PQ Group Holdings Reports First Quarter 2019 Results; Operating Performance On Track; Reaffirming 2019 Outlook

5/9/19

MALVERN, Pa.--(BUSINESS WIRE)--PQ Group Holdings Inc. (NYSE:PQG)  reported results for the first quarter ended March 31, 2019. Sales of $359.2 million were down 1.9% versus the same period in 2018; up 1.4% on a constant currency basis on improved pricing in all business segments. Net income was $3.2 million or $0.02 diluted EPS and Adjusted net income was $17.5 million or $0.13 Adjusted diluted EPS. Adjusted EBITDA was $101.0 million, down 6.4% (down 3.8% on a constant currency basis) with Refining Services' strong performance offset by anticipated lower Zeolyst Joint Venture results on customer order timing. Adjusted EBITDA margin was 26.0%.

“Our team's strong commercial execution, particularly in achieving higher prices in all of our business segments, delivered solid operating results,” commented Belgacem Chariag, PQ President and Chief Executive Officer. “With firm hydrocracking catalyst orders and expected growth in highway safety demand, we are reaffirming our outlook for 2019.”

The financial results and outlook include non-GAAP financial measures.These non-GAAP measures are more fully described and are reconciled from the respective measures determined under GAAP in “Presentation of Non-GAAP Financial Measures” and the attached appendix tables.

Review of Segment Results

Refining Services

Sales of $105.8 million increased 5.1% and Adjusted EBITDA of $39.7 million was up 11.8% versus the same period in 2018, largely driven by improved pricing from contract renewals in both regeneration services and virgin sulfuric acid product lines.

Catalysts

Sales of $15.9 million decreased 3.6%, and were in line on a constant currency basis versus the same period in 2018. Adjusted EBITDA of $18.1 million decreased 21% largely driven by the anticipated lower Zeolyst Joint Venture results due to timing of customer orders.

Performance Materials

Sales of $61.1 million decreased 2.6% versus the same period in 2018; sales rose 2.6% on a constant currency basis on improved pricing and product mix. Adjusted EBITDA of $10.5 million decreased $1.6 million as a result of higher costs related to the restart of capacity to meet higher demand along with modest inflationary pressures.

Performance Chemicals

Sales of $180.5 million and Adjusted EBITDA of $42.7 million decreased 5.0% and 5.3%, respectively; both were in line on a constant currency basis versus the same period in 2018. Improved pricing and product mix were offset by weaker demand in consumer products.

Cash Flows and Balance Sheet

For the three months ended March 31, 2019, cash flows from operating activities increased to $26.8 million, as compared to $22.0 million for the same period in 2018. This increase was primarily driven by an increase in net income and favorable changes in working capital.

At March 31, 2019, the Company had cash and cash equivalents of $52.3 million and total debt outstanding of $2,146.8 million.

2019 Financial Outlook

The Company reaffirms 2019 guidance as below:

  • Sales of $1,640 million to $1,670 million
  • Adjusted EBITDA of $470 million to $485 million
  • Adjusted diluted EPS of $0.75 to $0.93
  • Adjusted free cash flow of $125 million to $145 million

About PQ Group Holdings Inc.

PQ Group Holdings Inc. is a leading integrated and innovative global provider of specialty catalysts, materials and chemicals, and services. We support customers globally through our strategically located network of manufacturing facilities. We believe that our products, which are predominantly inorganic, and services contribute to improving the sustainability of the environment.

We have four uniquely positioned specialty businesses: Catalysts serves the global refining, petrochemical and emissions control industries; Refining Services provides sulfuric acid recycling to the North American refining industry; Performance Materials produces transportation reflective safety markings for roads and airports; and Performance Chemicals supplies diverse product end uses, including personal and industrial cleaning products, fuel-efficient tires, surface coatings, and food and beverage products.

We serve over 4,000 customers globally across many end uses and operate over 70 manufacturing facilities which are strategically located across six continents. For more information, see our website at https://www.pqcorp.com.