Quaker Houghton · NYSE:KWR
Quaker Houghton — Quaker Chemical — Q4 2020 Earnings Presentation
23 slides from Quaker Houghton's earnings presentation, Feb 25, 2021
Slide 1: Fourth Quarter and Full Year 2020 Results Investor Conference Call
Quaker Houghton Fourth Quarter and Full Year 2020 Results Investor Conference Call
Slide 2: Combination Basis of Presentation, Regulation G and Forward-Looking Statements
On August 1, 2019, Quaker Chemical Corporation (the “Company”, also known as Quaker Houghton) completed its combination with Hou ghton International, Inc. (“Houghton”) (herein referred to as “the Combination”). In addition, the Company acquired the operating divisions of Norman Hay plc (“Norman Hay”
Slide 3: Speakers
Michael F. Barry Chairman of the Board, Chief Executive Officer & President Mary Dean Hall Senior Vice President, Chief Financial Officer & Treasurer Robert T. Traub Senior Vice President, General Counsel & Corporate Secretary Shane W. Hostetter Vice President, Finance & Chief Accounting Officer ©20
Slide 4: Fourth Quarter 2020 Headlines
©2019 Quaker Houghton. All Rights Reserved 4 Fourth Quarter 2020 Headlines • Quarterly net sales of $385.9 million down 1% compared to the fourth quarter of 2019 but up 5% sequentially due to improved volumes on continued gradual COVID - 19 recovery • GAAP net income of $48.5 million compared to pri
Slide 5: Chairman Comments
©2019 Quaker Houghton. All Rights Reserved 5 Chairman Comments Fourth Quarter of 2020 • Continue to see sales and volumes increase from the second and third quarter levels with sequential growth in each business segment including net market share gains of approximately 4% • Adjusted EBITDA grew 8% f
Slide 6: Financial Highlights – Actual Results Fourth quarter of 2020
©2019 Quaker Houghton. All Rights Reserved 6 Financial Highlights – Actual Results Fourth quarter of 2020 • Net sales of $385.9 million decreased only 1% compared to $391.3 million in the Q4’19 primarily due to a 2% decrease from price and product mix, partially offset by a 1% positive impact from f
Slide 7: Financial Highlights – Non-GAAP Fourth quarter of 2020
©2019 Quaker Houghton. All Rights Reserved 7 Financial Highlights – Non - GAAP Fourth quarter of 2020 Non - GAAP Results • Non - GAAP operating income increased 16% to $43.7 million compared to $37.6 million in Q4’19 primarily due to the benefits from cost savings related to the Combination, partial
Slide 8: Financial Highlights – Actual Results Full year of 2020
©2019 Quaker Houghton. All Rights Reserved 8 Financial Highlights – Actual Results Full year of 2020 • Net sales of $1,417.7 million increased 25% compared to prior year primarily driven by a full year of net sales from Houghton an d Norman Hay; excluding net sales from acquisitions, net sales would
Slide 9: Financial Highlights – Non-GAAP & Pro Forma Full year of 2020
©2019 Quaker Houghton. All Rights Reserved 9 Financial Highlights – Non - GAAP & Pro Forma Full year of 2020 Non - GAAP Results • Non - GAAP operating income increased 10% to $134.0 million compared to $121.9 million in FY’19 primarily due to additional operating income from Houghton and Norman Hay
Slide 10: Financial Snapshot
©2019 Quaker Houghton. All Rights Reserved 10 Financial Snapshot ( dollars in millions, unless otherwise noted) (1) Certain amounts may not calculate due to rounding (2) Pro forma results for Q4 2020 and 2019 as well as YTD 2020 presented above are the actual results for Quaker Houghton Q4 2020 Q4 2
Slide 11: Pro Forma Adjusted EBITDA
©2019 Quaker Houghton. All Rights Reserved 11 Pro Forma Adjusted EBITDA (dollars in millions) $215 $221 $236 $234 $222 $200 $213 $225 $238 $250 2016 2017 2018 2019 2020 (1) Full year 2020 adjusted EBITDA decreased compared to 2019 due to the impact of COVID - 19 on overall volumes but showing growth
