UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

for the quarterly period ended ~~March 31,~~September 30, 2021


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the transition period from______ to ______

Commission file number: 1-13888

GRAFTECH INTERNATIONAL LTD.

(Exact name of registrant as specified in its charter)


Delaware			27-2496053
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification Number)


982 Keynote Circle		44131
Brooklyn Heights,	OH	(Zip code)
(Address of principal executive offices)

Registrant’s telephone number, including area code: (216) 676-2000

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, $0.01 par value per share	EAF	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ý No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer

☐

Accelerated Filer

☒

Emerging Growth Company

☐

Non-Accelerated Filer

☐

Smaller Reporting Company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~April 30,~~October 14, 2021, ~~267,258,940~~263,222,208 shares of common stock, par value $0.01 per share, were outstanding.

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Presentation of Financial, Market and Legal Data

We present our financial information on a consolidated basis. Unless otherwise noted, when we refer to dollars, we mean U.S. dollars.

Unless otherwise specifically noted, market and market share data in this Quarterly Report on Form 10-Q for the quarterly period ended ~~March 31,~~September 30, 2021 (the "Report") are our own estimates or derived from sources described in our Annual Report on Form 10-K for the year ended December 31, 2020 ("Annual Report on Form 10-K") filed on February 23, 2021. Our estimates involve risks and uncertainties and are subject to change based on various factors, including those discussed under “Forward-Looking Statements” and “Risk Factors” in this Report and in our Annual Report on Form 10-K. We cannot guarantee the accuracy or completeness of this market and market share data and have not independently verified it. None of the sources have consented to the disclosure or use of data in this Report.

Forward-Looking Statements

Some of the statements under “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and elsewhere in this Report 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”,~~confident,” or the negative versions of those words or other comparable words. Any forward-looking statements contained in this Report 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:

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•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;

•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;

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•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 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 ("NYSE") 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~~connection with the other cautionary statements, including the Risk Factors sections that are included in our Annual Report on Form 10-K, and other filings with the Securities and Exchange Commission ("SEC"). The forward-looking statements made in this Report 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.

If one or more of these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, our actual results may vary materially from what we may have expressed or implied by these forward-looking statements. We caution that you should not place undue reliance on any of our forward-looking statements. You should specifically consider the factors identified in this Report that could cause actual results to differ before making an investment decision to purchase our common stock. Furthermore, new risks and uncertainties arise from time to time, and it is impossible for us to predict those events or how they may affect us.

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

(Unaudited)


		As of March 31, 2021		As of December 31, 2020			As of September 30, 2021		As of December 31, 2020
ASSETS	ASSETS					ASSETS
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	96,446	$	145,442	Cash and cash equivalents	$	86,656	$	145,442
Accounts and notes receivable, net of allowance for doubtful accounts of $9,065 as of March 31, 2021 and $8,243 as of December 31, 2020		195,930		182,647
Accounts and notes receivable, net of allowance for doubtful accounts of $8,024 as of September 30, 2021 and $8,243 as of December 31, 2020						Accounts and notes receivable, net of allowance for doubtful accounts of $8,024 as of September 30, 2021 and $8,243 as of December 31, 2020	183,562		182,647
Inventories	Inventories	250,810		265,964		Inventories	269,709		265,964
Prepaid expenses and other current assets	Prepaid expenses and other current assets	40,544		35,114		Prepaid expenses and other current assets	64,595		35,114

Total current assets	Total current assets	583,730		629,167		Total current assets	604,522		629,167
Property, plant and equipment	Property, plant and equipment	786,124		784,902		Property, plant and equipment	807,532		784,902
Less: accumulated depreciation	Less: accumulated depreciation	287,666		278,685		Less: accumulated depreciation	308,029		278,685
Net property, plant and equipment	Net property, plant and equipment	498,458		506,217		Net property, plant and equipment	499,503		506,217
Deferred income taxes	Deferred income taxes	32,446		32,551		Deferred income taxes	32,944		32,551
Goodwill	Goodwill	171,117		171,117		Goodwill	171,117		171,117
Other assets	Other assets	92,370		93,660		Other assets	85,060		93,660
Total assets	Total assets	$	1,378,121	$	1,432,712	Total assets	$	1,393,146	$	1,432,712
LIABILITIES AND STOCKHOLDERS’ EQUITY	LIABILITIES AND STOCKHOLDERS’ EQUITY					LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable	Accounts payable	$	82,594	$	70,989	Accounts payable	$	105,177	$	70,989
Short-term debt	Short-term debt	127		131		Short-term debt	128		131
Accrued income and other taxes	Accrued income and other taxes	33,198		48,720		Accrued income and other taxes	54,503		48,720
Other accrued liabilities	Other accrued liabilities	83,679		56,501		Other accrued liabilities	81,661		56,501
Related party payable - tax receivable agreement	Related party payable - tax receivable agreement	3,922		21,752		Related party payable - tax receivable agreement	3,922		21,752
Total current liabilities	Total current liabilities	203,520		198,093		Total current liabilities	245,391		198,093
Long-term debt	Long-term debt	1,272,996		1,420,000		Long-term debt	1,127,412		1,420,000
Other long-term obligations	Other long-term obligations	77,284		81,478		Other long-term obligations	71,552		81,478
Deferred income taxes	Deferred income taxes	42,986		43,428		Deferred income taxes	44,316		43,428
Related party payable - tax receivable agreement	Related party payable - tax receivable agreement	15,176		19,098		Related party payable - tax receivable agreement	15,176		19,098

Contingencies - Note 7	Contingencies - Note 7					Contingencies - Note 7
Stockholders’ equity:	Stockholders’ equity:					Stockholders’ equity:
Preferred stock, par value $0.01, 300,000,000 shares authorized, NaN issued		0		0
Common stock, par value $0.01, 3,000,000,000 shares authorized, 267,257,592 shares issued and outstanding as of March 31, 2021 and 267,188,547 as of December 31, 2020		2,673		2,672
Preferred stock, par value $0.01, 300,000,000 shares authorized, none issued						Preferred stock, par value $0.01, 300,000,000 shares authorized, none issued	—		—
Common stock, par value $0.01, 3,000,000,000 shares authorized, 263,586,828 shares issued and outstanding as of September 30, 2021 and 267,188,547 as of December 31, 2020						Common stock, par value $0.01, 3,000,000,000 shares authorized, 263,586,828 shares issued and outstanding as of September 30, 2021 and 267,188,547 as of December 31, 2020	2,636		2,672
Additional paid-in capital	Additional paid-in capital	759,055		758,354		Additional paid-in capital	761,748		758,354
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(20,717)		(19,641)		Accumulated other comprehensive loss	(5,774)		(19,641)
Accumulated deficit	Accumulated deficit	(974,852)		(1,070,770)		Accumulated deficit	(869,311)		(1,070,770)
Total stockholders’ deficit	Total stockholders’ deficit	(233,841)		(329,385)		Total stockholders’ deficit	(110,701)		(329,385)

Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity	$	1,378,121	$	1,432,712	Total liabilities and stockholders’ equity	$	1,393,146	$	1,432,712

See accompanying Notes to Condensed Consolidated Financial Statements

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GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Dollars in thousands, except share data)

(Unaudited)


		For the Three Months Ended March 31,				For the Three Months Ended September 30,				For the Nine Months Ended September 30,
		2021		2020				2021		2020		2021		2020
CONSOLIDATED STATEMENTS OF OPERATIONS	CONSOLIDATED STATEMENTS OF OPERATIONS						CONSOLIDATED STATEMENTS OF OPERATIONS
Net sales	Net sales	$	304,397	$	318,646		Net sales	$	347,348	$	286,987	$	982,495	$	886,351
Cost of sales	Cost of sales	146,396		138,917			Cost of sales	170,286		131,862		518,549		401,379
Gross profit	Gross profit	158,001		179,729			Gross profit	177,062		155,125		463,946		484,972
Research and development	Research and development	969		712			Research and development	983		650		2,970		2,072
Selling and administrative expenses	Selling and administrative expenses	20,153		14,932			Selling and administrative expenses	19,006		19,062		114,942		49,995
Operating profit	Operating profit	136,879		164,085			Operating profit	157,073		135,413		346,034		432,905

Other income		(354)		(3,314)
Other (income) expense, net							Other (income) expense, net	(364)		694		(361)		(2,309)
Related party Tax Receivable Agreement expense (benefit)	Related party Tax Receivable Agreement expense (benefit)	47		(3,346)			Related party Tax Receivable Agreement expense (benefit)	—		—		47		(3,346)
Interest expense	Interest expense	22,167		25,672			Interest expense	16,048		22,474		54,209		69,026
Interest income	Interest income	(37)		(1,141)			Interest income	(417)		(93)		(653)		(1,582)
Income before provision for income taxes	Income before provision for income taxes	115,056		146,214			Income before provision for income taxes	141,806		112,338		292,792		371,116
Provision for income taxes	Provision for income taxes	16,257		23,946			Provision for income taxes	21,920		18,104		45,942		61,838

Net income	Net income	$	98,799	$	122,268		Net income	$	119,886	$	94,234	$	246,850	$	309,278

Basic income per common share*:	Basic income per common share*:						Basic income per common share*:
Net income per share	Net income per share	$	0.37	$	0.45		Net income per share	$	0.45	$	0.35	$	0.92	$	1.15

Weighted average common shares outstanding	Weighted average common shares outstanding	267,318,860		269,216,820			Weighted average common shares outstanding	267,106,109		267,265,705		267,327,888		267,908,427
Diluted income per common share*:	Diluted income per common share*:						Diluted income per common share*:
Income per share	Income per share	$	0.37	$	0.45		Income per share	$	0.45	$	0.35	$	0.92	$	1.15

Weighted average common shares outstanding	Weighted average common shares outstanding	267,465,319		269,236,562			Weighted average common shares outstanding	267,178,963		267,279,555		267,441,394		267,920,890

STATEMENTS OF COMPREHENSIVE INCOME (LOSS)	STATEMENTS OF COMPREHENSIVE INCOME (LOSS)						STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
Net income	Net income	$	98,799	$	122,268		Net income	$	119,886	$	94,234	$	246,850	$	309,278
Other comprehensive income:	Other comprehensive income:						Other comprehensive income:
Foreign currency translation adjustments, net of tax of $0 and $(163), respectively		(13,431)		(17,168)
Commodity and interest rate derivatives, net of tax of $(3,332) and $10,927, respectively		12,355		(39,781)
Other comprehensive income (loss), net of tax:		(1,076)		(56,949)
Foreign currency translation adjustments, net of tax of $0, $0, $0 and $(162) respectively							Foreign currency translation adjustments, net of tax of $0, $0, $0 and $(162) respectively	(9,112)		7,455		(13,689)		(6,083)
Commodity and interest rate derivatives, net of tax of $(1,024), $(740), $(7,435), and $7,224 respectively							Commodity and interest rate derivatives, net of tax of $(1,024), $(740), $(7,435), and $7,224 respectively	3,729		2,826		27,556		(25,717)
Other comprehensive (loss) income, net of tax:							Other comprehensive (loss) income, net of tax:	(5,383)		10,281		13,867		(31,800)
Comprehensive income	Comprehensive income	$	97,723	$	65,319		Comprehensive income	$	114,503	$	104,515	$	260,717	$	277,478

*See Note 11 "Earnings per Share"

See accompanying Notes to Condensed Consolidated Financial Statements

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GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(Unaudited)


		For the Three Months Ended March 31,					For the Nine Months Ended September 30,
		2021		2020			2021		2020
Cash flow from operating activities:	Cash flow from operating activities:					Cash flow from operating activities:
Net income	Net income	$	98,799	$	122,268	Net income	$	246,850	$	309,278
Adjustments to reconcile net income to cash provided by operations:	Adjustments to reconcile net income to cash provided by operations:					Adjustments to reconcile net income to cash provided by operations:
Depreciation and amortization	Depreciation and amortization	16,539		14,284		Depreciation and amortization	48,415		45,074

Related party Tax Receivable Agreement expense (benefit)	Related party Tax Receivable Agreement expense (benefit)	47		(3,346)		Related party Tax Receivable Agreement expense (benefit)	47		(3,346)
Deferred income tax provision	Deferred income tax provision	(2,840)		6,348		Deferred income tax provision	(6,180)		16,237

Stock-based compensation						Stock-based compensation	16,293		1,887

Interest expense	Interest expense	5,309		1,594		Interest expense	9,750		4,768
Other charges, net	Other charges, net	2,349		(838)		Other charges, net	6,784		448
Net change in working capital*	Net change in working capital*	25,187		27,727		Net change in working capital*	47,174		85,098
Change in related-party Tax Receivable Agreement	Change in related-party Tax Receivable Agreement	(21,799)		(27,857)		Change in related-party Tax Receivable Agreement	(21,799)		(27,857)
Change in long-term assets and liabilities	Change in long-term assets and liabilities	(1,166)		(897)		Change in long-term assets and liabilities	(4,323)		(14,922)
Net cash provided by operating activities	Net cash provided by operating activities	122,425		139,283		Net cash provided by operating activities	343,011		416,665
Cash flow from investing activities:	Cash flow from investing activities:					Cash flow from investing activities:
Capital expenditures	Capital expenditures	(14,174)		(13,901)		Capital expenditures	(40,426)		(30,688)
Proceeds from the sale of assets	Proceeds from the sale of assets	151		62		Proceeds from the sale of assets	356		78

Net cash used in investing activities	Net cash used in investing activities	(14,023)		(13,839)		Net cash used in investing activities	(40,070)		(30,610)
Cash flow from financing activities:	Cash flow from financing activities:					Cash flow from financing activities:

Debt issuance and modification costs	Debt issuance and modification costs	(2,971)		0		Debt issuance and modification costs	(3,109)		—

Repurchase of common stock-non-related party	Repurchase of common stock-non-related party	0		(30,099)		Repurchase of common stock-non-related party	(42,378)		(30,099)

Payment of tax withholdings related to net share settlement of equity awards						Payment of tax withholdings related to net share settlement of equity awards	(4,074)		(71)
Principal repayments on long-term debt	Principal repayments on long-term debt	(150,000)		0		Principal repayments on long-term debt	(300,000)		(249,214)

Dividends paid to non-related-party	Dividends paid to non-related-party	(1,394)		(5,926)		Dividends paid to non-related-party	(5,446)		(7,553)
Dividends paid to related-party	Dividends paid to related-party	(1,277)		(16,933)		Dividends paid to related-party	(2,567)		(20,650)
Other	Other	(1,120)		(46)		Other	(3,264)		—
Net cash used in financing activities	Net cash used in financing activities	(156,762)		(53,004)		Net cash used in financing activities	(360,838)		(307,587)
Net change in cash and cash equivalents	Net change in cash and cash equivalents	(48,360)		72,440		Net change in cash and cash equivalents	(57,897)		78,468
Effect of exchange rate changes on cash and cash equivalents	Effect of exchange rate changes on cash and cash equivalents	(636)		(1,266)		Effect of exchange rate changes on cash and cash equivalents	(889)		(562)
Cash and cash equivalents at beginning of period	Cash and cash equivalents at beginning of period	145,442		80,935		Cash and cash equivalents at beginning of period	145,442		80,935
Cash and cash equivalents at end of period	Cash and cash equivalents at end of period	$	96,446	$	152,109	Cash and cash equivalents at end of period	$	86,656	$	158,841

* Net change in working capital due to changes in the following components:	* Net change in working capital due to changes in the following components:					* Net change in working capital due to changes in the following components:
Accounts and notes receivable, net	Accounts and notes receivable, net	$	(16,643)	$	40,743	Accounts and notes receivable, net	$	(3,455)	$	78,408
Inventories	Inventories	11,648		(17,236)		Inventories	(7,246)		10,371
Prepaid expenses and other current assets	Prepaid expenses and other current assets	(1,510)		7,411		Prepaid expenses and other current assets	(17,664)		5,437
Income taxes payable	Income taxes payable	(18,368)		14,238		Income taxes payable	(2,371)		16,032
Accounts payable and accruals	Accounts payable and accruals	44,333		(17,388)		Accounts payable and accruals	71,748		(25,078)
Interest payable	Interest payable	5,727		(41)		Interest payable	6,162		(72)
Net change in working capital	Net change in working capital	$	25,187	$	27,727	Net change in working capital	$	47,174	$	85,098

See accompanying Notes to Condensed Consolidated Financial Statements

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~~GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES~~


GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT) (Dollars in thousands, except share data) (Unaudited)
	Issued Shares of Common Stock	Common Stock		Additional Paid-in Capital		Accumulated Other Comprehensive Income(Loss)		Retained Earnings (Accumulated Deficit)		Total Stockholders’ Equity (Deficit)
Balance as of December 31, 2020	267,188,547	$	2,672	$	758,354	$	(19,641)	$	(1,070,770)	$	(329,385)
Comprehensive income (loss):
Net income	—	—		—		—		98,799		98,799
Other comprehensive income (loss):
Commodity and interest rate derivatives income (loss), net of tax of $(3,144)	—	—		—		11,660		—		11,660
Commodity and interest rate derivatives reclassification adjustments, net of tax of $(187)	—	—		—		695		—		695
Foreign currency translation adjustments, net of tax of $0	—	—		—		(13,431)		—		(13,431)
Total other comprehensive loss	—	—		—		(1,076)		—		(1,076)
Stock-based compensation	92,135	1		766		—		—		767
Dividends paid to related party stockholder ($0.01 per share)	—	—		—		—		(1,277)		(1,277)
Dividends paid to non-related party stockholders ($0.01 per share)	—	—		—		—		(1,394)		(1,394)

Common stock withheld for taxes on equity award settlement	(23,090)	—		(65)		—		(210)		(275)

Balance as of March 31, 2021	267,257,592	$	2,673	$	759,055	$	(20,717)	$	(974,852)	$	(233,841)
Comprehensive income (loss):
Net income	—	—		—		—		28,165		28,165
Other comprehensive income (loss):
Commodity and interest rate derivatives income (loss), net of tax of $(1,921)	—	—		—		7,158		—		7,158
Commodity derivatives reclassification adjustments, net of tax of $(1,158)	—	—		—		4,314		—		4,314
Foreign currency translation adjustments, net of tax of $0	—	—		—		8,854		—		8,854
Total other comprehensive income	—	—		—		20,326		—		20,326
Stock-based compensation	917,410	9		15,254		—		—		15,263
Dividends paid to related party stockholder ($0.01 per share)	—	—		—		—		(650)		(650)
Dividends paid to non-related party stockholders ($0.01 per share)	—	—		—		—		(2,024)		(2,024)

Common stock withheld for taxes on equity award settlement	(294,250)	(3)		(757)		—		(3,039)		(3,799)
Balance as of June 30, 2021	267,880,752	$	2,679	$	773,552	$	(391)	$	(952,400)	$	(176,560)
Comprehensive income (loss):
Net income	—	—		—		—		119,886		119,886
Other comprehensive income (loss):
Commodity and interest rate derivative income (loss), net of tax of $(581)	—	—		—		2,111		—		2,111
Commodity derivatives reclassification adjustments, net of tax of $(443)	—	—		—		1,618		—		1,618
Foreign currency translation adjustments, net of tax of $0	—	—		—		(9,112)		—		(9,112)
Total other comprehensive income	—	—		—		(5,383)		—		(5,383)
Stock-based compensation	—	—		263		—		—		263
Dividends paid to related party stockholder ($0.01 per share)	—	—		—		—		(640)		(640)
Dividends paid to non-related party stockholders ($0.01 per share)	—	—		—		—		(2,028)		(2,028)
Common Stock Repurchased (from non-related party)*	(4,293,924)	(43)		(12,067)		—		(34,129)		(46,239)
Balance as of September 30, 2021	263,586,828	$	2,636	$	761,748	$	(5,774)	$	(869,311)	$	(110,701)
*In the third quarter 2021, stock repurchases of 363,616 shares totaling $3.9 million were pending settlement as of September 30, 2021. This is included in "Accounts payable" on the Condensed Consolidated Balance Sheet. See Note 11 "Earnings per Share" for details.

