CONSHOHOCKEN, Pa., April 22, 2024 /PRNewswire/ -- Quaker Houghton (NYSE: KWR) the global leader in industrial process fluids, today announced the release of its 2023 Sustainability Report. The report highlights how the Company combines its solutions with industry insight and intelligence to See Beyond™ the issues of today and secure a better tomorrow. Andy Tometich, Chief Executive Officer and President commented, "In 2023, we continued to advance our sustainability initiatives, making targeted investments ...

CONSHOHOCKEN, Pa., April 18, 2024 /PRNewswire/ -- Quaker Houghton (NYSE: KWR) today announced the following schedule and contact information for its first quarter 2024 earnings release and investor call. Earnings Release: Thursday, May 2, 2024 (after market close) Visit the investor relations portion of Quaker Houghton's website at https://investors.quakerhoughton.com/ Teleconference: Friday, May 3, 2024, at 8:30 a.m. (ET) Participate live by phone or listen to live audio webcas ...

Quaker Houghton Forward-Looking Statements Forward-Looking Statements Non-GAAP and Pro Forma Measures Additionally, the Company presents non-GAAP net income and non-GAAP earnings per diluted share as additional performance measures. Non-GAAP net income is calculated as adjusted EBITDA, defined above, less depreciation and amortization, interest expense, net, and taxes on income (loss) before equity in net income of associated companies, in each case adjusted, as applicable, for any depreciation, amortizatio ...

Part I [Business](index=4&type=section&id=Item%201.%20Business) Quaker Houghton leads in industrial process fluids, serving diverse industries globally with a focus on R&D, sustainability, and human capital management Principal Product Line Contributions to Net Sales | Major Product Line | 2023 (%) | 2022 (%) | 2021 (%) | | :--- | :--- | :--- | :--- | | Metal removal fluids | 23.6 % | 22.9 % | 23.4 % | | Rolling lubricants | 19.5 % | 20.8 % | 22.2 % | | Hydraulic fluids | 14.1 % | 14.1 % | 13.6 % | - In 2023, the company's five largest customers accounted for approximately **12%** of consolidated net sales, with the largest single customer representing about **3%**[16](index=16&type=chunk) Research and Development Expenses | Year | R&D Expense (USD Million) | | :--- | :--- | | 2023 | $50.3 | | 2022 | $46.0 | | 2021 | $44.9 | - In February 2024, the company acquired I.K.V. Tribologie IKVT for approximately **€27.0 million** to strengthen its position in high-performance lubricants and greases[22](index=22&type=chunk) - The company has set a target to achieve carbon neutrality in its global operations by **2030** and net zero emissions across its entire value chain by **2050**[32](index=32&type=chunk) - As of December 31, 2023, Quaker Houghton had approximately **4,400** full-time employees globally, with about **900** in the U.S. and **3,500** in non-U.S. subsidiaries[27](index=27&type=chunk) [Risk Factors](index=9&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks from cyclical demand, operational challenges, international market volatility, supply chain, and regulatory compliance - Demand for the company's products is highly dependent on the business cycles of its customers in the steel, automotive, aircraft, and durable goods industries[58](index=58&type=chunk) - The top five customers accounted for approximately **12%** of 2023 consolidated net sales, making the loss of a significant customer a material risk[60](index=60&type=chunk) - Variable rate indebtedness subjects the company to interest rate risk; rising rates increase debt service obligations and could negatively affect customer demand[71](index=71&type=chunk)[73](index=73&type=chunk) - Non-U.S. subsidiaries accounted for approximately **60% to 70%** of consolidated net sales over the past three years, exposing the company to significant foreign currency fluctuation risk[78](index=78&type=chunk) - The company uses approximately **3,000** different raw materials, and significant price fluctuations, particularly for commodity chemicals and materials linked to crude oil, can materially impact costs[81](index=81&type=chunk) - Cybersecurity incidents pose a significant risk. The company relies on IT systems for daily operations, and a breach could lead to data leaks, operational disruption, and potential liability under regulations like GDPR and CCPA[105](index=105&type=chunk)[106](index=106&type=chunk)[107](index=107&type=chunk) [Unresolved Staff Comments](index=20&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments from the SEC - None[119](index=119&type=chunk) [Cybersecurity](index=20&type=section&id=Item%201C.