $25 million in the third quarter 2009 and $70 million in the fourth quarter 2008. During the fourth quarter 2009, we settled a contingent liability in Brazil which had a favorable impact on operating income in the quarter of $4 million. Excluding the impact of this benefit, operating income was $42 million in the fourth quarter 2009, the highest quarterly operating income of the year.
-- Net income was $34 million, or $0.28 per diluted share, versus $7 million, or $0.06 per diluted share, in the third quarter 2009. Net income was $35 million or $0.29 per diluted share in the fourth quarter 2008, including the unfavorable impact of the non-cash impairment of $23 million, after tax, associated with our investment in Seadrift Coke L.P. (Seadrift).
-- On an operating basis, net income before special items* was $31 million, or $0.26 per diluted share, as compared to $18 million, or $0.15 per diluted share, in the third quarter 2009. Net income before special items* was $59 million, or $0.49 per diluted share, in the fourth quarter 2008.
2009 Full Year Review
-- Net sales were $659 million, versus 2008 net sales of $1,190 million. The year-over-year decline in sales was primarily the result of lower volumes associated with significantly reduced demand driven by the global economic recession, partially offset by an increase in year-over-year price realization.
-- Gross profit declined to $191 million or 29.0 percent of sales, as compared to $433 million or 36.4 percent of sales in 2008. The reduction in gross profit percentage was largely the result of unfavorable fixed cost absorption associated with lower sales volume.
-- Operating income was $99 million, versus $329 million in 2008. Operating income margin decreased to 15.0 percent of sales, from 27.6 percent in 2008.
-- Net income was $13 million, or $0.10 per diluted share, versus $201 million, or $1.74 per diluted share, in 2008. Adversely impacting net income in both periods were charges, net of tax, of $45 million in 2009 and $23 million in 2008, related to the non-cash impairment in the value of our investment in Seadrift.
-- On an operating basis, net income before special items* was $69 million, or $0.57 per diluted share, as compared to $242 million, or $2.09 per diluted share, in 2008.
-- Net cash provided by operating activities was $170 million, versus $249 million in 2008. Operating net cash in 2009 was favorably impacted by a $68 million decrease in working capital requirements. This solid performance allowed us to virtually eliminate our debt and finish the year with $50 million in cash and cash equivalents.
Craig Shular, Chief Executive Officer of GrafTech, commented, "Our team was able to achieve productivity and cost control initiatives allowing us to be profitable and cash flow positive in a very difficult operating environment. We completed the year with the strongest balance sheet in our Company's history, closing the year with $50 million in cash and an undrawn revolver."
Mr. Shular continued, "Standard & Poor's recognized the improvements made to the balance sheet by raising our corporate credit rating two notches to 'BB+' and increasing the rating on our revolving credit facility to 'BBB', or investment grade. The improvement to our credit ratings positions our Company well for future growth."