Press Releases
Quaker Chemical Announces First Quarter 2017 Results
The Company's first quarter of 2017 net income was
Mr. Barry continued, "Looking forward, we expect foreign exchange and raw materials to continue to be headwinds that may ratably decline as the year progresses. We remain committed to our strategy and believe our ability to take market share and leverage our past acquisitions will continue to help offset market challenges. Our 2017 plans continue to indicate growth in both the top and bottom lines, despite expected currency headwinds, with earnings growth in all regions. Overall, I continue to remain confident in our future and expect 2017 to be another good year for Quaker, as we expect to increase non-GAAP earnings and adjusted EBITDA for the eighth consecutive year. In addition, we believe our previously announced intention to combine with Houghton will create long-term sustainable value for our customers and shareholders, and we continue to expect closing by the end of the year or in the first quarter of 2018."
First Quarter of 2017 Summary
Net sales in the first quarter of 2017 were
Gross profit in the first quarter of 2017 increased
SG&A decreased
During the first quarter of 2017, the Company incurred
Operating income in the first quarter of 2017 was
Other expense was
Interest expense was
The Company's effective tax rates for the first quarters of 2017 and 2016 were 50.8% and 32.3%, respectively. The Company's first quarter of 2017 effective tax rate includes the impact of the Houghton combination-related expenses, noted above, which were considered non-deductible for the purpose of determining the Company's current quarter effective tax rate. Excluding these non-deductible costs, the Company's current quarter effective tax rate would have been approximately 30%. Comparatively, the first quarter of 2016 effective tax rate was also elevated, as it reflected earnings taxed at one of the Company's subsidiaries at a statutory rate of 25% while awaiting recertification of a concessionary 15% tax rate, which the Company received and recorded the full year benefit of during the fourth quarter of 2016. This concessionary tax rate was available to the Company during the first quarter of 2017. Currently, the Company continues to estimate its full year 2017 effective tax rate will approximate 28% to 30%, excluding the impact of non-deductible Houghton combination-related expenses, noted above.
Equity in net income of associated companies ("equity income") increased
The Company had a
Changes in foreign exchange rates negatively impacted the Company's first quarter of 2017 non-GAAP earnings per diluted share by approximately 3%, or
Balance Sheet and Cash Flow Items
The Company's net operating cash flow was
Subsequent Event
On
Non-GAAP Measures
Included in this public release are two non-GAAP (unaudited) financial measures: 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 tables reconcile non-GAAP earnings per diluted share (unaudited) and adjusted EBITDA (unaudited) to their most directly comparable GAAP (unaudited) financial measures:
Three Months Ended March 31, |
|||
2017 |
2016 |
||
GAAP earnings per diluted share attributable to Quaker Chemical Corporation common shareholders |
$ 0.52 |
$ 0.98 |
|
Equity income in a captive insurance company per diluted share |
(0.04) |
(0.01) |
|
Houghton combination-related expenses per diluted share |
0.69 |
— |
|
Cost streamlining initiative per diluted share |
0.01 |
— |
|
Currency conversion impact of the Venezuelan bolivar fuerte per diluted share |
— |
0.01 |
|
Non-GAAP earnings per diluted share |
$ 1.18 |
$ 0.98 |
|
Three Months Ended March 31, |
|||
2017 |
2016 |
||
Net income attributable to Quaker Chemical Corporation |
$ 6,992 |
$ 12,946 |
|
Depreciation and amortization |
4,930 |
4,934 |
|
Interest expense |
656 |
741 |
|
Taxes on income before equity in net income of associated companies |
6,865 |
6,305 |
|
Equity income in a captive insurance company |
(592) |
(52) |
|
Houghton combination-related expenses |
9,075 |
— |
|
Cost streamlining initiative |
286 |
— |
|
Currency conversion impact of the Venezuelan bolivar fuerte |
— |
88 |
|
Adjusted EBITDA |
$ 28,212 |
$ 24,962 |
|
Adjusted EBITDA margin (%) |
14.5% |
14.0% |
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 demand for the Company's products and services is largely derived from the demand for its customers' products, which subjects the Company to uncertainties related 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, significant changes in applicable tax rates and regulations, future terrorist attacks and other acts of violence. Other factors, including those related to the previously announced Houghton combination, could also adversely affect us. For more information regarding these risks and uncertainties as well as certain additional risks that we face, you should refer to the Risk Factors detailed in Item 1A of our 2016 Form 10-K, and in our quarterly and other reports filed from time to time with the Commission. 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 share and per share data) |
||||
(Unaudited) |
||||
Three Months Ended March 31, |
||||
2017 |
2016 |
|||
Net sales |
$ 194,909 |
$ 178,077 |
||
Cost of goods sold |
124,022 |
110,096 |
||
Gross profit |
70,887 |
67,981 |
||
% |
36.4% |
38.2% |
||
Selling, general and administrative expenses |
48,054 |
48,143 |
||
Combination-related expenses |
9,075 |
- |
||
Operating income |
13,758 |
19,838 |
||
% |
7.1% |
11.1% |
||