~~CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)~~

~~(Dollars in thousands, except share data)~~


GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT) (Dollars in thousands, except share data) (Unaudited)
	Issued Shares of Common Stock	Common Stock		Additional Paid-in Capital		Accumulated Other Comprehensive Income(Loss)		Retained Earnings (Accumulated Deficit)		Total Stockholders’ Equity (Deficit)
Balance as of December 31, 2019	270,485,308	$	2,705	$	765,419	$	(7,361)	$	(1,451,836)	$	(691,073)
Comprehensive income (loss):
Net income	—	—		—		—		122,268		122,268
Other comprehensive income (loss):
Commodity derivatives foreign currency derivatives income (loss), net of tax of $10,322	—	—		—		(37,577)		—		(37,577)
Commodity derivatives reclassification adjustments, net of tax of $605	—	—		—		(2,204)		—		(2,204)
Foreign currency translation adjustments, net of tax $(163)	—	—		—		(17,168)		—		(17,168)
Total other comprehensive loss	—	—		—		(56,949)		—		(56,949)
Stock-based compensation	29,394	—		405		—		—		405
Dividends paid to related party stockholder ($0.085 per share)	—	—		—		—		(16,933)		(16,933)
Dividends paid to non-related party stockholders ($0.085 per share)	—	—		—		—		(5,926)		(5,926)
Common Stock Repurchased and Retired (from non-related party)	(3,328,574)	(33)		(9,700)		—		(20,366)		(30,099)
Common stock repurchased and retired for equity award settlement	(7,465)	—		(21)		—		(25)		(46)
Adoption of ASC 326	—	—		—		—		(2,026)		(2,026)
Balance as of March 31, 2020	267,178,663	$	2,672	$	756,103	$	(64,310)	$	(1,374,844)	$	(680,379)
Comprehensive income (loss):
Net income	—	—		—		—		92,776		92,776
Other comprehensive income (loss):
Commodity derivatives income (loss), net of tax of $(3,199)	—	—		—		12,132		—		12,132
Commodity derivatives reclassification adjustments, net of tax of $236	—	—		—		(894)		—		(894)
Foreign currency translation adjustments, net of tax of $1	—	—		—		3,630		—		3,630
Total other comprehensive income	—	—		—		14,868		—		14,868
Stock-based compensation	13,017			718						718
Dividends paid to related party stockholder ($0.01 per share)	—	—		—		—		(1,993)		(1,993)
Dividends paid to non-related party stockholders ($0.01 per share)	—	—		—		—		(679)		(679)
Common stock repurchased and retired for equity award settlement	(3,133)			(9)				(16)		(25)
Balance as of June 30, 2020	267,188,547	$	2,672	$	756,812	$	(49,442)	$	(1,284,756)	$	(574,714)
Comprehensive income (loss):
Net income	—	—		—		—		94,234		94,234
Other comprehensive income (loss):
Commodity and foreign currency derivatives loss, net of tax of $(1,009)	—	—		—		3,852		—		3,852
Commodity derivatives reclassification adjustments, net of tax of $269	—	—		—		(1,026)		—		(1,026)
Foreign currency translation adjustments of $0	—	—		—		7,455		—		7,455
Total other comprehensive income	—	—		—		10,281		—		10,281
Stock-based compensation	—	—		764		—		—		764
Dividends paid to related party stockholder ($0.01 per share)	—	—		—		—		(1,724)		(1,724)
Dividends paid to non-related party stockholders ($0.01 per share)	—	—		—		—		(948)		(948)
Balance as of September 30, 2020	267,188,547	$	2,672	$	757,576	$	(39,161)	$	(1,193,194)	$	(472,107)

~~(Unaudited)~~

Issued
Shares of
Common
Stock Common
Stock Additional
Paid-in
Capital Accumulated
Other
Comprehensive
Income(Loss) Retained Earnings (Accumulated
Deficit) Total
Stockholders’
Equity (Deficit)
Balance as of December 31, 2020 267,188,547 $ 2,672 $ 758,354 $ (19,641) $ (1,070,770) $ (329,385)
Comprehensive income (loss):
Net income — — — — 98,799 98,799
Other comprehensive income (loss):
Commodity and interest rate derivatives income (loss), net of tax of $(3,144) — — — 11,660 — 11,660
Commodity and interest rate derivatives reclassification adjustments, net of tax of $(187) — — — 695 — 695
Foreign currency translation adjustments, net of tax of $0 — — — (13,431) — (13,431)
Total other comprehensive loss — — — (1,076) — (1,076)
Stock-based compensation 92,135 1 766 — — 767
Dividends paid to related party stockholder ($0.01 per share) — — — — (1,277) (1,277)
Dividends paid to non-related party stockholders ($0.01 per share) — — — — (1,394) (1,394)
Common stock repurchased and retired (from non-related party) — — — — — 0
Common stock withheld for taxes on equity award settlement (23,090) — (65) — (210) (275)
Balance as of March 31, 2021 267,257,592 $ 2,673 $ 759,055 $ (20,717) $ (974,852) $ (233,841)
Balance as of December 31, 2019 270,485,308 $ 2,705 $ 765,419 $ (7,361) $ (1,451,836) $ (691,073)
Comprehensive income (loss):
Net income — — — — 122,268 122,268
Other comprehensive income (loss):
Commodity derivatives foreign currency derivatives income (loss), net of tax of $10,322 — — — (37,577) — (37,577)
Commodity derivatives reclassification adjustments, net of tax of $605 — — — (2,204) — (2,204)
Foreign currency translation adjustments, net of tax $(163) — — — (17,168) — (17,168)
Total other comprehensive loss — — — (56,949) — (56,949)
Stock-based compensation 29,394 — 405 — — 405
Dividends paid to related party stockholder ($0.085 per share) — — — — (16,933) (16,933)
Dividends paid to non-related party stockholders ($0.085 per share) — — — — (5,926) (5,926)
Common Stock Repurchased and Retired (from non-related party) (3,328,574) (33) (9,700) — (20,366) (30,099)
Common stock repurchased and retired for equity award settlement (7,465) — (21) — (25) (46)
Adoption of ASC 326 — — — — (2,026) (2,026)
Balance as of March 31, 2020 267,178,663 $ 2,672 $ 756,103 $ (64,310) $ (1,374,844) $ (680,379)
See accompanying Notes to Condensed Consolidated Financial Statements

PART I (CONT'D)

GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(1)Organization and Summary of Significant Accounting Policies

A. Organization

GrafTech International Ltd. (the “Company”) 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. References herein to “GrafTech,” the “Company,” “we,” “our,” or “us” refer collectively to GrafTech International Ltd. and its subsidiaries.

On August 15, 2015, we became an indirect wholly owned subsidiary of Brookfield Asset Management Inc. (together with its affiliates, “Brookfield”). In April 2018, we completed our initial public offering ("IPO") of 38,097,525 shares of our common stock held by Brookfield at a price of $15.00 per share. We did not receive any proceeds related to the IPO. Our common stock is listed on the NYSE under the symbol “EAF.” Brookfield has since distributed a portion of its GrafTech common stock to the owners in the Brookfield consortium and sold shares of GrafTech common stock in public and private transactions, resulting in Brookfield's ownership of outstanding shares of GrafTech common stock ~~being reduced~~decreasing to 55.3% as of December 31, 2020 and ~~36.6%~~24.2% as of ~~March 31,~~September 30, 2021.

The Company’s only reportable segment, Industrial Materials, is comprised of our 2 major product categories: graphite electrodes and petroleum needle coke products. Petroleum needle coke is a key raw material used in the production of graphite electrodes. The Company's vision is to provide highly engineered graphite electrode services, solutions and products to electric arc furnace operators.

B. Basis of Presentation

The interim condensed consolidated financial statements are unaudited; however, in the opinion of management, they have been prepared in accordance with Rule 10-01 of Regulation S-X and in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The December 31, 2020 financial position data included herein was derived from the audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2020 ("Annual Report on Form 10-K"), filed on February 23, 2021, but does not include all disclosures required by GAAP in audited financial statements. These interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements, including the accompanying notes, contained in our Annual Report on Form 10-K.

The unaudited condensed consolidated financial statements reflect all adjustments (all of which are of a normal, recurring nature) which management considers necessary for a fair statement of financial position, results of operations, comprehensive income and cash flows for the interim periods presented. The results for the interim periods are not necessarily indicative of results which may be expected for any other interim period or for the full year.

C. New Accounting Standards

Recently Adopted Accounting Standards

In December 2019, the ~~FASB~~Financial Accounting Standards Board ("FASB") issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. ~~ASU~~Accounting Standards Update ("ASU") 2019-12 is intended to improve consistent application of Topic 740 and simplify the accounting for income taxes. This pronouncement removes certain exceptions to the general principles in Topic 740 and clarifies and amends existing guidance. ASU 2019-12 is effective for annual and interim reporting periods beginning after December 15, 2020, with early adoption permitted. The Company adopted ASU 2019-12 on January 1, 2021, with an immaterial effect on our financial position, results of operations and cash flows.

Accounting Standards Not Yet Adopted

In March 2020, the FASB issued ASU No. 2020-04, Facilitation of the Effects of Reference Rate Reform on Financial Reporting (Topic 848). This pronouncement contains optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions affected by reference rate reform. ASU 2020-04 is elective and applies to all entities, subject to meeting certain criteria, that have contracts, hedging relationships and other transactions that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform. ASU 2020-04 can be elected for both interim and annual periods from March 12, 2020 through December 31, 2022. We

PART I (CONT'D)

GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

plan to adopt ASU 2020-04 as of January 1, 2023. The adoption of ASU 2020-04 is not expected to have a material impact on our financial position, results of operations and cash flows.

~~PART I (CONT'D)~~

~~GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

(2)Revenue from Contracts with Customers

Disaggregation of Revenue

The following table provides information about disaggregated revenue by type of product and contract for the three and nine months ended ~~March 31,~~September 30, 2021 and 2020:


		For the Three Months Ended March 31,					For the Three Months Ended September 30,				For the Nine Months Ended September 30,
		2021		2020					2021		2020		2021		2020
		(Dollars in thousands)				(Dollars in thousands)
Graphite Electrodes - Three-to-five-year take-or-pay contracts		$	245,565	$	276,379
Graphite Electrodes - Short-term agreements and spot sales		47,255		30,818
Graphite Electrodes - Three-to-five-year take-or-pay contracts ("LTA")								Graphite Electrodes - Three-to-five-year take-or-pay contracts ("LTA")	$	267,349	$	250,011	$	766,503	$	771,400
Graphite Electrodes - Short-term agreements and spot sales ("Non-LTA")								Graphite Electrodes - Short-term agreements and spot sales ("Non-LTA")	69,295		32,303		181,754		93,232
By-products and other	By-products and other	11,577		11,449				By-products and other	10,704		4,673		34,238		21,719
Total Revenues	Total Revenues	$	304,397	$	318,646			Total Revenues	$	347,348	$	286,987	$	982,495	$	886,351

The Graphite Electrodes revenue categories include only graphite electrodes manufactured by GrafTech. The revenue category “By-products and Other” also includes resales of low-grade electrodes purchased from third-party suppliers, which represent a minimal contribution to our profitability.

Contract Balances

Substantially all of the Company's receivables relate to contracts with customers. Accounts receivables are recorded when the right to consideration becomes unconditional. Payment terms on invoices range from 30 to 120 days depending on the customary business practices of the jurisdictions in which we do business.

Certain short-term and longer-term sales contracts require up-front payments prior to the Company’s fulfillment of any performance obligation. These contract liabilities are recorded as current or long-term deferred revenue, depending on the lag between the pre-payment and the expected delivery of the related products. Additionally, deferred revenue or contract assets originate from contracts where the allocation of the transaction price to the performance obligations based on their relative stand-alone selling prices results in the timing of revenue recognition being different from the timing of the invoicing. In this case, deferred revenue is amortized into revenue based on the transaction price allocated to the remaining performance obligations and contract assets are realized through the contract invoicing.

Contract assets as of ~~March 31,~~September 30, 2021 were ~~$2.4~~$1.7 million, of which ~~$1.6 million and $0.8 million~~ are included in "Prepaid expenses and other current ~~assets" and "Other long-term~~ assets," ~~respectively,~~ on the Condensed Consolidated Balance Sheets. Contract assets as of December 31, 2020 ~~was~~were $2.7 million, of which $1.5 million and $1.2 million are included in "Prepaid expenses and other current assets" and "Other long-term assets," respectively, on the Condensed Consolidated Balance Sheets.

~~Current deferred revenue is included in "Other accrued liabilities" and long-term deferred revenue is included in "Other long-term obligations" on the Condensed Consolidated Balance Sheets.~~

1011

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The following table provides information about deferred revenue from contracts with customers (in thousands):. Current deferred revenue is included in "Other accrued liabilities" and long-term deferred revenue is included in "Other long-term obligations" on the Condensed Consolidated Balance Sheets:


		Current Deferred Revenue		Long-Term Deferred Revenue			Current Deferred Revenue		Long-Term Deferred Revenue
		(Dollars in thousands)					(Dollars in thousands)
Balance as of December 31, 2020	Balance as of December 31, 2020	$	13,056	$	5,662	Balance as of December 31, 2020	$	13,056	$	5,662
Increases due to cash received	Increases due to cash received	32,190		0		Increases due to cash received	31,543		—

Revenue recognized	Revenue recognized	(3,550)		0		Revenue recognized	(22,696)		—
Reclassifications between long-term and current	Reclassifications between long-term and current	546		(546)		Reclassifications between long-term and current	4,928		(4,928)
Foreign currency impact	Foreign currency impact	30		0		Foreign currency impact	(7)		(1)
Balance as of March 31, 2021		$	42,272	$	5,116
Balance as of September 30, 2021						Balance as of September 30, 2021	$	26,824	$	733

Transaction Price Allocated to the Remaining Performance Obligations

The following table presents estimated revenues expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) at the end of reporting period. The estimated revenues do not include contracts with original duration of one year or less. During the challenging market conditions in 2020, we were able to work with our customers to develop mutually beneficial solutions to their challenges, including volume commitments. We have negotiated long-term sales agreement ("LTA") modifications with many of these customers. We also worked to preserve our rights under the LTAs in a few arbitrations that arose from some non-performance and other disputes during the year.

We recorded ~~$246~~$767 million of LTA revenue in the ~~first three~~nine months ofended September 30, 2021, and we expect to record approximately ~~$675~~$233 million to ~~$775~~$278 million of LTA revenue for the remainder of 2021. ~~The~~The remaining revenue associated with our LTAs is expected to be approximately as follows:


	2022	2023 through 2024
	(Dollars in millions)
Estimated LTA revenue	$910-$1,010	$350-$450(1)

(1) Includes expected termination fees from a few customers that have failed to meet certain obligations under their LTAs.

The majority of the LTAs are defined as pre-determined fixed annual volume contracts while a small portion are defined with a specified volume range. For the year ~~2021~~2022 and beyond, the contractual revenue amounts above are based upon the minimum volume for those contracts with specified ranges. The actual revenue realized from these contracted volumes may vary in timing and total due to contract non-performance, contract arbitrations, credit risk associated with certain customers facing financial challenges and customer demand related to contracted volume ranges.

(3)Goodwill and Other Intangible Assets

We are required to review goodwill and indefinite-lived intangible assets annually for impairment. Goodwill impairment is tested at the reporting unit level on an annual basis and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. The ~~Goodwill~~goodwill balance was $171.1 million as of ~~March 31,~~September 30, 2021 and December 31, 2020.

1112

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GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The following table summarizes intangible assets with determinable useful lives by major category which are included in "Other Assets" on our Condensed Consolidated Balance Sheets:


Intangible Assets	Intangible Assets													Intangible Assets
		As of March 31, 2021						As of December 31, 2020							As of September 30, 2021						As of December 31, 2020
		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount			Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
		(Dollars in thousands)													(Dollars in thousands)
Trade name	Trade name	$	22,500	$	(12,439)	$	10,061	$	22,500	$	(11,932)	$	10,568	Trade name	$	22,500	$	(13,445)	$	9,055	$	22,500	$	(11,932)	$	10,568
Technological know-how	Technological know-how	55,300		(35,237)		20,063		55,300		(34,091)		21,209		Technological know-how	55,300		(37,467)		17,833		55,300		(34,091)		21,209
Customer–related intangible	Customer–related intangible	64,500		(24,937)		39,563		64,500		(23,848)		40,652		Customer–related intangible	64,500		(27,112)		37,388		64,500		(23,848)		40,652
Total finite-lived intangible assets	Total finite-lived intangible assets	$	142,300	$	(72,613)	$	69,687	$	142,300	$	(69,871)	$	72,429	Total finite-lived intangible assets	$	142,300	$	(78,024)	$	64,276	$	142,300	$	(69,871)	$	72,429

Amortization expense of intangible assets was $2.7 million and ~~$2.9~~$2.8 million in the three months ended ~~March 31,~~September 30, 2021 and 2020, respectively, and $8.2 million and $8.7 million in the nine months ended September 30, 2021 and 2020, respectively. Estimated amortization expense will be approximately ~~$8.0~~$2.6 million for the remainder of 2021, $10.1 million in 2022, $9.2 million in 2023, $8.0 million in 2024 and $7.3 million in 2025.

(4)Debt and Liquidity

The following table presents our long-term debt:


		As of March 31, 2021		As of December 31, 2020			As of September 30, 2021		As of December 31, 2020
		(Dollars in thousands)					(Dollars in thousands)
2018 Credit Facility (2018 Term Loan and 2018 Revolving Credit Facility)	2018 Credit Facility (2018 Term Loan and 2018 Revolving Credit Facility)	$	793,708	$	943,708	2018 Credit Facility (2018 Term Loan and 2018 Revolving Credit Facility)	$	643,708	$	943,708
2020 Senior Notes	2020 Senior Notes	500,000		500,000		2020 Senior Notes	500,000		500,000
Other debt	Other debt	591		615		Other debt	583		615
Unamortized debt discount and issuance costs	Unamortized debt discount and issuance costs	(21,176)		(24,192)		Unamortized debt discount and issuance costs	(16,751)		(24,192)
Total debt	Total debt	1,273,123		1,420,131		Total debt	1,127,540		1,420,131
Less: Short-term debt	Less: Short-term debt	(127)		(131)		Less: Short-term debt	(128)		(131)
Long-term debt	Long-term debt	$	1,272,996	$	1,420,000	Long-term debt	$	1,127,412	$	1,420,000

In ~~February~~the nine months ended September 30, 2021, we repaid ~~$150~~$300 million of principal of our 2018 Term Loan Facility (as defined below). The fair value of our debt was approximately ~~$1,296~~$1,160 million and $1,453 million as of ~~March 31,~~September 30, 2021 and December 31, 2020, respectively. The fair value of the debt is measured using level 3 inputs.

