x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Pennsylvania | 23-0993790 | ||||
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
901 E. Hector Street, Conshohocken, Pennsylvania | 19428 – 2380 | ||||
(Address of principal executive offices) | (Zip Code) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
Common Stock, $1 par value | KWR | New York Stock Exchange |
Large accelerated filer | x | Accelerated filer | o | |||||||||||||||||
Non-accelerated filer | o | Smaller reporting company | o | |||||||||||||||||
Emerging growth company | o |
Number of Shares of Common Stock Outstanding on April 30, 2023 | 17,980,840 |
Page | ||||||||
Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2023 and March 31, 2022 | ||||||||
Condensed Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2023 and March 31, 2022 | ||||||||
Condensed Consolidated Balance Sheets as of March 31, 2023 and December 31, 2022 | ||||||||
Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2023 and March 31, 2022 | ||||||||
Condensed Consolidated Statements of Changes in Equity for the Three Months Ended March 31, 2023 and | ||||||||
Three Months Ended March 31, | |||||||||||||||||||||||
2023 | 2022 | ||||||||||||||||||||||
Net sales | $ | 500,148 | $ | 474,171 | |||||||||||||||||||
Cost of goods sold (excluding amortization expense - See Note 13) | 326,698 | 328,100 | |||||||||||||||||||||
Gross profit | 173,450 | 146,071 | |||||||||||||||||||||
Selling, general and administrative expenses | 119,549 | 111,795 | |||||||||||||||||||||
Restructuring and related charges, net | 3,972 | 820 | |||||||||||||||||||||
Combination, integration and other acquisition-related expenses | — | 4,053 | |||||||||||||||||||||
Operating income | 49,929 | 29,403 | |||||||||||||||||||||
Other expense, net | (2,239) | (2,206) | |||||||||||||||||||||
Interest expense, net | (13,242) | (5,345) | |||||||||||||||||||||
Income before taxes and equity in net income of associated companies | 34,448 | 21,852 | |||||||||||||||||||||
Taxes on income before equity in net income of associated Companies | 9,533 | 2,866 | |||||||||||||||||||||
Income before equity in net income of associated Companies | 24,915 | 18,986 | |||||||||||||||||||||
Equity in net income of associated companies | 4,626 | 835 | |||||||||||||||||||||
Net income | 29,541 | 19,821 | |||||||||||||||||||||
Less: Net income attributable to noncontrolling interest | 7 | 5 | |||||||||||||||||||||
Net income attributable to Quaker Chemical Corporation | $ | 29,534 | $ | 19,816 | |||||||||||||||||||
Per share data: | |||||||||||||||||||||||
Net income attributable to Quaker Chemical Corporation common shareholders – basic | $ | 1.64 | $ | 1.11 | |||||||||||||||||||
Net income attributable to Quaker Chemical Corporation common shareholders – diluted | $ | 1.64 | $ | 1.11 | |||||||||||||||||||
Dividends declared | $ | 0.435 | $ | 0.415 |
Three Months Ended March 31, | |||||||||||||||||||||||
2023 | 2022 | ||||||||||||||||||||||
Net income | $ | 29,541 | $ | 19,821 | |||||||||||||||||||
Other comprehensive income (loss), net of tax | |||||||||||||||||||||||
Currency translation adjustments | 14,468 | (6,866) | |||||||||||||||||||||
Defined benefit retirement plans | (126) | 496 | |||||||||||||||||||||
Current period change in fair value of derivatives | 390 | 1,100 | |||||||||||||||||||||
Unrealized gain (loss) on available-for-sale securities | 334 | (1,000) | |||||||||||||||||||||
Other comprehensive income (loss) | 15,066 | (6,270) | |||||||||||||||||||||
Comprehensive income | 44,607 | 13,551 | |||||||||||||||||||||
Less: Comprehensive income attributable to noncontrolling interest | (10) | (6) | |||||||||||||||||||||
