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 ~~September 30, 2023~~March 31, 2024


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 or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)


901 E. Hector Street, Conshohocken, Pennsylvania			19428 – 2380
(Address of principal executive offices)			(Zip Code)

Registrant’s telephone number, including area code: 610-832-4000

Not Applicable

Former name, former address and former fiscal year, if changed since last report.

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $1 par value

KWR

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.


Number of Shares of Common Stock Outstanding on ~~October 31, 2023~~April 30, 2024			~~17,984,916~~17,989,892

Table of Contents

Quaker Chemical Corporation

Table of Contents


		Page
PART I.	FINANCIAL INFORMATION	2
Item 1.	Financial Statements (Unaudited)	2
	Condensed Consolidated Statements of Operations for the Three ~~and Nine~~ Months Ended ~~September 30, 2023~~March 31, 2024 and ~~September 30, 2022~~March 31, 2023	2
	Condensed Consolidated Statements of Comprehensive Income for the Three ~~and Nine~~ Months Ended ~~September 30, 2023~~March 31, 2024 and ~~September 30, 2022~~March 31, 2023	3
	Condensed Consolidated Balance Sheets as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022~~2023	4
	Condensed Consolidated Statements of Cash Flows for the ~~Nine~~Three Months Ended ~~September 30, 2023~~March 31, 2024 and ~~September 30, 2022~~March 31, 2023	5
	Condensed Consolidated Statements of Changes in Equity for the Three ~~and Nine~~ Months Ended ~~September 30, 2023~~March 31, 2024 and ~~September 30, 2022~~March 31, 2023	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	2319
Item 3.	Quantitative and Qualitative Disclosures about Market Risk.	3629
Item 4.	Controls and Procedures.	3629
PART II	OTHER INFORMATION.
Item 1.	Legal Proceedings.	3730
Item 1A.	Risk Factors.	3730
Item 2.	Unregistered Sales of Equity Securities , and Use of Proceeds ~~and Issuer Purchases of Equity Securities~~.	3730
Item 5.	Other Information.	3730
Item 6.	Exhibits.	3831
Signatures.		3932

Table of Contents

PART I

FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited).

Quaker Chemical Corporation

Condensed Consolidated Statements of Operations

(Unaudited; Dollars in thousands, except per share data)


		Three Months Ended September 30,				Nine Months Ended September 30,
		2023		2022		2023		2022
		Three Months Ended March 31,
		Three Months Ended March 31,
		Three Months Ended March 31,
		2024
		2024
		2024
Net sales
Net sales
Net sales	Net sales	$	490,612	$	492,218	$	1,486,204	$	1,458,777
Cost of goods sold (excluding amortization expense - See Note 13)	Cost of goods sold (excluding amortization expense - See Note 13)	307,265		331,469		951,716		1,002,393
Cost of goods sold (excluding amortization expense - See Note 13)
Cost of goods sold (excluding amortization expense - See Note 13)
Gross profit
Gross profit
Gross profit	Gross profit	183,347		160,749		534,488		456,384
Selling, general and administrative expenses	Selling, general and administrative expenses	122,810		115,456		362,212		343,081
Restructuring and related charges (credits), net		1,019		(1,423)		6,034		(604)
Combination, integration and other acquisition-related expenses		—		2,107		—		7,992
Selling, general and administrative expenses
Selling, general and administrative expenses
Restructuring and related charges, net
Restructuring and related charges, net
Restructuring and related charges, net

Operating income	Operating income	59,518		44,609		166,242		105,915
Other (expense) income, net		(2,713)		85		(8,558)		(10,520)

