Q1 2022 Quaker Chemical Corp Earnings Call

May 6, 2022

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Greetings and welcome to the Quaker Houghton first quarter 2022 earnings Conference call. A brief question and answer session will follow the formal presence presentation. If anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad as.

As a reminder, this conference is being recorded I would now like to turn the call over to Jeffrey Schnell Senior director of Investor Relations. Mr. Schnell, you may begin.

Thank you Kyle good morning, everyone welcome to Quaker Houghton's first quarter 2022 earnings conference call.

Joining us today are Andy Thomas <unk>, our Chief Executive Officer, and President Shane hosted our senior Vice President and Chief Financial Officer, and Robert Traub, Our General Counsel.

Our comments relate to the financial information released after the close of the U S markets yesterday may five 2020 to our press release and accompanying slides can be found on our investor website.

Both the prepared commentary and discussion during this call may contain forward looking statements, reflecting the company's current view of future events and their potential effect on Quaker houghton's operating and financial performance.

These statements involve uncertainties and risks, which may cause actual results to differ.

The company is under no obligation to provide subsequent updates to these forward looking statements.

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

For more information please refer to our filings with the SEC.

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

Thank you, Jeff and good morning, everyone.

Quaker Houghton delivered first quarter results that were in line with our expectations. Despite another quarter with an extremely challenging backdrop, we delivered.

Record net sales and growth of approximately 10% compared to the first quarter of 2021.

This was driven by strong price capture aimed at mitigating the significant inflationary pressures on our margins.

In the quarter, we expanded our portfolio of leading technical capabilities through two small acquisitions.

We also invested in productivity initiatives and we remain focused on providing best in class products and solutions to better serve our customers.

In the first quarter of 2022, we achieved $474 million of net sales adjusted EBITDA of approximately $60 million and adjusted diluted earnings per share of $1 42.

Results in the quarter can be characterized by strong revenue growth fueled by significant pricing actions and broadly favorable demand environment.

But we were challenged by a high degree of uncertainty caused by inconsistent raw material availability persistent and significant inflationary pressures and ongoing supply chain disruptions that limited our ability to capitalize on additional growth opportunities.

This was further amplified by geopolitical events that posed even greater challenges.

Nonetheless, the team executed well and despite the degree of the cost headwinds that we faced we delivered stable gross margins compared to the prior quarter.

Our revenue increased 10% compared to the prior year period with price led growth in all of our segments and while selling price and product mix increased 17% compared to the prior year organic volumes declined.

This was in line with our expectations and was primarily attributable to the difficult comparison to a very strong first quarter of 2021.

Sequentially, the company's organic sales volume increased approximately 3% as continued new business wins were partially offset by sequentially lower volumes in China.

Shane will shed more light on the moving pieces of the comparison momentarily.

Switching to our operating segments price capture was strong across all of our segments, both on a year over year and sequential basis.

Volumes increased in our global specialties business, which benefited from strong demand in Greece's in aerospace and continued momentum in aluminum cans.

Volume declined modestly and our other regional segments compared to a very strong prior year.

However volumes increased sequentially in all of our segments, except Asia Pacific, which reflected lower activity in China due to the lunar new year The Olympics and more recently the production curtailments related to China's zero Covid policy.

Supporting our growth is our ability to gain new business throughout the portfolio. We estimate our net new business wins contributed approximately 2% of sales in the first quarter of 2022.

This continued success reinforces our confidence that Quaker Houghton is well positioned to leverage the scale and the capabilities of the combined company.

Building on our customer intimate model with our targeted investments we will continue to drive long term growth above market growth rates by providing value added innovative solutions to our customers around the world.

While sales remained positive for US again this quarter the increases in our raw materials and other costs as well as supply chain constraints remains a challenge.

Our basket of raw materials increased over 5% in the first quarter of 2022 and are up more than 40% year over year.

Similar to last quarter in certain instances raw material availability limited, our sales growth, including our ability to secure new business.

The continued inflationary pressures on our raw materials manufacturing and other costs were the primary drivers of the downward pressure on our gross margins in the first quarter of 2022 compared to the prior year.

However, our realized pricing has again largely offset the dollar impact of the raw material inflation through the first quarter.

But it's clear that recovering our gross margin percentage to pre pandemic levels is a top priority for the company.

