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, 2014
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)	
 
(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:
 
 	¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)	
 
 	¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)	
 
 	¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))	
 
 	¨	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, 2014, Quaker Chemical Corporation announced its results of operations for the first quarter ended March 31, 2014, 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 29, 2014.  	
 	 	
99.2        	Supplemental Information related to first quarter ended March 31, 2014.	

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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 29, 2014	By:	/S/ MARGARET M. LOEBL	
 	 	Margaret M. Loebl	
 	 	Vice President, Chief Financial Officer and Treasurer	

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NEWS

Contact:
Margaret M. Loebl
Vice President, Chief Financial Officer and Treasurer
loeblm@quakerchem.com
T. 610.832.4160	 	

For Release: Immediate	
 
QUAKER CHEMICAL ANNOUNCES FIRST QUARTER 2014 RESULTS
 
·         3% revenue growth despite impacts from foreign exchange and the U.S. winter
·         11% growth in operating income and adjusted EBITDA
·         Stable margin levels continue to contribute to improved operating results

April 29, 2014
 
CONSHOHOCKEN, PA - Quaker Chemical Corporation (NYSE: KWR) today announced a 3% increase in net sales of $181.7 million for the first quarter of 2014 compared to the first quarter of 2013 net sales of $176.2 million. Foreign exchange rate translation negatively impacted net sales by 2%. Operating income increased 11% to $19.4 million in the first quarter of 2014 from $17.4 million in the first quarter of 2013. Similarly, the Company’s adjusted EBITDA increased 11% to $23.7 million in the first quarter of 2014 from $21.4 million in the first quarter of 2013. The Company’s earnings per diluted share for the first quarter of 2014 were $0.96 compared to $1.04 for the first quarter of 2013 and non-GAAP earnings per diluted share for the first quarter of 2014 were $0.95 compared to $0.96 for the first quarter of 2013. Despite strong operating results, the Company’s higher effective tax rate was the primary reason its earnings were down compared to the first quarter of 2013.
 
Michael F. Barry, Chairman, Chief Executive Officer and President commented, “We are pleased with our first quarter results especially in light of a continuing uneven global economic environment as well as negative impacts due to foreign exchange and the severe U.S. weather conditions. Our 11% growth in operating income and adjusted EBITDA is an indication that our business model and competitive positioning continue to serve us well. We experienced good growth in Europe and China, modest growth in North America and a decline in South America, primarily due to exchange rates.”
 
Mr. Barry continued, “Looking forward, we expect to see modest growth in most of our major markets, although some countries such as India and Brazil could continue to be challenging. We are also beginning to experience an increase in some of our raw material costs. However, we do believe our track record of increasing our market share and leveraging our recent acquisitions will continue and help offset the market issues we may experience. Overall, I continue to remain confident in our future and expect 2014 to be another good year for Quaker as we strive to increase revenue and earnings for the fifth consecutive year.”
 
First Quarter of 2014 Summary
 
Net sales for the first quarter of 2014 of $181.7 million increased approximately 3% from net sales of $176.2 million for the first quarter of 2013, including a decrease of approximately $2.7 million, or 2%, due to foreign exchange rate translation. The increase in net sales from the first quarter of 2013 was primarily driven by 6% higher product volumes, including increases across most regions.

Quaker Chemical Corporation
One Quaker Park, 901 E. Hector Street, Conshohocken, PA 19428-2380 USA
P: 610.832.4000 F: 610.832.8682
quakerchem.com

 	
 
Gross profit increased approximately $2.5 million, or approximately 4%, from the first quarter of 2013, which was primarily driven by the increased sales volumes, noted above, on stable gross margins of 35.8% and 35.5% for the first quarters of 2014 and 2013, respectively.
 
Selling, general and administrative expenses (“SG&A”) increased approximately $0.5 million from the first quarter of 2013, primarily driven by higher labor related costs and additional costs related to an amendment to the Company’s pension plan in the United Kingdom (“U.K.”). The additional pension related costs are non-recurring. Finally, these increases to SG&A were net of lower foreign currency exchange rate translation.
 
The change from other income of $0.3 million in the first quarter of 2013 to other expense of $0.5 million in the first quarter of 2014 was primarily the result of approximately $0.8 million of net foreign exchange losses in the current quarter.
 