Slide 12: Leverage and Liquidity Update
©2019 Quaker Houghton. All Rights Reserved 12 Leverage and Liquidity Update • Total gross outstanding borrowings of $899.1 million and cash on hand of $181.8 million result in net debt of $717.3 million, wh ich decreased $23.5 million or 3% compared to $740.8 million as of September 30, 2020 and dec
Slide 13: Appendix Actual and Non-GAAP Results
Appendix Actual and Non - GAAP Results
Slide 14: Non-GAAP financial information notes
The information included in this presentation includes non - GAAP (unaudited) financial information that includes EBITDA, adjusted EBITDA, adjusted EBITDA margin, non - GAAP operating income, non - GAAP operating margin, non - GAAP net income, non - GAAP earnings per diluted share, and pro forma net
Slide 15: Non-GAAP Operating Income Reconciliation
©2019 Quaker Houghton. All Rights Reserved 15 Non - GAAP Operating Income Reconciliation (dollars in thousands, unless otherwise noted) Q4 2020 Q4 2019 YTD 2020 YTD 2019 Operating income 34,707$ 20,276$ 59,360$ 46,134$ Fair value step up of inventory sold - 1,500 226 11,714 Houghton combination, int
Slide 16: Adjusted EBITDA & Non-GAAP Net Income Reconciliation
©2019 Quaker Houghton. All Rights Reserved 16 Adjusted EBITDA & Non - GAAP Net Income Reconciliation (dollars in thousands, unless otherwise noted) Q4 2020 Q4 2019 YTD 2020 YTD 2019 Net income attributable to Quaker Chemical Corporation 48,470$ 15,240$ 39,658$ 31,622$ Depreciation and amortization 2
Slide 17: Non-GAAP EPS Reconciliation
©2019 Quaker Houghton. All Rights Reserved 17 Non - GAAP EPS Reconciliation Q4 2020 Q4 2019 YTD 2020 YTD 2019 GAAP earnings per diluted share attributable to Quaker Chemical Corporation common shareholders Equity income in a captive insurance company per diluted share (0.03) (0.03) (0.07) (0.12) Fai
Slide 18: Segment Performance
©2019 Quaker Houghton. All Rights Reserved 18 Segment Performance (dollars in thousands) Q4 2020 Q4 2019 YTD 2020 YTD 2019 Net sales Americas 120,149$ 131,458$ 450,161$ 392,121$ EMEA 106,641 101,764 383,187 285,570 Asia/Pacific 88,449 82,605 315,299 247,839 Global Specialty Businesses 70,613 75,467
Slide 19: Quaker Houghton. Forward Together
& Quaker Vag Houghton. Forward Together
Slide 20: Full Year 2019 Pro Forma Reconciliation
©2019 Quaker Houghton. All Rights Reserved 20 Full Year 2019 Pro Forma Reconciliation (dollars in millions) Quaker Houghton Divestitures Other (a) Pro Forma* Net sales 1,134$ 475$ (34)$ (13)$ 1,562$ Net Income (Loss) Attributable to Quaker Houghton 32$ (3)$ (6)$ 10$ 33$ Depreciation and Amortization
Slide 21: Full Year 2018 Pro Forma Reconciliation
21 ©2019 Quaker Houghton. All Rights Reserved Full Year 2018 Pro Forma Reconciliation (dollars in millions) Quaker Houghton Divestitures Other (a) Pro Forma* Net sales 868$ 861$ (53)$ (22)$ 1,655$ Net Income (Loss) Attributable to Quaker Houghton 59$ (0)$ (9)$ 17$ 66$ Depreciation and Amortization 2
Slide 22: Full Year 2017 Pro Forma Reconciliation
22 ©2019 Quaker Houghton. All Rights Reserved Full Year 2017 Pro Forma Reconciliation (dollars in millions) Quaker Houghton Divestitures Other (a) Pro Forma* Net Income (Loss) Attributable to Quaker Houghton 20$ (47)$ (9)$ 9$ (26)$ Depreciation and Amortization 20 55 - 5 80 Interest Expense, Net 1 5
Slide 23: Full Year 2016 Pro Forma Reconciliation
23 ©2019 Quaker Houghton. All Rights Reserved Full Year 2016 Pro Forma Reconciliation (dollars in millions) Quaker Houghton Divestitures Other (a) Pro Forma* Net Income (Loss) Attributable to Quaker Houghton 61$ (37)$ (8)$ 7$ 23$ Depreciation and Amortization 20 55 - 5 80 Interest Expense, Net 1 51