Investors in Quaker Chemical Corporation (KWR) need to pay close attention to the stock based on moves in the options market lately. That is because the Oct 17, 2025 $130.00 Put had some of the highest implied volatility of all equity options today.What is Implied Volatility?Implied volatility shows how much movement the market is expecting in the future. Options with high levels of implied volatility suggest that investors in the underlying stocks are expecting a big move in one direction or the other. It ...

Have you evaluated the performance of Quaker Chemical's (KWR) international operations for the quarter ending June 2025? Given the extensive global presence of this specialty chemical company, analyzing the patterns in international revenues is crucial for understanding its financial strength and potential for growth. The global economy today is deeply interlinked, making a company's engagement with international markets a critical factor in determining its financial success and growth path. It has become e ...

Core Insights - Quaker Chemical reported Q2 2025 revenue of $483.4 million, exceeding analyst expectations by 4.8%, but faced profitability challenges with Non-GAAP EPS at $1.71, missing consensus by 6.6% and down 19.7% year-over-year [1][2] - The quarter included an $88.8 million non-cash goodwill impairment in the EMEA business, leading to a GAAP net loss of $66.6 million, highlighting ongoing margin pressure and challenges in Europe [1][7] Financial Performance - Non-GAAP EPS was $1.71, below the estimated $1.83 and down from $2.13 a year ago, reflecting a 19.7% decline [2] - Revenue increased by 4.3% year-over-year, from $463.6 million in Q2 2024 to $483.4 million in Q2 2025 [2] - Adjusted EBITDA decreased by 10.4% from the previous year, indicating underlying operating cash flow challenges [2] - Non-GAAP net income fell by 21.5% year-over-year to $30.0 million [2] - Non-GAAP operating margin decreased to 10.5%, down 2.4 percentage points from the previous year [2] Business Overview - Quaker Chemical operates in over 25 countries, providing industrial process fluids and chemicals to sectors such as steel, aluminum, automotive, and aerospace [3] - The company focuses on five core areas: global market share, product diversification, managing raw material costs, growth through acquisitions, and sustainability [4] Key Developments - The revenue growth was driven by a 6% contribution from acquisitions and 2% organic product volume growth, with the Dipsol acquisition significantly impacting results, especially in the Asia/Pacific region [5][6] - Despite revenue gains, profitability was affected by higher raw material and manufacturing costs, with flat sales in the Americas and slight growth in EMEA [6] - The Dipsol acquisition is expected to enhance the company's technology base and market reach, contributing to new surface treatment solutions [8] Strategic Initiatives - The company emphasizes customer intimacy and e-commerce channels for expansion, alongside investments in new manufacturing capacity to improve efficiency [9] - Ongoing sustainability efforts include increasing renewable energy usage and a $20 million multi-year cost reduction program [10] Capital Allocation - The company raised its quarterly dividend by approximately 5% and repurchased about $32.7 million of shares, with net debt rising to $734.8 million [11] - Management remains focused on using various capital allocation strategies to support future growth [11] Future Outlook - Management projects revenue and earnings for FY2025 to be stable, with no formal guidance provided due to uncertainties in global markets [12] - Key themes to monitor include cost-cutting progress, acquisition integration, EMEA recovery, and margin defense through selective price increases [13]

Financial Data and Key Metrics Changes - In the second quarter, the company reported net sales of $483 million, a 4% increase from the prior year, with organic volumes increasing by 2% [18] - Adjusted EBITDA was $75.5 million, reflecting a sequential increase of approximately $6 million, with adjusted EBITDA margins at 15.6% [9][20] - Gross margins were slightly lower at 36%, influenced by higher raw material and manufacturing costs, but remained within the target range [9][19] Business Line Data and Key Metrics Changes - The Asia Pacific segment achieved 3% organic sales growth, driven by strong contributions from new business wins and acquisitions, with sales increasing by 20% year over year [21] - The EMEA segment saw net sales growth compared to the prior year and quarter, with organic volumes increasing by 4% sequentially [22] - The Americas segment experienced a 1% decline in net sales year over year, with volumes down 2% [23] Market Data and Key Metrics Changes - The overall market served by the company is estimated to have declined by a low single-digit percentage compared to the prior year, with regional differences noted [7] - Demand uncertainty due to tariffs is impacting overall demand and geographic/product mix [8] Company Strategy and Development Direction - The company is focused on reducing complexity and improving cost structure to support long-term performance [6] - Investments are being made in new manufacturing capabilities and innovation to enhance customer solutions [10][11] - The integration of Dipsol's technology is expected to contribute positively to the company's portfolio [12] Management's Comments on Operating Environment and Future Outlook - Management anticipates that end market softness will persist through 2025, but remains confident in the ability to drive above-market growth [14][15] - The company is taking actions to enhance competitiveness and expects to deliver solid cash flow in 2025 [26][28] - Management expressed confidence in sustaining a long-term growth rate of 2% to 4% despite external market challenges [15][37] Other Important Information - The board approved a 5% increase in cash dividends, marking the sixteenth consecutive annual increase [14] - The company repurchased $33 million of shares and has $68 million remaining on its share repurchase authorization [28] Q&A Session Summary Question: Can you provide more details on the share gains and their sustainability? - Management noted broad-based share gains across all regions, particularly strong in Asia Pacific, and expressed confidence in sustaining a mid-single-digit growth rate into the second half of the year [35][37] Question: What is the outlook for Asia Pacific margins and raw material impacts? - Management indicated that new business wins may initially impact margins but expect stability and modest improvement in the second half, with targeted pricing actions in response to raw material costs [39] Question: What is the expected EBITDA growth cadence for the second half? - Management expects the second half to be stronger than the first, driven by new business wins and cost actions, but does not anticipate significant market improvement [41][46] Question: Can you elaborate on the double-digit growth in advanced products? - Management confirmed that advanced solutions, including Fluid Intelligence, are seeing strong traction and represent about 20% of total revenues, with higher growth rates than the corporate average [53] Question: What are the implications of tariffs on customer inventory and strategy? - Management noted that customers are cautious about building inventory due to uncertainty, but there is potential for positive impacts in North America [63] Question: What changes are being made to the commercial strategy? - Management highlighted improvements in organizational structure and operational efficiency to reduce complexity and enhance growth potential [66]