Interest expense was lower in the first quarter of 2014 compared to the first quarter of 2013, primarily due to decreases in average borrowings and interest rates. Interest income was higher in the first quarter of 2014 compared to the first quarter of 2013, primarily due to an increase in the level of the Company’s cash on hand.
 
The Company’s effective tax rates for the first quarters of 2014 and 2013 were 34.8% and 24.1%, respectively. The primary contributors to the increase in the current quarter’s effective tax rate were lower changes in reserves related to uncertain tax positions and certain one-time items that increased the current quarter’s effective tax rate. Although the tax rate is inflated in the first quarter of 2014, we continue to estimate the full year 2014 effective tax rate to approximate 30%.
 
Equity in net income of associated companies (“equity income”) was generally consistent between the first quarter of 2014 and the first quarter of 2013. The primary component of equity income is the Company’s interest in a captive insurance company, which was higher in the prior year, including an out-of-period adjustment. Also, a first quarter of 2013 charge due to the devaluation of the Venezuelan Bolivar Fuerte affected the equity income comparison.
 
Changes in foreign exchange rates negatively impacted the first quarter of 2014 net income by approximately $0.6 million, or $0.05 per diluted share.
 
Balance Sheet and Cash Flow Items
 
The Company had net operating cash outflows of approximately $1.8 million for the first quarter of 2014. The net cash outflow relates to an increase in cash invested in the Company’s working capital during the current quarter, which was primarily the result of increased sales at the end of the first quarter of 2014, reestablishing inventory safety stock levels that were low at year end 2013 and higher annual incentive compensation payouts related to an improvement in the Company’s prior year performance. Historically, the Company’s first quarter cash flows are the weakest of the year, primarily due to the factors mentioned above. Overall, the Company’s liquidity remains strong, as its cash position continued to exceed its debt at March 31, 2014, with no borrowings outstanding on its credit facility, and, also, the Company’s consolidated leverage ratio continued to be less than one times EBITDA.
 
Non-GAAP Measures
 
Included in this public release are non-GAAP financial measures of non-GAAP earnings per diluted share and adjusted EBITDA. The Company believes these non-GAAP financial measures provide meaningful supplemental information as they enhance 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 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.

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The following are reconciliations between the non-GAAP (unaudited) financial measures of non-GAAP earnings per diluted share and adjusted EBITDA to their most directly comparable GAAP (unaudited) financial measures:
  
 	 	Three Months Ended
March 31,	 	
 	 	2014	 	 	2013	 	
GAAP earnings per diluted share attributable to Quaker Chemical Corporation Common Shareholders	 	$	0.96	 	 	$	1.04	 	
 	 	 	 	 	 	 	 	 	
Equity income in a captive insurance company per diluted share	 	 	(0.06	)	 	 	(0.11	)	
 	 	 	 	 	 	 	 	 	
UK pension plan amendment per diluted share	 	 	0.05	 	 	 	-	 	
 	 	 	 	 	 	 	 	 	
Devaluation of the Venezuelan Bolivar Fuerte per diluted share	 	 	-	 	 	 	0.03	 	
 	 	 	 	 	 	 	 	 	
Non-GAAP earnings per diluted share	 	$	0.95	 	 	$	0.96	 	
  
 	 	Three Months Ended
March 31,	 	
 	 	2014	 	 	2013	 	
Net income attributable to Quaker Chemical Corporation	 	$	12,730	 	 	$	13,619	 	
 	 	 	 	 	 	 	 	 	
Depreciation and amortization	 	 	3,888	 	 	 	3,935	 	
 	 	 	 	 	 	 	 	 	
Interest expense	 	 	525	 	 	 	744	 	
 	 	 	 	 	 	 	 	 	
Taxes on income before equity in net income of associated companies	 	 	6,546	 	 	 	4,133	 	
 	 	 	 	 	 	 	 	 	
Equity income in a captive insurance company	 	 	(846	)	 	 	(1,435	)	
 	 	 	 	 	 	 	 	 	
UK pension plan amendment	 	 	902	 	 	 	-	 	
 	 	 	 	 	 	 	 	 	
Devaluation of the Venezuelan Bolivar Fuerte	 	 	-	 	 	 	357	 	
 	 	 	 	 	 	 	 	 	
Adjusted EBITDA	 	$	23,745	 	 	$	21,353	 	
 
 Forward-Looking Statements
 
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 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, future terrorist attacks and other acts of violence. 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 the first quarter of 2014 results is scheduled for April 30, 2014 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 website at  http://www.quakerchem.com . You can also access the conference call by dialing 877-269-7756.
 
