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]

Company Overview - Quaker Houghton is the global leader in industrial process fluids, operating in over 25 countries and serving thousands of advanced and specialized companies in sectors such as steel, aluminum, automotive, aerospace, and mining [3]. Dividend Announcement - The Board of Directors of Quaker Houghton declared a quarterly cash dividend of $0.508 per share, representing a 4.7% increase over the previous dividend [1]. - This dividend is scheduled to be paid on October 31, 2025, to shareholders of record as of October 17, 2025 [1]. Management Commentary - The CEO, Joseph A. Berquist, stated that the dividend increase reflects the company's confidence in its future and its ability to generate strong and consistent cash flow [2]. - The company has a balanced capital allocation strategy aimed at creating shareholder value, marking the 16th consecutive year of dividend increases and the 49th increase since going public in 1972 [2].

Company Overview - Quaker Chemical (KWR) is expected to report a year-over-year decline in earnings, with a projected EPS of $1.82, reflecting a decrease of 14.6% compared to the previous year [3] - Revenues for the upcoming quarter are anticipated to be $463.19 million, which is a slight decrease of 0.1% from the same quarter last year [3] Earnings Expectations - The earnings report is scheduled for July 31, and the actual results will significantly influence the stock price, depending on whether they meet or exceed expectations [2] - The consensus EPS estimate has been revised down by 1.22% over the last 30 days, indicating a bearish sentiment among analysts regarding the company's earnings prospects [4][12] Earnings Surprise Prediction - Quaker Chemical has an Earnings ESP of -1.84%, suggesting that the Most Accurate Estimate is lower than the Zacks Consensus Estimate, which complicates the prediction of an earnings beat [12] - The company currently holds a Zacks Rank of 3, which indicates a hold position, further complicating the outlook for a positive earnings surprise [12] Historical Performance - In the last reported quarter, Quaker Chemical had an earnings surprise of +3.95%, with actual earnings of $1.58 per share compared to an expected $1.52 [13] - Over the past four quarters, the company has only beaten consensus EPS estimates once [14] Industry Context - In the specialty chemical industry, Axalta Coating Systems (AXTA) is also expected to report earnings, with a projected EPS of $0.61, reflecting a year-over-year increase of 7% [18] - Axalta's revenue is expected to be $1.32 billion, down 2.1% from the previous year, and it has an Earnings ESP of -0.6% combined with a Zacks Rank of 4, indicating a sell position [19][20]

Group 1 - Quaker Houghton will release its second quarter 2025 earnings on July 31, 2025, after market close [1][2] - The investor call is scheduled for August 1, 2025, at 8:30 a.m. (ET) [2] - Quaker Houghton is a global leader in industrial process fluids, operating in over 25 countries and serving various advanced industries [3] Group 2 - The company employs approximately 4,400 individuals, including chemists, engineers, and industry experts [3] - Quaker Houghton focuses on providing innovative and sustainable solutions backed by advanced technology and deep process knowledge [3] - The headquarters of Quaker Houghton is located in Conshohocken, Pennsylvania, near Philadelphia [3]

Core Insights - Quaker Chemical's international operations are crucial for understanding its financial resilience and growth potential [1][2] - The company's reliance on international markets can provide a hedge against domestic downturns but also introduces complexities [3] Revenue Performance - Total revenue for the recent quarter was $442.91 million, a decline of 5.7% year-over-year [4] - Asia/Pacific contributed $99.93 million (22.56%) to total revenue, down 5.26% from expectations of $105.48 million [5] - EMEA generated $129.28 million (29.19%), missing the consensus estimate of $132.47 million by 2.41% [6] Future Projections - Analysts project revenues of $462.11 million for the ongoing fiscal quarter, a slight decline of 0.3% from the previous year [7] - For the full year, total revenue is expected to reach $1.86 billion, an increase of 1% from the prior year [8] - Contributions from Asia/Pacific and EMEA are anticipated to be $455.33 million (24.5%) and $535.09 million (28.8%), respectively [8] Market Context - The company's international revenue trends are essential for projecting its future trajectory amid global economic interconnections and geopolitical risks [9][10] - Shifts in earnings projections significantly influence stock prices, with improved forecasts generally leading to price increases [11][12]

