Quaker Chemical Corporation (NYSE:KWR) Q1 2021 Earnings Conference Call May 7, 2021 8:30 AM ET Company Participants Michael Barry - Chairman, Chief Executive Officer & President Shane Hostetter - Chief Financial Officer Conference Call Participants Katherine Griffin - Deutsche Bank Mike Harrison - Seaport Global Securities Dan Rizzo - Jefferies Brendan Popson - CJS Securities Steve O'Hara - Sidoti Operator Greetings and welcome to Quaker Houghton's First Quarter Earnings Release Conference Call. At this tim ...

Quaker Houghton First Quarter 2021 Results Investor Conference Call Quaker Houghton.. Forward Together Risks and Uncertainties Statement 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 ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-12019 QUAKER CHEMICAL CORPORATION (Exact name of Registrant as specified in its charter) Pennsylvania 23-0993790 (State or other jurisdict ...

Financial Performance - The Company's 2020 net sales increased by 25% to $1,417.7 million compared to $1,133.5 million in 2019, driven by acquisitions[143]. - Excluding acquisitions, net sales would have declined approximately 11% due to a 9% decrease in sales volumes related to COVID-19 impacts[143]. - The reported operating income for 2020 was $59.4 million, up from $46.1 million in 2019, while non-GAAP operating income increased by 10% to $134.0 million[143][144]. - Net income for 2020 was $39.7 million, with earnings per diluted share rising to $2.22 from $2.08 in 2019[144]. - Adjusted EBITDA for 2020 was $222.0 million, a 28% increase compared to $173.1 million in 2019, primarily due to acquisitions and cost savings[144]. - The Company generated net operating cash flow of $178.4 million in 2020, a 117% increase from $82.4 million in 2019[146]. - Non-GAAP operating income for 2020 was $134,036 thousand, with a non-GAAP operating margin of 9.5%[196]. - EBITDA for 2020 was $145,459 thousand, with adjusted EBITDA of $221,974 thousand and an adjusted EBITDA margin of 15.7%[197]. - Non-GAAP net income for 2020 was $85,151 thousand, compared to $88,711 thousand in 2019[198]. - The Company reported a net income attributable to Quaker Chemical Corporation of $39,658 thousand for 2020[197]. Cost Management and Synergies - The Company realized $58 million in cost synergies from the Houghton Combination, exceeding the original estimate of $35 million[148]. - The Company incurred $30.3 million in total Combination, integration, and other acquisition-related expenses in 2020, down from $38.0 million in 2019[184]. - The Company realized full-year cost synergies of approximately $58 million in 2020, up from $7 million in 2019, and expects to achieve $75 million in 2021 and $80 million in 2022[183]. - The Company recognized an additional $5.5 million in restructuring and related charges in 2020 as part of the QH Program, which aims to reduce total headcount by approximately 350 people globally[185]. - Restructuring charges were $5.5 million in 2020, significantly lower than $26.7 million in 2019, as part of the global cost synergy plan[207]. Debt and Cash Flow - The Company reduced its net debt by 12% or $94 million during 2020, despite making recent acquisitions[148]. - As of December 31, 2020, the Company had cash, cash equivalents, and restricted cash of $181.9 million, an increase of $38.3 million from $143.6 million at the end of 2019[172]. - Net cash flows provided by operating activities were $178.4 million in 2020, a significant increase from $82.4 million in 2019, primarily due to higher earnings from acquisitions and improved working capital[173]. - Net cash flows used in investing activities decreased to $71.4 million in 2020 from $908.6 million in 2019, largely due to reduced acquisition payments[174]. - The Company has total contractual cash obligations of $1,029,420 thousand, with $78,210 thousand due in 2021 and $733,380 thousand due in 2024[192]. - The Company anticipates sufficient cash flows from operations and liquidity to support its business objectives for at least the next twelve months[190]. - The Company may seek additional debt or equity financing to fund future growth opportunities, including potential acquisitions[190]. Tax and Liabilities - The Company recorded a $15.5 million transition tax liability for U.S. income taxes on undistributed earnings of non-U.S. subsidiaries, with $7.0 million paid and $8.5 million remaining to be paid in installments[161]. - As of December 31, 2020, the Company's gross liability for uncertain tax positions was $28.9 million, with potential reductions of up to $7.5 million from offsetting benefits in other tax jurisdictions[188]. - Interest obligations on long-term debt total $52,997 thousand, with $14,514 thousand due in 2021[192]. - The effective tax rate for 2020 was a benefit of 19.5%, compared to an expense of 7.2% in 2019, with an estimated effective tax rate of approximately 25% for 2020 and 22% for 2019 when excluding non-core items[212]. Segment Performance - Net sales for the Americas segment were $450.2 million in 2020, an increase of $58.0 million or 15% compared to 2019, with a decrease of approximately 16% when excluding acquisitions[230]. - EMEA segment net sales were $383.2 million in 2020, an increase of $97.6 million or 34% compared to 2019, with a decrease of approximately 7% when excluding acquisitions[231]. - Asia/Pacific segment net sales were $315.3 million in 2020, an increase of $67.5 million or 27% compared to 2019, with a decrease of approximately 5% when excluding acquisitions[232]. - Global Specialty Businesses segment net sales were $269.0 million in 2020, an increase of $61.1 million or 29% compared to 2019, reflecting the inclusion of additional months of Houghton and Norman Hay net sales[233]. Impairment and Asset Valuation - An impairment charge of $38.0 million was recorded in Q1 2020 for indefinite-lived intangible assets, primarily related to Houghton trademarks, reducing their book value to $204.0 million[166]. - The Company's consolidated indefinite-lived intangible assets were valued at $205.1 million as of December 31, 2020, down from $243.1 million in 2019, with no impairment charge warranted[167]. - The estimated fair value of the Houghton and Fluidcare trademarks was assessed using a WACC assumption of approximately 10% during the interim impairment assessment[166]. - The Company evaluated the impact of COVID-19 on its operations and determined that it did not represent a triggering event for impairment of indefinite-lived or long-lived assets as of March 31, 2020[164].