2018 Term Loan and 2018 Revolving Credit ~~Agreement~~Facility

In February ~~12,~~ 2018, the Company entered into a credit agreement (the “2018 Credit Agreement”) ~~among the Company, GrafTech Finance Inc. (“GrafTech Finance”)~~, GrafTech Switzerland SA (“Swissco”), GrafTech Luxembourg II S.à.r.l. (“Luxembourg Holdco” and, together with GrafTech Finance and Swissco, the “Co-Borrowers”), the lenders and issuing banks party thereto and JPMorgan Chase Bank, N.A. as administrative agent (the "Administrative Agent") and as collateral agent, which provides for (i) a ~~$1,500~~$2,250 million senior secured term facility (the “2018 Term Loan Facility”) after giving effect to the June 2018 amendment (the “First Amendment”) that increased the aggregate principal amount of the 2018 Term Loan Facility from $1,500 million to $2,250 million and (ii) a $250 million senior secured revolving credit facility (the “2018 Revolving Credit Facility” and, together with the 2018 Term Loan Facility, the “Senior Secured Credit Facilities”), which may be used from time to time for revolving credit borrowings denominated in dollars or Euro, the issuance of one or more letters of credit denominated in dollars, Euro, Pounds Sterling or Swiss Francs and one or more swing line loans denominated in dollars.. GrafTech Finance Inc. (“GrafTech Finance”) is the sole borrower under the 2018 Term Loan Facility while GrafTech Finance, GrafTech Switzerland SA (“Swissco”) and GrafTech Luxembourg II S.à.r.l. (“Luxembourg Holdco” and, together with GrafTech Finance and Swissco, ~~and Lux Holdco~~the “Co-Borrowers”) are ~~Co-Borrowers~~co-borrowers under the 2018 Revolving Credit Facility. ~~On February 12, 2018, GrafTech Finance borrowed $1,500 million under the~~The 2018 Term Loan Facility ~~(the "2018 Term Loans"). The 2018 Term Loans mature on February 12, 2025. The maturity date for~~and the 2018 Revolving Credit Facility ismature on February 12, ~~2023.~~2025 and February 12, 2023, respectively.

~~Borrowings under the~~The 2018 Term Loan Facility ~~bear~~bears interest, at ~~GrafTech Finance’s~~our option, at a rate equal to either (i) the Adjusted LIBO Rate (as defined in the 2018 Credit Agreement), plus an applicable margin ~~initially~~ equal to ~~3.50%~~3.00% per annum following an amendment in February 2021 (the “Second Amendment”) that decreased the Applicable Rate (as defined in the 2018 Credit Agreement) by 0.50% for each pricing level or (ii) the ABR Rate (as defined in the 2018 Credit Agreement), plus an applicable margin equal to

1213

PART I (CONT'D)

GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

~~annum or (ii) the ABR Rate (as defined in the 2018 Credit Agreement), plus an applicable margin initially equal to 2.50%~~2.00% per annum following the Second Amendment, in each case with one step down of 25 basis points based on achievement of certain public ratings of the 2018 Term ~~Loans.~~Loan Facility. The Second Amendment also decreased the interest rate floor from 1.0% to 0.50% for the 2018 Term Loan Facility.

~~Borrowings under the~~The 2018 Revolving Credit Facility ~~bear~~bears interest, at ~~the applicable Co-Borrower’s~~our option, at a rate equal to either (i) the Adjusted LIBO Rate, plus an applicable margin initially equal to 3.75% per annum or (ii) the ABR Rate, plus an applicable margin initially equal to 2.75% per annum, in each case with two 25 basis point step downs based on achievement of certain senior secured first lien net leverage ratios. In addition, ~~the Co-Borrowers will be~~we are required to pay a quarterly commitment fee on the unused commitments under the 2018 Revolving Credit Facility in an amount equal to 0.25% per annum.

~~All obligations under the 2018~~The Senior Secured Credit ~~Agreement~~Facilities are guaranteed by ~~GrafTech Finance and~~ each of our domestic ~~subsidiary of GrafTech,~~subsidiaries, subject to certain customary exceptions, and by GrafTech Luxembourg I S.à.r.l., a Luxembourg société à responsabilité limitée and an indirect wholly owned subsidiary of GrafTech, Luxembourg HoldCo, and Swissco (collectively, the “Guarantors”) with respect to all obligations under the 2018 Credit Agreement of each of our foreign ~~subsidiary of GrafTech~~subsidiaries that is a Controlled Foreign Corporation (within the meaning of Section 956 of the Internal Revenue Code of 1986, as amended from time to time (the ~~"Code"~~“Code”) are guaranteed by GrafTech Luxembourg I S.à.r.l., a Luxembourg société à responsabilité limitée and an indirect wholly owned subsidiary of GrafTech, Luxembourg Holdco and Swissco (collectively, the "Guarantors").

All obligations under the 2018 Credit Agreement are secured, subject to certain exceptions, ~~and Excluded Assets (as defined in the 2018 Credit Agreement),~~ by: (i) a pledge of all of the equity securities of ~~GrafTech Finance and~~ each domestic Guarantor ~~(other than GrafTech)~~ and of each other direct, wholly owned domestic subsidiary of GrafTech and any Guarantor, (ii) a pledge on no more than 65% of the equity interests of each subsidiary that is a Controlled Foreign Corporation (within the meaning of Section 956 of the Code), and (iii) security interests in, and mortgages on, personal property and material real property of ~~GrafTech Finance and~~ each domestic Guarantor, subject to permitted liens and certain exceptions specified in the 2018 Credit Agreement. The obligations of each foreign subsidiary of GrafTech that is a Controlled Foreign Corporation under the 2018 Revolving Credit Facility are secured by (i) a pledge of all of the equity securities of each Guarantor that is a Controlled Foreign Corporation and of each direct, wholly owned subsidiary of any Guarantor that is a Controlled Foreign Corporation, and (ii) security interests in certain receivables and personal property of each Guarantor that is a Controlled Foreign Corporation, subject to permitted liens and certain exceptions specified in the 2018 Credit Agreement.

The 2018 Term ~~Loans amortize~~Loan Facility amortizes at a rate ~~equal to 5% per annum~~ of ~~the original principal amount of the 2018 Term Loans~~$112.5 million a year payable in equal quarterly installments, with the remainder due at maturity. The Co-Borrowers are permitted to make voluntary prepayments at any time without premium or penalty, except in the case of prepayments made in connection with certain repricing transactions with respect to the 2018 Term Loans effected within twelve months of the closing date of the 2018 Credit Agreement, to which a 1.00% prepayment premium applies.penalty. GrafTech Finance is required to make prepayments under the 2018 Term ~~Loans~~Loan Facility (without payment of a premium) with (i) net cash proceeds from non-ordinary course asset sales (subject to customary reinvestment rights and other customary exceptions and exclusions), and (ii) commencing with the Company’s fiscal year ended December 31, 2019, 75% of Excess Cash Flow (as defined in the 2018 Credit Agreement), subject to step-downs to 50% and 0% of Excess Cash Flow based on achievement of a senior secured first lien net leverage ratio greater than 1.25 to 1.00 but less than or equal to 1.75 to 1.00 and less than or equal to 1.25 to 1.00, respectively. Scheduled quarterly amortization payments of the 2018 Term ~~Loans~~Loan Facility during any calendar year reduce, on a dollar-for-dollar basis, the amount of the required Excess Cash Flow prepayment for such calendar year, and the aggregate amount of Excess Cash Flow prepayments for any calendar year reduce subsequent quarterly amortization payments of the 2018 Term ~~Loans~~Loan Facility as directed by GrafTech Finance. As of September 30, 2021, we have satisfied all amortization requirements through prepayments through the maturity date.

The 2018 Credit Agreement contains customary representations and warranties and customary affirmative and negative covenants applicable to GrafTech and restricted subsidiaries, including, among other things, restrictions on indebtedness, liens, investments, fundamental changes, dispositions, and dividends and other distributions. The 2018 Credit Agreement contains a financial covenant that requires GrafTech to maintain a senior secured first lien net leverage ratio not greater than 4.00:1.00 when the aggregate principal amount of borrowings under the 2018 Revolving Credit Facility and outstanding letters of credit issued under the 2018 Revolving Credit Facility (except for undrawn letters of credit in an aggregate amount equal to or less than $35 million), taken together, exceed 35% of the total amount of commitments under the 2018 Revolving Credit Facility. The 2018 Credit Agreement also contains customary events of default.

~~First Amendment~~2020 Senior Notes

In December 2020, GrafTech Finance issued $500 million aggregate principal amount of 4.625% senior secured notes due 2028 (the “2020 Senior Notes”) in a private offering. The 2020 Senior Notes and related guarantees are secured on a pari passu basis by the collateral securing the Senior Secured Credit Facilities. All of the proceeds from the 2020 Senior Notes were used to partially repay borrowings under our 2018 ~~Credit Agreement~~Term Loan Facility.

OnThe 2020 Senior Notes pay interest in arrears on June 15 ~~2018,~~and December 15 of each year, with the ~~Company entered into~~principal due in full on December 15, 2028. Prior to December 15, 2023, up to 40% of the 2020 Senior Notes may be redeemed with the net cash proceeds of certain equity offerings at a ~~first amendment (the “First Amendment”)~~price equal to ~~its 2018 Credit Agreement.~~104.625% of the principal amount thereof, together with accrued and unpaid interest, if any. The ~~First Amendment amended~~2020 Senior Notes may be redeemed, in whole or in part, at any time prior to December 15, 2023 at a price equal to 100% of the ~~2018 Credit Agreement to provide for an additional $750 million in aggregate~~principal amount of the notes redeemed plus a premium together with accrued and unpaid interest,

1314

PART I (CONT'D)

GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

~~principal amount of incremental term loans (the “Incremental Term Loans”)~~if any, to, ~~GrafTech Finance. The Incremental Term Loans increased~~but not including, the aggregate principal amount of term loans incurred by GrafTech Finance under the 2018 Credit Agreement from $1,500 million to $2,250 million. The Incremental Term Loans have the same terms as those applicable to the 2018 Term Loans, including interest rate, payment and prepayment terms, representations and warranties and covenants. The Incremental Term Loans mature on February 12, 2025, the same date as the 2018 Term Loans. GrafTech paid an upfront fee of 1.00% of the aggregate principal amount of the Incremental Term Loans on the effective date of the First Amendment.

~~In 2019, we repaid $350 million of principal on our 2018 Term Loan Facility. During 2020 we reduced our 2018 Term Loan Facility principal by $900 million, of which $500 million was funded by~~redemption date. Thereafter, the 2020 Senior Notes ~~(as defined below) issued on December 22, 2020.~~

~~2018 Term Loan Repricing~~

~~On February 17, 2021, the Company entered into a second amendment (the “Second Amendment”) to its 2018 Credit Agreement to, among other things, (a) decrease the Applicable Rate (as defined~~may be redeemed, in ~~the 2018 Credit Agreement) with respect to any 2018 Term Loan (as defined~~whole or in the 2018 Credit Agreement) by 0.50% for each pricing level, (b) decrease the interest rate floor for all 2018 Term Loans to 0.50%, (c) add certain technical provisions with respect to the impact of European Union bail-in banking legislation on liabilities of certain non-U.S. financial institutions, and (d) add certain technical provisions in connection with future replacement of the LIBO Rate (as defined in the 2018 Credit Agreement). As a result of the Second Amendment and the combined effect of the reduction in the interest rate margin and the reduction in the interest rate floor, the interest ratepart, at various prices depending on the ~~2018 Term Loans has been reduced by 1.0% per year.~~

~~In connection with the Second Amendment, on February 12, 2021, GrafTech Finance repaid approximately $150 million of principal on 2018 Term Loans with cash on hand.~~

~~2020 Senior Notes~~

On December 22, 2020, GrafTech Finance issued $500 million aggregate principal amount of 4.625% Senior Secured Notes due 2028 (the “2020 Senior Notes”) at an issue price of 100% of the principal amount thereof in a private offering to qualified institutional buyers in accordance with Rule 144A under the Securities Act of 1933 (the “Securities Act”) and to non-U.S. persons outside the United States under Regulation S under the Securities Act.date redeemed.

The ~~2020 Senior Notes were issued pursuant to an~~ indenture dated as of December 22, 2020 (the “Indenture”), among GrafTech Finance, as issuer, the Company, as a guarantor, the other subsidiaries of the Company named therein as guarantors and U.S. Bank National Association, as trustee and notes collateral agent.

The 2020 Senior Notes are guaranteed on a senior secured basis by the Company and all of its existing and future direct and indirect U.S. subsidiaries that guarantee, or borrow under, the credit facilities under its 2018 Credit Agreement. The 2020 Senior Notes are also secured on a pari passu basis by the collateral securing the term loans under the 2018 Credit Agreement. GrafTech Finance, the Company and the other guarantors granted a security interest in such collateral, consisting of substantially all of their respective assets, as security for the obligations of GrafTech Finance, the Company and the other guarantors undergoverning the 2020 Senior Notes and the Indenture pursuant to a collateral agreement, dated as of December 22, 2020, among GrafTech Finance, the Company, the other subsidiaries of the Company named therein as grantors and U.S. Bank National Association, as collateral agent.

The 2020 Senior Notes bear interest at the rate of 4.625% per annum, which accrues from December 22, 2020 and is payable in arrears on June 15 and December 15 of each year, commencing on June 15, 2021. The 2020 Senior Notes will mature on December 15, 2028, unless earlier redeemed or repurchased, and are subject to the terms and conditions set forth in the Indenture.

GrafTech Finance may redeem some or all of the 2020 Senior Notes at the redemption prices and on the terms specified in the Indenture. If the Company or GrafTech Finance experiences specific kinds of changes in control or the Company or any of its restricted subsidiaries sells certain of its assets, then GrafTech Finance must offer to repurchase the 2020 Senior Notes on the terms set forth in the Indenture.

~~The Indenture~~(the “Indenture”) contains 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

~~PART I (CONT'D)~~

~~GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

merger, or sell, transfer, lease or otherwise dispose of all or substantially all assets. Pursuant to the Indenture, if our pro forma consolidated first lien net leverage ratio is no greater than 2.00 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 first lien net leverage ratio is greater than 2.00 to 1.00, we can make restricted payments pursuant to certain baskets.

The Indenture contains 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 2020 Senior 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 2020 Senior Notes may declare all of the 2020 Senior Notes to be due and payable immediately.

~~The entirety of the proceeds from the 2020 Senior Notes were used to partially repay borrowings under our 2018 Term Loan Facility.~~

(5)Inventories

Inventories are comprised of the following:


		As of March 31, 2021		As of December 31, 2020			As of September 30, 2021		As of December 31, 2020
		(Dollars in thousands)					(Dollars in thousands)
Inventories:	Inventories:					Inventories:
Raw materials	Raw materials	$	95,987	$	101,098	Raw materials	$	121,872	$	101,098
Work in process	Work in process	112,411		110,331		Work in process	114,332		110,331
Finished goods	Finished goods	42,412		54,535		Finished goods	33,505		54,535

Total	Total	$	250,810	$	265,964	Total	$	269,709	$	265,964

(6)Interest Expense

The following tables present the components of interest expense:


		For the Three Months Ended March 31,					For the Three Months Ended September 30,				For the Nine Months Ended September 30,
		2021		2020					2021		2020		2021		2020
		(Dollars in thousands)				(Dollars in thousands)
Interest incurred on debt	Interest incurred on debt	$	16,865	$	24,092			Interest incurred on debt	$	13,526	$	20,893	$	44,476	$	64,285

Accretion of original issue discount on 2018 Term Loans	Accretion of original issue discount on 2018 Term Loans	1,271		549				Accretion of original issue discount on 2018 Term Loans	815		549		2,658		1,647
Amortization of debt issuance and modification costs	Amortization of debt issuance and modification costs	4,031		1,031				Amortization of debt issuance and modification costs	1,707		1,032		7,075		3,094
Total interest expense	Total interest expense	$	22,167	$	25,672			Total interest expense	$	16,048	$	22,474	$	54,209	$	69,026

PART I (CONT'D)

GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Interest Rates

The 2020 Senior Notes carry a fixed interest rate of 4.625%. The 2018 Credit Agreement had an effective interest rate of 3.50% as of ~~March 31,~~September 30, 2021 and 4.50% as of December 31, 2020. See Note 4 "Debt and Liquidity" for details of these transactions.

~~In connection with~~During the ~~$150~~three months ended September 30, 2021, we made prepayments for a total of $100.0 million ~~prepayment of the borrowings~~ under our 2018 Term Loan ~~Facility in the first quarter of 2021,~~Facility. In connection with this, we recorded ~~$1.5~~$0.5 million of accelerated accretion of the original issue discount and we recorded $0.9 million of accelerated amortization of the debt issuance ~~costs and $0.9~~costs.

During the nine months ended September 30, 2021, we made prepayments for a total of $300.0 million under our 2018 Term Loan Facility. In connection with this, we recorded $1.8 million of accelerated accretion of the original issue discount ~~for~~and $2.9 million of accelerated amortization of the ~~three months ended March 31, 2021.~~debt issuance costs. We also recorded $1.6 million of modification costs related to the term loan ~~repricing.~~repricing in the first quarter of 2021. See Note 4 "Debt and Liquidity" for details of these transactions.

The Company has several interest rate swap contracts to fix ~~our~~the cash flows associated with the risk in variability in the one-month ~~U.S.~~USD. London Interbank Offered Rate ("~~US LIBO"~~USD LIBOR") for ~~a portion of our outstanding~~the 2018 Credit Agreement debt. See Note 9 "Derivative Instruments" for details of these transactions.

(7) Contingencies

Legal Proceedings

We are involved in various investigations, lawsuits, claims, demands, environmental compliance programs and other legal proceedings arising out of or incidental to the conduct of our business. While it is not possible to determine the ultimate

~~PART I (CONT'D)~~

~~GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

disposition of each of these matters, we do not believe that their ultimate disposition will have a material adverse effect on our financial position, results of operations or cash flows. Additionally, we are involved in the following legal proceedings described below.

We are involved in various arbitrations, sometimes as claimants and other times as respondents/counterclaimants, pending before the International Chamber of Commerce with several customers who, among other things, have failed to perform under their LTAs and in certain instances are seeking to modify or frustrate their contractual commitments to us. In particular, Aperam South America LTDA, Aperam Sourcing S.C.A., ArcelorMittal Sourcing S.C.A., and ArcelorMittal Brasil S.A. (the “Claimants”) initiated a single arbitration proceeding against two of the Company’s subsidiaries in the International Chamber of Commerce in June 2020. In June 2021, the Claimants filed their statement of claim, seeking approximately $61 million plus interest in monetary relief and/or reimbursement in respect of several fixed price LTAs that were executed between such subsidiaries and the Claimants in 2017 and 2018. The Claimants argue, among other things, that they should no longer be required to comply with the terms of the LTAs that they signed due to an alleged drop in market prices for graphite electrodes in January 2020. Alternatively, the Claimants argue that they should not be required to comply with the LTAs that they signed due to alleged market circumstances at the time of execution. We believe we have valid defenses to these claims. We intend to vigorously defend them and enforce our rights under the LTAs.

Pending litigation in Brazil has been brought by employees seeking to recover additional amounts and interest thereon under certain wage increase provisions applicable in 1989 and 1990 under collective bargaining agreements to which employers in the Bahia region of Brazil were a party (including our subsidiary in Brazil). Companies in Brazil have settled claims arising out of these provisions and, in May 2015, the litigation was remanded by the Brazilian Supreme Court in favor of the employees union. After denying an interim appeal by the Bahia region employers on June 26, 2019, the Brazilian Supreme Court finally ruled in favor of the employees union on September 26, 2019. The employers union has determined not to seek annulment of such decision. Separately, on October 1, 2015, a related action was filed by current and former employees against our subsidiary in Brazil to recover amounts under such provisions, plus interest thereon, which amounts together with interest could be material to us. If the Brazilian Supreme Court proceeding above had been determined in favor of the employers union, it would also have resolved this proceeding in our favor. In the first quarter of 2017, the state court initially ruled in favor of the employees. We appealed this state court ruling, and the appellate court issued a decision in our favor on May 19, 2020. The employees have further appealed and, on December 16, 2020, the court upheld the decision in favor of GrafTech Brazil. On February 22, 2021, the employees filed a further appeal and, on April 28, 2021, the court rejected the employees' appeal in favor of GrafTech Brazil. The ~~court's decision remains subject to~~employees filed a further appeal. As of ~~March 31,~~September 30, 2021, we are unable to assess the potential loss associated with these proceedings as the claims do not currently specify the number of employees seeking damages or the amount of damages being sought.