%20Cybersecurity) The company's cybersecurity risk management, overseen by the Audit Committee, follows the NIST framework with 24/7 monitoring and no material incidents reported - The Board, primarily through the Audit Committee, oversees management's approach to cybersecurity risks, with management providing updates at least quarterly[122](index=122&type=chunk) - The company's cybersecurity risk management program is based on the National Institute of Standards and Technology (**NIST**) framework, covering identification, protection, detection, response, and recovery[125](index=125&type=chunk) - The company operates global cybersecurity operations centers for **24/7** monitoring and incident response and conducts annual penetration and disaster recovery tests with third parties[125](index=125&type=chunk)[133](index=133&type=chunk) [Properties](index=21&type=section&id=Item%202.%20Properties) Quaker Houghton's global operations are supported by numerous owned and leased facilities, with headquarters in Conshohocken, Pennsylvania, and most owned properties mortgage-free - The corporate headquarters and a laboratory are located in Conshohocken, Pennsylvania[127](index=127&type=chunk) - Principal facilities are located globally, including sites in California, Illinois, and Ohio (Americas); Netherlands, Germany, and the U.K. (EMEA); and China, India, and Australia (Asia/Pacific)[127](index=127&type=chunk) - Most principal facilities are owned by the company and were mortgage-free as of December 31, 2023, with some key locations being leased[128](index=128&type=chunk) [Legal Proceedings](index=21&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in various legal and environmental proceedings, with management expecting no material adverse effect on financial condition or operations - The company is party to various legal proceedings, including environmental matters. For detailed information, refer to **Note 25** of the Notes to Consolidated Financial Statements[131](index=131&type=chunk) [Mine Safety Disclosures](index=21&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[132](index=132&type=chunk) [Information about our Executive Officers](index=22&type=section&id=Item%204%28a%29.%20Information%20about%20our%20Executive%20Officers) This section provides biographical information for the company's executive officers as of February 29, 2024, detailing their age, position, and business experience Executive Officers as of February 29, 2024 | Name | Age | Position | | :--- | :--- | :--- | | Andrew E. Tometich | 57 | Chief Executive Officer and President | | Joseph A. Berquist | 52 | Executive Vice President, Chief Commercial Officer | | Jeewat Bijlani | 47 | Executive Vice President, Chief Strategy Officer | | Jeffrey L. Fleck | 53 | Senior Vice President, Chief Global Supply Chain Officer | | Shane W. Hostetter | 42 | Executive Vice President, Chief Financial Officer | | Melissa Leneis | 41 | Executive Vice President, Chief Human Resources Officer | | Anna Ransley | 46 | Senior Vice President, Chief Digital Information Officer | | Dr. David Slinkman | 59 | Senior Vice President, Chief Technology Officer | | Robert T. Traub | 59 | Senior Vice President, General Counsel and Corporate Secretary | | Jeffrey J. Kutz | 64 | Vice President, Chief Accounting Officer | Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=24&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock trades on the NYSE, with cash dividends increasing in 2023 and a new **$150 million** share repurchase program authorized in February 2024 Cash Dividends Declared per Share | Year | Total Dividends per Share ($) | | :--- | :--- | | 2023 | $1.78 | | 2022 | $1.70 | Issuer Purchases of Equity Securities (Q4 2023) | Period | Total Shares Purchased | Average Price Paid Per Share ($) | | :--- | :--- | :--- | | Oct 2023 | 15,038 | $189.09 | | Nov 2023 | 30 | $175.71 | | Dec 2023 | 111 | $207.55 | | **Total** | **15,179** | **$158.68** | - In October 2023, **14,618** shares were released to the company from an indemnification escrow account related to the Houghton combination to satisfy tax audit settlements[143](index=143&type=chunk) - The 2015 Share Repurchase Program was terminated on February 28, 2024, and a new program authorizing up to **$150 million** in repurchases was approved[143](index=143&type=chunk)[183](index=183&type=chunk) [Reserved](index=25&type=section&id=Item%206.