Quaker Houghton Fourth Quarter and Full Year 2020 Results Investor Conference Call Quaker Houghton.. Forward Together Risks and Uncertainties Statement On August 1, 2019, Quaker Chemical Corporation (the "Company", also known as Quaker Houghton) completed its combination with Houghton International, Inc. ("Houghton") (herein referred to as "the Combination"). In addition, the Company acquired the operating divisions of Norman Hay plc ("Norman Hay") on October 1, 2019. Throughout this presentation, all figur ...

Quaker Chemical Corporation (NYSE:KWR) Q4 2020 Earnings Conference Call February 26, 2021 8:30 AM ET Company Participants Michael Barry - Chairman, Chief Executive Officer & President Mary Hall - Chief Financial Officer, Vice President & Treasurer Robert Traub - General Counsel Shane Hostetter - Head of Finance & Chief Accounting Officer Conference Call Participants Mike Harrison - Seaport Global Securities Katherine Griffin - Deutsche Bank Jon Tanwanteng - CJS Securities Steve O'Hara - Sidoti Laurence Alex ...

Forward Together ™ Quaker Houghton Investor Presentation January 2021 Quaker Houghton.. Forward Together Risks and Uncertainties Statement On August 1, 2019, Quaker Chemical Corporation (the "Company", also known as Quaker Houghton) completed its combination with Houghton International, Inc. ("Houghton") (herein referred to as "the Combination"). In addition, the Company acquired the operating divisions of Norman Hay plc ("Norman Hay") on October 1, 2019. Regulation G The attached charts include Company inf ...

Forward Together ™ Quaker Houghton Investor Presentation November 2020 Quaker Houghton.. Forward Together Risks and Uncertainties Statement On August 1, 2019, Quaker Chemical Corporation (the "Company", also known as Quaker Houghton) completed its combination with Houghton International, Inc. ("Houghton") (herein referred to as "the Combination"). In addition, the Company acquired the operating divisions of Norman Hay plc ("Norman Hay") on October 1, 2019. Regulation G The attached charts include Company in ...