PART I (CONT'D)

GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Product Warranties

We generally sell products with a limited warranty. We accrue for known warranty claims if a loss is probable and can be reasonably estimated. We also accrue for estimated warranty claims incurred based on a historical claims charge analysis. Claims accrued but not yet paid and the related activity within the accrual for the ~~three~~nine months ended ~~March 31,~~September 30, 2021, are presented below:


	(Dollars in thousands)
Balance as of December 31, 2020	$	1,997
Product warranty accruals and adjustments	~~164~~1,112
Settlements	~~(497)~~(1,818)
Balance as of ~~March 31,~~September 30, 2021	$	~~1,664~~1,291

Tax Receivable Agreement

On April 23, 2018, the Company entered into the ~~TRA~~tax receivable agreement (“TRA”) that provides Brookfield, as the sole pre-IPO stockholder, the right to receive future payments from us for 85% of the amount of cash savings, if any, in U.S. federal income tax and Swiss tax that we and our subsidiaries realize as a result of the utilization of the pre-IPO ~~Tax Assets.~~tax assets. In addition, we will pay interest on the payments we will make to Brookfield with respect to the amount of these cash savings from the due date (without extensions) of our tax return where we realize these savings to the payment date at a rate equal to LIBOR plus 1.00% per annum. The term of the TRA commenced on April 23, 2018 and will continue until there is no potential for any future tax benefit payments.

There was no liability recognized on the date we entered into the TRA as there was a full valuation allowance recorded against our deferred tax assets. During the second quarter of 2018, it was determined that the conditions were appropriate for the Company to release a valuation allowance of certain tax assets as we exited our three year cumulative loss position. This release resulted in the recording of a $86.5 million liability related to the TRA on the Consolidated Statements of Operations~~as "Related Party Tax Receivable Agreement Expense."~~

As of December 31, 2019, the total TRA liability was $89.9 million, of which $27.9 million was classified as a current liability in "Related party payable-tax receivable agreement" on the balance sheet, and $62.0 million of the liability remained as a long-term liability in "Related party payable-tax receivable agreement" on the balance sheet. The 2019 current liability was settled in the first quarter of 2020.

In 2020, the TRA liability was reduced by $21.1 million as a result of revised U.S. income estimates affecting the future usage of our U.S. tax attributes. The reduction was recorded as a "Related Party Tax Receivable Agreement Benefit" on the Consolidated Statement of Operations. As of December 31, 2020, total TRA liability was $40.9 million, of which

~~PART I (CONT'D)~~

~~GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

$21.8 million was classified as a current liability in "Related party payable - tax receivable agreement" on the balance sheet, as we expected this portion to be settled within twelve months, and $19.1 million of the liability remained as a long-term liability in "Related party payable - tax receivable agreement" on the balance sheet.

~~During the first quarter 2021, the previous current liability was settled. As of March 31,~~September 30, 2021, the total TRA liability was $19.1 million, of which $3.9 million was classified as a current liability in "Related party payable-tax receivable agreement" and $15.2 million remained as a long-term liability in "Related party payable-tax receivable agreement" on the balance sheet. As of December 31, 2020, the total TRA liability was $40.9 million, of which $21.8 million was classified as a current liability in "Related party payable-tax receivable agreement" on the balance sheet, as we expected this portion to be settled within twelve months, and $19.1 million of the liability remained as a long-term liability in "Related party payable - tax receivable agreement" on the balance sheet.

Long-term Incentive Plan

The long-term incentive plan ("LTIP") was adopted by the Company ~~effective as of~~in August ~~17,~~ 2015 asand amended and restated ~~as of~~in March ~~15,~~ 2018. The purpose of the plan iswas to retain senior management of the Company, to incentivize them to make decisions with a long-term view and to influence behavior in a way that is consistent with maximizing value for the pre-IPO stockholder of the Company in a prudent manner. Each participant iswas allocated a number of profit units, with a maximum of 30,000 profit units ("Profit Units") available under the plan. Awards of Profit Units generally ~~vest~~vested in equal increments over a five-year period beginning on the first anniversary of the grant date ~~and~~of the Profit Units, subject to continued employment with the Company through each vesting date. ~~Any~~If a participant ceased to provide services prior to any applicable vesting date for any reason, other than a termination for cause, then the participant forfeited all unvested Profit Units ~~that~~and any vested Profit Units remained outstanding. If a Participant had been terminated for cause, both vested and unvested Profit Units would have ~~not~~ been ~~previously forfeited will accelerate and become fully vested upon~~forfeited. Upon a ~~‘‘Change~~"Change in ~~Control’’~~Control" (as defined ~~below).~~

in the LTIP), the Profit Units ~~will generally be settled~~entitled the participant to a payment based on a percentage of the sum of (i) all net "Sale Proceeds" (as defined in ~~a lump sum~~the LTIP) received by Brookfield Capital IV L.P. and its affiliates ("Brookfield Capital IV") less (ii) the "Threshold Value" (as defined in the LTIP), with such payment ~~within 30 days following~~amount being determined by the Company's Board of Directors in its sole discretion. In the event that, in connection with a Change in Control, ~~based~~Brookfield Capital IV disposes of less than 100% of its ownership interest in the Company, the amount of the Sale Proceeds in excess of the Threshold Value shall be determined on a pro-rata basis by reference to the ~~‘‘Sales Proceeds’’ (as defined below) received~~percentage of ownership interest disposed, as determined by the Board of Directors of the Company.

The May 2021 secondary offering of our common stock by Brookfield Capital ~~Partners~~ IV ~~L.P. (together with its affiliates, "Brookfield Capital IV")~~constituted a "Change in ~~connection with~~Control" under the ~~Change~~LTIP. A "Change in ~~Control. The~~Control" under the LTIP ~~defines ‘‘Change in Control’’~~is defined as, ~~any~~among other things, a transaction or series of transactions (including, without limitation, the consummation of a combination, share purchases, recapitalization, redemption, issuance of capital stock, consolidation, reorganization or otherwise) pursuant to which (a) a Person not affiliated with Brookfield Capital IV acquires securities representing more than seventy percent (70%) of the combined voting power of the outstanding voting securities of the Company or the entity surviving or resulting from such transaction, (b) following a public offering of the Company’s stock, Brookfield Capital IV ~~has ceased~~ceases to have a beneficial ownership interest in at least 30% of the Company’s outstanding voting securities (effective on the first of such date)~~, or (c)~~. Upon completion of the May 2021 secondary offering, Brookfield beneficially owned approximately 24% of the Company's outstanding voting securities. Accordingly, the Company ~~sells all or substantially all of~~settled the ~~assets of the Company and its subsidiaries on a consolidated basis. It is intended that the occurrence of~~vested Profit

PART I (CONT'D)

GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Units in lump sum payment within 30 days following a Change in Control in which Sales Proceeds exceed the Threshold Value would constitute a ‘‘substantial risk of forfeiture’’ within the meaning of Section 409A of the Code. The LTIP defines ‘‘Threshold Value’’ as, as of any date of determination, an amount equal to $855,000,000 (which represents the amount of the total invested capital of Brookfield Capital IV as of August 17, 2015), plus the dollar value of any cash or other consideration contributed to or invested in the Company by Brookfield Capital IV after August 17, 2015. The Threshold Value shall be determined by the Company's Board of Directors in its sole discretion. The LTIP defines ‘‘Sales Proceeds’’ as, as of any date of determination, the sum of all proceeds actually received by the Brookfield Capital IV, net of all Sales Costs (as defined below), (i) as consideration (whether cash or equity) upon the Change in Control and (ii) as distributions, dividends, repurchases, redemptions or otherwise as a holder of such equity interests in the Company. Proceeds that are not paid upon or prior to or in connection with the Change in Control, including earn-outs, escrows and other contingent or deferred consideration shall become ‘‘Sale Proceeds’’ only as and when such proceeds are received by Brookfield Capital IV. ‘‘Sales Costs’’ means any costs or expenses (including legal or other advisory costs), fees (including investment banking fees), commissions or discounts payable directly by Brookfield Capital IV in connection with, arising out of or relating to a Change in Control, as determined by the Company's Board of Directors in its sole discretion.

~~The Profit Unit awards became 100% vested in August 2020. Given the successful completion of the IPO in~~Control. In the second quarter 2021, the settlement of ~~2018 and Brookfield's subsequent distribution and sale of shares of common stock, it is reasonably possible that a Change in Control, as defined above, may ultimately happen and that~~ the ~~awarded~~ Profit Units ~~will be subsequently paid out to the participants. Depending on Brookfield’s sale proceeds, the potential liability triggered by a Change in Control is estimated to be~~resulted in the ~~range~~recording of ~~$65~~a pre-tax charge of $73.4 million, ~~to $75 million. This liability will be~~of which $30.7 million was recorded in cost of sales and $42.7 million was recorded in selling and administrative expense. As of September 30, 2021, $66.7 million of the charges have been settled in cash by the Company ~~if and when~~while the ~~Change~~remainder of the liability, related to payroll taxes, is expected to be paid in ~~Control actually occurs.~~subsequent quarters, which will satisfy all obligations under the LTIP.

(8) Income Taxes

We compute and apply to ordinary income an estimated annual effective tax rate on a quarterly basis based on current and forecasted business levels and activities, including the mix of domestic and foreign results and enacted tax laws. The estimated annual effective tax rate is updated quarterly based on actual results and updated operating forecasts. Ordinary income refers to income (loss) before income tax expense excluding significant, unusual or infrequently occurring items. The tax effect of an unusual or infrequently occurring item is recorded in the interim period in which it occurs as a discrete item of

~~PART I (CONT'D)~~

~~GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

tax.

The following table summarizes the provision for income taxes for the three and nine months ended ~~March 31,~~September 30, 2021 and 2020:


		For the Three Months Ended March 31,							For the Three Months Ended September 30,					For the Nine Months Ended September 30,
		2021			2020						2021			2020			2021			2020
		(Dollars in thousands)						(Dollars in thousands)
Tax expense	Tax expense	$	16,257		$	23,946				Tax expense	$	21,920		$	18,104		$	45,942		$	61,838
Pretax income		115,056			146,214
Pre-tax income										Pre-tax income	141,806			112,338			292,792			371,116
Effective tax rates	Effective tax rates	14.1		%	16.4		%			Effective tax rates	15.5		%	16.1		%	15.7		%	16.7		%

The effective tax rate for the three months ended ~~March 31,~~September 30, 2021 was ~~14.1%~~15.5%. This rate slightly differs from the U.S. statutory rate of 21% primarily due to worldwide earnings from various countries taxed at ~~lower~~different rates, ~~the Section 250 Deduction and Foreign Tax Credits~~which is partially offset by the net ~~increase~~combined impact related to the U.S. taxation of global intangible low taxed income ("GILTI"), and Foreign Tax Credits ("FTCs").

The effective tax rate for the three months ended ~~March 31,~~September 30, 2020 was ~~16.4%~~16.1%. This rate differs from the U.S. statutory rate of 21% primarily due to worldwide earnings from various countries taxed at different rates.

The tax expense ~~decreased~~increased from ~~$23.9~~$18.1 million for the three months ended ~~March 31,~~September 30, 2020 to ~~$16.3~~$21.9 million for the three months ~~March 31,~~ended September 30, 2021. This change is primarily related to an increase in pre-tax income, partially offset by a ~~reduction~~decrease in ~~pretax income and~~effective tax rate due to the mix of worldwide earnings from various countries taxed at different rates and U.S. taxation of GILTI.

For the nine months ended September 30, 2021, the effective tax rate of 15.7% differs from the U.S. statutory rate of 21% primarily due to worldwide earnings from various countries taxed at different rates which is partially offset by the net combined impact related to the U.S. taxation of GILTI and FTCs.

For the nine months ended September 30, 2020, the effective tax rate of 16.7% differs from the U.S. statutory rate of 21% primarily due to worldwide earnings from various countries taxed at different rates.

The tax expense decreased from $61.8 million for the nine months ended September 30, 2020 to $45.9 million for the nine months ended September 30, 2021. This change is primarily related to the reduction in pre-tax income and the decrease in effective tax rate due to the mix of worldwide earnings from various countries taxed at different rates and the U.S. taxation of GILTI.

As of ~~March 31,~~September 30, 2021, we had unrecognized tax ~~benefits~~positions of $0.1 million, which, if recognized, would have aan immaterial, favorable, impact on our effective tax rate.

We file income tax returns in the U.S. federal jurisdiction, and various state and foreign jurisdictions. U.S. federal tax years prior to 2017 are generally closed by statute or have been audited and settled with the applicable domestic tax authorities. Other jurisdictions are still open to examination beginning after 2014.

PART I (CONT'D)

GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

We continue to assess the realization of our deferred tax assets based on determinations of whether it is more likely than not that deferred tax benefits will be realized through the generation of future taxable income. Appropriate consideration is given to all available evidence, both positive and negative, in assessing the need for a valuation allowance. Examples of positive evidence would include a strong earnings history, an event or events that would increase our taxable income through a continued reduction of expenses, and tax planning strategies that would indicate an ability to realize deferred tax assets. In circumstances where the significant positive evidence does not outweigh the negative evidence in regards to whether or not a valuation allowance is required, we have established and maintained valuation allowances on those net deferred tax assets.

(9) Derivative Instruments

We may use derivative instruments as part of our overall foreign currency, interest rate and commodity risk management strategies to manage the risk of exchange rate movements that would reduce the value of our foreign cash flows, manage the risk associated with fluctuations in interest rate indices and to minimize commodity price volatility. Foreign currency exchange rate movements create a degree of risk to our cash flows by affecting the value of sales made and costs incurred in currencies other than the U.S. dollar.

Certain of our derivative contracts contain provisions that require us to provide collateral. Since the counterparties to these financial instruments are large commercial banks and similar financial institutions, we do not believe that we are exposed to material counterparty credit risk. We do not anticipate nonperformance by any of the counterparties to our instruments.

Foreign currency derivatives

We enter into foreign currency derivatives from time to time to attempt to manage exposure to changes in currency exchange rates. These foreign currency instruments, which include, but are not limited to, forward exchange contracts and purchased currency options, are used to hedge global currency exposures such as foreign currency denominated debt, sales, receivables, payables and purchases.

~~PART I (CONT'D)~~

~~GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

We have no foreign currency cash flow hedges outstanding as of ~~March 31,~~September 30, 2021 and December 31, 2020 and, therefore, no unrealized gains or losses reported under accumulated other comprehensive income (loss).

As of ~~March 31,~~September 30, 2021, we had outstanding Mexican peso, euro, Swiss franc, South African rand and Japanese yen currency contracts with an aggregate notional amount of ~~$60.5~~$102.9 million. As of December 31, 2020, we had outstanding Mexican peso, South African rand, euro, Swiss franc and Japanese yen currency contracts, with an aggregate notional amount of $71.0 million. The foreign currency derivatives outstanding as of ~~March 31,~~September 30, 2021 have maturities through ~~September 30,~~December 31, 2021, and were not designated as hedging instruments.

Commodity derivative contracts

We have entered into commodity derivative contracts for refined oil products. These contracts are entered into to protect against the risk that eventual cash flows related to these products will be adversely affected by future changes in prices. We had outstanding commodity derivative contracts as of ~~March 31,~~September 30, 2021 with a notional amount of ~~$48.3~~$28.9 million ~~with~~and maturities from ~~April~~October 2021 to June 2022. The outstanding commodity derivative contracts represented a pre-tax net unrealized gain within "Accumulated Other Comprehensive Income" of ~~$6.2~~$12.3 million as of ~~March 31,~~September 30, 2021. We had outstanding commodity derivative contracts as of December 31, 2020 with a notional amount of $61.3 million representing a pre-tax net unrealized loss of $2.2 million.

In connection with the de-designated commodity derivative contracts, we recognized $0.2 million unrealized loss and $0.7 million unrealized gain in cost of sales in the three and nine months ended September 30, 2021, respectively, as a result of the variation in fair value from the de-designation date. This resulted from a small portion of our commodity derivative contracts that ceased to qualify for hedge accounting in the second quarter of 2021.

Interest rate swap contracts

During the third quarter of 2019, the Company entered into four interest rate swap contracts. The contracts ~~are~~were "pay fixed, receive variable" with notional amounts of $500 million ~~due~~expected to mature in August 2021 and another $500 million due to mature in August 2024. The Company’s risk management objective was to fix its cash flows associated with the risk in variability in the one-month ~~U.S. LIBO Rate~~USD LIBOR for a portion of our outstanding debt. It iswas expected that these swaps ~~will~~would fix the cash flows associated with the forecasted interest payments on this notional amount of debt to an effective fixed interest rate of

PART I (CONT'D)

GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

5.1%, which could be lowered to 4.85% depending on credit ratings. In December 2020, in connection with the $500 million principal repayment of the 2018 Term Loan Facility, we de-designated one interest rate swap contract of $250 million notional maturing in the third quarter of ~~2021. In~~2021, and in February 2021, ~~in connection with~~we closed the ~~$150 million principal repayment of the 2018 Term Loan, the Company closed one swap~~ contract ~~of $250 million notional that was due to mature in the third quarter 2021~~ and recorded a $0.9 million charge in interest expense.

Additionally, in February 2021, the Company modified the three remaining swaps with notional amounts of $250 million ~~maturing~~that matured in the third quarter 2021 and $500 million maturing in the third quarter 2024 in order to align their terms to the amended 2018 Term Loan Facility (see Note 4 "Debt and Liquidity" for details of the February 2021 repricing of the 2018 Term Loan Facility). It is expected that these swaps will fix the cash flows associated with the forecasted interest payments on this notional amount of debt to an effective fixed interest rate of 4.2%, which could be lowered to 3.95% depending on credit ratings. The modification triggered the de-designation and re-designation of the swaps. Because the modified swaps contained an other-than-insignificant financing element at re-designation date, they are considered hybrid instruments composed of a debt host and an embedded derivative. The debt host portion amounted to a liability of ~~$9.5~~$7.6 million as of ~~March 31,~~September 30, 2021 with ~~$3.1~~$2.5 million included in "Other accrued liabilities" and ~~$6.4~~$5.1 million in "Other long-term ~~obligations". It~~obligations." The corresponding loss is accounted for in "Accumulated Other Comprehensive income" and ~~will be~~is amortized over the remaining life of the swaps. The embedded derivative is treated as a cash-flow hedge.

Within "Accumulated Other Comprehensive Income", the portion of the interest rate ~~swap portion~~swaps qualifying as ~~cash-flow hedges~~a cash flow hedge represented a net unrealized pre-tax gain of ~~$2.4~~$1.7 million and a net unrealized pre-tax loss of ~~$11.9~~$11.0 million as of ~~March 31,~~September 30, 2021 and December 31, 2020, respectively. The fair value of these contracts was determined using Level 2 inputs.

