Quaker Chemical Corporation
Management’s Discussion and Analysis
33
The following tables reconcile the Company’snon-GAAP financial measures (unaudited) to their mostdirectly comparableGAAP (unaudited) financial measures (dollars in thousands unlessotherwise noted, except per share amounts):Non-GAAP Operating Income and Margin Reconciliations
Three Months Ended
Six Months Ended
2021
2020
2021
2020
Operating income (loss)
$
38,816
$
2,238
$
83,710
$
(10,206)
Houghton combination, integration and otheracquisition-related expenses (a)6,784
8,253
13,014
16,529
Restructuring and related charges (b)
298
486
1,473
2,202
Fair value step up of acquired inventory sold (c)
—
226
801
226
CEO transition costs (d)
308
—
812
—
Inactive subsidiary's non-operating litigation costs (e)
242
—
293
—
Customer bankruptcy costs (f)
—
—
—
463
Indefinite-lived intangible asset impairment (g)
—
—
—
38,000
Non-GAAP operating income
$
46,448
$
11,203
$
100,103
$
47,214
Non-GAAP operating margin (%) (o)
10.7%
3.9%
11.6%
7.1%
32
EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin
and Non-GAAP Net Income Reconciliations
Three Months Ended
Six Months Ended
2021
20202022
2021
20202022
2021
Net income (loss) attributable to Quaker Chemical Corporation
$
14,343
$
33,570
$
(7,735)34,159
$
72,185
$
(36,116)
Depreciation and amortization (a)(m)(j)
20,856
22,344
21,15841,583
44,792
42,742
Interest expense, net
6,494
5,618
6,81111,839
11,088
15,272
Taxes on income
before
(loss) before equity in net
(loss) income
of associated companies
(k)1,374
15,218
3,2224,240
25,907
(9,848)EBITDA
EBITDA43,067
76,750
23,45691,821
153,972
12,050
Equity incomeloss (income) in a captive insurance company (h)(f)
1,781
(883)
(482)2,025
(3,963)
(155)
Houghton combination, integrationCombination, restructuring and other
acquisition-related expenses (a)
6,6582,248
7,9636,956
7,0859,100
15,7669,359
RestructuringStrategic planning and related chargestransformation expenses (b)
298
486
1,473
2,202
Fair value step up of acquired inventory sold (c)3,112
—
2266,200
801—
226
CEOExecutive transition costs (d)(c)
645
308
—1,184
812
—Russia-Ukraine conflict related expenses (d)
Inactive subsidiary's non-operating litigation costs (e)
242929
—
2932,095
—
Customer bankruptcy costs (f)
—
—
—
463
Indefinite-lived intangible asset impairment (g)
—
—
—
38,000
Pension and postretirement benefit (income) costs,
non-service components (i)(129)
341
(253)
23,866
Brazilian non-income tax credits (j)(g)
—
(13,293)
—
(13,293)
Loss on extinguishment of debt (h)
6,763
—
Currency conversion impacts of hyper-inflationary economies (k)6,763
106—
73Other charges (e)
278(54)
124219
(253)
318
Adjusted EBITDA
$
58,491
$
70,057
$
32,063118,935
$
147,205
$
92,542
Adjusted EBITDA margin (%) (o)(l)
11.9%
16.1%
11.2%12.3%
17.0%
13.9%
Adjusted EBITDA
$
58,491
$
70,057
$
32,063118,935
$
147,205
$
92,542
Less: Depreciation and amortization - adjusted (a)
20,856
22,218
20,86941,583
44,251
41,980
Less: Interest expense, net
6,494
5,618
6,81111,839
11,088
15,272
Less: Taxes on income
before equity in net income
of associated companies - adjusted (a)
(n)(k)7,466
9,773
67316,368
21,512
7,136
Non-GAAP net income
$
23,675
$
32,448
$
3,71049,145
$
70,354
Non-GAAP Earnings per Diluted Share Reconciliations
Three Months Ended
Six Months Ended
2022
2021
2022
2021
GAAP earnings per diluted share attributable to
Quaker Chemical Corporation common shareholders
$
28,1540.80
$
1.88
$
1.91
$
4.03
Equity loss (income) in a captive insurance company
0.10
(0.05)
0.11
(0.22)
Combination, restructuring and other acquisition-related expenses per diluted share (a) 0.13
0.30
0.41
0.42
Strategic planning and transformation expenses per
0.13
—
0.27
—
Executive transition costs per diluted share (c)
0.03
0.02
0.05
0.04
Russia-Ukraine conflict related expenses per diluted share (d)
0.04
—
0.10
—
Brazilian non-income tax credits per diluted share (g)
—
(0.44)
—
(0.44)
Loss on extinguishment of debt per diluted share (h)
0.29
—
0.29
—
Other charges per diluted share (e)
0.01
(0.01)
0.02
Impact of certain discrete tax items per diluted share (i)
(0.20)
0.10
(0.39)
0.08
Non-GAAP earnings per diluted share (m)
$
1.32
$
1.82
$
2.74
$
3.93