Press Releases
Quaker Chemical Announces First Quarter 2015 Results
- Volume gains and gross margin drive good results despite foreign exchange impact
- Foreign currency exchange negatively impacts sales by 7% and EPS by $0.08 per share
- Strong operating cash flow generation, up $10 million from the prior year period
Mr. Barry continued, "Looking forward, we expect a challenging, but stable, market environment in many of the countries in which we operate, along with a continued strong U.S. Dollar. However, we remain committed to our strategy and believe our ability to increase market share and leverage our acquisitions will more than offset these market and exchange rate challenges. In addition, our strong cash flow and balance sheet will allow us to continue to pursue our key strategic initiatives and future acquisitions, which we believe will add significant shareholder value. Overall, I remain confident in our future and expect 2015 to be another good year for Quaker with increased earnings for the sixth consecutive year."
First Quarter of 2015 Summary
Net sales for the first quarter of 2015 of
Gross profit increased
Selling, general and administrative expenses ("SG&A") increased
Other expense was approximately
Interest expense was
The Company's effective tax rates for the first quarters of 2015 and 2014 were 30.8% and 34.8%, respectively. The primary contributors to the decrease in the current quarter's effective tax rate were lower changes in reserves related to uncertain tax positions in the first quarter of 2015 and certain one-time items that increased the first quarter of 2014's effective tax rate. We currently estimate the full year 2015 effective tax rate will approximate 30%.
Equity in net income of associated companies ("equity income") decreased by
The
Changes in foreign exchange rates negatively impacted the first quarter of 2015 net income by approximately
Balance Sheet and Cash Flow Items
The Company had net operating cash flows of approximately
Non-GAAP Measures
Included in this public release are non-GAAP (unaudited) financial measures of non-GAAP earnings per diluted share and adjusted EBITDA. The Company believes these non-GAAP financial measures provide meaningful supplemental information as they enhance a reader's understanding of the financial performance of the Company, are more indicative of future operating performance of the Company, and facilitate a better comparison among fiscal periods, as the non-GAAP financial measures exclude items that are not considered core to the Company's operations. Non-GAAP results are presented for supplemental informational purposes only and should not be considered a substitute for the financial information presented in accordance with GAAP.
The following are reconciliations between the non-GAAP (unaudited) financial measures of non-GAAP earnings per diluted share and adjusted EBITDA to their most directly comparable GAAP (unaudited) financial measures:
Three Months Ended March 31, | |||
2015 |
2014 | ||
GAAP earnings per diluted share attributable to Quaker Chemical Corporation common shareholders |
$ 0.78 |
$ 0.96 | |
Equity income in a captive insurance company per diluted share |
(0.06) |
(0.06) | |
U.K. pension plan amendment per diluted share |
— |
0.05 | |
Cost streamlining initiatives per diluted share |
0.01 |
— | |
Currency conversion impact of the Venezuelan Bolivar Fuerte per diluted share |
0.21 |
— | |
Non-GAAP earnings per diluted share |
$ 0.94 |
$ 0.95 |
Three Months Ended March 31, | |||
2015 |
2014 | ||
Net income attributable to Quaker Chemical Corporation |
$ 10,378 |
$ 12,730 | |
Depreciation and amortization |
4,698 |
3,888 | |
Interest expense |
587 |
525 | |
Taxes on income before equity in net income of associated companies |
5,359 |
6,546 | |
Equity income in a captive insurance company |
(795) |
(846) | |
U.K. pension plan amendment |
— |
902 | |
Cost streamlining initiatives |
173 |
— | |
Currency conversion impact of the Venezuelan Bolivar Fuerte |
2,806 |
— | |
Adjusted EBITDA |
$ 23,206 |
$ 23,745 |
Forward-Looking Statements
This release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected in such statements. A major risk is that the Company's demand is largely derived from the demand for its customers' products, which subjects the Company to downturns in a customer's business and unanticipated customer production shutdowns. Other major risks and uncertainties include, but are not limited to, significant increases in raw material costs, customer financial stability, worldwide economic and political conditions, foreign currency fluctuations, future terrorist attacks and other acts of violence. Other factors could also adversely affect us. Therefore, we caution you not to place undue reliance on our forward-looking statements. This discussion is provided as permitted by the Private Securities Litigation Reform Act of 1995.
