Financial Data and Key Metrics Changes - First quarter net sales were $443 million, a decline of 6% year-over-year or 3% on a constant currency basis [8][24] - Volumes declined approximately 1.5%, with new business wins and acquisitions contributing approximately 1% [25] - Gross margins improved 120 basis points to 36.4% compared to the lows in the fourth quarter of 2024, but declined year-over-year due to higher raw material costs [10][26] - Adjusted EBITDA for the first quarter was $69 million, reflecting a sequential increase of $4 million, with adjusted EBITDA margins at 15.6% [11][26] Business Line Data and Key Metrics Changes - Asia Pacific segment net sales declined 2% year-over-year, but organic volumes increased approximately 1% [27] - EMEA segment net sales were down 7% year-over-year, with total sales volumes declining 3% [29] - The Americas segment net sales declined 7% year-over-year, with volumes down 3% due to soft industrial activity [30] Market Data and Key Metrics Changes - Overall market demand was softer than anticipated, with aggregate market declines estimated at a low to mid single-digit percentage [6][21] - The company outperformed the aggregate of the end markets, particularly in the Asia Pacific segment, which showed growth despite challenging conditions [9][10] Company Strategy and Development Direction - The company is focused on returning to growth, reducing complexity, and effectively deploying capital [11][12] - Strategic investments include acquiring three companies to enhance the portfolio and expand the addressable market [7][19] - The company is advancing a $20 million cost program expected to deliver approximately $15 million in benefits primarily in SG&A [14][26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in mitigating tariff impacts through a local for local strategy and maintaining strong customer relationships [8][22] - The outlook for 2025 anticipates a low single-digit percentage decline in underlying market growth rates, with expectations for revenue and earnings to align with 2024 levels [21][22] - Management noted a strong pipeline of trials and business development opportunities, aiming for above-market growth in 2025 [20][21] Other Important Information - The company is investing in a new facility in China to enhance local supply capabilities [15][34] - Capital expenditures for 2025 are expected to remain at 2.5% to 3.5% of sales [34] Q&A Session Summary Question: Impact of tariffs on input costs and overall demand - Management indicated that while there are some raw material purchase impacts, the main concern is the uncertainty affecting overall demand [41][46] Question: Details on strategic initiatives to simplify operations - Management discussed efforts to reduce complexity, improve brand awareness, and enhance customer experience through technology and inside sales channels [47][52] Question: Expectations for second quarter EBITDA growth - Management expects modest sequential improvement in EBITDA for Q2, driven by seasonal demand and contributions from recent acquisitions [55][56] Question: Volatility in order patterns and customer feedback - Management noted increased order volatility, particularly in Europe and The Americas, with customers managing inventories prudently [59][60] Question: Contribution from acquisitions and outlook - Dipsol is expected to contribute approximately $80 million in sales for 2025, with strategic fit and synergy potential highlighted [67][68] Question: Capital allocation strategy - Management emphasized a balanced approach to capital allocation, focusing on growth investments, debt reduction, and shareholder returns [75][76]

Quaker Chemical (KWR) Q1 2025 Earnings Call May 02, 2025 08:30 AM ET Speaker0 As a reminder, this conference is being recorded. I would now like to turn the call over to Jeffrey Snell, Vice President, Investor Relations. Mr. Snell, you may begin. Speaker1 Thank you. Good morning, and welcome to our first quarter twenty twenty five earnings conference call. On the call today are Joe Burkwist, our President and Chief Executive Officer Tom Kohler, our Executive Vice President and Chief Financial Officer and Ro ...