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8-K - FORM 8-K - QUAKER CHEMICAL CORPv385324_8k.htm
EX-99.1 - EXHIBIT 99.1 - QUAKER CHEMICAL CORPv385324_ex99-1.htm

 

Exhibit 99.2

 

1 Quaker Chemical Corporation Investor Conference Call August 1, 2014 Second Quarter 2014 Results

 
 

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 b e read in conjunction with the C ompany’s second quarter earnings news release dated July 31, 2014, which has been furnished to the SEC on Form 8-K, and the Company’s Form 10-Q for the quarterly period ended June 30, 2014, 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 differ ma terially 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

 
 

Speakers Chart #1 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

 
 

Second Quarter 2014 Headlines ▪ 3.5% revenue growth on increased product volume levels ▪ Strong operating income leads 11% increase in non - GAAP earnings per share ▪ Acquisition of remaining 49% interest in Australian affiliate Chart #2

 
 

Chairman Comments Second Quarter 2014 ▪ Second Quarter 2014 x Solid volume growth x Growth in North America, China and Europe, partially offset by poor economic conditions in South America x Stable margins despite select market challenges x Strong operating results x Effective business model and competitive position ▪ 2014 Outlook x Expect further share gains and leverage from acquisitions x Some increases in raw material costs x Continue to actively pursue acquisitions “Overall, I continue to remain confident in our future and expect 2014 to be another good year for Quaker as we strive to increase revenue and earnings for the fifth consecutive year.” -- Michael F. Barry, Chairman, CEO & President Chart #3

 
 

Chief Financial Officer -- Highlights 1) Solid Volume Increases Net Sales 2) Stable Margins Continue to Drive Strong Operating Results 3) SG&A Down Compared to Second Quarter of 2013 4) Solid Growth in Operating Income and Adjusted EBITDA 5) Higher Operating Income Leads 11% Increase in Non - GAAP Earnings 6) Liquidity is a Quaker Strength Chart #4 Second Quarter 2014

 
 

Product Volume by Quarter Thousand Kilograms 25,000 30,000 35,000 40,000 45,000 50,000 55,000 4Q08 YTD Avg. 1Q092Q093Q094Q091Q102Q103Q104Q101Q112Q113Q114Q111Q122Q123Q124Q121Q132Q133Q134Q131Q142Q14 Chart #5

 
 

Financial Snapshot Q2 2014 Q2 2013 YTD 2014 YTD 2013 Net Sales ($Mils.) 191.3 184.8 373.0 361.0 Gross Margin (%) 35.7 36.4 35.7 36.0 Operating Margin (%) 10.9 10.7 10.8 10.3 Net Income attributable to Quaker Chemical Corporation ($Mils.) 15.4 16.1 28.2 29.7 Adjusted EBITDA ($Mils.) – Trailing Twelve Months 93.4 84.4 -- -- Adjusted EBITDA Margin (%) 12.6 11.8 -- -- Earnings Per Diluted Share 1.16 1.22 2.13 2.26 Non - GAAP Earnings Per Diluted Share 1.11 1.00 2.07 1.96 Debt ($Mils.) 26.0 23.9 -- -- Equity ($Mils.) 364.7 312.4 -- -- Net Operating Cash Flow ($Mils.) 10.1 16.2 8.3 27.5 Chart #6

 
 

Gross Margin Percentage 28.0% 34.7% 35.4% 32.6% 33.7% 35.8% 20.0% 25.0% 30.0% 35.0% 40.0% 2008 2009 2010 2011 2012 2013 Gross Margin Percentage 36.4% 35.9% 35.4% 35.8% 35.7% 20.0% 25.0% 30.0% 35.0% 40.0% Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Gross Margin Percentage Chart #7

 
 

Adjusted EBITDA Baseline Historical Performance $40.1 $44.2 $66.8 $73.0 $80.9 $89.6 $99.1 6.9% 9.8% 12.3% 10.7% 11.4% 12.3% 13.3% 2008 2009 2010 2011 2012 2013 Q2 2014 Annualized Adjusted EBITDA ($ Mils.) Adjusted EBITDA Margin (%) 2008 – 2014 Annualized CAGR: 16.3% +640 Margin bps Chart #8

 
 

Balance Sheet Net Cash / (Debt) -$100 -$80 -$60 -$40 -$20 $0 $20 $40 $60 $80 2008 2009 2010 2011 2012 2013 Q2 2014 $ Millions Cash ST/LT Debt Net Debt Chart #9

 
 

APPENDIX

 
 

