Quaker Houghton · NYSE:KWR
Quaker Houghton — Quaker Chemical — Q3 2020 Earnings Presentation
25 slides from Quaker Houghton's earnings presentation, Nov 5, 2020
Slide 1: Quaker Houghton Third Quarter 2020 Results Investor Conference Call
Quaker Houghton Third Quarter 2020 Results Investor Conference Call
Slide 2: 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: Third Quarter 2020 Headlines
©2019 Quaker Houghton. All Rights Reserved 4 Third Quarter 2020 Headlines • Net sales of $367.2 million up 28% sequentially compared to second quarter but still negatively impacted by lower volumes due to COVID - 19 • GAAP net income of $27.3 million compared to prior year third quarter net loss of
Slide 5: Chairman Comments and 2020 Outlook
©2019 Quaker Houghton. All Rights Reserved 5 Chairman Comments Third Quarter of 2020 • Strong rebound in our business with net sales growth of 28% and adjusted EBITDA nearly doubling when compared to the second quarter of 2020 • All four business segments showed good sequential growth as our end mar
Slide 6: Financial Highlights – Actual Results
©2019 Quaker Houghton. All Rights Reserved 6 Financial Highlights – Actual Results Third quarter of 2020 • Net sales of $367.2 million increased 13% compared to Q3’19 due to net sales from acquisitions, primarily Houghton and Norman Hay, of $74.6 million; excluding acquisitions, net sales would have
Slide 7: Financial Highlights – Non-GAAP & Pro Forma
©2019 Quaker Houghton. All Rights Reserved 7 Financial Highlights – Non - GAAP & Pro Forma Third quarter of 2020 Non - GAAP Results • Non - GAAP EPS of $1.56 in both Q3’20 and Q3’19 as higher net income was offset by the additional shares issued at the close of the Combination • Non - GAAP operating
Slide 8: Financial Snapshot
©2019 Quaker Houghton. All Rights Reserved 8 Financial Snapshot ( dollars in millions, unless otherwise noted) (1) Certain amounts may not calculate due to rounding (2) Pro forma results for Q3 2020 and YTD 2020 presented above are the actual results for Quaker Houghton Q3 2020 Q3 2019 YTD 2020 YTD
Slide 9: Pro Forma Adjusted EBITDA
©2019 Quaker Houghton. All Rights Reserved 9 Pro Forma Adjusted EBITDA (dollars in millions) $215 $221 $236 $234 $230 $217 $200 $213 $225 $238 $250 2016 2017 2018 2019 TTM Q3'19 TTM Q3'20 (1) TTM Q3’20 adjusted EBITDA decreased compared to 2019 due to the impact of COVID - 19 on overall volumes $61
Slide 10: Leverage and Liquidity Update
©2019 Quaker Houghton. All Rights Reserved 10 Leverage and Liquidity Update • Total gross outstanding borrowings of $896.6 million and cash on hand of $155.8 million result in net debt of $740.8 million as of September 30, 2020, which decreased $57.9 million or 7% compared to $798.7 million as of Ju
Slide 11: Appendix Actual and Non-GAAP Results
Appendix Actual and Non - GAAP Results
Slide 12: Non-GAAP financial information notes
The information included in this presentation includes non - GAAP (unaudited) financial information that includes EBITDA, adjusted EBITDA, adjusted EBITDA margin, non - GAAP operating income, non - GAAP operating margin, non - GAAP net income, non - GAAP earnings per diluted share, and pro forma net
Slide 13: Non-GAAP Operating Income
©2019 Quaker Houghton. All Rights Reserved 13 Non - GAAP Operating Income Reconciliation (dollars in thousands, unless otherwise noted) Q3 2020 Q3 2019 YTD 2020 YTD 2019 Operating income (loss) 34,859$ (14,502)$ 24,653$ 25,858$ Fair value step up of inventory sold - 10,214 226 10,214 Houghton combin
Slide 14: Adjusted EBITDA & Non-GAAP Net Income
©2019 Quaker Houghton. All Rights Reserved 14 Adjusted EBITDA & Non - GAAP Net Income Reconciliation (dollars in thousands, unless otherwise noted) Q3 2020 Q3 2019 YTD 2020 YTD 2019 Net income (loss) attributable to Quaker Chemical Corporation 27,304$ (13,053)$ (8,812)$ 16,382$ Depreciation and amor
Slide 15: Non-GAAP EPS Reconciliation
©2019 Quaker Houghton. All Rights Reserved 15 Non - GAAP EPS Reconciliation Q3 2020 Q3 2019 YTD 2020 YTD 2019 GAAP earnings (loss) per diluted share attributable to Quaker Chemical Corporation common shareholders Equity income in a captive insurance company per diluted share (0.03) (0.03) (0.04) (0.
Slide 16: Segment Performance
©2019 Quaker Houghton. All Rights Reserved 16 Segment Performance (dollars in thousands) Q3 2020 Q3 2019 YTD 2020 YTD 2019 Net sales Americas 119,540$ 116,691$ 330,012$ 260,663$ EMEA 94,005 82,369 276,546 183,806 Asia/Pacific 84,877 74,266 226,850 165,234 Global Specialty Businesses 68,802 51,804 19
Slide 17: Quaker Houghton Forward Together
& Quaker Vg Houghton. Forward Together
Slide 18: TTM Q3 2020 Adjusted EBITDA
©2019 Quaker Houghton. All Rights Reserved 18 TTM Q3 2020 Adjusted EBITDA Reconciliation (dollars in thousands) A B C = B - A D E = C + D YTD Q3 2019 Full Year 2019 Q4 2019 YTD Q3 2020 TTM Q3 2020 Net income (loss) attributable to Quaker Chemical Corporation 16,382$ 31,622$ 15,240$ (8,812)$ 6,428$ D
Slide 19: Q3 2019 Pro Forma
©2019 Quaker Houghton. All Rights Reserved 19 Q3 2019 Pro Forma Reconciliation (dollars in millions) As Reported Houghton Divestitures Other (a) Pro Forma* Net Sales 325$ 72$ (9)$ (2)$ 386$ Net (Loss) Income Attributable to Quaker Houghton (13)$ (7)$ (1)$ 2$ (20)$ Depreciation and Amortization 14 4
Slide 20: YTD Q3 2019 Pro Forma
©2019 Quaker Houghton. All Rights Reserved 20 YTD Q3 2019 Pro Forma Reconciliation (dollars in millions) As Reported Houghton Divestitures Other (a) Pro Forma* Net Sales 742$ 475$ (34)$ (13)$ 1,171$ Net Income (Loss) Attributable to Quaker Houghton 16$ (3)$ (6)$ 9$ 16$ Depreciation and Amortization
Slide 21: TTM Q3 2019 Pro Forma
©2019 Quaker Houghton. All Rights Reserved 21 TTM Q3 2019 Pro Forma Reconciliation (dollars in thousands) Quaker Houghton Divestitures Other (a) Pro Forma* Net sales 954$ 683$ (46)$ (22)$ 1,568$ Net Income (Loss) Attributable to Quaker Houghton 24$ (7)$ (9)$ 13$ 21$ Depreciation and Amortization 29
Slide 22: Full Year 2019 Pro Forma
©2019 Quaker Houghton. All Rights Reserved 22 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 23: Full Year 2018 Pro Forma
23 ©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 24: Full Year 2017 Pro Forma
24 ©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 25: Full Year 2016 Pro Forma
25 ©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