Attached files

file filename
8-K - CURRENT REPORT - QUAKER CHEMICAL CORPv358525_8k.htm
EX-99.1 - EXHIBIT 99.1 - QUAKER CHEMICAL CORPv358525_ex99-1.htm

1 Quaker Chemical Corporation Investor Conference Call October 30, 2013 Third Quarter 2013 Results

 
 

2 Regulation G The attached charts include Company 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 and allows investors to better evaluate the financial results of the Company. These measures should not be viewed as an alternative to GAAP measures of performance. Furthermore, these measures may not be consistent with similar measures provided by other companies. This data should be read in conjunction with the Company’s third quarter earnings news release dated October 29, 2013, which has been furnished to the SEC on Form 8-K, and the Company’s Form 10-Q for the quarterly period ended September 30, 2013, which has been filed with the SEC. Forward-Looking Statements This presentation may contain forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to d iffer 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. Risks and Uncertainties Statement

 
 

3 Speakers Michael F. Barry Chairman of the Board, Chief Executive Officer & President Margaret M. Loebl Vice President, Chief Financial Officer & Treasurer Robert T. Traub General Counsel Chart #1

 
 

4 Third Quarter 2013 Headlines ▪ 14% earnings per share growth despite challenging economic environment ▪ Expected $0.08 per share third quarter tax benefit delayed until fourth quarter ▪ Strong net operating cash flow of $24.5 million in Q3 2013 Chart #2

 
 

5 Chairman Comments ▪ Q3 2013 x Solid sales / margins in a difficult economy x Gaining share & leveraging acquisitions x Earnings growth and strong cash flow generation x Growing TTM Adjusted EBITDA x Liquidity remains a Company strength ▪ Q4 2013 Outlook x Expect good operating results x Subject to typical negative seasonality impacts around the holidays at year end Third Quarter 2013 Chart #3 We remain confident in our future and expect 2013 to be another strong year for Quaker in terms of earnings, cash flow generation, EBITDA growth and shareholder value creation.

 
 

6 Crude Steel Output Thousand Metric Tons Chart #4 Jan - Sept Jan - Sept % 2013 2012 Change EU-27 123,779 129,208 -4.2 Other Europe 27,239 28,706 -5.1 CIS 81,513 84,415 -3.4 N. America 88,882 92,663 -4.1 S. America 34,773 35,190 -1.2 Africa 11,402 11,410 -0.1 Middle East 19,321 18,096 +6.8 Asia 795,080 750,723 +5.9 Oceania 4,225 4,378 -3.5 Source: WSA

 
 

7 Product Volume by Quarter Thousand Kilograms 25,000 30,000 35,000 40,000 45,000 50,000 55,000 4Q08 YTD Avg. 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q112Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 Metalworking Process Chemicals Segment Chart #5

 
 

8 Financial Snapshot Q3 2013 Q3 2012 YTD 2013 YTD 2012 Net Sales ($Mils.) 184.1 180.9 545.1 535.4 Gross Margin (%) 35.9 32.7 35.9 33.5 Operating Margin (%) 10.2 8.8 10.3 9.3 Net Income attributable to Quaker Chemical Corporation ($Mils.) 12.6 10.9 42.3 34.4 Adjusted EBITDA ($Mils.) – Trailing Twelve Months 87.5 77.3 -- -- Adjusted EBITDA Margin (%) 12.2 10.9 -- -- Earnings Per Diluted Share 0.95 0.83 3.21 2.63 Non - GAAP Earnings Per Diluted Share 0.91 0.80 2.87 2.61 Debt ($Mils.) 19.2 38.6 -- -- Equity ($Mils.) 324.8 293.4 -- -- Net Operating Cash Flow ($Mils.) 24.5 19.8 51.9 41.8 Chart #6

 
 

9 Gross Margin Percentage 32.7% 34.2% 35.5% 36.4% 35.9% 20.0% 25.0% 30.0% 35.0% 40.0% Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Gross Margin Percentage Chart #7 28.0% 34.7% 35.4% 32.6% 33.7% 35.9% 20.0% 25.0% 30.0% 35.0% 40.0% 2008 2009 2010 2011 2012 2013 YTD Gross Margin Percentage

 
 

10 Adjusted EBITDA Baseline Historical Performance $40.1 $44.2 $66.8 $73.0 $80.9 $91.5 6.90% 9.80% 12.30% 10.70% 11.40% 12.60% 2008 2009 2010 2011 2012 Q3 2013 Annualized Adjusted EBITDA ($ Mils.) Adjusted EBITDA Margin (%) Chart #8 CAGR: 17.9% +570 Margin bps 2008 – 2013 Annualized

 
 

11 Balance Sheet Net Cash / (Debt) -$100 -$80 -$60 -$40 -$20 $0 $20 $40 $60 $80 2008 2009 2010 2011 2012 Q3 2013 $ Millions Cash ST/LT Debt Net Debt Chart #9

 
 