%20Reserved) This item is reserved and contains no information [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) The company's 2023 performance showed increased net sales and significant net income recovery, driven by gross margin improvements and strong operating cash flow [Executive Summary](index=26&type=section&id=Executive%20Summary) The company's 2023 performance saw a **1%** net sales increase to **$1.95 billion**, significant net income recovery, and **25%** Adjusted EBITDA growth, driven by improved margins and strong cash flow 2023 Key Financial Results vs. 2022 | Metric | 2023 (USD) | 2022 (USD) | Change | | :--- | :--- | :--- | :--- | | Net Sales | $1,953.3M | $1,943.6M | +1% | | Net Income (Loss) | $112.7M | ($15.9M) | N/A | | Diluted EPS | $6.26 | ($0.89) | N/A | | Non-GAAP Net Income | $137.6M | $105.3M | +30.7% | | Non-GAAP Diluted EPS | $7.65 | $5.87 | +30.3% | | Adjusted EBITDA | $320.4M | $257.2M | +25% | - The **1%** increase in net sales was driven by a **7%** increase in selling price/mix and **1%** favorable FX, offset by a **7%** decline in sales volumes[149](index=149&type=chunk) - Net operating cash flow increased significantly to **$279.0 million** in 2023 from **$41.8 million** in 2022, driven by improved operating performance and better working capital management[152](index=152&type=chunk) [Critical Accounting Policies and Estimates](index=27&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) The company's critical accounting policies involve significant judgments and estimates, particularly for credit losses, tax exposures, and the valuation of goodwill and other intangible assets - The consolidated allowance for credit losses was **$13.3 million** as of December 31, 2023, compared to **$13.5 million** in 2022[155](index=155&type=chunk) - The company's consolidated goodwill was **$512.5 million** at the end of 2023. No impairment was recorded in 2023, but a **$93.0 million** impairment charge was taken for the EMEA reporting unit in Q4 2022[160](index=160&type=chunk)[161](index=161&type=chunk) - The EMEA reporting unit's goodwill is sensitive to impairment risk. A **3.0 percentage point** increase in the WACC or a **4.0 percentage point** decline in the compound annual revenue growth rate could lead to full impairment of its remaining goodwill[162](index=162&type=chunk) [Liquidity and Capital Resources](index=29&type=section&id=Liquidity%20and%20Capital%20Resources) The company's cash increased to **$194.5 million** in 2023, driven by **$279.0 million** in operating cash flow, used primarily for debt repayment and a new **$150 million** share repurchase program Cash Flow Summary (2023 vs. 2022) | Cash Flow Activity | 2023 (USD Million) | 2022 (USD Million) | | :--- | :--- | :--- | | Net Cash from Operating Activities | $279.0 | $41.8 | | Net Cash Used in Investing Activities | ($27.6) | ($40.2) | | Net Cash (Used in) Provided by Financing Activities | ($238.6) | $24.7 | - As of December 31, 2023, the company had **$744.5 million** in borrowings outstanding under its Credit Facility and approximately **$465.7 million** of unused capacity under its revolver[171](index=171&type=chunk) - In Q1 2023, the company entered into **$300.0 million** of three-year interest rate swaps to convert a portion of its variable-rate debt to a fixed rate, managing interest rate risk[173](index=173&type=chunk) - A new share repurchase program authorizing up to **$150 million** was approved on February 28, 2024, replacing the previous 2015 program[183](index=183&type=chunk) Contractual Obligations as of December 31, 2023 (in thousands) | Contractual Obligations | Total (USD Thousands) | 2024 (USD Thousands) | 2025 (USD Thousands) | 2026 (USD Thousands) | 2027 (USD Thousands) | 2028 (USD Thousands) | 2029 and Beyond (USD Thousands) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Long-term debt | $755,046 | $23,250 | $36,955 | $36,914 | $647,899 | $10,028 | $— | | Interest obligations | $155,556 | $46,855 | $44,948 | $42,601 | $20,977 | $175 | $— | | Operating leases | $39,694 | $13,130 | $9,027 | $6,840 | $3,543 | $1,909 | $5,245 | | Purchase obligations | $1,285,259 | $1,282,910 | $783 | $783 | $783 | $— | $— | | **Total** | **$2,266,986** | **$1,384,494** | **$96,439** | **$87,496** | **$673,461** | **$12,127** | **$12,969** | [Non-GAAP Measures](index=32&type=section&id=Non-GAAP%20Measures) The company utilizes non-GAAP financial measures, including Adjusted EBITDA and non-GAAP EPS, to offer supplemental performance insights by excluding non-core operational items Reconciliation of Net Income to Adjusted EBITDA (in thousands) | | 2023 (USD Thousands) | 2022 (USD Thousands) | 2021 (USD Thousands) | | :--- | :--- | :--- | :--- | | Net income (loss) attributable to Quaker | $112,748 | ($15,931) | $121,369 | | Depreciation and amortization | $83,020 | $81,514 | $87,728 | | Interest expense, net | $50,699 | $32,579 | $22,326 | | Taxes on income (loss) | $55,585 | $24,925 | $34,939 | | **EBITDA** | **$302,052** | **$123,087** | **$266,362** | | Adjustments (e.g., Restructuring, Impairment) | $18,327 | $134,063 | $7,747 | | **Adjusted EBITDA** | **$320,379** | **$257,150** | **$274,109** | Reconciliation of GAAP EPS to Non-GAAP EPS | | 2023 (USD) | 