~~PART I (CONT'D)~~

~~GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

The fair value of all derivatives is recorded as assets or liabilities on a gross basis in our Condensed Consolidated Balance Sheets. As of ~~March 31,~~September 30, 2021 and December 31, 2020, the fair value of our derivatives and their respective balance sheet locations are presented in the following tables:


		Asset Derivatives			Liability Derivatives				Asset Derivatives			Liability Derivatives
		Location	Fair Value		Location	Fair Value			Location	Fair Value		Location	Fair Value
As of March 31, 2021		(Dollars in thousands)
As of September 30, 2021								As of September 30, 2021	(Dollars in thousands)
Derivatives designated as cash flow hedges:	Derivatives designated as cash flow hedges:							Derivatives designated as cash flow hedges:
Commodity derivative contracts	Commodity derivative contracts	Prepaid and other current assets	$	5,592	Other accrued liabilities	$	0	Commodity derivative contracts	Prepaid and other current assets	$	12,322	Other accrued liabilities	$	—
		Other long-term assets	571		Other long-term obligations	0			Other long-term assets	—		Other long-term obligations	—
Interest rate swap contracts	Interest rate swap contracts	Prepaid and other current assets	0		Other accrued liabilities	848		Interest rate swap contracts	Prepaid and other current assets	—		Other accrued liabilities	848
		Other long-term assets	3,291		Other long-term obligations	0			Other long-term assets	2,510		Other long-term obligations	—
Total fair value	Total fair value		$	9,454		$	848	Total fair value		$	14,832		$	848

As of December 31, 2020	As of December 31, 2020							As of December 31, 2020
Derivatives designated as cash flow hedges:	Derivatives designated as cash flow hedges:							Derivatives designated as cash flow hedges:
Commodity derivative contracts	Commodity derivative contracts	Prepaid and other current assets	$	518	Other accrued liabilities	$	888	Commodity derivative contracts	Prepaid and other current assets	$	518	Other accrued liabilities	$	888
		Other long-term assets	63		Other long-term obligations	1,898			Other long-term assets	63		Other long-term obligations	1,898
Interest rate swap contracts	Interest rate swap contracts	Prepaid and other current assets	0		Other accrued liabilities	4,080		Interest rate swap contracts	Prepaid and other current assets	—		Other accrued liabilities	4,080
		Other long-term assets	0		Other long-term obligations	6,903			Other long-term assets	—		Other long-term obligations	6,903
Total fair value	Total fair value		$	581		$	13,769	Total fair value		$	581		$	13,769

Asset Derivatives Liability Derivatives
Location Fair Value Location Fair Value
As of March 31, 2021 (Dollars in thousands)
Derivatives not designated as hedges:
Foreign currency derivatives Prepaid and other current assets $ 146 Other accrued liabilities $ 429
Total fair value $ 146 $ 429
As of December 31, 2020
Derivatives not designated as hedges:
Foreign currency derivatives Prepaid and other current assets $ 6 Other accrued liabilities $ 111
Commodity derivatives contracts Prepaid and other current assets 0 Other accrued liabilities 952
Total fair value $ 6 $ 1,063

PART I (CONT'D)

GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)


	Asset Derivatives			Liability Derivatives
	Location	Fair Value		Location	Fair Value
As of September 30, 2021	(Dollars in thousands)
Derivatives not designated as hedges:
Foreign currency derivatives	Prepaid and other current assets	$	43	Other accrued liabilities	$	1,077
Commodity derivative contracts	Prepaid and other current assets	$	724	Other accrued liabilities	$	—

Total fair value		$	767		$	1,077

As of December 31, 2020
Derivatives not designated as hedges:
Foreign currency derivatives	Prepaid and other current assets	$	6	Other accrued liabilities	$	111
Interest rate swap contracts	Prepaid and other current assets	—		Other accrued liabilities	952

Total fair value		$	6		$	1,063

The realized (gains) losses resulting from the settlement of commodity derivative contracts designated as hedges remain in "Accumulated Other Comprehensive Income" until they are recognized in the Statement of Operations when the hedged item impacts earnings, which is when the finished product is sold. As of ~~March 31,~~September 30, 2021 and 2020, net realized pre-tax gains of $7.0 million and net realized pre-tax losses of ~~$5.0 million and $0.5~~$8.0 million, respectively, were reported under "Accumulated Other Comprehensive Income" and will be and were, respectively, released to earnings within the following 12 months. See the table below for amounts recognized in the Statement of Operations.

2021

PART I (CONT'D)

GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The location and amount of realized (gains) losses on derivatives are recognized in the Statements of Operations as follows for the periods ended ~~March 31,~~September 30, 2021 and 2020:


				Amount of (Gain)/Loss Recognized											Amount of (Gain)/Loss Recognized
		Location of Realized (Gain)/Loss Recognized in the Consolidated Statement of Operations		For the Three Months Ended March 31,									Location of Realized (Gain)/Loss Recognized in the Consolidated Statement of Operations		For the Three Months Ended September 30,
			2021			2020								2021			2020
Derivatives designated as cash flow hedges:	Derivatives designated as cash flow hedges:					(Dollars in thousands)						Derivatives designated as cash flow hedges:					(Dollars in thousands)
Commodity derivative contracts	Commodity derivative contracts	Cost of sales		$	549		$	(2,809)		Commodity derivative contracts			Cost of sales		$	1,191		$	(1,295)
Interest rate swap contracts	Interest rate swap contracts	Interest expense (income)		1,330			(206)			Interest rate swap contracts			Interest expense		285			1,537

Derivatives not designated as hedges:	Derivatives not designated as hedges:									Derivatives not designated as hedges:
Foreign currency derivatives	Foreign currency derivatives	Cost of sales, Other expense (income)		$	1,629		$	(499)		Foreign currency derivatives			Cost of sales, Other expense (income)		$	448		$	(243)
Commodity derivative contracts	Commodity derivative contracts	Cost of sales		0			(139)			Commodity derivative contracts			Cost of sales		(440)			(207)
Interest rate swap contracts		Interest expense		866			0

													Amount of (Gain)/Loss Recognized
											Location of (Gain)/Loss Recognized in the Consolidated Statement of Operations			For the Nine Months Ended September 30,
									Location of (Gain)/Loss Recognized in the Consolidated Statement of Operations				2021		2020
Derivatives designated as cash flow hedges:															(Dollars in thousands)
Commodity contract hedges										Commodity contract hedges			Cost of sales		$	6,238		$	(5,234)
Interest rate swap contracts										Interest rate swap contracts			Interest expense		1,571			2,852

Derivatives not designated as hedges:										Derivatives not designated as hedges:
Foreign currency derivatives										Foreign currency derivatives			Cost of sales, Other expense (income)		$	2,342		$	(959)
Commodity derivative contracts										Commodity derivative contracts			Cost of sales		(682)			(321)
Interest rate swap contracts										Interest rate swap contracts			Interest expense		866			—

(10) Accumulated Other Comprehensive Income (Loss)

The balance in our accumulated other comprehensive income (loss) is set forth in the following table:


		As of March 31, 2021		As of December 31, 2020			As of September 30, 2021		As of December 31, 2020
		(Dollars in thousands)					(Dollars in thousands)
Foreign currency translation adjustments, net of tax	Foreign currency translation adjustments, net of tax	$	(16,156)	$	(2,725)	Foreign currency translation adjustments, net of tax	$	(16,414)	$	(2,725)
Commodity and interest rate derivatives, net of tax	Commodity and interest rate derivatives, net of tax	(4,561)		(16,916)		Commodity and interest rate derivatives, net of tax	10,640		(16,916)
Total accumulated comprehensive (loss)	Total accumulated comprehensive (loss)	$	(20,717)	$	(19,641)	Total accumulated comprehensive (loss)	$	(5,774)	$	(19,641)

PART I (CONT'D)

GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(11) Earnings per Share

During the ~~three~~nine months ended ~~March 31,~~September 30, 2021 and 2020, we repurchased 4,293,924 shares for $46.2 million and 3,328,574 shares for $30.1 million, respectively, of our common stock under the repurchase ~~program that was approved on July~~program. In the three months ended September 30, ~~2019. These~~2021 and 2020, we repurchased 4,293,924 shares for $46.2 million and no shares, respectively, under this program. The settled shares were subsequently retired. As of September 30, 2021, there were 363,616 shares for $3.9 million that were pending settlement. There were 0no shares ~~repurchased under this program during the three months ended March 31, 2021.~~pending settlement at September 30, 2020.

The following table shows the information used in the calculation of our basic and diluted earnings per share calculation for the ~~three~~nine months ended ~~March 31,~~September 30, 2021 and 2020:


		For the Three Months Ended March 31,		For the Three Months Ended September 30,			For the Nine Months Ended September 30,
		2021	2020			2021	2020	2021	2020

Weighted average common shares outstanding for basic calculation	Weighted average common shares outstanding for basic calculation	267,318,860	269,216,820		Weighted average common shares outstanding for basic calculation	267,106,109	267,265,705	267,327,888	267,908,427
Add: Effect of stock options, deferred share units and restricted stock units	Add: Effect of stock options, deferred share units and restricted stock units	146,459	19,742		Add: Effect of stock options, deferred share units and restricted stock units	72,854	13,850	113,506	12,463
Weighted average common shares outstanding for diluted calculation	Weighted average common shares outstanding for diluted calculation	267,465,319	269,236,562		Weighted average common shares outstanding for diluted calculation	267,178,963	267,279,555	267,441,394	267,920,890

Basic earnings per common share are calculated by dividing net income (loss) by the weighted average number of common shares outstanding, which includes ~~110,647~~136,324 and ~~53,204~~123,343 shares of participating securities in the three and nine months ended ~~March 31,~~September 30, 2021, respectively, and 77,157 and 65,264 shares of participating securities in the three and nine months ended September 30, 2020, respectively. Diluted earnings per share are calculated by dividing net income (loss) by the sum of the weighted average number of common shares outstanding plus the additional common shares that would have been outstanding if potentially dilutive securities had been issued.

The weighted average common shares outstanding for the diluted earnings per share calculation excludes consideration of ~~1,106,823~~1,372,601 and ~~1,297,661~~1,461,000 equivalent shares in the three and nine months ended ~~March 31,~~September 30, 2021, respectively, and 1,730,960 and 1,644,002 in the three and nine months ended September 30, 2020, respectively, as these shares are anti-dilutive.

~~PART I (CONT'D)~~

~~GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

(12) Stock-Based Compensation

Stock-based compensation awards granted by our Board of Directors for the three and nine months ended ~~March 31,~~September 30, 2021 and 2020 were as follows:


		For the Three Months Ended March 31,		For the Three Months Ended September 30,		For the Nine Months Ended September 30,
		2021	2020			2021	2020	2021	2020
Award type:	Award type:				Award type:
Stock options	Stock options	477,500	298,000		Stock options	—	4,000	479,500	304,000
Deferred share units	Deferred share units	11,811	12,552		Deferred share units	15,621	20,027	41,293	44,670
Restricted stock units	Restricted stock units	514,460	309,389		Restricted stock units	—	16,729	515,960	328,720

In the three months ended ~~March 31,~~September 30, 2021 and 2020, we recognized ~~$0.8~~$0.3 million and ~~$0.4~~$0.8 million, respectively, in stock-based compensation expense. A majority of the expense, ~~$0.7~~$0.2 million and ~~$0.3~~$0.7 million, respectively, was recorded as selling and administrative expense in the Consolidated Statement of Operations, with the remaining expenses incurred as cost of sales.

AsIn the nine months ended September 30, 2021 and 2020, we recognized $16.3 million and $1.9 million, respectively, in stock - based compensation expense. A majority of ~~March 31, 2021, unrecognized compensation cost related to non-vested stock options, deferred share units~~expense, $14.3 million and ~~restricted stock units~~$1.6 million, respectively, was ~~$16.2 million, which will be recognized over~~recorded as selling and administrative expense in the Consolidated Statement of Operations, with the remaining ~~weighted average life~~expenses incurred as cost of ~~4.1 years. Certain~~sales.

PART I (CONT'D)

GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

In the nine months ended September 30, 2021 the expense includes $14.7 million due to the "Change in Control" accelerated vesting provisions of certain of our ~~awards include provisions that accelerate vesting in the event of a Change in Control.~~awards. For the purpose of these grants, a “Change in Control” ~~shall occur upon (i)~~occurred when Brookfield and any affiliates thereof ~~(collectively, the “Majority Stockholder”) ceasing~~ceased to own stock of the Company that constitutes at least thirty percent (30%) or thirty-five percent (35%), as applicable, of the total fair market value or total voting power of the stock of the Company or (ii) any one person, or more than one person acting as a group (as defined under Treasury Regulation § 1.409A-3(i)(5)(v)(B)) other than the Company, the Majority Stockholder or any employee benefit plan sponsored by the Company acquires ownership of stockCompany. Out of the ~~Company that, together~~$14.7 million recorded with ~~stock held by such person or group, constitutes one hundred percent (100%) of~~ the total fair market value or total Voting Power of the stock of GrafTech. As of March 31, 2021, unrecognized compensation subject to this acceleration was $15.2 million and will result in an accelerated non-cash charge if and when a Change in Control, ~~actually occurs. Of this expense, approximately $1.0~~$0.9 million ~~will accelerate~~accelerated at the 35% ownership level and the remaining ~~$14.2~~$13.8 million accelerated at the 30% ownership level.

As of September 30, 2021, unrecognized compensation cost related to stock options, deferred share units and restricted stock units was $0.7 million, which will be recognized over the remaining weighted average life of 1.7 years.

Stock option, deferred share unit and restricted stock unit award activity under the Company's Omnibus Equity Incentive Plan for the ~~three~~nine months ended ~~March 31,~~September 30, 2021 was as follows:

Stock Options


		Number of Shares	Weighted- Average Exercise Price			Number of Shares	Weighted- Average Exercise Price
Outstanding unvested as of December 31, 2020	Outstanding unvested as of December 31, 2020	906,361	$	13.01	Outstanding unvested as of December 31, 2020	906,361	$	13.01
Granted	Granted	477,500	11.49		Granted	479,500	11.49
Vested	Vested	(81,200)	10.39		Vested	(1,227,592)	12.05
Forfeited	Forfeited	0	0		Forfeited	(42,349)	13.36
Outstanding unvested as of March 31, 2021		1,302,661	$	12.62
Outstanding unvested as of September 30, 2021					Outstanding unvested as of September 30, 2021	115,920	$	16.85

~~PART I (CONT'D)~~

~~GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

Deferred Share Unit and Restricted Stock Unit awards


		Number of Shares	Weighted- Average Grant Date Fair Value			Number of Shares	Weighted- Average Grant Date Fair Value
Outstanding unvested as of December 31, 2020	Outstanding unvested as of December 31, 2020	524,488	$	10.41	Outstanding unvested as of December 31, 2020	524,488	$	10.41
Granted	Granted	526,271	11.50		Granted	557,253	11.48
Vested	Vested	(99,847)	10.69		Vested	(1,062,252)	10.95
Forfeited		0	0
Outstanding unvested as of March 31, 2021		950,912	$	10.98
Cancelled					Cancelled	(16,793)	10.78
Outstanding unvested as of September 30, 2021					Outstanding unvested as of September 30, 2021	2,696	$	13.96

(13) Subsequent Events

On ~~May~~November 3, 2021, our Board of Directors declared a quarterly dividend of $0.01 per share to stockholders of record as of the close of business on ~~May 28,~~November 30, 2021, to be paid on ~~June 30,~~December 31, 2021. Additionally, our Board of Directors has approved a $150 million open market stock repurchase program. During the third quarter, the Company repurchased $46 million under its previously authorized stock repurchase program. The Company is now authorized to repurchase up to $163 million in shares of the Company’s common stock, inclusive of the $13 million remaining as of the end of the third quarter of this year under its previous stock repurchase program.

2324

PART I (CONT’D)

GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The Company

GrafTech is a leading manufacturer of graphite electrodes, the critical consumable for the electric arc furnace industry. We are the only graphite electrode producer that is substantially vertically integrated into petroleum needle coke, a key raw material for graphite electrodes. ~~Vertical~~This vertical integration ~~has allowed us~~allows GrafTech to ~~adopt~~enter into longer term agreements with its customers. These agreements have a ~~commercial strategy with long-term, fixed price, fixed volume, take-or-pay contracts ("LTAs") providing~~duration of more than 12 months and include pre-determined ranges of volumes and prices. This provides greater earnings stability and ~~visibility. These contracts define volumes~~visibility for GrafTech and ~~prices, along with price-escalation mechanisms~~a committed, secure source of supply for ~~inflation, and include significant termination payments (typically, 50% to 70% of remaining contracted revenue) and, in certain cases, parent guarantees and collateral arrangements to manage~~ our ~~customer credit risk.~~customers.

The environmental and economic advantages of electric arc furnace steel production positions both that industry and the graphite electrode industry for continued long-term growth.

We believe GrafTech's leadership position, strong cash flows, and advantaged low cost structure and vertical integration are sustainable competitive advantages. ~~Our~~The services and solutions we provide will position our customers and us for a better future.

Commercial Update and Outlook

GrafTech reported ~~solid results~~strong sales volumes of 43 thousand MT in the ~~first~~third quarter of 2021, ~~with sales~~consisting of long-term agreement ("LTA") volumes of ~~37 thousand metric tons ("MT"), consisting of LTA volumes of 26~~28 thousand MT at an average approximate price of $9,500 per MT and non-LTA volumes of 1115 thousand MT at an average approximate price of ~~$4,200~~$4,600 per MT.

The non-LTA prices for graphite electrodes delivered and recognized in revenue in the third quarter increased 12% over second quarter non-LTA pricing. The non-LTA sales price reflects a mix of annual agreements negotiated in the fourth quarter of 2020, quarterly agreements negotiated earlier in 2021 along with spot agreements. By volume, more than three quarters of third quarter non-LTA sales were at prices agreed to under annual and quarterly agreements, when graphite electrode prices were lower than they are currently, and the remainder at spot pricing.

In the fourth quarter, we expect our non-LTA price for graphite electrodes delivered and recognized in revenue to be 7-9% higher than in the third quarter of 2021. In 2022, we expect our non-LTA pricing to be significantly higher than the second half of 2021 as market conditions have improved since we last negotiated annual pricing contracts in late 2020.

We also expect some cost increases in the fourth quarter of 2021 and into 2022, driven by recent global cost pressures, particularly for third-party needle coke, energy, and freight.

Production volumes in the third quarter of 2021 increased 22% compared to the third quarter of 2020but were impacted sequentially byour annual planned major maintenance work at our two European facilities. In the third quarter of 2021, we introduced additional connecting pin production capabilities at our St Marys, Pennsylvania facility.

Globally, steel market capacity utilization rates continue to be strong:


	Q3 2021	Q2 2021	Q3 2020
Global steel market (ex-China) capacity utilization rates (1)	74%	75%	60%
U.S. steel market capacity utilization rates (2)	85%	82%	64%

1 Source: World Steel Association and Metal Expert

2 Source: American Iron and Steel Institute

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~~2021 have been updated from our prior ~~estimate~~estimates as follows:


		2021	2022	2023 through 2024		2021	2022	2023 through 2024
Estimated LTA volume (thousands of metric tons)	Estimated LTA volume (thousands of metric tons)	98-108	95-105	35-45	Estimated LTA volume (thousands of metric tons)	106-110	95-105	35-45
Estimated LTA revenue (in millions)	Estimated LTA revenue (in millions)	$925-$1,025	$910-$1,010	$350-$450(1)	Estimated LTA revenue (in millions)	$1,000-$1,045	$910-$1,010	$350-$450(1)

(1) Includes expected termination fees from a few customers that have failed to meet certain obligations under their LTAs

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

��

Q1 2021 Q4 2020 Q1 2020
Global (ex-China) capacity utilization rates 73% 72% 71%
U.S. steel market capacity utilization rates 77% 72% 79%
PART I (CONT’D)

GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES

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

In February 2021, we provided an outlook on earnings per share and adjusted EBITDA for the first half of 2021. Due to better than expected first quarter results, we now anticipate first half earnings per share and adjusted EBITDA will decline by mid-single digits, on a percentage basis, compared to the first half of 2020. These estimates exclude the possibility of any Change in Control charges that could be triggered if and when Brookfield's ownership actually falls below 30%, or 35% with respect to certain equity awards. These charges could include a long-term incentive compensation ("LTIP") cash charge of ~~$65 million to $75 million~~ ~~and non-cash accelerated equity compensation expense for certain equity awards of approximately $15.2 million.~~

Capital Structure and Capital Allocation

As of ~~March 31,~~September 30, 2021, GrafTech had cash and cash equivalents of ~~$96~~$87 million and total debt of approximately ~~$1.3~~$1.1 billion.We continue to make progress in reducing our long-term debt, repaying $100 million in the third quarter, for a total debt repayment of $300 million in the first nine months of 2021.

