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KWR NYSE· Quaker Chemical Corporation
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KWR NYSE· Quaker Chemical Corporation
Earnings report Q3 2023

KWR Reports Stable Net Sales and Improved Gross Margins in Q3 2023

Segments of revenue

KWR operates in three reportable segments: Americas, Europe, Middle East and Africa (EMEA), and Asia/Pacific. In the third quarter of 2023, the Americas segment accounted for approximately 63% of the company's consolidated net sales, EMEA represented approximately 16%, and Asia/Pacific accounted for approximately 21%.

Americas: The Americas segment reported net sales of $312.6 million, a decrease of $7.3 million or 2%, compared to the third quarter of 2022. This decline was primarily due to divestitures related to the Combination and the ongoing war in Ukraine. However, the segment's operating earnings increased by $12.4 million or 80% compared to the same quarter last year, driven by an increase in net sales and improved operating margins.

EMEA: The EMEA segment reported net sales of $78.5 million, a decrease of $1.6 million or 2%, compared to the third quarter of 2022. This decline was primarily due to the impacts of the Combination divestitures and the ongoing war in Ukraine. However, the segment's operating earnings increased by $2.9 million or 12% compared to the same quarter last year, driven by new business wins and cost management initiatives.

Asia/Pacific: The Asia/Pacific segment reported net sales of $105.1 million, an increase of $1.9 million or 2%, compared to the third quarter of 2022. This growth was driven by higher sales volumes of 6%, partially offset by an unfavorable impact from foreign currency translation of 4%. The increase in sales volumes was primarily due to increased end market activity and new business wins, partially offset by the impacts of the company's value-based pricing initiatives.

Strengths

KWR delivered strong results in the third quarter of 2023, with relatively stable net sales and improved gross margins. Despite ongoing inflationary pressures, macroeconomic and geopolitical challenges, soft end market conditions, and other factors impacting customers and end markets, the company managed to achieve earnings growth. The recovery in gross margins and cost management initiatives contributed to the positive performance.

Challenges

KWR faced challenges in the third quarter of 2023, including divestitures related to the Combination and the ongoing war in Ukraine, which impacted net sales in the Americas and EMEA segments. Additionally, inflationary pressures and higher labor-related costs led to higher selling, general, and administrative expenses, partially offsetting the earnings growth.

Noteworthy

In the first quarter of 2023, KWR reorganized its executive management team to align with its new business structure, which includes three reportable segments. This restructuring aims to enhance operational efficiency and better address the needs of different geographic regions.

Summary

KWR demonstrated resilience in the third quarter of 2023, delivering stable net sales and improved gross margins. Despite challenges such as divestitures, geopolitical tensions, and inflationary pressures, the company managed to achieve earnings growth. The Americas and EMEA segments faced headwinds due to divestitures and geopolitical challenges, while the Asia/Pacific segment experienced growth driven by increased sales volumes. KWR's focus on cost management and operational efficiency will be crucial in navigating the uncertain macroeconomic and geopolitical environment in the remainder of 2023.

Source documents

Form 10-Q  filed on Nov 02, 2023
93 pages scanned

Reference data

Company financials Q3 revenue 467M
Analyst estimates Q3 EPS missed by -6.42%
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