GrafTech International Ltd. (GTI, Financial) filed Quarterly Report for the period ended 2010-03-31.
Graftech International Ltd. has a market cap of $1.62 billion; its shares were traded at around $13.47 with a P/E ratio of 13.9 and P/S ratio of 2.5. GTI is in the portfolios of Chuck Royce of Royce& Associates, John Buckingham of Al Frank Asset Management, Inc., RS Investment Management, Steven Cohen of SAC Capital Advisors, Jim Simons of Renaissance Technologies LLC, George Soros of Soros Fund Management LLC, NWQ Managers of NWQ Investment Management Co.
Provision for income taxes. The provision for income taxes for the three months ended March 31, 2009 was a tax expense of $5.2 million on pretax income of $13.6 million as compared to tax expense of $11.7 million on pretax income of $45.2 million for the three months ended March 31, 2010. The lower effective tax rates were 37.9% and 25.8% for the three months ended March 31, 2009 and 2010, respectively. The decrease in the effective tax rate is primarily due to jurisdictional shifts of income, and changes in the utilization of attributes and related changes to valuation allowances.
During 2008, we entered into a supply chain financing arrangement with a financing party that provides additional working capital liquidity of up to $50 million. Under this arrangement, we essentially assigned our rights to purchase needle coke from our supplier to the financing party. The financing party purchases the product from our supplier under the standard payment terms and then immediately resells it to us under longer payment terms. The financing party pays the supplier the purchase price for the product and then we pay the financing party. Our payment for this needle coke will include a mark up (the Mark-Up). The Mark-Up is subject to quarterly reviews. In effect, we have a longer period of time to pay the financing party than by purchasing directly from the supplier which helps us maintain a balanced cash conversion cycle between inventory payments and the collection of receivables. During the three months ended March 31, 2010, the financing party invoiced us $51.2 million and we repaid $24.7 million for purchases of inventory under this arrangement, including a Mark-Up of $0.4 million. This agreement is subject to termination 90 days after notice is sent by either party.
borrowings of up to $215.0 million and, subject to certain conditions (including a maximum senior secured leverage ratio test), an accordion feature that permits GrafTech Finance to establish additional credit facilities thereunder in an aggregate amount, together with the Revolving Facility, of up to $425 million.
At March 31, 2010, there were no borrowings drawn from the Revolving Facility, and $209.5 million was available (after consideration of outstanding letters of credit of $5.5 million). It is possible that our future ability to borrow under the Revolving Facility may effectively be less because of the impact of additional borrowings upon our compliance with the maximum net senior secured debt leverage ratio permitted or minimum interest coverage ratio required under the Revolving Facility.
At March 31, 2010 we had outstanding letters of credit of $6.8 million under a $10 million Letter of Credit facility with another commercial bank.
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Graftech International Ltd. has a market cap of $1.62 billion; its shares were traded at around $13.47 with a P/E ratio of 13.9 and P/S ratio of 2.5. GTI is in the portfolios of Chuck Royce of Royce& Associates, John Buckingham of Al Frank Asset Management, Inc., RS Investment Management, Steven Cohen of SAC Capital Advisors, Jim Simons of Renaissance Technologies LLC, George Soros of Soros Fund Management LLC, NWQ Managers of NWQ Investment Management Co.
Highlight of Business Operations:
Cost of sales. The two primary drivers of the increase in cost of sales period over period were increases in shipments of our products of $23.2 million and currency impacts of $17.5 million across both of our segments. The global recession led to a dramatic decline in the demand for, and corresponding production of, graphite electrodes during the three months ended March 31, 2009. Our production volume increased throughout the second half of 2009 and continued in the first quarter of 2010 as our customers ramped up production from the low levels experienced during the first quarter of 2009.Provision for income taxes. The provision for income taxes for the three months ended March 31, 2009 was a tax expense of $5.2 million on pretax income of $13.6 million as compared to tax expense of $11.7 million on pretax income of $45.2 million for the three months ended March 31, 2010. The lower effective tax rates were 37.9% and 25.8% for the three months ended March 31, 2009 and 2010, respectively. The decrease in the effective tax rate is primarily due to jurisdictional shifts of income, and changes in the utilization of attributes and related changes to valuation allowances.
During 2008, we entered into a supply chain financing arrangement with a financing party that provides additional working capital liquidity of up to $50 million. Under this arrangement, we essentially assigned our rights to purchase needle coke from our supplier to the financing party. The financing party purchases the product from our supplier under the standard payment terms and then immediately resells it to us under longer payment terms. The financing party pays the supplier the purchase price for the product and then we pay the financing party. Our payment for this needle coke will include a mark up (the Mark-Up). The Mark-Up is subject to quarterly reviews. In effect, we have a longer period of time to pay the financing party than by purchasing directly from the supplier which helps us maintain a balanced cash conversion cycle between inventory payments and the collection of receivables. During the three months ended March 31, 2010, the financing party invoiced us $51.2 million and we repaid $24.7 million for purchases of inventory under this arrangement, including a Mark-Up of $0.4 million. This agreement is subject to termination 90 days after notice is sent by either party.
borrowings of up to $215.0 million and, subject to certain conditions (including a maximum senior secured leverage ratio test), an accordion feature that permits GrafTech Finance to establish additional credit facilities thereunder in an aggregate amount, together with the Revolving Facility, of up to $425 million.
At March 31, 2010, there were no borrowings drawn from the Revolving Facility, and $209.5 million was available (after consideration of outstanding letters of credit of $5.5 million). It is possible that our future ability to borrow under the Revolving Facility may effectively be less because of the impact of additional borrowings upon our compliance with the maximum net senior secured debt leverage ratio permitted or minimum interest coverage ratio required under the Revolving Facility.
At March 31, 2010 we had outstanding letters of credit of $6.8 million under a $10 million Letter of Credit facility with another commercial bank.
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