We are implementing further aggressive pricing actions in the second quarter and have more planned as we expect the complexities of supply chains will continue to impact raw material pricing and availability through 2022.

Continuity of supply and product availability are critical to our customers' operations and we remain committed to prioritizing their needs by leveraging our global sourcing capabilities and expertise. This is a prime example of where we earned value at our customers.

Our R&D and field experts also partner closely with our customers to offer innovative value enhancing solutions that improve our customers' processes and lower total cost of ownership.

These collaborations build lasting partnerships with our customers. This is a clear competitive advantage for Quaker Houghton and highlights the power of our technical capabilities and global scale, which are essential to the success of our customers and our company.

With our customers' value driven approach and Differentiators, we are encouraged by the demand outlook for our products and services globally.

Assuming the current environment is not overcome by the ongoing geopolitical and macro events, especially in China. It also remains our expectation that gross margins will begin to improve later this year.

So as we step back the first quarter demonstrated execution against our clear priorities. We are still at the onset of our journey and have a lot of work to do but I would like to reemphasize our core priorities.

First we are focused on our strategic pricing initiatives, which are aimed at recovering our margin profile to pre pandemic levels.

Second we are committed to growth through new profitable business wins, and increasing our share of wallet with our current customers.

And third we are investing in our business to drive a meaningful multi year improvement in our systems and processes to drive more productivity generate more value with our customers and execute on our 2030 sustainability goals.

Additionally, the strength of our balance sheet and free cash flow profile will enable us to remain opportunistic with attractive and accretive deals bolstering our product offering and geographic approach.

Turning to the outlook I am encouraged by the current demand profile across our end markets. However, this outlook should be taken into context of the recent geopolitical events that are magnified the uncertainty in the market most significantly in China.

To that end in the second quarter, we expect sales to be negatively impacted by production curtailments in China, principally due to the zero COVID-19 policies shutdown, which went into effect in March and remains in effect.

As a reminder, China represents less than 20% of sales for Quaker Houghton.

So the extent of the Lockdowns are not yet fully understood. If the restrictions remain in effect, we estimate China production could be halved in the quarter.

With this uncertainty specifically in China will pose some near term challenges it does not alter the confidence in our strategy for the overall direction of our company.

We remain focused on delivering on the items within our control as such and adding to the specific pricing increases in the second quarter, we will implement additional global price increases above anticipated raw material inflation, which will begin to flow through the results in the third quarter.

So while we expect gross margins to be slightly down in the second quarter compared to the first quarter due in large part to the estimated impact of China Covid restrictions. It is our expectation that gross margins will improve sequentially in the third quarter as we capture the benefit of our aggressive pricing actions and targeted cost actions.

Together with a favorable demand environment and the assumption that China production will recover we expect strong year over year EBITDA growth in the second half of the year.

To summarize I am confident in our differentiated customer intimate strategy underpinning the growth engine that is Quaker Houghton I'm.

I am pleased with our execution in the quarter, which saw price and mix increases another 3% over the fourth quarter of 2021, while earning new business.

We expect continued price capture as we progress throughout the year, which should help to begin to drive to a recovery in margins I'm.

Im encouraged by the demand outlook, albeit with reduced near term visibility, especially related to China.

We believe our investments in technology and systems, we will increase our productivity and enhance our offerings to our customers.

We are better leveraging our innovation engine around the world driving deeper customer relationships with the proper tools and capabilities for the future and working to get more deeply embedded in our customers' workflows.

Together with our value based pricing initiatives, we are taking necessary actions to improve our business. We are not standing still and we are determined to drive results. We believe our model positions us well, especially when raw materials and other inflationary pressures eventually recede.

Positive momentum is evident in our business, we have a prudent capital allocation strategy and a solid and experienced playbook to unlock our growth potential.

Im optimistic about the many opportunities ahead.

Finally, I don't want to Miss the opportunity to highlight that we released our 2021 sustainability report, where we outlined the progress we've made on our 2030 goals our commitment to sustainability is at the core of Quaker Houghton.

We continue to deepen our understanding of the changing landscape and are investing to find innovative ways to deliver long term shareholder value in a transitioning world.

With that I'd like to pass the call to Shane to review our financial results in more detail Shane.

Thanks, Andy and good morning, everyone.

First quarter net sales were $474 million, which increased 10% compared to the prior year and marked another record sales quarter for our company.

