Slide 1: Second Quarter 2017 Results Investor Conference Call
1 Second Quarter 2017 Results Investor Conference Call July 28, 2017 Quaker Chemical Corporation
Slide 2: Regulation G and Forward-Looking Statements
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 ongoing operating results of the Company
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: Second Quarter 2017 Headlines
Second Quarter 2017 Headlines ▪ 8% growth in net sales driven by a strong volume increase of 7% ▪ Net income of $11.9 million and earnings per diluted share of $0.89 include the impact of Houghton combination - related expenses ▪ 12% increase in non - GAAP earnings per diluted share to $1.24 Chart #
Slide 5: Chairman Comments
Chairman Comments Second Quarter 2017 ▪ Second Quarter 2017 x Net sales of $201.2 million driven by increases in organic volume on continued market share gains and increased production in some end markets x Strong volumes drove higher gross profit despite a decline in gross margin primarily due to r
Slide 6: Net sales increase of 8% to $201.2 million
▪ Net sales increase of 8% to $201.2 million driven by strong organic volume growth of 5%, increases from the Q4’16 acquisition of Lubricor of 2% and an increase from price and product mix of 2%, partially offset by FX of 1% ▪ Lower gross margin of 35.7% in Q2’17 compared to 38.2% in Q2’16 primarily
Slide 7: Financial Snapshot
Chart #5 Financial Snapshot ($ Millions unless otherwise noted) Q2 2017 Q2 2016 YTD 2017 YTD 2016 Net Sales 201.2 186.9 396.1 365.0 Gross Profit 71.8 71.4 142.7 139.4 Gross Margin 35.7% 38.2% 36.0% 38.2% SG&A 49.6 48.7 97.6 96.8 Combination-related expenses 4.3 --- 13.4 --- Operating Income 17.9 22.
Slide 8: Strong organic volumes continue to drive top line growth
Chart #6 Strong organic volumes continue to drive top line growth Product Volume by Quarter and Year in Thousands of Kilograms 115,000 135,000 155,000 175,000 195,000 215,000 235,000 255,000 25,000 30,000 35,000 40,000 45,000 50,000 55,000 60,000 65,000 70,000 Full Year Volume Quarter Volume Quarter
Slide 9: Gross Margin Percentage Trends
28.1% 35.0% 35.6% 32.7% 33.8% 35.9% 35.8% 37.7% 37.5% 20.0% 25.0% 30.0% 35.0% 40.0% 2008 2009 2010 2011 2012 2013 2014 2015 2016 Gross Margin Percentage 38.2% 37.2% 36.5% 36.4% 35.7% 20.0% 25.0% 30.0% 35.0% 40.0% Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Gross Margin Percentage Chart #7 Gross Margins
Slide 10: Adjusted EBITDA Baseline Historical Performance
$40.1 $44.2 $66.8 $73.0 $80.9 $89.6 $99.8 $101.6 $106.6 $104.8 $110.2 6.9% 9.8% 12.3% 10.7% 11.4% 12.3% 13.0% 13.8% 14.3% 14.2% 14.2% 2008 2009 2010 2011 2012 2013 2014 2015 2016 Trailing Twelve Months Q2 2016 Trailing Twelve Months Q2 2017 Adjusted EBITDA ($ Mils.) Adjusted EBITDA Margin (%) FY 200
Slide 11: Balance Sheet Cash and Debt
-$120 -$80 -$40 $0 $40 $80 $120 2008 2009 2010 2011 2012 2013 2014 2015 2016 Q2 2017 $ Millions Cash ST/LT Debt Net Cash (Debt) Chart #9 Continued strong cash flow generation and balance sheet Balance Sheet Cash and Debt
Slide 12: Appendix
APPENDIX
Slide 13: Non-GAAP EPS Reconciliation
Chart #10 Non - GAAP EPS Reconciliation Q2 2017 Q2 2016 YTD 2017 YTD 2016 GAAP earnings per diluted share 0.89$ 1.13$ 1.42$ 2.11$ Equity income in a captive insurance company per diluted share (0.04) (0.02) (0.08) (0.03) Houghton combination-related expenses per diluted share 0.27 - 0.95 - U.S. pens
Slide 14: Adjusted EBITDA Reconciliation
Chart #11 Adjusted EBITDA Reconciliation 2008 2009 2010 2011 2012 2013 2014 2015 2016 Net income 9,833 16,058 32,120 45,892 47,405 56,339 56,492 51,180 61,403 Depreciation 10,879 9,525 9,867 11,455 12,252 12,339 12,306 12,395 12,557 Amortization 1,177 1,078 988 2,338 3,106 3,445 4,325 6,811 7,009 In
Slide 15: TTM Adjusted EBITDA Reconciliation
TTM Adjusted EBITDA Reconciliation Chart #12 I = G + H H G = F - D F E = C + D D C = B - A B A Trailing Twelve Months Q2 2017 YTD Q2 2017 Last Six Months 2016 FY 2016 Trailing Twelve Months Q2 2016 YTD Q2 2016 Last Six Months 2015 FY 2015 YTD Q2 2015 Net income 52,340 18,898 33,442 61,403 53,725 27,