Conference Call
As previously announced,
About Quaker
Quaker Chemical Corporation Condensed Consolidated Statements of Income (Dollars in thousands, except per share data) (Unaudited) Three Months Ended March 31, 2015 2014 Net sales $ 181,330 $ 181,674 Cost of goods sold 115,002 116,560 Gross profit 66,328 65,114 % 36.6% 35.8% Selling, general and administrative expenses 48,464 45,741 Operating income 17,864 19,373 % 9.9% 10.7% Other expense, net (194) (473) Interest expense (587) (525) Interest income 320 453 Income before taxes and equity in net income of associated companies 17,403 18,828 Taxes on income before equity in net income of associated companies 5,359 6,546 Income before equity in net income of associated companies 12,044 12,282 Equity in net (loss) income of associated companies (1,437) 1,027 Net income 10,607 13,309 Less: Net income attributable to noncontrolling interest 229 579 Net income attributable to Quaker Chemical Corporation $ 10,378 $ 12,730 % 5.7% 7.0% Per share data: Net income attributable to Quaker Chemical Corporation Common Shareholders - basic $ 0.78 $ 0.96 Net income attributable to Quaker Chemical Corporation Common Shareholders - diluted $ 0.78 $ 0.96
Quaker Chemical Corporation Condensed Consolidated Balance Sheets (Dollars in thousands, except par value and share amounts) (Unaudited) March 31, December 31, 2015 2014 ASSETS Current assets Cash and cash equivalents $ 64,338 $ 64,731 Accounts receivable, net 180,402 189,484 Inventories, net 77,176 77,708 Prepaid expenses and other current assets 18,282 19,595 Total current assets 340,198 351,518 Property, plant and equipment, net 81,865 85,763 Goodwill 75,169 77,933 Other intangible assets, net 67,153 70,408 Investments in associated companies 20,536 21,751 Deferred income taxes 21,770 24,411 Other assets 33,586 33,742 Total assets $ 640,277 $ 665,526 LIABILITIES AND EQUITY Current liabilities Short-term borrowings and current portion of long-term debt $ 401 $ 403 Accounts and other payables 71,718 78,977 Accrued compensation 11,954 19,853 Other current liabilities 24,711 25,668 Total current liabilities 108,784 124,901 Long-term debt 72,698 75,328 Deferred income taxes 7,558 8,584 Other non-current liabilities 86,108 91,578 Total liabilities 275,148 300,391 Equity Common stock, $1 par value; authorized 30,000,000 shares; issued and outstanding 2015 - 13,332,472 shares; 2014 - 13,300,891 shares 13,332 13,301 Capital in excess of par value 100,947 99,056 Retained earnings 305,902 299,524 Accumulated other comprehensive loss (62,971) (54,406) Total Quaker shareholders' equity 357,210 357,475 Noncontrolling interest 7,919 7,660 Total equity 365,129 365,135 Total liabilities and equity $ 640,277 $ 665,526
Quaker Chemical Corporation Condensed Consolidated Statements of Cash Flows (Dollars in thousands) (Unaudited) Three Months Ended March 31, 2015 2014 Cash flows from operating activities Net income $ 10,607 $ 13,309 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation 3,071 3,075 Amortization 1,627 813 Equity in undistributed earnings of associated companies, net of dividends 1,437 (927) Deferred compensation and other, net 1,091 2,944 Stock-based compensation 1,685 1,388 Gain on disposal of property, plant and equipment (21) (48) Insurance settlements realized (115) (337) Pension and other postretirement benefits 10 (1,665) Increase (decrease) in cash from changes in current assets and current liabilities, net of acquisitions: Accounts receivable 3,428 (13,387) Inventories (2,584) (6,389) Prepaid expenses and other current assets (2,634) (29) Accounts payable and accrued liabilities (9,516) (544) Net cash provided by (used in) operating activities 8,086 (1,797) Cash flows from investing activities Investments in property, plant and equipment (2,414) (3,057) Payments related to acquisitions, net of cash acquired 528 - Proceeds from disposition of assets 80 58 Interest earned on insurance settlements 10 11 Change in restricted cash, net 105 326 Net cash used in investing activities (1,691) (2,662) Cash flows from financing activities Repayment of long-term debt (1,327) (232) Dividends paid (3,990) (3,300) Stock options exercised, other (50) (205) Excess tax benefit related to stock option exercises 287 239 Net cash used in financing activities (5,080) (3,498) Effect of exchange rate changes on cash (1,708) (85) Net decrease in cash and cash equivalents (393) (8,042) Cash and cash equivalents at the beginning of the period 64,731 68,492 Cash and cash equivalents at the end of the period $ 64,338 $ 60,450
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SOURCE
Margaret M. Loebl, Vice President, Chief Financial Officer and Treasurer, loeblm@quakerchem.com, T. 610.832.4160