Financial Data and Key Metrics Changes - Fourth quarter net sales were $444 million, a decline of 5% year-over-year or 3% lower on a constant currency basis [9][37] - Gross margins were 35.2% in the fourth quarter, impacted by manufacturing absorption, raw material cost increases, and customer production levels [11][40] - Adjusted EBITDA for the fourth quarter was $65 million, with a full year total of $311 million [12][43] - Operating cash flow for 2024 was $205 million, supporting capital allocation priorities including dividends and acquisitions [12][54] Business Line Data and Key Metrics Changes - Asia Pacific segment net sales increased approximately 5% year-over-year, driven by a 5% increase in sales volumes [44] - EMEA segment net sales decreased by 7% year-over-year, with a decline in sales volumes of approximately 4% [46] - Americas segment net sales declined by 8% year-over-year, impacted by lower selling prices and a 1% decline in total sales volumes [49] Market Data and Key Metrics Changes - Market conditions were persistently soft throughout 2024, with a low to mid single-digit decline in aggregate end markets [9][10] - The company expects end markets to grow approximately 1% to 2% in 2025, primarily in the second half of the year [31][81] Company Strategy and Development Direction - The company aims to return to growth, reduce complexity, and enhance shareholder value through disciplined capital deployment [17][30] - Focus on globalizing operations and aligning resources with faster-growing regions, including India and Southeast Asia [20][21] - Emphasis on customer intimacy and improving operational efficiencies to support organic growth [23][25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to deliver above-market performance despite challenging conditions [10][34] - Expectations for gross margins to be comparable to 2024 levels, with revenue, adjusted EBITDA, and earnings growth anticipated in 2025 [34][81] - The long-term fundamentals of the industry are viewed positively, with a focus on managing controllable factors while investing in capabilities [35][58] Other Important Information - The company completed two acquisitions in 2024 and recently acquired Chemical Solutions & Innovations in South Africa [29][56] - A new $20 million cost action plan has been identified, expected to drive approximately $15 million in savings [27][58] Q&A Session Summary Question: Gross margin performance in Q4 and future targets - Management indicated that the historical gross margin target of 37% to 38% is still relevant, with expectations for recovery in Q1 [65][68] Question: Performance in Asia Pacific and growth opportunities - Asia Pacific's success is attributed to new business wins, with plans to replicate this success in other regions [71][76] Question: Expectations for revenue and EBITDA growth in 2025 - Management anticipates gradual market improvement, with a focus on new business gains and a healthy pipeline [80][84] Question: Raw materials expectations for 2025 - Stability in raw materials is expected, with no significant volatility anticipated [90] Question: Volume trends in the Americas - Improvement is expected in the second half of 2025, following a decline in the first half [92] Question: Impact of new capacity coming online - New capacity is expected across Asia and the US, contributing to growth [95][96] Question: Cost savings initiatives and SG&A expectations - Cost savings are primarily targeting SG&A, with expectations for SG&A to be flat to modestly up in 2025 [106][107] Question: Details on the acquisition of CSI - CSI enhances the portfolio in South Africa, supporting growth in the region [109] Question: Capital allocation priorities - The focus remains on investing in the business through M&A and organic growth, with share repurchases considered as opportunities arise [112]

