UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE
SECURITIES EXCHANGE ACT OF 1934
April
28, 2009
Date
of Report (Date of earliest event reported)
QUAKER
CHEMICAL CORPORATION
(Exact
name of Registrant as specified in its charter)
Commission
File Number 001-12019
|
PENNSYLVANIA
|
No.
23-0993790
|
|
|
(State
or other jurisdiction of
incorporation
or organization)
|
(I.R.S.
Employer
Identification
No.)
|
|
One
Quaker Park
901
Hector Street
Conshohocken,
Pennsylvania 19428
|
|
(Address
of principal executive offices)
|
|
(Zip
Code)
|
|
(610)
832-4000
|
|
(Registrant’s
telephone number, including area
code)
|
Not
Applicable
|
(Former
name or former address, if changed since last
report)
|
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
o Written communications
pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material
pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
o Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
INFORMATION
TO BE INCLUDED IN THE REPORT
Item
2.02. Results of Operations
and Financial Condition.
On April 28, 2009, Quaker Chemical
Corporation announced its results of operations for the first quarter ended
March 31, 2009 in a press release, the text of which is included as Exhibit 99.1
hereto.
Item
9.01. Financial Statements
and Exhibits.
The following exhibit is included as
part of this report:
|
Exhibit No.
|
||
|
99.1
|
Press
Release of Quaker Chemical Corporation dated April 28,
2009.
|
-2-
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
| QUAKER CHEMICAL CORPORATION | |||
| Registrant | |||
|
Date:
April 28, 2009
|
By:
|
/s/
Mark A. Featherstone
|
|
|
Mark
A. Featherstone
Vice
President and
Chief
Financial Officer
|
|||
-3-
 |
||
|
For
Release:
Immediate
|
NEWS
|
Contact:
Mark
A. Featherstone
Vice
President and
Chief
Financial Officer
610-832-4160
|
Quaker
Chemical Announces First Quarter Results
April 28,
2009
CONSHOHOCKEN,
PA – Quaker Chemical Corporation (NYSE:KWR) today announced net sales for the
first quarter 2009 of $98.5 million and breakeven results. The first
quarter 2009 results include a restructuring charge of $2.3 million, or
approximately $0.14 per diluted share, and a gain of $1.2 million, or
approximately $0.11 per diluted share, related to the disposition of land in
Europe.
Michael
F. Barry, Chief Executive Officer and President, commented, "Our first quarter
results represent significant progress from the fourth quarter as we have seen
continued improvement as the quarter progressed. Our improvement in
results is being driven by aggressive cost-reduction efforts, margin improvement
and moderate product volume increases. While we continue to expect
2009 volumes to be significantly below 2008, we anticipate first quarter 2009
volumes to be the low point of the year.”
Mr. Barry
continued, "We remain focused on managing our costs and working
capital. We generated significant cash flow during the quarter, with
our net debt at 2005 levels. As I have mentioned previously, while
2009 will be a challenging year for Quaker and our customers, we remain
confident that our business model, strong associate base, key growth initiatives
and solid balance sheet will get us through this difficult period in a
profitable manner and position us well for the future."
First Quarter 2009
Summary
Net sales
for the first quarter were $98.5 million, down 33% from $147.7 million for the
first quarter of 2008. The decrease in net sales was primarily due to
volume declines in all of the Company’s regions and market segments, as the
global economic downturn continues to impact the Company. Volumes
were down approximately 32%, which were partially offset by a favorable 4%
increase in selling price and mix. Foreign exchange rate translation
also decreased revenues by approximately 5%.
Gross
margins were down approximately $14.9 million, or 34%, compared to the first
quarter of 2008, reflective of the above noted volume declines. The
gross margin percentage of 29.1% was consistent with the first quarter of 2008,
but represents a considerable improvement over the 24.2% reported for the fourth
quarter of 2008. The margin percentage expansion from the fourth
quarter was the result of the cost reduction actions the Company has taken and a
more favorable raw material cost environment as well as product and regional
sales mix.
Selling,
general and administrative expenses (“SG&A”) decreased $7.8 million, or 23%,
compared to the first quarter of 2008. Savings from the fourth
quarter 2008 and first quarter 2009 restructuring programs, reduced incentive
compensation and other cost savings measures accounted for approximately 70% of
the decline. Changes in foreign exchange rates accounted for the
remainder of the decrease.
-more-
As
previously announced, the Company implemented an additional restructuring
program in the first quarter of 2009. The first quarter 2009 program
included provisions for severance for 60 employees totaling $2.3
million. The fourth quarter 2008 program resulted in the elimination
of more than 80 positions.
The
increase in other income compared to the first quarter of 2008 reflects a $1.2
million gain related to the disposition of land in Europe. The tax
benefit recorded for the first quarter of 2009 reflects no tax provided for the
land sale gain, due to the utilization of net operating losses, which were
previously not benefited.
The
decrease in equity income reflects declining steel demand caused by declines in
the auto industry that impacted the Company’s Japanese affiliate.