Comprehensive income attributable to Quaker Chemical Corporation | $ | 44,597 | $ | 13,545 |
March 31, 2023 | December 31, 2022 | ||||||||||
ASSETS | |||||||||||
Current assets | |||||||||||
Cash and cash equivalents | $ | 189,872 | $ | 180,963 | |||||||
Accounts receivable, net | 482,746 | 472,888 | |||||||||
Inventories | |||||||||||
Raw materials and supplies | 148,119 | 151,105 | |||||||||
Work-in-process and finished goods | 145,375 | 133,743 | |||||||||
Prepaid expenses and other current assets | 63,189 | 55,438 | |||||||||
Total current assets | 1,029,301 | 994,137 | |||||||||
Property, plant and equipment, at cost | 439,367 | 428,190 | |||||||||
Less: Accumulated depreciation | (236,279) | (229,595) | |||||||||
Property, plant and equipment, net | 203,088 | 198,595 | |||||||||
Right of use lease assets | 43,344 | 43,766 | |||||||||
Goodwill | 517,206 | 515,008 | |||||||||
Other intangible assets, net | 936,345 | 942,925 | |||||||||
Investments in associated companies | 90,841 | 88,234 | |||||||||
Deferred tax assets | 10,422 | 11,218 | |||||||||
Other non-current assets | 27,916 | 27,739 | |||||||||
Total assets | $ | 2,858,463 | $ | 2,821,622 | |||||||
LIABILITIES AND EQUITY | |||||||||||
Current liabilities | |||||||||||
Short-term borrowings and current portion of long-term debt | $ | 19,350 | $ | 19,245 | |||||||
Accounts payable | 216,633 | 193,983 | |||||||||
Dividends payable | 7,822 | 7,808 | |||||||||
Accrued compensation | 26,713 | 39,834 | |||||||||
Accrued restructuring | 6,809 | 5,483 | |||||||||
Accrued pension and postretirement benefits | 1,572 | 1,560 | |||||||||
Other accrued liabilities | 90,513 | 86,873 | |||||||||
Total current liabilities | 369,412 | 354,786 | |||||||||
Long-term debt | 921,555 | 933,561 | |||||||||
Long-term lease liabilities | 26,086 | 26,967 | |||||||||
Deferred tax liabilities | 157,935 | 160,294 | |||||||||
Non-current accrued pension and postretirement benefits | 28,985 | 28,765 | |||||||||
Other non-current liabilities | 37,702 | 38,664 | |||||||||
Total liabilities | 1,541,675 | 1,543,037 | |||||||||
Commitments and contingencies (Note 18) | |||||||||||
Equity | |||||||||||
Common stock $1 par value; authorized 30,000,000 shares; issued and outstanding March 31, 2023 – 17,981,822 shares; December 31, 2022 – 17,950,264 shares | 17,982 | 17,950 | |||||||||
Capital in excess of par value | 929,674 | 928,288 | |||||||||
Retained earnings | 491,632 | 469,920 | |||||||||
Accumulated other comprehensive loss | (123,177) | (138,240) | |||||||||
Total Quaker shareholders’ equity | 1,316,111 | 1,277,918 | |||||||||
Noncontrolling interest | 677 | 667 | |||||||||
Total equity | 1,316,788 | 1,278,585 | |||||||||
Total liabilities and equity | $ | 2,858,463 | $ | 2,821,622 |
Three Months Ended March 31, | |||||||||||
2023 | 2022 | ||||||||||
Cash flows from operating activities | |||||||||||
Net income | $ | 29,541 | $ | 19,821 | |||||||
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | |||||||||||
Amortization of debt issuance costs | 353 | 1,187 | |||||||||
Depreciation and amortization | 20,246 | 20,447 | |||||||||
Equity in undistributed earnings of associated companies, net of dividends | (4,401) | 2,135 | |||||||||
Deferred compensation, deferred taxes and other, net | (2,231) | (3,801) | |||||||||
Share-based compensation | 3,527 | 2,462 | |||||||||
Combination and other acquisition-related expenses, net of payments | — | (4,246) | |||||||||
Restructuring and related charges | 3,972 | 820 | |||||||||
Pension and other postretirement benefits | (415) | (1,316) | |||||||||