Financial Data and Key Metrics Changes - In Q2 2025, the company reported net sales of $483 million, a 4% increase year over year, with organic volumes up 2% driven by new business wins and acquisitions contributing an additional 6% to sales [18][6] - Adjusted EBITDA for the second quarter was $75.5 million, reflecting a margin of 15.6%, which is lower than the previous year due to higher raw material costs and disciplined cost management [20][8] - Gross margins were reported at 36%, slightly down from 36.4% in the previous year, influenced by product and geographic mix as well as increased manufacturing costs [19][8] Business Line Data and Key Metrics Changes - The Asia Pacific segment achieved 3% organic sales growth in Q2, with a 20% year-over-year increase in sales, bolstered by acquisitions and strong organic volume growth [21][6] - The EMEA segment saw net sales growth compared to both the prior year and quarter, with organic volumes increasing 4% sequentially, driven by advanced and operating solutions [22][6] - The Americas segment experienced a 1% decline in net sales year over year, with a 2% decrease in volumes, although price mix was slightly positive [23][6] Market Data and Key Metrics Changes - The overall market served by the company is estimated to have declined by a low single-digit percentage compared to the prior year, with regional differences impacting performance [6][7] - Demand uncertainty due to tariffs is affecting geographic and product mix, although share gains across the portfolio are mitigating these impacts [7][6] Company Strategy and Development Direction - The company is focused on reducing complexity and improving cost structure to support long-term performance, with a commitment to serving customers and driving growth [5][10] - Investments in new manufacturing capabilities and innovation through R&D are key strategies to enhance customer outcomes and drive sustainable growth [10][11] - The company is implementing a $20 million cost program expected to yield approximately $15 million in savings in 2025, with further actions anticipated to deliver additional savings by 2026 [12][13] Management's Comments on Operating Environment and Future Outlook - Management anticipates that the softness in end markets will persist through 2025, but remains confident in the ability to drive above-market growth through a healthy pipeline of product trials [14][15] - The company expects to maintain adjusted EBITDA margins in the high teens over time, with ongoing efforts to improve cost efficiency and manage inflationary pressures [60][62] - Management expressed optimism about the company's position and growth potential, regardless of external market conditions [68][69] Other Important Information - The company approved a 5% increase in cash dividends, marking the sixteenth consecutive annual increase, and repurchased $33 million of shares [14][28] - The net debt at the end of the quarter was $735 million, with a net leverage ratio of 2.6 times trailing twelve months adjusted EBITDA [28][25] Q&A Session Summary Question: Share gains and sustainability of growth - Management noted broad-based share gains across all regions, particularly strong in Asia Pacific, and expressed confidence in sustaining mid-single-digit growth rates into the second half of the year [34][36] Question: Asia Pacific margins and raw material impacts - Management indicated that new business wins in Asia Pacific may lead to modest margin improvements over time, despite current raw material headwinds related to oleochemicals [38][39] Question: Outlook for sequential EBITDA growth - Management expects stronger performance in the second half compared to the first half, driven by new business wins and cost actions, but does not anticipate significant market improvement [41][46] Question: Advanced products growth and margins - The advanced products segment, including Fluid Intelligence, is expected to grow significantly, contributing around 20% of total revenues with higher growth rates than the corporate average [52][54] Question: Cost savings program details - The new $20 million cost savings program is expected to yield significant savings, with a focus on both G&A and network improvements [56][57] Question: Customer sentiment regarding tariffs - Customers are cautious about building inventory due to uncertainty from tariffs, with some adjustments in inventory levels noted [64][65] Question: Commercial strategy and organizational changes - Management highlighted improvements in customer retention and share gains, with operational changes made to enhance product line management and sales deployment [67][68]

Financial Performance - Net sales for Q2 2025 were $4834 million, a 43% increase year-over-year[11] - Non-GAAP earnings per diluted share for Q2 2025 were $171[11] - Adjusted EBITDA for Q2 2025 was $755 million with a margin of 156%[11,18] - YTD 2025 net sales reached $9263 million, a 08% decrease compared to YTD 2024[11,12] - YTD 2025 non-GAAP earnings per diluted share were $329[11] - Adjusted EBITDA for YTD 2025 was $1445 million[11] Volume and Leverage - Sales volumes in Q2 2025 increased by 2% year-over-year, driven by growth in the Asia/Pacific segment[15] - Sales volumes in Q2 2025 increased by 4% compared to Q1 2025[15] - The company's leverage ratio as of June 30, 2025, was 26x[11,22] Additional Information - Total debt was $937 million, with cash and cash equivalents of $202 million, resulting in net debt of $735 million[22]

Quaker Chemical (KWR) came out with quarterly earnings of $1.71 per share, missing the Zacks Consensus Estimate of $1.82 per share. This compares to earnings of $2.13 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of -6.04%. A quarter ago, it was expected that this specialty chemical company would post earnings of $1.52 per share when it actually produced earnings of $1.58, delivering a surprise of +3.95%. Over the last four qu ...

PART I. FINANCIAL INFORMATION This section presents the company's unaudited condensed consolidated financial statements and management's discussion and analysis [Item 1. Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed consolidated financial statements, including core financial statements and comprehensive notes on accounting, segments, and debt [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This statement details the company's revenues, expenses, and net income or loss over specific periods | Metric (in thousands) | Q2 2025 | Q2 2024 | 6M 2025 | 6M 2024 | | :-------------------- | :------ | :------ | :------ | :------ | | Net sales | $483,400 | $463,567 | $926,314 | $933,326 | | Gross profit | $171,723 | $175,718 | $332,983 | $357,281 | | Operating (loss) income | $(52,510) | $58,449 | $(24,886) | $113,975 | | Net (loss) income | $(66,563) | $34,910 | $(53,646) | $70,168 | | Basic EPS | $(3.78) | $1.94 | $(3.04) | $3.90 | | Diluted EPS | $(3.78) | $1.94 | $(3.04) | $3.89 | | Dividends declared | $0.485 | $0.455 | $0.970 | $0.910 | - The significant net loss in Q2 2025 and 6M 2025 was primarily driven by an **$88.840 million impairment charge**[10](index=10&type=chunk) [Condensed Consolidated Statements of Comprehensive Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) This statement presents net income alongside other comprehensive income items like currency translation adjustments | Metric (in thousands) | Q2 2025 | Q2 2024 | 6M 2025 | 6M 2024 | | :-------------------- | :------ | :------ | :------ | :------ | | Net (loss) income | $(66,563) | $34,910 | $(53,646) | $70,168 | | Currency translation adjustments | $62,012 | $(18,840) | $89,141 | $(44,229) | | Other comprehensive income (loss) | $60,601 | $(18,774) | $86,569 | $(41,419) | | Comprehensive (loss) income | $(5,962) | $16,136 | $32,923 | $28,749 | - **Currency translation adjustments significantly impacted comprehensive income, showing a gain of $62.012 million in Q2 2025 compared to a loss of $18.840 million in Q2 2024**[13](index=13&type=chunk) [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This statement provides a snapshot of the company's assets, liabilities, and equity at specific points in time | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Cash and cash equivalents | $201,918 | $188,880 | | Total current assets | $974,107 | $876,417 | | Property, plant and equipment, net | $286,511 | $229,532 | | Goodwill | $502,438 | $518,894 | | Other intangible assets, net | $908,297 | $827,098 | | Total assets | $2,848,810 | $2,610,649 | | Total current liabilities | $380,059 | $379,768 | | Long-term debt | $897,953 | $669,614 | | Total liabilities | $1,503,355 | $1,256,466 | | Total equity | $1,345,455 | $1,354,183 | - **Long-term debt increased by $228.339 million from December 31, 2024, to June 30, 2025**[16](index=16&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This statement categorizes cash inflows and outflows from operating, investing, and financing activities | Metric (in thousands) | 6M 2025 | 6M 2024 | | :-------------------- | :------ | :------ | | Net cash provided by operating activities | $38,522 | $73,534 | | Net cash used in investing activities | $(180,720) | $(33,225) | | Net cash provided by (used in) financing activities | $147,554 | $(39,297) | | Net increase (decrease) in cash and cash equivalents | $13,038 | $(5,959) | | Cash and cash equivalents at the end of the period | $201,918 | $188,568 | - **Payments related to acquisitions, net of cash acquired, increased from $24.899 million in 6M 2024 to $164.078 million in 6M 2025**[19](index=19&type=chunk) - **Borrowings on revolving credit facilities, net, increased significantly from $20.533 million in 6M 2024 to $216.000 million in 6M 2025**[19](index=19&type=chunk) [Condensed Consolidated Statements of Changes in Equity](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Equity) This statement tracks changes in the company's equity components, including common stock, retained earnings, and AOCI | Metric (in thousands) | Dec 31, 2024 | June 30, 2025 | | :-------------------- | :----------- | :------------ | | Common Stock | $17,674 | $17,394 | | Capital in Excess of Par Value | $903,781 | $876,969 | | Retained Earnings | $633,731 | $563,063 | | Accumulated Other Comprehensive Loss | $(201,619) | $(115,181) | | Total Quaker Shareholders' Equity | $1,353,567 | $1,342,245 | | Noncontrolling Interest | $616 | $3,210 | | Total Equity | $1,354,183 | $1,345,455 | - **Retained earnings decreased by $70.668 million from December 31, 2024, to June 30, 2025, primarily due to the net loss and dividends**[22](index=22&type=chunk) - **Shares purchased under share repurchase program, net of excise taxes, amounted to $32.982 million in Q2 2025**[22](index=22&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) These notes provide detailed explanations and additional information supporting the condensed consolidated financial statements [Note 1 – Basis of Presentation and Description of Business](index=12&type=section&id=Note%201%20%E2%80%93%20Basis%20of%20Presentation%20and%20Description%20of%20Business) This note outlines the company's business, reporting segments, and the basis for financial statement presentation - **Quaker Houghton is a global leader in industrial process fluids, serving steel, aluminum, automotive, aerospace, offshore, container, mining, and metalworking industries**[26](index=26&type=chunk) - **The company operates in three reportable segments: Americas, EMEA, and Asia/Pacific**[26](index=26&type=chunk) - **Argentina's and Türkiye's economies are considered hyper-inflationary, resulting in remeasurement losses of $0.7 million (Q2 2025) and $1.2 million (6M 2025)**[27](index=27&type=chunk) [Note 2 – Business Acquisitions](index=12&type=section&id=Note%202%20%E2%80%93%20Business%20Acquisitions) This note details recent business acquisitions, including consideration paid, assets acquired, and liabilities assumed - **Acquired Dipsol Chemicals Co., Ltd. in April 2025 for approximately $185.6 million, expanding surface treatment and plating solutions, primarily in Asia/Pacific**[28](index=28&type=chunk) | Dipsol Acquisition (in thousands) | Fair Value | | :-------------------------------- | :--------- | | Total Assets Acquired | $172,706 | | Total Liabilities Assumed | $37,504 | | Noncontrolling interest | $(2,451) | | Goodwill | $52,862 | | Total Consideration | $185,613 | - **Recognized $55.0 million in intangible assets (customer relationships, product technologies, trademarks) and $52.9 million in goodwill from Dipsol acquisition**[32](index=32&type=chunk) - **Acquired Natech, Ltd. (UK) for $6.5 million and CSI (South Africa) for $3.9 million in April and February 2025, respectively, strengthening EMEA surface treatment and market presence**[36](index=36&type=chunk)[37](index=37&type=chunk) - **Acquisition-related expenses were $0.8 million (Q2 2025) and $4.1 million (6M 2025), up from $0.2 million (Q2 2024) and $0.5 million (6M 2024)**[41](index=41&type=chunk) [Note 3 – Recently Issued Accounting Standards](index=17&type=section&id=Note%203%20%E2%80%93%20Recently%20Issued%20Accounting%20Standards) This note discusses the impact and evaluation of recently issued accounting standards on financial reporting - **Adopted ASU 2023-07, Segment Reporting, enhancing disclosures on significant segment expenses like product costs**[43](index=43&type=chunk) - **Evaluating ASU 2023-09, Income Taxes, which requires additional detail on effective tax rate reconciliation and disaggregated income taxes paid, effective after December 15, 2024**[44](index=44&type=chunk) - **Evaluating ASU 2024-03, Expense Disaggregation Disclosures, requiring additional information on inventory purchases, employee compensation, depreciation, and intangible asset amortization, effective after December 15, 2026**[45](index=45&type=chunk) [Note 4 – Business Segments](index=17&type=section&id=Note%204%20%E2%80%93%20Business%20Segments) This note provides financial information and performance metrics for the company's operating business segments - **Segment performance is evaluated by the CEO based on segment operating earnings, which include net sales less directly related product costs and other operating expenses**[47](index=47&type=chunk) | Segment | Q2 2025 | Q2 2024 | 6M 2025 | 6M 2024 | | :------ | :------ | :------ | :------ | :------ | | Americas | $58,976 | $64,137 | $117,438 | $130,906 | | EMEA | $24,995 | $26,652 | $48,388 | $56,223 | | Asia/Pacific | $28,715 | $31,000 | $54,645 | $61,377 | | Totals | $112,686 | $121,789 | $220,471 | $248,506 | - **Product costs for 6M 2025 include $6.0 million amortization of Dipsol's inventory step-up and a $3.6 million gain from an out-of-period inventory adjustment**[51](index=51&type=chunk) [Note 5 – Net Sales and Revenue Recognition](index=19&type=section&id=Note%205%20%E2%80%93%20Net%20Sales%20and%20Revenue%20Recognition) This note details the company's net sales by customer industry and its policies for revenue recognition - **Top five customers accounted for approximately 12% of consolidated net sales in 2024, with the largest customer at 3%**[54](index=54&type=chunk) | Customer Industries | Q2 2025 | Q2 2024 | 6M 2025 | 6M 2024 | | :------------------ | :------ | :------ | :------ | :------ | | Metals | $154,955 | $149,210 | $302,078 | $298,967 | | Metalworking and other | $328,445 | $314,357 | $624,236 | $634,359 | | Consolidated Total | $483,400 | $463,567 | $926,314 | $933,326 | - **Deferred revenue decreased from $4.2 million at December 31, 2024, to $2.3 million at June 30, 2025, as performance obligations were satisfied**[56](index=56&type=chunk) [Note 6 – Leases](index=21&type=section&id=Note%206%20%E2%80%93%20Leases) This note outlines the company's lease arrangements, including lease expenses and liabilities | Lease Expense | Q2 2025 | Q2 2024 | 6M 2025 | 6M 2024 | | :------------ | :------ | :------ | :------ | :------ | | Operating lease expense | $4,302 | $3,727 | $8,010 | $7,470 | | Short-term lease expense | $140 | $193 | $284 | $392 | | Lease Liabilities | June 30, 2025 | December 31, 2024 | | :---------------- | :------------ | :---------------- | | Right-of-use lease assets | $40,610 | $34,120 | | Long-term lease liabilities | $24,315 | $20,028 | | Total operating lease liabilities | $37,145 | $30,647 | - **A new lease agreement for global headquarters in Radnor, PA, with a total commitment of $79.7 million, is expected to commence in Q3 2025 and is not yet included in lease liabilities**[62](index=62&type=chunk) [Note 7 – Restructuring and Related Activities](index=22&type=section&id=Note%207%20%E2%80%93%20Restructuring%20and%20Related%20Activities) This note describes the company's restructuring programs, associated charges, and accrued liabilities - **Global cost and optimization program initiated in 2022 aims to reduce headcount by approximately 380 positions globally by end of 2025**[63](index=63&type=chunk) | Metric | Q2 2025 | Q2 2024 | 6M 2025 | 6M 2024 | | :----- | :------ | :------ | :------ | :------ | | Restructuring and related charges, net | $8,793 | $320 | $23,383 | $2,177 | | Accrued Restructuring | Amount | | :-------------------- | :----- | | Balance as of Dec 31, 2024 | $2,297 | | Severance costs | $20,922 | | Asset-related and facility closure charges | $2,461 | | Cash payments | $(15,946) | | Balance as of June 30, 2025 | $7,646 | [Note 8 – Share-Based Compensation](index=24&type=section&id=Note%208%20%E2%80%93%20Share-Based%20Compensation) This note details the company's share-based compensation plans, expenses, and unrecognized compensation | Metric | Q2 2025 | Q2 2024 | 6M 2025 | 6M 2024 | | :----- | :------ | :------ | :------ | :------ | | Share-based compensation expense | $3,700 | $4,200 | $6,900 | $8,100 | - **Unrecognized compensation expense for restricted stock units was $12.1 million (weighted average remaining period of 1.7 years) and for PSUs was $9.4 million (weighted average remaining period of 2.3 years) as of June 30, 2025**[69](index=69&type=chunk)[72](index=72&type=chunk) - **PSUs are subject to market-based Total