PQ Group Holdings Announces Preliminary First Quarter 2021 Results from Continuing Operations; Solid Performance despite Texas Storm Impacts
PQ Group Holdings Inc. (NYSE:PQG) has reported preliminary results for Q1 2021, estimating sales between $123 million and $127 million, slightly lower than $126 million in Q1 2020. The Zeolyst Joint Venture saw sales drop to $28-$30 million from $32 million. The Texas storm adversely affected the Refining Services business by an estimated $6 million, leading to an operating income between $1 million and $3 million, down from $12 million a year ago. Adjusted EBITDA is projected at $40-$42 million, down from $49 million in the same period last year, primarily due to storm-related impacts.
- Strong operational and financial performance emphasized by company management.
- Products deemed critical in recovery trends, indicating potential for future sales growth.
- Portfolio transformation nearing completion, focusing on catalysts and services.
- Sales estimates decreased compared to the previous year, particularly in the Zeolyst Joint Venture.
- Operating income significantly lower than Q1 2020, indicating reduced profitability.
- Estimated $9 million negative impact on Adjusted EBITDA due to the Texas storm.
PQ Group Holdings Inc. (NYSE:PQG) (“PQ” or the “Company”) today announced certain preliminary results from continuing operations1 for the first quarter ended March 31, 2021.
Sales2 are estimated to be in the range of
“We delivered strong operational and financial performance in the first quarter, underscoring the resilience and criticality of our products and services to meet recovery trends we are seeing across our customer base. Absent the storm, our results would have exceeded the first quarter of last year, which was prior to the effects of the pandemic,” said Belgacem Chariag, PQ Chairman, President and Chief Executive Officer. “Our portfolio transformation is nearly complete and we have advanced our strategic objective to become a pure-play catalysts and services company with leading growth and margins.”
1 Continuing operations for 2020 and 2021 include the Company’s Refining Services and Catalysts businesses
2 GAAP sales only; Excludes proportionate 50 percent share of Zeolyst Joint Venture sales
3 Subject to finalization of discontinued operations for the Performance Chemicals segment
Investor Contact:
Nahla A. Azmy
(610) 651-4561
Nahla.Azmy@pqcorp.com
About PQ Group Holdings Inc.
PQ Group Holdings Inc. and subsidiaries is a leading integrated and innovative global provider of specialty catalysts, 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 three uniquely positioned specialty businesses: Refining Services provides sulfuric acid recycling to the North American refining industry; Catalysts serves the packaging and engineering plastics and the global refining, petrochemical and emissions control industries; and Performance Chemicals supplies diverse product end uses, including personal and industrial cleaning products, fuel-efficient tires, surface coatings, and food and beverage products.
For more information, see our website at https://www.pqcorp.com.
Presentation of Preliminary First Quarter 2021 Results from Continuing Operations
The preliminary financial estimated results presented above are unaudited and preliminary estimates that have been prepared by management in good faith on a consistent basis with prior periods. However, the Company has not completed its financial closing procedures for the three months ended March 31, 2021 and actual results may differ from these preliminary estimates, and such differences could be material. The preliminary financial estimated results do not present all information necessary for an understanding of the Company’s financial condition as of, and its results and operations for, the fiscal quarter ended March 31, 2021. Accordingly, undue reliance should not be placed on these preliminary estimates. In addition, PricewaterhouseCoopers LLP, the Company’s independent registered public accounting firm, has not audited, reviewed, compiled, or performed any procedures with respect to these preliminary financial estimated results and does not express an opinion or any other form of assurance with respect to these preliminary financial estimated results or their achievability. The Company undertakes no obligation to update or supplement the information provided above until it releases its financial statements for the quarter ended March 31, 2021. The Company cautions you that such preliminary estimates are not guarantees of the Company’s full financial results for the quarterly period or of future performance or outcomes and that actual results may differ materially from the estimates described above.
Presentation of Non-GAAP Financial Measures
In addition to the preliminary estimated results presented in accordance with U.S. generally accepted accounting principles (“GAAP”), the Company has also presented a non-GAAP financial measure — Adjusted EBITDA — which presents results on a basis adjusted for certain items. The Company uses Adjusted EBITDA for business planning purposes and in measuring its performance relative to that of its competitors. The Company believes that Adjusted EBITDA is an important metric to assess its operating performance from period-to-period by excluding certain items that the Company believes are not representative of its core business. Adjusted EBITDA is not intended to replace, and should not be considered superior to, the presentation of the Company’s financial results in accordance with GAAP. The Company’s presentation of Adjusted EBITDA likely differs from similar measures reported by other companies and, as a result, may not be comparable to other similarly titled measures. Adjusted EBITDA is reconciled from operating income from continuing operations under GAAP in the appendix below.