Financial Data and Key Metrics Changes - Fourth quarter net sales were $444 million, a 5% decline from the prior year or 3% lower on a constant currency basis [9][37] - Gross margins were 35.2% in the fourth quarter, impacted by manufacturing absorption, raw material cost increases, and customer production levels [11][40] - Adjusted EBITDA for the fourth quarter was $65 million, with a full year total of $311 million [12][43] - Operating cash flow for 2024 was $205 million, supporting capital allocation priorities [12][54] Business Line Data and Key Metrics Changes - Asia Pacific segment net sales increased approximately 5% year-over-year, driven by a 5% increase in sales volumes [44] - EMEA segment net sales decreased by 7% year-over-year, with a decline in sales volumes and service revenues [46] - Americas segment net sales declined 8% year-over-year, impacted by lower selling prices and volumes [49] Market Data and Key Metrics Changes - Market conditions were persistently soft throughout 2024, with a low to mid single-digit decline in aggregate end markets [9][39] - The company expects end markets to grow approximately 1% to 2% in 2025, primarily in the second half of the year [31][81] Company Strategy and Development Direction - The company aims to return to growth, reduce complexity, and enhance shareholder value through disciplined capital deployment [17][29] - Focus on globalizing operations and aligning resources with faster-growing regions, including India and Southeast Asia [20][21] - Emphasis on customer intimacy and operational efficiencies to drive organic growth [22][23] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to deliver above-market performance despite challenging conditions [10][34] - Expectations for gross margins to be comparable to 2024 levels, with revenue and adjusted EBITDA growth anticipated in 2025 [34][81] - The long-term fundamentals of the industry are viewed positively, with a focus on managing controllable factors [35][58] Other Important Information - The company completed two acquisitions in 2024 and recently acquired Chemical Solutions & Innovations in South Africa [29][56] - A new $20 million cost action plan has been identified, expected to drive approximately $15 million in savings [27][58] Q&A Session Summary Question: Gross margin performance in Q4 - Management acknowledged a decline in gross margins due to various factors but indicated a return to historical levels is expected in 2025 [63][65] Question: Performance in Asia Pacific - Management highlighted strong new business wins in Asia Pacific and expressed optimism about transferring that success to other regions [69][71] Question: Expectations for raw materials in 2025 - Stability in raw materials is anticipated, with no significant volatility expected [90] Question: Volume trends in the Americas - Improvement in volumes is expected throughout 2025, with the first quarter likely being the lowest [92] Question: Impact of new capacity - New capacity is coming online in both Asia and the US, contributing to growth opportunities [95][96] Question: Cost savings initiatives - Cost savings are primarily targeting SG&A, with expectations for SG&A to be flat to modestly up in 2025 [106] Question: Capital allocation priorities - The focus remains on investing in the business through M&A and organic growth, with share repurchases considered opportunistically [112]

Quaker Chemical (KWR) Q4 2024 Earnings Call February 25, 2025 08:30 AM ET Company Participants Jeffrey Schnell - Vice President, Investor RelationsJoseph Berquist - President and Chief Executive OfficerTom Coler - Executive Vice President & Chief Financial OfficerDavid Begleiter - Managing DirectorJonathan Tanwanteng - Managing Director Conference Call Participants Arun Viswanathan - Senior Equity AnalystMichael Harrison - Managing Director and Senior Chemicals AnalystLaurence Alexander - Analyst Operator G ...

Core Insights - Quaker Chemical (KWR) reported a revenue of $444.09 million for the quarter ended December 2024, reflecting a year-over-year decline of 4.9% [1] - The earnings per share (EPS) for the quarter was $1.33, down from $1.78 in the same quarter last year, indicating a significant decrease [1] - The reported revenue exceeded the Zacks Consensus Estimate of $441.71 million by 0.54%, while the EPS fell short of the consensus estimate of $1.62 by 17.90% [1] Financial Performance Metrics - Quaker Chemical's stock has returned +2.4% over the past month, outperforming the Zacks S&P 500 composite, which saw a decline of -0.5% [3] - The company currently holds a Zacks Rank 5 (Strong Sell), suggesting potential underperformance relative to the broader market in the near term [3] Geographic Revenue Breakdown - Revenue from the Americas was reported at $208.59 million, surpassing the average estimate of $201.35 million, but showing a year-over-year decline of 7.9% [4] - Revenue from the Asia/Pacific region was $109.62 million, exceeding the average estimate of $106.70 million, with a year-over-year increase of 4.6% [4] - Revenue from the EMEA region was $125.88 million, below the estimated $130.05 million, reflecting a year-over-year decrease of 7.3% [4]