Financial Data and Key Metrics Changes - The company reported a sequential sales increase of 28% from Q2 2020, totaling $367 million, but a 5% decrease compared to pro forma Q3 2019 sales of $386 million [6][25] - Gross margin improved to 38.2%, up from 34% in Q2 and 32.3% in Q3 of the previous year [13][26] - Non-GAAP operating income rose to $43.2 million from $11.2 million in Q2 and increased by 25% from $34.5 million in Q3 2019 [28] - Adjusted EBITDA nearly doubled to approximately $64 million in Q3 from $32 million in Q2, reflecting a 5% increase compared to pro forma adjusted EBITDA of $61 million in Q3 2019 [30][31] - Net debt decreased by 7% or $58 million, improving the leverage ratio to 3.4 times from 3.7 times at the end of Q2 [17][34] Business Line Data and Key Metrics Changes - The Americas region saw the largest sales improvement, with a 48% sequential increase driven by stronger volumes [6] - Asia Pacific, EMEA, and Global Specialty Businesses experienced sales growth of 24%, 21%, and 16% respectively compared to Q2 [7] - The metalworking industry group grew 39% sequentially, primarily due to automotive OEMs recovering from shutdowns [8] - Overall sequential volumes were up 27%, but pro forma volumes were down approximately 10% year-over-year [10] Market Data and Key Metrics Changes - The company gained approximately 2% in organic sales growth due to net share gains compared to Q3 2019 [11] - Aerospace, which constitutes about 3% of sales, is expected to take longer to recover compared to other markets [12][82] Company Strategy and Development Direction - The company aims to continue market share gains and explore potential smaller bolt-on acquisitions [12] - Increased synergy estimates for 2020 from $53 million to $58 million, with projections for 2021 raised from $65 million to $75 million [16][35] - The company is focused on disciplined cost management and generating positive cash flow during downturns [36] Management's Comments on Operating Environment and Future Outlook - Management anticipates gradual sequential improvement in markets over the next year or two, but acknowledges uncertainty due to COVID-19 [18] - For Q4, adjusted EBITDA is expected to be similar to Q3, with full-year adjusted EBITDA projected to exceed $215 million [18][19] - The company expects a greater than 20% increase in adjusted EBITDA for 2021, driven by integration savings and market share gains [37] Other Important Information - The company has implemented cost-saving measures, including cutting capital expenditures by over 30% [14] - Strong cash flow management has allowed the company to reduce net debt and improve liquidity [34] Q&A Session Summary Question: What drives confidence in the 2021 EBITDA outlook? - Management indicated that the outlook is based on gradual market recovery and continued market share gains, but acknowledged uncertainty due to potential COVID-19 impacts [46][48] Question: What does steel business consolidation mean for the company? - Management does not anticipate any impact on business due to strong relationships with significant customers involved in the consolidation [49] Question: What drove margin strength in the Americas? - The Americas experienced disproportionate raw material savings and effective manufacturing consolidations contributing to margin strength [51][52] Question: Clarification on EBITDA guidance for Q4? - Management indicated that guidance reflects uncertainty in the market, particularly with ongoing lockdowns in Europe [55] Question: Have any Houghton revenue synergies been identified? - Management confirmed that net market share gains of 2% this quarter are partly due to sales synergies from the Combination [61] Question: How will temporary cost reductions impact future synergies? - Management expects some temporary cost reductions to return as business normalizes, but this is factored into the EBITDA guidance [64][65] Question: Real-time demand in October and November? - Management did not provide specific comments on October demand but indicated that guidance accounts for potential December weakness [72] Question: Cash flow dynamics as business recovers? - Management expects to manage working capital prudently, anticipating positive cash flow as earnings and sales pick up [76] Question: Where are the increasing synergies coming from? - Management noted that initial synergies were underestimated, and recent acceleration in synergy realization is contributing to the increase [78]