Balance Sheet and Cash Flow
Items
The
Company’s net debt-to-total-capital ratio remained strong at 31% as of March 31,
2009, compared to 32% as of December 31, 2008. In addition, cash
flows from operations improved $14.4 million compared to the first quarter of
2008, largely the result of improved working capital levels.
The
Company is closely monitoring the current circumstances surrounding Chrysler LLC
and General Motors Corporation, two of the Company’s largest customers, both of
whom have pending requests for additional government funding. The
Company’s accounts receivable for General Motors Corporation and Chrysler LLC
were approximately $6.7 million and $5.8 million, respectively, as of March 31,
2009. The Company has taken steps which it believes significantly
reduces its exposure, and continues to pursue other measures to minimize this
risk.
Quaker
Chemical Corporation is a leading global provider of process chemicals, chemical
specialties, services, and technical expertise to a wide range of industries -
including steel, automotive, mining, aerospace, tube and pipe, coatings and
construction materials. Our products, technical solutions, and
chemical management services enhance our customers' processes, improve their
quality, and lower their costs. Quaker's headquarters is located near
Philadelphia in Conshohocken, Pennsylvania.
This
release contains forward-looking statements that 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, and future terrorist attacks such as
those that occurred on September 11, 2001. 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.
As
previously announced, Quaker Chemical’s investor conference call to discuss
first quarter results is scheduled for April 29, 2009 at 2:30 p.m.
(ET). Access the conference by calling 877-269-7756 or visit Quaker’s
Web site at www.quakerchem.com
for a live webcast.
-more-
|
Quaker Chemical
Corporation
|
|
Condensed Consolidated Statement of
Income
|
|
(Dollars in thousands, except per share data and
share
amounts)
|
|
(Unaudited)
|
||||||||
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Three
Months Ended March 31,
|
||||||||
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2009
|
2008
|
|||||||
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Net
sales
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$ | 98,507 | $ | 147,718 | ||||
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Cost
of goods sold
|
69,793 | 104,083 | ||||||
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Gross
margin
|
28,714 | 43,635 | ||||||
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%
|
29.1 | % | 29.5 | % | ||||
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Selling,
general and administrative expenses
|
26,697 | 34,504 | ||||||
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Restructuring
and related charges
|
2,289 | - | ||||||
|
Operating
(loss) income
|
(272 | ) | 9,131 | |||||
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%
|
-0.3 | % | 6.2 | % | ||||
|
Other
income, net
|
1,454 | 161 | ||||||
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Interest
expense, net
|
(1,089 | ) | (1,182 | ) | ||||
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Income
before taxes
|
93 | 8,110 | ||||||
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Taxes
on income
|
(251 | ) | 2,765 | |||||
| 344 | 5,345 | |||||||
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Equity
in net (loss) income of associated companies
|
(142 | ) | 112 | |||||
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Net
income
|
202 | 5,457 | ||||||
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Less:
Net Income attributable to noncontrolling interest
|
200 | 364 | ||||||
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Net
income attributable to Quaker Chemical Corporation
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$ | 2 | $ | 5,093 | ||||
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%
|
0.0 | % | 3.4 | % | ||||
|
Per share data:
|
||||||||
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Net
income attributable to Quaker Chemical Corporation - basic
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$ | 0.00 | $ | 0.50 | ||||
|
Net
income attributable to Quaker Chemical Corporation -
diluted
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$ | 0.00 | $ | 0.50 | ||||
-more-
|
Quaker Chemical
Corporation
|
|
Condensed Consolidated Balance
Sheet
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|
(Dollars in thousands, except par value and share
amounts)
|
|
(Unaudited)
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||||||||
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March
31,
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December
31,
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|||||||
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2009
|
2008
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|||||||
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ASSETS
|
||||||||
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Current
assets
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||||||||
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Cash
and cash equivalents
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$ | 17,977 | $ | 20,892 | ||||
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Construction
fund (restricted cash)
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7,455 | 8,281 | ||||||
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Accounts
receivable, net
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89,575 | 98,702 | ||||||
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Inventories,
net
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46,285 | 57,419 | ||||||
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Prepaid
expenses and other current assets
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14,987 | 15,532 | ||||||
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Total
current assets
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176,279 | 200,826 | ||||||
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Property,
plant, and equipment, net