(Decrease) increase in cash from changes in current assets and current liabilities, net of acquisitions: | |||||||||||
Accounts receivable | (3,974) | (26,270) | |||||||||
Inventories | (5,792) | (33,873) | |||||||||
Prepaid expenses and other current assets | (6,765) | (6,506) | |||||||||
Change in restructuring liabilities | (2,747) | (408) | |||||||||
Accounts payable and accrued liabilities | 6,468 | 23,249 | |||||||||
Net cash provided by (used in) operating activities | 37,782 | (6,299) | |||||||||
Cash flows from investing activities | |||||||||||
Investments in property, plant and equipment | (6,161) | (8,847) | |||||||||
Payments related to acquisitions, net of cash acquired | — | (9,383) | |||||||||
Net cash used in investing activities | (6,161) | (18,230) | |||||||||
Cash flows from financing activities | |||||||||||
Payments of long-term debt | (4,703) | (14,112) | |||||||||
(Payments) borrowings on revolving credit facilities, net | (9,776) | 43,000 | |||||||||
Payments on other debt, net | (469) | (102) | |||||||||
Dividends paid | (7,809) | (7,428) | |||||||||
Other stock related activity | (2,109) | (801) | |||||||||
Net cash (used in) provided by financing activities | (24,866) | 20,557 | |||||||||
Effect of foreign exchange rate changes on cash | 2,154 | 348 | |||||||||
Net decrease in cash and cash equivalents | 8,909 | (3,624) | |||||||||
Cash and cash equivalents at the beginning of the period | 180,963 | 165,176 | |||||||||
Cash and cash equivalents at the end of the period | $ | 189,872 | $ | 161,552 |
Common Stock | Capital in Excess of Par Value | Retained Earnings | Accumulated Other Comprehensive Loss | Noncontrolling Interest | Total | ||||||||||||||||||||||||||||||
Balance as of December 31, 2021 | $ | 17,897 | $ | 917,053 | $ | 516,334 | $ | (63,990) | $ | 628 | $ | 1,387,922 | |||||||||||||||||||||||
Net income | — | — | 19,816 | — | 5 | 19,821 | |||||||||||||||||||||||||||||
Amounts reported in other comprehensive (loss) income | — | — | — | (6,271) | 1 | (6,270) | |||||||||||||||||||||||||||||
Dividends ($0.415 per share) | — | — | (7,434) | — | — | (7,434) | |||||||||||||||||||||||||||||
Share issuance and equity-based compensation plans | 15 | 1,646 | — | — | — | 1,661 | |||||||||||||||||||||||||||||
Balance as of March 31, 2022 | $ | 17,912 | $ | 918,699 | $ | 528,716 | $ | (70,261) | $ | 634 | $ | 1,395,700 | |||||||||||||||||||||||
Balance as of December 31, 2022 | $ | 17,950 | $ | 928,288 | $ | 469,920 | $ | (138,240) | $ | 667 | $ | 1,278,585 | |||||||||||||||||||||||
Net income | — | — | 29,534 | — | 7 | 29,541 | |||||||||||||||||||||||||||||
Amounts reported in other comprehensive income | — | — | — | 15,063 | 3 | 15,066 | |||||||||||||||||||||||||||||
Dividends ($0.435 per share) | — | — | (7,822) | — | — | (7,822) | |||||||||||||||||||||||||||||
Share issuance and equity-based compensation plans | 32 | 1,386 | — | — | — | 1,418 | |||||||||||||||||||||||||||||
Balance as of March 31, 2023 | $ | 17,982 | $ | 929,674 | $ | 491,632 | $ | (123,177) | $ | 677 | $ | 1,316,788 | |||||||||||||||||||||||
Three Months Ended March 31, | |||||||||||||||||||||||
2023 | 2022 | ||||||||||||||||||||||
Net sales | |||||||||||||||||||||||
Americas | $ | 251,413 | $ | 212,091 | |||||||||||||||||||
EMEA | 152,449 | 146,819 | |||||||||||||||||||||
Asia/Pacific | 96,286 | 115,261 | |||||||||||||||||||||
Total net sales | $ | 500,148 | $ | 474,171 | |||||||||||||||||||
Segment operating earnings | |||||||||||||||||||||||
Americas | $ | 66,125 | $ | 45,022 | |||||||||||||||||||
EMEA | 27,571 | 23,247 | |||||||||||||||||||||
Asia/Pacific | 27,652 | 24,501 | |||||||||||||||||||||