2022 (USD) | 2021 (USD) | | :--- | :--- | :--- | :--- | | GAAP earnings (loss) per diluted share | $6.26 | ($0.89) | $6.70 | | Adjustments (per share) | $1.39 | $6.76 | $0.18 | | **Non-GAAP earnings per diluted share** | **$7.65** | **$5.87** | **$6.88** | [Operations](index=37&type=section&id=Operations) Consolidated net sales increased **1%** in 2023 to **$1.95 billion**, driven by price/mix gains offsetting volume declines, resulting in improved gross margin and operating income across all segments - **2023 vs. 2022:** Net sales increased **1%** due to a **7%** price/mix increase and **1%** favorable FX, offset by a **7%** volume decline. Gross margin improved to **36.1%** from **31.5%**[196](index=196&type=chunk)[198](index=198&type=chunk) - **2022 vs. 2021:** Net sales increased **10%** due to a **22%** price/mix increase, offset by a **7%** volume decline and **6%** unfavorable FX. Gross margin decreased to **31.5%** from **33.8%** due to significant raw material cost inflation[208](index=208&type=chunk)[210](index=210&type=chunk) Segment Operating Earnings (in millions) | Segment | 2023 (USD Million) | 2022 (USD Million) | 2021 (USD Million) | | :--- | :--- | :--- | :--- | | Americas | $266.0 | $223.6 | $176.3 | | EMEA | $104.8 | $76.4 | $111.0 | | Asia/Pacific | $118.5 | $105.8 | $109.2 | [Quantitative and Qualitative Disclosures About Market Risk](index=42&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Quaker Houghton faces market risks from interest rates, foreign currency, commodity prices, and credit, with mitigation strategies including interest rate swaps and credit loss allowances - A **100 basis point** change in interest rates would result in an approximate **$7.4 million** change to annual interest expense, based on debt levels as of December 31, 2023[237](index=237&type=chunk) - A hypothetical **10%** strengthening or weakening of key foreign currencies against the U.S. dollar would have impacted 2023 revenues by approximately **$100.7 million** and pre-tax earnings by about **$12.8 million**[239](index=239&type=chunk) - A **one percentage point** change in gross margin would have increased or decreased the company's 2023 pre-tax earnings by approximately **$19.5 million**, highlighting sensitivity to commodity price risk[241](index=241&type=chunk) - In Q1 2023, the company entered into **$300.0 million** of interest rate swaps to convert a portion of its variable-rate debt to a fixed rate, mitigating interest rate risk[238](index=238&type=chunk) [Financial Statements and Supplementary Data](index=44&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the company's audited consolidated financial statements for fiscal year 2023, including statements of operations, balance sheets, cash flows, and comprehensive notes Consolidated Statement of Operations Highlights (Year Ended Dec 31, in thousands) | | 2023 (USD Thousands) | 2022 (USD Thousands) | 2021 (USD Thousands) | | :--- | :--- | :--- | :--- | | Net sales | $1,953,313 | $1,943,585 | $1,761,150 | | Gross profit | $705,644 | $612,654 | $594,640 | | Operating income | $214,495 | $52,304 | $150,460 | | Net income (loss) attributable to Quaker | $112,748 | ($15,931) | $121,360 | Consolidated Balance Sheet Highlights (As of Dec 31, in thousands) | | 2023 (USD Thousands) | 2022 (USD Thousands) | | :--- | :--- | :--- | | Total current assets | $927,889 | $994,130 | | Total assets | $2,714,211 | $2,821,620 | | Total current liabilities | $367,510 | $354,780 | | Total liabilities | $1,329,289 | $1,543,030 | | Total equity | $1,384,922 | $1,278,580 | Consolidated Statement of Cash Flows Highlights (Year Ended Dec 31, in thousands) | | 2023 (USD Thousands) | 2022 (USD Thousands) | 2021 (USD Thousands) | | :--- | :--- | :--- | :--- | | Net cash provided by operating activities | $279,020 | $41,794 | $48,933 | | Net cash used in investing activities | ($27,621) | ($40,191) | ($49,130) | | Net cash (used in) provided by financing activities | ($238,606) | $24,672 | ($13,465) | [Changes in and Disagreements With Accountants on Accounting and Financial Disclosure](index=96&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20With%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) This item is not applicable as there were no changes in or disagreements with accountants on accounting and financial disclosure - Not Applicable[518](index=518&type=chunk) [Controls and Procedures](index=96&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2023, with no material changes identified - The principal executive officer and principal financial officer concluded that disclosure controls and procedures were effective as of December 31, 2023[519](index=519&type=chunk) - Management concluded that the company's internal control over financial reporting was effective as of December 31, 2023, based on the **COSO** framework[522](index=522&type=chunk) [Other Information](index=96&type=section&id=Item%209B.