Business Wire | May 5, 2021 06:40AM EDT

GrafTech Reports First Quarter 2021 Results

May 05, 2021

BROOKLYN HEIGHTS, Ohio--(BUSINESS WIRE)--May 05, 2021--GrafTech International Ltd. (NYSE: EAF) (GrafTech or the Company) today announced financial results for the quarter ended March 31, 2021.

First Quarter 2021 Highlights

* Reported net income of $99 million, or $0.37 per share, and net income margin of 32% * Adjusted EBITDA1 of $155 million, for a 51% margin2 * Generated cash flow from operating activities of $122 million * Reduced debt by $150 million and lowered interest rate on our Term Loan by 100 basis points * Sales volume of 37 thousand metric tons (MT) increased 9% compared to the first quarter of 2020 * Production volume of 36 thousand MT increased 9% compared to the first quarter of 2020

CEO Comments

President and Chief Executive Officer David Rintoul commented, "We are pleased with our first quarter results as we achieved improvement in key production and sales volume metrics, while further strengthening our balance sheet by reducing our long term debt and lowering our interest rate. Once again, our team remained focused on executing our strategy, delivering results, and positioning the company as market conditions improve.

"We are encouraged by developments in the current market for graphite electrodes as we are seeing increased demand for our products, which is beginning to have a positive influence on spot prices. We expect to see improvement in our reported non-LTA pricing in the second half of 2021. We believe GrafTech is well positioned for success given the long term growth opportunity associated with the benefits of electric arc furnace steel production."

First Quarter 2021 Financial Performance



(dollars in thousands, except per share Q1 2021 Q4 2020 Q1 2020amounts)Net sales $ 304,397 $ 338,010 $ 318,646

Net income $ 98,799 $ 125,096 $ 122,268

Earnings per share^3 $ 0.37 $ 0.47 $ 0.45

Adjusted EBITDA^1 $ 155,045 $ 175,538 $ 179,178

Cash flow from operations $ 122,425 $ 146,981 $ 139,283

Free cash flow^4 $ 108,251 $ 141,594 $ 125,382

* 51% adjusted EBITDA2 margin in the first quarter * 70% of adjusted EBITDA converted to free cash flow5 in the first quarter

Operational and Commercial Update

GrafTech continues to focus on strong execution. Our plants achieved a 95% on-time delivery rate in the first quarter, and we are currently increasing production with the improving demand for graphite electrodes.

Key operating metrics



(in thousands, except percentages) Q1 2021 Q4 2020 Q1 2020

Sales volume (MT)^6 37 37 34

Production volume (MT)^7 36 36 33

Production capacity excluding St. Marys (MT)^8, 9 51 52 51

Capacity utilization excluding St. Marys^8, 10 71 % 69 % 65 %

Total production capacity (MT)^9, 11 58 59 58

Total capacity utilization^10, 11 62 % 61 % 57 %

GrafTech reported solid results in the first quarter of 2021, with sales volumes of 37 thousand MT, consisting of long term agreement (LTA) volumes of 26 thousand MT at an average approximate price of $9,500 per MT and non-LTA volumes of 11 thousand MT at an average approximate price of $4,200 per MT.

The estimated shipments of graphite electrodes for the final two years of the initial term under our LTAs and for the years 2023 through 2024 remain unchanged from our prior estimate as follows:

2021 2022 2023 through 2024

Estimated LTA volume (in thousands 98-108 95-105 35-45of MT)

Estimated LTA revenue (in $925-$1,025 $910-$1,010 $350-$450^12millions)

Global steel market capacity utilization rates have continued to improve sequentially:

Q1 2021 Q4 2020 Q1 2020

Global (ex-China) capacity utilization rate^13 73% 72% 71%

U.S. steel market capacity utilization rate^14 77% 72% 79%

With the improved market demand, we expect sales volumes to increase through the balance of the year.

Capital Structure and Capital Allocation

As of March 31, 2021, GrafTech had cash and cash equivalents of $96 million and total debt of approximately $1.3 billion.

Our 2021 capital expenditure range expectations are unchanged, between $55 and $65 million, and we continue to expect our primary use of cash to be debt repayment.

