Quaker Houghton · NYSE:KWR
Quaker Houghton — Quaker Chemical — Q3 2017 Earnings Presentation
16 slides from Quaker Houghton's earnings presentation, Oct 26, 2017
Slide 1: Third Quarter 2017 Results Investor Conference Call
1 Third Quarter 2017 Results Investor Conference Call October 27, 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: Third Quarter 2017 Headlines
Third Quarter 2017 Headlines ▪ 12% growth in net sales primarily driven by strong volume increase of 7% ▪ Net income of $11.1 million and earnings per diluted share of $0.83 includes the impact of $9.7 million or $0.52 per diluted share of Houghton combination - related expenses ▪ 6% increase in non
Slide 5: Chairman Comments Third Quarter 2017
Chairman Comments Third Quarter 2017 ▪ Third Quarter 2017 x Net sales of $212.9 million driven by increases in organic volume on continued market share gains and increased production in some end markets x Strong volumes drove higher gross profit despite a decline in gross margin primarily due to hig
Slide 6: Third Quarter 2017 Results Commentary
▪ Net sales increase of 12% due to organic volume growth of 5%, increases primarily from the Q4’16 acquisition of Lubricor of 2%, an increase from changes in price and product mix of 3% and a positive impact from FX of 2% ▪ Lower gross margin of 35.1% in Q3’17 compared to 37.2% in Q3’16 primarily du
Slide 7: Financial Snapshot
Chart #5 Financial Snapshot ($ Millions unless otherwise noted) Q3 2017 Q3 2016 YTD 2017 YTD 2016 Net Sales 212.9 190.4 609.0 555.4 Gross Profit 74.8 70.9 217.5 210.3 Gross Margin 35.1% 37.2% 35.7% 37.9% SG&A 51.1 47.9 148.7 144.7 Combination-related expenses 9.7 1.2 23.1 1.2 Operating Income 14.0 2
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 37.2% 36.5% 36.4% 35.7% 35.1% 20.0% 25.0% 30.0% 35.0% 40.0% Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 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 $106.2 $111.3 6.9% 9.8% 12.3% 10.7% 11.4% 12.3% 13.0% 13.8% 14.3% 14.4% 13.9% 2008 2009 2010 2011 2012 2013 2014 2015 2016 Trailing Twelve Months Q3 2016 Trailing Twelve Months Q3 2017 Adjusted EBITDA ($ 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 Q3 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 Q3 2017 Q3 2016 YTD 2017 YTD 2016 GAAP earnings per diluted share 0.83$ 1.21$ 2.25$ 3.32$ Equity income in a captive insurance company per diluted share (0.03) (0.04) (0.11) (0.07) Houghton combination-related expenses per diluted share 0.52 0.08 1.47 0.08 U.S
Slide 14: Adjusted EBITDA Reconciliation
Chart #11 Adjusted EBITDA Reconciliation Q3 2017 Q3 2016 YTD 2017 YTD 2016 Net income attributable to Quaker Chemical Corporation 11,142 16,008 30,040 43,969 Depreciation and amortization 5,017 4,868 14,954 14,788 Interest expense 793 758 2,229 2,226 Taxes on income before equity in net income of as
Slide 15: Adjusted EBITDA Reconciliation 2008-2016
Chart #12 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 16: TTM Adjusted EBITDA Reconciliation
TTM Adjusted EBITDA Reconciliation Chart #13 I = G + H H G = F - D F E = C + D D C = B - A B A Trailing Twelve Months Q3 2017 YTD Q3 2017 Last Three Months 2016 FY 2016 Trailing Twelve Months Q3 2016 YTD Q3 2016 Last Three Months 2015 FY 2015 YTD Q3 2015 Net income 47,474 30,040 17,434 61,403 55,362