Financial Performance - Q3 2025 net sales were $493.8 million, a 7% increase from $462.3 million in Q3 2024[3] - Q3 2025 net income was $30.5 million, or $1.75 per diluted share, compared to $32.3 million, or $1.81 per diluted share in Q3 2024[4] - Non-GAAP net income for Q3 2025 was $36.3 million, with non-GAAP earnings per diluted share at $2.08, reflecting a 10% increase year-over-year[6] - Adjusted EBITDA for Q3 2025 was $82.9 million, a 5% increase from $78.6 million in Q3 2024, with adjusted EBITDA margins at 16.8%[6] - Total net sales for Q3 2025 reached $493,842,000, a 6.8% increase from $462,274,000 in Q3 2024[31] - The company reported a net income of $30.5 million for the three months ended September 30, 2025, compared to $32.3 million for the same period in 2024[23] - GAAP earnings per diluted share for the three months ended September 30, 2025, is $1.75, compared to $1.81 for the same period in 2024[24] Sales and Market Trends - Organic sales volumes increased by 3% year-over-year, driven by new business wins of approximately 5% globally[6] - The Asia/Pacific segment saw a net sales increase of 18% year-over-year, primarily due to organic sales volume growth and contributions from acquisitions[10] - The company anticipates continued soft market conditions through year-end but expects year-over-year revenue and earnings growth in Q4 2025[8] Costs and Expenses - The company incurred restructuring and related charges of $7.7 million for the three months ended September 30, 2025[23] - Restructuring and related charges for Q3 2025 were $7,745,000, compared to $2,610,000 in Q3 2024, indicating an increase of 196.7%[31] - Interest expense increased to $10,941,000 in Q3 2025 from $10,347,000 in Q3 2024, reflecting a rise of 5.7%[31] Cash Flow and Debt - Cash flow from operating activities for the nine months ended September 30, 2025, was $89.9 million, down from $141.5 million in the same period of 2024[14] - As of September 30, 2025, total gross debt was $875.2 million, with net debt at approximately $703.2 million, resulting in a net leverage ratio of 2.4x[15] - Net cash provided by operating activities for the nine months ended September 30, 2025, was $89,909 thousand, down from $141,514 thousand in the same period of 2024, a decrease of 36.4%[36] - Long-term debt rose to $838,522 thousand, an increase of 25.2% from $669,614 thousand at December 31, 2024[33] Equity and Assets - Total assets increased to $2,816,797 thousand as of September 30, 2025, up from $2,610,649 thousand at December 31, 2024, representing a growth of 7.9%[33] - Total equity increased to $1,366,883 thousand as of September 30, 2025, compared to $1,354,183 thousand at December 31, 2024, reflecting a growth of 0.9%[33] Impairment and Losses - The company reported a net loss of $23,160,000 for the nine months ended September 30, 2025, compared to a net income of $102,540,000 for the same period in 2024[31] - The company incurred impairment charges of $88,840,000 for the nine months ended September 30, 2025, with no impairment charges reported in the same period of 2024[31] - The company reported impairment charges of $88,840 thousand during the nine months ended September 30, 2025, which were not present in the same period of 2024[36] Future Outlook - The company plans to continue focusing on market expansion and new product development as part of its growth strategy[21] - The company anticipates maintaining sufficient liquidity and compliance with credit facility terms despite economic uncertainties and inflationary pressures[27]

Core Points - Quaker Houghton is set to release its third quarter 2025 earnings on October 30, 2025, after market close, with a subsequent investor call scheduled for October 31, 2025, at 8:30 a.m. (ET) [1] - The company is a global leader in industrial process fluids, operating in over 25 countries and serving advanced industries such as steel, aluminum, automotive, aerospace, and mining [2] - Quaker Houghton has approximately 4,400 employees, including chemists and engineers, focusing on innovative and sustainable solutions for its customers [2] Earnings Release and Investor Call - Earnings Release Date: October 30, 2025, after market close [1] - Investor Call Date: October 31, 2025, at 8:30 a.m. (ET) [1] - Participation Options: Live phone call or audio webcast available on the company's investor relations website [1] Dividend Announcement - The Board of Directors declared a quarterly cash dividend of $0.508 per share, representing a 4.7% increase over the previous dividend [5]

Group 1 - Quaker Chemical, operating as Quaker Houghton, is a leader in industrial process fluids, serving industries such as specialized steel, automotive, and mining [1] - The company specializes in products like metal removal fluids, rolling lubricants, and hydraulic fluids [1] Group 2 - The investment group European Small Cap Ideas focuses on high-quality small-cap investment opportunities in Europe, emphasizing capital gains and dividend income [1] - The group offers two model portfolios: the European Small Cap Ideas portfolio and the European REIT Portfolio, along with weekly updates and educational content [1]