Total segment operating earnings | 121,348 | 92,770 | |||||||||||||||||||||
Combination, integration and other acquisition-related expenses | — | (4,053) | |||||||||||||||||||||
Restructuring and related charges, net | (3,972) | (820) | |||||||||||||||||||||
Non-operating and administrative expenses | (51,771) | (43,305) | |||||||||||||||||||||
Depreciation of corporate assets and amortization | (15,676) | (15,189) | |||||||||||||||||||||
Operating income | 49,929 | 29,403 | |||||||||||||||||||||
Other expense, net | (2,239) | (2,206) | |||||||||||||||||||||
Interest expense, net | (13,242) | (5,345) | |||||||||||||||||||||
Income before taxes and equity in net income of associated companies | $ | 34,448 | $ | 21,852 |
Three Months Ended March 31, | |||||||||||||||||||||||
2023 | 2022 | ||||||||||||||||||||||
Americas | 2,827 | 3,056 | |||||||||||||||||||||
EMEA | 6,093 | 12,176 | |||||||||||||||||||||
Asia/Pacific | 59 | 297 |
Three Months Ended March 31, 2023 | ||||||||||||||||||||||||||
Americas | EMEA | Asia/Pacific | Consolidated Total | |||||||||||||||||||||||
Customer Industries | ||||||||||||||||||||||||||
Metals | $ | 68,134 | $ | 39,103 | $ | 46,660 | $ | 153,897 | ||||||||||||||||||
Metalworking and other | 183,279 | 113,346 | 49,626 | 346,251 | ||||||||||||||||||||||
$ | 251,413 | $ | 152,449 | $ | 96,286 | $ | 500,148 | |||||||||||||||||||
Timing of Revenue Recognized | ||||||||||||||||||||||||||
Product sales at a point in time | $ | 240,481 | $ | 141,506 | $ | 93,923 | $ | 475,910 | ||||||||||||||||||
Services transferred over time | 10,932 | 10,943 | 2,363 | 24,238 | ||||||||||||||||||||||
$ | 251,413 | $ | 152,449 | $ | 96,286 | $ | 500,148 |
Three Months Ended March 31, 2022 | ||||||||||||||||||||||||||
Americas | EMEA | Asia/Pacific | Consolidated Total | |||||||||||||||||||||||
Customer Industries | ||||||||||||||||||||||||||
Metals | $ | 55,317 | $ | 36,793 | $ | 55,682 | $ | 147,792 | ||||||||||||||||||
Metalworking and other | 156,774 | 110,026 | 59,579 | 326,379 | ||||||||||||||||||||||
$ | 212,091 | $ | 146,819 | $ | 115,261 | $ | 474,171 | |||||||||||||||||||
Timing of Revenue Recognized | ||||||||||||||||||||||||||
Product sales at a point in time | $ | 201,775 | $ | 136,803 | $ | 112,548 | $ | 451,126 | ||||||||||||||||||
Services transferred over time | 10,316 | 10,016 | 2,713 | 23,045 | ||||||||||||||||||||||
$ | 212,091 | $ | 146,819 | $ | 115,261 | $ | 474,171 |
Three Months Ended March 31, | |||||||||||||||||||||||
2023 | 2022 | ||||||||||||||||||||||
Operating lease expense | $ | 3,936 | $ | 3,409 | |||||||||||||||||||
Short-term lease expense | 211 | 219 |
Three Months Ended March 31, | |||||||||||||||||||||||
2023 | 2022 | ||||||||||||||||||||||
Cash paid for amounts included in the measurement of lease liabilities: | |||||||||||||||||||||||
Operating cash flows from operating leases | $ | 3,857 | $ | 3,365 | |||||||||||||||||||
Non-cash lease liabilities activity: | |||||||||||||||||||||||
Leased assets obtained in exchange for new operating lease liabilities | 2,833 | 4,689 |
March 31, 2023 | December 31, 2022 | ||||||||||
Right of use lease assets | $ | 43,344 | $ | 43,766 | |||||||
Other current liabilities | 12,652 | 12,024 | |||||||||
Long-term lease liabilities | 26,086 | 26,967 | |||||||||
Total operating lease liabilities | $ | 38,738 | $ | 38,991 | |||||||
Weighted average remaining lease term (years) | 4.96 | 5.10 | |||||||||
Weighted average discount rate | 4.50 | % | 4.36 | % |
March 31, 2023 | |||||
For the remainder of 2023 | $ | 10,749 | |||
For the year ended December 31, 2024 | 11,784 | ||||
For the year ended December 31, 2025 | 7,740 | ||||