%20Other%20Information) During the fourth quarter ended December 31, 2023, no director or officer adopted or terminated any Rule 10b5-1 trading arrangement or any non-Rule 10b5-1 trading arrangement - No director or officer adopted or terminated a **Rule 10b5-1** or non-Rule 10b5-1 trading arrangement during the fourth quarter of 2023[524](index=524&type=chunk) [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=96&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This item is not applicable to the company - Not applicable[525](index=525&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=97&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information on directors, executive officers, and corporate governance is incorporated by reference from the company's 2024 Proxy Statement - Information is incorporated by reference from the 2024 Proxy Statement[528](index=528&type=chunk) [Executive Compensation](index=97&type=section&id=Item%2011.%20Executive%20Compensation) Detailed information regarding executive compensation is incorporated by reference from the company's definitive Proxy Statement for the 2024 Annual Meeting of Shareholders - Information is incorporated by reference from the 2024 Proxy Statement[529](index=529&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=97&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information on security ownership and equity compensation plans is incorporated by reference from the company's 2024 Proxy Statement, with a summary of available securities provided Equity Compensation Plan Information as of December 31, 2023 | Plan Category | Securities to be issued upon exercise (a) | Weighted-average exercise price (b) ($) | Securities available for future issuance (c) | | :--- | :--- | :--- | :--- | | Equity compensation plans approved by security holders | 62,853 | $214.40 | 460,407 | | **Total** | **62,853** | **$214.40** | **460,407** | [Certain Relationships and Related Transactions, and Director Independence](index=97&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information regarding certain relationships, related party transactions, and director independence is incorporated by reference from the company's definitive Proxy Statement for the 2024 Annual Meeting of Shareholders - Information is incorporated by reference from the 2024 Proxy Statement[532](index=532&type=chunk) [Principal Accountant Fees and Services](index=97&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information regarding the fees paid to and services provided by the principal accountant, PricewaterhouseCoopers LLP, is incorporated by reference from the company's definitive Proxy Statement for the 2024 Annual Meeting of Shareholders - Information is incorporated by reference from the 2024 Proxy Statement[533](index=533&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=98&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists the financial statements, schedules, and exhibits filed with the Form 10-K report, including an index to consolidated financial statements and various corporate documents - This section provides an index to the financial statements (**pages 42-49**) and lists all exhibits filed with the report, including material contracts and officer certifications[534](index=534&type=chunk)[536](index=536&type=chunk) [Form 10-K Summary](index=101&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company has elected not to provide a summary of the Form 10-K report under this item - The Company has elected not to include a Form 10-K summary[540](index=540&type=chunk)

Exhibit 99.1 For Release: Immediate QUAKER HOUGHTON ANNOUNCES FOURTH QUARTER AND FULL YEAR 2023 RESULTS February 29, 2024 CONSHOHOCKEN, PA – Quaker Houghton ("the Company") (NYSE: KWR), the global leader in industrial process fluids, today announced its fourth quarter and full year 2023 results. | | Three Months Ended | | | | Twelve Months Ended | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | December 31, | | | | December 31, | | | | | ($ in thousands, except per share data) | 2023 | | | ...

Quaker Chemical Corporation (NYSE:KWR) Q3 2023 Earnings Call Transcript November 3, 2023 8:30 AM ET Company Participants Jeffrey Schnell - Vice President, Investor Relations Andy Tometich - President and Chief Executive Officer Shane Hostetter - Executive Vice President and Chief Financial Officer Conference Call Participants Mike Harrison - Seaport Research Partners Vincent Anderson - Stifel Justin Ages - CJS Securities Arun Viswanathan - RBC Capital Markets David Begleiter - Deutsche Bank Operator Greetin ...