~~Our~~We repurchased 4.3 million shares in the third quarter for approximately $46 million under our existing open market share repurchase authorization.

For the remainder of 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. Our capital expenditure range expectations are unchanged, between $55 and $65 million. In addition, our Board of Directors has approved a new $150 million open market stock repurchase program. The Company is now authorized to repurchase up to $163 million in shares of the Company’s common stock, inclusive of the $13 million remaining under the prior stock repurchase program as of the end of the third quarter of this year.

~~PART I (CONT’D)~~

~~GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES~~

Key metrics used by management to measure performance

In addition to measures of financial performance presented in our Consolidated Financial Statements in accordance with ~~U.S. generally accepted accounting principles ("GAAP"),~~GAAP, we use certain other financial measures and operating metrics to analyze the performance of our company. The “non-GAAP” financial measures consist of EBITDA, adjusted EBITDA, adjusted net income and adjusted ~~EBITDA,~~EPS. which help us evaluate growth trends, establish budgets, assess operational efficiencies and evaluate our overall financial performance. The key operating metrics consist of sales volume, production volume, production capacity and capacity utilization.

Key financial measures

For the Three Months Ended March 31,
(in thousands) 2021 2020
Net sales $ 304,397 $ 318,646
Net income 98,799 122,268
EBITDA (1)
153,725 185,029
Adjusted EBITDA (1)
155,045 179,178


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
(in thousands, except per share data)	2021		2020		2021		2020
Net sales	$	347,348	$	286,987	$	982,495	$	886,351
Net income	$	119,886	$	94,234	$	246,850	$	309,278
Earnings per share(1)	$	0.45	$	0.35	$	0.92	$	1.15
EBITDA(2)	$	173,021	$	150,960	$	394,763	$	483,634
Adjusted net income(2)	$	119,038	$	96,109	$	333,405	$	308,344
Adjusted earnings per share(1)(2)	$	0.45	$	0.36	$	1.25	$	1.15
Adjusted EBITDA(2)	$	172,175	$	153,105	$	487,123	$	483,408

(1)Earnings per share represents diluted earnings per share. Adjusted earnings per share represents adjusted diluted earnings per share.

(2) Non-GAAP financial measures; see below for information and ~~a reconciliation~~reconciliations of EBITDA, adjusted EBITDA, adjusted net income, and adjusted ~~EBITDA~~EPS to net income, the most directly comparable financial measure calculated and presented in accordance with GAAP.

Key operating metrics


		For the Three Months Ended March 31,				For the Three Months Ended September 30,						For the Nine Months Ended September 30,
(in thousands, except price data)		2021		2020
(in thousands, except utilization)							(in thousands, except utilization)	2021		2020			2021		2020
Sales volume (MT)(1)	Sales volume (MT)(1)	37		34			Sales volume (MT)(1)	43		33			123		98
Production volume (MT)(2)	Production volume (MT)(2)	36		33			Production volume (MT)(2)	39		32			119		98
Production capacity excluding St. Marys (MT)(3)(4)	Production capacity excluding St. Marys (MT)(3)(4)	51		51			Production capacity excluding St. Marys (MT)(3)(4)	48		48			150		150
Capacity utilization excluding St. Marys (3)(5)	Capacity utilization excluding St. Marys (3)(5)	71	%	65	%		Capacity utilization excluding St. Marys (3)(5)	81	%	67	%		79	%	65	%
Total production capacity (MT)(4)(6)	Total production capacity (MT)(4)(6)	58		58			Total production capacity (MT)(4)(6)	55		55			171		171
Total capacity utilization(5)(6)	Total capacity utilization(5)(6)	62	%	57	%		Total capacity utilization(5)(6)	71	%	58	%		70	%	57	%

(1) Sales volume reflects only graphite electrodes manufactured by GrafTech.

(2) Production volume reflects graphite electrodes we produced during the period.

(3) In the first quarter of 2018, our St. Marys, Pennsylvania facility began graphitizing a limited amount of electrodes sourced from our Monterrey, Mexico facility.

PART I (CONT’D)

GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES

(4) Production capacity reflects expected maximum production volume during the period under normal operating conditions, standard product mix and expected maintenance outage. Actual production may vary.

(5) Capacity utilization reflects production volume as a percentage of production capacity.

(6) Includes graphite electrode facilities in Calais, France; Monterrey, Mexico; Pamplona, ~~Spain~~Spain; and St. Marys, Pennsylvania.

Non-GAAP financial measures

In addition to providing results that are determined in accordance with ~~generally accepted accounting principles in the United States (“GAAP”),~~GAAP, we have provided certain financial measures that are not in accordance with GAAP. EBITDA, adjusted EBITDA, adjusted net income, and adjusted ~~EBITDA~~EPS 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 adjusted for any pension and other post employment benefit ("OPEB") plan expenses or gains, ~~initial and follow-on~~ public ~~offering~~offerings and related 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, related party ~~Tax Receivable Agreement (as defined below)~~tax receivable agreement, dated April 27, 2018 ("TRA") adjustments, stock-based compensation, ~~and~~ non‑cash fixed asset write‑~~offs.~~offs and Change in Control charges that were triggered as a result of the ownership of our largest stockholder falling below 30% of our total outstanding shares. For purposes of this section, a "Change in Control" occurred when Brookfield and any affiliates thereof ceased to own stock of the Company that constitutes at least thirty percent (30%) or thirty-five percent (35%), as applicable, of the total fair market value or total voting power of the stock of the Company. 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

~~PART I (CONT’D)~~

~~GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES~~

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 also monitor the ratio of total debt to 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 assets and 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~~offerings and related expenses;

•adjusted EBITDA does not reflect related party ~~Tax Receivable Agreement~~TRA adjustments;

•adjusted EBITDA does not reflect stock-based compensation or the non‑cash write‑off of fixed assets;

•adjusted EBITDA does not reflect the Change in Control charges; and

•other companies, including companies in our industry, may calculate EBITDA and adjusted EBITDA differently, which reduces its usefulness as a comparative measure.

We define adjusted net income, a non‑GAAP financial measure, as net income or loss and excluding the items used to calculate adjusted EBITDA, less the tax effect of those adjustments. We define adjusted EPS, a non‑GAAP financial measure, as adjusted net income divided by the weighted average of diluted common shares outstanding during the period. We believe adjusted net income and adjusted EPS are useful to present to investors because we believe that they assist investors’ understanding of the underlying operational profitability of the Company.

PART I (CONT’D)

GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES

In evaluating EBITDA, ~~and~~ adjusted EBITDA, adjusted net income, adjusted EPS, you should be aware that in the future, we will incur expenses similar to the adjustments in the reconciliation ~~below.~~below, other than change in control charges. Our presentations of EBITDA, adjusted EBITDA, adjusted net income and adjusted ~~EBITDA~~EPS 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 net income, and adjusted ~~EBITDA~~EPS alongside other measures of financial performance ~~measures,~~and liquidity, including our net income, EPS and other GAAP measures.

~~PART I (CONT’D)~~

~~GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES~~

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

For the Three Months Ended March 31,
2021 2020
(in thousands)
Net income $ 98,799 $ 122,268
Add:
Depreciation and amortization 16,539 14,284
Interest expense 22,167 25,672
Interest income (37) (1,141)
Income taxes 16,257 23,946
EBITDA 153,725 185,029
Adjustments:
Pension and OPEB plan expenses (1)
431 542
Initial and follow-on public offering and related expenses (2)
422 4
Non-cash gain on foreign currency remeasurement (3)
(348) (3,461)
Stock-based compensation (4)
768 410
Related party Tax Receivable Agreement adjustment (5)
47 (3,346)
Adjusted EBITDA $ 155,045 $ 179,178


Reconciliation of Net Income to Adjusted Net Income
	For the Three Months ended September 30,				For the Nine Months Ended September 30,
	2021		2020		2021		2020
	(in thousands, except per share data)
Net income	$	119,886	$	94,234	$	246,850	$	309,278

Diluted income per common share:
Net income per share	$	0.45	$	0.35	$	0.92	$	1.15
Weighted average shares outstanding	267,178,963		267,279,555		267,441,394		267,920,890

Net income	$	119,886	$	94,234	$	246,850	$	309,278
Adjustments, pre-tax:
Pension and OPEB plan expenses (1)	434		583		1,295		1,666
Public offerings and related expenses (2)	—		—		663		4
Non-cash loss (gain) on foreign currency remeasurement (3)	(1,542)		798		365		(441)
Stock-based compensation (4)	262		764		1,580		1,891
Non-cash fixed asset write-off (5)	—		—		313		—
Related party Tax Receivable Agreement adjustment (6)	—		—		47		(3,346)
Change in Control LTIP award (7)	—		—		73,384		—
Change in control stock-based compensation acceleration (7)	—		—		14,713		—
Total non-GAAP adjustments pre-tax	(846)		2,145		92,360		(226)
Income tax impact on non-GAAP adjustments	2		270		5,805		708
Adjusted net income	$	119,038	$	96,109	$	333,405	$	308,344

(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~~offerings 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 write-off of fixed assets.

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

(7)In the second quarter of 2021, we incurred change in control charges as a result of the ownership of our largest stockholder, Brookfield, moving below 30% of our shares outstanding.

PART I (CONT’D)

GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES


Reconciliation of EPS to Adjusted EPS
	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2021		2020		2021		2020

EPS	$	0.45	$	0.35	$	0.92	$	1.15
Adjustments per share:
Pension and OPEB plan expenses (1)	—		—		—		0.01
Public offerings and related expenses (2)	—		—		—		—
Non-cash gains and losses on foreign currency remeasurement (3)	—		0.01		—		—
Stock-based compensation (4)	—		—		0.02		0.01
Non-cash fixed asset write-off (5)	—		—		—		—
Related party Tax Receivable Agreement adjustment (6)	—		—		—		(0.02)
Change in control LTIP award (7)	—		—		0.27		—
Change in control stock-based compensation acceleration (7)	—		—		0.06		—
Total non-GAAP adjustments pre-tax per share	—		0.01		0.35		—
Income tax impact on non-GAAP adjustments per share	—		—		0.02		—
Adjusted EPS	$	0.45	$	0.36	$	1.25	$	1.15

(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 public offerings 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.

(7)In the second quarter of 2021, we incurred Change in Control charges as a result of the ownership of our largest shareholder, Brookfield, moving below 30% of our total shares outstanding.

PART I (CONT’D)

GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2021		2020		2021		2020
	(in thousands)
Net income	$	119,886	$	94,234	$	246,850	$	309,278
Add:

Depreciation and amortization	15,584		16,241		48,415		45,074
Interest expense	16,048		22,474		54,209		69,026
Interest income	(417)		(93)		(653)		(1,582)
Income taxes	21,920		18,104		45,942		61,838
EBITDA	173,021		150,960		394,763		483,634
Adjustments:
Pension and OPEB plan expenses (1)	434		583		1,295		1,666

Public offerings and related expenses (2)	—		—		663		4
Non-cash loss (gain) on foreign currency remeasurement (3)	(1,542)		798		365		(441)
Stock-based compensation (4)	262		764		1,580		1,891
Non-cash fixed asset write-off (5)	—		—		313		—
Related party Tax Receivable Agreement adjustment (6)	—		—		47		(3,346)
Change in Control LTIP award (7)	—		—		73,384		—
Change in control stock-based compensation acceleration (7)	—		—		14,713		—
Adjusted EBITDA	$	172,175	$	153,105	$	487,123	$	483,408

(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 public offerings 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 write-off of fixed assets.

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

(7)In the second quarter of 2021, we incurred change in control charges as a result of the ownership of our largest shareholder, Brookfield, moving below 30% of our shares outstanding.

Key operating metrics

In addition to measures of financial performance presented in accordance with GAAP, we use certain operating metrics to analyze the performance of our company. The key operating metrics consist of sales volume, production volume, production capacity and capacity utilization. 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 only graphite electrodes manufactured by GrafTech. For a discussion of our revenue recognition policy, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Critical Accounting Policies-Revenue ~~Recognition.”~~Recognition” in our Annual Report on Form 10-K. Sales volume helps investors understand the factors that drive our net sales.

Production volume reflects graphite electrodes produced during the period. Production capacity reflects expected maximum production volume during the period under normal operating conditions, standard product mix and expected maintenance downtime. Capacity utilization reflects production volume as a percentage of production capacity. Production volume, production capacity and capacity utilization help us understand the efficiency of our production, evaluate cost of sales and consider how to approach our contract initiative.

2730

PART I (CONT’D)

GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES

Results of Operations

The Three Months Ended ~~March 31,~~September 30, 2021 Compared to the Three Months Ended ~~March 31,~~September 30, 2020

The tables presented in our period-over-period comparisons summarize our Condensed Consolidated Statements of Operations and illustrate key financial indicators used to assess the consolidated financial results. Throughout ~~our Management's~~this "Management's Discussion and Analysis of Financial Condition and Results of Operations" in this Quarterly Report on Form 10-Q ("MD&A"), insignificant changes may be deemed not meaningful and are generally excluded from the discussion.


		For the Three Months Ended March 31,				Increase/ Decrease		% Change			For the Three Months Ended September 30,					Increase/ Decrease		% Change
		2021		2020						2021		2020
		(Dollars in thousands)											(Dollars in thousands)

Net sales	Net sales	$	304,397	$	318,646	$	(14,249)	(4)	%	Net sales	$	347,348		$	286,987	$	60,361	21	%
Cost of sales	Cost of sales	146,396		138,917		7,479		5	%	Cost of sales	170,286			131,862		38,424		29	%
Gross profit	Gross profit	158,001		179,729		(21,728)		(12)	%	Gross profit	177,062			155,125		21,937		14	%
Research and development	Research and development	969		712		257		36	%	Research and development	983			650		333		51	%
Selling and administrative expenses	Selling and administrative expenses	20,153		14,932		5,221		35	%	Selling and administrative expenses	19,006			19,062		(56)		—	%
Operating income	Operating income	136,879		164,085		(27,206)		(17)	%	Operating income	157,073			135,413		21,660		16	%
Other expense (income), net		(354)		(3,314)		2,960		(89)	%
Related party Tax Receivable Agreement expense (benefit)		47		(3,346)		3,393		N/A
Other (income) expense, net										Other (income) expense, net	(364)			694		(1,058)		(152)	%

Interest expense	Interest expense	22,167		25,672		(3,505)		(14)	%	Interest expense	16,048			22,474		(6,426)		(29)	%
Interest income	Interest income	(37)		(1,141)		1,104		(97)	%	Interest income	(417)			(93)		(324)		348	%
Income before provision for income taxes	Income before provision for income taxes	115,056		146,214		(31,158)		(21)	%	Income before provision for income taxes	141,806			112,338		29,468		26	%
Provision for income taxes	Provision for income taxes	16,257		23,946		(7,689)		(32)	%	Provision for income taxes	21,920			18,104		3,816		21	%
Net income	Net income	$	98,799	$	122,268	$	(23,469)	(19)	%	Net income	$	119,886		$	94,234	$	25,652	27	%

Net sales. Net sales ~~decreased~~increased from ~~$318.6~~$287.0 million in the three months ended ~~March 31,~~September 30, 2020 to ~~$304.4~~$347.3 million in the three months ended ~~March 31,~~September 30, 2021. ~~Lower net~~The third quarter of 2020 was impacted by market conditions, including the COVID-19 pandemic. Stronger demand for our products in the third quarter of 2021 resulted in a 30% increase in sales ~~reflect decreased~~volume compared to the same period of 2020. Partially offsetting the increased volume was a decrease in average realized sales ~~prices~~prices. This decrease in ~~the first quarter of 2021. This price decline~~prices reflects an increased percentage of non-LTA sales at prices lower than our LTA contracted ~~prices as LTA deliveries have come down in accordance with the terms of the LTAs. Partially offsetting this impact was a 9% increase in sales volume due to the higher volume of non-LTA sales.~~prices.

Cost of sales. We experienced an increase in cost of sales from ~~$138.9~~$131.9 million in the three months ended ~~March 31,~~September 30, 2020 to ~~$146.4~~$170.3 million in the three months ended ~~March 31,~~September 30, 2021, primarily due to the 9%30% increase in ~~non-LTA~~ sales volume of manufactured electrodes. ~~Partially offsetting this increase was a per unit reduction~~We expect some cost increases in the fourth quarter of ~~costs due to less usage of~~2021 and into 2022, driven by recent global cost pressures, particularly for third-party needle ~~coke.~~coke, energy and freight.

Selling and administrative expenses. Selling and administrative expenses ~~increased~~were flat from ~~$14.9~~$19.1 million in the three months ended ~~March 31,~~September 30, 2020 to ~~$20.2~~$19.0 million in the three months ended ~~March 31, 2021 primarily due to higher legal costs and additions to the allowance for doubtful accounts.~~

~~Other expense (income), net.~~ Other income decreased from $3.3 million in the three months ended March 31, 2020 to $0.4 million in the three months ended March 31, 2021, primarily due to advantageous non-cash foreign currency impacts on non-operating assets and liabilities in 2020 that did not recur inSeptember 30, 2021.

~~Related party Tax Receivable Agreement expense (benefit).~~ Related party Tax Receivable Agreement expense increased from a benefit of $3.3 million in the three months ended March 31, 2020 to an expense of $0.05 million in the three months ended March 31, 2021 due to a nonrecurring favorable adjustment that occurred in the first quarter of 2020.

Interest expense. Interest expense decreased from ~~$25.7~~$22.5 million in the three months ended ~~March 31,~~September 30, 2020 to ~~$22.2~~$16.0 million in the three months ended ~~March 31,~~September 30, 2021, primarily due to lower interest rates and lower average borrowings. During the three months ended March 31, 2021, we repriced our 2018 Term Loan Facility and reduced our term loan balance by an additional $150.0 million. These transactions resulted in $1.5 million of accelerated amortization of debt issuance costs and

~~PART I (CONT’D)~~

~~GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES~~

$0.9 million of accelerated accretion of the original issue discount for the three months ended March 31, 2021. We also recorded $1.6 million of modification costs related to the term loan repricing.

Provision for income taxes. The following table summarizes the expense for income taxes:


		For the Three Months Ended March 31,							For the Three Months ended September 30,
		2021			2020				2021			2020
		(Dollars in thousands)							(Dollars in thousands)

Tax expense	Tax expense	$	16,257		$	23,946		Tax expense	$	21,920		$	18,104
Pretax income		115,056			146,214
Pre-tax income								Pre-tax income	141,806			112,338
Effective tax rates	Effective tax rates	14.1		%	16.4		%	Effective tax rates	15.5		%	16.1		%

PART I (CONT’D)

GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES

The effective tax rate for the three months ended ~~March 31,~~September 30, 2021 was ~~14.1%~~15.5%. This rate differs from the U.S. statutory rate of 21% primarily due to worldwide earnings from various countries taxed at ~~lower~~different rates, ~~the Section 250 Deduction and Foreign Tax Credits~~which was partially offset by the net ~~increase~~combined impact related to the U.S. taxation of global intangible low taxed income ~~("GILTI"~~(“GILTI”) and Foreign Tax Credits (“FTCs”).

Tax expense ~~decreased~~increased from ~~$23.9~~$18.1 million for the three months ended ~~March 31,~~September 30, 2020 to ~~$16.3~~$21.9 million for the three months ended ~~March 31,~~September 30, 2021.This change is primarily related to an increase in pre-tax income, partially offset by a decrease in effective tax rate due to the mix of worldwide earnings from various countries taxed at different rates and U.S. taxation of GILTI.

The Nine Months Ended September 30, 2021 Compared to the Nine Months EndedSeptember 30, 2020

The tables presented in our period-over-period comparisons summarize our Condensed Consolidated Statements of Operations and illustrate key financial indicators used to assess the consolidated financial results. Throughout our MD&A, insignificant changes may be deemed not meaningful and are generally excluded from the discussion.