For the year ended December 31, 2026 | 5,614 | ||||
For the year ended December 31, 2027 | 2,616 | ||||
For the year ended December 31, 2028 and beyond | 5,496 | ||||
Total lease payments | 43,999 | ||||
Less: imputed interest | (5,261) | ||||
Present value of lease liabilities | $ | 38,738 |
Restructuring Programs | |||||
Accrued restructuring as of December 31, 2022 | $ | 5,483 | |||
Restructuring and related charges, net | 3,972 | ||||
Cash payments | (2,747) | ||||
Currency translation adjustments | 101 | ||||
Accrued restructuring as of March 31, 2023 | $ | 6,809 |
Three Months Ended March 31, | |||||||||||||||||||||||
2023 | 2022 | ||||||||||||||||||||||
Stock options | $ | 431 | $ | 267 | |||||||||||||||||||
Non-vested stock awards and restricted stock units | 2,171 | 1,548 | |||||||||||||||||||||
Director stock ownership plan | 10 | 24 | |||||||||||||||||||||
Performance stock units | 915 | 623 | |||||||||||||||||||||
Total share-based compensation expense | $ | 3,527 | $ | 2,462 |
2023 Grants | |||||
Number of PSUs granted | 15,707 | ||||
Risk-free interest rate | 3.85% | ||||
Dividend yield | 0.96% | ||||
Expected term (years) | 3.0 |
Three Months Ended March 31, | |||||||||||||||||||||||||||||||||||||||||||||||
Pension Benefits | Other Postretirement Benefits | ||||||||||||||||||||||||||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||||||||||||||||||||||||||
Service cost | $ | 104 | $ | 180 | $ | — | $ | (8) | |||||||||||||||||||||||||||||||||||||||
Interest cost | 2,455 | 1,360 | 19 | 9 | |||||||||||||||||||||||||||||||||||||||||||
Expected return on plan assets | (1,997) | (2,084) | — | — | |||||||||||||||||||||||||||||||||||||||||||
Actuarial loss (gain) amortization | 101 | 257 | (30) | (24) | |||||||||||||||||||||||||||||||||||||||||||
Prior service cost (income) amortization | 8 | 2 | (4) | 1 | |||||||||||||||||||||||||||||||||||||||||||
Net periodic benefit (income) cost | $ | 671 | $ | (285) | $ | (15) | $ | (22) |
Three Months Ended March 31, | |||||||||||||||||||||||
2023 | 2022 | ||||||||||||||||||||||
Income from third party license fees | $ | 325 | $ | 404 | |||||||||||||||||||
Foreign exchange losses, net | (3,326) | (1,905) | |||||||||||||||||||||
Non-income tax refunds and other related credits (expense) | 360 | (1,322) | |||||||||||||||||||||
Pension and postretirement benefit (costs) income, non-service components | (552) | 479 | |||||||||||||||||||||
Facility remediation recovery, net | 827 | — | |||||||||||||||||||||
Other non-operating income, net | 127 | 138 | |||||||||||||||||||||
Total other expense, net | $ | (2,239) | $ | (2,206) |
Three Months Ended March 31, | |||||||||||||||||||||||
2023 | 2022 | ||||||||||||||||||||||
Basic earnings per common share | |||||||||||||||||||||||
Net income attributable to Quaker Chemical Corporation | $ | 29,534 | $ | 19,816 | |||||||||||||||||||
Less: income allocated to participating securities | (145) | (78) | |||||||||||||||||||||
Net income available to common shareholders | $ | 29,389 | $ | 19,738 | |||||||||||||||||||
Basic weighted average common shares outstanding | 17,866,670 | 17,826,061 | |||||||||||||||||||||
Basic earnings per common share | $ | 1.64 | $ | 1.11 | |||||||||||||||||||
Diluted earnings per common share | |||||||||||||||||||||||
Net income attributable to Quaker Chemical Corporation | $ | 29,534 | $ | 19,816 | |||||||||||||||||||
Less: income allocated to participating securities | (145) | (78) | |||||||||||||||||||||
Net income available to common shareholders | $ | 29,389 | $ | 19,738 | |||||||||||||||||||
Basic weighted average common shares outstanding | 17,866,670 | 17,826,061 | |||||||||||||||||||||
