CONSHOHOCKEN, Pa., April 29, 2013 /PRNewswire/ -- Quaker
Chemical Corporation (NYSE: KWR) today announced net sales and
earnings per diluted share of $176.2
million and $1.04 for the
first quarter of 2013, respectively, compared to first quarter of
2012 net sales and earnings per diluted share of $177.6 million and $0.95, respectively. Net income for the
first quarter of 2013 was $13.6
million compared to net income of $12.4 million for the first quarter of
2012. Non-GAAP earnings per diluted share were $0.96 for the first quarter of 2013 compared to
$0.91 for the first quarter of
2012. See Non-GAAP Measures section below.
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Michael F. Barry, Chairman, Chief
Executive Officer and President, commented, "We are pleased to
report solid results in the first quarter given the challenging
global economic environment. We generated good cash flow and our
gross margins are continuing to return to more acceptable
levels. Our market share gains and acquisitions have helped
us to have relatively stable volumes and revenues despite weak
conditions in numerous parts of the world, especially in
Europe.
Mr. Barry concluded, "Going forward, we believe we will continue
to face challenging market conditions around the world with
Europe continuing to be the most
pronounced. We do, however, remain optimistic about our
future and expect 2013 to be another good year for Quaker."
First Quarter of 2013 Summary
Net sales for the first quarter of 2013 were $176.2 million, a decrease of less than 1% from
$177.6 million in the first quarter
of 2012. Foreign exchange rate translation decreased revenues
by approximately $2.2 million, or 1%,
which was partially offset by a slight increase due to selling and
price mix of less than 1%. Product volumes, including
acquisitions, were consistent in the first quarter of 2013 compared
to the first quarter of 2012.
Gross profit increased approximately $2.8
million, or approximately 5%, from the first quarter of
2012. The increase in gross profit on consistent sales was
due to an improvement in gross margin to 35.5% compared to 33.7%
for the first quarter of 2012 and 34.2% for the fourth quarter of
2012. The increase in gross margin is reflective of the
Company's continuing initiative to restore its margins to more
acceptable levels.
Selling, general and administrative expenses ("SG&A")
increased approximately $2.1 million
compared to the first quarter of 2012, primarily related to
increases due to acquisitions, higher incentive compensation and
higher selling, inflationary and other labor related costs which
were partially offset by a decrease in foreign exchange rate
translation.
The decrease in interest expense was due to lower average
borrowings and lower interest rates experienced in the first
quarter of 2013 as compared to the first quarter of 2012.
The Company's effective tax rates for the first quarters of 2013
and 2012 of 24.1% and 21.5%, respectively, reflect decreases in
reserves for uncertain tax positions due to the expiration of
applicable statutes of limitations for certain tax years of
approximately $0.10 and $0.12 per diluted share, respectively. Also,
contributing to the difference in the effective tax rate is that
the tax rate in China was 15% in
2012 compared to 25% in the first quarter of 2013. While
the Company's re-certification of its Chinese subsidiary as a
high tech enterprise is pending, the Company will record tax
expense at the statutory rate of 25%. The Company has
experienced and expects to further experience volatility in its
effective tax rates due to the varying timing of tax audits and the
expiration of applicable statutes of limitations as they relate to
uncertain tax positions, among other factors. The Company
estimates that its full year 2013 effective tax rate will be in the
high twenty percent range, as compared to the lower rate
experienced in the first quarter of 2013.
The increase in equity in net income of associated companies was
primarily due to higher earnings related to the Company's equity
interest in a captive insurance company in the first quarter of
2013 compared to the first quarter of 2012 of $0.11 and $0.04 per
diluted share, respectively. The Company's first quarter of
2013 equity in net income of associated companies includes a
non-cash out of period adjustment of approximately $1.0 million, which primarily related to a
reinsurance contract held by the Company's captive insurance equity
affiliate. This increase was partially offset by a charge of
approximately $0.03 per diluted share
related to the devaluation of the Venezuelan Bolivar Fuerte during
the first quarter of 2013.