Financial Performance - Net sales for the three months ended September 30, 2020, increased to $367.2 million, up 12.9% from $325.1 million in the same period of 2019[11] - Gross profit for the three months ended September 30, 2020, was $140.2 million, representing a 33.4% increase compared to $105.1 million in 2019[11] - Operating income for the three months ended September 30, 2020, was $34.9 million, a significant recovery from an operating loss of $14.5 million in the same period of 2019[11] - Net income attributable to Quaker Chemical Corporation for the three months ended September 30, 2020, was $27.3 million, compared to a net loss of $13.1 million in 2019[11] - Comprehensive income for the three months ended September 30, 2020, was $61.6 million, compared to a comprehensive loss of $40.2 million in the same period of 2019[13] - Total net sales for the three months ended September 30, 2020, were $367.2 million, a 12.9% increase from $325.1 million in the same period of 2019[50] - Basic earnings per share for the three months ended September 30, 2020, was $1.53, compared to a loss of $0.80 for the same period in 2019[100] - Adjusted EBITDA for the third quarter of 2020 was $63.9 million, a 24% increase from $51.4 million in the prior year quarter, primarily due to the Combination and cost savings[145] Cash and Assets - Cash and cash equivalents increased to $155.8 million as of September 30, 2020, from $123.5 million at the end of 2019[16] - Total assets decreased to $2.75 billion as of September 30, 2020, from $2.85 billion at the end of 2019[16] - Total liabilities decreased to $1.53 billion as of September 30, 2020, from $1.61 billion at the end of 2019[16] - As of September 30, 2020, the company had cash, cash equivalents, and restricted cash totaling $174.7 million, an increase of $31.1 million from $143.6 million at December 31, 2019[158] Acquisitions and Integration - The acquisition of Houghton was completed on August 1, 2019, with a total consideration of $1.662 billion, including cash and common stock[29] - The Company incurred approximately $6.9 million and $23.4 million in combination, integration, and other acquisition-related expenses for the three and nine months ended September 30, 2020, respectively[33] - The acquisition of Norman Hay was completed on October 1, 2019, with an original purchase price of £80 million, enhancing the Company's technology and engineering expertise in various industrial markets[34] - The Combination with Houghton required divestiture of certain product lines, sold for approximately $37 million in cash, representing about 3% of the combined company's net sales[28] - The Company recorded accelerated depreciation charges of $0.8 million during the nine months ended September 30, 2020, related to the Houghton integration[33] Segment Performance - Segment operating earnings for the Americas increased to $31.1 million in Q3 2020, up 30.5% from $23.8 million in Q3 2019[50] - The EMEA segment reported net sales of $94.0 million for Q3 2020, representing a 14.2% increase from $82.4 million in Q3 2019[50] - Asia/Pacific net sales rose to $84.9 million in Q3 2020, a 14.3% increase compared to $74.3 million in Q3 2019[50] - Global Specialty Businesses achieved net sales of $68.8 million in Q3 2020, up 32.7% from $51.8 million in Q3 2019[50] Restructuring and Expenses - The Company accrued restructuring charges of $3.585 million for the nine months ended September 30, 2020, with total accrued restructuring as of September 30, 2020, amounting to $8.893 million[75] - SG&A expenses increased by $16.2 million due to Houghton and Norman Hay, but were partially offset by COVID-19 cost savings actions[200] - The Company recorded additional restructuring charges of $1.4 million in Q3 2020 as part of its ongoing restructuring program initiated in Q3 2019[202] Tax and Compliance - The effective tax rate for the three months ended September 30, 2020, was an expense of 8.1%, while for the nine months, it was a benefit of 38.3%[89] - The Company expects to recognize tax benefits of $5.0 million related to foreign tax credit valuation allowances and $2.1 million from a 2019 return to provision adjustment in Q3 2020[89] - As of September 30, 2020, the Company had a deferred tax liability of $6.4 million, down from $8.2 million at December 31, 2019[91] Debt and Financing - Total debt as of September 30, 2020, was $896.6 million, a decrease from $934.9 million as of December 31, 2019[112] - The Company had unused capacity under its Revolver of approximately $239 million as of September 30, 2020[113] - The Company capitalized $23.7 million of third-party debt issuance costs related to the New Credit Facility[117] - As of September 30, 2020, the Company was in compliance with all covenants of the New Credit Facility[115] COVID-19 Impact - The Company continues to monitor the impact of COVID-19, which has caused significant disruptions, including volume declines and lower net sales across its operations[136] - All 34 production facilities worldwide are currently open and operating, deemed essential businesses, and the Company has implemented health and safety measures for employees[155] - The Company anticipates that the impact from COVID-19 will gradually improve sequentially each quarter, subject to effective containment measures[156] Impairment and Valuation - As of September 30, 2020, the Company recorded an impairment charge of $38.0 million for the Houghton and Fluidcare trademark and tradename intangible assets due to a decrease in projected net sales and an increase in the WACC assumption[109] - The estimated fair value of the Houghton and Fluidcare trademark and tradename intangible assets was $204.0 million as of September 30, 2020, down from $242.0 million as of December 31, 2019[109] Shareholder Returns - The company declared dividends of $0.395 per share for the three months ended September 30, 2020, compared to $0.385 per share in 2019[11] - The Company declared dividends of $20,735,000 at a rate of $1.165 per share during the third quarter of 2020[124]