Quaker Houghton · NYSE:KWR
Quaker Houghton — Quaker Chemical — Q3 2019 Earnings Presentation
26 slides from Quaker Houghton's earnings presentation, Nov 12, 2019
Slide 1: Quaker Houghton Third Quarter 2019 Results Investor Conference Call
Quaker Houghton Third Quarter 2019 Results Investor Conference Call
Slide 2: Combination, 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”. Therefore, two months of Houghton’s operations are included in the Company’s third quarter
Slide 3: Speakers
Michael F. Barry Chairman of the Board, Chief Executive Officer & President Mary Dean Hall Senior Vice President, Chief Financial Officer & Treasurer Joseph Berquist Senior Vice President, Global Specialty Businesses & Chief Strategy Officer Shane Hostetter Vice President, Finance & Chief Accounting
Slide 4: Chairman Comments Third Quarter 2019
©2019 Quaker Houghton. All Rights Reserved 4 Chairman Comments Third Quarter 2019 • Net sales negatively impacted by the compounding conditions of a weak global automotive market, a generally weaker industrial environment in most parts of the world, some customer inventory corrections in their marke
Slide 5: Financial Highlights – Actual Results
©2019 Quaker Houghton. All Rights Reserved 5 Financial Highlights – Actual Results Third quarter of 2019 (inclusive of two months of Houghton’s results) • Net sales of $325.1 million increase 46% compared to prior year primarily due to Houghton • Excluding Houghton, net sales declined 7% due to lowe
Slide 6: Financial Highlights – Non-GAAP & Pro Forma
©2019 Quaker Houghton. All Rights Reserved 6 Financial Highlights – Non - GAAP & Pro Forma Third quarter of 2019 Non - GAAP Results (inclusive of two months of Houghton’s results) • Non - GAAP EPS of $1.56 declined from $1.63 in the prior year impacted by the timing of the Combination’s close and re
Slide 7: Financial Snapshot Third quarter of 2019
©2019 Quaker Houghton. All Rights Reserved 7 Financial Snapshot Third quarter of 2019 (dollars in millions unless otherwise noted) Q3 2019 Q3 2018 YTD 2019 YTD 2018 GAAP Net Sales $ 325.1 $ 222.0 $ 742.2 $ 656.0 Gross Profit 105.1 81.1 256.0 237.5 Operating (Loss) Income (14.5) 24.9 25.9 67.7 Net (L
Slide 8: Quaker Houghton's Pro-Forma Adjusted EBITDA
©2019 Quaker Houghton. All Rights Reserved 8 Quaker Houghton’s Pro - Forma Adjusted EBITDA (dollars in millions) $215 $221 $236 $230 $200 $210 $220 $230 $240 2016 2017 2018 TTM Q3'19 Note: Estimated pro - forma adjusted EBITDA represents full year performance for both Quaker and Houghton and adjusts
Slide 9: Leverage and Liquidity Update
©2019 Quaker Houghton. All Rights Reserved 9 Leverage and Liquidity Update • At close on August 1, 2019, net debt to pro forma TTM adjusted EBITDA estimated to be ~3.4x compared to ~3.3x as of September 30, 2019; Norman Hay acquisition increases leverage to ~3.5x initially • Remain committed to de -
Slide 10: Update to Certain Accounting Adjustments and Other Financial Items
©2019 Quaker Houghton. All Rights Reserved 10 Update to Certain Accounting Adjustments and Other Financial Items • Previously disclosed net sales decrease due to conforming of accounting policies including revenue recognition now estimated to be ~$15 – $30 million; minimal impact to consolidated EBI
Slide 11: Save the Date: December 11, 2019
Save the Date: December 11, 2019 New York Stock Exchange CONFIDENTIAL, DO NOT DISTRIBUTE
Slide 12: Quaker Houghton. Forward Together
& Quaker Vag Houghton. Forward Together
Slide 13: Non-GAAP financial information notes
The information included in the attached charts includes non - GAAP (unaudited) financial information that includes EBITDA, adjust ed EBITDA, non - GAAP operating income, non - GAAP earnings per diluted share and pro forma adjusted EBITDA. The Company believes these non - GAAP financial measures pro
Slide 14: Non-GAAP Operating Income Reconciliation