Changes in foreign exchange rates negatively impacted the first
quarter of 2013 net income by approximately $0.1 million or $0.01 per diluted share.
Balance Sheet and Cash Flow Items
Net operating cash flow increased to $11.3 million for the first quarter of 2013
compared to $6.7 million in the first
quarter of 2012, which was primarily driven by improved working
capital management and the Company's first dividend distribution
from its captive insurance equity affiliate of $2.0 million. The Company's liquidity continues
to be strong, as its cash position exceeded its debt as of
March 31, 2013 and its consolidated
leverage ratio was less than one times EBITDA.
Non-GAAP Measures
Included in this public release is a non-GAAP financial measure
of non-GAAP earnings per diluted share. The Company believes
this non-GAAP financial measure provides meaningful supplemental
information as it enhances a reader's understanding of the
financial performance of the Company, is more indicative of future
operating performance of the Company, and facilitates a better
comparison among fiscal periods, as the non-GAAP measure excludes
items that are not considered core to the Company's
operations. Non-GAAP results are presented for supplemental
informational purposes only and should not be considered a
substitute for the financial information presented in accordance
with GAAP.
The following is a reconciliation between the non-GAAP
(unaudited) financial measure of non-GAAP earnings per diluted
share to its most directly comparable GAAP (unaudited) measure:
|
|
Three
Months Ended
March
31,
|
|
|
2013
|
|
2012
|
GAAP
earnings per diluted share attributable to Quaker Chemical
Corporation Common Shareholders
|
|
$
1.04
|
|
$
0.95
|
|
|
|
|
|
Devaluation of the Venezuelan Bolivar per diluted
share
|
|
0.03
|
|
--
|
|
|
|
|
|
Equity
income in a captive insurance company per diluted share
|
|
(0.11)
|
|
(0.04)
|
|
|
|
|
|
Non-GAAP
earnings per diluted share attributable to Quaker Chemical
Corporation Common Shareholders
|
|
$
0.96
|
|
$
0.91
|
Forward-Looking Statements
This release contains forward-looking statements that are
subject to certain risks and uncertainties that could cause actual
results to differ materially from those projected in such
statements. A major risk is that the Company's demand is
largely derived from the demand for its customers' products, which
subjects the Company to downturns in a customer's business and
unanticipated customer production shutdowns. Other major
risks and uncertainties include, but are not limited to,
significant increases in raw material costs, customer financial
stability, worldwide economic and political conditions, foreign
currency fluctuations, future terrorist attacks and other acts of
violence. Other factors could also adversely affect us.
Therefore, we caution you not to place undue reliance on our
forward-looking statements. This discussion is provided as
permitted by the Private Securities Litigation Reform Act of
1995.
Conference Call
As previously announced, Quaker Chemical's investor conference
call to discuss the first quarter of 2013 results is scheduled for
April 30, 2013 at 8:30 a.m. (ET). A live webcast of the
conference call, together with supplemental information, can be
accessed through the Company's Investor Relations website at
http://www.quakerchem.com. You can also access the conference
call by dialing 877-269-7756.
About Quaker
Quaker Chemical is a leading global provider of
process fluids, chemical specialties, and technical expertise
to a wide range of industries, including steel, aluminum,
automotive, mining, aerospace, tube and pipe, cans, and
others. For nearly 100 years, Quaker has helped customers
around the world achieve production efficiency, improve product
quality, and lower costs through a combination of innovative
technology, process knowledge, and customized services.
Headquartered in Conshohocken,
Pennsylvania USA, Quaker serves businesses worldwide with
a network of dedicated and experienced professionals
whose mission is to make a difference.