Operating income

Operating income
Other income (expense), net
Other income (expense), net
Other income (expense), net
Interest expense, net
Interest expense, net
Interest expense, net	Interest expense, net	(12,781)		(8,389)		(38,744)		(20,228)
Income before taxes and equity in net income of associated companies	Income before taxes and equity in net income of associated companies	44,024		36,305		118,940		75,167
Income before taxes and equity in net income of associated companies
Income before taxes and equity in net income of associated companies
Taxes on income before equity in net income of associated companies
Taxes on income before equity in net income of associated companies
Taxes on income before equity in net income of associated companies	Taxes on income before equity in net income of associated companies	13,593		10,185		36,956		14,425
Income before equity in net income of associated companies	Income before equity in net income of associated companies	30,431		26,120		81,984		60,742
Equity in net income (loss) of associated companies		3,279		(212)		10,660		(642)
Income before equity in net income of associated companies
Income before equity in net income of associated companies
Equity in net income of associated companies
Equity in net income of associated companies
Equity in net income of associated companies
Net income
Net income
Net income	Net income	33,710		25,908		92,644		60,100
Less: Net income attributable to noncontrolling interest	Less: Net income attributable to noncontrolling interest	40		41		94		74
Less: Net income attributable to noncontrolling interest
Less: Net income attributable to noncontrolling interest
Net income attributable to Quaker Chemical Corporation
Net income attributable to Quaker Chemical Corporation
Net income attributable to Quaker Chemical Corporation	Net income attributable to Quaker Chemical Corporation	$	33,670	$	25,867	$	92,550	$	60,026
Per share data:	Per share data:
Per share data:
Per share data:
Net income attributable to Quaker Chemical Corporation common shareholders – basic
Net income attributable to Quaker Chemical Corporation common shareholders – basic
Net income attributable to Quaker Chemical Corporation common shareholders – basic	Net income attributable to Quaker Chemical Corporation common shareholders – basic	$	1.87	$	1.44	$	5.15	$	3.35
Net income attributable to Quaker Chemical Corporation common shareholders – diluted	Net income attributable to Quaker Chemical Corporation common shareholders – diluted	$	1.87	$	1.44	$	5.14	$	3.35
Net income attributable to Quaker Chemical Corporation common shareholders – diluted
Net income attributable to Quaker Chemical Corporation common shareholders – diluted
Dividends declared	Dividends declared	$	0.455	$	0.435	$	1.325	$	1.265
Dividends declared
Dividends declared

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Table of Content

Quaker Chemical Corporation

Condensed Consolidated Statements of Comprehensive Income

(Unaudited; Dollars in thousands)


		Three Months Ended September 30,				Nine Months Ended September 30,
		2023		2022		2023		2022
		Three Months Ended March 31,
		Three Months Ended March 31,
		Three Months Ended March 31,
		2024
		2024
		2024
Net income
Net income
Net income	Net income	$	33,710	$	25,908	$	92,644	$	60,100

Other comprehensive (loss) income, net of tax	Other comprehensive (loss) income, net of tax

Other comprehensive (loss) income, net of tax

Other comprehensive (loss) income, net of tax
Currency translation adjustments
Currency translation adjustments
Currency translation adjustments	Currency translation adjustments	(25,504)		(71,986)		(24,116)		(155,284)
Defined benefit retirement plans	Defined benefit retirement plans	281		497		852		2,400
Defined benefit retirement plans
Defined benefit retirement plans
Current period change in fair value of derivatives	Current period change in fair value of derivatives	1,241		(140)		5,804		1,535
Unrealized (loss) gain on available-for-sale securities		(637)		(818)		938		(2,385)
Other comprehensive loss		(24,619)		(72,447)		(16,522)		(153,734)
Current period change in fair value of derivatives
Current period change in fair value of derivatives
Unrealized gain on available-for-sale securities
Unrealized gain on available-for-sale securities
Unrealized gain on available-for-sale securities
Other comprehensive (loss) income
Other comprehensive (loss) income
Other comprehensive (loss) income

Comprehensive income (loss)		9,091		(46,539)		76,122		(93,634)
Less: Comprehensive loss attributable to noncontrolling interest		(36)		(3)		(55)		(5)
Comprehensive income (loss) attributable to Quaker Chemical Corporation		$	9,055	$	(46,542)	$	76,067	$	(93,639)
Comprehensive income

Comprehensive income

Comprehensive income
Less: Comprehensive loss (income) attributable to noncontrolling interest
Less: Comprehensive loss (income) attributable to noncontrolling interest
Less: Comprehensive loss (income) attributable to noncontrolling interest
Comprehensive income attributable to Quaker Chemical Corporation
Comprehensive income attributable to Quaker Chemical Corporation
Comprehensive income attributable to Quaker Chemical Corporation

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Table of Content

Quaker Chemical Corporation

Condensed Consolidated Balance Sheets

(Unaudited; Dollars in thousands, except par value)