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About Quaker
 
Quaker Chemical is a leading global provider of process fluids, chemical specialties, and technical expertise to a wide range of industries, including steel, aluminum, automotive, mining, aerospace, tube and pipe, cans, and others.  For nearly 100 years, Quaker has helped customers around the world achieve production efficiency, improve product quality, and lower costs through a combination of innovative technology, process knowledge, and customized services. Headquartered in Conshohocken, Pennsylvania USA, Quaker serves businesses worldwide with a network of dedicated and experienced professionals whose mission is to make a difference.
 
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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,	 	
 	 	2014	 	 	2013	 	
 	 	 	 	 	 	 	
Net sales	 	$	181,674	 	 	$	176,193	 	
 	 	 	 	 	 	 	 	 	
Cost of goods sold	 	 	116,560	 	 	 	113,585	 	
 	 	 	 	 	 	 	 	 	
Gross profit	 	 	65,114	 	 	 	62,608	 	
%	 	 	35.8	%	 	 	35.5	%	
 	 	 	 	 	 	 	 	 	
Selling, general and administrative expenses	 	 	45,741	 	 	 	45,197	 	
 	 	 	 	 	 	 	 	 	
Operating income	 	 	19,373	 	 	 	17,411	 	
%	 	 	10.7	%	 	 	9.9	%	
 	 	 	 	 	 	 	 	 	
Other (expense) income, net	 	 	(473	)	 	 	346	 	
Interest expense	 	 	(525	)	 	 	(744	)	
Interest income	 	 	453	 	 	 	169	 	
Income before taxes and equity in net income of associated companies	 	 	18,828	 	 	 	17,182	 	
 	 	 	 	 	 	 	 	 	
Taxes on income before equity in net income of associated companies	 	 	6,546	 	 	 	4,133	 	
Income before equity in net income of associated companies	 	 	12,282	 	 	 	13,049	 	
 	 	 	 	 	 	 	 	 	
Equity in net income of associated companies	 	 	1,027	 	 	 	1,142	 	
 	 	 	 	 	 	 	 	 	
Net income	 	 	13,309	 	 	 	14,191	 	
 	 	 	 	 	 	 	 	 	
Less: Net income attributable to noncontrolling interest	 	 	579	 	 	 	572	 	
 	 	 	 	 	 	 	 	 	
Net income attributable to Quaker Chemical Corporation	 	$	12,730	 	 	$	13,619	 	
%	 	 	7.0	%	 	 	7.7	%	
 	 	 	 	 	 	 	 	 	
Per share data:	 	 	 	 	 	 	 	 	
Net income attributable to Quaker Chemical Corporation Common Shareholders - basic	 	$	0.96	 	 	$	1.04	 	
Net income attributable to Quaker Chemical Corporation Common Shareholders - diluted	 	$	0.96	 	 	$	1.04	 	
 
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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,	 	
 	 	2014	 	 	2013	 	
ASSETS	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	
Current assets	 	 	 	 	 	 	 	 	
Cash and cash equivalents	 	$	60,450	 	 	$	68,492	 	
Accounts receivable, net	 	 	178,945	 	 	 	165,629	 	
Inventories	 	 	78,014	 	 	 	71,557	 	
Prepaid expenses and other current assets	 	 	22,735	 	 	 	23,169	 	
Total current assets	 	 	340,144	 	 	 	328,847	 	
 	 	 	 	 	 	 	 	 	
Property, plant and equipment, net	 	 	83,854	 	 	 	85,488	 	
Goodwill	 	 	58,633	 	 	 	58,151	 	
Other intangible assets, net	 	 	30,472	 	 	 	31,272	 	
Investments in associated companies	 	 	20,494	 	 	 	19,397	 	
Deferred income taxes	 	 	19,936	 	 	 	24,724	 	
Other assets	 	 	36,174	 	 	 	36,267	 	
Total assets	 	$	589,707	 	 	$	584,146	 	
 	 	 	 	 	 	 	 	 	
