Quaker Chemical sales up 4% in 2012

Changes in foreign exchange rates negatively impacted the fourth quarter of 2012 net income by approximately $0.3 million, or $0.02 per diluted share.

Full Year Summary

Net sales for 2012 were $708.2 million, an increase of 4% from $683.2 million in 2011. Product volumes, including acquisitions, increased revenues by approximately 5% and selling and price mix increased revenues by approximately 3%, while foreign exchange rate translation decreased revenues by approximately $26.8 million, or 4%.

Gross profit increased by approximately $16.1 million, or 7%, from 2011, with gross margin improving to 33.7% from 32.6% for 2011, reflecting some stabilization in raw material costs experienced primarily at the end of 2012, allowing margins to return to more acceptable levels.

The decrease in interest expense was primarily due to lower average borrowings and lower interest rates in 2012 as compared to 2011, and the decrease in interest income from 2011 to 2012 was primarily caused by lower cash levels invested in higher interest rate jurisdictions.

Other income for 2012 included increases due to changes in the fair value of the contingent consideration liability of $1.7 million, or $0.09 per diluted share, and the fair value of the acquisition-related liability of $1.0 million, or $0.08 per diluted share, noted above. 

Other income for 2011 included a lower adjustment to the fair value of the contingent consideration liability of $0.6 million, or $0.03 per diluted share, noted above, and, also, approximately $2.7 million, or $0.22 per diluted share, of other income related to the revaluation of the Company's previously held ownership interest in its Mexican affiliate to its fair value, which was related to the Company's 2011 purchase of the remaining ownership interest in this entity.

In addition, the Company experienced higher foreign exchange losses in 2012 and, also, received lower third party license fees in 2012, primarily as a result of the prior year purchase of the remaining ownership interest in the Company's Mexican affiliate.

The Company's 2012 and 2011 effective tax rates of 24.7% and 24.0%, respectively, reflect decreases in reserves for uncertain tax positions due to the expiration of applicable statutes of limitations for certain tax years of approximately $0.17 and $0.16 per diluted share, respectively. 

The Company has experienced and expects to further experience volatility in its effective tax rates due to the varying timing of tax audits and the expiration of applicable statutes of limitations as they relate to uncertain tax positions, among other factors.  The Company estimates its 2013 effective tax rate to be in the high twenty percent range.

Quaker Chemical