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59,291 | 60,945 | ||||||
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Goodwill
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41,889 | 40,997 | ||||||
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Other
intangible assets, net
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6,123 | 6,417 | ||||||
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Investments
in associated companies
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7,404 | 7,987 | ||||||
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Deferred
income taxes
|
35,638 | 34,179 | ||||||
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Other
assets
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40,451 | 34,088 | ||||||
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Total
assets
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$ | 367,075 | $ | 385,439 | ||||
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LIABILITIES
AND SHAREHOLDERS' EQUITY
|
||||||||
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Current
liabilities
|
||||||||
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Short-term
borrowings and current portion of long-term debt
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$ | 2,673 | $ | 4,631 | ||||
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Accounts
and other payables
|
41,933 | 51,341 | ||||||
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Accrued
restructuring and related activities
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1,804 | 2,198 | ||||||
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Accrued
compensation
|
6,652 | 7,741 | ||||||
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Accrued
pension and postretirement benefits
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7,369 | 7,380 | ||||||
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Other
current liabilities
|
12,006 | 10,573 | ||||||
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Total
current liabilities
|
72,437 | 83,864 | ||||||
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Long-term
debt
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77,629 | 84,236 | ||||||
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Deferred
income taxes
|
7,638 | 7,156 | ||||||
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Accrued
pension and postretirement benefits
|
36,852 | 37,638 | ||||||
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Other
non-current liabilities
|
44,338 | 42,670 | ||||||
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Total
liabilities
|
238,894 | 255,564 | ||||||
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Quaker
shareholders' equity
|
||||||||
|
Common
stock, $1 par value; authorized 30,000,000 shares; issued
10,997,036
|
10,997 | 10,833 | ||||||
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Capital
in excess of par value
|
25,495 | 25,238 | ||||||
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Retained
earnings
|
117,091 | 117,089 | ||||||
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Accumulated
other comprehensive loss
|
(29,490 | ) | (27,237 | ) | ||||
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Total
Quaker shareholders' equity
|
124,093 | 125,923 | ||||||
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Noncontrolling
interest
|
4,088 | 3,952 | ||||||
|
Total
shareholders' equity
|
128,181 | 129,875 | ||||||
|
Total
liabilities and shareholders' equity
|
$ | 367,075 | $ | 385,439 | ||||
-more-
|
Quaker Chemical
Corporation
|
|
Condensed Consolidated Statement of Cash
Flows
|
|
For the three months ended March
31,
|
|
(Dollars in
thousands)
|
|
(Unaudited)
|
||||||||
|
2009
|
2008
|
|||||||
|
Cash
flows from operating activities
|
||||||||
|
Net
income
|
$ | 202 | $ | 5,457 | ||||
|
Adjustments
to reconcile net income to net cash provided by (used in) operating
activities:
|
||||||||
|
Depreciation
|
2,458 | 2,680 | ||||||
|
Amortization
|
257 | 300 | ||||||
|
Equity
in net loss (income) of associated companies, net of
dividends
|
142 | (112 | ) | |||||
|
Deferred
compensation and other, net
|
(2,852 | ) | 1,268 | |||||
|
Stock-based
compensation
|
352 | 376 | ||||||
|
Restructuring
and related charges
|
2,289 | - | ||||||
|
Gain
on disposal of property, plant and equipment
|
(1,193 | ) | (35 | ) | ||||
|
Insurance
settlement realized
|
(144 | ) | (136 | ) | ||||
|
Pension
and other postretirement benefits
|
(1,907 | ) | (2,458 | ) | ||||
|
Increase
(decrease) in cash from changes in current assets and current liabilities,
net of acquisitions:
|
||||||||
|
Accounts
receivable
|
7,196 | 1,159 | ||||||
|
Inventories
|
10,060 | (2,374 | ) | |||||
|
Prepaid
expenses and other current assets
|
34 | (3,037 | ) | |||||
|
Accounts
payable and accrued liabilities
|
(6,045 | ) | (9,280 | ) | ||||
|
Change
in restructuring liabilities
|
(2,652 | ) | - | |||||
|
Net
cash provided by (used in) operating activities
|
8,197 | (6,192 | ) | |||||
|
Cash
flows from investing activities
|
||||||||
|
Capital
expenditures
|
(2,375 | ) | (1,949 | ) | ||||
|
Payments
related to acquisitions
|
(1,000 | ) | (1,000 | ) | ||||
|
Proceeds
from disposition of assets
|
1,605 | 65 | ||||||
|
Insurance
settlement received and interest earned
|
5,056 | 5,112 | ||||||
|
Change
in restricted cash, net
|
(4,086 | ) | (4,976 | ) | ||||
|
Net
cash used in investing activities
|
(800 | ) | (2,748 | ) | ||||
|
Cash
flows from financing activities
|
||||||||
|
Net
decrease in short-term borrowings
|
(1,619 | ) | (378 | ) | ||||
|
Proceeds
from long-term debt
|
1,584 | 9,844 | ||||||
|
Repayments
of long-term debt
|
(7,728 | ) | (251 | ) | ||||
|
Dividends
paid
|
(2,492 | ) | (2,181 | ) | ||||
|
Stock
options exercised, other
|
69 | 1,486 | ||||||
|
Net
cash (used in) provided by financing activities
|
(10,186 | ) | 8,520 | |||||
|
Effect
of exchange rate changes on cash
|
(126 | ) | 752 | |||||
|
Net
(decrease) increase in cash and cash equivalents
|
(2,915 | ) | 332 | |||||
|
Cash
and cash equivalents at the beginning of the period
|
20,892 | 20,195 | ||||||
|
Cash
and cash equivalents at the end of the period
|
$ | 17,977 | $ | 20,527 | ||||