Revenue From Contracts with Customers

3 Months Ended

Mar. 31, 2020

Revenue from Contract with Customer [Abstract]

Disaggregation of Revenue

The following table provides information about disaggregated revenue by type of product and contract for the three months ended March 31, 2020 and 2019:



	For the Three Months Ended March 31,
	2020		2019
	(Dollars in thousands)
Graphite Electrodes - Three-to-five-year take-or-pay contracts	$	276,379	$	396,040
Graphite Electrodes - Short-term agreements and spot sales	30,818		47,296
By-products and other	11,449		31,658
Total Revenues	$	318,646	$	474,994

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

Contract Balances

Receivables, net of allowances for doubtful accounts, were $198.9 million as of March 31, 2020 and $247.1 million as of December 31, 2019. 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, under ASC 606, deferred revenue originates 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.

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.

The following table provides information about deferred revenue from contracts with customers (in thousands):



	Current deferred revenue			Long-Term deferred revenue
	(Dollars in thousands)
Balance as of December 31, 2019	$	11,776		$	3,858
Increases due to cash received	9,189			—
Revenue recognized	(177		)	—
Revisions of estimates	—			—
Reclassifications between long-term and current	—			—
Foreign currency impact	(751		)	—
Balance as of March 31, 2020	$	20,037		$	3,858

Transaction Price Allocated to the Remaining Performance Obligations

As of December 31, 2019, under its long-term take-or-pay contracts, the Company expected to record revenues of $1,251 million for 2020. We now estimate that our long-term contract revenue in 2020 will be in the range of $950 million to $1,100 million. We recorded $276 million in the first quarter and we expect to record approximately $675 million to $825 million for the

remainder of 2020. The decreased expectation for 2020 includes the impact of the force majeure notices associated with the COVID-19 induced shutdowns of customers’ facilities as well as non-performance by certain other customers struggling with the impact of reduced steel demand. We expect that some of this decrease in 2020 long-term contract revenue will be recovered in future years.

Our contractual revenue for future years is $1,211 million for 2021, $1,145 million for 2022 and $29 million for 2023. The majority of the long-term take-or-pay contracts are defined as pre-determined fixed annual volume contracts while a small portion are defined with a specified volume range. For the year 2021 and beyond, the contractual revenue amounts above are based upon the mid-point of the volume range for those contracts with specified ranges. The actual revenue realized from these contracted volumes may vary in timing and total due to the credit risk associated with certain customers facing financial challenges as well as customer demand related to contracted volume ranges.

Disaggregation of Revenue [Table Text Block]

The following table provides information about disaggregated revenue by type of product and contract for the three months ended March 31, 2020 and 2019:



	For the Three Months Ended March 31,
	2020		2019
	(Dollars in thousands)
Graphite Electrodes - Three-to-five-year take-or-pay contracts	$	276,379	$	396,040
Graphite Electrodes - Short-term agreements and spot sales	30,818		47,296
By-products and other	11,449		31,658
Total Revenues	$	318,646	$	474,994