Other (expense) income, net |
(105) |
102 |
||
Interest expense |
(656) |
(741) |
||
Interest income |
523 |
348 |
||
Income before taxes and equity in net income of associated companies |
13,520 |
19,547 |
||
Taxes on income before equity in net income of associated companies |
6,865 |
6,305 |
||
Income before equity in net income of associated companies |
6,655 |
13,242 |
||
Equity in net income of associated companies |
959 |
102 |
||
Net income |
7,614 |
13,344 |
||
Less: Net income attributable to noncontrolling interest |
622 |
398 |
||
Net income attributable to Quaker Chemical Corporation |
$ 6,992 |
$ 12,946 |
||
% |
3.6% |
7.3% |
||
Share and per share data: |
||||
Basic weighted average common shares outstanding |
13,176,096 |
13,116,807 |
||
Diluted weighted average common shares outstanding |
13,221,061 |
13,129,394 |
||
Net income attributable to Quaker Chemical Corporation Common Shareholders - basic |
$ 0.53 |
$ 0.98 |
||
Net income attributable to Quaker Chemical Corporation Common Shareholders - diluted |
$ 0.52 |
$ 0.98 |
||
Quaker Chemical Corporation |
|||
Condensed Consolidated Balance Sheets |
|||
(Dollars in thousands, except par value and share amounts) |
|||
(Unaudited) |
|||
March 31, |
December 31, |
||
2017 |
2016 |
||
ASSETS |
|||
Current assets |
|||
Cash and cash equivalents |
$ 90,593 |
$ 88,818 |
|
Accounts receivable, net |
201,929 |
195,225 |
|
Inventories, net |
87,117 |
77,082 |
|
Prepaid expenses and other current assets |
15,237 |
15,343 |
|
Total current assets |
394,876 |
376,468 |
|
Property, plant and equipment, net |
85,233 |
85,734 |
|
Goodwill |
81,683 |
80,804 |
|
Other intangible assets, net |
71,850 |
73,071 |
|
Investments in associated companies |
24,063 |
22,817 |
|
Non-current deferred tax assets |
22,460 |
24,382 |
|
Other assets |
28,841 |
28,752 |
|
Total assets |
$ 709,006 |
$ 692,028 |
|
LIABILITIES AND EQUITY |
|||
Current liabilities |
|||
Short-term borrowings and current portion of long-term debt |
$ 726 |
$ 707 |
|
Accounts and other payables |
90,215 |
82,164 |
|
Accrued compensation |
13,754 |
19,356 |
|
Accrued restructuring |
530 |
670 |
|
Other current liabilities |
33,963 |
24,514 |
|
Total current liabilities |
139,188 |
127,411 |
|
Long-term debt |
65,649 |
65,769 |
|
Non-current deferred tax liabilities |
12,101 |
12,008 |
|
Other non-current liabilities |
70,093 |
74,234 |
|
Total liabilities |
287,031 |
279,422 |
|
Equity |
|||
Common stock, $1 par value; authorized 30,000,000 shares; issued and |
13,291 |
13,278 |
|
Capital in excess of par value |
112,838 |
112,475 |
|
Retained earnings |
366,819 |
364,414 |
|
Accumulated other comprehensive loss |
(81,961) |
(87,407) |
|
Total Quaker shareholders' equity |
410,987 |
402,760 |
|
Noncontrolling interest |
10,988 |
9,846 |
|
Total equity |
421,975 |
412,606 |
|
Total liabilities and equity |
$ 709,006 |
$ 692,028 |
|
Quaker Chemical Corporation |
|||
Condensed Consolidated Statements of Cash Flows |
|||
(Dollars in thousands) |
|||
(Unaudited) |
|||
Three Months Ended March 31, |
|||
2017 |
2016 |
||
Cash flows from operating activities |
|||
Net income |
$ 7,614 |
$ 13,344 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|||
Depreciation |
3,157 |
3,157 |
|
Amortization |
1,773 |
1,777 |
|
Equity in undistributed earnings of associated companies, net of dividends |
(829) |
(27) |
|
Deferred compensation and other, net |
(696) |
980 |
|
Stock-based compensation |
1,153 |
1,798 |
|
Gain on disposal of property, plant and equipment and other assets |
(15) |
(20) |
|
Insurance settlement realized |
(240) |
(279) |
|
Combination-related expenses |
9,075 |
- |
|
Pension and other postretirement benefits |
(2,263) |
(2,685) |
|
(Decrease) increase in cash from changes in current assets and current liabilities, net of acquisitions: |
|||
Accounts receivable |
(3,813) |
2,602 |
|
Inventories |
(8,820) |
(1,800) |
|
Prepaid expenses and other current assets |
755 |
1,183 |
|
Accounts payable and accrued liabilities |
2,279 |
(8,647) |
|
Change in combination-related liabilities |
(660) |
- |
|
Change in restructuring liabilities |
(148) |
(509) |
|
Net cash provided by operating activities |
8,322 |
10,874 |
|
Cash flows from investing activities |
|||
Investments in property, plant and equipment |
(2,531) |
(2,172) |
|
Payments related to acquisitions, net of cash acquired |
- |
(1,384) |
|
Proceeds from disposition of assets |
15 |
26 |
|
Insurance settlement interest earned |
9 |
8 |
|
Change in restricted cash, net |
231 |
271 |
|
Net cash used in investing activities |
(2,276) |
(3,251) |
|
Cash flows from financing activities |
|||
Proceeds from long-term debt |
- |
14,687 |
|
Repayments of long-term debt |
(474) |
(159) |
|
Dividends paid |
(4,583) |
(4,243) |
|
Stock options exercised, other |
(777) |
(253) |
|
Payments for repurchase of common stock |
- |
(5,859) |
|
Excess tax benefit related to stock option exercises |
- |
104 |
|
Net cash (used in) provided by financing activities |
(5,834) |
4,277 |
|
Effect of exchange rate changes on cash |
1,563 |
1,421 |
|
Net increase in cash and cash equivalents |
1,775 |
13,321 |
|
Cash and cash equivalents at the beginning of the period |
88,818 |
81,053 |
|
Cash and cash equivalents at the end of the period |
$ 90,593 |
$ 94,374 |
|
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/quaker-chemical-announces-first-quarter-2017-results-300448887.html
SOURCE
Mary Dean Hall, Vice President, Chief Financial Officer and Treasurer, Hallm@quakerchem.com, T. 610.832.4160