The increase in sales was driven by a 17% increase in price and mix and 2% growth from acquisitions, which was slightly offset by a 6% decline in organic sales volumes and a 3% unfavorable impact from foreign exchange.

Consistent with recent quarters, we experienced strong increases in net sales, which was directly related to our strategic price initiatives that Andy discussed.

These were implemented across all of our businesses in response to the significant global raw material increases that began last year and have continued into this year.

The decline in sales volumes was attributable to several factors. Most significant was the difficult comparison to a strong double digit growth in the first quarter of 2021 as customers replenish their supply chains due to the continued economic recovery from COVID-19.

These high prior year volumes were primarily seen in the automotive markets ahead of the well publicized semiconductor chip shortage and also China was stronger last year due to higher production levels as they had limited lunar new year shutdowns due to travel restrictions.

Comparatively China production was reduced in the current quarter by power restrictions and shutdowns around the Olympics overall, we estimate about half of the 6% decline in our volumes year over year was attributable to these items.

Additionally, our volumes decreased due to the reduction in tolling related to the products that we previously divested as part of the combination as we spoke about in the fourth quarter. This accounted for approximately 2% of the volume decline.

Furthermore, we faced our other global economic impacts that reduced our volumes, including the zero Covid policy in China, and the warrant Ukraine and also we made some strategic decisions to reduce volumes in accordance with our value based pricing initiatives.

So net net we believe we continued to grow in excess of our markets, which on average were slightly down compared to the prior year.

This was driven by new business wins of approximately 2%, which were net of losses, including those we experienced due to our value based pricing actions.

Sequentially net sales increased approximately 6% this was driven by a 3% gain in price and product mix and a 4% growth in volumes, including acquisitions. This highlights the favorable demand environment, which we remain optimistic.

As we look to the rest of the year.

These demand trends were partially offset by lower volumes under the tolling agreement that I mentioned before and continued supply chain constraints, which limited both the availability of certain raw materials as well as our ability to gain further new business.

Gross margins in the first quarter were 31% and as we guided or in line with the fourth quarter of 2021.

While we continue to capture price the inflationary pressures, we face continued amount.

That said exiting the first quarter, our commercial teams again largely recovered our product margins on a dollar per kilogram of volume sold basis, but given we expect more cost pressures, we have already implemented further pricing actions in the second quarter, and we will be announcing additional price actions in the short term as well to help begin to recover margins to pre pandemic led.

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SG&A increased approximately $4 million compared to the prior year, largely due to higher labor related costs on year over year inflation additional costs associated with recent acquisitions and higher cost compared to the prior year, COVID-19 levels, including <unk> and professional fees.

Also as mentioned last quarter, we forecasted an increase in SG&A for 2022, largely related to certain strategic initiatives, including spend related to it.

R&D and sustainability processes.

The net of all of these items resulted in adjusted EBITDA of $60 million for the first quarter. This was down from 77 million in the prior year period for the reasons discussed earlier and roughly flat compared to the fourth quarter of 2021.

From a segment perspective, all four segments had higher net sales compared to the prior year as each of the segments benefited from double digit increases in selling price and product mix and additional net sales from acquisitions. However, organic sales volumes. This decrease across all segments, except the global specialty businesses for the reasons I previously discussed.

Segment operating earnings declined in all of our segments year over year due to gross margin pressure, except the global specialty businesses, which increased due to favorable demand.

Sequentially net sales and price increase in all of our operating segments are.

Our volumes also increased sequentially and almost all of our segments due to solid overall demand trends Asia Pacific did decline slightly though but this was mainly due to lower activity in China, including the initial impact of the zero Covid policy.

Operating earnings increased or flat in all of our segments sequentially as continued inflationary pressures on input costs were more than offset by our pricing actions and continued volume growth, which was driven by net new business wins.

Below the line both interest expense and other expense were largely in line with the prior year.

From a tax perspective, our effective tax rate, excluding nonrecurring and non core items was approximately 27% for the quarter compared to 25% in the prior year period.

We continue to expect our full year effective tax rate to remain roughly in line with 2021 levels pending any changes to domestic or foreign legislation.

Our GAAP EPS was $1 11, but excluding nonrecurring and non core items, our GAAP diluted EPS was $1 42.

