'2009 will be a challenging year for Quaker' - Mr. Barry
Quaker Chemical Corporation announced net sales for the first quarter 2009 of $98.5 million and breakeven results. The first quarter 2009 results include a restructuring charge of $2.3 million, or approximately $0.14 per diluted share, and a gain of $1.2 million, or approximately $0.11 per diluted share, related to the disposition of land in Europe.
Michael F. Barry, Chief Executive Officer and President, commented, "Our first quarter results represent significant progress from the fourth quarter as we have seen continued improvement as the quarter progressed. Our improvement in results is being driven by aggressive cost-reduction efforts, margin improvement and moderate product volume increases. While we continue to expect 2009 volumes to be significantly below 2008, we anticipate first quarter 2009 volumes to be the low point of the year."
Mr. Barry continued, "We remain focused on managing our costs and working capital. We generated significant cash flow during the quarter, with our net debt at 2005 levels. As I have mentioned previously, while 2009 will be a challenging year for Quaker and our customers, we remain confident that our business model, strong associate base, key growth initiatives and solid balance sheet will get us through this difficult period in a profitable manner and position us well for the future."
First quarter 2009 summary
Net sales for the first quarter were $98.5 million, down 33% from $147.7 million for the first quarter of 2008. The decrease in net sales was primarily due to volume declines in all of the Company's regions and market segments, as the global economic downturn continues to impact the Company. Volumes were down approximately 32%, which were partially offset by a favorable 4% increase in selling price and mix. Foreign exchange rate translation also decreased revenues by approximately 5%.
Gross margins were down approximately $14.9 million, or 34%, compared to the first quarter of 2008, reflective of the above noted volume declines. The gross margin percentage of 29.1% was consistent with the first quarter of 2008, but represents a considerable improvement over the 24.2% reported for the fourth quarter of 2008. The margin percentage expansion from the fourth quarter was the result of the cost reduction actions the Company has taken and a more favorable raw material cost environment as well as product and regional sales mix.
Selling, general and administrative expenses ("SG&A") decreased $7.8 million, or 23%, compared to the first quarter of 2008. Savings from the fourth quarter 2008 and first quarter 2009 restructuring programs, reduced incentive compensation and other cost savings measures accounted for approximately 70% of the decline. Changes in foreign exchange rates accounted for the remainder of the decrease.
As previously announced, the Company implemented an additional restructuring program in the first quarter of 2009. The first quarter 2009 program included provisions for severance for 60 employees totaling $2.3 million. The fourth quarter 2008 program resulted in the elimination of more than 80 positions.