Core Viewpoint - Quaker Chemical reported quarterly earnings of $1.33 per share, missing the Zacks Consensus Estimate of $1.62 per share, and showing a decline from $1.78 per share a year ago, indicating a significant earnings surprise of -17.90% [1] Financial Performance - The company posted revenues of $444.09 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 0.54%, but down from $467.11 million year-over-year [2] - Over the last four quarters, Quaker Chemical has only surpassed consensus EPS estimates once [2] Stock Performance - Quaker Chemical shares have increased by approximately 0.7% since the beginning of the year, while the S&P 500 has gained 2.2% [3] - The stock is currently rated Zacks Rank 5 (Strong Sell), indicating expectations of underperformance in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $1.82 on revenues of $456.95 million, and for the current fiscal year, it is $8.42 on revenues of $1.88 billion [7] - The trend for estimate revisions ahead of the earnings release has been unfavorable, which may impact future stock performance [6] Industry Context - The Chemical - Specialty industry, to which Quaker Chemical belongs, is currently ranked in the bottom 20% of over 250 Zacks industries, suggesting potential challenges for stock performance [8]

Financial Performance - Quaker Houghton reported net sales of $1,839.7 million in 2024, a decrease of 6% from $1,953.3 million in 2023, primarily due to a 4% decrease in selling price and product mix, a 2% decrease in sales volumes, and a 1% unfavorable impact from foreign currency translation[141]. - The company generated net income of $116.6 million or $6.51 per diluted share in 2024, compared to $112.7 million or $6.26 per diluted share in 2023, reflecting lower interest expenses and foreign exchange losses[142]. - Adjusted EBITDA for 2024 was $310.9 million, a decrease of 3% from $320.4 million in 2023, primarily due to lower net sales[142]. - Net cash flows from operating activities were $204.6 million in 2024, down from $279.0 million in 2023, driven by reduced cash inflow from working capital[144]. - The Americas segment accounted for approximately 48% of consolidated net sales in 2024, with net sales of $882.1 million, a decrease of $95.0 million or 10% compared to 2023[211]. Acquisitions and Strategic Initiatives - The Company acquired Chemical Solutions & Innovations (CSI) for approximately $3.9 million in February 2025, enhancing its position in South Africa[21]. - In July 2024, Quaker Houghton acquired the Sutai Group for approximately $16.2 million, strengthening its technology portfolio in the Asia/Pacific region[22]. - The acquisition of I.K.V. Tribologie IKVT for $35.2 million in February 2024 bolstered the Company's position in high-performance lubricants and greases[23]. - Strategic acquisitions are part of the company's business strategy, but successful integration and realization of synergies are critical to avoid adverse financial impacts[56]. Research and Development - Research and development expenses for 2024 were $57.3 million, an increase from $50.3 million in 2023 and $46.0 million in 2022[20]. - The company is committed to continuous product development to meet customer demands for higher performance, but faces risks if competitors introduce superior products[53]. Employee and Operational Insights - The Company had approximately 4,400 full-time employees globally as of December 31, 2024, with around 3,400 employed by non-U.S. subsidiaries[29]. - The company emphasizes the importance of safety culture, implementing ten "lifesaving" rules and several "Live Safe" initiatives to prevent serious injuries[40]. Financial Obligations and Liquidity - The Company had total net debt of $519.4 million as of December 31, 2024, consisting of total borrowings of $708.3 million less cash and cash equivalents of $188.9 million[162]. - The weighted average variable interest rate on outstanding borrowings was approximately 6.1% for the twelve months ended December 31, 2024, with an interest rate of approximately 5.2% on outstanding borrowings as of December 31, 2024[163]. - The Company believes its existing cash and anticipated cash flows will be sufficient to support its operating requirements and fund business objectives for at least the next twelve months[171]. Market and Economic Risks - The company faces significant risks from demand fluctuations in the steel, automotive, aerospace, and industrial equipment industries, which are cyclical[49]. - The company is exposed to economic uncertainties, including inflation, supply chain constraints, and potential downturns in customer industries[45]. - Rising interest rates could increase debt service obligations and negatively impact customer demand for the company's products[70]. - The company is subject to risks from currency fluctuations, particularly between the U.S. dollar and major currencies like the Euro and British pound, affecting profitability[73]. Environmental, Social, and Governance (ESG) Considerations - The company is subject to increasing scrutiny regarding its Environmental, Social, and Governance (ESG) practices, which may impose additional costs and risks[106]. - The company has adopted certain sustainability practices as highlighted in its annual Sustainability Report, which is available on its corporate website[107]. - The company may face reputational challenges if its ESG procedures do not meet stakeholder expectations, potentially harming its financial performance[108]. Legal and Regulatory Risks - The company may experience adverse effects from legislative and regulatory changes, tariffs, and geopolitical tensions, particularly related to Russia and Belarus[44]. - Compliance with complex global regulations is essential, as failure could result in increased costs and operational restrictions[83]. - Ongoing legal proceedings, including environmental matters, could adversely impact liquidity and reputation in the market[82]. Shareholder Returns - The company declared cash dividends totaling $1.88 per share, amounting to $33.6 million for the year ended December 31, 2024, compared to $1.78 per share or $32.0 million for 2023[132]. - The company has authorized a new share repurchase program of up to $150 million, effective immediately with no expiration date[64].