Shareholder Return (TSR) relative to the S&P Composite 1500 Chemicals index and performance-based Return on Invested Capital (ROIC) measures**[70](index=70&type=chunk)[71](index=71&type=chunk) [Note 9 – Pension and Other Postretirement Benefits](index=26&type=section&id=Note%209%20%E2%80%93%20Pension%20and%20Other%20Postretirement%20Benefits) This note provides information on the company's pension and other postretirement benefit plans and costs | Metric | Q2 2025 (Pension) | Q2 2024 (Pension) | 6M 2025 (Pension) | 6M 2024 (Pension) | | :----- | :---------------- | :---------------- | :---------------- | :---------------- | | Net periodic benefit cost (income) | $568 | $586 | $1,116 | $1,174 | - **Expected full-year cash contributions: $7.0 million to pension plans and $0.2 million to other postretirement benefit plans**[75](index=75&type=chunk) [Note 10 – Other (Expense) Income, net](index=26&type=section&id=Note%2010%20%E2%80%93%20Other%20(Expense)%20Income,%20net) This note details various non-operating income and expense items, including foreign exchange and disposals | Metric | Q2 2025 | Q2 2024 | 6M 2025 | 6M 2024 | | :----- | :------ | :------ | :------ | :------ | | Non-income tax refunds and other related credits | $132 | $868 | $300 | $3,023 | | (Loss) gain on disposals of property, plant, equipment and other assets, net | $(40) | $510 | $2,108 | $917 | | Foreign exchange losses, net | $(1,083) | $(727) | $(4,601) | $(1,175) | | Earnout liability adjustment | $(340) | — | $(340) | — | | Interest income | $752 | — | $1,412 | — | | Total other (expense) income, net | $(653) | $422 | $(1,362) | $1,502 | - **Foreign exchange losses, net, increased significantly to $4.601 million for 6M 2025 from $1.175 million for 6M 2024**[76](index=76&type=chunk) - **A $2.2 million gain was recognized from the sale of certain property during the six months ended June 30, 2025**[76](index=76&type=chunk) [Note 11 – Income Taxes](index=27&type=section&id=Note%2011%20%E2%80%93%20Income%20Taxes) This note explains the company's effective tax rates, tax provisions, and the impact of tax law changes | Period | 2025 | 2024 | | :----- | :--- | :--- | | Q2 | (8.3)% | 32.8% | | 6M | (26.8)% | 30.1% | - **The negative effective tax rates in 2025 were largely driven by goodwill impairment charges and the mix of pre-tax earnings**[80](index=80&type=chunk) - **The "One Big Beautiful Bill Act" (OBBB), signed into law on July 4, 2025, includes significant changes to federal corporate tax provisions, which the company is currently assessing for future impact**[81](index=81&type=chunk) [Note 12 – Earnings Per Share](index=27&type=section&id=Note%2012%20%E2%80%93%20Earnings%20Per%20Share) This note presents the calculation of basic and diluted earnings per share, including anti-dilutive shares | Metric | Q2 2025 | Q2 2024 | 6M 2025 | 6M 2024 | | :----- | :------ | :------ | :------ | :------ | | Net (loss) income attributable to Quaker Chemical Corporation | $(66,580) | $34,885 | $(53,658) | $70,112 | | Basic (loss) earnings per common share | $(3.78) | $1.94 | $(3.04) | $3.90 | | Diluted (loss) earnings per common share | $(3.78) | $1.94 | $(3.04) | $3.89 | - **The number of anti-dilutive shares increased significantly to 60,117 (Q2 2025) and 67,575 (6M 2025) from 16,098 (Q2 2024) and 31,000 (6M 2024), reflecting the net loss**[82](index=82&type=chunk) [Note 13 – Goodwill and Other Intangible Assets](index=28&type=section&id=Note%2013%20%E2%80%93%20Goodwill%20and%20Other%20Intangible%20Assets) This note details the company's goodwill and other intangible assets, including acquisitions and impairment charges | Metric | Dec 31, 2024 | June 30, 2025 | | :----- | :----------- | :------------ | | Balance as of period end | $518,894 | $502,438 | | Goodwill recognized for Dipsol acquisition | — | $52,862 | | Goodwill impairments | — | $(88,840) | - **A pre-tax, non-cash impairment charge of $88.8 million was recorded in Q2 2025 for the EMEA reporting unit's goodwill, driven by lower projected financial performance and increased cost of capital due to tariff uncertainty**[85](index=85&type=chunk) | Asset Type | June 30, 2025 | December 31, 2024 | | :--------- | :------------ | :---------------- | | Customer lists and rights to sell | $576,975 | $543,805 | | Trademarks, formulations and product technology | $130,014 | $97,884 | | Total definite-lived intangible assets | $707,076 | $641,785 | - **Amortization expense for definite-lived intangible assets was $16.088 million for Q2 2025 and $30.325 million for 6M 2025**[87](index=87&type=chunk) [Note 14 – Debt](index=29&type=section&id=Note%2014%20%E2%80%93%20Debt) This note provides information on the company's various debt instruments, interest rates, and credit facilities | Debt Type | June 30, 2025 | December 31, 2024 | | :-------- | :------------ | :---------------- | | Revolver | $277,063 | $48,820 | | U.S. Term Loan | $495,504 | $508,863 | | Euro Term Loan | $152,694 | $138,767 | | Total debt | $936,695 | $708,267 | | Total long-term debt | $897,953 | $669,614 | - **The weighted average variable interest rate on the Credit Facility was approximately 5.2% for Q2 and 6M 2025**[92](index=92&type=chunk) - **The company has $300.0 million notional interest rate swaps to convert variable rate borrowings to a fixed rate of 3.64% plus applicable margin**[93](index=93&type=chunk) - **Unused capacity under the Revolver was approximately $220 million as of June 30, 2025**[92](index=92&type=chunk) [Note 15 – Accumulated Other Comprehensive Income](index=32&type=section&id=Note%2015%20%E2%80%93%20Accumulated%20Other%20Comprehensive%20Income) This note details the components of accumulated other comprehensive income, including currency translation adjustments | Component | Dec 31, 2024 | June 30, 2025 | | :-------- | :----------- | :------------ | | Currency Translation Adjustments | $(192,841) | $(103,831) | | Defined Benefit Pension Plans | $(10,313) | $(11,682) | | Unrealized Gain (Loss) in Available-for-Sale Securities | $287 | $(224) | | Derivative Instruments | $1,248 | $556 | | Total AOCI | $(201,619) | $(115,181) | - **Other comprehensive income (loss) before reclassifications for 6M 2025 was $85.624 million, primarily due to currency translation adjustments**[102](index=102&type=chunk) [Note 16 – Fair Value Measurements](index=33&type=section&id=Note%2016%20%E2%80%93%20Fair%20Value%20Measurements) This note describes the company's fair value measurements for financial instruments and other assets - **Company-owned life insurance policies are valued at fair value and are immaterial**[103](index=103&type=chunk) [Note 17 – Hedging Activities](index=33&type=section&id=Note%2017%20%E2%80%93%20Hedging%20Activities) This note explains the company's use of derivative instruments for hedging foreign currency and interest rate risks - **Uses foreign exchange forward contracts to hedge currency variability on foreign currency-denominated assets/liabilities**[105](index=105&type=chunk) - **Entered into $300.0 million notional interest rate swaps in Q1 2023 to convert variable-rate borrowings to fixed-rate, designated as cash flow hedges**[110](index=110&type=chunk) - **Entered into cross-currency swaps totaling $175.0 million notional amount in Q2 2025 to hedge U.S. Dollar against European Euro and Japanese Yen, designated as net investment hedges**[111](index=111&type=chunk)[112](index=112&type=chunk) | Derivative Instrument | Q2 2025 | Q2 2024 | 6M 2025 | 6M 2024 | | :-------------------- | :------ | :------ | :------ | :------ | | Net investment hedges | $697 | — | $697 | — | | Interest rate swaps | $518 | $1,273 | $1,041 | $2,559 | | Foreign exchange forward contracts | $1,441 | $(1,675) | $(415) | $(732) | | Total | $2,656 | $(402) | $1,323 | $1,827 | [Note 18 – Commitments and Contingencies](index=36&type=section&id=Note%2018%20%E2%80%93%20Commitments%20and%20Contingencies) This note outlines the company's commitments and potential liabilities, including environmental and legal matters - **Accrued approximately $5.6 million for environmental matters and other litigation as of June 30, 2025**[116](index=116&type=chunk) - **No new material adverse environmental matters or litigation during Q2 or 6M 2025**[117](index=117&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.](index=37&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) This section provides management's perspective on the company's financial condition and results of operations, highlighting key performance drivers, liquidity, capital resources, and future outlook. It discusses the net loss in Q2 2025 due to