Earnings call transcript Q4 2022

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Operator

Greetings, and welcome to the Quaker Houghton Fourth Quarter 2022 Earnings Conference Call. A brief question-and-answer session will follow the formal presentation. [Operator Instructions].

As a reminder, this conference is being recorded.

I would now like to turn the call over to Jeffrey Schnell, Vice President of Investor Relations. Mr. begin. may you Schnell,

Jeffrey Schnell

Good XXXX welcome earnings Paul. quarter our and full-year conference morning, you, to and fourth Thank call.

and our Joining our us Counsel. Vice Hostetter, our President Tometich, Officer; President Senior and Chief Robert today Executive Officer; General are Traub, Chief Financial Andy and Shane

U.S. relate comments of financial February XX, after the information Our yesterday, released XXXX. the close to markets

Our website. on our press investor release and accompanying slides can be found

to events contain and commentary involve forward-looking and may potential performance. view discussion forward-looking may statements no differ. to these prepared call current financial reflecting actual company the cause Quaker Both of uncertainties statements. on is obligation this future their effect and updates which Houghton's under company's the provide during to results The and operating risks, statements These subsequent

and Appendix contains has on are presentation to the available also certain company of non-GAAP financial measures, GAAP of our the comparable website. financial non-GAAP measures financial the these presentation in the most measures reconciliations provided which This materials, directly

additional For to the with filings our SEC. please information, refer

my Now, to over Andy. turn call the to pleasure it's

Andy Tometich

everyone. Jeff, good morning, you, Thank and

in margins. environment. results turn we deliver displayed Overall, sheet. generated fourth our quarter, drove and to cash $XX together cost We prior improvement EBITDA strengthened management, in driven our in the key to execution compared our balance We and demonstrated double-digit initiatives flow sales our In the and an progress delivered uneven growth, continued by year, value-based gross to million we and pricing difficult of operating on work an on ability priorities. which disciplined operating

the with reflected end most end the This across environment, continuation steel was segments markets. at result our our degrees but Volumes of a was industrial regional of the to was evident primarily year. compared decline our Sales a volumes did and and year, prior which in half expectations. in this largely and line varying back markets pronounced softer market in the

year-over-year it currency top strong a balancing of of this improving the priority historic product margins to we improvement foreign mix in Though, price quarter, our partially approximately customer needs fourth impacts, delivered team's XX%. illustrates levels. back with financial substantial the In was by and and relationships our execution, offset

third segments. quarter, and patterns. volumes sequentially increased as declined Compared mix seasonal demand another by quarter to X% and across pricing typical product Sales the softer was amplified all fourth X%

margins our XXXX. period. progress our the supply prices inflationary material, dampened by XX.X% slightly fourth driven increase an and were compared of are logistics margins the points Gross basis pressures offset making quarter quarter, to year approximately cost manufacturing, in Gross declined third and This compared raw of in the our higher primarily with costs. chain Though, on higher we margins, progress quarter. the to the by XXX partially was prior

costs due some mix our material Raw on chain challenges materials increased Americas certain supply to in key the raw product within part sequentially segment. impacting

had resulting cost also December. lower in especially volumes We fixed from some absorption

customer and supply service challenges, intimate a our hallmark model. difficult we delivered of this circumstances, in our continuity commitment for superior these Notwithstanding of and customers is to again

improve foundation the we million share. per Taken of ongoing financial together, company quarter, EBITDA $XX strong demand in operational of The the a uneven the and and despite for earnings $X.XX adjusted on and XXXX environment, and performance complexities diluted XXXX. adjusted half the fourth in in of is to delivered second

of both again, all year-over-year Once our strong segments. price on was sequential basis. capture our to a across and Turning segments

except Unfavorable was basis volumes a year-over-year and in all translation year-over-year headwind. Asia-Pacific. currency for also However, foreign significant on declined a sequential segments

Asia-Pacific, year-over-year and Global business our Asia-Pacific, Business. and sequentially segment Specialties improved EMEA in The the continues. recovery in a Specialties on in they our Margins year-over-year and Americas, margins basis increased Global the

declined Americas the Segment in operating margins sequentially.

