Unassociated Document


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549
FORM 8-K

CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

April 26, 2011
Date of Report (Date of earliest event reported)

QUAKER CHEMICAL CORPORATION
(Exact name of Registrant as specified in its charter)


Commission File Number 001-12019

PENNSYLVANIA
 
 No. 23-0993790
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
 

One Quaker Park
901 E. Hector Street
Conshohocken, Pennsylvania 19428
(Address of principal executive offices)
(Zip Code)
 

(610) 832-4000
(Registrant’s telephone number, including area code)
 

Not Applicable
(Former name or former address, if changed since last report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o     Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o     Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o     Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

     


 
 
 
 
INFORMATION TO BE INCLUDED IN THE REPORT

Item 2.02.               Results of Operations and Financial Condition.

On April 26, 2011, Quaker Chemical Corporation announced its results of operations for the first quarter ended March 31, 2011, in a press release, the text of which is included as Exhibit 99.1 hereto.  Supplemental information related to the same period is also included as Exhibit 99.2 hereto.



Item 9.01.
Financial Statements and Exhibits.

The following exhibits are included as part of this report:

Exhibit No.
 
99.1
Press Release of Quaker Chemical Corporation dated April 26, 2011.
   
99.2
Supplemental Information related to first quarter ended March 31, 2011.

 
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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


     
QUAKER CHEMICAL CORPORATION
Registrant
 
         
Date:  April 26, 2011
 
By:
/s/ Mark A. Featherstone
 
     
Mark A. Featherstone
Vice President and
Chief Financial Officer
 
         


 
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Unassociated Document
 
 
 NEWS
 
    For Release:
       Immediate
Contact:
Mark A. Featherstone
Vice President and
Chief Financial Officer
610-832-4160
   
 

QUAKER CHEMICAL CORPORATION ANNOUNCES FIRST QUARTER 2011 RESULTS

 
·
Strong quarterly sales up 25% to $159.9 million from Q1 2010
 
·
Q1 2011 diluted EPS of $0.91 vs. $0.84 diluted EPS in Q1 2010
 
·
Product volumes higher than Q1 2010 by 16%

April 26, 2011

CONSHOHOCKEN, PA – Quaker Chemical Corporation (NYSE:KWR) today announced net sales of $159.9 million and earnings per diluted share of $0.91 for the first quarter of 2011, up 25% and 8%, respectively, compared to net sales of $128.3 million and earnings per diluted share of $0.84 for the first quarter of 2010.

Michael F. Barry, Chairman, Chief Executive Officer and President, commented, “We are off to a good start in 2011, despite the continuing challenge of escalating raw material costs.  We are and will be implementing additional price increases as part of our ongoing effort to restore our margins to more acceptable levels.  However, our profitability continues to grow due to good demand in our base markets, new business gained and the contribution from our recent acquisitions.”

Mr. Barry further stated, “Despite the uncertainties in the raw material markets and global economies, our goal for 2011 remains to build upon the profitability we achieved in 2010.  With our leadership positions in both the emerging and mature markets, as well as our organic and external growth opportunities, I remain confident in our prospects for 2011 and beyond.”

First Quarter 2011 Summary

Net sales for the first quarter of 2011 were $159.9 million, an increase of 25% from $128.3 million in the first quarter of 2010.  The increase in net sales was primarily the result of higher volumes and selling prices across the globe.  Product volumes were higher by approximately 16% including the effects of acquisitions.  Selling prices and mix increased revenues by approximately 7%, as the Company continues to implement price increases to help offset higher raw material costs.  Foreign exchange rates also increased revenues by approximately 2%.

Gross profit increased by approximately $5.4 million, but gross margin decreased from 36.9% in the first quarter of 2010 to 33% in the first quarter of 2011, as raw material costs continued to escalate, particularly in the first quarter of 2011.  The Company continues to implement price increases to recover these higher costs.

Selling, general and administrative expenses (“SG&A”) increased approximately $5.0 million compared to the first quarter of 2010.  Higher selling costs on increased business activity, our 2010 acquisitions, foreign exchange rate translation and higher professional fees accounted for approximately 62% of the increase.  Higher inflationary and other costs partially offset by lower incentive compensation accounted for the remainder of the increase.  SG&A as a percentage of sales decreased to 24.2% in the first quarter of 2011 from 26.2% in the first quarter of 2010.
 
 

 

Net interest expense decreased due to lower interest rates despite higher average borrowings.  Equity in net income of associated companies increased compared to the first quarter of 2010 as the prior year quarter reflected a charge of approximately $0.03 per diluted share related to the first quarter 2010 devaluation of the Venezuelan Bolivar Fuerte.

The Company’s low first quarter 2011 and 2010 effective tax rates include the expiration of applicable statutes of limitations for uncertain tax positions of approximately $0.11 per diluted share, in each period.  The Company has experienced and expects to further experience volatility in its quarterly 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.  However, the Company expects a higher effective tax rate for the full year 2011 as compared to the first quarter 2011 rate.

Balance Sheet and Cash Flow Items

Debt increased from December 31, 2010 due to higher working capital requirements on increased business activity, as well as the timing of payments related to incentive compensation.
 
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, and future terrorist attacks such as those that occurred on September 11, 2001.  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 first quarter results is scheduled for April 27, 2011 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 Web site at http://www.quakerchem.com.  You can also access the conference call by dialing 877-269-7756.

About Quaker

Quaker Chemical Corporation is a leading global provider of process chemicals, chemical specialties, services, and technical expertise to a wide range of industries – including steel, aluminum, automotive, mining, aerospace, tube and pipe, coatings and construction materials.  Our products, technical solutions and chemical management services enhance our customers’ processes, improve their product quality and lower their costs.  Quaker’s headquarters is located near Philadelphia in Conshohocken, Pennsylvania.
 