©2019 Quaker Houghton. All Rights Reserved 14 Non - GAAP Operating Income Reconciliation (dollars in thousands unless otherwise noted) Q3 2019 Q3 2018 YTD 2019 YTD 2018 Operating (loss) income (14,502)$ 24,919$ 25,858$ 67,713$ Fair value step up of Houghton inventory sold 10,214 - 10,214 - Houghton
Slide 15: Adjusted EBITDA Reconciliation
©2019 Quaker Houghton. All Rights Reserved 15 Adjusted EBITDA Reconciliation (dollars in thousands unless otherwise noted) Q3 2019 Q3 2018 YTD 2019 YTD 2018 Net (loss) income attributable to Quaker Chemical Corporation (13,053)$ 19,690$ 16,382$ 51,668$ Depreciation and amortization 14,312 4,883 24,0
Slide 16: Non-GAAP EPS Reconciliation
©2019 Quaker Houghton. All Rights Reserved 16 Non - GAAP EPS Reconciliation Q3 2019 Q3 2018 YTD 2019 YTD 2018 GAAP (loss) earnings per diluted share (0.80)$ 1.47$ 1.14$ 3.87$ Equity income in a captive insurance company per diluted share (0.03) (0.03) (0.09) (0.08) Fair value step up of Houghton inv
Slide 17: Segment Performance
©2019 Quaker Houghton. All Rights Reserved 17 Segment Performance (dollars in thousands) Q3 2019 Q3 2018 YTD 2019 YTD 2018 Net sales Americas 116,710$ 77,374$ 260,682$ 225,115$ EMEA 82,468 51,346 184,280 164,753 Asia/Pacific 74,266 49,928 165,234 143,388 Global Specialty Businesses 51,686 43,374 132
Slide 18: Quaker Houghton. Forward Together
& Quaker Vag Houghton. Forward Together
Slide 19: Q3 2019 Pro Forma Reconciliations
©2019 Quaker Houghton. All Rights Reserved 19 Q3 2019 Pro Forma Reconciliations (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: Q3 2018 Pro Forma Reconciliations
©2019 Quaker Houghton. All Rights Reserved 20 Q3 2018 Pro Forma Reconciliations (dollars in millions) As Reported Houghton Divestitures Other (a) Pro Forma* Net sales 222$ 213$ (13)$ (5)$ 417$ Net Income Attributable to Quaker Houghton 20$ 1$ (3)$ 4$ 23$ Depreciation and Amortization 5 13 - 1 19 Int
Slide 21: YTD September 2019 Pro Forma Reconciliations
©2019 Quaker Houghton. All Rights Reserved 21 YTD September 2019 Pro Forma Reconciliations (dollars in millions) As Reported Houghton Divestitures Other (a) Pro Forma* Net sales 742$ 475$ (34)$ (13)$ 1,171$ Net Income Attributable to Quaker Houghton 16$ (3)$ (6)$ 9$ 16$ Depreciation and Amortization
Slide 22: YTD September 2018 Pro Forma Reconciliations
©2019 Quaker Houghton. All Rights Reserved 22 YTD September 2018 Pro Forma Reconciliations (dollars in millions) As Reported Houghton Divestitures Other (a) Pro Forma* Net sales 656$ 654$ (40)$ (15)$ 1,255$ Net Income Attributable to Quaker Houghton 52$ 5$ (8)$ 12$ 60$ Depreciation and Amortization
Slide 23: Full Year 2016 Pro Forma Reconciliation
23 ©2019 Quaker Houghton. All Rights Reserved Full Year 2016 Pro Forma Reconciliation (dollars in millions) As Reported Houghton Divestitures Other (a) Pro Forma* Net Income Attributable to Quaker Houghton 61$ (37)$ (8)$ 7$ 23$ Depreciation and Amortization 20 55 - 5 80 Interest Expense, Net 1 51 -
Slide 24: Full Year 2017 Pro Forma Reconciliation
24 ©2019 Quaker Houghton. All Rights Reserved Full Year 2017 Pro Forma Reconciliation (dollars in millions) As Reported Houghton Divestitures Other (a) Pro Forma* Net Income Attributable to Quaker Houghton 20$ (47)$ (9)$ 9$ (26)$ Depreciation and Amortization 20 55 - 5 80 Interest Expense, Net 1 51
Slide 25: Full Year 2018 Pro Forma Reconciliation
25 ©2019 Quaker Houghton. All Rights Reserved Full Year 2018 Pro Forma Reconciliation (dollars in millions) As Reported Houghton Divestitures Other (a) Pro Forma* Net Income Attributable to Quaker Houghton 59$ 0$ (9)$ 15$ 66$ Depreciation and Amortization 20 54 - 5 80 Interest Expense, Net 4 56 - (2
Slide 26: TTM Q3 '19 Pro Forma Reconciliation
26 ©2019 Quaker Houghton. All Rights Reserved TTM Q3 ’19 Pro Forma Reconciliation (dollars in millions) As Reported Houghton Divestitures Other (a) Pro Forma* Net Income Attributable to Quaker Houghton 24$ (7)$ (9)$ 13$ 21$ Depreciation and Amortization 29 44 - 5 78 Interest Expense, Net 8 48 - (21)