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Sep 30, 2021
Quaker Chemical Q3 2021 Earnings Report
Quaker Houghton's Q3 2021 results were announced, showcasing increased net sales and net income compared to the prior year quarter.
Key Takeaways
Quaker Houghton reported a 22% increase in net sales to $449.1 million driven by higher sales volumes, price increases, and favorable foreign currency translation. Net income increased to $31.1 million, or $1.73 per diluted share. The company experienced challenges from escalating raw material costs, which negatively impacted gross margins.
Net sales increased by 22% compared to the prior year quarter, reaching $449.1 million.
Organic sales volumes increased by 6% due to market share gains and gradual improvement in end market conditions.
Net income rose to $31.1 million, or $1.73 per diluted share, compared to $27.3 million, or $1.53 per diluted share in the prior year quarter.
Adjusted EBITDA increased by 3% to $66.2 million, driven by increased net sales, higher cost synergies, and foreign exchange gains, offset by lower gross margins and higher SG&A expenses.
Forward Guidance
The company expects raw material costs to continue to increase in the fourth quarter, but at a slower pace. Price increases are being implemented to address these costs, with the goal of reaching targeted product margin levels by the end of the year. While top line headwinds are expected in Q4, sequential improvement in product margins is anticipated, with adjusted EBITDA expected to be in a similar range to Q3. 2022 is expected to be a strong year with net sales and earnings growth above long-term trends.
Positive Outlook
- Raw material costs are expected to increase at a slower pace in Q4.
- Price increases are being implemented to offset higher raw material costs.
- Targeted product margin levels are expected to be reached by the end of the year.
- Sequential improvement in product margins is anticipated in Q4.
- Net sales and earnings growth are expected to be above long-term trends in 2022.
Challenges Ahead
- Raw material costs are expected to continue to increase in the fourth quarter.
- A negative impact is expected in China due to power restrictions.
Historical Earnings Impact
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