This was a 10% increase compared to $1 29 per share in the fourth quarter of 2021, but a decline year over year.

This prior year decrease was mainly due to the impact on gross margin that I previously discussed.

Shifting to the company's liquidity profile.

Our balance sheet liquidity remained healthy and our net debt of $765 million did increased $29 million at year end, but this was mainly driven by seasonal impacts and inflation driven increases in working capital, which we had previously anticipated.

Cash from operations was an outflow of approximately 6 million for the quarter, which was an improvement compared to the prior year.

The first quarter reflected working capital outflows, primarily related to an increase in inventory and receivables given the significant inflationary input costs as well as timing of accruals.

We also did take some action to continue to build safety stock as we anticipate our customers' needs.

Looking forward, we are taking steps to improve our working capital efficiency, including inventory reductions.

Though working capital levels will likely remain elevated in 2022 due to these continued inflationary trends, we expect the level of such will decline and be lower than the prior year ultimately, though the level of these investments will continue to reflect the conditions of our global supply chain and overall operating environment as we progress throughout this year.

Outside of operating liquidity for the quarter, we paid approximately 7 million of dividends, we spent approximately $9 million and two small but accretive acquisitions and we also invested approximately 9 million in capital expenditures, which is in line with what we guided last quarter at approximately one 5% to two 5% of total sales in 2022.

Overall this additional capital spend as well as the additional operating expense I previously mentioned represent investments in our business, which are expected to improve our productivity and profitability and better position the company to capitalize on the next phase of our growth.

The company's net leverage remains healthy with a net leverage of approximately three times compared to two seven times at the end of 2021.

This increase in leverage primarily reflects lower adjusted EBIT year over year due to the strong prior year performance coming out of Coke.

That said, we remain committed to reducing our leverage to our target of two five times, while we also balanced the other priorities in our capital allocation strategy.

Summarize we are optimistic about the future of Quaker Houghton.

<unk> remains favorable we are aggressively working to recover our margins and we are confident in the growth potential and cash flow generation of our business. Overall, we are confident in our ability to execute our priorities, including delivering on our capital allocation strategy, which will ultimately maximize shareholder value.

With that I'll turn it back over to Andy.

Thank you Shane before we turn the call over for your questions I want to take a moment to highlight once again that our people are the backbone of the company I want to extend my gratitude to all of our global colleagues that are focused on executing our goals. We appreciate your continued dedication to our company our customers.

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

Thank you we will now be conducting a question and answer session.

You'd like to ask a question. Please press star one on your telephone keypad.

A confirmation tone will indicate your line is in the question queue.

You May press star two if you'd like to remove your question from the queue.

For participants using speaker equipment may be necessary to pick up your handset before pressing the star keys.

One moment, please while we poll for questions.

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

Thank you good morning.

Just wanted to thank you guys just on China is your guidance, assuming these lockdowns persist through the entirety of the quarter or that are they they do and at some point during the quarter.

Yes, I think David Thanks for the question I think the one thing that's certain is that there is uncertainty in China at the moment, it's still evolving.

It's our best estimation of the overall impact for the quarter.

But we're going to continue to monitor it.

<unk>.

We believe thats the full quarter impact.

Got it and just on price versus raws, where you I know you exited.

Our neutral basis, we were behind for the entirety of the quarter and Q2 do you expect pricing to offset raws for the quarter.

<unk>.

Yes, so we will continue to.

Use our strategy of recovering all of the cost of raw materials through our pricing actions that has not changed we continue to do that through the second quarter, but as we highlighted we're also going to be exiting the quarter with some additional pricing increase actions to attempt to get in front of inflationary pressures to start to improve that raw material margin.

Going forward.

Thank you.

Thank you. Our next question is from Jon <unk> with CJS Securities. Please proceed with your question.

Hi, Good morning, it's Pete Lucas for Jon just a couple of quick questions first on the bigger front, how should we think about your appetite for larger M&A today, given the slight sequential increase in leverage in rising interest rate environment.

Yes, maybe Pete Thanks for the question I'll start and then maybe Shane will add a bit we continue to apply our capital allocation strategy. We feel like we're in a good position to be able to do that acquisitions, along with dividends and debt downpayment.

Our critical aspects of that we have a portfolio that ranges from small to medium to large size deals and we believe we're in a position to be able to execute on any of those.