on lower effect However, related the this and was product some well constraints raw volumes primarily as supply corresponding higher to mix. material cost as absorption acute to related

prior levels. well slightly remain sequentially, year and they our pre-pandemic control. improve The margins profitability path EMEA While below is to within improved

actions, a and have operational we range through gives identified improve begun targeted addition cost In we profitability. further as actions implement us in targeted to our and of further efficiencies our margins improve confidence our XXXX. ability to to price This to progress

net uncertainty, and challenging disruptions, strong and Turning cost and We to significant environment inflation, manufacturing a macroeconomic was supply very exchange highlighted full-year. of geopolitical $X.X the by finished sales despite raw XXXX material achieved This billion. ongoing chain foreign impacts. record and

in adjusted year. inflection gross XXXX, drove as margins EBITDA, of second we delivered In of the $XXX in an half the we million

We foreign also in from exit faced region our and the approximately $XX headwinds exchange XXXX. million from of Russia-Ukraine EBITDA

volume due were impacts in the addition, there to China. situation COVID meaningful In

significant currency pricing headwinds, segments the sales Excluding to in were double-digit higher four XXXX compared by XXXX, in foreign all gains. led

the but increased in in total, in with mid-single-digits XXXX, in Volumes Specialties our Global a market our in declined we which segments. percent largely indices, declined Business estimate line our volumes were range. other In

continue to contributed net to to the due XXXX, we of value-based includes volumes volumes approximately ability Our to X% new impact declined earn our which business in pricing initiatives.

Global increased and in and XXXX, Americas Asia-Pacific in significantly Business compared Business, Specialties in Global Americas were the roughly and in were and Segment flat flattish expanded in Asia-Pacific to margins down Segment the EMEA. Specialties declined the EMEA. the in earnings

the accomplish, margins to EMEA, still am hard especially second team's of I improvement the more in proud of XXXX. While driving much there work half is in in

outlook. the to Turning

from quarter, headwinds uneven end improve progress priorities softer Lunar a of on overall volume timing backdrop the first progress and New what in Year likely predict control. We we and quarter and some XXXX trends. the we continuation from manage margins The macroeconomic we executing is our difficult to can expect continued market of to levels gross while the In through environment remain on market as fourth will we XXXX. expect

primarily labor inflation. also will SG&A costs additional some to We have due

are XXXX. We optimistic from we that first improve cautiously demand as progress will levels through quarter

XXXX. expect driven business underlying be improvement earnings and outgrow as management, by ability our to cost deliver XXXX flow to growth continue This and compared will cash we an margins free full-year, and our in to the new at as earn improved Looking to markets. well gross in

what back, proud Quaker the to on objectives Stepping Throughout and we These we our success. confident I'm culture of and long-term highly XXXX, our in year, have objectives. growth Houghton. accomplished power focused company support I'm in the remained together future the will of

our We a in centered intimacy. are to our our continue fortunate is and our a themes digitization, we advantage differentiated sustainability of through strategic will our to disciplined scale, foundation, customers, for which company, earning customer have strong invest on with drive With take and value approach, stakeholders.

and bit to footprint will we success our products enhance themes, is a capabilities these efficiently how to becoming like our to critical customers, our more. I'd valuable even Globalizing more our to long-term and highlight supporting our growth. are most leverage an of partner and which long-term portfolio solutions scale

customer external high including drive digital data, tools intimacy offering deeper fluid of value our touch to further using and will differentiates delivery cost levels internal to intelligence also our our while that enhancing proposition. manage and Digitization serve,

will continue to be at core sustainability And the company. of our

develop our building and We are further critical additional driving our of towards sustainable platforms goals. XXXX solutions capabilities to

is geopolitical, at initiatives and operating and we plan. to program actions strategy. to and the profitable support those Therefore, plan improve a productive strategic This of three be our strategy, global include organization, and meant range themes our the remain. structure goals next customer always complexities forefront, to and drive And years will cost of optimize upgrade a environment in the deliver have more and the on on uncertainty These enacted intimate strategic go-to-market and long-term improve cost differentiate the further things and that fourth long-term leading company initiated enable and growth to current our will accelerate macroeconomic, organization. quarter, optimization footprint, our our portfolio and focus a our the while are over will simplify few the

results. with quarter outgrew added to enhancements exited momentum share XXXX, we we summarize, increasing which by In delivering customer drove To our customers, going and the we value committed as on for forward. productivity wallet to we're build markets we our and new expect fourth

further our to and we In actions our margins XXXX, cash improve flow. take will designed