Conference Call Information

In conjunction with this earnings release, you are invited to listen to our earnings call being held on May 5, 2021 at 10:00 a.m. Eastern Time. The webcast and accompanying slide presentation will be available at www.GrafTech.com, in the Investors section. The earnings call dial-in number is +1 (866) 521-4909 toll-free in the U.S. and Canada or +1 (647) 427-2311 for overseas calls, conference ID: 3248097. A replay of the Conference Call will be available until August 5, 2021 by dialing +1 (800) 585-8367 toll-free in the U.S. and Canada or +1 (416) 621-4642 for overseas calls, conference ID: 3248097. A replay of the webcast will also be available on our website until August 5, 2021, at www.GrafTech.com, in the Investors 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. The information in our website is not part of this release or any report we file or furnish to the SEC.

About GrafTech

GrafTech International Ltd. is a leading manufacturer of high-quality graphite electrode products essential to the production of electric arc furnace steel and other ferrous and non-ferrous metals. The Company has a competitive portfolio of low cost graphite electrode manufacturing facilities, including three of the highest capacity facilities in the world. We are the only large-scale graphite electrode producer that is substantially vertically integrated into petroleum needle coke, our primary raw material for graphite electrode manufacturing. This unique position provides competitive advantages in product quality and cost.

________________________

^1 A non-GAAP financial measure, see below for more information and areconciliation of EBITDA and adjusted EBITDA to net income, the most directlycomparable financial measure calculated and presented in accordance with GAAP.

^2 Adjusted EBITDA margin is calculated as adjusted EBITDA divided by net sales(Q1 2021 adjusted EBITDA of $155 million/Q1 2021 net sales of $304 million).

^3 Earnings per share represents diluted earnings per share.

^4 A non-GAAP financial measure, see below for more information and areconciliation of free cash flow to cash flow from operating activities, themost directly comparable financial measure calculated and presented inaccordance with GAAP.

^5 Free cash flow conversion is calculated as free cash flow divided byadjusted EBITDA (Q1 2021 free cash flow of $108 million/Q1 2021 adjusted EBITDAof $155 million).

^6 Sales volume reflects only graphite electrodes manufactured by GrafTech.

^7 Production volume reflects graphite electrodes we produced during theperiod.

^8 In the first quarter of 2018, our St. Marys facility began graphitizing alimited number of electrodes sourced from our Monterrey, Mexico facility.

^9 Production capacity reflects expected maximum production volume during theperiod under normal operating conditions, standard product mix and expectedmaintenance outage. Actual production may vary.

^10 Capacity utilization reflects production volume as a percentage ofproduction capacity.

^11 Includes graphite electrode facilities in Calais, France; Monterrey,Mexico; Pamplona, Spain; and St. Marys, Pennsylvania.

^12 Includes expected termination fees from a few customers that have failed tomeet certain obligations under their long term agreements.

^13 Source: World Steel Association and Metal Expert.

^14 Source: American Iron and Steel Institute.