When the moment's right so.

And just for your latter point around our leverage.

We were anticipating an outflow from cash flow perspective, given the working capital constraints as well as our first quarter tends to be the seasonally lowest quarter from a cash flow perspective, we anticipate paying down debt this year and still believe our leverage and our overall profile on a capital side is very healthy.

Oh, great. Thanks, and then just to follow up on the cash flow I think you touched on it and I apologize if I missed it but I think you said remain elevated in 2022.

Do we see that normalize going forward or do you expect still expect to grow working capital disappoint sales and maybe I think you did mentioned also adding to safety stock.

Sure.

It's a great question and I compared it to last year right and then last year you might remember, we had a pretty significant working capital outflow.

Depressed some of our operating cash flow what I said was we did have some working capital investment this quarter and anticipate further working capital investment given the rising raw material costs as well as pricing side of that but not in the level of last year and I anticipate still strong operating cash flow in the given year.

Great. Thanks jump back in the queue.

Thanks Pete.

Thank you. Our next question is from Mike Harrison with Seaport Research. Please proceed with your question.

Hi, good morning.

Good morning, Mike wanted to wanted to ask what you guys are seeing on the raw material front obviously.

If you can give some color on how you're seeing those costs trend compared to the 40% year on year increase that you saw in the first quarter and it sounds like you guys are still experiencing some issues with availability of some of your key inputs you referenced building safety stock, but also.

I'll reference that.

Your volumes could have been better if you had gotten all of the materials you need so maybe just comment as well on the availability issue and whether that's improving.

Sure. Thanks, Thanks, Mike.

Great question I think what we have seen is a continuation of the trend on raw material increases there.

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Was some belief that there was a path towards that starting to decline and the increased rates into 2022, I think we've not seen that occur it's been exacerbated by the uncertainty with the Ukraine War as well as the situation in China. So we're still seeing raw materials continued to increase which is why we're still moving forward with our price.

<unk> actions and as I mentioned trying to get in front of some of the inflationary impacts as we move forward through the quarter as far as availability goes I think we indicated we feel like we may be missed on about 1% to 2% of sales on an opportunity basis. If we would've had a few a few more key raw materials.

It was really it was really in targeted areas don't believe that thats going to be a long term impact, but the supply chains have continued to be volatile and these are the situations that we continue to deal with yes just.

Just add to what Andrew just said, Mike and you were looking to kind of have a little bit guidance on raw materials as we look to the rest of the year. Just if you look at what we did in the first quarter, we mentioned that our raw materials increased over 5%.

If I look to the second quarter, we believe it's going to be at least that as well. So that gives you parameters. So to speak of what we're looking at to go into the second quarter.

Alright. Thank you that's helpful.

What's also hoping you could talk a little bit about these productivity initiatives that you referenced.

I believe it sounds like maybe this is a new set of initiatives maybe you can talk about.

The costs associated with those initiatives.

What kind of benefits you expect to see and when.

Yeah, I'll start and Shane if you want to add anything but this is part of overall strategically how we can temporary as the business and continue to refresh our customer intimate model, which is still the key to our growth and our differentiation.

That's why customers buy from us and we're going to continue that but as we look forward on new ways to be able to contemporary as our business and increase the productivity and the way we provide that intimacy the way we produce materials thinking about our network and where we can optimize and maybe add some capabilities from.

Capex standpoint, so that we can take advantage of some of the growth in those areas that are underserved by US now those are the areas, where we think we're going to get additional productivity as well as growth.

From the investments we're making.

And Mike you might have remembered in the fourth quarter, we did talk a little bit about these initiatives and we anticipated higher operating spend related to such.

Namely in the R&D.

And sustainability areas from a number perspective, a numeric side.

Not give guidance on that side of things, but just wanted to note that they will be going forward.

Alright, thanks and.

Just wanted to see if I could get a little bit more precision on the gross margin guidance. If we just go ahead and say that the first quarter was a 31% gross margin number.

Guiding the Q2 is going to be down and then improvement in the second half and I was wondering is that improvement compared to the below 31% level that you expect in Q2 is that improvement on a year over year basis, where.

Last Q3 was a little bit over 32%.

Again.

I understand you don't want to give a lot of precision because theres a lot of uncertainty out there, but any additional color would be very helpful for us yes.

