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
29, 2008
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
Hector Street
Conshohocken,
Pennsylvania 19428
|
|
(Address
of principal executive offices)
|
|
(Zip
Code)
|
|
|
|
(610)
832-4000
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(Registrant’s
telephone number, including area code)
|
|
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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
29, 2008, Quaker Chemical Corporation announced its results of operations for
the first quarter ended March 31, 2008 in a press release, the text of which
is
included as Exhibit 99.1 hereto.
Item
9.01. Financial
Statements and Exhibits.
The
following exhibit is included as part of this report:
|
Exhibit
No.
|
|
|
99.1
|
Press
Release of Quaker Chemical Corporation dated April 29, 2008.
|
-2-
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 thereunto
duly authorized.
| QUAKER CHEMICAL CORPORATION | ||
| Registrant | ||
|
Date:
April 30, 2008
|
By:
|
/s/
Mark A. Featherstone
|
|
|
|
Mark
A. Featherstone
Vice
President and
Chief
Financial Officer
|
-3-
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NEWS
|
||
|
For
Release:
Immediate
|
Contact:
Mark
A. Featherstone
Vice
President and
Chief
Financial Officer
610-832-4160
|
|
|
|
||
QUAKER
CHEMICAL ANNOUNCES RECORD QUARTERLY SALES AND A
44%
INCREASE IN FIRST QUARTER EARNINGS
April
29,
2008
CONSHOHOCKEN,
PA - Quaker Chemical Corporation (NYSE:KWR) today announced sales for the first
quarter 2008 of $147.7 million, a quarterly record, and net income of $5.1
million, increases of 18.3% and 44.0%, respectively, compared to the first
quarter of 2007. Earnings per share increased to $0.50 per diluted share from
$0.35 per diluted share for the first quarter of 2007.
“We’re
very pleased with our start in 2008, particularly given today’s world,”
commented Ronald J. Naples, Chairman and Chief Executive Officer. "We
achieved improvement in operating income as a percentage of sales to over 6%,
despite the headwinds of rapidly escalating raw material costs. We did see
a
decrease in our sequential gross margin percentage from the fourth quarter
of
2007, but were able to maintain our margins in dollar terms, and continue to
work with our customers to recognize the value we deliver and our cost
realities. With our future in mind, we remain committed to invest in key growth
initiatives, while at the same time being mindful of today’s challenges and
limited visibility of the current economic environment and commodity price
trends. As suggested by our recent dividend increase, we have confidence about
our long-term future and the prospects of earnings improvement for 2008.”
First
Quarter 2008 Summary
Net
sales
for the first quarter were $147.7 million, up 18.3% from $124.9 million for
the
first quarter 2007. The increase in net sales was attributable to volume growth,
higher sales prices and foreign exchange rate translation. Volume growth was
realized in virtually all the Company’s regions, including higher revenue
related to the Company’s Chemical Management Services (“CMS”) channel. Foreign
exchange rate translation increased revenues by approximately 8% for the first
quarter of 2008, compared to the same period in 2007. Selling price increases
were realized, in part, as a result of an ongoing effort to offset higher raw
material costs. CMS revenues were higher due to the full year impact of
additional CMS accounts gained in 2007, as well as the renewal and restructuring
of several of the Company’s CMS contracts.
Gross
margin dollars were up more than $5.0 million, or 13.2% for the first quarter
of
2008, compared to the same period in 2007. However, the gross margin percentage
was 29.5% for the first quarter of 2008, compared to 30.9% for the first quarter
of 2007. The Company’s larger mix of CMS contracts reported on a gross versus
pass-through basis decreased gross margin as a percentage of sales by
approximately 0.5 percentage points. The remaining decline in gross margin
as a
percentage of sales is due to increased raw material costs in excess of price
increases, as well as product and regional sales mix. The Company has announced
and implemented a number of further price increases to aid in offsetting
unprecedented levels in the Company’s key raw material costs.
Selling,
general and administrative expenses for the quarter increased $2.6 million,
compared to the first quarter of 2007. Foreign exchange rate translation
accounted for the majority of the increase over the prior year period.
Inflationary increases were largely offset by lower legal and environmental
costs and lower incentive compensation expense.
-
more
-
The
decrease in other income was primarily due to foreign exchange rate losses
in
2008 compared to gains in 2007. Net interest expense was lower due to lower
average borrowings as well as lower interest rates.
Balance
Sheet and Cash Flow Items
The
Company’s net debt increased from December 31, 2007, primarily to fund working
capital needs driven by higher quarterly sales and scheduled first quarter
payments, including the payment of incentive compensation. The Company’s net
debt-to-total-capital ratio was 34% at March 31, 2008, compared to 43% at March
31, 2007 and 32% at December 31, 2007.