Special note regarding forward-looking statements

This news release and related discussions may contain forward-looking statements that reflect our current views with respect to, among other things, future events and financial performance. You can identify these forward-looking statements by the use of forward-looking words such as "will," "may," "plan," "estimate," "project," "believe," "anticipate," "expect," "foresee," "intend," "should," "would," "could," "target," "goal," "continue to," "positioned to," "are confident", or the negative versions of those words or other comparable words. Any forward-looking statements contained in this release are based upon our historical performance and on our current plans, estimates and expectations considering information currently available to us. The inclusion of this forward-looking information should not be regarded as a representation by us that the future plans, estimates, or expectations contemplated by us will be achieved. Our expectations and targets are not predictions of actual performance and historically our performance has deviated, often significantly, from our expectations and targets. These forward-looking statements are subject to various risks and uncertainties and assumptions relating to our operations, financial results, financial condition, business, prospects, growth strategy and liquidity. Accordingly, there are or will be important factors that could cause our actual results to differ materially from those indicated in these statements. We believe that these factors include, but are not limited to: the ultimate impact that the COVID-19 pandemic has on our business, results of operations, financial condition and cash flows; the cyclical nature of our business and the selling prices of our products may lead to periods of reduced profitability and net losses in the future; the possibility that we may be unable to implement our business strategies, including our ability to secure and maintain longer-term customer contracts, in an effective manner; the risks and uncertainties associated with litigation, arbitration, and like disputes, including the current stockholder litigation and disputes related to contractual commitments; the possibility that global graphite electrode overcapacity may adversely affect graphite electrode prices; pricing for graphite electrodes has historically been cyclical and the price of graphite electrodes may continue to decline in the future; the sensitivity of our business and operating results to economic conditions and the possibility others may not be able to fulfill their obligations to us in a timely fashion or at all; our dependence on the global steel industry generally and the electric arc furnace steel industry in particular; the competitiveness of the graphite electrode industry; our dependence on the supply of petroleum needle coke; our dependence on supplies of raw materials (in addition to petroleum needle coke) and energy; the possibility that our manufacturing operations are subject to hazards; changes in, or more stringent enforcement of, health, safety and environmental regulations applicable to our manufacturing operations and facilities; the legal, compliance, economic, social and political risks associated with our substantial operations in multiple countries; the possibility that fluctuation of foreign currency exchange rates could materially harm our financial results; the possibility that our results of operations could deteriorate if our manufacturing operations were substantially disrupted for an extended period, including as a result of equipment failure, climate change, regulatory issues, natural disasters, public health crises, such as the COVID-19 pandemic, political crises or other catastrophic events; our dependence on third parties for certain construction, maintenance, engineering, transportation, warehousing and logistics services; the possibility that we are unable to recruit or retain key management and plant operating personnel or successfully negotiate with the representatives of our employees, including labor unions; the possibility that we may divest or acquire businesses, which could require significant management attention or disrupt our business; the sensitivity of goodwill on our balance sheet to changes in the market; the possibility that we are subject to information technology systems failures, cybersecurity attacks, network disruptions and breaches of data security; our dependence on protecting our intellectual property; the possibility that third parties may claim that our products or processes infringe their intellectual property rights; the possibility that significant changes in our jurisdictional earnings mix or in the tax laws of those jurisdictions could adversely affect our business; the possibility that our indebtedness could limit our financial and operating activities or that our cash flows may not be sufficient to service our indebtedness; the possibility that restrictive covenants in our financing agreements could restrict or limit our operations; the fact that borrowings under certain of our existing financing agreements subject us to interest rate risk; the possibility of a lowering or withdrawal of the ratings assigned to our debt; the possibility that disruptions in the capital and credit markets could adversely affect our results of operations, cash flows and financial condition, or those of our customers and suppliers; the possibility that highly concentrated ownership of our common stock may prevent minority stockholders from influencing significant corporate decisions; the possibility that we may not pay cash dividends on our common stock in the future; the fact that certain of our stockholders have the right to engage or invest in the same or similar businesses as us; the possibility that the market price of our common stock could be negatively affected by sales of substantial amounts of our common stock in the public markets, including by Brookfield Asset Management Inc. and its affiliates; the fact that certain provisions of our Amended and Restated Certificate of Incorporation and our Amended and Restated By-Laws could hinder, delay or prevent a change of control; the fact that the Court of Chancery of the State of Delaware will be the exclusive forum for substantially all disputes between us and our stockholders; and the loss of our status as a "controlled company" within the meaning of the New York Stock Exchange corporate governance standards, which will result in us no longer qualifying for exemptions from certain corporate governance requirements.

These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements, including the Risk Factors sections included in our most recent Annual Report on Form 10-K and other filings with the SEC. The forward-looking statements made in this press release relate only to events as of the date on which the statements are made. We do not undertake any obligation to publicly update or review any forward-looking statement, except as required by law, whether as a result of new information, future developments or otherwise.

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 EBITDA margin, free cash flow and free cash flow conversion are non-GAAP financial measures.

We define EBITDA, a non-GAAP financial measure, as net income or loss plus interest expense, minus interest income, plus income taxes and depreciation and amortization. We define adjusted EBITDA as EBITDA plus any pension and other post-employment benefit ("OPEB") plan expenses, initial and follow-on public offering and related expenses, non-cash gains or losses from foreign currency remeasurement of non-operating liabilities in our foreign subsidiaries where the functional currency is the U.S. dollar, related party Tax Receivable Agreement expense, stock-based compensation and non-cash fixed asset write-offs. 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.

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. Adjusted EBITDA margin is also a non-GAAP financial measure used by our management and our board of directors as supplemental information to assess the Company's operational performance and is calculated as adjusted EBITDA divided by net sales. In addition, we believe adjusted EBITDA, adjusted EBITDA margin 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 also monitor the ratio of total debt to trailing twelve month adjusted EBITDA, because we believe it is a useful and widely used way to assess our leverage.