We expand capabilities, of products. we will transformation and particularly our portfolio our use as digital innovation to sustainable advance

diverse people, We and in will globally. culture our continue to invest talent

healthy we improving our actions, a strategy, with core capital our portfolio acquisitions, better disciplined including our future. and allocation balance and will executing while be and deliberate company maintain the price will cost, the We on profitability in bolt-on complementing sheet, positioning investments, our for

Quaker and capabilities to confident I our to to come. customer in drive order Houghton's growth and our operational in am years industry-leading harness scale and excellence value power proposition the ability for global differentiated of intimate

financials. I'd discuss With to that, to Shane it over to pass the like

Shane Hostetter

and Andy, good morning, Thanks, everyone.

by with response driven decline recent an was sales inflationary our X% to realized implement these and the Consistent In This $XXX drove a sales. across increase the pricing compared pricing from sales of in partially exchange. quarters, in And continue the to another was impact initiatives to portfolio gains we as net basis, year. pressures volumes foreign price which on by actions XX% sequential we fourth offset of index, net we the quarter, business. total delivered X% unfavorable our value-based in on increase persistent our increase in prior X% million, a a X% a

part tolling to as divested of Russia the on conflict of wind well year, previous Ukraine, due to between prior from the combination. we the Compared and the as volumes as declined ongoing down volumes

X% about to the patterns. market by in Excluding year. volumes, by these decline price soft volumes normal as impacts, were declined a in prior increase compared offset X% X% a further two impacted our Sequentially, seasonal was conditions

with XXX year, markets. compared improvement Gross of inflationary products key in points pricing on balance, implemented drivers in limited XX absorption the The actions to line costs, were especially primary the and costs, XX.X% did significant cases, availability our our certain XX.X% reflects manufacturing contend basis last mix, higher both of in Gross materials with and fixed were and December. expected for margins believe in high-value In underlying impacted material quarter volumes the largely on prior margins point some product our quarter. to year-over-year sequentially. were in this raw in pressures. we raw strong XX.X% decline The which our basis Americas, fourth than

we make margins increased fourth historically high stabilized raw levels. material with to at cost through actions further XXXX. taking, pressures largely but optimization advance and we costs on material the expect another While as remain X% have quarter, our cost progress we in the are Combined raw

approximately Looking to million pressures relatively labor increase prior inflationary the compared costs, percent as SG&A, basis, or non-GAAP on reflects year-over-year This period. a had remained at on year we consistent $X our an but X% a of of sales. our

inflation costs mid-single-digit our XXXX. expect in We labor on

quarter, in in as well EBITDA an which declined was were $X lower mentioned prior the offset year. the to Sequentially $XX currency. compared volumes as volumes that a gross seasonally foreign was adjusted margin on XX% the an million adjusted Our its margins, the lower which of was primarily impact earlier. reflects of improvement This and million, of impact fourth increase which EBITDA gross result

From a increases significant compared in foreign selling the segment excluding EMEA year, prior Business perspective, Global and delivered by Specialties to double-digit the sales driven growth the prices. Americas, exchange,

Our customers in China. volumes were pronounced Asia-Pacific, did indirect though direct the in COVID to and most they segments, all in our impacts due of decline primarily on

declined, For remaining volumes our XXXX conditions reflecting softer in the XXXX. end compared market to segments,

our Related impact Business. currency, headwind in headwind segment, and in a mid-single-digit Specialty FX was double-digit Asia-Pacific, a a foreign in our to remained EMEA high-single-digit Global

again, pricing, degrees. varying segments, sequential realized but positive at All

uneven due sequentially EMEA, to across the impacts increased patterns Asia-Pacific declined resulting on demand Specialties and from our COVID Businesses, of customers. Americas, volumes Our the the timing Global of while

a impact low-single-digit Asia-Pacific segment. in our was currency Foreign

of delivered fourth Specialties in the those in segments. margin This strong year-over-year significant Global increase three was quarter. operating in improvement earnings Asia-Pacific, We Americas, and our result Business a a in

remains behind continued year due to prior the EMEA pressures. margin

Specialty pricing ahead, in improve and of Sequentially, and increased EMEA. are Asia-Pacific our segment. we actions the Global operating taking Looking Business, additional this cost margins profitability to the

However, in right demonstrates and to the globally. Americas, primarily path material down manufacturing raw improvement were XXXX on margins absorption, they we due corresponding The our recovering cost modestly are costs, throughout the mix higher to before. mentioned