Effect of dilutive securities | 32,076 | 25,798 | |||||||||||||||||||||
Diluted weighted average common shares outstanding | 17,898,746 | 17,851,859 | |||||||||||||||||||||
Diluted earnings per common share | $ | 1.64 | $ | 1.11 |
Americas | EMEA | Asia/Pacific | Global Specialty Businesses | Total | |||||||||||||||||||||||||
Balance as of December 31, 2022 | $ | 215,899 | $ | 34,567 | $ | 150,375 | $ | 114,167 | $ | 515,008 | |||||||||||||||||||
Reallocation of reporting units | 63,697 | 31,711 | 18,759 | (114,167) | — | ||||||||||||||||||||||||
Balance as of January 1, 2023 | 279,596 | 66,278 | 169,134 | — | 515,008 | ||||||||||||||||||||||||
Goodwill additions (reductions) | — | — | — | — | — | ||||||||||||||||||||||||
Currency translation adjustments | 1,773 | (116) | 541 | — | 2,198 | ||||||||||||||||||||||||
Balance as of March 31, 2023 | $ | 281,369 | $ | 66,162 | $ | 169,675 | $ | — | $ | 517,206 |
Gross Carrying Amount | Accumulated Amortization | Net Book Value | |||||||||||||||||||||||||||||||||
March 31, 2023 | December 31, 2022 | March 31, 2023 | December 31, 2022 | March 31, 2023 | December 31, 2022 | ||||||||||||||||||||||||||||||
Customer lists and rights to sell | $ | 839,280 | $ | 831,600 | $ | 205,800 | $ | 191,286 | $ | 633,480 | $ | 640,314 | |||||||||||||||||||||||
Trademarks, formulations and product technology | 160,149 | 158,564 | 48,856 | 46,281 | 111,293 | 112,283 | |||||||||||||||||||||||||||||
Other | 6,168 | 7,576 | 5,848 | 6,390 | 320 | 1,186 | |||||||||||||||||||||||||||||
Total definite-lived intangible assets | $ | 1,005,597 | $ | 997,740 | $ | 260,504 | $ | 243,957 | $ | 745,093 | $ | 753,783 |
Three Months Ended March 31, | |||||||||||||||||||||||
2023 | 2022 | ||||||||||||||||||||||
Amortization expense | $ | 14,513 | $ | 14,553 |
For the remainder of 2023 | $ | 43,829 | |||
For the year ended December 31, 2024 | 57,734 | ||||
For the year ended December 31, 2025 | 56,953 | ||||
For the year ended December 31, 2026 | 56,708 | ||||
For the year ended December 31, 2027 | 56,410 | ||||
As of March 31, 2023 | As of December 31, 2022 | ||||||||||||||||||||||
Interest Rate | Outstanding Balance | Interest Rate | Outstanding Balance | ||||||||||||||||||||
Credit Facilities: | |||||||||||||||||||||||
Revolver | 6.0% | $ | 185,897 | 5.2% | $ | 195,673 | |||||||||||||||||
U.S. Term Loan | 6.3% | 592,500 | 5.7% | 596,250 | |||||||||||||||||||
Euro Term Loan | 4.1% | 153,072 | 3.1% | 151,572 | |||||||||||||||||||
Industrial development bonds | 5.3% | 10,000 | 5.3% | 10,000 | |||||||||||||||||||
Bank lines of credit and other debt obligations | Various | 1,317 | Various | 1,303 | |||||||||||||||||||
Total debt | $ | 942,786 | $ | 954,798 | |||||||||||||||||||
Less: debt issuance costs | (1,881) | (1,992) | |||||||||||||||||||||
Less: short-term and current portion of long-term debts | (19,350) | (19,245) | |||||||||||||||||||||
Total long-term debt | $ | 921,555 | $ | 933,561 |
Three Months Ended March 31, | |||||||||||||||||||||||
2023 | 2022 | ||||||||||||||||||||||
Interest expense | $ | 13,876 | $ | 4,746 | |||||||||||||||||||
Amortization of debt issuance costs | 353 | 1,187 | |||||||||||||||||||||
Total | $ | 14,229 | $ | 5,933 |
Currency Translation Adjustments | Defined Benefit Pension Plans | Unrealized (Loss) Gain in Available-for- Sale Securities | Derivative Instruments | Total | |||||||||||||||||||||||||
Balance as of December 31, 2022 | $ | (132,161) | $ | (4,595) | $ | (1,484) | $ | — | $ | (138,240) | |||||||||||||||||||
Other comprehensive income (loss) before reclassifications | 14,465 | (243) | 462 | 506 | 15,190 | ||||||||||||||||||||||||