Our use of adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are:

* adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs; * adjusted EBITDA does not reflect our cash expenditures for capital equipment or other contractual commitments, including any capital expenditure requirements to augment or replace our capital assets; * adjusted EBITDA does not reflect the interest expense or the cash requirements necessary to service interest or principal payments on our indebtedness; * adjusted EBITDA does not reflect tax payments that may represent a reduction in cash available to us; * adjusted EBITDA does not reflect expenses relating to our pension and OPEB plans; * adjusted EBITDA does not reflect the non-cash gains or losses from foreign currency remeasurement of non-operating liabilities in our foreign subsidiaries where the functional currency is the U.S. dollar; * adjusted EBITDA does not reflect initial and follow-on public offering and related expenses; * adjusted EBITDA does not reflect related party Tax Receivable Agreement expense; * adjusted EBITDA does not reflect stock-based compensation or the non-cash write-off of fixed assets; and * other companies, including companies in our industry, may calculate EBITDA, adjusted EBITDA and adjusted EBITDA margin differently, which reduces its usefulness as a comparative measure.

Free cash flow, a non-GAAP financial measure, is a metric used by our management and our board of directors to analyze cash flows generated from operations. We define free cash flow as net cash provided by operating activities less capital expenditures. We believe free cash flow is useful to present to investors because we believe that it facilitates comparison of the Company's performance with its competitors. Free cash flow conversion is also a non-GAAP financial measure used by our management and our board of directors as supplemental information to evaluate the Company's ability to convert earnings from our operational performance to cash. We calculate free cash flow conversion as free cash flow divided by adjusted EBITDA.

In evaluating EBITDA, adjusted EBITDA, adjusted EBITDA margin, free cash flow and free cash flow conversion, you should be aware that in the future, we will incur expenses similar to the adjustments in the reconciliation presented below. Our presentations of EBITDA, adjusted EBITDA, adjusted EBITDA margin, free cash flow and free cash flow conversion 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 EBITDA, adjusted EBITDA, adjusted EBITDA margin, free cash flow and free cash flow conversion alongside other financial performance measures, including our net income (loss) and cash flow from operating activities, respectively, and other GAAP measures.

GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

Unaudited

As of As of March 31, December 31, 2021 2020

ASSETS

Current assets:

Cash and cash equivalents $ 96,446 $ 145,442

Accounts and notes receivable, net of allowancefor doubtful accounts of 195,930 182,647 $9,065 as of March 31, 2021 and $8,243 as ofDecember 31, 2020

Inventories 250,810 265,964

Prepaid expenses and other current assets 40,544 35,114

Total current assets 583,730 629,167

Property, plant and equipment 786,124 784,902

Less: accumulated depreciation 287,666 278,685

Net property, plant and equipment 498,458 506,217

Deferred income taxes 32,446 32,551

Goodwill 171,117 171,117

Other assets 92,370 93,660

Total assets $ 1,378,121 $ 1,432,712

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable $ 82,594 $ 70,989

Short-term debt 127 131

Accrued income and other taxes 33,198 48,720

Other accrued liabilities 83,679 56,501

Related party payable - tax receivable agreement 3,922 21,752

Total current liabilities 203,520 198,093



Long-term debt 1,272,996 1,420,000

Other long-term obligations 77,284 81,478

Deferred income taxes 42,986 43,428

Related party payable - tax receivable agreement 15,176 19,098 long-term

Stockholders' equity:

Preferred stock, par value $0.01, 300,000,000 - - shares authorized, none issued

Common stock, par value $0.01, 3,000,000,000shares authorized, 267,257,592

shares issued and outstanding as of March 31, 2,673 2,672 2021 and 267,188,547

as of December 31, 2020

Additional paid-in capital 759,055 758,354

Accumulated other comprehensive loss (20,717 ) (19,641 )

Accumulated deficit (974,852 ) (1,070,770 )

Total stockholders' deficit (233,841 ) (329,385 )



Total liabilities and stockholders' equity $ 1,378,121 $ 1,432,712

GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in thousands, except per share data)

Unaudited

For the Three Months Ended March 31,

2021

2020

CONSOLIDATED STATEMENTS OF OPERATIONS

Net sales

$

304,397

$

318,646

Cost of sales

146,396

138,917

Gross profit

158,001

179,729

Research and development

969

712

Selling and administrative expenses

20,153

14,932

Operating profit

136,879

164,085

Other expense

(354

)

(3,314

)

Related party Tax Receivable Agreement expense (benefit)

47

(3,346

)

Interest expense

22,167

25,672

Interest income

(37

)

(1,141

)

Income before provision for income taxes

115,056

146,214

Provision for income taxes

16,257

23,946

Net income

$

98,799

$

122,268

Basic income per common share:

