Quaker Houghton · NYSE:KWR
Quaker Houghton — Quaker Chemical — FY2019 Earnings Presentation
24 slides from Quaker Houghton's earnings presentation, Mar 2, 2020
Slide 1: Fourth Quarter and Full Year 2019 Results Investor Conference Call
Quaker Houghton Fourth Quarter and Full Year 2019 Results Investor Conference Call
Slide 2: Combination, late filing and Regulation G disclosures
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”). As a result, five months of operations of Houghton post - closing of the Combination are
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 and Full Year 2019 Headlines
©2019 Quaker Houghton. All Rights Reserved 4 Fourth Quarter and Full Year 2019 Headlines • Net income of $15.2 million and $31.6 million for the fourth quarter and full year 2019 • Adjusted EBITDA of $60.6 million for the fourth quarter of 2019 up 4% versus prior year pro forma and ahead of previous
Slide 5: Chairman Comments and 2020 Outlook
©2019 Quaker Houghton. All Rights Reserved 5 Chairman Comments Fourth Quarter 2019 • Net sales negatively impacted by the compounding conditions of a weak global automotive market, a generally weaker global industrial environment and continued customer inventory corrections and reductions in consump
Slide 6: Financial Highlights – Actual Results Fourth Quarter 2019
©2019 Quaker Houghton. All Rights Reserved 6 Financial Highlights – Actual Results Fourth quarter of 2019 • Net sales of $391.3 million increased 85% compared to prior year due to the inclusion of Houghton and Norman Hay • Excluding Houghton and Norman Hay, net sales declined 10% due to lower volume
Slide 7: Financial Highlights – Non-GAAP & Pro Forma Fourth Quarter 2019
©2019 Quaker Houghton. All Rights Reserved 7 Financial Highlights – Non - GAAP & Pro Forma Fourth quarter of 2019 Non - GAAP Results • Non - GAAP EPS of $1.34 compared to $1.54 in the prior year impacted by the increase in share count due to the closing of the Combination • Non - GAAP operating inco
Slide 8: Financial Highlights – Actual Results Full Year 2019
©2019 Quaker Houghton. All Rights Reserved 8 Financial Highlights – Actual Results Full Year of 2019 • Net sales of $1,133.5 million increased 31% compared to prior year due to the inclusion of Houghton and Norman Hay • Excluding Houghton and Norman Hay, net sales declined 6% due to lower volumes of
Slide 9: Financial Highlights – Non-GAAP & Pro Forma Full Year 2019
©2019 Quaker Houghton. All Rights Reserved 9 Financial Highlights – Non - GAAP & Pro Forma Full Year of 2019 Non - GAAP Results • Non - GAAP EPS of $5.83 compared to $6.17 in the prior year impacted by the increase to the share count from the Combination partially offset by earnings attributed to Ho
Slide 10: Financial Snapshot 2019
©2019 Quaker Houghton. All Rights Reserved 10 Financial Snapshot 2019 (dollars in millions, unless otherwise noted) Q4 2019 Q4 2018 YTD 2019 YTD 2018 GAAP Net Sales $ 391.3 $ 211.5 $ 1,133.5 $ 867.5 Gross Profit 136.1 74.8 392.1 312.3 Operating Income 20.3 20.1 46.1 87.8 Net Income 15.2 7.8 31.6 59.