Financial Performance - Q4 2024 net sales were $444.1 million, a decrease of 5% from $467.1 million in Q4 2023, driven by a 4% decline in selling price and product mix, a 2% unfavorable impact from foreign currency translation, and a 1% decline in organic sales volumes[4] - Q4 2024 net income was $14.2 million, or $0.81 per diluted share, compared to $20.2 million, or $1.12 per diluted share in Q4 2023; non-GAAP net income was $23.6 million, or $1.33 per diluted share, down from $31.9 million, or $1.78 per diluted share in the prior year[5] - Full year 2024 net sales totaled $1.84 billion, with net income of $116.6 million and earnings per diluted share of $6.51; non-GAAP net income was $133.5 million, or $7.44 per diluted share[6] - Adjusted EBITDA for Q4 2024 was $64.8 million, a decrease of approximately 16% from $77.0 million in Q4 2023; full year adjusted EBITDA was $310.9 million[5] - Non-GAAP operating income for Q4 2024 was $40,453,000, compared to $50,884,000 in Q4 2023, reflecting a decrease of 20.4%[21] - Adjusted EBITDA for the twelve months ended December 31, 2024, was $310,918,000, compared to $320,379,000 for the same period in 2023, a decrease of 2.1%[21] - Non-GAAP net income for the twelve months ended December 31, 2024, was $133,456,000, slightly down from $137,643,000 in 2023, a decrease of 3.2%[22] - Non-GAAP earnings per diluted share for Q4 2024 were $1.33, compared to $1.78 in Q4 2023, a decline of 25.3%[22] Segment Performance - The Americas segment reported Q4 2024 net sales of $208.6 million, down 8% year-over-year, while the EMEA segment saw a 7% decline to $125.9 million; the Asia/Pacific segment increased by 5% to $109.6 million[9] - Segment operating earnings in the Americas for Q4 2024 were $50,930,000, a decrease of 17.6% from $61,756,000 in Q4 2023[24] - The Americas segment reported net sales of $208,585,000 in Q4 2024, down 7.9% from $226,564,000 in Q4 2023[24] - EMEA segment net sales decreased to $125,877,000 in Q4 2024 from $135,745,000 in Q4 2023, a decline of 7.3%[24] Cash Flow and Debt - Operating cash flow for 2024 was $204.6 million, down from $279.0 million in 2023, primarily due to a higher inflow of working capital in the prior year[14] - As of December 31, 2024, total gross debt was $708.3 million, with cash and cash equivalents of $188.9 million, resulting in net debt of $519.4 million[15] - Interest expense, net for the twelve months ended December 31, 2024, was $41,002,000, down from $50,699,000 in 2023, a decrease of 19.3%[21] - Total liabilities decreased to $1.26 billion in 2024 from $1.33 billion in 2023, indicating a reduction of 5.5%[30] - Payments of long-term debt increased to $57,221 million in 2024 from $38,932 million in 2023, representing a rise of approximately 46.7%[33] Shareholder Returns - The Company returned approximately $82.4 million to shareholders through dividends and share repurchases in 2024, including repurchasing 312,997 shares for approximately $49.2 million[15] - Share repurchase program resulted in $49,247 million spent in 2024, with no prior expenditures in 2023[33] Strategic Initiatives - The Company completed two strategic acquisitions in 2024, contributing to sales growth despite challenging market conditions[6] - The Company anticipates cost savings of at least $20 million in 2025 through steps to reduce complexity and improve operational efficiency[7] Asset Management - Total assets as of December 31, 2024, were $2.61 billion, a decrease from $2.71 billion as of December 31, 2023[30] - Cash and cash equivalents were $188.9 million as of December 31, 2024, down from $194.5 million in 2023[30] - The company reported a significant increase in accounts receivable, which rose to $24,975 million in 2024 from $32,169 million in 2023, indicating a decrease of approximately 22.3%[33] Economic Outlook - The company expects to maintain sufficient liquidity and compliance with credit facility terms despite economic uncertainties[25] - The effect of foreign exchange rate changes on cash resulted in a loss of $11,141 million in 2024, contrasting with a gain of $771 million in 2023[33] - The company experienced a net decrease in cash and cash equivalents of $5,647 million in 2024, compared to an increase of $13,564 million in 2023[33]