an impairment charge, the impact of acquisitions, and ongoing soft market conditions [Executive Summary](index=37&type=section&id=Executive%20Summary) This summary highlights key financial performance metrics, including net sales, net income, and cash flow - **Net sales increased 4% to $483.4 million in Q2 2025, driven by 6% from acquisitions and 2% from sales volumes, partially offset by a 4% decline in selling price/product mix**[122](index=122&type=chunk) - **Reported a net loss of $66.6 million ($3.78 diluted EPS) in Q2 2025, compared to net income of $34.9 million ($1.94 diluted EPS) in Q2 2024, primarily due to an $88.8 million non-cash goodwill impairment charge**[123](index=123&type=chunk) - **Non-GAAP net income decreased to $30.0 million ($1.71 diluted EPS) in Q2 2025 from $38.2 million ($2.13 diluted EPS) in Q2 2024, due to lower gross margins and higher SG&A**[123](index=123&type=chunk) - **Net cash flows provided by operating activities decreased to $38.5 million in 6M 2025 from $73.5 million in 6M 2024, reflecting lower operating performance and higher restructuring cash outflows**[125](index=125&type=chunk) [Critical Accounting Policies and Estimates](index=38&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section discusses the significant accounting policies and estimates that require management's judgment - **No material changes to critical accounting policies and estimates since the 2024 Form 10-K**[129](index=129&type=chunk) [Recently Issued Accounting Standards](index=38&type=section&id=Recently%20Issued%20Accounting%20Standards) This section refers to Note 3 for details on recently issued accounting standards and their potential impact - **Refer to Note 3 for information on recently adopted and issued accounting standards**[130](index=130&type=chunk) [Liquidity and Capital Resources](index=38&type=section&id=Liquidity%20and%20Capital%20Resources) This section analyzes the company's cash position, debt, and ability to meet short-term and long-term obligations | Metric | June 30, 2025 | December 31, 2024 | | :----- | :------------ | :---------------- | | Cash and cash equivalents | $201,918 | $188,880 | - **Net cash provided by operating activities decreased to $38.5 million in 6M 2025 from $73.5 million in 6M 2024**[132](index=132&type=chunk) - **Net cash used in investing activities increased to $180.7 million in 6M 2025 (vs. $33.2 million in 6M 2024), primarily due to $164.1 million in acquisition payments**[133](index=133&type=chunk) - **Net cash provided by financing activities increased to $147.5 million in 6M 2025 (vs. $39.3 million used in 6M 2024), driven by $216.0 million net borrowings on the revolving credit facility**[134](index=134&type=chunk) - **Total net debt as of June 30, 2025, was approximately $734.8 million**[136](index=136&type=chunk) - **The company repurchased approximately $32.7 million of common stock under its share repurchase program in 6M 2025**[134](index=134&type=chunk) [Operations Review](index=41&type=section&id=Operations%20Review) This review analyzes the company's consolidated and segment-level operational performance for the reporting periods [Consolidated Operations Review – Comparison of the Second Quarter of 2025 with the Second Quarter of 2024](index=41&type=section&id=Consolidated%20Operations%20Review%20%E2%80%93%20Comparison%20of%20the%20Second%20Quarter%20of%202025%20with%20the%20Second%20Quarter%20of%202024) This review compares the company's consolidated operational performance for Q2 2025 against Q2 2024 | Segment | Sales volumes | Selling price & product mix | Foreign currency | Acquisition & other | Total | | :------ | :------------ | :-------------------------- | :--------------- | :------------------ | :---- | | Americas | (2)% | 1 % | (2)% | 2 % | (1)% | | EMEA | 1 % | (7)% | 4 % | 3 % | 1 % | | Asia/Pacific | 8 % | (5)% | — % | 17 % | 20 % | | Consolidated | 2 % | (4)% | — % | 6 % | 4 % | - **COGS increased 8% to $311.7 million, reflecting higher sales volumes, raw material costs, manufacturing costs, and $6.0 million Dipsol inventory step-up amortization, partially offset by a $3.6 million inventory adjustment gain**[148](index=148&type=chunk) - **Gross margin decreased to 35.5% (GAAP) and 36.0% (non-GAAP) in Q2 2025 from 37.9% in Q2 2024**[149](index=149&type=chunk) - **SG&A increased 8% to $126.6 million, primarily due to acquisitions**[150](index=150&type=chunk) - **Operating loss of $52.5 million in Q2 2025 was primarily due to an $88.8 million non-cash goodwill impairment charge in the EMEA segment**[153](index=153&type=chunk)[154](index=154&type=chunk) [Consolidated Operations Review – Comparison of the First Six Months of 2025 with the First Six Months of 2024](index=43&type=section&id=Consolidated%20Operations%20Review%20%E2%80%93%20Comparison%20of%20the%20First%20Six%20Months%20of%202025%20with%20the%20First%20Six%20Months%20of%202024) This review compares the company's consolidated operational performance for 6M 2025 against 6M 2024 | Segment | Sales volumes | Selling price & product mix | Foreign currency | Acquisition & other | Total | | :------ | :------------ | :-------------------------- | :--------------- | :------------------ | :---- | | Americas | (2)% | — % | (3)% | 1 % | (4)% | | EMEA | (3)% | (3)% | 1 % | 2 % | (3)% | | Asia/Pacific | 4 % | (4)% | (1)% | 10 % | 9 % | | Consolidated | (1)% | (2)% | (2)% | 4 % | (1)% | - **COGS increased 3% to $593.3 million, reflecting higher raw material and manufacturing costs, and $6.0 million Dipsol inventory step-up amortization, partially offset by a $3.6 million inventory adjustment gain**[163](index=163&type=chunk) - **Gross margin decreased to 35.9% (GAAP) and 36.2% (non-GAAP) in 6M 2025 from 38.3% in 6M 2024**[164](index=164&type=chunk) - **SG&A increased 2% to $245.6 million, primarily due to acquisitions, partially offset by lower incentive compensation**[165](index=165&type=chunk) - **Operating loss of $24.9 million in 6M 2025 was primarily due to an $88.8 million non-cash goodwill impairment charge in the EMEA segment**[167](index=167&type=chunk)[168](index=168&type=chunk) [Reportable Segments Review - Comparison of the Second Quarter of 2025 with the Second Quarter of 2024](index=44&type=section&id=Reportable%20Segments%20Review%20-%20Comparison%20of%20the%20Second%20Quarter%20of%202025%20with%20the%20Second%20Quarter%20of%202024) This review analyzes the performance of each reportable segment for Q2 2025 compared to Q2 2024 - **Americas: Net sales decreased 1% to $221.1 million, driven by 2% lower sales volumes (soft end markets, tariffs) and 2% unfavorable foreign currency, partially offset by 2% from acquisitions. Segment operating earnings decreased 8% to $59.0 million due to lower net sales and gross margins**[177](index=

[Executive Summary](index=1&type=section&id=Executive%20Summary) [Second Quarter 2025 Highlights](index=1&type=section&id=Second%20Quarter%202025%20Highlights) Quaker Houghton reported a 4% year-over-year increase in net sales to $483.4 million for Q2 2025, driven by a 2% increase in organic sales volumes and a 6% contribution from acquisitions, despite recording a net loss of $66.6 million primarily due to an $88.8 million goodwill impairment charge in the EMEA segment, leading to declines in non-GAAP net income and Adjusted EBITDA compared to the prior year Key Financial Highlights | Metric | Q2 2025 ($ in thousands) | Q2 2024 ($ in thousands) | Change (%) | | :--------------------------------------- | :----------------------- | :----------------------- | :--------- | | Net sales | 483,400 | 463,567 | 4% | | Net (loss) income attributable to Quaker Chemical Corporation | (66,580) | 34,885 | -291% | | Net (loss) income per diluted share | (3.78) | 1.94 | -295% | | Non-GAAP net income | 30,000 | 38,232 | -21.5% | | Non-GAAP Earnings per diluted share | 1.71 | 2.13 | -19.7% | | Adjusted EBITDA | 75,479 | 84,291 | -10.4% | - Net sales increased **4% year-over-year** to **$483.4 million**, driven by a **2% increase in sales volumes** (including **5% from new business wins**) and a **6% contribution from acquisitions**, partially offset by a **4% decline in selling price and product mix**[3](index=3&type=chunk)[5](index=5&type=chunk) - The reported net loss of **$66.6 million** (or **$3.78 per diluted share**) includes an **$88.8 million non-cash goodwill impairment charge** related to the EMEA segment[4](index=4&type=chunk)[5](index=5&type=chunk) - The Company repurchased **$32.7 million in shares** and raised its quarterly cash dividend by approximately **5%** in Q2 2025[5](index=5&type=chunk)[14](index=14&type=chunk) [CEO