Quaker
Chemical Corporation
|
Condensed Consolidated Statement of
Income
|
(Dollars in thousands, except per share data and
share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
Three
Months Ended March 31,
|
|
|
2013
|
|
2012
|
|
|
|
|
|
Net
sales
|
|
$
176,193
|
|
$
177,638
|
|
|
|
|
|
Cost of
goods sold
|
|
113,585
|
|
117,843
|
|
|
|
|
|
Gross
profit
|
|
62,608
|
|
59,795
|
%
|
|
35.5%
|
|
33.7%
|
|
|
|
|
|
Selling,
general and administrative expenses
|
|
45,197
|
|
43,093
|
|
|
|
|
|
Operating
income
|
|
17,411
|
|
16,702
|
%
|
|
9.9%
|
|
9.4%
|
|
|
|
|
|
Other
income, net
|
|
346
|
|
341
|
Interest
expense
|
|
(744)
|
|
(1,174)
|
Interest
income
|
|
169
|
|
123
|
Income
before taxes and equity in net income of associated
companies
|
|
17,182
|
|
15,992
|
|
|
|
|
|
Taxes on
income before equity in net income of associated
companies
|
|
4,133
|
|
3,445
|
Income
before equity in net income of associated companies
|
|
13,049
|
|
12,547
|
|
|
|
|
|
Equity in
net income of associated companies
|
|
1,142
|
|
565
|
|
|
|
|
|
Net
income
|
|
14,191
|
|
13,112
|
|
|
|
|
|
Less: Net
income attributable to noncontrolling interest
|
|
572
|
|
747
|
|
|
|
|
|
Net income
attributable to Quaker Chemical Corporation
|
|
$
13,619
|
|
$
12,365
|
%
|
|
7.7%
|
|
7.0%
|
|
|
|
|
|
Per
share data:
|
|
|
|
|
Net income
attributable to Quaker Chemical Corporation Common Shareholders
-
basic
|
|
$
1.04
|
|
$
0.96
|
Net income
attributable to Quaker Chemical Corporation Common Shareholders
-
diluted
|
|
$
1.04
|
|
$
0.95
|
|
|
|
|
|
Quaker
Chemical Corporation
|
Condensed Consolidated Balance
Sheet
|
(Dollars in thousands, except par value and share
amounts)
|
|
|
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
March
31,
|
|
December 31,
|
|
|
2013
|
|
2012
|
ASSETS
|
|
|
|
|
|
|
|
|
|
Current
assets
|
|
|
|
|
Cash and
cash equivalents
|
|
$
35,256
|
|
$
32,547
|
Accounts
receivable, net
|
|
157,163
|
|
154,197
|
Inventories
|
|
73,965
|
|
72,471
|
Prepaid
expenses and other current assets
|
|
17,763
|
|
18,595
|
Total
current assets
|
|
284,147
|
|
277,810
|
|
|
|
|
|
Property,
plant and equipment, net
|
|
84,928
|
|
85,112
|
Goodwill
|
|
59,248
|
|
59,169
|
Other
intangible assets, net
|
|
32,972
|
|
32,809
|
Investments in associated companies
|
|
15,605
|
|
16,603
|
Deferred
income taxes
|
|
28,935
|
|
30,673
|
Other
assets
|
|
34,752
|
|
34,458
|
Total
assets
|
|
$
540,587
|
|
$
536,634
|
|
|
|
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
Short-term
borrowings and current portion of long-term debt
|
|
$
1,905
|
|
$
1,468
|
Accounts
and other payables
|
|
74,807
|
|
70,794
|
Accrued
compensation
|
|
11,016
|
|
16,842
|
Other
current liabilities
|
|
25,280
|
|
18,688
|
Total
current liabilities
|
|
113,008
|
|
107,792
|
Long-term
debt
|
|
27,675
|
|
30,000
|
Deferred
income taxes
|
|
6,256
|
|
6,383
|
Other
non-current liabilities
|
|
91,675
|
|
102,783
|
Total
liabilities
|
|
238,614
|
