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Quaker Chemical (KWR) Q2 Earnings Top Estimates, Revenues Lag

Zacks Equity Research
·4 mins read

Quaker Chemical Corporation KWR slipped to a loss of $7.7 million or 43 cents per share in the second quarter of 2020 from a profit of $15.6 million or $1.17 a year ago. The bottom line in the reported quarter was hit by the impacts of the coronavirus pandemic.

Barring one-time items, earnings came in at 21 cents per share for the reported quarter, down from $1.56 a year ago. It, however, surpassed the Zacks Consensus Estimate of 11 cents.

Net sales went up 39% year over year to $286 million in the quarter. It, however, missed the Zacks Consensus Estimate of $292 million. Revenues were driven by additional sales associated with the company's combination with Houghton International, Inc. and the acquisition of the operating divisions of Norman Hay plc.

Quaker Chemical Corporation Price, Consensus and EPS Surprise

 

Quaker Chemical Corporation Price, Consensus and EPS Surprise
Quaker Chemical Corporation Price, Consensus and EPS Surprise

Quaker Chemical Corporation price-consensus-eps-surprise-chart | Quaker Chemical Corporation Quote

 

Margins

The company’s gross profit in the reported quarter climbed around 30% year over year on the back of sales related to Houghton and Norman Hay. Gross margin for the quarter was 34%, down from 36.5% a year ago. Gross margin was affected by reduced volumes and the impact from fixed manufacturing costs.

Adjusted EBITDA was $32.1 million for the reported quarter, up modestly from $31.4 million in the prior-year quarter.

Financials

The company ended the quarter with cash and cash equivalents of $322.5 million, up nearly fourfold year over year. Long-term debt was $1,070.3 million, up from $11.8 million a year ago.

Net operating cash flow for the reported quarter was $24.5 million. For the first six months of 2020, net operating cash flow was $44.7 million, up from $22.4 million for the same period a year ago, aided by additional earnings from Houghton and Norman Hay.

Outlook

The company sees gradual sequential improvement as it progresses through the back half of 2020.  It continues to expect full-year 2020 adjusted EBITDA to be more than $200 million.  

Quaker Chemical also expects its additional cost-savings actions, integration synergies, improvement in product margins and good cash flows to continue to help it amid the current challenging environment.

Price Performance

The company’s shares are up 25.2% over a year, compared with the 7.4% decline recorded by its industry.

 

 

Zacks Rank & Key Picks

Quaker Chemical currently carries a Zacks Rank #4 (Sell).

Better-ranked stocks worth considering in the basic materials space include Barrick Gold Corporation GOLD, Harmony Gold Mining Company Limited HMY and Eldorado Gold Corporation EGO.

Barrick Gold has a projected earnings growth rate of 74.5% for the current year. The company’s shares have gained around 60% in a year. It currently has a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Harmony Gold has an expected earnings growth rate of 528.6% for the current fiscal year. The company’s shares have shot up around 110% in the past year. It presently carries a Zacks Rank #2 (Buy).

Eldorado Gold has an expected earnings growth rate of 2,225% for the current year. The company’s shares have shot up around 44% in the past year. It presently carries a Zacks Rank #2.

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