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, 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.
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.
As
previously announced, Quaker Chemical’s investor conference call to discuss
first quarter results is scheduled for April 30, 2008 at 2:30 p.m. (ET). Access
the conference by calling 877-269-7756 or visit Quaker’s Web site at
www.quakerchem.com
for
a live webcast.
-
more
-
|
Quaker
Chemical Corporation
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|||||||
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Condensed
Consolidated Statement of Income
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|||||||
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(Dollars
in thousands, except per share data and share
amounts)
|
|||||||
|
|
|
|
|
|
|
||
|
|
|
|
|
|
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||
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(Unaudited)
|
|
||||
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|
|
|
|
|
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||
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Three
Months Ended March 31,
|
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||||
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2008
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|
2007
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|||
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Net
sales
|
$
|
147,718
|
$
|
124,891
|
|||
|
Cost
of goods sold
|
104,083
|
86,345
|
|||||
|
Gross
margin
|
43,635
|
38,546
|
|||||
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%
|
29.5
|
%
|
30.9
|
%
|
|||
|
Selling,
general and administrative expenses
|
34,504
|
31,919
|
|||||
|
Operating
income
|
9,131
|
6,627
|
|||||
|
%
|
6.2
|
%
|
5.3
|
%
|
|||
|
Other
income, net
|
161
|
327
|
|||||
|
Interest
expense, net
|
(1,182
|
)
|
(1,350
|
)
|
|||
|
Income
before taxes
|
8,110
|
5,604
|
|||||
|
Taxes
on income
|
2,765
|
1,844
|
|||||
|
5,345
|
3,760
|
||||||
|
Equity
in net income of associated companies
|
112
|
125
|
|||||
|
Minority
interest in net income of subsidiaries
|
(364
|
)
|
(348
|
)
|
|||
|
Net
income
|
$
|
5,093
|
$
|
3,537
|
|||
|
%
|
3.4
|
%
|
2.8
|
%
|
|||
|
Per
share data:
|
|||||||
|
Net
income - basic
|
$
|
0.50
|
$
|
0.36
|
|||
|
Net
income - diluted
|
$
|
0.50
|
$
|
0.35
|
|||
|
Shares
Outstanding:
|
|||||||
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Basic
|
10,085,859
|
9,907,683
|
|||||
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Diluted
|
10,179,539
|
10,024,905
|
|||||
-
more -
|
Quaker
Chemical Corporation
|
|||||||
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Condensed
Consolidated Balance Sheet
|
|||||||
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(Dollars
in thousands, except par value and share
amounts)
|
|||||||
|
|
|
|
|
|
|
||
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|
|
(Unaudited)
|
|
||||
|
|
|
|
|
|
|
||
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|
March
31,
|
|
December
31,
|
|
||
|
|
|
2008
|
|
2007
|
|||
|
ASSETS
|
|||||||
|
Current
assets
|
|||||||
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Cash
and cash equivalents
|
$
|
20,527
|
$
|
20,195
|
|||
|
Accounts
receivable, net
|
120,273
|
118,135
|
|||||
|
Inventories,
net
|
64,559
|
60,738
|
|||||
|
Prepaid
expenses and other current assets
|
16,057
|
14,433
|
|||||
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Total
current assets
|
221,416
|
213,501
|
|||||
|
Property,
plant and equipment, net
|
63,707
|
62,287
|
|||||
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Goodwill
|
45,799
|
43,789
|
|||||
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Other
intangible assets, net
|
7,668
|
7,873
|
|||||
|
Investments
in associated companies
|
7,959
|
7,323
|
|||||
|
Deferred
income taxes
|
32,018
|
30,257
|
|||||
|
Other