Financial Data and Key Metrics Changes - First quarter net sales were $443 million, a decline of 6% year-over-year or 3% on a constant currency basis [8][24] - Volumes declined approximately 1.5%, with new business wins and acquisitions contributing approximately 1% [25] - Gross margins improved 120 basis points to 36.4% compared to the lows in the fourth quarter of 2024, but declined year-over-year due to higher raw material costs [10][26] - Adjusted EBITDA for the first quarter was $69 million, reflecting a sequential increase of $4 million, with adjusted EBITDA margins at 15.6% [11][26] Business Line Data and Key Metrics Changes - Asia Pacific segment net sales declined 2% year-over-year, but organic volumes increased approximately 1% [27] - EMEA segment net sales were down 7% year-over-year, with total sales volumes declining 3% [29] - The Americas segment net sales declined 7% year-over-year, with volumes down 3% due to soft industrial activity [30] Market Data and Key Metrics Changes - Overall market demand was softer than anticipated, with aggregate market declines estimated at a low to mid single-digit percentage [6][21] - The company outperformed the aggregate of the end markets, particularly in the Asia Pacific segment, which showed growth despite challenging conditions [9][10] Company Strategy and Development Direction - The company is focused on returning to growth, reducing complexity, and effectively deploying capital [11][12] - Strategic investments include acquiring three companies to enhance the portfolio and expand the addressable market [7][19] - The company is advancing a $20 million cost program expected to deliver approximately $15 million in benefits primarily in SG&A [14][26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in mitigating tariff impacts through a local for local strategy and maintaining strong customer relationships [8][22] - The outlook for 2025 anticipates a low single-digit percentage decline in underlying market growth rates, with expectations for revenue and earnings to align with 2024 levels [21][22] - Management noted a strong pipeline of trials and business development opportunities, aiming for above-market growth in 2025 [20][21] Other Important Information - The company is investing in a new facility in China to enhance local supply capabilities [15][34] - Capital expenditures for 2025 are expected to remain at 2.5% to 3.5% of sales [34] Q&A Session Summary Question: Impact of tariffs on input costs and overall demand - Management indicated that while there are some raw material purchase impacts, the main concern is the uncertainty affecting overall demand [41][46] Question: Details on strategic initiatives to simplify operations - Management discussed efforts to reduce complexity, improve brand awareness, and enhance customer experience through technology and inside sales channels [47][52] Question: Expectations for second quarter EBITDA growth - Management expects modest sequential improvement in EBITDA for Q2, driven by seasonal demand and contributions from recent acquisitions [55][56] Question: Volatility in order patterns and customer feedback - Management noted increased order volatility, particularly in Europe and The Americas, with customers managing inventories prudently [59][60] Question: Contribution from acquisitions and outlook - Dipsol is expected to contribute approximately $80 million in sales for 2025, with strategic fit and synergy potential highlighted [67][68] Question: Capital allocation strategy - Management emphasized a balanced approach to capital allocation, focusing on growth investments, debt reduction, and shareholder returns [75][76]

Financial Data and Key Metrics Changes - First quarter net sales were $443 million, a decline of approximately 6% from the prior year or 3% on a constant currency basis [7][23] - Gross margins improved 120 basis points to 36.4% compared to the lows in the fourth quarter of 2024, but declined year over year due to higher raw material costs and product mix [10][24] - Adjusted EBITDA for the first quarter was $69 million, reflecting a sequential increase of $4 million, with adjusted EBITDA margins at 15.6% [11][25] Business Line Data and Key Metrics Changes - The Asia Pacific segment saw net sales decline by 2% year over year, but organic volumes increased approximately 1% [26] - EMEA segment net sales were down 7% year over year, with total sales volumes declining 3% [28] - The Americas segment experienced a 7% decline in net sales year over year, with volumes down 3% due to soft industrial activity [29] Market Data and Key Metrics Changes - Overall market conditions were softer than anticipated, with aggregate market declines estimated at a low to mid single digit percentage compared to the prior year [5][20] - The company outperformed the aggregate of the end markets, with total volumes inclusive of acquisitions declining approximately 1.5% [8][10] Company Strategy and Development Direction - The company is advancing a $20 million cost program expected to deliver approximately $15 million in benefits primarily in SG&A [6][14] - Strategic investments included the acquisition of three companies to enhance the portfolio and expand the addressable market [6][18] - The company aims to enhance customer intimacy and streamline operations to improve efficiency and reduce complexity [12][16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in mitigating tariff impacts through a local for local strategy and maintaining strong customer relationships [7][21] - The outlook for 2025 anticipates a low single digit percentage decline in underlying market growth rates, with expectations for revenue and earnings to align with 2024 levels [20][21] - Management noted a strong pipeline of trials and business development opportunities, expecting to drive above market growth in 2025 [19][20] Other Important Information - The company is focused on improving customer satisfaction through initiatives that reduce lead times and enhance cost competitiveness [13][15] - Capital expenditures in the first quarter were approximately $12 million, with expectations for 2025 capital expenditures to remain at 2.5% to 3.5% of sales [32] Q&A Session Summary Question: Impact of tariffs on input costs and overall demand - Management indicated that while there are some impacts from raw material purchases, the local sourcing strategy helps mitigate most tariff effects [39][40] Question: Details on strategic initiatives for simplifying operations - Management discussed efforts to reduce complexity in product lines and improve brand clarity, along with enhancing customer service through technology [46][48][50] Question: Expectations for second quarter EBITDA growth - Management expects modest sequential improvement in EBITDA for Q2, driven by seasonal demand and contributions from recent acquisitions [52][54] Question: Volatility in order patterns and customer feedback - Management noted increased order volatility, particularly in Europe and The Americas, with customers managing inventories prudently [58][59] Question: Capital allocation strategy amidst market conditions - Management emphasized a balanced approach to capital allocation, focusing on growth investments, debt reduction, and shareholder returns [72][74]

Quaker Houghton First Quarter 2025 Results Investor Conference Call Forward-Looking Statements Regulation G The attached charts include Company information that does not conform to generally accepted accounting principles ("GAAP"). Management believes that an analysis of this data is meaningful to investors because it provides insight with respect to ongoing operating results of the Company and helps investors to evaluate the financial results of the Company. These measures should not be viewed as an altern ...