$X.X volume XX% capture price of headwind the of decline year-over-year. full-year. to to strong increase in volumes, This markets, is overall approximately the This total volumes related by our a we the X% our we volumes, with war X%. globally. and line the Without divested softer conditions Russia-Ukraine In sales X% partially was due XXXX, offset an reflected currency. billion, total primarily foreign estimate from to result of XX%, and which generated declined impacts in Switching a tolling

include wins, business due new contribution which impact pricing business a value-based year. of the positive was we for to the Net declined our X% initiatives,

growth profitable approach as prioritize will on opportunities. company We the this we value-based to focus continue long-term

XXXX and by saw raw business. our cost impacted inflation [sic] the on year. throughout the margins Our gross were energy XX.X% manufacturing incremental year we These for were material the

did year, XX the points margins progress X Our than than in XXXX throughout half and points gross we approximately second of improve percentage nearly half the higher first and were basis as higher XXXX. the prior

is the We impacts. delivered decision approximate currency of the Russia-Ukraine in region XXXX. $XXX headwinds a build, from million of solid combined considering result This to exit adjusted EBITDA EBITDA our $XX to foreign and million

cash in We earnings of will organization, margin earnings price are power the this we to and deliver flow. and and cost through emphasize to confident recovery improved free actions continue improved

segment, pricing in foreign our initiatives. partially lower segment, increase exchange, our This in our across XXXX, volumes each sales net by Specialty global segments increased by By all except excluding Business. was Global offset driven

our segment, XXXX. was meaningful a headwind a seeing most in EMEA impact. pronounced also currency Foreign in was XX% nearly This

grew Americas Specialty and earnings Global in the Segment Business operating in XXXX.

with was in segment volumes. as lower the year our Our improvement an prior margins consistent impact Asia-Pacific segment offset the of roughly

margins its continue XXXX, the For to EMEA, both earnings in declined as on and recovery. cost price segment versus its lag

As underway improve the actions in our segments, mentioned, especially have profitability EMEA. to of we

our both in other expense to compared quarter expense the line, fourth and interest prior year. higher and sequentially the were Below

of interest debt reflect borrowing Our cost costs higher costs fourth the approximately for our X.X% with quarter. at

in non-recurring timing for approximately rate, and the effective excluding XX% due tax earnings. mix quarter in and XX% was and items XXXX, overall non-core Our primarily to fourth

pending full-year to changes or our in domestic legislation. rate expect roughly XXXX XXXX We foreign levels line tax effective to be with any

took was the of which capital. a in in inflationary of included quarter today, on This loss interest of new $X.XX. share net charge per we the effect the war our was market our goodwill the of the conditions reflects Ukraine, earnings a a diluted recorded $X GAAP cost non-cash higher as program. primarily charge result quarter on fourth savings EMEA restructuring impairment Also, our impacts other the cost of we we ongoing energy rates unprecedented of Our see segment, cost of and XXXX, million pressures, part fourth and result

quarter Our prior earnings in to which $X.XX non-GAAP up in year, reflecting operating $X.XX, the year-over-year. share our fourth diluted were X% the improvement earnings was compared per

the $XX million quarter, in generated resulted cash full-year for We liquidity. to Switching in which XXXX. $XX of from operations million

fourth our quarter. we improve. flow conversion in While In capital like, than higher to working remains XXXX, would we expect we to progress made cash the begin

in the and to $X invested in approximately net This We $XX translates million X.X% in million capital full-year expenditures our quarter of XXXX. sales.

be expect of Looking in to ahead, X% we CapEx X.X% to XXXX. in the range sales of net

with with prudent be investments, balancing will macroeconomic strategic we the However, overall these our environment outlook.