|
246,958
|
|
|
|
|
|
Equity
|
|
|
|
|
Common
stock, $1 par value; authorized 30,000,000 shares; issued
13,139,691
|
|
13,140
|
|
13,095
|
Capital in
excess of par value
|
|
95,775
|
|
94,470
|
Retained
earnings
|
|
225,790
|
|
215,390
|
Accumulated other comprehensive loss
|
|
(41,747)
|
|
(41,855)
|
Total
Quaker shareholders' equity
|
|
292,958
|
|
281,100
|
Noncontrolling interest
|
|
9,015
|
|
8,576
|
Total
equity
|
|
301,973
|
|
289,676
|
Total
liabilities and equity
|
|
$
540,587
|
|
$
536,634
|
|
|
|
|
|
Quaker
Chemical Corporation
|
Condensed Consolidated Statement of Cash
Flows
|
For the
three months ended March 31,
|
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited)
|
|
|
2013
|
|
2012
|
Cash flows
from operating activities
|
|
|
|
|
Net
income
|
|
$
14,191
|
|
$
13,112
|
Adjustments to reconcile net income to net cash
provided by operating activities:
|
|
|
|
|
Depreciation
|
|
3,056
|
|
3,057
|
Amortization
|
|
879
|
|
746
|
Equity in
undistributed earnings of associated companies, net of
dividends
|
|
921
|
|
(381)
|
Deferred
compensation and other, net
|
|
(861)
|
|
(103)
|
Stock-based compensation
|
|
1,040
|
|
1,186
|
Gain on
disposal of property, plant and equipment
|
|
(2)
|
|
(14)
|
Insurance
settlement realized
|
|
-
|
|
(483)
|
Pension
and other postretirement benefits
|
|
(2,521)
|
|
(2,357)
|
(Decrease)
increase in cash from changes in current assets and current
liabilities, net of
acquisitions:
|
|
|
|
|
Accounts
receivable
|
|
(3,977)
|
|
(9,764)
|
Inventories
|
|
(1,837)
|
|
352
|
Prepaid
expenses and other current assets
|
|
(457)
|
|
(557)
|
Accounts
payable and accrued liabilities
|
|
874
|
|
1,938
|
Net cash
provided by operating activities
|
|
11,306
|
|
6,732
|
|
|
|
|
|
Cash flows
from investing activities
|
|
|
|
|
Investments in property, plant and
equipment
|
|
(2,723)
|
|
(3,178)
|
Payments
related to acquisitions, net of cash acquired
|
|
(647)
|
|
-
|
Proceeds
from disposition of assets
|
|
13
|
|
64
|
Insurance
settlement received and interest earned
|
|
14
|
|
18
|
Change in
restricted cash, net
|
|
(14)
|
|
465
|
Net cash
used in investing activities
|
|
(3,357)
|
|
(2,631)
|
|
|
|
|
|
Cash flows
from financing activities
|
|
|
|
|
Net
increase in short-term borrowings
|
|
594
|
|
-
|
Proceeds
from long-term debt
|
|
-
|
|
1,350
|
Repayment
of long-term debt
|
|
(2,438)
|
|
(189)
|
Dividends
paid
|
|
(3,208)
|
|
(3,105)
|
Stock
options exercised, other
|
|
(59)
|
|
(1,288)
|
Excess tax
benefit related to stock option exercises
|
|
369
|
|
546
|
Net cash
used in financing activities
|
|
(4,742)
|
|
(2,686)
|
|
|
|
|
|
Effect of
exchange rate changes on cash
|
|
(498)
|
|
640
|
Net
increase in cash and cash equivalents
|
|
2,709
|
|
2,055
|
Cash and
cash equivalents at the beginning of the period
|
|
32,547
|
|
16,909
|
Cash and
cash equivalents at the end of the period
|
|
$
35,256
|
|
$
18,964
|
|
|
|
|
|
SOURCE Quaker Chemical Corporation