	For the Nine Months Ended September 30,				Increase/ Decrease		% Change
	2021		2020
	(Dollars in thousands)

Net sales	$	982,495	$	886,351	$	96,144	11	%
Cost of sales	518,549		401,379		117,170		29	%

Gross profit	463,946		484,972		(21,026)		(4)	%
Research and development	2,970		2,072		898		43	%
Selling and administrative expenses	114,942		49,995		64,947		130	%
Operating income	346,034		432,905		(86,871)		(20)	%
Other income	(361)		(2,309)		1,948		(84)	%
Related party Tax Receivable Agreement expense (benefit)	47		(3,346)		3,393		N/A
Interest expense	54,209		69,026		(14,817)		(21)	%
Interest income	(653)		(1,582)		(929)		59	%
Income before provision for income taxes	292,792		371,116		(78,324)		(21)	%
Provision for income taxes	45,942		61,838		(15,896)		(26)	%


Net income	$	246,850	$	309,278	$	(62,428)	(20)	%

Net sales. Net sales increased by $96.1 million, or 11%, from $886.4 million in the nine months ended September 30, 2020 to $982.5 million in the nine months ended September 30, 2021. Higher net sales reflect a 26% increase in sales volume driven primarily by improved customer demand, as the same period of 2020 was impacted by market conditions, including the COVID-19 pandemic. Partially offsetting the increased volume was a decrease in average realized sales prices. This decrease in prices reflects an increased percentage of non-LTA sales at prices lower than our LTA contracted prices.

Cost of sales. Cost of sales increased by $117.2 million, or 29%, from $401.4 million in the nine months ended September 30, 2020 to $518.5 million in the nine months ended September 30, 2021. This increase was primarily due to the 26% increase in sales volume of manufactured electrodes. Additionally, cost of sales for the nine months ended September 30, 2021 was impacted by a one-time long-term incentive plan ("LTIP") charge of $30.7 million resulting from a Change in Control after our largest stockholder's ownership of our common stock was reduced below 30% of our outstanding common stock. We expect some cost increases in the fourth quarter of 2021 and into 2022, driven by recent global cost pressures, particularly for third-party needle coke, energy and freight.

PART I (CONT’D)

GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES

Selling and administrative expenses. Selling and administrative expenses increased from $50.0 million in the nine months ended September 30, 2020 to $114.9 million in the nine months ended September 30, 2021 primarily due to the aforementioned Change in Control resulting in $42.6 million of one-time LTIP expense. Additionally, the Change in Control resulted in $12.9 million of one-time accelerated stock based compensation expense.

Other income. Other income decreased from $2.3 million in the nine months ended September 30, 2020 to $0.4 in the nine months ended September 30, 2021. This change was primarily due to advantageous non-cash foreign currency impacts on non-operating assets and liabilities in the nine months ended September 30, 2020 that did not recur in the same period of 2021.

Related party Tax Receivable Agreement expense (benefit). During the first quarter of 2020, the Company recorded an adjustment to our related-party payable-Tax Receivable Agreement liability resulting in a benefit of $3.3 million due to the revised profit expectation for the year 2020, primarily caused by market conditions and the COVID-19 pandemic.

Interest expense. Interest expense decreased by $14.8 million from $69.0 million in the nine months ended September 30, 2020 to $54.2 million in the same period of 2021, primarily due to lower interest rates and lower average borrowings. Partially offsetting these decreases was an increase of $4.3 million in amortization of deferred financing fees and original issue discounts in the nine months ended September 30, 2021 resulting from prepayments on our term loan. Additionally, 2021 interest expense was negatively impacted by the absence of a $3.8 million benefit that occurred in 2020 resulting from discounts on debt repurchases.

Provision for income taxes. The following table summarizes the expense for income taxes:


	For the Nine Months Ended September 30,
	2021			2020
	(Dollars in thousands)
Tax expense	$	45,942		$	61,838
Pre-tax income	292,792			371,116
Effective tax rates	15.7		%	16.7		%

The effective tax rate for the nine months ended September 30, 2021 was 15.7%. This rate differs from the U.S. statutory rate of 21% primarily due to worldwide earnings from various countries taxed at different rates, partially offset by the net combined impact related to the U.S. taxation of GILTI and FTCs.

The tax expense decreased from $61.8 million for the nine months ended September 30, 2020 to $45.9 million for the nine months ended September 30, 2021. This change is primarily related to athe reduction in ~~pretax~~pre-tax income and the decrease in effective tax rate due to the mix of worldwide earnings from various countries taxed at different rates and the U.S. taxation of GILTI.

GrafTech has considered the tax impact of COVID-19 legislation, including the U.S. Coronavirus Aid, Relief and Economic Security (CARES) Act and has concluded that there is no material tax impact. The Company continues to monitor the tax effects of any legislative changes.

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 sales 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 profit and net income.

Many of the non-U.S. countries in which we have a manufacturing facility 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 sales or net income.

PART I (CONT’D)

GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES

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 $0.4 million and an increase of ~~$4.7~~$9.1 million for the three and nine months ended ~~March 31,~~September 30, 2021, respectively, compared to the same period of 2020. The impact of these changes on our cost of sales was an increase of ~~$3.4~~$1.9 million and $13.5 million for the three and nine months ended ~~March 31,~~September 30, 2021, respectively, compared to the same period of 2020.

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.”

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). Our uses of those funds (other than for operations) have consisted principally of dividends, capital expenditures, scheduled debt repayments, optional debt repayments, share repurchases and other obligations. 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. As of ~~March 31,~~September 30, 2021, we had liquidity of ~~$342.8~~$333.4 million, consisting of ~~$246.4~~$246.7 million of availability under our 2018 Revolving Credit Facility (as defined below) (subject to continued compliance with the financial covenants and representations) and cash and cash equivalents of ~~$96.4~~$86.7 million. We had long-term debt of ~~$1,273.0~~$1,127.4 million and short-term debt of $0.1 million as of ~~March 31,~~September 30, 2021. As of December 31, 2020, we had liquidity of

~~PART I (CONT’D)~~

~~GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES~~

~~$391.8~~ $391.8 million consisting of $246.4 million available on our 2018 Revolving Credit Facility (subject to continued compliance with the financial covenants and representations) and cash and cash equivalents of $145.4 million. We had long-term debt of $1,420.0 million and short-term debt of $0.1 million as of December 31, 2020.

As of ~~March 31,~~September 30, 2021 and December 31, 2020, ~~$91.4~~$64.3 million and $114.6 million, respectively, of our cash and cash equivalents were located outside of the U.S. We repatriate funds from our foreign subsidiaries through dividends. All of our subsidiaries face the customary statutory limitation that distributed dividends ~~do not~~cannot exceed the amount of retained and current earnings. In addition, for our subsidiary in South Africa, the South Africa Central Bank requires that certain solvency and liquidity ratios remain above defined levels after the dividend distribution, which historically has not materially affected our ability to repatriate cash from this jurisdiction. The cash and cash equivalents balances in South Africa were ~~$1.8~~$2.5 million and $1.6 million as of ~~March 31,~~September 30, 2021 and December 31, 2020, respectively. Upon repatriation to the U.S., the foreign source portion of dividends we receive from our foreign subsidiaries is no longer subject to U.S. federal income tax as a result of The Tax Cuts and Jobs ~~Act.~~Act of 2017.

Cash flow and plans to manage liquidity. Our cash flow typically fluctuates significantly between quarters due to various factors. These factors include customer order patterns, fluctuations in working capital requirements, timing of tax payments, timing of capital expenditures, acquisitions, divestitures and other factors. Cash flow from operations is expected to remain at positive sustained levels due to the predictable earnings generated by our ~~three-to-five-year sales contracts~~LTAs with our customers.

Debt Structure

We had availability under the 2018 Revolving Credit Facility of $246.7 million as of September 30, 2021 and $246.4 million as of ~~March 31, 2021 and~~ December 31, 2020, which consisted of the $250 million limit reduced by $3.3 million and $3.6 million of outstanding letters of ~~credit.~~credit, respectively.

OnIn February ~~12,~~ 2018, wethe Company entered into ~~the 2018~~a credit agreement (the “2018 Credit ~~Agreement,~~Agreement”), which provides for ~~the 2018 Revolving Facility and the 2018~~(i) a $2,250 million senior secured term facility (the “2018 Term Loan ~~Facility ("2018 Term Loans"~~Facility”)~~. On February 12, 2018, our wholly owned subsidiary, GrafTech Finance, borrowed $1,500 million under the 2018 Term Loan Facility.~~

On June 15, 2018, GrafTech entered into the First Amendment to its 2018 Credit Agreement. The First Amendment amends the 2018 Credit Agreement to provide for an additional $750 million in Incremental Term Loans principal outstanding under the promissory note. The Incremental Term Loans increase the aggregate principal amount of term loans incurred by GrafTech Finance under the 2018 Credit Agreement from $1,500 million to $2,250 million. The Incremental Term Loans have the same terms as those applicable after giving effect to the ~~existing term loans under the~~June 2018 Credit Agreement, including interest rate, payment and prepayment terms, representations and warranties and covenants. The Incremental Term Loans mature on February 12, 2025, the same date as the existing term loans. GrafTech paid an upfront fee of 1.00% ofamendment (the “First Amendment”) that increased the aggregate principal amount of the ~~Incremental~~2018 Term ~~Loans~~Loan Facility from $1,500 million to $2,250 million and (ii) a $250 million senior secured revolving credit facility (the “2018 Revolving Credit Facility” and, together with the 2018 Term Loan Facility, the “Senior Secured Credit Facilities”). GrafTech Finance Inc. (“GrafTech Finance”) is the sole borrower under the 2018 Term Loan Facility while GrafTech Finance, GrafTech Switzerland SA (“Swissco”) and GrafTech Luxembourg II S.à.r.l. (“Luxembourg Holdco” and, together with GrafTech Finance and Swissco, the “Co-Borrowers”) are co-borrowers under the 2018 Revolving Credit Facility. The 2018 Term Loan Facility and the 2018 Revolving Credit Facility mature on February 12, 2025 and February 12, 2023, respectively.

The 2018 Term Loan Facility bears interest, at our option, at a rate equal to either (i) the Adjusted LIBO Rate (as defined in the 2018 Credit Agreement), plus an applicable margin equal to 3.00% per annum following an amendment in February 2021 (the “Second Amendment”) that decreased the Applicable Rate (as defined in the 2018 Credit Agreement) by

PART I (CONT’D)

GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES

0.50% for each pricing level or (ii) the ABR Rate (as defined in the 2018 Credit Agreement), plus an applicable margin equal to 2.00% per annum following the Second Amendment, in each case with one step down of 25 basis points based on achievement of certain public ratings of the 2018 Term Loan Facility. The Second Amendment also decreased the interest rate floor from 1.0% to 0.50% for the 2018 Term Loan Facility.

The 2018 Revolving Credit Facility bears interest, at our option, at a rate equal to either (i) the Adjusted LIBO Rate, plus an applicable margin initially equal to 3.75% per annum or (ii) the ABR Rate, plus an applicable margin initially equal to 2.75% per annum, in each case with two 25 basis point step downs based on achievement of certain senior secured first lien net leverage ratios. In addition, we are required to pay a quarterly commitment fee on the ~~effective date~~unused commitments under the 2018 Revolving Credit Facility in an amount equal to 0.25% per annum.

The Senior Secured Credit Facilities are guaranteed by each of our domestic subsidiaries, subject to certain customary exceptions, and by GrafTech Luxembourg I S.à.r.l., a Luxembourg société à responsabilité limitée and an indirect wholly owned subsidiary of GrafTech, Luxembourg HoldCo, and Swissco (collectively, the “Guarantors”) with respect to all obligations under the 2018 Credit Agreement of each of our foreign subsidiaries that is a Controlled Foreign Corporation (within the meaning of Section 956 of the ~~First Amendment.~~Internal Revenue Code of 1986, as amended from time to time (the “Code”)).

All obligations under the 2018 Credit Agreement are secured, subject to certain exceptions, by: (i) a pledge of all of the equity securities of each domestic Guarantor and of each other direct, wholly owned domestic subsidiary of GrafTech and any Guarantor, (ii) a pledge on no more than 65% of the equity interests of each subsidiary that is a Controlled Foreign Corporation (within the meaning of Section 956 of the Code), and (iii) security interests in, and mortgages on, personal property and material real property of each domestic Guarantor, subject to permitted liens and certain exceptions specified in the 2018 Credit Agreement. The ~~current principal outstanding on our~~obligations of each foreign subsidiary of GrafTech that is a Controlled Foreign Corporation under the 2018 Revolving Credit Facility are secured by (i) a pledge of all of the equity securities of each Guarantor that is a Controlled Foreign Corporation and of each direct, wholly owned subsidiary of any Guarantor that is a Controlled Foreign Corporation, and (ii) security interests in certain receivables and personal property of each Guarantor that is a Controlled Foreign Corporation, subject to permitted liens and certain exceptions specified in the 2018 Credit Agreement.

The 2018 Term ~~Loans~~Loan Facility amortizes at a rate of $112.5 million a year payable in equal quarterly installments, with the remainder due at maturity. The Co-Borrowers are permitted to make voluntary prepayments at any time without premium or penalty. GrafTech Finance is ~~$794.0 million.~~required to make prepayments under the 2018 Term Loan Facility (without payment of a premium) with (i) net cash proceeds from non-ordinary course asset sales (subject to customary reinvestment rights and other customary exceptions and exclusions), and (ii) commencing with the Company’s fiscal year ended December 31, 2019, 75% of Excess Cash Flow (as defined in the 2018 Credit Agreement), subject to step-downs to 50% and 0% of Excess Cash Flow based on achievement of a senior secured first lien net leverage ratio greater than 1.25 to 1.00 but less than or equal to 1.75 to 1.00 and less than or equal to 1.25 to 1.00, respectively. Scheduled quarterly amortization payments of the 2018 Term Loan Facility during any calendar year reduce, on a dollar-for-dollar basis, the amount of the required Excess Cash Flow prepayment for such calendar year, and the aggregate amount of Excess Cash Flow prepayments for any calendar year reduce subsequent quarterly amortization payments of the 2018 Term Loan Facility as directed by GrafTech Finance. As of September 30, 2021, we have satisfied all amortization requirements through prepayments through the maturity date.

2020 Senior Notes

On December 22, 2020, GrafTech Finance issued $500 million aggregate principal amount of the ~~2020~~4.628% senior secured notes due 2028 (the "2020 Senior ~~Notes~~Notes") at an issue price of 100% of the principal amount thereof in a private offering to qualified institutional buyers in accordance with Rule 144A under the Securities Act and to non-U.S. persons outside the United States under Regulation S under the Securities Act.

The 2020 Senior Notes were issued pursuant to the indenture among GrafTech Finance, as issuer, the Company, as a guarantor, the other subsidiaries of the Company named therein as guarantors and U.S. Bank National Association, as trustee and notes collateral ~~agent.~~agent (the "Indenture").

PART I (CONT’D)

GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES

The 2020 Senior Notes are guaranteed on a senior secured basis by the Company and all of its existing and future direct and indirect U.S. subsidiaries that guarantee, or borrow under, the credit facilities under its 2018 Credit ~~Agreement .~~Agreement. The 2020 Senior Notes are secured on a pari passu basis by the collateral securing the term loans under the 2018 Credit Agreement. GrafTech Finance, the Company and the other guarantors granted a security interest in such collateral, consisting of substantially all of their respective assets, as security for the obligations of GrafTech Finance, the Company and the other guarantors under the 2020 Senior Notes and the Indenture pursuant to a collateral agreement, dated as of December 22, 2020 (the “Collateral Agreement”), among GrafTech Finance, the Company, the other subsidiaries of the Company named therein as grantors and U.S. Bank National Association, as collateral agent.

~~PART I (CONT’D)~~

~~GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES~~

The Indenture contains 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. The Indenture contains 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 2020 Senior 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 2020 Senior Notes may declare all of the Senior Notes to be due and payable immediately.

The entirety of the 2020 Senior Notes proceeds was used to pay down a portion of our 2018 Term Loans.

~~2018 Term Loan Repricing~~

On February 17, 2021, the Company entered into a second amendment (the “Second Amendment”) to its 2018 Credit Agreement to, among other things, (a) decrease the Applicable Rate (as defined in the 2018 Credit Agreement) with respect to any 2018 Term Loans (as defined in the 2018 Credit Agreement) by 0.50% for each pricing level, (b) decrease the interest rate floor for all 2018 Term Loans to 0.50%, (c) add certain technical provisions with respect to the impact of European Union bail-in banking legislation on liabilities of certain non-U.S. financial institutions, and (d) add certain technical provisions in connection with future replacement of the LIBO Rate (as defined in the 2018 Credit Agreement). As a result of the Second Amendment and the combined effect of the reduction in the interest rate margin and the reduction in the interest rate floor, the interest rate on the 2018 Term Loans has been reduced by 1.0% per year.

~~In connection with the Second Amendment, on February 12, 2021, GrafTech Finance repaid approximately $150 million aggregate principal amount of its 2018 Term Loans with cash on hand.~~

Uses of Liquidity

On July 30, 2019, our Board of Directors authorized a program to repurchase up to $100 million of our outstanding common stock. 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. We ~~have~~ repurchased ~~4,333,259~~4,293,924 shares of common stock for a total purchase price of ~~$41.0~~$46.2 million ~~under this program since inception. There were no shares repurchased~~ under this program during the ~~three~~nine months ended ~~March 31,~~September 30, 2021. The Company had $12.8 million remaining under this program as of September 30, 2021. Additionally, our Board of Directors has approved a new $150 million open market stock repurchase program.

We currently pay a quarterly dividend of $0.01 per share, or $0.04 on an annualized basis. We review our capital structure with the Board of Directors on an ongoing basis. There can be no assurance that we will pay dividends in the future in these amounts or at all. Our Board of Directors may change the timing and amount of any future dividend payments or eliminate the payment of future dividends in its sole discretion, without any prior notice to our stockholders. Our ability to pay dividends will depend upon many factors, including our financial position and liquidity, results of operations, legal requirements, restrictions that may be imposed by the terms of our current and future credit facilities and other debt obligations and other factors deemed relevant by our Board of Directors.

During 2020, we reduced our long-term debt principal by $400 million. During the ~~three~~nine months ended ~~March 31,~~September 30, 2021, we repaid an additional ~~$150~~$300 million of principal of our 2018 Term Loans. WeFor the remainder of 2021, we continue to ~~prioritize balance sheet flexibility and~~expect our primary use of cash to be debt repayment. ~~We anticipate using a majority of the cash flow that we generate to repay debt, but we will continue to examine opportunities to repurchase our common stock.~~

~~PART I (CONT’D)~~

~~GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES~~

Our capital expenditure range expectations for 2021 are unchanged, between $55 and $65 milli
on.

Potential uses of our liquidity include dividends, share repurchases, capital expenditures, acquisitions, scheduled debt repayments, optional debt repayments, ~~compensation-related Change in Control payments~~ and other general purposes. 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 ~~the current downturn caused by~~ any potential resurgence of

PART I (CONT’D)

GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES

the COVID-19 pandemic, 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 of such financing, if available.

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.

During the second quarter of 2021, the Company paid out $61.5 million under its LTIP resulting from a Change in Control provision upon Brookfield's ownership of the Company's common stock falling below 30% of our total outstanding shares, which occurred in the second quarter of 2021. We paid an additional $5.3 million related to payroll taxes in the third quarter of 2021 and the remaining $6.6 million related to payroll taxes will be paid in subsequent quarters. For details of the LTIP, see Note 7 "Contingencies" to the Notes to Condensed Consolidated Financial Statements.

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.