Our balance remained liquidity strong. sheet and

return. Our our net we shareholder and the quarter part strategy, adjusted EBITDA. towards of to which other allocation reducing a capital Xx and ratio fourth at our X.Xx, $XXX remain priorities the net target end was to including the committed of our net our remain was of leverage critical will balance our dividends million, continue in debt leverage We

geopolitical macroeconomic remain environment The predict. and difficult to

best-in-class remain initiatives, and and our well-positioned delivering as XXXX growth have our customers. our to fully beyond. as to ample and opportunities providing services various end markets, margin within We well products in improvement are committed We earnings

Before highlight new and of I to our alignment I the reflect first in business close, of beginning we the will that management our reportable XXXX; want quarter structure. segments to executive better change

as Asia-Pacific. and as segments: Specialty will will Global three in respective EMEA, well structure formally those the new These consist Business regional Our regional Americas, include in geographies. of segments the prior new breakdown results

will you financial the providing be future. in comparable We information

to will Andy. I turn that, back With it

Andy Tometich

Thank you, Shane.

again and thank living but for team was customers, Quaker to we entire our once to well. the ongoing company our I their for XXXX our commitment values. Houghton year, executed challenging a want

we'd address with questions. to happy your be And that,

Operator

question-and-answer Thank be you. session. a [Operator Instructions]. We'll now conducting

Thank you.

from first Please Seaport your Mike Our question proceed is question. Harrison with with Research Partners.

Mike Harrison

hear and the demand wondering about inflation Congratulations rates solid trends the of of you year. to particularly what in as of kind some industrial China on around a have signs can interest Americas and terms result I'm Was regions. in different finish higher maybe world underlying concerns in post-COVID you be you're talk affecting the to whether any us may seeing demand demand? you're in a recovery of the walk any if seeing interested and if about

Andy Tometich

Yes. think the saw quarter I Thanks, of kind starting we in fourth Mike. Maybe there's continuity. what because with some

there's lot the offline. of on as uncertainty part energy in there's of a assets knock-on of making the and the markets. the Ukraine a being in still with impact case being the First end war result about been is in taken pressure know underlying all lot EMEA, a primarily markets of But the metal some of the of effects We additional down.

a And Europe, a work quarter, inventories working are These I greater there products some more little of then, through And as in there downstream of of knock-on of the bit again, was as seasonality Americas, products. not I kind fourth our though, degree, think was a effect. think having well the down and inventories. the To also in them in these of some customers' are inventories. our

initiatives In inventories, combination uneven a And in characterize also but was small a in because after churn I being think well, controllable some I the was policies. of Asia-Pacific, going. amount of think I of restart was margin There for as there relaxation of the factors. particular, also that worked the pretty our system. customer would out of a we Asia -- there us margin had COVID then,

than of being a There's is Europe But action. I online. still as forward. I say think assets of fair in kind we a words that, stage, would about a at amount back hear uncertainty. it's Mike, brought lot lot continuing go of more this We

And an place. prove see unstable world where we'll is So to just the that goes.

working want in a we've moment, the the that devastating dealing objective a hard comment, with been effect that situation very impact a families to there. But just our of too, their safe, And I in bit ensure take primary are Just and with unclear. knock-on and colleagues been is very our We've safe, to they're weeks, there. Turkey. that's last the two little

off coming we're Asia, In Year. the New Lunar of

of little restarts a of there chain COVID that's bit uncertainty to again, the how So these going and some unevenness. supply and with, play

down that occurring some still the the to issues those affecting a materials we our but ability, raw is think Americas, the demand We for of highlighted couple still respect with destocking. is wind there. probably products With had on some we

result the what fourth continuation bit little in quarter. that of we is of So saw a a

I anticipate we back to through the system, more we little a think as stability. I have will these year. and be to we'll going However, things, shorter-term that it's their improve through lot move the A way think of worked

we're year So where cautiously about the optimistic develop. will

Mike Harrison

All I detail bit like to set wanted if on the over could little That comprehensive. Thank bigger we get taking, course a the more the a you. implemented is be it's few to some actions. sounds going if very was It's of years actions of helpful. this see also you're that more cost right. going it of be to next

help is this SG&A? what procurement do the more and Is side? like? for program? project And the operational would look the on And So how understand, entire costs it us more you much savings

Andy Tometich

We add our of with efficiently get our first. are effectively consistent and growth strategy Shane as maybe thing the don't intimate and Yes. these actions model. Thanks, commentary I'll to and as want continue to started bit Mike. strategic -- intent do first support to to I'd a Why then customer mean that that I'll I a is possible. highlight little ask

to big touch around Obviously, the will businesses world. a focus all Europe. of we're on our going have It