Net income per share

$

0.37

$

0.45

Weighted average common shares outstanding

267,318,860

269,216,820

Diluted income per common share:

Income per share

$

0.37

$

0.45

Weighted average common shares outstanding

267,465,319

269,236,562

GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in thousands, except per share data)

Unaudited

For the Three Months Ended March 31,

2021 2020

CONSOLIDATED STATEMENTS OF OPERATIONS

Net sales $ 304,397 $ 318,646

Cost of sales 146,396 138,917

Gross profit 158,001 179,729

Research and development 969 712

Selling and administrative expenses 20,153 14,932

Operating profit 136,879 164,085



Other expense (354 ) (3,314 )

Related party Tax Receivable Agreement expense 47 (3,346 )(benefit)

Interest expense 22,167 25,672

Interest income (37 ) (1,141 )

Income before provision for income taxes 115,056 146,214

Provision for income taxes 16,257 23,946

Net income $ 98,799 $ 122,268



Basic income per common share:

Net income per share $ 0.37 $ 0.45

Weighted average common shares outstanding 267,318,860 269,216,820

Diluted income per common share:

Income per share $ 0.37 $ 0.45

Weighted average common shares outstanding 267,465,319 269,236,562



GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

Unaudited

For the Three Months Ended March 31,

2021

2020

Cash flow from operating activities:

Net income

$

98,799

$

122,268

Adjustments to reconcile net income to cash

provided by operations:

Depreciation and amortization

16,539

14,284

Related party Tax Receivable Agreement expense (benefit)

47

(3,346

)

Deferred income tax provision

(2,840

)

6,348

Interest expense

5,309

1,594

Other charges, net

2,349

(838

)

Net change in working capital*

25,187

27,727

Change in related-party Tax Receivable Agreement

(21,799

)

(27,857

)

Change in long-term assets and liabilities

(1,166

)

(897

)

Net cash provided by operating activities

122,425

139,283

Cash flow from investing activities:

Capital expenditures

(14,174

)

(13,901

)

Proceeds from the sale of assets

151

62

Net cash used in investing activities

(14,023

)

(13,839

)

Cash flow from financing activities:

Debt issuance and modification costs

(2,971

)

-

Repurchase of common stock - non-related party

-

(30,099

)

Principal repayments on long-term debt

(150,000

)

-

Dividends paid to non-related party

(1,394

)

(5,926

)

Dividends paid to related party

(1,277

)

(16,933

)

Other

(1,120

)

(46

)

Net cash used in financing activities

(156,762

)

(53,004

)

Net change in cash and cash equivalents

(48,360

)

72,440

Effect of exchange rate changes on cash and cash equivalents

(636

)

(1,266

)

Cash and cash equivalents at beginning of period

145,442

80,935

Cash and cash equivalents at end of period

$

96,446

$

152,109

* Net change in working capital due to changes in the following components:

Accounts and notes receivable, net

$

(16,643

)

$

40,743

Inventories

11,648

(17,236

)

Prepaid expenses and other current assets

(1,510

)

7,411

Income taxes payable

(18,368

)

14,238

Accounts payable and accruals

44,333

(17,388

)

Interest payable

5,727

(41

)

Net change in working capital

$

25,187

$

27,727

GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

Unaudited

For the Three Months Ended March 31,

2021 2020

Cash flow from operating activities:

Net income $ 98,799 $ 122,268

Adjustments to reconcile net income to cash provided by operations:

Depreciation and amortization 16,539 14,284

Related party Tax Receivable Agreement expense 47 (3,346 )(benefit)

Deferred income tax provision (2,840 ) 6,348

Interest expense 5,309 1,594

Other charges, net 2,349 (838 )

Net change in working capital* 25,187 27,727

Change in related-party Tax Receivable Agreement (21,799 ) (27,857 )

Change in long-term assets and liabilities (1,166 ) (897 )

Net cash provided by operating activities 122,425 139,283

Cash flow from investing activities:

Capital expenditures (14,174 ) (13,901 )

Proceeds from the sale of assets 151 62

Net cash used in investing activities (14,023 ) (13,839 )

Cash flow from financing activities:

Debt issuance and modification costs (2,971 ) -

Repurchase of common stock - non-related party - (30,099 )

Principal repayments on long-term debt (150,000 ) -

Dividends paid to non-related party (1,394 ) (5,926 )

Dividends paid to related party (1,277 ) (16,933 )

Other (1,120 ) (46 )

Net cash used in financing activities (156,762 ) (53,004 )