LIABILITIES AND EQUITY	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	
Current liabilities	 	 	 	 	 	 	 	 	
Short-term borrowings and current portion of long-term debt	 	$	1,267	 	 	$	1,395	 	
Accounts and other payables	 	 	81,367	 	 	 	75,580	 	
Accrued compensation	 	 	12,188	 	 	 	20,801	 	
Other current liabilities	 	 	33,141	 	 	 	33,080	 	
Total current liabilities	 	 	127,963	 	 	 	130,856	 	
Long-term debt	 	 	17,215	 	 	 	17,321	 	
Deferred income taxes	 	 	6,459	 	 	 	6,729	 	
Other non-current liabilities	 	 	80,062	 	 	 	84,544	 	
Total liabilities	 	 	231,699	 	 	 	239,450	 	
 	 	 	 	 	 	 	 	 	
Equity	 	 	 	 	 	 	 	 	
Common stock, $1 par value; authorized 30,000,000 shares; issued 13,226,717	 	 	13,227	 	 	 	13,196	 	
Capital in excess of par value	 	 	100,429	 	 	 	99,038	 	
Retained earnings	 	 	267,707	 	 	 	258,285	 	
Accumulated other comprehensive loss	 	 	(33,015	)	 	 	(34,700	)	
Total Quaker shareholders' equity	 	 	348,348	 	 	 	335,819	 	
Noncontrolling interest	 	 	9,660	 	 	 	8,877	 	
Total equity	 	 	358,008	 	 	 	344,696	 	
Total liabilities and equity	 	$	589,707	 	 	$	584,146	 	

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Quaker Chemical Corporation 	
Condensed Consolidated Statement of Cash Flows 	
For the three months ended March 31,	
(Dollars in thousands)	
 
 	 	(Unaudited)	 	
 	 	2014	 	 	2013	 	
Cash flows from operating activities	 	 	 	 	 	 	 	 	
Net income	 	$	13,309	 	 	$	14,191	 	
Adjustments to reconcile net income to net cash (used in) provided by operating activities:	 	 	 	 	 	 	 	 	
Depreciation	 	 	3,075	 	 	 	3,056	 	
Amortization	 	 	813	 	 	 	879	 	
Equity in undistributed earnings of associated companies, net of dividends	 	 	(927	)	 	 	921	 	
Deferred compensation and other, net	 	 	2,944	 	 	 	(861	)	
Stock-based compensation	 	 	1,388	 	 	 	1,040	 	
Gain on disposal of property, plant and equipment	 	 	(48	)	 	 	(2	)	
Insurance settlement realized	 	 	(337	)	 	 	-	 	
Pension and other postretirement benefits	 	 	(1,665	)	 	 	(2,521	)	
(Decrease) increase in cash from changes in current assets and current liabilities, net of acquisitions:	 	 	 	 	 	 	 	 	
Accounts receivable	 	 	(13,387	)	 	 	(3,977	)	
Inventories	 	 	(6,389	)	 	 	(1,837	)	
Prepaid expenses and other current assets	 	 	(29	)	 	 	(457	)	
Accounts payable and accrued liabilities	 	 	(544	)	 	 	874	 	
Net cash (used in) provided by operating activities	 	 	(1,797	)	 	 	11,306	 	
 	 	 	 	 	 	 	 	 	
Cash flows from investing activities	 	 	 	 	 	 	 	 	
Investments in property, plant and equipment	 	 	(3,057	)	 	 	(2,723	)	
Payments related to acquisitions, net of cash acquired	 	 	-	 	 	 	(647	)	
Proceeds from disposition of assets	 	 	58	 	 	 	13	 	
Insurance settlement interest earned	 	 	11	 	 	 	14	 	
Change in restricted cash, net	 	 	326	 	 	 	(14	)	
Net cash used in investing activities	 	 	(2,662	)	 	 	(3,357	)	
 	 	 	 	 	 	 	 	 	
Cash flows from financing activities	 	 	 	 	 	 	 	 	
Net increase in short-term borrowings	 	 	-	 	 	 	594	 	
Repayment of long-term debt	 	 	(232	)	 	 	(2,438	)	
Dividends paid	 	 	(3,300	)	 	 	(3,208	)	
Stock options exercised, other	 	 	(205	)	 	 	(59	)	
Excess tax benefit related to stock option exercises	 	 	239	 	 	 	369	 	
Net cash used in financing activities	 	 	(3,498	)	 	 	(4,742	)	
 	 	 	 	 	 	 	 	 	