assets
|
40,476
|
34,019
|
|||||
|
Total
assets
|
$
|
419,043
|
$
|
399,049
|
|||
|
LIABILITIES
AND SHAREHOLDERS' EQUITY
|
|||||||
|
Current
liabilities
|
|||||||
|
Short-term
borrowings and current portion of long-term debt
|
$
|
3,875
|
$
|
4,288
|
|||
|
Accounts
and other payables
|
68,519
|
67,380
|
|||||
|
Accrued
compensation
|
9,730
|
17,287
|
|||||
|
Other
current liabilities
|
17,701
|
17,396
|
|||||
|
Total
current liabilities
|
99,825
|
106,351
|
|||||
|
Long-term
debt
|
89,235
|
78,487
|
|||||
|
Deferred
income taxes
|
8,209
|
7,583
|
|||||
|
Other
non-current liabilities
|
77,557
|
71,722
|
|||||
|
Total
liabilities
|
274,826
|
264,143
|
|||||
|
Minority
interest in equity of subsidiaries
|
4,750
|
4,513
|
|||||
|
Shareholders'
equity
|
|||||||
|
Common
stock, $1 par value; authorized 30,000,000 shares; issued 10,268,988
shares
|
10,269
|
10,147
|
|||||
|
Capital
in excess of par value
|
11,844
|
10,104
|
|||||
|
Retained
earnings
|
118,506
|
115,767
|
|||||
|
Accumulated
other comprehensive loss
|
(1,152
|
)
|
(5,625
|
)
|
|||
|
Total
shareholders' equity
|
139,467
|
130,393
|
|||||
|
Total
liabilities and shareholders' equity
|
$
|
419,043
|
$
|
399,049
|
|||
-
more -
|
Quaker
Chemical Corporation
|
|||||||
|
Condensed
Consolidated Statement of Cash Flows
|
|||||||
|
For
the Three months ended March 31,
|
|||||||
|
(Dollars
in thousands)
|
|||||||
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
|
|
|
(Unaudited)
|
|
||||
|
|
|
2008
|
|
2007
|
|||
|
Cash
flows from operating activities
|
|||||||
|
Net
income
|
$
|
5,093
|
$
|
3,537
|
|||
|
Adjustments
to reconcile net income to net cash used in operating activities:
|
|||||||
|
Depreciation
|
2,680
|
2,719
|
|||||
|
Amortization
|
300
|
339
|
|||||
|
Equity
in net income of associated companies, net of dividends
|
(112
|
)
|
44
|
||||
|
Minority
interest in earnings of subsidiaries
|
364
|
348
|
|||||
|
Deferred
income tax
|
1,246
|
361
|
|||||
|
Deferred
compensation and other, net
|
22
|
267
|
|||||
|
Stock-based
compensation
|
376
|
262
|
|||||
|
(Gain)
Loss on disposal of property, plant and equipment
|
(35
|
)
|
5
|
||||
|
Insurance
settlement realized
|
(136
|
)
|
(265
|
)
|
|||
|
Pension
and other postretirement benefits
|
(2,458
|
)
|
(869
|
)
|
|||
|
Increase
(decrease) in cash from changes in current assets and current liabilities,
net of acquisitions:
|
|||||||
|
Accounts
receivable
|
1,159
|
(10,633
|
)
|
||||
|
Inventories
|
(2,374
|
)
|
(3,019
|
)
|
|||
|
Prepaid
expenses and other current assets
|
(3,037
|
)
|
(873
|
)
|
|||
|
Accounts
payable and accrued liabilities
|
(9,280
|
)
|
2,749
|
||||
|
Net
cash used in operating activities
|
(6,192
|
)
|
(5,028
|
)
|
|||
|
Cash
flows from investing activities
|
|||||||
|
Capital
expenditures
|
(1,949
|
)
|
(2,721
|
)
|
|||
|
Payments
related to acquisitions
|
(1,000
|
)
|
(1,000
|
)
|
|||
|
Proceeds
from disposition of assets
|
65
|
-
|
|||||
|
Insurance
settlement received and interest earned
|
5,112
|
143
|
|||||
|
Change
in restricted cash, net
|
(4,976
|
)
|
122
|
||||
|
Net
cash used in investing activities
|
(2,748
|
)
|
(3,456
|
)
|
|||
|
Cash
flows from financing activities
|
|||||||
|
Net
decrease in short-term borrowings
|
(378
|
)
|
(1,262
|
)
|
|||
|
Proceeds
from long-term debt
|
9,844
|
5,277
|
|||||
|
Repayments
of long-term debt
|
(251
|
)
|
(225
|
)
|
|||
|
Dividends
paid
|
(2,181
|
)
|
(2,137
|
)
|
|||
|
Stock
options exercised, other
|
1,486
|
1,809
|
|||||
|
Distributions
to minority shareholders
|
-
|
(270
|
)
|
||||
|
Net
cash provided by financing activities
|
8,520
|
3,192
|
|||||
|
Effect
of exchange rate changes on cash
|
752
|
17
|
|||||
|
Net
increase (decrease) in cash and cash equivalents
|
332
|
(5,275
|
)
|
||||
|
Cash
and cash equivalents at the beginning of the period
|
20,195
|
16,062
|
|||||
|
Cash
and cash equivalents at the end of the period
|
$
|
20,527
|
$
|
10,787
|
|||