Quaker Chemical (KWR) Tops Q1 EPS by 28c, Revenues Beat

May 11, 2020 4:35 PM EDT

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Quaker Chemical (NYSE: KWR) reported Q1 EPS of $1.38, $0.28 better than the analyst estimate of $1.10. Revenue for the quarter came in at $378.6 million versus the consensus estimate of $362.76 million.

Michael F. Barry, Chairman, Chief Executive Officer and President, commented, "Since our last communication in early March, the COVID-19 pandemic has intensified around the globe. For Quaker Houghton, our top priority is to protect the health and safety of our employees and our customers, while ensuring business continuity to meet our customers' needs. All of our 34 plants are operating and we have been able to meet our customers' needs. For the first quarter, our overall results were somewhat better than our expectations despite the impacts we anticipated due to COVID-19 and Boeing's decision to temporarily stop production of the 737 Max aircraft, which we estimate negatively impacted our sales by 4% and 1%, respectively. Our first quarter benefited from estimated share gains of 2%, the prior quarter Norman Hay acquisition, $10 million of integration synergies and the additional cost savings measures put in place due to COVID-19, which collectively drove a 10% increase in our pro forma adjusted EBITDA year-over-year despite the current market challenges."

Mr. Barry continued, "Looking forward, we expect the second quarter to be the most challenging quarter of the year, as many customers have shutdown or significantly reduced their production, especially in the first half of the quarter. We do expect to see a gradual sequential improvement as we progress through the second half of the year. However, providing any guidance is very difficult given the current economic uncertainty caused by the COVID-19 pandemic, so we are not providing specific guidance at this time. In order to give some sense of direction for the remainder of the year, we expect our second quarter adjusted EBITDA to be down by nearly half of the first quarter adjusted EBITDA and we expect our full year adjusted EBITDA to be more than $200 million. Further, we do not expect to have any liquidity or bank covenant issues. Overall, our higher expected integration synergies, additional cost savings actions, improvement in gross margins, and the expected release of cash via working capital are expected to continue to help us during this challenging time. As we look forward to 2021 and 2022, we expect to achieve significant increases in our adjusted EBITDA as we complete our integration cost synergies, continue to take share in the marketplace, and benefit from a projected gradual rebound in demand in our end markets over this period."

For earnings history and earnings-related data on Quaker Chemical (KWR) click here.

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