Yes, Thanks, Mike.

Yes, as we looked at and tried to paint that picture Ray you probably need pretty much on that.

Yes.

Right around 31% in Q1, we talked a little bit about is declining in Q2, mainly due to the China impact on our overall margins whether it be fixed cost absorption whether that be the fact that we're not getting the volumes on some of our pricing initiatives coming through.

Or for that matter simply that China tends to be higher gross margins as I looked at that in Q3 on a sequential basis, we were kind of moving that in guiding that we have we're.

We're going to be putting in place aggressive price actions to really try to recover to pre pandemic levels from a margin perspective in Q2. So we see in Q3, a growth and our margins on that side. So sequentially. It will be an easier answer to you to your question Mike.

Alright, thanks very much.

Thanks, Mike.

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

Hi, guys, it's Dan Rizzo on for Laurence how are you.

Hey, Dan.

So with the pricing I mean, how much of your pricing is automatic pass through based on contracts versus negotiated.

Yeah. So I think we've indicated before about 25% of our business is tied to contractual indices.

So those tend to have a lag of approximately.

30 to 60 days, depending upon the specific deal so 75% of our of our businesses continuously negotiated thats the activity.

Our primary pricing actions have been focused and that will continue as we go forward.

And then.

So I mean I know, we are where we are now but when prices do start to ease.

How does it work I mean, given that 75% is negotiated will you be able to I guess hold onto a portion a bit longer.

As things go down or how should we think about it just out in the future.

Dan It's great question, I think Thats, one of the beauty beauties of our customer intimate model and the fact that we value price.

So just like there is sometimes a bit of a lag for us to move with inflationary cost and pass that through it also provides some stickiness as we go forward because we price based upon value we've proven that in multiple cycles.

And we've proven in the current cycle, even with increasing prices that we are gaining new business. So I think I think our model reinforces that we do truly add value and that stickiness of that price overhang when raw materials start to roll is something we're going to look forward to.

And then finally, you mentioned I think 2% growth from new business wins, but less left some on the table because of supply chain and logistical constraints. So just to reiterate this is something you said in the past Gen.

Generally youll do 3% to 4% growth above market from new business wins as we look out over the next few years correct.

Yes, that's consistent and really I think what we're highlighting is the current current issue with a few raw material availability supply chain issues. The point being if we had had those we would've been right in that spot that we've been communicating all the time, yes, one thing I would just add to that Dan and I really want to emphasize is we had a strong.

<unk> performance from net new business wins to 2% because that was despite some strategic volumes from a pricing action perspective. So if you look going forward, we will be further emphasizing our emphasis on strategic pricing, which may result in some of those volume declines, but we do feel very good on the net new business wins still but it.

Be a little bit lower than the traditional side of things.

Alright, Thank you very much.

Mr. Tom. Thank you Sir no further questions at this time I would like to turn the floor back over to Andy Thomas for closing comments.

Well, thank you very much.

And with the future of Quaker Houghton is bright and we are committed to executing and delivering sustainable long term value for our shareholders and I really want to thank you for your interest in Quaker Houghton and please do reach out to Jeff with any follow up questions. Thank you.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

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Greetings and welcome to the Quaker Houghton first quarter of 2022 earnings Conference call. A brief question and answer session will follow the formal presence presentation.

If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.

As a reminder, this conference is being recorded I would now like to turn the call over to Jeffrey Schnell Senior director of Investor Relations. Mr. <unk> you may begin.

Thank you Kyle good morning, everyone welcome to Quaker Houghton's first quarter 2022 earnings conference call.

Joining us today are Andy Thomas <unk>, our Chief Executive Officer, and President Shane Hostetter, Our senior Vice President and Chief Financial Officer, and Robert Tropp, Our General Counsel.

Our comments relate to the financial information released after the close of the U S markets yesterday may five 2020 to our press release and accompanying slides can be found on our investor website.

Both the prepared commentary and discussion during this call may contain forward looking statements, reflecting the company's current view of future events and their potential effects on Quaker houghton's operating and financial performance.

These statements involve uncertainties and risks, which may cause actual results to differ.

The company is under no obligation to provide subsequent updates to these forward looking statements.

For more information please refer to our filings with the SEC now, it's my pleasure to hand, the call over to Andy.

Thank you, Jeff and good morning, everyone quicker.