Quaker(US:KWR)2020-11-05 21:37Financial 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]