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Jun 30, 2020
Quaker Chemical Q2 2020 Earnings Report
Quaker Houghton's Q2 2020 results were impacted by COVID-19, with net sales declining by 27% compared to pro forma 2019. The company reported a net loss, but adjusted EBITDA remained positive due to cost synergies and the inclusion of Norman Hay.
Key Takeaways
Quaker Houghton reported a challenging second quarter in 2020, with a net loss of $7.7 million due to the impact of COVID-19 on global industrial production. Net sales increased 39% year-over-year to $286.0 million, driven by the Houghton and Norman Hay acquisitions, but declined 27% compared to prior year pro forma net sales. Despite the challenges, the company generated cash, reduced net debt, and realized integration cost savings.
Net sales increased 39% year-over-year to $286.0 million, but declined 27% compared to prior year pro forma net sales due to COVID-19.
The company had a net loss of $7.7 million, or $0.43 per diluted share, compared to net income of $15.6 million in the prior year.
Adjusted EBITDA was $32.1 million, down 44% compared to pro forma prior year due to COVID-19, but benefited from cost synergies and Norman Hay.
The company generated cash, reduced net debt by $13 million, and realized $12 million in integration cost savings.
Forward Guidance
Quaker Houghton anticipates gradual sequential improvement in the second half of the year and expects full-year adjusted EBITDA to be more than $200 million.
Positive Outlook
- Expect gradual sequential improvement in the second half of the year.
- Full year adjusted EBITDA expected to be more than $200 million in 2020.
- No expected liquidity or bank covenant issues.
- Integration synergies, additional cost savings actions, and improvement in product margins are expected to help during this challenging time.
- Expect significant increases in adjusted EBITDA in 2021 and 2022 as integration synergies are completed and demand rebounds.
Challenges Ahead
- Economic uncertainty caused by COVID-19.
- Significant declines in pro forma net sales due to COVID-19 across all segments.
- Americas was the most impacted region.
Historical Earnings Impact
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