Core Viewpoint - Quaker Chemical (KWR) is expected to report a decline in quarterly earnings and revenues, with analysts adjusting their estimates downward, indicating a reassessment of the company's performance [1][2]. Financial Projections - Quarterly earnings are predicted to be $1.62 per share, reflecting a 9% decline year-over-year [1]. - Revenues are forecasted at $441.71 million, representing a 5.4% decrease compared to the same period last year [1]. Earnings Estimate Revisions - Over the past 30 days, the consensus EPS estimate has been adjusted downward by 2.4%, indicating a collective reassessment by analysts [2]. - Revisions to earnings projections are critical for predicting investor behavior and are linked to short-term stock price performance [3]. Geographic Revenue Estimates - Analysts project 'Geographic Revenue- Asia/Pacific' to reach $106.70 million, a 1.8% increase from the prior-year quarter [5]. - 'Geographic Revenue- Americas' is expected to be $201.35 million, reflecting an 11.1% decrease year-over-year [5]. - 'Geographic Revenue- EMEA' is estimated at $130.05 million, indicating a 4.2% decline from the previous year [5]. Segment Operating Earnings - 'Segment operating earnings- Americas' are projected at $56.10 million, down from $61.76 million in the same quarter last year [6]. - 'Segment operating earnings- Asia Pacific' are expected to be $30.50 million, compared to $31.85 million reported in the same quarter last year [6]. - 'Segment operating earnings- EMEA' are estimated at $23.05 million, slightly down from $23.74 million in the previous year [7]. Market Performance - Quaker Chemical shares have increased by 2.6% over the past month, underperforming the S&P 500 composite, which rose by 4.7% [8]. - The company holds a Zacks Rank 5 (Strong Sell), suggesting it is expected to underperform the overall market in the near future [8].

Core Viewpoint - Quaker Houghton is set to release its fourth quarter and full year 2024 earnings on February 24, 2025, followed by an investor call on February 25, 2025 [1][2]. Company Information - Quaker Houghton is recognized as the global leader in industrial process fluids, operating in over 25 countries and serving thousands of advanced and specialized companies across various sectors including steel, aluminum, automotive, aerospace, and mining [3]. - The company employs approximately 4,400 individuals, including chemists, engineers, and industry experts, focusing on providing innovative and sustainable solutions backed by advanced technology and deep process knowledge [3]. - Quaker Houghton is headquartered in Conshohocken, Pennsylvania, near Philadelphia, and emphasizes partnerships with customers to enhance operational efficiency [3].

Core Viewpoint - Quaker Houghton has appointed Joseph Berquist as the new Chief Executive Officer and President, succeeding Andy Tometich, effective immediately [1][2]. Leadership Transition - The Board of Directors expressed gratitude to Andy Tometich for his three years of leadership, highlighting his valuable outside perspective [2]. - The Board aims to have a CEO with in-depth knowledge of the industry, which is expected to drive shareholder value through organic growth and acquisitions [2]. - Joseph Berquist has a long history with Quaker Houghton, having joined in 1997 and held various leadership roles, including Chief Strategy Officer and Executive Vice President, Chief Commercial Officer [2][3]. Company Background - Quaker Houghton is recognized as the global leader in industrial process fluids, operating in over 25 countries and serving advanced industries such as steel, aluminum, automotive, and aerospace [3]. - The company employs approximately 4,400 individuals, including chemists and engineers, to provide innovative and sustainable solutions to its customers [3].