Slide 11: Quaker Houghton's Pro Forma Adjusted EBITDA
©2019 Quaker Houghton. All Rights Reserved 11 Quaker Houghton’s Pro Forma Adjusted EBITDA (dollars in millions) $215 $221 $236 $234 $200 $210 $220 $230 $240 2016 2017 2018 2019 FY’19 pro forma adjusted EBITDA decrease primarily due to lower volumes and FX; but Q4’19 increase due to benefits from Nor
Slide 12: Leverage and Liquidity Update
©2019 Quaker Houghton. All Rights Reserved 12 Leverage and Liquidity Update • At close on August 1, 2019, net debt to TTM adjusted EBITDA of ~3.42x compared to ~3.47x as of December 31, 2019 • Net debt to adjusted EBITDA expected to improve to ~3.0x or better by end of 2020 • Despite Norman Hay acqu
Slide 13: Appendix Actual and Non-GAAP Results
Appendix Actual and Non - GAAP Results
Slide 14: Non-GAAP financial information notes
The information included in this presentation includes non - GAAP (unaudited) financial information that includes EBITDA, adjusted EBITDA, non - GAAP operating income, non - GAAP net income, non - GAAP earnings per diluted share, and pro forma net sales, net income, EBITDA and adjusted EBITDA. The C
Slide 15: Non-GAAP Operating Income Reconciliation
©2019 Quaker Houghton. All Rights Reserved 15 Non - GAAP Operating Income Reconciliation (dollars in thousands unless otherwise noted) Q4 2019 Q4 2018 YTD 2019 YTD 2018 Operating income 20,276$ 20,068$ 46,134$ 87,781$ Fair value step up of Houghton and Norman Hay inventory sold 1,500 - 11,714 - Houg
Slide 16: Adjusted EBITDA Reconciliation
©2019 Quaker Houghton. All Rights Reserved 16 Adjusted EBITDA Reconciliation (dollars in thousands unless otherwise noted) Q4 2019 Q4 2018 YTD 2019 YTD 2018 Net income attributable to Quaker Chemical Corporation 15,240$ 7,805$ 31,622$ 59,473$ Depreciation and amortization 21,250 4,803 45,264 19,714
Slide 17: Non-GAAP EPS Reconciliation
©2019 Quaker Houghton. All Rights Reserved 17 Non - GAAP EPS Reconciliation Q4 2019 Q4 2018 YTD 2019 YTD 2018 GAAP earnings per diluted share 0.86$ 0.58$ 2.08$ 4.45$ Equity (income) loss in a captive insurance company per diluted share (0.03) 0.01 (0.12) (0.07) Fair value step up of Houghton and Nor
Slide 18: Segment Performance
©2019 Quaker Houghton. All Rights Reserved 18 Segment Performance (dollars in thousands) Q4 2019 Q4 2018 YTD 2019 YTD 2018 Net sales Americas 131,439$ 72,486$ 392,121$ 297,601$ EMEA 101,290 52,231 285,570 216,984 Asia/Pacific 82,605 49,114 247,839 192,502 Global Specialty Businesses 75,960 37,650 20
Slide 19: Quaker Houghton. Forward Together
& Quaker Ye Houghton. Forward Together
Slide 20: Q4 2018 Pro Forma Reconciliations
©2019 Quaker Houghton. All Rights Reserved 20 Q4 2018 Pro Forma Reconciliations (dollars in millions) Quaker Houghton Divestitures Other (a) Pro Forma* Net sales 211$ 208$ (13)$ (5)$ 401$ Net Income Attributable to Quaker Houghton 8$ (5)$ (1)$ 5$ 6$ Depreciation and Amortization 5 13 - 1 19 Interest
Slide 21: Full Year 2019 Pro Forma Reconciliations
©2019 Quaker Houghton. All Rights Reserved 21 Full Year 2019 Pro Forma Reconciliations (dollars in millions) Quaker Houghton Divestitures Other (a) Pro Forma* Net sales 1,134$ 475$ (34)$ (13)$ 1,562$ Net Income Attributable to Quaker Houghton 32$ (3)$ (6)$ 10$ 33$ Depreciation and Amortization 45 31
Slide 22: Full Year 2018 Pro Forma Reconciliations
22 ©2019 Quaker Houghton. All Rights Reserved Full Year 2018 Pro Forma Reconciliations (dollars in millions) Quaker Houghton Divestitures Other (a) Pro Forma* Net sales 868$ 861$ (53)$ (22)$ 1,655$ Net Income Attributable to Quaker Houghton 59$ (0)$ (9)$ 17$ 66$ Depreciation and Amortization 20 54 -
Slide 23: Full Year 2017 Pro Forma Reconciliations
23 ©2019 Quaker Houghton. All Rights Reserved Full Year 2017 Pro Forma Reconciliations (dollars in millions) Quaker 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 - (1
Slide 24: Full Year 2016 Pro Forma Reconciliations
24 ©2019 Quaker Houghton. All Rights Reserved Full Year 2016 Pro Forma Reconciliations (dollars in millions) Quaker 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 - (14)