Amounts reclassified from AOCI | — | 76 | (40) | — | 36 | ||||||||||||||||||||||||
Related tax amounts | — | 41 | (88) | (116) | (163) | ||||||||||||||||||||||||
Balance as of March 31, 2023 | $ | (117,696) | $ | (4,721) | $ | (1,150) | $ | 390 | $ | (123,177) | |||||||||||||||||||
Balance as of December 31, 2021 | $ | (49,843) | $ | (13,172) | $ | 397 | $ | (1,372) | $ | (63,990) | |||||||||||||||||||
Other comprehensive (loss) income before reclassifications | (6,867) | 432 | (1,277) | 1,429 | (6,283) | ||||||||||||||||||||||||
Amounts reclassified from AOCI | — | 229 | 11 | — | 240 | ||||||||||||||||||||||||
Related tax amounts | — | (165) | 266 | (329) | (228) | ||||||||||||||||||||||||
Balance as of March 31, 2022 | $ | (56,710) | $ | (12,676) | $ | (603) | $ | (272) | $ | (70,261) |
Total Fair Value | Fair Value Measurements as of March 31, 2023 Using Fair Value Hierarchy | |||||||||||||||||||||||||
Assets | Level 1 | Level 2 | Level 3 | |||||||||||||||||||||||
Company-owned life insurance | $ | 2,204 | $ | — | $ | 2,204 | $ | — | ||||||||||||||||||
Total | $ | 2,204 | $ | — | $ | 2,204 | $ | — |
Total Fair Value | Fair Value Measurements as of December 31, 2022 Using Fair Value Hierarchy | |||||||||||||||||||||||||
Assets | Level 1 | Level 2 | Level 3 | |||||||||||||||||||||||
Company-owned life insurance | $ | 2,114 | $ | — | $ | 2,114 | $ | — | ||||||||||||||||||
Total | $ | 2,114 | $ | — | $ | 2,114 | $ | — |
Currency | March 31, 2023 | |||||||
Mexican Peso | $ | 18,000 | ||||||
Fair Value | |||||||||||||||||
Condensed Consolidated Balance Sheet Location | March 31, 2023 | December 31, 2022 | |||||||||||||||
Derivatives designated as cash flow hedges: | |||||||||||||||||
Interest rate swaps | Other non-current Assets | $ | 506 | $ | — | ||||||||||||
March 31, 2023 | December 31, 2022 | |||||||||||||
Derivatives designated as cash flow hedges: | ||||||||||||||
Interest rate swaps | AOCI | $ | 390 | $ | — | |||||||||
Location and Amount of Gain (Loss) Recognized in Statements of Operations | ||||||||||||||||||||||||||
Three Months Ended March 31, | ||||||||||||||||||||||||||
2023 | 2022 | |||||||||||||||||||||||||
Interest rate swaps | Interest expense, net | $ | — | $ | (637) | |||||||||||||||||||||
Foreign exchange forward contracts | Other expense, net | 293 | — | |||||||||||||||||||||||
$ | 293 | $ | (637) |
Non-GAAP Operating Income and Margin Reconciliations | Three Months Ended March 31, | ||||||||||||||||||||||
2023 | 2022 | ||||||||||||||||||||||
Operating income | $ | 49,929 | $ | 29,403 | |||||||||||||||||||
Combination, integration and other acquisition-related expenses (a) | — | 4,053 | |||||||||||||||||||||
Restructuring and related charges, net (b) | 3,972 | 820 | |||||||||||||||||||||
Strategic planning expenses (c) | 2,087 | 3,088 | |||||||||||||||||||||
Russia-Ukraine conflict related expenses (d) | — | 1,166 | |||||||||||||||||||||
Other charges (e) | 305 | 631 | |||||||||||||||||||||
Non-GAAP operating income | $ | 56,293 | $ | 39,161 | |||||||||||||||||||
Non-GAAP operating margin (%) (j) | 11.3 | % | 8.3 | % |
EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin and Non-GAAP Net Income Reconciliations | Three Months Ended March 31, | ||||||||||||||||||||||
2023 | 2022 | ||||||||||||||||||||||
Net income attributable to Quaker Chemical Corporation | $ | 29,534 | $ | 19,816 | |||||||||||||||||||
Depreciation and amortization (h) | 20,510 | 20,727 | |||||||||||||||||||||
Interest expense, net | 13,242 | 5,345 | |||||||||||||||||||||
Taxes on income before equity in net income of associated companies (i) | 9,533 | 2,866 | |||||||||||||||||||||