Net change in cash and cash equivalents (48,360 ) 72,440

Effect of exchange rate changes on cash and cash (636 ) (1,266 )equivalents

Cash and cash equivalents at beginning of period 145,442 80,935

Cash and cash equivalents at end of period $ 96,446 $ 152,109



* Net change in working capital due to changes in the following components:

Accounts and notes receivable, net $ (16,643 ) $ 40,743

Inventories 11,648 (17,236 )

Prepaid expenses and other current assets (1,510 ) 7,411

Income taxes payable (18,368 ) 14,238

Accounts payable and accruals 44,333 (17,388 )

Interest payable 5,727 (41 )

Net change in working capital $ 25,187 $ 27,727

NON-GAAP RECONCILIATION

(Dollars in thousands)

The following table reconciles our non-GAAP key financial measures to the most directly comparable GAAP measures:

Q1 2021

Q4 2020

Q1 2020

Net income

$

98,799

$

125,096

$

122,268

Add:

Depreciation and amortization

16,539

17,889

14,284

Interest expense

22,167

29,048

25,672

Interest income

(37

)

(168

)

(1,141

)

Income taxes

16,257

13,833

23,946

EBITDA

$

153,725

$

185,698

$

185,029

Adjustments:

Pension and OPEB plan expenses (1)

431

4,430

542

Initial and follow-on public offering and related expenses (2)

422

260

4

Non-cash gains and losses on foreign currency remeasurement (3)

(348

)

1,738

(3,461

)

Stock-based compensation (4)

768

778

410

Non-cash fixed asset write-off (5)

-

378

-

Related party Tax Receivable Agreement adjustment (6)

47

(17,744

)

(3,346

)

Adjusted EBITDA

$

155,045

$

175,538

$

179,178



NON-GAAP RECONCILIATION

(Dollars in thousands)

The following table reconciles our non-GAAP key financial measures to the mostdirectly comparable GAAP measures:



Q1 2021 Q4 2020 Q1 2020



Net income $ 98,799 $ 125,096 $ 122,268

Add:

Depreciation and amortization 16,539 17,889 14,284

Interest expense 22,167 29,048 25,672

Interest income (37 ) (168 ) (1,141 )

Income taxes 16,257 13,833 23,946

EBITDA $ 153,725 $ 185,698 $ 185,029

Adjustments:

Pension and OPEB plan expenses ^(1) 431 4,430 542

Initial and follow-on public offering and 422 260 4 related expenses ^(2)

Non-cash gains and losses on foreign (348 ) 1,738 (3,461 )currency remeasurement ^(3)

Stock-based compensation ^(4) 768 778 410

Non-cash fixed asset write-off ^(5) - 378 -

Related party Tax Receivable Agreement 47 (17,744 ) (3,346 )adjustment ^(6)

Adjusted EBITDA $ 155,045 $ 175,538 $ 179,178

(1) Service and interest cost of our OPEB plans. Also includes a mark-to-market loss (gain) for plan assets as of December of each year.

(2) Legal, accounting, printing and registration fees associated with the initial and follow-on public offering and related expenses.

(3) Non-cash gains and 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.

(4) Non-cash expense for stock-based compensation grants.

(5) Non-cash fixed asset write-off recorded for obsolete assets.

(6) Non-cash expense adjustment for future payment to our sole pre-IPO stockholder for tax assets that are expected to be utilized.

^(1) Service and interest cost of our OPEB plans. Also includes amark-to-market loss (gain) for plan assets as of December of each year.

^(2) Legal, accounting, printing and registration fees associated with theinitial and follow-on public offering and related expenses.

^(3) Non-cash gains and losses from foreign currency remeasurement ofnon-operating assets and liabilities of our non-U.S. subsidiaries where thefunctional currency is the U.S. dollar.

^(4) Non-cash expense for stock-based compensation grants.

^(5) Non-cash fixed asset write-off recorded for obsolete assets.

^(6) Non-cash expense adjustment for future payment to our sole pre-IPOstockholder for tax assets that are expected to be utilized.

Reconciliation to Free Cash Flow

(in thousands)

Q1 2021

Q4 2020

Q1 2020

Net cash provided by operating activities

$

122,425

$

146,981

$

139,283

Capital expenditures

(14,174

)

(5,387

)

(13,901

)

Free cash flow

$

108,251

$

141,594

$

125,382

View source version on businesswire.com: https://www.businesswire.com/news/home/20210505005198/en/

CONTACT: Wendy Watson 216-676-2699