		September 30, 2023		December 31, 2022
	March 31, 2024									March 31, 2024					December 31, 2023
ASSETS	ASSETS
Current assets	Current assets
Current assets
Current assets
Cash and cash equivalents
Cash and cash equivalents
Cash and cash equivalents	Cash and cash equivalents	$	198,358	$	180,963	$	195,750				$	194,527
Accounts receivable, net	Accounts receivable, net	446,459		472,888		Accounts receivable, net		440,018					444,950
Inventories	Inventories
Raw materials and supplies
Raw materials and supplies
Raw materials and supplies	Raw materials and supplies	129,204		151,105		116,411					119,047
Work-in-process and finished goods	Work-in-process and finished goods	121,566		133,743		Work-in-process and finished goods		124,055					114,810
Prepaid expenses and other current assets	Prepaid expenses and other current assets	70,724		55,438		Prepaid expenses and other current assets		56,795					54,555
Total current assets	Total current assets	966,311		994,137		Total current assets		933,029					927,889
Property, plant and equipment, at cost	Property, plant and equipment, at cost	431,565		428,190		Property, plant and equipment, at cost		445,118					453,419
Less: Accumulated depreciation	Less: Accumulated depreciation	(235,125)		(229,595)		Less: Accumulated depreciation		(242,888)					(245,608)
Property, plant and equipment, net	Property, plant and equipment, net	196,440		198,595		Property, plant and equipment, net		202,230					207,811
Right of use lease assets	Right of use lease assets	38,595		43,766		Right of use lease assets		38,195					38,614
Goodwill	Goodwill	504,457		515,008		Goodwill		522,575					512,518
Other intangible assets, net	Other intangible assets, net	890,464		942,925		Other intangible assets, net		886,146					896,721
Investments in associated companies	Investments in associated companies	92,965		88,234		Investments in associated companies		99,850					101,151
Deferred tax assets	Deferred tax assets	9,569		11,218		Deferred tax assets		10,117					10,737
Other non-current assets	Other non-current assets	33,705		27,739		Other non-current assets		22,228					18,770
Total assets	Total assets	$	2,732,506	$	2,821,622	Total assets		$	2,714,370				$	2,714,211
LIABILITIES AND EQUITY	LIABILITIES AND EQUITY
Current liabilities	Current liabilities
Current liabilities
Current liabilities
Short-term borrowings and current portion of long-term debt
Short-term borrowings and current portion of long-term debt
Short-term borrowings and current portion of long-term debt	Short-term borrowings and current portion of long-term debt	$	19,246	$	19,245	$	27,790				$	23,444
Accounts payable	Accounts payable	190,067		193,983		Accounts payable		191,161					184,813
Dividends payable	Dividends payable	8,190		7,808		Dividends payable		8,185					8,186
Accrued compensation	Accrued compensation	43,641		39,834		Accrued compensation		28,024					55,194
Accrued restructuring	Accrued restructuring	3,590		5,483		Accrued restructuring		1,516					3,350
Accrued pension and postretirement benefits	Accrued pension and postretirement benefits	1,574		1,560		Accrued pension and postretirement benefits		2,210					2,208
Other accrued liabilities	Other accrued liabilities	85,799		86,873		Other accrued liabilities		91,341					90,315
Total current liabilities	Total current liabilities	352,107		354,786		Total current liabilities		350,227					367,510
Long-term debt	Long-term debt	804,973		933,561		Long-term debt		740,408					730,623
Long-term lease liabilities	Long-term lease liabilities	22,163		26,967		Long-term lease liabilities		22,819					22,937
Deferred tax liabilities	Deferred tax liabilities	151,606		160,294		Deferred tax liabilities		150,618					146,957
Non-current accrued pension and postretirement benefits	Non-current accrued pension and postretirement benefits	27,344		28,765		Non-current accrued pension and postretirement benefits		28,931					29,457
Other non-current liabilities	Other non-current liabilities	33,212		38,664		Other non-current liabilities		29,575					31,805
Total liabilities	Total liabilities	1,391,405		1,543,037		Total liabilities		1,322,578					1,329,289
Commitments and contingencies (Note 18)	Commitments and contingencies (Note 18)					Commitments and contingencies (Note 18)
Equity	Equity
Common stock $1 par value; authorized 30,000,000 shares; issued and outstanding September 30, 2023 – 18,000,855 shares; December 31, 2022 – 17,950,264 shares		18,001		17,950
Common stock $1 par value; authorized 30,000,000 shares; issued and outstanding March 31, 2024 – 17,989,801 shares; December 31, 2023 – 17,991,988 shares
Common stock $1 par value; authorized 30,000,000 shares; issued and outstanding March 31, 2024 – 17,989,801 shares; December 31, 2023 – 17,991,988 shares
Common stock $1 par value; authorized 30,000,000 shares; issued and outstanding March 31, 2024 – 17,989,801 shares; December 31, 2023 – 17,991,988 shares								17,990					17,992
Capital in excess of par value	Capital in excess of par value	938,473		928,288		Capital in excess of par value		942,546					940,101
Retained earnings	Retained earnings	538,628		469,920		Retained earnings		577,682					550,641
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(154,724)		(138,240)
Total Quaker shareholders’ equity	Total Quaker shareholders’ equity	1,340,378		1,277,918		Total Quaker shareholders’ equity		1,391,231					1,384,319
Noncontrolling interest	Noncontrolling interest	723		667		Noncontrolling interest		561					603
Total equity	Total equity	1,341,101		1,278,585		Total equity		1,391,792					1,384,922
Total liabilities and equity	Total liabilities and equity	$	2,732,506	$	2,821,622	Total liabilities and equity		$	2,714,370				$	2,714,211

