Quaker Houghton · NYSE:KWR
Quaker Houghton — Quaker Chemical — Q2 2019 Earnings Presentation
17 slides from Quaker Houghton's earnings presentation, Aug 1, 2019
Slide 1: Second Quarter 2019 Results Investor Conference Call
1 Second Quarter 2019 Results Investor Conference Call August 2, 2019 Quaker Chemical Corporation (also known as Quaker Houghton)
Slide 2: Risks and Uncertainties Statement
Risks and Uncertainties Statement On August 1, 2019, Quaker Chemical Corporation completed its combination with Houghton International, Inc. (“Houghton”) (here in referred to as “the Combination”). The results of operations of Houghton are not included in the Company’s results described in this pres
Slide 3: Speakers
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 Joseph Berquist Senior Vice President, Global Specialty Business
Slide 4: Second Quarter 2019 Headlines
▪ Quaker Chemical Corporation closed its combination with Houghton International, Inc. on August 1, 2019 ▪ Net sales of $205.9 million reflect a 3% negative foreign exchange impact and certain end - market challenges ▪ Reported net income of $15.6 million or $1.17 per diluted share ▪ Adjusted EBITDA
Slide 5: Chairman Comments
Chairman Comments ▪ Second Quarter 2019 • Headwinds in the quarter included continued negative impacts from foreign exchange of ~ 3%, a decline in underlying markets including lower global automotive production of ~7% and a number of global customers reducing production in June due to inventory corr
Slide 6: Second quarter 2019 results discussion
▪ Non - GAAP EPS of $1.56 and adjusted EBITDA of $31.4 million decreased 2% compared to $1.59 and $32.2 million in Q2’18, respectively, primarily due to the negative impact from foreign exchange of approximately 3% or $0.04 per diluted share ▪ Net sales of $205.9 million decreased 7% driven by a neg
Slide 7: Financial Snapshot
Chart #5 Financial Snapshot ($ in Millions unless otherwise noted) Q2 2019 Q2 2018 YTD 2019 YTD 2018 Net Sales 205.9 222.0 417.1 434.0 Gross Profit 75.2 80.9 150.9 156.4 Gross Margin (%) 36.5% 36.5% 36.2% 36.0% SG&A 50.0 54.1 101.5 104.1 Combination and Other Acquisition- Related Expenses 4.6 4.3 9.
Slide 8: Volume declines sequentially and year-over-year
Chart #6 Volume declines sequentially and year - over - year driven by challenging end - market conditions 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 Quarter Vo
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% 36.2% 25.0% 28.0% 31.0% 34.0% 37.0% 40.0% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 YTD 2019 Gross Margin Percentage 36.5% 36.5% 35.4% 35.9% 36.5% 33.0% 34.0% 35.0% 36.0% 37.0% 38.0% Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 201
Slide 10: Adjusted EBITDA Historical Performance
$41.0 $46.9 $68.2 $74.4 $83.8 $92.7 $100.2 $103.3 $106.8 $115.1 $125.8 $121.9 $123.7 7.1% 10.4% 12.5% 10.9% 11.8% 12.7% 13.1% 14.0% 14.3% 14.0% 14.5% 14.2% 14.5% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Trailing Twelve Months Q2'18 Trailing Twelve Months Q2'19 Adjusted EBITDA ($ Mils.)
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 Q2 2019 $ Millions Cash ST/LT Debt Net Cash (Debt) Chart #9 Continued strong balance sheet as the Company’s cash exceeded its debt ~ $74 million Balance Sheet Cash and Debt
Slide 12: Appendix
A Quaker ee Houghton. Forward Together APPENDIX
Slide 13: Non-GAAP EPS Reconciliation
Chart #10 Non - GAAP EPS Reconciliation Q2 2019 Q2 2018 YTD 2019 YTD 2018 GAAP earnings per diluted share 1.17$ 1.44$ 2.20$ 2.40$ Equity income in a captive insurance company per diluted share (0.03) (0.08) (0.06) (0.05) Houghton combination and other acquisition-related expenses per diluted share 0
Slide 14: Non-GAAP Operating Income Reconciliation
Chart #11 Non - GAAP Operating Income Reconciliation ($ in thousands unless otherwise noted) Q2 2019 Q2 2018 YTD 2019 YTD 2018 Operating income 20,531$ 22,563$ 40,360$ 42,794$ Houghton combination and other acquisition-related expenses 4,604 4,291 9,087 9,500 Charges related to the settlement of a n
Slide 15: TTM Adjusted EBITDA Reconciliation
Chart #12 TTM Adjusted EBITDA Reconciliation ($ in thousands unless otherwise noted) * The Company updated its calculation methodology to include the use of interest expense net of interest income compared to t he historical use of only interest expense, and also to include the non - service compone
Slide 16: Adjusted EBITDA Reconciliation
Chart #13 Adjusted EBITDA Reconciliation ($ in thousands unless otherwise noted) * The Company updated its calculation methodology to include the use of interest expense net of interest income compared to t he historical use of only interest expense, and also to include the non - service component o
Slide 17: Segment Performance
Chart #14 Segment Performance ($ in thousands) Q2 2019 Q2 2018 YTD 2019 YTD 2018 Net sales North America 94,383$ 97,392$ 189,636$ 189,212$ EMEA 53,150 60,166 109,438 122,221 Asia/Pacific 49,827 55,348 100,354 104,125 South America 8,509 9,056 17,651 18,459 Total net sales 205,869$ 221,962$ 417,079$