Effect of exchange rate changes on cash	 	 	(85	)	 	 	(498	)	
Net (decrease) increase in cash and cash equivalents	 	 	(8,042	)	 	 	2,709	 	
Cash and cash equivalents at the beginning of the period	 	 	68,492	 	 	 	32,547	 	
Cash and cash equivalents at the end of the period	 	$	60,450	 	 	$	35,256	 	

 	

1 Quaker Chemical Corporation Investor Conference Call April 30, 2014 First Quarter 2014 Results

 	

Regulation G The attached charts include Company information that does not conform to generally accepted accounting principles (GAAP). Management believes that an analysis of this data is meaningful to investors because it provides insight with respect to ongoing operating results of the Company and allows investors to better evaluate the financial results of the Company. These measures should not be viewed as an alternative to GAAP measures of performance. Furthermore, these measures may not be consistent with similar measures provided by other companies. This data should be read in conjunction with the Company’s first quarter earnings news release dated April 29, 2014, which has been furnished to the SEC on Form 8-K, and the Company’s Form 10-Q for the quarterly period ended March 31, 2014, which has been filed with the SEC. Forward-Looking Statements This presentation may contain 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, future terrorist attacks and other acts of violence. 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. Risks and Uncertainties Statement

 	

Speakers Chart #1 Michael F. Barry Chairman of the Board, Chief Executive Officer & President Margaret M. Loebl Vice President, Chief Financial Officer & Treasurer Robert T. Traub General Counsel

 	

First Quarter 2014 Headlines ▪ 3% revenue growth despite impacts from foreign exchange and the U.S. winter ▪ 11% growth in operating income and adjusted EBITDA ▪ Stable margin levels contribute to improved operating results Chart #2

 	

Chairman Comments First Quarter 2014 ▪ First Quarter 2014 x Solid volume levels across most regions x Stable margins despite select market challenges x Strong operating results x Effective business model and competitive position x Liquidity remains a Company strength ▪ 2014 Outlook x Modest growth with challenges in Brazil & India x Furthering share gains and leverage from acquisitions x Some increases in raw material costs x Continue to actively pursue acquisitions “Overall, I continue to remain confident in our future and expect 2014 to be another good year for Quaker as we strive to increase revenue and earnings for the fifth consecutive year.” -- Michael F. Barry, Chairman, CEO & President Chart #3

 	

Product Volume by Quarter Thousand Kilograms 25,000 30,000 35,000 40,000 45,000 50,000 55,000 4Q08 YTD Avg. 1Q092Q093Q094Q091Q102Q103Q104Q101Q112Q113Q114Q111Q122Q123Q124Q121Q132Q133Q134Q131Q14 Chart #4

 	

Financial Snapshot Q1 2014 Q1 2013 Net Sales ($Mils.) 181.7 176.2 Gross Margin (%) 35.8 35.5 Operating Margin (%) 10.7 9.9 Net Income attributable to Quaker Chemical Corporation ($Mils.) 12.7 13.6 Adjusted EBITDA ($Mils.) – Trailing Twelve Months 92.0 81.9 Adjusted EBITDA Margin (%) 12.5 11.6 Earnings Per Diluted Share 0.96 1.04 Non - GAAP Earnings Per Diluted Share 0.95 0.96 Debt ($Mils.) 18.5 29.6 Equity ($Mils.) 358.0 302.0 Net Operating Cash Flow ($Mils.) (1.8) 11.3 Chart #5

 	

Gross Margin Percentage 28.0% 34.7% 35.4% 32.6% 33.7% 35.8% 20.0% 25.0% 30.0% 35.0% 40.0% 2008 2009 2010 2011 2012 2013 Gross Margin Percentage 35.5% 36.4% 35.9% 35.4% 35.8% 20.0% 25.0% 30.0% 35.0% 40.0% Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Gross Margin Percentage Chart #6

 	

Adjusted EBITDA Baseline Historical Performance $40.1 $44.2 $66.8 $73.0 $80.9 $89.6 $95.0 6.90% 9.80% 12.30% 10.70% 11.40% 12.30% 13.10% 2008 2009 2010 2011 2012 2013 Q1 2014 Annualized Adjusted EBITDA ($ Mils.) Adjusted EBITDA Margin (%) 2008 – 2014 Annualized CAGR: 15.5% +620 Margin bps Chart #7

 	

Balance Sheet Net Cash / (Debt) -$100 -$80 -$60 -$40 -$20 $0 $20 $40 $60 $80 2008 2009 2010 2011 2012 2013 Q1 2014 $ Millions Cash ST/LT Debt Net Debt Chart #8