Non - GAAP Earnings Per Diluted Share Reconciliation Chart #10 Q2 2014 Q2 2013 YTD 2014YTD 2013 GAAP Earnings Per Diluted Share 1.16$ 1.22$ 2.13$ 2.26$ UK pension plan amendment per diluted share -$ -$ 0.05$ -$ Mineral oil excise tax refund per diluted share -$ (0.14)$ -$ (0.14)$ Change in acquisition-related earnout liability per diluted share -$ 0.03$ -$ 0.03$ Cost streamlining inititiatives per diluted share 0.02$ 0.02$ 0.02$ 0.02$ Currency conversion impacts of the Venezuelan Bolivar Fuerte per diluted share 0.02$ -$ 0.02$ 0.03$ Equity income in a captive insurance company per diluted share (0.09)$ (0.13)$ (0.15)$ (0.24)$ Non-GAAP Earnings Per Diluted Share 1.11$ 1.00$ 2.07$ 1.96$

 
 

Annualized Adjusted EBITDA Reconciliation Chart #11 2008 2009 2010 2011 2012 2013 YTD Q2 2014 Net income 9,833 16,058 32,120 45,892 47,405 56,339 28,157 Depreciation 10,879 9,525 9,867 11,455 12,252 12,339 6,084 Amortization 1,177 1,078 988 2,338 3,106 3,445 1,628 Interest expense 5,509 5,533 5,225 4,666 4,283 2,922 1,106 Taxes on income 4,977 7,065 12,616 14,256 15,575 20,489 13,084 Restructuring and related activities 2,916 2,289 - - - - - Non-income tax contingency charge - - 4,132 - - 796 - 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) (497) - Equity loss (income) from a captive insurance company 1,299 162 (313) (2,323) (1,812) (5,451) (2,071) Currency conversion impacts of the Venezuelan Bolivar - - 322 - - 357 321 U.S customer bankruptcies - - - - 1,254 - - Cost streamlining initiatives - - - - - 1,419 348 UK pension plan amendment - - - - - - 902 Adjusted EBITDA 40,095 44,153 66,838 72,971 80,935 89,618 49,559 Adjusted EBITDA Margin 6.9% 9.8% 12.3% 10.7% 11.4% 12.3% 13.3% Multiply Adjusted EBITDA by Annual Run Rate 1 1 1 1 1 1 2 Annualized Adjusted EBITDA 40,095 44,153 66,838 72,971 80,935 89,618 99,118

 
 

Trailing Twelve Months Adjusted EBITDA Reconciliation Chart #12 I = G + H H G = F - D F E = C + D D C = B - A B A Trailing Twelve Months Q2 2014 YTD Q2 2014 Last Six Months 2013 YTD 2013 Trailing Twelve Months Q2 2013 YTD Q2 2013 Last Six Months 2012 YTD 2012 YTD Q2 2012 Net income 54,794 28,157 26,637 56,339 53,634 29,702 23,932 47,405 23,473 Depreciation 12,298 6,084 6,214 12,339 12,408 6,125 6,283 12,252 5,969 Amortization 3,310 1,628 1,682 3,445 3,404 1,763 1,641 3,106 1,465 Interest expense 2,522 1,106 1,416 2,922 3,464 1,506 1,958 4,283 2,325 Taxes on income 22,612 13,084 9,528 20,489 18,217 10,961 7,256 15,575 8,319 Non-income tax contingency 796 - 796 796 - - - - - Mineral oil excise tax refund - - - (2,540) (2,540) (2,540) - - - Non-cash gain from the purchase of an equity affiliate - - - - - - - - - Change in acquisition-related earnout liability (1,172) - (1,172) (497) (1,062) 675 (1,737) (1,737) - Equity loss (income) from a captive insurance company (4,391) (2,071) (2,320) (5,451) (3,956) (3,131) (825) (1,812) (987) Currency conversion impacts of the Venezuelan Bolivar 321 321 - 357 357 357 - - - U.S. customer bankruptcies - - - - 98 - 98 1,254 1,156 Transition costs related to key employees - - - - (0) - (0) 609 609 Cost streamlining initiatives 1,365 348 1,017 1,419 402 402 - - - UK pension plan amendment 902 902 - - - - - - - Adjusted EBITDA 93,357 49,559 43,798 89,618 84,426 45,820 38,606 80,935 42,329 Adjusted EBITDA Margin 12.6% 13.3% 11.9% 12.3% 11.8% 12.7% 10.9% 11.4% 11.9%