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Table of Content

Quaker Chemical Corporation

Condensed Consolidated Statements of Cash Flows

(Unaudited; Dollars in thousands)


		Nine Months Ended September 30,
		2023		2022
	Three Months Ended March 31,						Three Months Ended March 31,
	2024					2024		2023
Cash flows from operating activities	Cash flows from operating activities
Net income	Net income	$	92,644	$	60,100
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Net income
Net income
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of debt issuance costs
Amortization of debt issuance costs
Amortization of debt issuance costs	Amortization of debt issuance costs	1,059		2,589
Depreciation and amortization	Depreciation and amortization	61,434		60,692
Equity in undistributed earnings of associated companies, net of dividends	Equity in undistributed earnings of associated companies, net of dividends	(7,486)		3,612

Deferred compensation, deferred taxes and other, net	Deferred compensation, deferred taxes and other, net	(515)		(8,844)
Deferred compensation, deferred taxes and other, net
Deferred compensation, deferred taxes and other, net
Share-based compensation	Share-based compensation	11,189		8,635
Loss on extinguishment of debt		—		5,246

Combination and other acquisition-related expenses, net of payments		—		(4,265)
Restructuring and related charges (credits), net		6,034		(604)

Restructuring and related charges, net

Restructuring and related charges, net

Restructuring and related charges, net
Pension and other postretirement benefits	Pension and other postretirement benefits	(2,000)		(6,556)
Increase (decrease) in cash from changes in current assets and current liabilities, net of acquisitions:
Decrease in cash from changes in current assets and current liabilities, net of acquisitions:
Accounts receivable
Accounts receivable
Accounts receivable	Accounts receivable	22,133		(65,256)
Inventories	Inventories	30,607		(72,386)
Prepaid expenses and other current assets	Prepaid expenses and other current assets	(9,771)		(11,081)
Change in restructuring liabilities	Change in restructuring liabilities	(7,914)		(1,234)
Accounts payable and accrued liabilities	Accounts payable and accrued liabilities	2,046		3,059
Net cash provided by (used in) operating activities		199,460		(26,293)
Net cash provided by operating activities

Cash flows from investing activities	Cash flows from investing activities
Cash flows from investing activities
Cash flows from investing activities
Investments in property, plant and equipment
Investments in property, plant and equipment
Investments in property, plant and equipment	Investments in property, plant and equipment	(25,794)		(20,230)
Payments related to acquisitions, net of cash acquired	Payments related to acquisitions, net of cash acquired	—		(9,421)

Proceeds from disposition of assets	Proceeds from disposition of assets	—		65
Proceeds from disposition of assets
Proceeds from disposition of assets
Net cash used in investing activities	Net cash used in investing activities	(25,794)		(29,586)

Cash flows from financing activities
Cash flows from financing activities
Cash flows from financing activities	Cash flows from financing activities
Payments of long-term debt	Payments of long-term debt	(14,075)		(668,500)
Proceeds from long-term debt		—		750,000
Payments on revolving credit facilities, net		(112,835)		(10,418)
Borrowings on other debt, net		797		2,131
Financing-related debt issuance costs		—		(3,734)
Payments of long-term debt
Payments of long-term debt
Borrowings (payments) on revolving credit facilities, net

Payments on other debt, net
Payments on other debt, net
Payments on other debt, net