Commentary and Outlook](index=2&type=section&id=CEO%20Commentary%20and%20Outlook) CEO Joe Berquist highlighted strong organic volume growth of 2% year-over-year, exceeding market growth due to new business wins, particularly in Asia/Pacific, and despite a challenging macroeconomic environment, especially in the U.S. and Europe, the company is focused on advancing its enterprise strategy and managing costs, with an outlook for H2 2025 anticipating continued tepid economic conditions but expecting stronger performance, aiming for full-year 2025 revenue and earnings to be in the range of 2024, supported by $20 million in additional run-rate cost savings by the end of 2026 - Generated **2% year-over-year organic volume growth** in Q2 2025, driven by strong new business wins across all segments, with Asia/Pacific achieving **8% organic volume growth**[6](index=6&type=chunk) - Anticipates tepid economic conditions in H2 2025 but expects stronger business performance, positioning for full-year 2025 revenue and earnings in the range of 2024[7](index=7&type=chunk) - Initiated actions expected to deliver approximately **$20 million of additional run-rate cost savings** by the end of 2026[7](index=7&type=chunk) [Consolidated Financial Results](index=1&type=section&id=Consolidated%20Financial%20Results) [Net Sales Performance](index=1&type=section&id=Net%20Sales%20Performance) Consolidated net sales for Q2 2025 increased by 4% year-over-year to $483.4 million, primarily fueled by a 2% increase in sales volumes, including a 5% contribution from new business wins, and a 6% benefit from acquisitions, partially offset by a 4% decline in selling price and product mix, influenced by product/service mix and index-based contracts Net Sales and Variance Drivers | Metric | Q2 2025 ($ in thousands) | Q2 2024 ($ in thousands) | Change (%) | | :-------- | :----------------------- | :----------------------- | :--------- | | Net sales | 483,400 | 463,567 | 4% | | Sales volumes | 2% | - | - | | Acquisitions | 6% | - | - | | Selling price & product mix | -4% | - | - | - Organic sales volumes increased **4%** compared to the first quarter of 2025[3](index=3&type=chunk) [Net Income and Earnings Per Share (GAAP)](index=1&type=section&id=Net%20Income%20and%20Earnings%20Per%20Share%20(GAAP)) The company reported a significant GAAP net loss of $66.6 million, or $3.78 per diluted share, in Q2 2025, a substantial decline from net income of $34.9 million, or $1.94 per diluted share, in Q2 2024, predominantly driven by an $88.8 million non-cash goodwill impairment charge related to the EMEA segment GAAP Net Income and EPS | Metric | Q2 2025 ($ in thousands) | Q2 2024 ($ in thousands) | Change (%) | | :--------------------------------------- | :----------------------- | :----------------------- | :--------- | | Net (loss) income attributable to Quaker Chemical Corporation | (66,580) | 34,885 | -291% | | Net (loss) income per diluted share | (3.78) | 1.94 | -295% | - The net loss includes an **$88.8 million non-cash goodwill impairment charge** associated with the EMEA reportable segment[4](index=4&type=chunk) [Non-GAAP Financial Performance (Non-GAAP Net Income, Adjusted EBITDA)](index=1&type=section&id=Non-GAAP%20Financial%20Performance%20(Non-GAAP%20Net%20Income%2C%20Adjusted%20EBITDA)) Excluding non-recurring items, non-GAAP net income for Q2 2025 was $30.0 million ($1.71 per diluted share), down from $38.2 million ($2.13 per diluted share) in Q2 2024, while Adjusted EBITDA decreased by approximately 10% to $75.5 million, with adjusted EBITDA margins at 15.6%, reflecting lower operating margins despite increased net sales Non-GAAP Net Income and Adjusted EBITDA | Metric | Q2 2025 ($ in thousands) | Q2 2024 ($ in thousands) | Change (%) | | :--------------------------------------- | :----------------------- | :----------------------- | :--------- | | Non-GAAP net income | 30,000 | 38,232 | -21.5% | | Non-GAAP Earnings per diluted share | 1.71 | 2.13 | -19.7% | | Adjusted EBITDA | 75,479 | 84,291 | -10.4% | | Adjusted EBITDA margin | 15.6% | 18.2% | -2.6 pp | - The decrease in Adjusted EBITDA was due to lower operating margins, despite the increase in net sales[4](index=4&type=chunk) [Segment Results](index=2&type=section&id=Segment%20Results) [Overview of Segment Performance](index=2&type=section&id=Overview%20of%20Segment%20Performance) In Q2 2025, consolidated organic sales volumes increased 2% year-over-year, driven by strong new business wins across all segments, with Asia/Pacific showing significant growth, while Americas and EMEA faced soft end market conditions and tariff-related uncertainty, leading to decreased operating earnings across all segments year-over-year due to higher raw material, manufacturing, and SG&A costs, but increased quarter-over-quarter driven by higher net sales Net Sales by Segment | Segment | Q2 2025 Net Sales ($ in thousands) | Q2 2024 Net Sales ($ in thousands) | YoY Change (%) | | :---------- | :----------------------- | :----------------------- | :------------- | | Americas | 221,062 | 223,517 | -1% | | EMEA | 139,923 | 138,001 | 1% | | Asia/Pacific | 122,415 | 102,049 | 20% | | Total | 483,400 | 463,567 | 4% | - Underlying end market activity remained below prior year levels in Americas and EMEA, amplified by tariff uncertainty, while Asia/Pacific improved[10](index=10&type=chunk) - Operating earnings decreased in all segments year-over-year due to lower operating margins from higher raw material, manufacturing costs, and SG&A expenses[12](index=12&type=chunk) - Operating earnings increased in all segments quarter-over-quarter (Q2 2025 vs. Q1 2025) primarily due to increased net sales[12](index=12&type=chunk) [Americas Segment](index=2&type=section&id=Americas%20Segment) The Americas segment experienced a 1% decline in net sales in Q2 2025 compared to the prior year, primarily due to decreased sales volumes and unfavorable foreign currency translation, partially offset by a modest increase in selling price and product mix and contributions from acquisitions, with segment operating earnings also decreasing Americas Segment Financials | Metric | Q2 2025 ($ in thousands) | Q2 2024 ($ in thousands) | YoY Change (%) | | :------------------------ | :----------------------- | :----------------------- | :------------- | | Net Sales | 221,062 | 223,517 | -1% | | Segment operating earnings | 58,976 | 64,137 | -8.0% | Americas Segment Sales Variance Drivers | Sales Variance Driver | Americas (Q2 2025 vs Q2 2024) | | :-------------------- | :---------------------------- | | Sales volumes | (2)% | | Selling price & product mix | 1 % | | Foreign currency | (2)% | | Acquisition & other | 2 % | | Total | (1)% | [EMEA Segment](index=2&type=section&id=EMEA%20Segment) The EMEA segment saw a slight increase of approximately 1% in net sales in Q2 2025, driven by increased sales volumes, acquisitions, and favorable foreign currency translation, despite a decline in selling price and product mix, though segment operating earnings decreased, and the segment was notably impacted by an $88.8 million goodwill impairment charge EMEA Segment Financials | Metric | Q2 2025 ($ in thousands) | Q2 2024 ($ in thousands) | YoY Change (%) | | :------------------------ | :----------------------- | :----------------------- | :------------- | | Net Sales | 139,923 | 138,001 | 1% | | Segment operating earnings | 24,995 | 26,652 | -6.3% | EMEA Segment Sales Variance Drivers | Sales Variance Driver | EMEA (Q2 2025 vs Q2 2024) | | :-------------------- | :-------------------------- | | Sales volumes | 1 % | | Selling price & product mix | (7)% | | Foreign currency | 4 % | | Acquisition & other | 3 % | | Total | 1 % | - The EMEA segment incurred an **$88.8 million goodwill impairment charge** in Q2 2025[4](index=4&type=chunk)[26](index=26&type=chunk) [Asia/Pacific Segment](index=2&type=section&id=Asia%2FPacific%20Segment) The Asia/Pacific segment demonstrated strong performance with a 20% increase in net sales in Q2 2025, primarily due to significant increases in sales volumes and contributions from acquisitions (Dipsol and Sutai), partially offset by a decrease in selling price and product mix, despite which segment operating earnings saw a decline Asia/Pacific Segment Financials | Metric | Q2 2025 ($ in thousands) | Q2 2024 ($ in thousands) | YoY Change (%) | | :------------------------ | :----------------------- | :----------------------- | :------------- | | Net Sales | 122,415 | 102,049 | 20% | | Segment operating earnings | 28,715 | 31,000 | -7.4% | Asia/Pacific Segment Sales Variance Drivers | Sales Variance