 
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Quaker Chemical Corporation
Condensed Consolidated Statement of Income
(Dollars in thousands, except per share data and share amounts)


   
(Unaudited)
 
             
   
Three Months Ended March 31,
 
   
2011
   
2010
 
             
Net sales
  $ 159,865     $ 128,320  
                 
Cost of goods sold
    107,131       80,980  
                 
Gross profit
    52,734       47,340  
  %
    33.0 %     36.9 %
                 
Selling, general and administrative expenses
    38,634       33,669  
                 
Operating income
    14,100       13,671  
  %
    8.8 %     10.7 %
                 
Other income, net
    539       763  
Interest expense, net
    (946 )     (1,127 )
Income before taxes and equity in net income (loss) of associated companies
    13,693       13,307  
                 
Taxes on income before equity in net income (loss) of associated companies
    2,822       3,181  
Income before equity in net income (loss) of associated companies
    10,871       10,126  
                 
Equity in net income (loss) of associated companies
    359       (89 )
                 
Net income
    11,230       10,037  
                 
Less: Net income attributable to noncontrolling interest
    630       618  
                 
Net income attributable to Quaker Chemical Corporation
  $ 10,600     $ 9,419  
  %
    6.6 %     7.3 %
                 
Per share data:
               
Net income attributable to Quaker Chemical Corporation Common Shareholders - basic
  $ 0.92     $ 0.85  
Net income attributable to Quaker Chemical Corporation Common Shareholders - diluted
  $ 0.91     $ 0.84  
 
 
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Quaker Chemical Corporation
Condensed Consolidated Balance Sheet
(Dollars in thousands, except par value and share amounts)

   
(Unaudited)
 
             
   
March 31,
   
December 31,
 
   
2011
   
2010
 
ASSETS
           
             
Current assets
           
Cash and cash equivalents
  $ 23,564     $ 25,766  
Accounts receivable, net
    130,948       116,266  
Inventories
    70,230       60,841  
Prepaid expenses and other current assets
    13,899       12,609  
Total current assets
    238,641       215,482  
                 
Property, plant and equipment, net
    78,494       76,535  
Goodwill
    53,675       52,758  
Other intangible assets, net
    23,579       24,030  
Investments in associated companies
    9,439       9,218  
Deferred income taxes
    27,303       28,846  
Other assets
    44,896       42,561  
Total assets
  $ 476,027     $ 449,430  
                 
LIABILITIES AND EQUITY
               
                 
Current liabilities
               
Short-term borrowings and current portion of long-term debt
  $ 809     $ 890  
Accounts and other payables
    76,595       63,893  
Accrued compensation
    9,728       17,140  
Other current liabilities
    19,108       19,268  
Total current liabilities
    106,240       101,191  
Long-term debt
    83,766       73,855  
Deferred income taxes
    6,410       6,108  
Other non-current liabilities
    78,849       81,177  
Total liabilities
    275,265       262,331  
                 
Equity
               
Common stock, $1 par value; authorized 30,000,000 shares; issued 11,531,148
    11,531       11,492  
Capital in excess of par value
    39,132       38,275  
Retained earnings
    152,237       144,347  
Accumulated other comprehensive loss
    (9,497 )     (13,736 )
Total Quaker shareholders' equity
    193,403       180,378  
Noncontrolling interest
    7,359       6,721  
Total equity
    200,762       187,099  
Total liabilities and equity
  $ 476,027     $ 449,430  
 
 
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Quaker Chemical Corporation
Condensed Consolidated Statement of Cash Flows
For the three months ended March 31,
(Dollars in thousands)


   
(Unaudited)
 
   
2011
   
2010
 
Cash flows from operating activities
           
Net income
  $ 11,230     $ 10,037  
Adjustments to reconcile net income to net cash used in operating activities:
               
Depreciation
    2,656       2,593  
Amortization
    486       254  
Equity in net (income) loss of associated companies, net of dividends
    (262 )     89  
Deferred compensation and other, net
    1,967       289  
Stock-based compensation
    868       727  
Gain on disposal of property, plant and equipment
    (40 )     (32 )
Insurance settlement realized
    (365 )     (345 )
Pension and other postretirement benefits
    (4,910 )     (2,265 )
Increase (decrease) in cash from changes in current assets and current liabilities, net of acquisitions:
               
Accounts receivable
    (12,478 )     (3,606 )
Inventories
    (8,309 )     (5,332 )
Prepaid expenses and other current assets
    (2,397 )     (1,360 )
Accounts payable and accrued liabilities
    4,455       (5,818 )
Net cash used in operating activities
    (7,099 )     (4,769 )
                 
Cash flows from investing activities
               
Capital expenditures
    (3,475 )     (2,042 )
Proceeds from disposition of assets
    170       41  
Insurance settlement received and interest earned
    22       5,038  
Change in restricted cash, net
    343       (2,742 )
Net cash (used in) provided by investing activities
    (2,940 )     295  
                 
Cash flows from financing activities
               
Proceeds from long-term debt
    10,000       7,583  
Repayments of long-term debt
    (231 )     (122 )
Dividends paid
    (2,701 )     (2,550 )
Stock options exercised, other
    (50 )     135  
Excess tax benefit related to stock option exercises
    78       321  
Net cash provided by financing activities
    7,096       5,367  
                 
Effect of exchange rate changes on cash
    741       (1,124 )
Net decrease in cash and cash equivalents
    (2,202 )     (231 )
Cash and cash equivalents at the beginning of the period
    25,766       25,051  
Cash and cash equivalents at the end of the period
  $ 23,564     $ 24,820