Dividends paid
Dividends paid
Dividends paid	Dividends paid	(23,459)		(22,302)
Other stock related activity	Other stock related activity	(953)		(616)
Net cash (used in) provided by financing activities		(150,525)		46,561
Net cash provided by (used in) financing activities
Effect of foreign exchange rate changes on cash	Effect of foreign exchange rate changes on cash	(5,746)		(16,967)
Net increase (decrease) in cash and cash equivalents		17,395		(26,285)
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the period	Cash and cash equivalents at the beginning of the period	180,963		165,176
Cash and cash equivalents at the end of the period	Cash and cash equivalents at the end of the period	$	198,358	$	138,891

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Table of Content

Quaker Chemical Corporation

Condensed Consolidated Statements of Changes in Equity

(Unaudited; Dollars in thousands, except per share amounts)


		Common Stock		Capital in Excess of Par Value		Retained Earnings		Accumulated Other Comprehensive Loss		Noncontrolling Interest		Total
Balance as of December 31, 2021		$	17,897	$	917,053	$	516,334	$	(63,990)	$	628	$	1,387,922
Net income		—		—		19,816		—		5		19,821
Amounts reported in other comprehensive (loss) income		—		—		—		(6,271)		1		(6,270)
Dividends ($0.415 per share)		—		—		(7,434)		—		—		(7,434)
Share issuance and equity-based compensation plans		15		1,646		—		—		—		1,661
Balance as of March 31, 2022		$	17,912	$	918,699	$	528,716	$	(70,261)	$	634	$	1,395,700
Net income		—		—		14,343		—		28		14,371
Amounts reported in other comprehensive loss		—		—		—		(74,985)		(33)		(75,018)
Dividends ($0.415 per share)		—		—		(7,438)		—		—		(7,438)
Share issuance and equity-based compensation plans		8		2,943		—		—		—		2,951
Balance as of June 30, 2022		$	17,920	$	921,642	$	535,621	$	(145,246)	$	629	$	1,330,566
Net income		—		—		25,867		—		41		25,908
Amounts reported in other comprehensive loss		—		—		—		(72,409)		(38)		(72,447)
Dividends ($0.435 per share)		—		—		(7,803)		—		—		(7,803)
Share issuance and equity-based compensation plans		11		3,395		—		—		—		3,406
Balance as of September 30, 2022		$	17,931	$	925,037	$	553,685	$	(217,655)	$	632	$	1,279,630

	Common Stock													Common Stock	Capital in Excess of Par Value	Retained Earnings	Accumulated Other Comprehensive Loss	Noncontrolling Interest	Total
Balance as of December 31, 2022	Balance as of December 31, 2022	$	17,950	$	928,288	$	469,920	$	(138,240)	$	667	$	1,278,585
Net income	Net income	—		—		29,534		—		7		29,541
Amounts reported in other comprehensive income	Amounts reported in other comprehensive income	—		—		—		15,063		3		15,066
Dividends ($0.435 per share)	Dividends ($0.435 per share)	—		—		(7,822)		—		—		(7,822)
Share issuance and equity-based compensation plans	Share issuance and equity-based compensation plans	32		1,386		—		—		—		1,418
Balance as of March 31, 2023	Balance as of March 31, 2023	$	17,982	$	929,674	$	491,632	$	(123,177)	$	677	$	1,316,788
Net income		—		—		29,346		—		47		29,393
Amounts reported in other comprehensive loss		—		—		—		(6,931)		(38)		(6,969)
Dividends ($0.435 per share)		—		—		(7,830)		—		—		(7,830)
Share issuance and equity-based compensation plans		17		5,267		—		—		—		5,284
Balance as of June 30, 2023		$	17,999	$	934,941	$	513,148	$	(130,108)	$	686	$	1,336,666

Balance as of December 31, 2023

Balance as of December 31, 2023

Balance as of December 31, 2023
Net income	Net income	—		—		33,670		—		40		33,710
Amounts reported in other comprehensive loss	Amounts reported in other comprehensive loss	—		—		—		(24,616)		(3)		(24,619)
Dividends ($0.455 per share)	Dividends ($0.455 per share)	—		—		(8,190)		—		—		(8,190)
Share issuance and equity-based compensation plans	Share issuance and equity-based compensation plans	2		3,532		—		—		—		3,534
Balance as of September 30, 2023		$	18,001	$	938,473	$	538,628	$	(154,724)	$	723	$	1,341,101
Balance as of March 31, 2024