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```markdown [PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) The unaudited condensed consolidated financial statements for Quaker Chemical Corporation show a slight decrease in net sales for the third quarter of 2023 compared to 2022, but a significant increase in net income and operating income, driven by improved gross margins; for the nine-month period, both net sales and net income increased year-over-year; the balance sheet indicates a decrease in total assets and total liabilities since year-end 2022; cash flow from operations improved substantially in the first nine months of 2023 compared to the same period in 2022, primarily due to higher net income and favorable changes in working capital [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) | Metric | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | **Net sales** | $490.6M | $492.2M | $1.49B | $1.46B | | **Gross profit** | $183.3M | $160.7M | $534.5M | $456.4M | | **Operating income** | $59.5M | $44.6M | $166.2M | $105.9M | | **Net income attributable to Quaker Chemical Corporation** | $33.7M | $25.9M | $92.6M | $60.0M | | **Diluted EPS** | $1.87 | $1.44 | $5.14 | $3.35 | [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) | Metric | September 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | **Cash and cash equivalents** | $198.4M | $181.0M | | **Total current assets** | $966.3M | $994.1M | | **Total assets** | $2.73B | $2.82B | | **Long-term debt** | $805.0M | $933.6M | | **Total liabilities** | $1.39B | $1.54B | | **Total Quaker shareholders' equity** | $1.34B | $1.28B | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) - Net cash provided by operating activities significantly improved to **$199.5M** for the nine months ended Sep 30, 2023, compared to a use of **$(26.3M)** in the prior-year period. This was driven by higher net income and favorable changes in working capital, particularly accounts receivable and inventories[19](index=19&type=chunk) | Cash Flow Activity (Nine Months Ended Sep 30) | 2023 | 2022 | | :--- | :--- | :--- | | **Net cash provided by (used in) operating activities** | $199.5M | $(26.3M) | | **Net cash used in investing activities** | $(25.8M) | $(29.6M) | | **Net cash (used in) provided by financing activities** | $(150.5M) | $46.6M | | **Net increase (decrease) in cash and cash equivalents** | $17.4M | $(26.3M) | [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) - In Q1 2023, the company reorganized its management and business structure, resulting in three reportable segments: Americas, EMEA, and Asia/Pacific. The previous Global Specialty Businesses segment was eliminated, and its operations were reallocated. Prior period information has been recast to align with this new structure[24](index=24&type=chunk) - The company initiated a global cost and optimization program in Q4 2022, targeting a reduction of approximately **100** positions globally to improve its cost structure. The program is expected to continue throughout 2023[48](index=48&type=chunk) - In Q1 2023, the company entered into **$300.0 million** notional amounts of three-year interest rate swaps to convert a portion of its variable-rate debt to a fixed rate, managing exposure to interest rate risk[75](index=75&type=chunk)[88](index=88&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=31&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) Management reported strong Q3 2023 results despite a challenging economic environment; net sales were nearly flat year-over-year at **$490.6 million**, as price/mix increases and favorable currency translation offset a **4%** volume decline; gross margin significantly improved to **37.4%** from **32.7%**, driving net income up to **$33.7 million** from **$25.9 million** in Q3 2022; the company generated strong operating cash flow of **$199.5 million** in the first nine months of 2023, a significant improvement from the prior year, due to higher earnings and better working capital management; management remains focused on execution amid macroeconomic uncertainty and expects higher earnings and cash flow for the full year 2023 compared to 2022 [Consolidated Operations Review](index=39&type=section&id=Consolidated%20Operations%20Review) - **Q3 2023 vs. Q3 2022:** - Net sales decreased by less than **1%** to **$490.6 million**, as a **2%** increase in price/mix and **2%** favorable FX impact were offset by a **4%** decline in sales volumes[136](index=136&type=chunk) - Gross margin improved significantly to **37.4%** from **32.7%**, driven by value-based pricing initiatives implemented in 2022[138](index=138&type=chunk) - SG&A increased by **6%** to **$122.8 million** due to higher labor-related and incentive compensation costs[139](index=139&type=chunk) - Operating income rose to **$59.5 million** from **$44.6 million**[142](index=142&type=chunk) - **Nine Months 2023 vs. Nine Months 2022:** - Net sales increased **2%** to **$1.49B**, driven by an **11%** increase in price/mix, which offset a **9%** volume decline[149](index=149&type=chunk) - Gross margin expanded to **36.0%** from **31.3%** due to pricing initiatives and moderating raw material costs[151](index=151&type=chunk) - Operating income grew to **$166.2 million** from **$105.9 million**[156](index=156&type=chunk) [Reportable Segments Review](index=41&type=section&id=Reportable%20Segments%20Review) | Segment (Q3 2023 vs Q3 2022) | Net Sales | % Change | Operating Earnings | % Change | Key Drivers | | :--- | :--- | :--- | :--- | :--- | :--- | | **Americas** | $245.9M | -3% | $69.1M | +4% | Sales volumes down 8%, offset by price/mix and FX. Earnings up on improved margins. | | **EMEA** | $139.6M | +4% | $27.9M | +80% | Price/mix and FX gains offset 9% volume decline. Strong earnings growth from higher sales and margins. | | **Asia/Pacific** | $105.1M | +2% | $31.0M | +16% | Sales volumes up 6%, partially offset by unfavorable FX. Earnings up on higher sales and improved margins. | [Liquidity and Capital Resources](index=33&type=section&id=Liquidity%20and%20Capital%20Resources) - Cash and cash equivalents increased by **$17.4 million** to **$198.4 million** in the first nine months of 2023. The increase was driven by strong operating cash flow of **$199.5 million**, which was partially offset by **$150.5 million** used in financing activities (primarily debt repayment) and **$25.8 million** in investing activities[106](index=106&type=chunk) - The company's total net debt was **$627.5 million** as of September 30, 2023. The company was in compliance with all credit facility covenants and had approximately **$414 million** of unused capacity under its revolver[111](index=111&type=chunk)[112](index=112&type=chunk) - A global cost and optimization program initiated in late 2022 is expected to generate full run-rate cost savings of approximately **$20 million** by the end of 2024, with total cash costs estimated at **1** to **1.5** times the savings[119](index=119&type=chunk) [Non-GAAP Measures](index=35&type=section&id=Non-GAAP%20Measures) | Metric (Q3) | 2023 | 2022 | | :--- | :--- | :--- | | **Adjusted EBITDA** | $84.4M | $70.3M | | **Adjusted EBITDA Margin** | 17.2% | 14.3% | | **Non-GAAP EPS** | $2.05 | $1.74 | - Non-GAAP adjustments primarily exclude items not considered core to operations, such as restructuring charges, strategic planning expenses, currency impacts from hyper-inflationary economies, and certain acquisition-related expenses[124](index=124&type=chunk)[125](index=125&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=46&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk.) The company's primary market risk exposure is to interest rate fluctuations due to its variable-rate credit facility; as of September 30, 2023, outstanding borrowings under the facility were **$814.8 million**; to mitigate this risk, in the first quarter of 2023, the company entered into interest rate swaps with a notional amount of **$300.0 million** to convert a portion of its variable-rate debt to a fixed rate - The company is exposed to interest rate risk from its variable-rate Credit Facility, which had **$814.8 million** in borrowings outstanding as of September 30, 2023[184](index=184&type=chunk) - To manage interest rate risk, the company entered into **$300.0 million** of three-year interest rate swaps in Q1 2023, converting a portion of its variable-rate borrowings to an average fixed rate of **3.64%** plus an applicable margin[185](index=185&type=chunk) [Controls and Procedures](index=46&type=section&id=Item%204.%20Controls%20and%20Procedures.) Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of September 30, 2023; there were no changes during the quarter that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting - The principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective as of September 30, 2023[186](index=186&type=chunk) - No material changes to the company's internal control over financial reporting occurred during the third quarter of 2023[187](index=187&type=chunk) [PART II. OTHER INFORMATION](index=47&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Legal Proceedings](index=47&type=section&id=Item%201.%20Legal%20Proceedings.) The company refers to Note 18 of the Condensed Consolidated Financial Statements for information on legal proceedings; the note indicates no new material litigation and states that adequate accruals of approximately **$6 million** have been made for ongoing matters as of September 30, 2023 - For details on legal proceedings, the report incorporates by reference the information in Note 18 of the financial statements[190](index=190&type=chunk) - As of September 30, 2023, the company has accrued approximately **$6 million** for ongoing environmental and litigation matters, with no significant changes reported during the quarter[93](index=93&type=chunk) [Risk Factors](index=47&type=section&id=Item%201A.%20Risk%20Factors.) The company states that there have been no material changes to the risk factors previously disclosed in its Annual Report on Form 10-K for the year ended December 31, 2022 - There have been no material changes to the risk factors described in the company's 2022 Form 10-K[191](index=191&type=chunk) [Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities](index=47&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%2C%20Use%20of%20Proceeds%20and%20Issuer%20Purchases%20of%20Equity%20Securities.) During the third quarter of 2023, the company acquired **2,791** shares of its common stock from employees; these acquisitions were related to the payment of exercise prices for stock options or for tax withholding upon the vesting of restricted stock; no shares were repurchased under the publicly announced 2015 Share Repurchase Program | Period (2023) | Total Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | July | 2,661 | $195.06 | | August | 130 | $204.79 | | September | 0 | N/A | | **Total Q3** | **2,791** | **$195.37** | - All shares purchased during the quarter were acquired from employees in connection with equity compensation plans and not as part of the publicly announced share repurchase program[192](index=192&type=chunk) [Other Information](index=47&type=section&id=Item%205.