The Company's long-term incentive plan ("LTIP") contains a Change in Control provision requiring a payout of the plan upon Brookfield's ownership of the Company's common stock falling below 30%. Brookfield currently owns approximately 36.6% of our outstanding shares of common stock. The estimated range of the cash payout is ~~$65 million to $75 million~~ ~~if and when a Change in Control actually occurs. For further information related to LTIP, see Note 7 "Contingencies" to the Notes to Condensed Consolidated Financial Statements.~~

Capital expenditures totaled ~~$14.2~~$40.4 million in the ~~three~~nine months ended ~~March 31,~~September 30, 2021. ~~We are managing inventory levels to match demand.~~

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 increased borrowings under our 2018 Revolving Credit Facility, to the extent available.

Cash Flows

The following table summarizes our cash flow activities:


		For the Three Months Ended March 31,					For the Nine Months Ended September 30,
		2021		2020			2021		2020
		(in millions)					(in millions)
Cash flow provided by (used in):	Cash flow provided by (used in):					Cash flow provided by (used in):
Operating activities	Operating activities	$	122.4	$	139.3	Operating activities	$	343.0	$	416.7
Investing activities	Investing activities	$	(14.0)	$	(13.8)	Investing activities	$	(40.1)	$	(30.6)
Financing activities	Financing activities	$	(156.8)	$	(53.0)	Financing activities	$	(360.8)	$	(307.6)

Operating Activities

Cash flow from operating activities represents cash receipts and cash disbursements related to all of our activities other than investing and financing activities. Operating cash flow is derived by adjusting net income (loss) for:

•Non-cash items such as depreciation and amortization, impairment, post retirement obligations, and severance and pension plan changes;

•Gains and losses attributed to investing and financing activities such as gains and losses on the sale of assets, loan modification charges and unrealized currency transaction gains and losses; and

•Changes in operating assets and liabilities, which reflect timing differences between the receipt and payment of cash associated with transactions and when they are recognized in results of operations.

~~PART I (CONT’D)~~

~~GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES~~

The net impact of the changes in working capital (operating assets and liabilities), which are discussed in more detail below, include the impact of changes in: receivables, inventories, prepaid expenses, accounts payable, accrued liabilities, accrued taxes, interest payable and payments of other current liabilities.

During the ~~three~~nine months ended ~~March 31,~~September 30, 2021, changes in working capital resulted in a net source of funds of ~~$25.2~~$47.2 million, which was impacted by:

PART I (CONT’D)

GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES

•net cash outflows in accounts receivable of ~~$16.6~~$3.5 million from the increase in accounts receivable due to the timing of sales;

•net cash ~~inflows~~outflows due to ~~decreased~~increased inventory of ~~$11.6~~$7.2 million resulting from ~~lower~~higher costs and ~~sales outpacing production;~~quantities on hand;

•net cash outflows due to increased prepaid expense and other current assets of $17.7 million resulting primarily from the timing of refunds of value-added taxes in certain foreign jurisdictions;

•net cash outflows from decreased income taxes payable of ~~$18.4~~$2.4 million resulting from tax payments, partially offset by 2021 income tax accruals;

•net cash inflows from increases in accounts payable and accruals of ~~$44.3~~$71.7 million, due to increased ~~deferred revenue liabilities related to customer prepayments;~~raw material purchases; and

•net cash inflows ~~of $5.7 million~~ from ~~increased~~increases in interest payable of $6.2 million, due to the timing of interest ~~accruing~~payments on ~~our~~the 2020 Senior ~~Notes which will be paid semi-annually.~~Notes.

Uses of cash in the ~~three~~nine months ended ~~March 31,~~September 30, 2021 included payments under our LTIP of $66.7 million, payments under the TRA of $21.8 million, cash taxes paid of $51.4 million, cash paid for interest of $38.3 million, and contributions to pension and other benefit plans of ~~$1.3 million, cash paid for interest of $11.6 million, payments under our tax receivable agreement, dated April 23, 2018 ("TRA") of $21.8 million and taxes paid of $35.8~~$3.6 million.

During the ~~three~~nine months ended ~~March 31,~~September 30, 2020, changes in working capital resulted in a net ~~use~~source of funds of ~~$27.7~~$85.1 million, which was impacted by:

•net cash inflows in accounts receivable of ~~$40.7~~$78.4 million from the decrease in accounts receivable due to lower sales;

•net cash ~~outflows from increases~~inflows in inventory of ~~$17.2~~$10.4 million ~~due primarily~~from our efforts to ~~higher quantities of decant oil on hand;~~reduce inventory levels and lower production levels;

•net cash inflows of ~~$7.4~~$5.4 million from the decrease in other current assets primarily due to value-added tax refunds received from foreign governments;

•net cash inflows from increased income taxes payable of ~~$14.2~~$16.0 million resulting from our ability to defer aapproximately $50.0 million of tax payment in a foreign jurisdiction resulting from government enacted COVID-19 relief, partially offset by lower required tax payments due to lower profitability; and

•net cash outflows from decreases in accounts payable and accruals of ~~$17.4~~$25.1 million, due to lower purchases of third-party needle ~~coke.~~coke and payments.

Uses of cash in the ~~three~~nine months ended ~~March 31,~~September 30, 2020 included payments under the TRA of $27.9 million, cash paid for interest of $68.0 million and taxes paid of $31.9 million, and contributions to pension and other benefit plans of ~~$0.7 million, cash paid for interest of $24.1 million, payments under our TRA of $27.9 million and taxes paid of $2.3~~$5.3 million.

Investing Activities

Net cash used in investing activities was ~~$14.0~~$40.1 million during the ~~three~~nine months ended ~~March 31,~~September 30, 2021, resulting primarily from capital expenditures.

Net cash used in investing activities was ~~$13.8~~$30.6 million during the ~~three~~nine months ended ~~March 31,~~September 30, 2020, resulting from capital expenditures.

Financing Activities

Net cash outflow from financing activities was ~~$156.8~~$360.8 million during the ~~three~~nine months ended ~~March 31,~~September 30, 2021, which was the result of the repayment of ~~$150.0~~$300.0 million of principal on our 2018 Term Loan Facility, ~~$1.6~~common stock repurchases of $42.4 million, taxes paid related to stock awards vesting of ~~debt modification costs from our term loan repricing, $1.4~~$4.1 million, $3.1 million of debt issuance and modification costs ~~from our 2020 Senior Note Issuance~~ and ~~$2.7~~$8.0 million of total dividends to stockholders.

Net cash outflow from financing activities was $307.6 million during the nine months ended September 30, 2020, which was the result of the repayment of $249.2 million on our 2018 Term Loan Facility, $28.2 million of total dividends to stockholders and $30.1 million of stock repurchases.

PART I (CONT’D)

GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES

Net cash outflow from financing activities was $53.0 million during the three months ended March 31, 2020, which was the result of $22.9 million of total dividends to stockholders and $30.1 million of stock repurchases.

Related Party Transactions

We have engaged in transactions with affiliates or related parties during 2021 and we expect to continue to do so in the future. These transactions include ongoing obligations under the TRA, Stockholders Rights Agreement and Registration Rights Agreement, each with Brookfield.

Recent Accounting Pronouncements

We discuss recently adopted accounting standards in Note 1, "Organization and Summary of Significant Accounting Policies" of the Notes to Condensed Consolidated Financial Statements.

Description of Our Financing Structure

We discuss our financing structure in more detail in Note 4, "Debt and Liquidity" of the Notes to Condensed Consolidated Financial Statements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are exposed to market risks, primarily from changes in interest rates, currency exchange rates, energy commodity prices and commercial energy rates. From time to time, we enter into transactions that have been authorized according to documented policies and procedures in order to manage these risks. These transactions primarily relate to financial instruments described below. Since the counterparties to these financial instruments are large commercial banks and similar financial institutions, we do not believe that we are exposed to material counterparty credit risk. We do not use financial instruments for trading purposes.

Our exposure to changes in interest rates results primarily from floating rate long-term debt tied to LIBO Rate or Euro LIBO Rate.

Our exposure to changes in currency exchange rates results primarily from:

•sales made by our subsidiaries in currencies other than local currencies;

•raw material purchases made by our foreign subsidiaries in currencies other than local currencies; and

•investments in and intercompany loans to our foreign subsidiaries and our share of the earnings of those subsidiaries, to the extent denominated in currencies other than the U.S. dollar.

Our exposure to changes in energy commodity prices and commercial energy rates results primarily from the purchase or sale of refined oil products and the purchase of natural gas and electricity for use in our manufacturing operations.

Interest rate risk management. We periodically enter into agreements with financial institutions that are intended to limit our exposure to additional interest expense due to increases in variable interest rates. These instruments effectively cap our interest rate exposure. In 2019, we entered into four interest rate swap contracts, and in 2021, we modified three contracts and closed one contract. As of ~~March 31,~~September 30, 2021, we recorded an unrealized pre-tax gain of ~~$2.4~~$1.7 million and a net unrealized pre-tax loss of $11.9 million as of December 31, 2020. Additionally, as a result of the February 2021 modification, the modified swaps are considered hybrid instruments composed of a debt host and an embedded derivative. As of ~~March 31,~~September 30, 2021, the debt host portion amounted to aan unrealized pre-tax loss of ~~$9.5~~$7.6 million, which ~~will be~~is amortized over the remaining life of the swaps.

Currency rate management. We enter into foreign currency derivatives from time to time to attempt to manage exposure to changes in currency exchange rates. These foreign currency derivatives, which include, but are not limited to, forward exchange contracts and purchased currency options, attempt to hedge global currency exposures. Forward exchange contracts are agreements to exchange different currencies at a specified future date and at a specified rate. Purchased currency options are instruments which give the holder the right, but not the obligation, to exchange different currencies at a specified rate at a specified date or over a range of specified dates. Forward exchange contracts and purchased currency options are carried at fair value.

The outstanding foreign currency derivatives represented a $1.0 million unrealized pre-tax net loss as of September 30, 2021 and a net unrealized pre-tax loss of $0.1 million as of December 31, 2020.

PART I (CONT’D)

GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES

~~The outstanding foreign currency derivatives represented $0.3 million pre-tax net loss as of March 31, 2021 and a net pre-tax loss of $0.1 million as of December 31, 2020.~~

Energy commodity management. We have entered into commodity derivative contracts to effectively fix some or all of our exposure to refined oil products. The outstanding commodity derivative contracts represented a net unrealized gain of ~~$6.2~~$12.3 million and a net unrealized loss of $2.2 million as of ~~March 31,~~September 30, 2021 and December 31, 2020, respectively.

Sensitivity analysis. We use sensitivity analysis to quantify potential impacts that market rate changes may have on the underlying exposures as well as on the fair values of our derivatives. The sensitivity analysis for the derivatives represents the hypothetical changes in value of the hedge position and does not reflect the related gain or loss on the forecasted underlying transaction.

A hypothetical increase in interest rates of 100 basis points (1%) would have increased our interest expense by ~~$0.1~~$0.2 million, net of the impact of our interest rate swap, for the ~~three~~nine months ended ~~March 31,~~September 30, 2021. The same 100 basis ~~points~~point increase would have resulted in an increase of ~~$13.6~~$11.2 million in the fair value of our interest rate swap portfolio.

As of ~~March 31,~~September 30, 2021, a 10% appreciation or depreciation in the value of the U.S. dollar against foreign currencies from the prevailing market rates would have resulted in a corresponding decrease of ~~$3.8~~$8.3 million or a corresponding increase of ~~$3.8~~$8.3 million, respectively, in the fair value of the foreign currency hedge portfolio.

A 10% increase or decrease in the value of the underlying commodity prices that we hedge would have resulted in a corresponding increase or decrease of ~~$4.8~~$2.9 million in the fair value of the commodity hedge portfolio as of ~~March 31,~~September 30, 2021. Because of the high correlation between the hedging instrument and the underlying exposure, fluctuations in the value of the instruments are generally offset by reciprocal changes in the value of the underlying exposure.

For further information related to the financial instruments described above, see Note 9 "Derivative Instruments" to the Notes to Condensed Consolidated Financial Statements.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures. Management is responsible for establishing and maintaining adequate disclosure controls and procedures at the reasonable assurance level. Disclosure controls and procedures are designed at the reasonable assurance level to ensure that information required to be disclosed by a reporting company in the reports that it files or submits under Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by it in the reports that it files under the Exchange Act is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of ~~March 31,~~September 30, 2021. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that these controls and procedures were effective at the reasonable assurance level as of ~~March 31,~~September 30, 2021.

Changes in Internal Control over Financial Reporting. There have been no changes in our internal control over financial reporting that occurred during the three months ended ~~March 31,~~September 30, 2021 that materially affected or are reasonably likely to materially affect our internal control over financial reporting.

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PART II. OTHER INFORMATION

GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES

Item 1. Legal Proceedings

We are involved in various investigations, lawsuits, claims, demands, labor disputes and other legal proceedings, including with respect to environmental and human exposure or other personal injury matters, arising out of or incidental to the conduct of our business. While it is not possible to determine the ultimate disposition of each of these matters and proceedings, we do not believe that their ultimate disposition will have a material adverse effect on our financial position, results of operations or cash flows. Additionally, we are involved in the following legal proceedings.

On September 30, 2020, a stockholder of the Company filed a lawsuit in the Delaware Court of Chancery. The stockholder filed an amended complaint on February 5, 2021, in response to the defendants' motion to dismiss. The amended complaint challenges the fairness of the Company’s repurchase of shares of its common stock from Brookfield for $250 million pursuant to a December 3, 2019 share repurchase agreement and also a related block trade by Brookfield of shares of the Company’s common stock. The stockholder, on behalf of an alleged class of holders of shares of the Company’s common stock as of December 3, 2019 and also purportedly on behalf of the Company, asserts claims for breach of fiduciary duty against certain members of the Company’s Board of Directors and Brookfield. The stockholder also challenges the appointment of the ~~newest~~ independent director who was appointed to the Company’s Board of Directors on August 5, 2020, as allegedly in violation of the Company’s Amended and Restated Certificate of Incorporation and the Stockholder Rights Agreement with certain Brookfield entities and affiliates. The stockholder seeks, among other things, an award of monetary relief to the Company and a declaration that the appointment of the ~~newest~~ independent director to the Board of Directors is invalid. On March 22, 2021, the defendants filed a motion to dismiss the amended complaint. On September 29, 2021, the stockholder voluntarily abandoned the stockholder's direct individual and class action claims challenging the share repurchase. On October 4, 2021, the Delaware Court of Chancery heard oral argument on the defendants' motion to dismiss the stockholder's remaining claims and took the matter under advisement.

Table of PART II. OTHER INFORMATION (CONT'D)

GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES

Item 1A. Risk Factors

There have been no material changes to the Risk Factors disclosed in Part I- Item 1A of our Annual Report on Form 10-K filed February 23, 2021. You should not interpret the disclosure of any risk factor to imply that the risk has not already materialized.

~~Table of Contents~~

Item 2. Unregistered Sale of Equity Securities and Use of Proceeds

The table below sets forth the information on a monthly basis regarding GrafTech's purchases of its common stock, par value $0.01 per share, during the ~~first~~third quarter of 2021.

~~Period~~

~~Total Number of Shares Purchased~~

~~Average Price Paid per Share~~

~~Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs~~

~~Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs~~ ~~(1)~~

~~January 1 through January 31, 2021~~

—

~~59,030,305~~

~~February 1 through February 28, 2021~~

—

~~59,030,305~~

~~March 1 through March 31, 2021~~

—

~~59,030,305~~

~~Total~~

—

~~59,030,305~~


Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (1)

July 1 through July 31, 2021	—	$	—	—	$	59,030,305
August 1 through August 31, 2021	1,104,576	$	10.75	1,104,576	$	47,152,178
September 1 through September 30, 2021	3,189,348	$	10.77	3,189,348	$	12,793,671
Total	4,293,924	$	10.77	4,293,924	$	12,793,671

(1) Authorization remaining pursuant to our previously announced program to repurchase, which was authorized by our Board of Directors on July 30, 2019 (the “Share Repurchase Program”). The Share Repurchase Program was announced on July 31, 2019 and allows for the purchase of up to $100 million of outstanding shares of our common stock from time to time on the open market, including under Rule 10b5-1 and/or Rule 10b-18 plans. The Share Repurchase Program has no expiration date.

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Table of ~~Contents~~

PART II. OTHER INFORMATION (CONT'D)

GRAFTECH INTERNATIONAL LTD. AND SUBSIDIARIES

Item 6. Exhibits


Exhibit Number			Description of Exhibit








3.1			Amended and Restated Certificate of Incorporation of GrafTech International Ltd. (incorporated by reference to Exhibit 3.1 to GrafTech International Ltd.'s Quarterly Report on Form 10-Q filed May 1, 2019).

3.2			Amended and Restated By Laws of GrafTech International Ltd. (incorporated by reference to Exhibit 3.2 to GrafTech International Ltd.'s Registration Statement on Form S 1/A (Registration No. 333-223791) filed April 13, 2018).

~~10.1~~			Second Amendment, dated as of February 17, 2021, by and among the Company, GrafTech Finance Inc., GrafTech Luxembourg II s.a.r.l., GrafTech Switzerland SA, JPMorgan Chase Bank, N.A., as Administrative Agent, and the lenders party thereto. (Incorporated by reference to exhibit 10.1 to GrafTech International Ltd. 's Current Report on Form 8-K filed February 19, 2021).

31.1*			Certification pursuant to Rule 13a-14(a) under the Exchange Act by David J. Rintoul, President and Chief Executive Officer (Principal Executive Officer).

31.2*			Certification pursuant to Rule 13a-14(a) under the Exchange Act by Quinn J. Coburn, Chief Financial Officer, Vice President Finance and Treasurer (Principal Financial Officer).

32.1**			Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by David J. Rintoul, President and Chief Executive Officer (Principal Executive Officer).

32.2**			Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by Quinn J. Coburn, Chief Financial Officer, Vice President Finance and Treasurer (Principal Financial Officer).

101			The following financial information from GrafTech International Ltd.'s Quarterly Report on Form 10-Q for the quarterly period ended ~~March 31,~~September 30, 2021 formatted in Inline XBRL (Extensible Business Reporting Language) includes: (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Operations and Comprehensive Income, (iii) the Condensed Consolidated Statements of Cash Flows, (iv) the ~~Condensed~~ Consolidated Statements of Stockholders' Equity (Deficit), and (v) Notes to the Condensed Consolidated Financial Statements.

104			Cover Page Interactive Data file (formatted as Inline XBRL and contained in Exhibit 101).

____________________________

* Filed herewith

** Furnished herewith

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.


			GRAFTECH INTERNATIONAL LTD.
Date:	~~May~~November 5, 2021	By:	/s/ Quinn J. Coburn
			Quinn J. Coburn
			Chief Financial Officer, Vice President Finance and Treasurer (Principal Financial Officer)

3944


PART I. FINANCIAL INFORMATION:

Item 1. Financial Statements

Condensed Consolidated Balance Sheets (unaudited)			5

Condensed Consolidated Statements of Operations and Comprehensive Income (unaudited)			6

Condensed Consolidated Statements of Cash Flows (unaudited)			7

~~Condensed~~ Consolidated Statements of Stockholders' Equity (~~Deficit)~~ (Deficit) (unaudited)			8

Notes to Condensed Consolidated Financial Statements (unaudited)			910

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			2425

Item 3. Quantitative and Qualitative Disclosures About Market Risk			3439

Item 4. Controls and Procedures			3540

PART II. OTHER INFORMATION:

Item 1. Legal Proceedings			3641

Item 1A. Risk Factors			3641

Item 2. Unregistered Sale of Equity Securities and Use of Proceeds			3742

Item 6. Exhibits			3843

SIGNATURE			3944


	Q1 2021	Q4 2020	Q1 2020
Global (ex-China) capacity utilization rates	73%	72%	71%
U.S. steel market capacity utilization rates	77%	72%	79%