American chemical company Quaker Chemical Corporation has revealed an increase of $0.7 million in equity in net income of associated companies for the first nine months of 2020 compared to the first nine months of 2019, according to its Q3 figures.
The chemical company explained that the increase was primarily due to additional earnings from Houghton's 50 percent interest in a joint venture in Korea, however it was partially offset by lower earnings as compared to the prior year period from the firm's interest in a captive insurance company.
Quaker outlined that its equity income in a captive insurance company in Q3 2020 made a loss of $542,000, compared to the same period last year, where the company reported a loss of $524,000.
The equity income in a captive insurance company per diluted share matched Q3 2019’s loss of 0.03.
Commenting on the company’s full results, Michael Barry, chairman, CEO and president, said: "We experienced a strong rebound in our business in Q3 compared to Q2 with sales growing by 28 percent and adjusted EBITDA nearly doubling.”
Barry explained: “All four business segments had good sequential growth as our end markets improved from the very poor second quarter conditions, especially in the Americas and Europe, the Middle East and Africa. Our adjusted EBITDA growth continued to benefit from our estimated cost synergies of $17 million in the quarter as well as estimated market share gains of 2 percent in the quarter. Our cash flow generation continues to be strong as we reduced our net debt by 7 percent or $58 million this quarter."
While the company has seen a rebound in many of its end markets, Barry noted: “We are still not back to where we would have expected our business to be when we started the year.”
He concluded: “Looking forward, we expect gradual sequential improvement in our markets as we progress through the next two years, although given the uncertainty in our operating environment, the improvement by quarter is hard to predict.”
“For Q4, we expect our adjusted EBITDA to be in the range of our Q3 result. For the full year, we now expect our adjusted EBITDA to exceed $215 million. Overall, our integration synergies, additional cost savings actions, improvement in product margins, and good cash flows are expected to continue to help us during this challenging time. As we look forward to 2021, we expect to achieve a 20 plus percent increase in our adjusted EBITDA as we complete our integration cost synergies, continue to take a share in the marketplace and benefit from a projected gradual rebound in demand."