```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 ...

Quaker Chemical Corporation (NYSE:KWR) Q1 2023 Earnings Conference Call May 5, 2023 8:30 AM ET Company Participants Andy Tometich - President & CEO Shane Hostetter - EVP & CFO Robert Traub - General Counsel Jeffrey Schnell - VP, IR Conference Call Participants Mike Harrison - Seaport Research Partners Dan Rizzo - Jefferies David Begleiter - Deutsche Bank Arun Viswanathan - RBC Capital Markets Jon Tanwanteng - CJS Securities Operator Greetings, and welcome to the Quaker Houghton First Quarter 2023 Earnings C ...

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 March 31, 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 ...

Quaker Chemical Corporation (NYSE:KWR) Q4 2022 Earnings Conference Call February 24, 2023 8:30 AM ET Company Participants Jeffrey Schnell - VP, IR Andy Tometich - President & CEO Shane Hostetter - SVP & CFO Robert Traub - General Counsel Conference Call Participants Mike Harrison - Seaport Research Partners David Begleiter - Deutsche Bank Arun Viswanathan - RBC Laurence Alexander - Jefferies Jon Tanwanteng - CJS Securities Operator Greetings, and welcome to the Quaker Houghton Fourth Quarter 2022 Earnings C ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2022 OR 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 (St ...

Quaker Chemical Corporation (NYSE:KWR) Q3 2022 Earnings Conference Call November 4, 2022 8:30 AM ET Company Participants Jeffrey Schnell - Head of Investor Relations Andy Tometich - Chief Executive Officer and President Shane Hostetter - Senior Vice President and Chief Financial Officer Conference Call Participants Mike Harrison - Seaport Research Partners David Begleiter - Deutsche Bank Laurence Alexander - Jefferies Jon Tanwanteng - CJS Securities David Silva - CLK Arun Viswanathan - RBC Operator Greeting ...

Financial Performance - Net sales for Q3 2022 were $492.2 million, a 9.6% increase from $449.1 million in Q3 2021[11]. - Gross profit for the nine months ended September 30, 2022, was $456.4 million, slightly up from $455.8 million in the same period of 2021[11]. - Operating income decreased to $44.6 million in Q3 2022 from $36.0 million in Q3 2021, while for the nine months it was $105.9 million, down from $119.7 million[11]. - Net income attributable to Quaker Chemical Corporation for Q3 2022 was $25.9 million, compared to $31.1 million in Q3 2021, reflecting a decline of 16.9%[11]. - For the nine months ended September 30, 2022, consolidated total revenue reached $1,458.8 million, a 10.9% increase from $1,314.1 million in the same period of 2021[54]. - Revenue from the Americas segment was $700.5 million, up 24.6% from $562.8 million in the prior year[54]. - The Company reported total segment operating earnings of $108.951 million for the three months ended September 30, 2022, compared to $95.374 million in Q3 2021, reflecting a 14.2% increase[44]. - The Company’s Global Specialty Businesses segment reported net sales of $101.094 million for Q3 2022, up from $77.373 million in Q3 2021, marking a 30.5% increase[44]. - Basic earnings per common share for Q3 2022 was $1.44, down from $1.74 in Q3 2021, representing a decrease of 17.3%[88]. - Non-GAAP earnings per diluted share for the third quarter of 2022 were $1.74, up from $1.63 in the prior year quarter[136]. Cash Flow and Assets - Cash and cash equivalents decreased to $138.9 million as of September 30, 2022, from $165.2 million at the end of 2021[16]. - Total assets decreased to $2.83 billion as of September 30, 2022, from $2.96 billion at the end of 2021[16]. - Cash flows from operating activities for the nine months ended September 30, 2022, resulted in a net cash used of $26.3 million, compared to a net cash provided of $2.5 million in the same period of 2021[19]. - The company experienced a net operating cash outflow of $26.3 million in the first nine months of 2022, compared to a net operating cash flow of $2.5 million in the same period of 2021[138]. - The Company had Amended Credit Facility borrowings outstanding of $941.2 million as of September 30, 2022, compared to $889.6 million under the Original Credit Facility as of December 31, 2021[157]. Debt and Liabilities - Long-term debt increased to $931.5 million as of September 30, 2022, compared to $836.4 million at the end of 2021[16]. - Total debt as of September 30, 2022, was $954.066 million, an increase of 5.9% from $901.348 million as of December 31, 2021[97]. - The Company recorded a loss on extinguishment of debt amounting to $6.763 million during the nine months ended September 30, 2022[77]. - The cumulative liability for gross unrecognized tax benefits decreased by approximately $6.3 million from December 31, 2021, to $16.2 million as of September 30, 2022[80]. Acquisitions and Investments - In January 2022, the company acquired a business for approximately $8.0 million, enhancing its product offerings in the Americas region[28]. - In October 2022, Quaker Chemical Corporation acquired a business for approximately $3.5 million, strengthening its position in pickling inhibitors and additives[26]. - The Company acquired a tin-plating solutions business for $25.0 million, allocating $19.6 million to intangible assets and recording $5.0 million of goodwill[36]. - The acquisition of Baron Industries in November 2021 was valued at $11.0 million, with potential earn-out provisions totaling up to $4.5 million[31]. Operational Challenges - The company continues to face challenges from ongoing inflationary pressures, supply chain issues, and geopolitical factors, impacting its operations and market conditions[135]. - The decline in organic sales volumes was 9%, attributed to softer end market conditions, particularly in Europe and Asia/Pacific[135]. - The Company continues to monitor various financial, economic, and geopolitical conditions that could impact future performance, including the ongoing Russia-Ukraine war[92]. Tax and Regulatory Matters - The company's effective tax rates for the three and nine months ended September 30, 2022, were 28.1% and 19.2%, respectively, compared to 2.6% and 21.8% for the same periods in 2021[79]. - The company recognized a net benefit to the tax provision of $1.9 million during the first nine months of 2022 due to the settlement of tax audits[87]. - The Company expects to reduce its cumulative liability for gross unrecognized tax benefits by approximately $4.1 million during the year ending December 31, 2022[83]. Strategic Initiatives - The QH Program aims to reduce total headcount by approximately 400 people globally, with ongoing reductions expected into 2023[59]. - The Company expects continued operating costs and cash flows related to strategic planning and transformation expenses in 2022 and extending into the next several years[159]. - The Company incurred strategic planning and transformation expenses of $4,545 thousand in Q3 2022, compared to no such expenses in Q3 2021[174]. Miscellaneous - The Company believes its existing cash and anticipated cash flows will be sufficient to support operations and fund business objectives for at least the next twelve months, including ongoing acquisition integration and capital expenditures[163]. - The Company recorded $10.4 million in total Combination, integration, and other acquisition-related expenses in the first nine months of 2022, down from $13.6 million in the same period of 2021[159].

Quaker Chemical Corporation (NYSE:KWR) Q2 2022 Earnings Conference Call August 5, 2022 8:30 AM ET Company Participants Jeffrey Schnell - Senior Director of Investor Relations Andy Tometich - Chief Executive Officer and President Shane Hostetter - Senior Vice President and Chief Financial Officer Conference Call Participants David Begleiter - Deutsche Bank Pete Lukas - CJS Securities Mike Harrison - Seaport Research Dan Rizzo - Jefferies Operator Greetings, and welcome to the Quaker Houghton Second Quarter 2 ...