 	

APPENDIX

 	

Non - GAAP Earnings Per Diluted Share Reconciliation Q1 2014 Q1 2013 GAAP Earnings Per Diluted Share 0.96$ 1.04$ UK pension plan amendment per diluted share 0.05$ -$ Devaluation of the Venezuelan Bolivar Fuerte per diluted share -$ 0.03$ Equity income in a captive insurance company per diluted share (0.06)$ (0.11)$ Non-GAAP Earnings Per Diluted Share 0.95$ 0.96$ Chart #9

 	

Annualized Adjusted EBITDA Reconciliation 2008 2009 2010 2011 2012 2013 YTD Q1 2014 Net income 9,833 16,058 32,120 45,892 47,405 56,339 12,730 Depreciation 10,879 9,525 9,867 11,455 12,252 12,339 3,075 Amortization 1,177 1,078 988 2,338 3,106 3,445 813 Interest expense 5,509 5,533 5,225 4,666 4,283 2,922 525 Taxes on income 4,977 7,065 12,616 14,256 15,575 20,489 6,546 Restructuring and related activities 2,916 2,289 - - - - - Non-income tax contingency charge - - 4,132 - - 796 - Equity affiliate out of period charge - - 564 - - - - Mineral oil excise tax refund - - - - - (2,540) - Transition costs related to key employees 3,505 2,443 1,317 - 609 - - Non-cash gain from the purchase of an equity affiliate - - - (2,718) - - - Change in acquisition-related earnout liability - - - (595) (1,737) (497) - Equity loss (income) from a captive insurance company 1,299 162 (313) (2,323) (1,812) (5,451) (846) Devaluation of the Venezuelan Bolivar - - 322 - - 357 - U.S customer bankruptcies - - - - 1,254 - - Cost streamlining initiatives - - - - - 1,419 - UK pension plan amendment - - - - - - 902 Adjusted EBITDA 40,095 44,153 66,838 72,971 80,935 89,618 23,745 Adjusted EBITDA Margin 6.9% 9.8% 12.3% 10.7% 11.4% 12.3% 13.1% Multiply Adjusted EBITDA by Annual Run Rate 1 1 1 1 1 1 4 Annualized Adjusted EBITDA 40,095 44,153 66,838 72,971 80,935 89,618 94,980 Chart #10

 	

Trailing Twelve Months Adjusted EBITDA Reconciliation I = G + H H G = F - D F E = C + D D C = B - A B A Trailing Twelve Months Q1 2014 Q1 2014 Last Nine Months 2013 YTD 2013 Trailing Twelve Months Q1 2013 Q1 2013 Last Nine Months 2012 YTD 2012 Q1 2012 Net income 55,450 12,730 42,720 56,339 48,659 13,619 35,040 47,405 12,365 Depreciation 12,358 3,075 9,283 12,339 12,251 3,056 9,195 12,252 3,057 Amortization 3,379 813 2,566 3,445 3,239 879 2,360 3,106 746 Interest expense 2,703 525 2,178 2,922 3,853 744 3,109 4,283 1,174 Taxes on income 22,902 6,546 16,356 20,489 16,263 4,133 12,130 15,575 3,445 Non-income tax contingency 796 - 796 796 - - - - - Mineral oil excise tax refund (2,540) - (2,540) (2,540) - - - - Non-cash gain from the purchase of an equity affiliate - - - - - - - - - Change in acquisition-related earnout liability (497) - (497) (497) (1,737) - (1,737) (1,737) - Equity loss (income) from a captive insurance company (4,862) (846) (4,016) (5,451) (2,828) (1,435) (1,393) (1,812) (419) Devaluation of the Venezuelan Bolivar - - - 357 357 357 - - - U.S. customer bankruptcies - - - - 1,254 - 1,254 1,254 - Transition costs related to key employees - - - - 609 - 609 609 - Cost streamlining initiatives 1,419 1,419 1,419 - - - - - UK pension plan amendment 902 902 - - - - - - - Adjusted EBITDA 92,010 23,745 68,265 89,618 81,920 21,353 60,567 80,935 20,368 Adjusted EBITDA Margin 12.5% 13.1% 12.3% 12.3% 11.6% 12.1% 11.4% 11.4% 11.5% Chart #11