The Company is not able to provide a reconciliation of Adjusted EBITDA to net income (the closest comparable financial measure presented in accordance with GAAP) without unreasonable effort or expense due to timing for completing our quarterly financial closing procedures, particularly related to discontinued operations. Items include certain non-cash, nonrecurring or other items that are included in net income as well as the related tax impacts of these items and changes in foreign currency exchange rates, due to the uncertainty and variability of the nature and amount of these charges and costs that will be determined as part of the Company’s financial closing procedures.
Zeolyst Joint Venture
The Company’s zeolite catalysts product group operates through its Zeolyst Joint Venture, which is accounted for as an equity method investment in accordance with GAAP. The presentation of the Zeolyst Joint Venture’s sales represents
Note on Forward-Looking Statements
Some of the information contained in this press release constitutes “forward-looking statements.” Forward-looking statements can be identified by words such as “anticipates,” “intends,” “plans,” “seeks,” “believes,” “estimates,” “expects,” “projects” and similar references to future periods. Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Examples of forward-looking statements include, but are not limited to, statements regarding the portfolio transformation and strategic objectives. Our actual results may differ materially from those contemplated by the forward-looking statements. We caution you, therefore, against relying on any of these forward-looking statements. They are neither statements of historical fact nor guarantees or assurances of future performance. Important factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to, our ability to close on the sale of the Performance Chemicals business segment on our anticipated timeline, or at all, regional, national or global political, economic, business, competitive, market and regulatory conditions, including the ongoing COVID-19 pandemic, tariffs and trade disputes, currency exchange rates and other factors, including those described in the sections titled “Risk Factors” and “Management Discussion & Analysis of Financial Condition and Results of Operations” in our filings with the SEC, which are available on the SEC’s website at www.sec.gov. These forward-looking statements speak only as of the date of this release. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by applicable law.
Appendix Table A-1: Reconciliation of Operating Income to Adjusted EBITDA
|
|
Three months ended March 31, |
||||||
|
|
2021 |
|
2020 |
||||
|
|
(in millions) |
||||||
Reconciliation of operating income attributable to PQ Group Holdings Inc. to Adjusted EBITDA |
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|
|
|
||||
Operating income4 |
|
$ |
2 |
|
|
$ |
12 |
|
Depreciation and amortization |
|
|
20 |
|
|
19 |
|
|
EBITDA |
|
|
22 |
|
|
31 |
|
|
Equity in net income from affiliated companies |
|
|
5 |
|
|
8 |
|
|
Joint venture depreciation, amortization and interest(a) |
|
|
4 |
|
|
4 |
|
|
Amortization of investment in affiliate step-up(b) |
|
|
2 |
|
|
2 |
|
|
Net loss on asset disposals(c) |
|
|
1 |
|
|
— |
|
|
LIFO (benefit) expense(d) |
|
|
— |
|
|
(2 |
) |
|
Transaction and other related costs(e) |
|
|
— |
|
|
1 |
|
|
Equity-based compensation |
|
|
6 |
|
|
4 |
|
|
Restructuring, integration and business optimization expenses(f) |
|
|
2 |
|
|
— |
|
|
Defined benefit pension plan cost(g) |
|
|
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FAQ
What were PQG's estimated sales for the first quarter of 2021?
PQ Group Holdings estimated sales for Q1 2021 were between $123 million and $127 million.
How did the Texas storm affect PQG's financial results?
The Texas storm is estimated to have negatively impacted PQG's sales and Adjusted EBITDA by approximately 5% and 18%, respectively.
What is PQG's estimated Adjusted EBITDA for Q1 2021?
The estimated Adjusted EBITDA for PQ Group Holdings in Q1 2021 is projected between $40 million and $42 million.
How did sales from the Zeolyst Joint Venture compare year-over-year?
Sales from the Zeolyst Joint Venture dropped to $28-$30 million in Q1 2021, down from $32 million in Q1 2020.
What was PQG's operating income for the first quarter of 2021?
PQ Group Holdings' estimated operating income for Q1 2021 is between $1 million and $3 million, compared to $12 million in Q1 2020.
pqg
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