PQ Group Holdings Inc. (NYSE: PQG) reported Q4 EPS of $0.13, $0.04 better than the analyst estimate of $0.09. Revenue for the quarter came in at $352.4 million versus the consensus estimate of $365.36 million.

• Sales of $352.4 million for the fourth quarter and $1,567.1 million for the year;
• Net income of $19.1 million with diluted EPS of $0.14 and Adjusted net income of $18.0 million with Adjusted diluted EPS of $0.13 for the quarter; Net income of $79.5 million with diluted EPS of $0.59 and Adjusted net income of $125.2 million with Adjusted diluted EPS of $0.92 for the year;
• Adjusted EBITDA of $103.1 million for the quarter and $474.3 million for the year; Adjusted EBITDA margin of 27.3% for the year expanded 100 basis points;
• Net cash provided by operating activities of $267.7 million and Adjusted free cash flow of $166.2 million for the year;
• Repaid debt of $215 million and reduced leverage ratio to 3.9x at year-end;
• Launched transformation of the Performance Chemicals business focusing on future efficiency and growth

“We had a better than expected finish to 2019 driven by the excellent performance of our Catalysts business in the fourth quarter,” commented Belgacem Chariag, PQ Chairman, President and Chief Executive Officer. “For the year, our Catalysts and Performance Materials business segments delivered outstanding results leading to a solid financial outcome. Strong commercial execution and improved capital efficiency coupled with asset monetizations drove a record $166 million of Adjusted free cash flow, ahead of our guidance. This enabled us to repay $215 million of debt and reduce our leverage ratio by more than one-half turn, in line with our commitment.”

GUIDANCE:

PQ Group Holdings Inc. sees FY2020 revenue of $1.595-1.625 billion, versus the consensus of $1.61 billion.

2020 Financial Outlook

The outlook for 2020 is impacted by the limited recovery in demand for Performance Chemicals products in the first part of the year. While three of our business units are set for healthy growth, the Catalysts business is projected to decline following an excellent year in 2019.

Commenting on the 2020 outlook, Chariag said, “During 2020, we will build on our 2019 performance and portfolio optimization actions by executing the transformation plan for Performance Chemicals. The combination of these efforts with our improving financial flexibility positions us to accelerate our future growth prospects.”

The Company provides 2020 guidance as below.

• Sales of $1,595 million to $1,625 million, reflecting lower sulfur prices and continued weak demand for Performance Chemicals through the first half of 2020
• Adjusted EBITDA of $470 million to $480 million range
• Adjusted diluted EPS of approximately $0.85 to $1.02
• Adjusted free cash flow in the range of $155 million to $175 million

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