Driver | Asia/Pacific (Q2 2025 vs Q2 2024) | | :-------------------- | :-------------------------------- | | Sales volumes | 8 % | | Selling price & product mix | (5)% | | Foreign currency | — % | | Acquisition & other | 17 % | | Total | 20 % | - Sales from acquisitions, primarily Dipsol and Sutai, significantly contributed to the Asia/Pacific segment's growth[9](index=9&type=chunk) [Cash Flow and Liquidity](index=4&type=section&id=Cash%20Flow%20and%20Liquidity) [Cash Flow and Liquidity Highlights](index=4&type=section&id=Cash%20Flow%20and%20Liquidity%20Highlights) Net cash provided by operating activities for the six months ended June 30, 2025, decreased to $38.5 million from $73.5 million in the prior year, reflecting lower operating performance and higher restructuring outflows, while the company's net debt stood at approximately $734.8 million, with a net debt to trailing twelve months adjusted EBITDA ratio of 2.6x, influenced by the Dipsol acquisition Operating Cash Flow | Metric | Six Months Ended June 30, 2025 ($ in thousands) | Six Months Ended June 30, 2024 ($ in thousands) | YoY Change (%) | | :-------------------------------- | :------------------------------------ | :------------------------------------ | :------------- | | Net cash provided by operating activities | 38,522 | 73,534 | -47.6% | Debt and Liquidity Metrics | Metric | As of June 30, 2025 ($ in thousands) | | :--------------------------------------- | :----------------------------------- | | Total gross debt | 936,700 | | Cash and cash equivalents | 201,900 | | Net debt | 734,800 | | Net debt / Trailing twelve months adjusted EBITDA | 2.6x | - The Dipsol acquisition, completed in April 2025, was funded with borrowings under the Company's existing credit facility, impacting net debt[14](index=14&type=chunk) [Non-GAAP Measures and Reconciliations](index=4&type=section&id=Non-GAAP%20Measures%20and%20Reconciliations) [Introduction and Definitions](index=4&type=section&id=Introduction%20and%20Definitions) This section provides definitions and reconciliations for various non-GAAP financial measures, including EBITDA, Adjusted EBITDA, non-GAAP operating income, non-GAAP gross profit, and their respective margins, as well as non-GAAP net income and EPS, which are presented to offer supplemental information, enhance understanding of financial performance, and facilitate period-over-period comparisons by excluding items not indicative of core operations or future performance - Non-GAAP measures are used to provide meaningful supplemental information, enhance understanding of financial performance, facilitate comparison among fiscal periods, and exclude items not indicative of future operating performance or considered core to the Company's operations[15](index=15&type=chunk) - EBITDA is defined as net income attributable to the Company before depreciation and amortization, interest expense, and taxes on income before equity in net income of associated companies[16](index=16&type=chunk) - Adjusted EBITDA, non-GAAP operating income, and non-GAAP gross profit are calculated by adjusting their GAAP counterparts for certain items management believes are not indicative of future operating performance or core operations[16](index=16&type=chunk) [Non-GAAP Gross Profit and Margin Reconciliations](index=5&type=section&id=Non-GAAP%20Gross%20Profit%20and%20Margin%20Reconciliations) The reconciliation shows that non-GAAP gross profit for Q2 2025 was $174.1 million, slightly lower than Q2 2024's $175.7 million, with the non-GAAP gross profit margin decreasing to 36.0% from 37.9% year-over-year, primarily due to acquisition-related inventory amortization and other adjustments Non-GAAP Gross Profit and Margin Reconciliation | Metric | Q2 2025 ($ in thousands) | Q2 2024 ($ in thousands) | YoY Change (%) | | :------------------------------------ | :----------------------- | :----------------------- | :------------- | | Gross profit | 171,723 | 175,718 | -2.3% | | Acquisition-related step-up inventory amortization | 6,022 | — | - | | Gain on inventory and other adjustments | (3,604) | — | - | | Non-GAAP gross profit | 174,141 | 175,718 | -0.9% | | Non-GAAP profit margin (%) | 36.0% | 37.9% | -1.9 pp | [Non-GAAP Operating Income and Margin Reconciliations](index=5&type=section&id=Non-GAAP%20Operating%20Income%20and%20Margin%20Reconciliations) Non-GAAP operating income for Q2 2025 was $50.6 million, down from $59.8 million in Q2 2024, with the non-GAAP operating margin decreasing to 10.5% from 12.9%, as adjustments include significant impairment charges, restructuring costs, and acquisition-related expenses, which transformed a GAAP operating loss into a non-GAAP operating income Non-GAAP Operating Income and Margin Reconciliation | Metric | Q2 2025 ($ in thousands) | Q2 2024 ($ in thousands) | YoY Change (%) | | :------------------------------------ | :----------------------- | :----------------------- | :------------- | | Operating (loss) income | (52,510) | 58,449 | -189.8% | | Impairment charges | 88,840 | — | - | | Restructuring and related charges, net | 8,793 | 320 | 2647.8% | | Non-GAAP operating income | 50,641 | 59,815 | -15.3% | | Non-GAAP operating margin (%) | 10.5% | 12.9% | -2.4 pp | [EBITDA, Adjusted EBITDA, and Non-GAAP Net Income Reconciliations](index=6&type=section&id=EBITDA%2C%20Adjusted%20EBITDA%2C%20and%20Non-GAAP%20Net%20Income%20Reconciliations) EBITDA for Q2 2025 was a loss of $24.4 million, significantly down from $82.8 million in Q2 2024, primarily due to the goodwill impairment, while Adjusted EBITDA decreased by 10.4% to $75.5 million, with a margin of 15.6%, and Non-GAAP net income was $30.0 million, a 21.5% decrease from the prior year, after various adjustments for non-core items EBITDA, Adjusted EBITDA, and Non-GAAP Net Income Reconciliation | Metric | Q2 2025 ($ in thousands) | Q2 2024 ($ in thousands) | YoY Change (%) | | :--------------------------------------- | :----------------------- | :----------------------- | :------------- | | EBITDA | (24,408) | 82,845 | -129.5% | | Adjusted EBITDA | 75,479 | 84,291 | -10.4% | | Adjusted EBITDA margin (%) | 15.6% | 18.2% | -2.6 pp | | Non-GAAP net income | 30,000 | 38,232 | -21.5% | - Key adjustments to reconcile EBITDA to Adjusted EBITDA include an **$88.8 million impairment charge** and **$8.8 million in restructuring charges** for Q2 2025[22](index=22&type=chunk) [Non-GAAP Earnings per Diluted Share Reconciliations](index=7&type=section&id=Non-GAAP%20Earnings%20per%20Diluted%20Share%20Reconciliations) Non-GAAP earnings per diluted share for Q2 2025 was $1.71, a decrease from $2.13 in Q2 2024, a figure derived by adjusting the GAAP loss per diluted share of $3.78 for various non-recurring and non-core items, most notably the $4.91 per share impact of impairment charges Non-GAAP Earnings per Diluted Share Reconciliation | Metric | Q2 2025 | Q2 2024 | YoY Change (%) | | :-------------------------------------------------------------------------------- | :------ | :------ | :------------- | | GAAP (loss) earnings per diluted share attributable to Quaker Chemical Corporation common shareholders | (3.78) | 1.94 | -295% | | Impairment charges (per share) | 4.91 | — | - | | Non-GAAP earnings per diluted share | 1.71 | 2.13 | -19.7% | [Segment Measures and Reconciliations Notes](index=7&type=section&id=Segment%20Measures%20and%20Reconciliations%20Notes) Segment operating earnings are defined as net sales less directly related product costs and other operating expenses, excluding certain corporate and administrative costs and restructuring charges, with notes clarifying the inclusion of amortization expense within equity in net income of associated companies and the adjustment of taxes on income for reconciling items in non-GAAP calculations - Segment operating earnings exclude corporate and administrative costs and restructuring charges not directly attributable to segment net sales[24](index=24&type=chunk) - Depreciation and amortization includes amortization expense related to the acquisition of a **50% equity interest in Korea Houghton Corporation**[25](index=25&type=chunk) - Adjusted taxes on income account for current and deferred income tax impacts of non-GAAP reconciling items, determined using applicable tax rates[25](index=25&type=chunk) [Company Information](index=9&type=section&id=Company%20Information) [About Quaker Houghton](index=9&type=section&id=About%20Quaker%20Houghton) Quaker Houghton is a global leader in industrial process fluids, operating in over 25 countries, providing high-performing, innovative, and sustainable solutions to a diverse