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Quaker(KWR) - 2024 Q1 - Quarterly Report

Financial Performance - Net sales for Q1 2024 were $469,759,000, a decrease of 6.1% from $500,148,000 in Q1 2023[10] - Gross profit increased to $181,563,000 in Q1 2024, up 4.4% from $173,450,000 in Q1 2023[10] - Operating income rose to $55,526,000, reflecting an increase of 11.7% compared to $49,929,000 in the same period last year[10] - Net income attributable to Quaker Chemical Corporation was $35,227,000, a 19.0% increase from $29,534,000 in Q1 2023[10] - Basic net income per share increased to $1.96, up from $1.64 in Q1 2023, representing a growth of 19.5%[10] - Comprehensive income attributable to Quaker Chemical Corporation was $12,655,000, down from $44,597,000 in Q1 2023[13] - The Company generated net income of $35.2 million, or $1.95 per diluted share, in Q1 2024, compared to $29.5 million, or $1.64 per diluted share, in Q1 2023, reflecting a year-over-year increase of 19% in net income[92] - Non-GAAP earnings per diluted share for Q1 2024 were $2.09, up from $1.89 in the prior year quarter, indicating a growth of approximately 10.6%[92] - Adjusted EBITDA for Q1 2024 was $83.3 million, compared to $78.8 million in Q1 2023, representing a year-over-year increase of 5.7%[92] Cash Flow and Investments - Cash and cash equivalents at the end of Q1 2024 were $195,750,000, slightly up from $194,527,000 at the end of Q4 2023[16] - The company reported a net cash provided by operating activities of $27,231,000, a decrease from $37,782,000 in Q1 2023[19] - Cash used in investing activities increased to $29.3 million in Q1 2024 from $6.2 million in Q1 2023, primarily due to payments related to the IKV acquisition[101] - Cash flows provided by financing activities were $6.6 million in Q1 2024, a significant improvement compared to cash used in financing activities of $24.9 million in Q1 2023[102] Debt and Financing - Total debt as of March 31, 2024, was $769.632 million, an increase from $755.612 million as of December 31, 2023[64] - The weighted average variable interest rate on outstanding borrowings under the Credit Facility was approximately 6.4% for the three months ended March 31, 2024[67] - Interest expense for the three months ended March 31, 2024, was $11.282 million, down from $13.876 million in the same period of 2023[73] - The Company entered into $300 million notional amounts of interest rate swaps to convert variable rate borrowings to a fixed rate of 3.64% plus an applicable margin[68] - Total net debt as of March 31, 2024, was approximately $573.8 million, calculated as total borrowings of $769.6 million less cash and cash equivalents[104] Segment Performance - Segment operating earnings for the Americas increased slightly to $66.8 million in Q1 2024 from $66.1 million in Q1 2023, while EMEA segment operating earnings rose to $29.6 million from $27.6 million[33] - The Americas segment accounted for approximately 49% of consolidated net sales in Q1 2024, with net sales of $229.8 million, a decrease of 9% year-over-year[142] - The EMEA segment represented approximately 29% of consolidated net sales in Q1 2024, with net sales of $138.4 million, also a decrease of 9% year-over-year[144] - The Asia/Pacific segment accounted for approximately 22% of consolidated net sales in Q1 2024, with net sales of $101.6 million, an increase of 6% year-over-year[145] Acquisitions and Restructuring - The Company acquired I.K.V. Tribologie IKVT for €32.2 million ($34.6 million), enhancing its position in high-performance lubricants and greases[27] - Restructuring costs incurred during Q1 2024 amounted to $1.9 million, with a total of approximately 120 positions expected to be reduced globally[44] Shareholder Returns - The company declared dividends of $0.455 per share, an increase from $0.435 per share in Q1 2023[10] - The Company initiated a new share repurchase program authorizing the repurchase of up to $150 million of its outstanding common stock[112] - No shares were acquired under the 2024 Share Repurchase Program during the quarter ended March 31, 2024[165] Tax and Regulatory - The effective tax rate for Q1 2024 was 27.3%, slightly down from 27.7% in Q1 2023[60] - The company anticipates continued volatility in effective tax rates due to factors such as tax audits, uncertain tax positions, and foreign tax credit valuation allowances[137] Other Financial Metrics - Total other income for Q1 2024 was $1.080 million, compared to a loss of $2.239 million in Q1 2023[58] - SG&A expenses increased by approximately $4.7 million, or 4%, to $124.2 million in Q1 2024, driven by higher labor-related costs[131] - The net periodic benefit cost for pension benefits in Q1 2024 was $588,000, down from $671,000 in Q1 2023[55] - The Company expects to make full year cash contributions of approximately $5.7 million to its pension plans in 2024[56]