Leaders in Industrial Process Fluids Combine to Form Quaker Houghton
A Strategic Combination is Formed
"We are rooted in companies commonly acknowledged as authorities in industrial fluids and valued experts in customer processes," said
The company's combined breadth of product and service offerings can be found in end-markets such as aerospace, aluminum, automotive, machinery, can manufacturing, industrial parts manufacturing, mining, offshore, steel, and tube and pipe industries.
With its expanded products and services portfolio, the company expects that cross-selling opportunities will facilitate continued above-market growth. Specific products the company offers include metal cutting and forming fluids, corrosion protection fluids, specialty hydraulic fluids, and steel and aluminum rolling oils. In addition, legacy-Houghton customers will benefit from Quaker's strength in specialty greases, high-pressure die casting, mining specialties, surface treatment and bio-based lubricants, while legacy-Quaker customers will now have access to Houghton's heat treatment quenchants, offshore hydraulic fluids, metal finishing products, and a broader metal removal fluids portfolio.
"Our foundation will be the same customer-intimate operating model that has been key to the success of our customers," Mr. Barry said. "Moving forward together, we will draw upon our rich history and shared expertise to enhance our product and service offerings and continue to deliver value-added service expertise to our customers."
Value Creation for Shareholders
The combination of
The company expects to achieve significant cost reductions as a result of the combination and has increased its estimate of cost synergies to
In addition to cost synergies, the company expects that its growth strategy will create additional value over time. Revenue-based synergies, such as cross-selling, will be an important contributor to growth going forward. The legacy product portfolios of both Quaker and Houghton can now be offered to the combined, complementary customer base, where 14,000 of the 15,000 total customers are unique to one company or the other. The company believes the revenue synergies are achievable and will be significant over time, beginning after year one. In the first year, the company's focus will be to maintain service levels for its customers and ensure no supply chain disruptions, while successfully executing its integration plans. In year two, the revenue synergies will begin to be visible as the company expects to grow above the market by 2% to 4% as it has in the past.
The company also expects to continue to grow through acquisitions which remain part of its core growth strategy. In the short term, the company will focus on paying down debt, but will continue to consider smaller acquisitions that can create value. Both Quaker and Houghton have long histories of building value through acquisitions.
"Today is a historic day for our businesses," Mr. Barry said. "We are finally beginning our journey as Quaker Houghton, and are now the leading global supplier of industrial process fluids to the metals and metalworking markets. Two years from now, we expect to have an enterprise that will be integrated and generating over
Mr. Barry continued, "While we are certainly a leader in our chosen markets, there is significant growth potential for this new company. We estimate that Quaker Houghton's revenue of
The final purchase consideration at closing of the combination was comprised of: 1) approximately
To fund the purchase, the company borrowed a total of
In addition, the company divested certain product lines at closing in compliance with the
Leadership and Governance
In addition to Mr. Barry, Quaker Houghton's management includes existing leaders from both legacy companies. The newly formed executive leadership team is comprised of:
Joseph A. Berquist, SVP, Global Specialty Businesses & Chief Strategy Officer
- Jeewat Bijlani, SVP, Managing Director –
- Dieter Laininger, SVP, Managing Director – APAC
Adrian Steeples, SVP, Managing Director – EMEA
Global Functional Leaders
Mary Dean Hall, SVP, Chief Financial Officer & Treasurer Kym Johnson, SVP, Global Human Resources, CHRO Wilbert Platzer, SVP, Global Operations, EHS & Procurement
Dave Slinkman, SVP, Chief Technology Officer Robert T. Traub, SVP, General Counsel & Corporate Secretary
Quaker Houghton now has an 11-member Board of Directors, consisting of the eight directors from
- Ramaswami Seshasayee
Michael J. Shannon
Conference Call and Webcast Information
Quaker Houghton has scheduled an investor call beginning at
August 2, 2019, 7:30 a.m. (ET)
Please call 5-10 minutes prior to the scheduled start of call. No password required.
If unable to participate live, select from one of the following replay options:
Available through August 8, 2019
Call +1 877-660-6853 (toll free); Conference ID No. 13692496
The information included in this public release references certain non-GAAP (unaudited) financial measures. The Company presents EBITDA which is calculated as net income attributable to the Company before depreciation and amortization, interest expense, net, and taxes on income before equity in net income of associated companies. The Company also presents adjusted EBITDA which is calculated as EBITDA plus or minus certain items that are not indicative of future operating performance or not considered core to the Company's operations. The Company believes the non-GAAP financial measures provide meaningful supplemental information as it enhances a reader's understanding of the financial performance of the Company, are more indicative of future operating performance of the Company, and facilitate a better comparison among fiscal periods, as the non-GAAP financial measures exclude items that are not indicative of future operating performance or 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.
This release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements 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 demand for the Company's products and services is largely derived from the demand for its customers' products, which subjects the Company to uncertainties related 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, significant changes in applicable tax rates and regulations, future terrorist attacks and other acts of violence. Other factors could also adversely affect us, including those related to the Houghton Combination and the integration of the combined company. For more information regarding these risks and uncertainties as well as certain additional risks that we face, you should refer to the Risk Factors detailed in Item 1A of our Form 10-K for the year ended
About Quaker Houghton
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