%20Other%20Information.) On August 31, 2023, Jeewat Bijlani, Executive Vice President and Chief Strategy Officer, entered into a Rule 10b5-1 written trading arrangement; the plan covers the potential sale of up to **2,900** shares and the exercise and sale of up to **6,338** shares from stock options, effective from December 1, 2023, to July 31, 2024 - On August 31, 2023, an executive officer, Jeewat Bijlani, entered into a Rule 10b5-1 trading plan for the potential sale of company common stock and shares from stock options, scheduled to run from December 2023 to July 2024[194](index=194&type=chunk) [Exhibits](index=48&type=section&id=Item%206.%20Exhibits.) This section lists the exhibits filed with the Form 10-Q, including certifications by the CEO and CFO pursuant to the Securities Exchange Act of 1934 and the Sarbanes-Oxley Act of 2002, as well as Inline XBRL documents ```

Financial Data and Key Metrics Changes - Net sales in Q2 2023 increased by 1% year-over-year to $495 million, driven by an 11% increase in price and mix, offset by a 10% decline in volumes [19][39] - Adjusted EBITDA for Q2 2023 was $80 million, representing a 37% increase compared to the prior year, with adjusted EBITDA margins expanding to 16.2% [23][44] - Gross margins improved to 35.9%, up 540 basis points year-over-year and 120 basis points sequentially [21][41] - Operating cash flow for Q2 2023 was $78 million, contributing to a total of $116 million for the first half of the year, marking a year-over-year improvement of $125 million [51] Business Line Data and Key Metrics Changes - All segments showed improved margin performance year-over-year, although volumes declined across the board, particularly in Asia Pacific and EMEA due to softer market conditions [25][48] - The Americas segment experienced year-over-year sales growth primarily due to price and mix increases, while EMEA and Asia Pacific saw declines in net sales due to volume reductions [45][46] Market Data and Key Metrics Changes - Market conditions in steel and general industrial remained soft, impacting overall volumes, while automotive and aerospace markets showed some improvement [20][82] - The company noted that underlying market performance was down mid-single-digits, with some segments improving and others remaining soft [66] Company Strategy and Development Direction - The company is focused on advancing its strategy, enhancing customer value, and investing in innovation and sustainability initiatives [29][35] - There is an emphasis on balancing pricing with the cost to serve, aiming for long-term profitability while navigating current market uncertainties [104][106] Management's Comments on Operating Environment and Future Outlook - Management anticipates continued uncertainty in the demand environment for the second half of the year, with expectations for adjusted EBITDA in Q3 to be similar to Q2 [27][78] - The company remains committed to its long-term growth strategy, despite the challenging macroeconomic backdrop, and is optimistic about future cash generation and margin improvements [29][55] Other Important Information - The company has paid down approximately $73 million of debt year-to-date and announced a 5% increase in dividends, marking the 14th consecutive annual increase [24][53] - The net debt at the end of Q2 was $696 million, with a net leverage ratio improving to 2.3 times adjusted EBITDA [54] Q&A Session Summary Question: What is the outlook for volumes and the impact of pricing strategies? - Management noted that while there has been stability in volumes, year-over-year declines are attributed to tough comparisons and strategic pricing initiatives that have led to some churn in lower-margin business [66][68] Question: Will the company be more aggressive in capital allocation given cash flow performance? - Management confirmed that capital allocation strategies remain unchanged, focusing on shareholder value through dividends, debt reduction, and investments in growth initiatives [71][72] Question: How is the company managing market share amidst pricing pressures? - Management indicated that they are successfully gaining new business at higher profitability levels, despite some volume losses due to strategic pricing [80][91] Question: What is the performance outlook in specific markets like automotive? - Management acknowledged mixed performance across markets, with some improvements in automotive and aerospace, while steel and general industrial remain soft [82] Question: How is the digitalization effort progressing? - Management highlighted ongoing efforts with the FLUIDTREND software platform, focusing on monitoring capabilities and targeted customer applications [94][96]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-Q x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2023 OR o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-12019 QUAKER CHEMICAL CORPORATION (Exact name of registrant as specified in its charter) Pennsylvania 23-0993790 (State o ...