customer base across industries like steel, automotive, and aerospace, supported by approximately 4,400 employees - Quaker Houghton is the global leader in industrial process fluids with operations in over **25 countries**[28](index=28&type=chunk) - Serves thousands of advanced and specialized customers in industries such as steel, aluminum, automotive, aerospace, and metalworking[28](index=28&type=chunk) - Employs approximately **4,400 individuals**, including chemists, engineers, and industry experts[28](index=28&type=chunk) [Forward-Looking Statements](index=9&type=section&id=Forward-Looking%20Statements) This section contains forward-looking statements subject to various risks and uncertainties, including economic downturns, tariffs, inflation, supply chain constraints, interest rates, geopolitical conflicts, and regulatory changes, with the company cautioning against undue reliance on these statements, which are based on information available as of the press release date and are not subject to revision - Forward-looking statements are based on assumptions and expectations about future events, including potential effects of economic downturns, tariffs, inflation, and global supply chain constraints[27](index=27&type=chunk) - Major risks include demand for products being derived from customer demand, inflationary pressures, supply chain constraints, customer financial instability, high interest rates, and geopolitical conflicts[27](index=27&type=chunk) - The company disclaims any duty or obligation to update or revise any forward-looking statements[27](index=27&type=chunk) [Conference Call Details](index=9&type=section&id=Conference%20Call%20Details) An investor conference call to discuss Q2 2025 performance was scheduled for Friday, August 1, 2025, at 8:30 a.m. ET, with a live webcast and supplemental information accessible via the company's Investor Relations website - Investor conference call for Q2 2025 performance was scheduled for **Friday, August 1, 2025, at 8:30 a.m. ET**[27](index=27&type=chunk) - Live webcast and supplemental information available on investors.quakerhoughton.com[27](index=27&type=chunk) [Condensed Consolidated Financial Statements](index=10&type=section&id=Condensed%20Consolidated%20Financial%20Statements) [Condensed Consolidated Statements of Operations](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The Condensed Consolidated Statements of Operations show a net loss attributable to Quaker Chemical Corporation of $66.6 million for Q2 2025, a significant decline from a net income of $34.9 million in Q2 2024, primarily driven by an $88.8 million impairment charge and increased restructuring costs, despite a rise in net sales Condensed Consolidated Statements of Operations | Metric ($ in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :-------------------------------------------------------------------------------- | :------------------------------- | :------------------------------- | | Net sales | 483,400 | 463,567 | | Gross profit | 171,723 | 175,718 | | Operating (loss) income | (52,510) | 58,449 | | (Loss) income before taxes and equity in net income of associated companies | (65,942) | 48,117 | | Net (loss) income attributable to Quaker Chemical Corporation | (66,580) | 34,885 | | Net (loss) income per diluted share attributable to Quaker Chemical Corporation common shareholders | (3.78) | 1.94 | - Impairment charges of **$88.8 million** and restructuring charges of **$8.8 million** significantly impacted operating income in Q2 2025[30](index=30&type=chunk) [Condensed Consolidated Balance Sheets](index=11&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets increased to $2.85 billion from $2.61 billion at December 31, 2024, primarily due to increases in property, plant and equipment, and other intangible assets, while total liabilities also rose to $1.50 billion from $1.26 billion, driven by a significant increase in long-term debt, and total equity slightly decreased Condensed Consolidated Balance Sheets | Metric ($ in thousands) | June 30, 2025 | December 31, 2024 | | :--------------------------------------- | :------------ | :---------------- | | Total current assets | 974,107 | 876,417 | | Total assets | 2,848,810 | 2,610,649 | | Total current liabilities | 380,059 | 379,768 | | Long-term debt | 897,953 | 669,614 | | Total liabilities | 1,503,355 | 1,256,466 | | Total Quaker shareholders' equity | 1,342,245 | 1,353,567 | | Total equity | 1,345,455 | 1,354,183 | - Goodwill decreased from **$518.9 million** to **$502.4 million**, reflecting the impairment charge[32](index=32&type=chunk) - Long-term debt increased by **$228.3 million**, contributing to the rise in total liabilities[32](index=32&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=13&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2025, net cash provided by operating activities significantly decreased to $38.5 million from $73.5 million in the prior year, net cash used in investing activities increased substantially to $180.7 million, primarily due to payments related to acquisitions, and net cash provided by financing activities turned positive at $147.6 million, driven by net borrowings on revolving credit facilities Condensed Consolidated Statements of Cash Flows | Metric ($ in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------------- | :------------------------------- | :------------------------------- | | Net cash provided by operating activities | 38,522 | 73,534 | | Net cash used in investing activities | (180,720) | (33,225) | | Net cash provided by financing activities | 147,554 | (39,297) | | Net increase (decrease) in cash and cash equivalents | 13,038 | (5,959) | | Cash and cash equivalents at the end of the period | 201,918 | 188,568 | - Payments related to acquisitions, net of cash acquired, totaled **$164.1 million** for the six months ended June 30, 2025[36](index=36&type=chunk) - Borrowings on revolving credit facilities, net, contributed **$216.0 million** in cash from financing activities[36](index=36&type=chunk)

Core Insights - Quaker Houghton reported a net loss of $66.6 million in Q2 2025, primarily due to an $88.8 million non-cash goodwill impairment charge related to its EMEA segment [4][6][7] - The company's net sales for Q2 2025 were $483.4 million, a 4% increase from $463.6 million in Q2 2024, driven by a 2% increase in sales volumes and a 6% contribution from acquisitions [3][6][8] - The company generated non-GAAP net income of $30.0 million and non-GAAP earnings per diluted share of $1.71 in Q2 2025, compared to $38.2 million and $2.13 in Q2 2024 [4][6][8] Financial Performance - Q2 2025 net sales increased by 4% year-over-year, with organic sales volumes up 2% and acquisitions contributing approximately 6% [3][6] - The adjusted EBITDA for Q2 2025 was $75.5 million, a decrease of about 10% from $84.3 million in Q2 2024, reflecting lower operating margins despite increased sales [4][6][8] - The company reported a diluted loss per share of $3.78 in Q2 2025, compared to earnings of $1.94 per share in Q2 2024 [4][6][8] Segment Performance - In Q2 2025, net sales in the Americas segment were $221.1 million, a decrease of approximately 1% from $223.5 million in Q2 2024 [9][10] - The EMEA segment saw net sales of $139.9 million, a slight increase of about 1% compared to the same period in 2024 [9][10] - The Asia/Pacific segment experienced a significant increase in net sales of 20% year-over-year, reaching $122.4 million, driven by strong sales volumes and contributions from acquisitions [9][10] Market Conditions - The company noted that underlying end market activity remained below prior year levels, particularly in the Americas and EMEA segments, due to uncertainties related to tariffs [10][11] - Despite the challenging macroeconomic environment, the Asia/Pacific segment showed improvement, with 8% organic volume growth compared to the prior year [5][10] - The company anticipates tepid economic conditions to persist in the second half of 2025, but expects to achieve full-year revenue and earnings in line with 2024 levels [7][10] Cash Flow and Liquidity - For the six months ended June 30, 2025, net cash provided by operating activities was $38.5 million, down from $73.5 million for the same period in 2024 [14][15] - As of June 30, 2025, the company's total gross debt was $936.7 million, with cash and cash equivalents of $201.9 million, resulting in net debt of approximately $734.8 million [15][16] - The company repurchased 296,113 shares for $32.7 million in Q2 2025 and raised its quarterly cash dividend by approximately 5% [6][15]