Quaker(US:KWR)2021-11-04 20:53Financial Performance - Net sales for the three months ended September 30, 2021, were $449,072 thousand, a 22.3% increase from $367,224 thousand in the same period of 2020[11] - Gross profit for the nine months ended September 30, 2021, was $455,776 thousand, compared to $371,429 thousand for the same period in 2020, reflecting a 22.7% increase[11] - Operating income for the three months ended September 30, 2021, was $36,010 thousand, up from $34,859 thousand in the prior year, representing a 3.3% increase[11] - Net income attributable to Quaker Chemical Corporation for the nine months ended September 30, 2021, was $103,243 thousand, compared to a net loss of $8,812 thousand in the same period of 2020[11] - Total net sales for the three months ended September 30, 2021, were $449.1 million, a 22.3% increase from $367.2 million in the same period of 2020[50] - For the nine months ended September 30, 2021, total net sales reached $1.31 billion, up 27.4% from $1.03 billion in the same period of 2020[50] - The company reported a net income of $31.1 million, or $1.73 per diluted share, for Q3 2021, up from $27.3 million, or $1.53 per diluted share, in Q3 2020, reflecting a year-over-year increase of 14% in net income[143] - Non-GAAP earnings per diluted share for Q3 2021 were $1.63, compared to $1.56 in Q3 2020, indicating a 4.5% increase[143] - Adjusted EBITDA for Q3 2021 was $66.2 million, a 3% increase from $63.9 million in Q3 2020, driven by higher net sales and realized cost synergies of approximately $19 million[143] - Adjusted EBITDA for the nine months ended September 30, 2021, was $213.374 million, up from $156.483 million in the same period of 2020, reflecting a growth of 36.3%[178] Cash Flow and Liquidity - Cash flows from operating activities for the nine months ended September 30, 2021, were $2,509 thousand, a significant decrease from $112,048 thousand in the same period of 2020[19] - The company’s cash and cash equivalents decreased to $141,393 thousand as of September 30, 2021, from $181,895 thousand at the beginning of the period[19] - As of September 30, 2021, the Company had cash, cash equivalents, and restricted cash of $141.4 million, down from $181.9 million at the end of 2020[153] - The Company experienced a net operating cash flow of $2.5 million in the first nine months of 2021, a significant decrease from $112.0 million in the same period of 2020, primarily due to changes in working capital[146] Assets and Liabilities - Total assets as of September 30, 2021, were $2,941,827 thousand, an increase from $2,891,834 thousand as of December 31, 2020[16] - Total liabilities decreased to $1,558,131 thousand as of September 30, 2021, from $1,570,920 thousand as of December 31, 2020[16] - The total debt as of September 30, 2021, was $900.662 million, slightly up from $899.134 million as of December 31, 2020[108] - The total long-term debt as of September 30, 2021, was $839.275 million, a decrease from $849.068 million as of December 31, 2020[108] - The Company had approximately $4.4 million of deferred revenue as of September 30, 2021, compared to $4.0 million as of December 31, 2020[58] Acquisitions and Investments - The Company acquired Grindaix-GmbH for approximately $2.9 million in September 2021, enhancing its Global Specialty Businesses segment[30] - In February 2021, the Company acquired a tin-plating solutions business for approximately $25 million, with $19.6 million allocated to intangible assets[32] - The Company completed the acquisition of Coral Chemical Company for approximately $54.1 million in December 2020, providing expertise in metal finishing fluid solutions[36] - The total initial purchase price for two acquisitions closed in November 2021 was approximately $10 million, with potential earn-out provisions totaling approximately $4 million[34] Tax and Regulatory Matters - The effective tax rate for the three months ended September 30, 2021, was 2.6%, a decrease from 8.1% in the same period of 2020[88] - The cumulative liability for gross unrecognized tax benefits as of September 30, 2021, was $24 million, an increase of $1.9 million from December 31, 2020[89] - The company has a $6 million reserve for uncertain tax positions related to a corporate income tax audit with the Italian tax authorities covering tax years 2014 through 2018[95] - Houghton Deutschland GmbH is under audit by the German tax authorities for tax years 2015 through 2017, with reserves recorded for $0.9 million as of September 30, 2021[96] Operational Efficiency and Cost Management - The Company expects to reduce total headcount by approximately 400 people globally as part of its restructuring plan, with anticipated cost synergies approximating one-times the restructuring costs incurred[69] - Total share-based compensation expense for the nine months ended September 30, 2021, was $8.441 million, a decrease from $17.820 million in the same period of 2020[72] - The Company realized cost synergies of approximately $19 million in Q3 2021, compared to $17 million in Q3 2020, reflecting ongoing integration efforts[143] - The Company expects to incur additional costs related to the integration of Quaker and Houghton, with cash payments expected to be approximately 1.3 times the anticipated cost synergies of $80 million in 2022[163] Market Conditions and Sales Performance - The company experienced continued market share gains and improved end market conditions compared to the previous year[142] - Sales volume increased by approximately 10%, with an additional 4% contribution from acquisitions and a 10% increase from selling price and product mix[142] - The EMEA segment reported net sales of $122.2 million for Q3 2021, a 30% increase from $94.0 million in Q3 2020[50] - Asia/Pacific segment net sales rose to $98.7 million in Q3 2021, compared to $84.9 million in Q3 2020, marking a 16.2% increase[50] - The Global Specialty Businesses segment achieved net sales of $77.4 million in Q3 2021, up from $68.8 million in Q3 2020, reflecting a 12.5% growth[50] Miscellaneous - The Company matched 50% of the first 6% of compensation contributed to its 401(k) plan, with total contributions for the nine months ended September 30, 2021 amounting to $1.5 million[81] - The Company recorded a non-cash pension settlement charge of approximately $22.7 million during the termination of the Legacy Quaker U.S. Pension Plan[83] - The Company recognized non-income tax credits of approximately $13.3 million due to a favorable ruling by the Brazilian Supreme Court regarding indirect taxes[132] - The company recorded a $5.4 million gain on the sale of certain real property assets during the nine months ended September 30, 2021[182]