EBITDA | 72,819 | 48,754 | |||||||||||||||||||||
Equity (income) loss in a captive insurance company (f) | (422) | 244 | |||||||||||||||||||||
Combination, integration and other acquisition-related expenses (a) | — | 6,032 | |||||||||||||||||||||
Restructuring and related charges, net (b) | 3,972 | 820 | |||||||||||||||||||||
Strategic planning expenses (c) | 2,087 | 3,088 | |||||||||||||||||||||
Russia-Ukraine conflict related expenses (d) | — | 1,166 | |||||||||||||||||||||
Other charges (e) | 335 | 340 | |||||||||||||||||||||
Adjusted EBITDA | $ | 78,791 | $ | 60,444 | |||||||||||||||||||
Adjusted EBITDA margin (%) (j) | 15.8 | % | 12.7 | % | |||||||||||||||||||
Adjusted EBITDA | $ | 78,791 | $ | 60,444 | |||||||||||||||||||
Less: Depreciation and amortization (h) | 20,510 | 20,727 | |||||||||||||||||||||
Less: Interest expense, net | 13,242 | 5,345 | |||||||||||||||||||||
Less: Taxes on income before equity in net income of associated companies - adjusted (a)(i) | 11,047 | 8,902 | |||||||||||||||||||||
Non-GAAP net income | $ | 33,992 | $ | 25,470 |
Non-GAAP Earnings per Diluted Share Reconciliations | Three Months Ended March 31, | ||||||||||||||||||||||
2023 | 2022 | ||||||||||||||||||||||
GAAP earnings per diluted share attributable to Quaker Chemical Corporation common shareholders | $ | 1.64 | $ | 1.11 | |||||||||||||||||||
Equity (income) loss in a captive insurance company per diluted share (f) | (0.02) | 0.01 | |||||||||||||||||||||
Combination, integration and other acquisition-related expenses per diluted share (a) | — | 0.25 | |||||||||||||||||||||
Restructuring and related charges, net per diluted share (b) | 0.17 | 0.03 | |||||||||||||||||||||
Strategic planning expenses per diluted share (c) | 0.10 | 0.14 | |||||||||||||||||||||
Russia-Ukraine conflict related expenses per diluted share (d) | — | 0.06 | |||||||||||||||||||||
Other charges per diluted share (e) | 0.01 | 0.01 | |||||||||||||||||||||
Impact of certain discrete tax items per diluted share (g) | (0.01) | (0.19) | |||||||||||||||||||||
Non-GAAP earnings per diluted share (k) | $ | 1.89 | $ | 1.42 |
Period | (a) Total Number of Shares Purchased (1) | (b) Average Price Paid Per Share (2) | (c) Total Number of Shares Purchased as part of Publicly Announced Plans or Programs | (d) Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs (3) | ||||||||||||||||||||||
January 1 - January 31 | 103 | $ | 196.87 | — | $ | 86,865,026 | ||||||||||||||||||||
February 1 - February 28 | 30,521 | $ | 215.44 | — | $ | 86,865,026 | ||||||||||||||||||||
March 1 - March 31 | 5,033 | $ | 193.28 | — | $ | 86,865,026 | ||||||||||||||||||||
Total | 35,657 | $ | 201.86 | — | $ | 86,865,026 |
3.1 | – | |||||||
3.2 | – | |||||||
10.1 | – | |||||||
10.2 | – | |||||||
10.3 | – | |||||||
31.1 | – | |||||||
31.2 | – | |||||||
32.1 | – | |||||||
32.2 | – | |||||||
101.INS | – | Inline XBRL Instance Document* | ||||||
101.SCH | – | Inline XBRL Taxonomy Schema Document* | ||||||
101.CAL | – | Inline XBRL Taxonomy Calculation Linkbase Document* | ||||||
101.DEF | – | Inline XBRL Taxonomy Definition Linkbase Document* | ||||||
101.LAB | – | Inline XBRL Taxonomy Label Linkbase Document* | ||||||
101.PRE | – | Inline XBRL Taxonomy Presentation Linkbase Document* | ||||||
104 | – | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101.INS)* |
QUAKER CHEMICAL CORPORATION | |||||
(Registrant) | |||||
/s/ Shane W. Hostetter | |||||
Date: May 4, 2023 | Shane W. Hostetter, Senior Vice President, Chief Financial Officer (officer duly authorized on behalf of, and principal financial officer of, the Registrant) |