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Table of Contents

Quaker Chemical Corporation

Notes to Condensed Consolidated Financial Statements

(Unaudited; Dollars in thousands, except per share amounts, unless otherwise stated)

Note 1 – Basis of Presentation and Description of Business

As used in these Notes to Condensed Consolidated Financial Statements of this Quarterly Report on Form 10-Q for the period ended ~~September 30, 2023~~March 31, 2024 (the “Report”), the terms “Quaker Houghton,” the “Company,” “we,” and “our” refer to Quaker Chemical Corporation (doing business as Quaker Houghton), its subsidiaries, and associated companies, unless the context otherwise requires. ~~The “Combination” refers to the legacy Quaker combination with Houghton International, Inc. (“Houghton”).~~

Basis of Presentation

The condensed consolidated financial statements included herein are unaudited and have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”) for interim financial reporting and the United States Securities and Exchange Commission (“SEC”) regulations. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, the financial statements reflect all adjustments consisting ~~only~~ of normal recurring adjustments which are necessary for a fair statement of the financial position, results of operations and cash flows for the interim periods. The results for the ~~nine~~three months ended ~~September 30, 2023~~March 31, 2024 are not necessarily indicative of the results to be expected for the full year. These financial statements should be read in conjunction with the Company’s Annual Report filed on Form 10-K for the year ended December 31, ~~2022 (the “2022~~2023 (as amended, the “2023 Form 10-K”).

During the first quarter of 2023, the Company reorganized its executive management team to align with its new business structure. The Company’s new structure includes three reportable segments: (i) Americas; (ii) Europe, Middle East and Africa (“EMEA”); and (iii) Asia/Pacific. Prior to the Company’s reorganization, the Company’s historical reportable segments were: (i) Americas; (ii) EMEA; (iii) Asia/Pacific; and (iv) Global Specialty Businesses. Prior period information has been recast to align with the Company’s business structure as of January 1, 2023, including reportable segments and customer industry disaggregation. As a result of the Company’s new organizational structure effective January 1, 2023, the Company reallocated goodwill previously held by the former Global Specialty Businesses segment to the remaining business segments as of January 1, 2023. However, the Company did not recast the carrying amount of goodwill for the year ended December 31, 2022. See Notes 4, 5, and 13 of Notes to Condensed Consolidated Financial Statements.

Description of Business

The Company was organized in 1918 and incorporated as a Pennsylvania business corporation in 1930. Quaker Houghton is the global leader in industrial process fluids. With a presence around the world, including operations in over 25 countries, the Company’s customers include thousands of the world’s most advanced and specialized steel, aluminum, automotive, aerospace, offshore, container, mining, and metalworking companies. Quaker Houghton develops, produces, and markets a broad range of formulated chemical specialty products and offers chemical management services, which the Company refers to as ~~“Fluidcare~~FluidcareTM”, for various heavy industrial and manufacturing ~~applications.~~applications sold in its three reportable segments: (i) Americas; (ii) Europe, Middle East and Africa (“EMEA”); and (iii) Asia/Pacific.

Hyper-inflationary economies

Argentina’s and Türkiye’s economies were considered hyper-inflationary under U.S. GAAP effective July 1, 2018 and April 1, 2022, respectively. As of, and for the three ~~and nine~~ months ended ~~September 30, 2023,~~March 31, 2024, the Company's Argentine and Turkish subsidiaries together represented ~~a combined~~ 1% and 2% of the Company’s consolidated total assets and net sales, respectively. During the three ~~and nine~~ months ended ~~September 30,~~March 31, 2024 and 2023, the Company recorded ~~$1.2 million and $2.9~~$0.9 million of remeasurement ~~losses associated with the applicable currency conversions, respectively. Comparatively, during the three~~gains and ~~nine months ended September 30, 2022, the Company recorded $1.0 million and $1.2~~$0.5 million of remeasurement losses associated with the applicable currency conversions, respectively. These gains and losses were recorded within ~~foreign exchange losses, net, which is a component of~~ Other income (expense) ~~income,~~, net, in the Company’s Condensed Consolidated Statements of Operations.