Company Overview - Quaker Chemical is a global specialty chemical company focused on supplying high-value process fluids and solutions to industrial manufacturers, serving sectors such as steel, aluminum, automotive, aerospace, and mining across the Americas, EMEA, and Asia/Pacific regions [5]. - The company reported a total revenue of $1.83 billion and a net income of $(7.13) million for the trailing twelve months (TTM) [4]. Recent Developments - Luminus Management sold 42,585 shares of Quaker Chemical, valued at approximately $5.6 million, during the quarter ended September 30, 2025, and retained 60,466 shares worth about $8 million at quarter-end, making Quaker Chemical its 5th-largest equity position [2][3]. - Quaker Chemical's stake represented 7.2% of Luminus Management's reported assets under management (AUM) [3]. Financial Performance - Quaker Chemical's revenue showed a 4% year-over-year increase to $483.4 million in the second quarter, with acquisitions contributing 6 percentage points and higher volume adding 2 percentage points, although lower prices and a changing mix subtracted 4 percentage points [6][7]. - Despite the sales growth, the company's net income, adjusted for certain items, dropped 21.5% to $30 million [7]. Market Position - As of October 2, 2025, Quaker Chemical's shares were priced at $132.59, reflecting a 19% decline over the past year, underperforming the S&P 500 by 36.6 percentage points during the same period [3].

Core Insights - Quaker Houghton has announced two key executive appointments to enhance its strategic priorities and growth strategy [1][2] - Christine Johnson has been appointed as Senior Vice President and Chief Transformation Officer, while Dr. André Frodl has been promoted to Vice President, R&D – Metals and Metalworking [1][2] - The leadership changes are aimed at driving innovation and operational excellence within the company [1] Leadership Appointments - Christine Johnson will lead transformation and process optimization efforts, focusing on unlocking value and accelerating the company's growth strategy [1] - Johnson previously worked at McKinsey & Company, advising materials and energy companies on strategy and transformation [1] - Dr. André Frodl will oversee global R&D for metals and metalworking, taking over from the retiring Dr. Dave Slinkman [2] - Frodl has been with Quaker Houghton for two decades, previously managing advanced development labs across multiple regions [2] Company Overview - Quaker Houghton is a global leader in industrial process fluids, operating in over 25 countries [3] - The company serves a diverse range of industries, including steel, aluminum, automotive, aerospace, and mining [3] - With approximately 4,400 employees, Quaker Houghton emphasizes innovative and sustainable solutions backed by advanced technology and process knowledge [3]

Core Viewpoint - Quaker Chemical (KWR) and Hawkins (HWKN) are both stocks in the Chemical - Specialty sector that are currently rated as a Zacks Rank of 2 (Buy), indicating positive earnings outlooks for both companies [3]. Valuation Metrics - KWR has a forward P/E ratio of 18.18, while HWKN has a significantly higher forward P/E of 41.40 [5]. - The PEG ratio for KWR is 1.46, suggesting a more favorable valuation relative to its expected EPS growth, compared to HWKN's PEG ratio of 2.59 [5]. - KWR's P/B ratio stands at 1.7, indicating a lower market value relative to its book value, whereas HWKN has a P/B ratio of 7.87 [6]. Value Grades - Based on various valuation metrics, KWR holds a Value grade of B, while HWKN has a Value grade of D, suggesting that KWR is currently the superior value option [6].

Group 1 - Investors in Quaker Chemical Corporation (KWR) should monitor the stock due to significant activity in the options market, particularly the Oct 17, 2025 $130.00 Put, which has high implied volatility [1] - Implied volatility indicates the market's expectation of future price movement, suggesting that investors anticipate a significant change in Quaker Houghton shares, possibly due to an upcoming event [2] - Quaker Houghton currently holds a Zacks Rank 3 (Hold) in the Chemical - Specialty industry, which is in the bottom 27% of the Zacks Industry Rank, with the Zacks Consensus Estimate for the current quarter slightly increasing from $2.05 to $2.06 per share over the last 60 days [3] Group 2 - The high implied volatility may indicate a developing trading opportunity, as options traders often seek to sell premium on options with such volatility, aiming for the underlying stock to not move as much as expected at expiration [4]

Core Insights - Quaker Chemical's international operations are crucial for understanding its financial strength and growth potential [1][2] - The company's reliance on international markets can provide a hedge against domestic downturns and access to faster-growing economies, but it also introduces complexities [3] Revenue Performance - Total revenue for the quarter was $483.4 million, reflecting a year-over-year increase of 4.3% [4] - Asia/Pacific contributed $122.42 million, accounting for 25.3% of total revenue, surpassing the consensus estimate by +2.44% [5] - EMEA generated $139.92 million, representing 29% of total revenue, exceeding expectations by +3.19% [6] Future Projections - Analysts project total revenue of $473.92 million for the current fiscal quarter, indicating a 2.5% increase from the prior year [7] - For the full year, total revenue is expected to reach $1.85 billion, a 0.3% increase from the previous year [8] Market Dynamics - The interconnected global economy necessitates a thorough understanding of a company's international market engagement for accurate earnings projections [2][10] - Quaker Chemical's reliance on international revenues presents both opportunities and challenges, making it essential to track these trends for future projections [9]

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]