But the activities optimize and we've overall profitably. we've customer some our goal started model already delivery As to of grow to highlighted, there. is intimate the

improvements and a supply organization, at optimization major will that So opportunities, take have on some simplifying some the looking of include global footprints, go-to-market. broader as buckets now we can scale we chain advantage

can as some So while, indicated, maybe we're for color there. add going to a But Shane, be continue looking broadly. and will you pretty it

Shane Hostetter

Mike. Yes,

a -- we in already coming in took quarter, will restructuring quarters. mentioned, million began $X just and the it fourth there as it So you charge so continue

and I possible to be or the also growth. is emphasis SG&A, the simplifying across my runs about drive profitability repositioning talked of going a just scripts, EMEA and about footprints whether this the it Andy is cost of be up business in would as growth that profitable program. that perspective talked net mid-single-digits, and portfolio for with As From

Mike Harrison

in point of a terms overall have All this this or right. the you do guys program, number savings And I expected from guess a at ballpark?

Shane Hostetter

the Thanks, Not Mike. will but come. time, we as at Yes. quarters this keep to informed you

Mike Harrison

have energy a I bit of what and on now that costs last raw terms and how was talk then in and just XXXX? And Was as inflation uncertainty. maybe about Okay. But to headwind your $XX get know lot of around are of expectations kind mentioned million question for just material more You your we help headwind is in better XXXX? little XXXX? a there's in of understand of FX understanding maybe related maybe into the Russia. QX EBITDA start in than inflation expectations us much impact a I EBITDA

Andy Tometich

materials, raw think of the on the start half I'll back Mike. can Shane on wrap and then that. Thanks, I

still characterize of an I I There's mean, overall continue see we as some in stabilizing correct. in to uncertainty. we as amount highlighted, quarter, it materials the increase costs. You're raw raw fourth would pool. material as fair a even

put pretty biologically formulations base differentiate. and well petroleum oils, a base enabling derived we a our number additives significant pool as forth and of together that large complicated have that you allow chunk buckets portion know, a As oils then us with really on surfactants to chemistry and major of so derived as

dynamics components of to there's and those those each in within And one within happening those. we of different stabilize. one total, starting individual each But see in buckets

on only supply which customers. security but managing of our Really, we reinforcing our to be proposition, is that, value to not continue focused

the did that we fourth possible with that continue only focus, with supplier, we also situation everything deliver but ensure continued we've that quarter, had very to keep to closely worked security we customers So our even and our supply. not the in to

going look make to raw will to necessary. the they we are again, future, we starting stabilize. at as so But are adjustments where believe continue in materials And

Shane Hostetter

Yes. throughout Mike. gone the Obviously, raw cost had over up your bucket have beginning certainly, And inflationary latter we XXXX, significant on year. our XX%. raw on combat pressures of biggest the we've materials, to have point, materials at the as our

to work margins. So on perspective and dollar on And we've our inflationary as SG&A. also, then had to get side back then well to, obviously, obviously, that price our a that back costs from energy as related significant

Operator

Thank you.

with next question your David Please Begleiter Our question. is Bank. with from Deutsche proceed

David Begleiter

on Thank pricing you. Andy, Good morning. -- just

Andy Tometich

Hi, David.

Shane Hostetter

Hi, David.

David Begleiter

morning. Good

Just you much on carryover in pricing, pricing took how we have actions XXXX? in XXXX from

Andy Tometich

Yes.

for I use-based on ownership David. customers. So and I mean, to first all, we really And that value cost the of for question, and the thanks want reinforce our continue our total pricing of

We So targeted very efforts. that were all XXXX, forward. we our in still go on actions that very have as that throughout continues continues. working We hard of

depend go. previously, indicated, on our talked raw going we to contracts. really, where to quarter indices And have it's do materials I've As and that with about about is we've of a customer base tied

how As that I that on materials stabilize, happens pricing. are forward, what with moves raw will mentioned, impact upon starting to depending direct a have

here relationship So value manage well, what improvement. drive use goal on we make continue our customers. they're to the supporting as to is we're approach, the to sure want will and the and that focus We with margin doing

Shane Hostetter

expecting obviously, year-over-year. about a Andy David, at from Yes. change but all to talked pure And increase that, things highlighted pricing just could things just equal. all mid-single-digit on that equal, add We're ramp the a things and just to year,

David Begleiter

capital? given should use working of expect of to And cash the we Very capital, working cash the on just last some from years, release this year Shane, good. couple

Shane Hostetter

Yes, David.

working of In an in working efficiency. obviously, the we to two So capital, effects drive improving due reductions as on these over our our largely and investment working million we really we focus capital had last inventory continuity QX, did some I've over years, supply. capital are improvement of prioritize $XXX as around

we capital, Looking that our improvement where XXXX, drive and cash conversion. to our improvement possible will at in working continue to flow drive in

in definitely our is flow. to an years, to prior cash we'll so And improvement look compared XXXX

Operator

you. Thank

next Our with Arun Please with is Viswanathan proceed question your from RBC. question.