12 Net Cash Flow From Operations 19.8 21.1 11.3 16.2 24.5 0 10 20 30 40 50 60 70 80 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Operating Cash Flow ($ Millions) Chart #10 13.4 41.6 37.5 19.7 62.9 51.9 0 10 20 30 40 50 60 70 80 2008 2009 2010 2011 2012 YTD 2013 Operating Cash Flow ($ Millions)

 
 

13 APPENDIX

 
 

14 Chart #11 Q3 2013 Q3 2012 YTD 2013 YTD 2012 GAAP Earnings Per Diluted Share 0.95$ 0.83$ 3.21$ 2.63$ CFO transition costs per diluted Share -$ -$ -$ 0.03$ Customer bankruptcies per diluted share -$ -$ -$ 0.06$ Cost streamlining inititiatives per diluted share 0.05$ -$ 0.07$ -$ Mineral oil excise tax refund per diluted share -$ -$ (0.14)$ -$ Change in acquisition-related earnout liability per diluted share -$ -$ 0.03$ -$ Devaluation of the Venezuelan Bolivar per diluted share -$ -$ 0.03$ -$ Equity income in a captive insurance company per diluted share (0.09)$ (0.03)$ (0.33)$ (0.11)$ Non-GAAP Earnings Per Diluted Share 0.91$ 0.80$ 2.87$ 2.61$ Non - GAAP Earnings Per Diluted Share Reconciliation

 
 

15 Annualized Adjusted EBITDA Reconciliation Chart #12 2008 2009 2010 2011 2012 YTD Q3 2013 Net income 9,833 16,058 32,120 45,892 47,405 42,253 Depreciation 10,879 9,525 9,867 11,455 12,252 9,219 Amortization 1,177 1,078 988 2,338 3,106 2,621 Interest expense 5,509 5,533 5,225 4,666 4,283 2,223 Taxes on income 4,977 7,065 12,616 14,256 15,575 16,933 Restructuring and related activities 2,916 2,289 - - - - Non-income tax contingency charge - - 4,132 - - - Equity affiliate out of period charge - - 564 - - - Mineral oil excise tax refund - - - - - (2,540) Transition costs related to key employees 3,505 2,443 1,317 - 609 - Non-cash gain from the purchase of an equity affiliate - - - (2,718) - - Change in acquisition-related earnout liability - - - (595) (1,737) 675 Equity loss (income) from a captive insurance company 1,299 162 (313) (2,323) (1,812) (4,378) Devaluation of the Venezuelan Bolivar - - 322 - - 357 U.S customer bankruptcies - - - - 1,254 - Cost streamlining initiatives - - - - - 1,277 Adjusted EBITDA 40,095 44,153 66,838 72,971 80,935 68,640 Adjusted EBITDA Margin 6.9% 9.8% 12.3% 10.7% 11.4% 12.6% Multiply Adjusted EBITDA by Annual Run Rate 1 1 1 1 1 1 1/3 Annualized Adjusted EBITDA 40,095 44,153 66,838 72,971 80,935 91,520

 
 

16 Trailing Twelve Months Adjusted EBITDA Reconciliation Chart #13 I = G + H H G = F - D F E = C + D D C = B - A B A Q3 2013 Trailing Twelve Months Q3 2013 YTD Q3 2013 Last Three Months 2012 YTD 2012 Trailing Twelve Months Q3 2012 YTD Q3 2012 Last Three Months 2011 YTD 2011 YTD Q3 2011 Net income 12,551 55,260 42,253 13,007 47,405 44,768 34,398 10,370 45,892 35,522 Depreciation 3,094 12,470 9,219 3,251 12,252 11,929 9,001 2,928 11,455 8,527 Amortization 858 3,444 2,621 823 3,106 3,025 2,283 742 2,338 1,596 Interest expense 717 3,147 2,223 924 4,283 4,441 3,359 1,082 4,666 3,584 Taxes on income 5,972 19,816 16,933 2,883 15,575 13,987 12,692 1,295 14,256 12,961 Mineral oil excise tax refund - (2,540) (2,540) - - - - - - Non-cash gain from the purchase of an equity affiliate - - - - - - - - (2,718) (2,718) Change in acquisition-related earnout liability - (1,062) 675 (1,737) (1,737) (595) - (595) (595) - Equity loss (income) from a captive insurance company (1,247) (4,764) (4,378) (386) (1,812) (2,026) (1,426) (600) (2,323) (1,723) Devaluation of the Venezuelan Bolivar - 357 357 - - - - - - - U.S. customer bankruptcies - 98 - 98 1,254 1,156 1,156 - - - Transition costs related to key employees - (0) - (0) 609 609 609 - - - Cost streamlining initiatives 875 1,277 1,277 - - - - - - - Adjusted EBITDA 22,820 87,503 68,640 18,863 80,935 77,294 62,072 15,222 72,971 57,749 Adjusted EBITDA Margin 12.4% 12.2% 12.6% 10.9% 11.4% 10.9% 11.6% 8.8% 10.7% 11.3%