Quaker Houghton · NYSE:KWR
Quaker Houghton — Quaker Chemical — Q1 2019 Earnings Presentation
17 slides from Quaker Houghton's earnings presentation, May 2, 2019
Slide 1: First Quarter 2019 Results Investor Conference Call
1 First Quarter 2019 Results Investor Conference Call May 3, 2019 Quaker Chemical Corporation
Slide 2: Risks and Uncertainties Statement
Risks and Uncertainties Statement Regulation G The attached charts include C ompany information that does not conform to generally accepted accounting principles ( “GAAP”). Management believes that an analysis of this data is meaningful to investors because it provides insight with respect to ongoin
Slide 3: Speakers
Speakers Michael F. Barry Chairman of the Board, Chief Executive Officer & President Mary Dean Hall Vice President, Chief Financial Officer & Treasurer Robert T. Traub Vice President, General Counsel & Corporate Secretary Chart #1
Slide 4: First Quarter 2019 Headlines
▪ Volume growth of 3% results in relatively flat sales of $211.2 million despite a 5% negative foreign exchange impact and challenging end market conditions ▪ Reported net income of $13.8 million or $1.03 per diluted share ▪ Non - GAAP earnings per diluted share of $1.41 comparable to the prior year
Slide 5: Chairman Comments
Chairman Comments ▪ First Quarter 2019 • Non - GAAP earnings per diluted share of $1.41 comparable to the prior year • Net sales of $211.2 million benefited from increases in volume of 3% and selling price and product mix of 1%, but were offset by a negative impact from foreign currency translation
Slide 6: Q1 2019 financial results commentary
▪ Q1’19 non - GAAP EPS of $1.41 comparable to prior year and adjusted EBITDA decreased slightly to $29.6 million compared to $30.9 million in the prior year primarily due to the negative impact from foreign exchange of approximately 4% or $0.06 per diluted share ▪ Net sales of $211.2 million decreas
Slide 7: Financial Snapshot
Chart #5 Financial Snapshot ($ in Millions unless otherwise noted) Q1 2019 Q1 2018 Net Sales 211.2 212.1 Gross Profit 75.8 75.4 Gross Margin (%) 35.9% 35.6% SG&A 51.5 50.0 Combination-Related Expenses 4.5 5.2 Operating Income 19.8 20.2 Operating Margin (%) 9.4% 9.5% Non-GAAP Operating Income 24.3 25
Slide 8: Continued market share gains drive volume growth
Chart #6 Continued market share gains drive volume growth despite estimated declines in our underlying markets Product Volume by Quarter and Year in Thousands of Kilograms 100,000 140,000 180,000 220,000 260,000 300,000 30,000 40,000 50,000 60,000 70,000 80,000 Full Year Volume Quarter Volume Quarte
Slide 9: Gross Margin Percentage Trends
28.1% 35.0% 35.6% 32.7% 33.8% 35.9% 35.8% 37.7% 37.5% 35.5% 36.0% 25.0% 28.0% 31.0% 34.0% 37.0% 40.0% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Gross Margin Percentage 35.6% 36.5% 36.5% 35.4% 35.9% 33.0% 34.0% 35.0% 36.0% 37.0% 38.0% Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Gross Margin
Slide 10: Adjusted EBITDA Historical Performance
FY 2008 – Q1 2019 CAGR: 11.4% +730 Margin bps Adjusted EBITDA* Baseline Historical Performance Chart #8 *Refer to Appendix and non - GAAP reconciliations; recast for changes in adjusted EBITDA presentation in Q1’19.
Slide 11: Balance Sheet Cash and Debt
-$110 -$90 -$70 -$50 -$30 -$10 $10 $30 $50 $70 $90 $110 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Q1 2019 $ Millions Cash ST/LT Debt Net Cash (Debt) Chart #9 Continued strong balance sheet as the Company’s cash exceeded its debt ~ $60 million Balance Sheet Cash and Debt
Slide 12: Appendix
@ Quaker APPENDIX
Slide 13: Non-GAAP EPS Reconciliation
Chart #10 Non - GAAP EPS Reconciliation Q1 2019 Q1 2018 GAAP earnings per diluted share 1.03$ 0.95$ Equity (income) loss in a captive insurance company per diluted share (0.03) 0.03 Houghton combination-related expenses per diluted share 0.35 0.38 Pension and postretirement benefit costs, non-servic
Slide 14: Non-GAAP Operating Income Reconciliation
Chart #11 Non - GAAP Operating Income Reconciliation ($ in thousands unless otherwise noted) Q1 2019 Q1 2018 Operating income 19,829$ 20,231$ Houghton combination-related expenses 4,483 5,209 Non-GAAP operating income 24,312$ 25,440$ Non-GAAP operating margin (%) 11.5% 12.0%
Slide 15: Adjusted EBITDA reconciliation, trailing twelve months
I = G + H H G = F - D F E = C + D D C = B - A B A Trailing Twelve Months Q1 2019 YTD Q1 2019 Last Nine Months 2018 FY 2018 Trailing Twelve Months Q1 2018 YTD Q1 2018 Last Nine Months 2017 FY 2017 YTD Q1 2017 Net income 60,585$ 13,844$ 46,741$ 59,473$ 26,018$ 12,732$ 13,286$ 20,278$ 6,992$ Depreciati
Slide 16: Adjusted EBITDA reconciliation, 2008-2018
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Net income 9,833$ 16,058$ 32,120$ 45,892$ 47,405$ 56,339$ 56,492$ 51,180$ 61,403$ 20,278$ 59,473$ Depreciation 10,879 9,525 9,867 11,455 12,252 12,339 12,306 12,395 12,557 12,598 12,373 Amortization 1,177 1,078 988 2,338 3,106 3,445 4,325 6,811
Slide 17: Segment Performance
Q1 2019 Q1 2018 Net sales North America 95,253$ 91,820$ EMEA 56,288 62,055 Asia/Pacific 50,527 48,777 South America 9,142 9,403 Total net sales 211,210$ 212,055$ Q1 2019 Q1 2018 Operating earnings, excluding indirect operating expenses North America 20,872$ 20,365$ EMEA 8,782 10,293 Asia/Pacific 13,