Arun Viswanathan

well. Great. taking Jeff. morning, for Andy, my and Thanks you're Shane questions. Good Hope

So guess I --

Andy Tometich

Good morning, Arun.

Arun Viswanathan

that When was a destocking was on some that's if if And as little morning. bit kind there in do look of growth expect Good some QX? into of Thanks. maybe hampered touch you you also well you seasonal And in QX, there QX? can QX impacts and so subsiding?

Andy Tometich

Arun. Yes. Thanks, Yes.

As to their with our see not products but I a we se few with really across varying destocking, different our of degrees again, more about a we ago, it's because highlighted per and just-in-time customers customers minutes regions, downstream. our model, did our are

sure, we move that still quarter not year the we Asia but the we the particular, uncertainties basically, comes of only occurs where -- through in the were with fourth well behind improve, associated in seasonality us, that calendar unevenness those as fourth as is full Lunar I coming as pickup For the in out With to the there quarter, in we a things believe Year. in that things there's region, around New XXXX. some as continue will think

Arun Viswanathan

recovering percent those of that? an that And EBIT pre-COVID help targets, that we some You mentioned you dollar basis that. should about EBITDA prioritize how you that? on think or margins? or are basis Where do levels? your measuring And margins if to Is to dollar you characterize could what us want with

Andy Tometich

Sure.

So from margin to -- the to have driver higher standpoint. XX% relates historic gross a levels, make big ultimately, been back margin gross for historic in The gross to But us the the on EBITDA. our the pre-COVID get we above goal progression levels on is margin. a levels and

our those place. we continue through on this to So our for that but quarters. been It's we going in now has remain work with value-based that goals We've us initiatives communicated multiple as with work goal. to time take it customers, and

Shane Hostetter

Yes.

margin above range to EBITDA add XX% well. historically, XX% Andy that mentioned certainly margin as from Arun, perspective to that, above as EBITDA focus perspective largely to which an Just equate well. we on

Arun Viswanathan

sounds Great. Thanks, but clarify successful obviously, on, that it catch to but obviously that still price, Shane. bucket so then, relatively to And just you've along. is like been more up putting moving there's through in

demand. uneven noted You

volumes of Or that of those you that what plus basis? be recovering there? say, run margins some cost kind it back the kind to may order from FX And in you Is rate get of XX% XXXX now really it get the what's margin? leverage would are get that, and that the is that Or do is pressure? early EBITDA Or improvement? fixed you So timing the there? an get to buckets expect when less to

Andy Tometich

have we've biggest I used and current in in for value focusing it continuing value and continued inflationary environment. And to the robustness use. to So is customers use. our lever of add seen think the more this on historically approach And the we us we've the for that's

that continuing more value, of our continue as add goal to more is forward profitable customers is to to to go work growth their here. So we in ensure primary wallet with of participate

As But before, opportunity the pricing raw which forward approach. focus in mentioned that we'll the they and as depending the use our to I've regardless, materials us move path a quickly. degree stabilize little to and give value upon hopefully more will on continue

Arun Viswanathan

the do a comp? manageable given slight you how to just movements lastly, tailwind here FX? just we clarify, the in of about to should just did and the see that think again, maybe expect that you slightly year, headwind more given FX, some Or currencies And a last be

Shane Hostetter

strong year-over-year the year about think obviously, So I throughout If Arun. a last had the year. right? dollar Yes, comp, we U.S.

to right the I be right? sequentially, probably that was where as there it around headwind. a it's if comparison year-over-year going is looks look That I like think So I think at rate neutral. the about, said, now, given

probably big not it's impact So versus as year. prior an sequentially,

Operator

you. Thank

with from your Our next question Alexander Laurence with Jefferies. proceed is Please question.

