GrafTech looking for growth opportunities following $184 million net debt reduction

By Jennifer Lanning Drey

Portland, Ore., May 1 - GrafTech International Ltd. has reduced debt by $184 million within the last year, positioning the company to take advantage of growth opportunities, Craig Shular, chief executive officer of GrafTech, said Thursday during the company's first-quarter earnings conference call.

Net debt at the end of the first quarter was $313 million.

"We've done an awful lot of deleveraging and the drive behind that has been to position our company for growth," Shular said.

The first-quarter debt reduction was helped by a $49 million improvement in net cash provided by operating activities, as compared to the 2007 quarter. In the current quarter, net cash provided by operating activities was $67 million.

The company is targeting cash flow from operations of about $180 million for the full year.

During the call, Shular made it clear that the company's priority for free cash flow would be to fund growth and that no growth opportunity would be ruled out. The CEO said the company has a number of internal opportunities, particularly as its engineered solutions business gains traction, and will also look for acquisition opportunities.

"If we can find the right opportunities to grow our company and improve the portfolio, we will seize those opportunities," Shular said.

"We have that luxury now, obviously, with the balance sheet in the fine condition it is today."

Shular said GrafTech's $215 million revolver was "virtually undrawn" at the end of the quarter.

2008 sales guidance bumped up

GrafTech also increased its projected sales growth for 2008 to a range of 16% to 18%, up from prior guidance of between 12% and 14%.

"We are encouraged by underlying demand for our products," Shular said.

GrafTech's first-quarter net sales increased 27% over the prior-year first quarter, coming in at $290 million versus $228 million in the 2007 quarter. First-quarter income from continuing operations was $39 million versus $19 million in the first quarter of 2007.

The company is facing significant raw material costs, which it has offset through price increases, productivity initiatives and by moving into high-growth markets such as the solar market, Shular said.

GrafTech is a Parma, Ohio-based graphite and carbon producer.

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