Laurence Alexander

feel One be is up picked is, out you for issues? how of So to chain volume the that you going good Two missed can based you supply questions. much QX? on give any sense on just a in morning. back And

Andy Tometich

Laurence, Hi question. -- thanks for yes, the thanks

I and We're think it. we've It's managed impact on in of been an It's relatively serving that a there. more as of mix demand the been pretty small. manageable still had customers margin this their to result came point really -- is time. our

raw just more up I as don't any on It's there's destruction. demand So we the key believe security catching material. get

Shane Hostetter

probably to it's Americas X% to X% numbers, respective volume, -- of in Margin think I somewhere Yes. that Laurence, range.

Laurence Alexander

you of restructuring you regional respect sort with pressure? what inflation which are in inflation, is to the SG&A after any terms savings, wage -- then And the the abatement in seeing seeing are

Andy Tometich

Yes.

of continuing each particular each in in level want geography. pressure go regions. I Laurence, I don't think, detail. country, say, to don't for continuing overall in we're inflation talk to remains the idiosyncrasies different of by and we the see But country that part, there the -- everywhere But most you I mean to labor would for to are it general, can on increase. I see

Operator

Thank you.

is question Securities. next Jon question. with your from with CJS proceed Our Please Tanwanteng

Jon Tanwanteng

you for questions. good taking my Hi, Thank morning, guys.

Andy Tometich

Good morning, Jon.

Jon Tanwanteng

some First sequential one but season out then holiday western is, can the Year. going and coming of you volume destocking, pricing QX Lunar in comment trends to New

so, will lapping sequential up volume on mention you did a be a as specific just price basis question think you but year-over-year have mid-single-digits I more that. if or maybe price and

Andy Tometich

Yes. Thanks, Jon.

this not be gone number uncertainties pricing already, including to of anticipate For a to the course, think like from down the that bit for highlighted little Turkey, Volume the fourth still new of no sequentially. sequentially But first upsets be new we have and that there's quarter. anywhere we reasons challenges as assuming away here. I've a we'll is the up flattish potentially is in going significant fair quarter, highlighted I already, world,

is be and expand we gross believe result margins though net will up. our So

Jon Tanwanteng

an year. volumes And maybe in declining Great. head environment from elasticity clients if it mostly Just understand to maybe believe moderating where pushback price help Okay. still flat. them? the will you as been hold same? push you just helpful. then power? getting going to terms us you try are when pricing you even about think you in talk through of And in more the general about and or declining through you the year And Has just forward. of as That's or Are can that the your the kind implications

Andy Tometich

Jon. question, Great Yes.

the a never customer meeting go to give admit, first there's them think seen first I'm on is I've So to involved into one of necessity period and ever the sustained chemicals a price I where asking through don't in use. my based say push of the in increase. pricing I'll three being and value also you inflation industry, to decades us specialty a

course, there's, of so occur. that would And type of normal the pushback

new successful very doing we've it to what not and doing, wins, in we as that's still because net were been were price positive business net participate But highlighted, business strategic we I in had We XXXX. shows Shane think and results, we of our chose in increases. in

those we're can the And on we're deliverables conversations having about real I successful close, from. years' our use value and two price to and still so in because that probably getting benefit quarters now basing worth multiple with increases, customers think of

Jon Tanwanteng

then Thank Got you. Shane. helpful No, last one commentary. for And it. very that's just

Again, that but I think increase through a is be QX. more in going remains you if And SG&A forward. could if the based up, little I you specific stable or savings. the for year mentioned was mid-single-digits wondering about on year,

Shane Hostetter

Yes.

ratably timing I I increase midway at a throughout quarter, timing anticipate that's But anticipate given look and as I related QX, from inflation compensation variances all, second well it inflation to in of sequential with kicking of our look will if QX much quarter. QX, bit the So to third If SG&A year. as being fourth it and quarter, cost. don't at little between we the up all through do from XXXX, the some in

Operator

like are Thank over to further you. any the There to comments. for I'd turn questions back management this closing at no floor time.

Andy Tometich

Thank you for that.

our all committed any clearly clear for and do continued if to just Houghton, focused thank please and I follow-up of executing want Jeff questions. your generating you on So value up, you wrap in to Quaker we're interest to have out on reach for to priorities stakeholders.

Operator

conference. today's concludes This

time. at your your for Thank You participation. may disconnect lines you this

Quaker Chemical (KWR) 24 Feb 232022 Q4 Earnings call transcript