Note 2 – Business Acquisitions

~~Previous Acquisitions~~

~~In October 2022,~~During February 2024, the Company acquired ~~a business~~I.K.V. Tribologie IKVT and its subsidiaries (“IKV”) for 32.2 million EUR, or $34.6 million, including an initial cash payment of 27.6 million EUR, or $29.7 million, subject to routine and customary post-closing adjustments related to working capital and net indebtedness levels as well as earn-out provisions related to the finalization of 2023 earnings currently estimated at 4.6 million EUR, or $4.9 million, that ~~provides pickling~~is payable during 2024. Assets acquired included approximately $4.8 million of cash and ~~rinsing products and services,~~cash equivalents. IKV, which iswill be part of the Company’s EMEA ~~reportable~~ segment, ~~for approximately 3.5 million EUR or approximately $3.5 million. This~~specializes in high-performance lubricants and greases, including original equipment manufacturer first-fill greases that are primarily used in the automotive, aerospace, electronics, and other industrial markets. The acquisition ~~along with~~of IKV strengthens the Company’s ~~January 2022 acquisition~~position in first-fill greases. The Company preliminarily allocated $15.0 million of the purchase price to intangible assets, comprised of approximately $11.1 million of customer relationships to be amortized over 16 years; $3.2 million of product technologies to be amortized over 14 years; and $0.7 million of trademarks to be amortized over 5 years. In addition, the Company recognized $16.0 million of goodwill in the ~~Americas (described below),~~EMEA segment, none of which ~~had similar specializations~~is deductible for tax purposes. The goodwill recognized on the transaction is primarily attributable to expected cost and product offerings in pickling inhibitor technologies, strengthens Quaker Houghton’s position in pickling inhibitors and additives, enabling the Company to better support and optimize production processes for customers across the metals industry.growth synergies. As of ~~September 30, 2023,~~March 31, 2024, the allocation of the purchase ~~of this acquisition~~price has not been finalized.

The results of operations of IKV subsequent to the acquisition date are included in the unaudited Condensed Consolidated Statements of Operations for the three months ended March 31, 2024.

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Quaker Chemical Corporation

Notes to Condensed Consolidated Financial Statements - Continued

(Unaudited; Dollars in thousands, except per share amounts, unless otherwise stated)

In January 2022, the Company acquired a business that provides pickling inhibitor technologies, drawing lubricants and stamping oil, and various other lubrication, rust preventative, and cleaner applications, which is part of the Americas reportable segment, for approximately $8.0 million. This business broadens the Company’s product offerings within its existing metals and metalworking business in the Americas region. During the third quarter of 2022 the Company finalized post-closing adjustments that resulted in the Company paying less than $0.1 million of additional purchase consideration. Also in January 2022, the Company acquired a business related to the sealing and impregnation of metal castings for the automotive sector, as well as impregnation resin and impregnation systems for metal parts, which is part of the EMEA reportable segment, for approximately 1.2 million EUR or approximately $1.4 million. This business broadens its product offerings and service capabilities within its existing impregnation business. The allocation of the purchase prices of both of these January 2022 acquisitions have been finalized.

In November 2021, the Company acquired Baron Industries, a privately held company that provides vacuum impregnation services of castings, powder metals and electrical components for its Americas reportable segment for $11.0 million, including an initial cash payment of $7.1 million, subject to post-closing adjustments, as well as certain earn-out provisions that are payable at various times from 2022 through 2025. The earn-out provisions could total a maximum of $4.5 million. As of September 30, 2023, the Company has remaining earn-out liabilities recorded on its Condensed Consolidated Balance Sheet of $1.1 million. Additionally, during the third quarter of 2022 the Company finalized post-closing adjustments that resulted in the Company receiving a payment of less than $0.1 million.

In December 2020, the Company acquired Coral Chemical Company, LLC (“Coral”), a privately held U.S.-based provider of metal finishing fluid solutions. Subsequent to the acquisition, the Company and the sellers of Coral (the “Sellers”) have worked to finalize certain post-closing adjustments. During the second quarter of 2022, after failing to reach resolution, the Sellers filed suit asserting certain amounts owed related to tax attributes of the acquisition. During the first nine months of 2023, there have been no material changes to the facts and circumstances of the claim asserted by the Sellers, and the Company continues to believe the potential range of exposure for this claim is $0 to $1.5 million.

Note 3 – Recently Issued Accounting Standards

~~There have been no recently~~Recently Issued Accounting Standards Not Yet Adopted

The Financial Accounting Standards Board (“FASB”) issued ~~accounting standards~~Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures in November 2023. This ASU expands on reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The disclosure specifies that ~~will have a material~~significant segment expenses are expenses that are regularly provided to the chief operating decision maker and are used to evaluate performance by segment to make decisions about resource allocations. ASU 2023-07 is effective for annual reports for fiscal years beginning after December 15, 2023, with early adoption permitted. The Company is currently evaluating the disclosure requirements of this standard and the impact on ~~the Company’s condensed consolidated financial statements~~its Consolidated Financial Statements and related ~~footnote~~ disclosures.

The FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures in December 2023. This ASU requires public business entities to disclose additional information in specified categories with respect to the reconciliation of the effective tax rate to the statutory rate (the “rate reconciliation”) for federal, state, and foreign income taxes. It also requires greater detail about individual reconciling items in the rate reconciliation to the extent the impact of those items exceeds a specified threshold. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024. The Company is currently evaluating the disclosure requirements of this standard and the impact on its Consolidated Financial Statements.

Note 4 – Business Segments

The Company’s operating segments, which are consistent with its reportable segments, reflect the structure of the Company’s internal organization, the method by which the Company’s resources are allocated and the manner by which the chief operating decision maker assesses the Company’s performance. The Company has three reportable segments: (i) Americas; (ii) EMEA; and (iii) Asia/Pacific. The three segments are composed of the net sales and operations in each respective region. ~~All prior period information has been recast to reflect the Company’s new reportable segments. See Note 1 of Notes to Condensed Consolidated Financial Statements.~~

Segment operating earnings for each of the Company’s reportable segments are comprised of the segment’s net sales less directly related Cost of goods sold (“COGS”), and Selling, general and administrative expenses (“SG&A”). Operating expenses not directly attributable to the net sales of each respective segment, such as certain corporate and administrative costs ~~Combination, integration and other acquisition-related expenses,~~ and Restructuring and related charges, ~~(credits),~~ net, are not included in segment operating earnings. Other items not specifically identified with the Company’s reportable segments include Interest expense, net and Other ~~(expense)~~ income (expense), net.

The following table presents information about the performance of the Company’s reportable segments for the three months ended March 31, 2024 and 2023:



Net sales	2024		2023
Americas	$	229,754	$	251,413
EMEA	138,422		152,449
Asia/Pacific	101,583		96,286
Total net sales	$	469,759	$	500,148

Segment operating earnings
Americas	$	66,770	$	66,125
EMEA	29,571		27,571
Asia/Pacific	30,377		27,652
Total segment operating earnings	126,718		121,348

Restructuring and related charges, net	(1,857)		(3,972)
Non-operating and administrative expenses	(54,177)		(51,771)
Depreciation of corporate assets and amortization	(15,158)		(15,676)
Operating income	55,526		49,929
Other income (expense), net	1,080		(2,239)
Interest expense, net	(10,824)		(13,242)
Income before taxes and equity in net income of associated companies	$	45,782	$	34,448

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Quaker Chemical Corporation

Notes to Condensed Consolidated Financial Statements - Continued

(Unaudited; Dollars in thousands, except per share amounts, unless otherwise stated)

~~The following table presents information about the performance of the Company’s reportable segments:~~

Three Months Ended
September 30, Nine Months Ended
September 30,
2023 2022 2023 2022
Net sales
Americas $ 245,899 $ 254,678 $ 750,531 $ 702,580
EMEA 139,620 134,386 435,602 426,739
Asia/Pacific 105,093 103,154 300,071 329,458
Total net sales $ 490,612 $ 492,218 $ 1,486,204 $ 1,458,777
Segment operating earnings
Americas $ 69,148 $ 66,749 $ 204,280 $ 164,065
EMEA 27,922 15,479 81,076 58,803
Asia/Pacific 30,963 26,723 86,604 76,146
Total segment operating earnings 128,033 108,951 371,960 299,014
Combination, integration and other acquisition-related expenses — (2,107) — (7,992)
Restructuring and related (charges) credits, net (1,019) 1,423 (6,034) 604
Non-operating and administrative expenses (52,280) (47,852) (154,001) (139,894)
Depreciation of corporate assets and amortization (15,216) (15,806) (45,683) (45,817)
Operating income 59,518 44,609 166,242 105,915
Other (expense) income, net (2,713) 85 (8,558) (10,520)
Interest expense, net (12,781) (8,389) (38,744) (20,228)
Income before taxes and equity in net income of associated companies $ 44,024 $ 36,305 $ 118,940 $ 75,167

~~The following table summarizes inter-segment revenues.~~ All inter-segment transactions have been eliminated from each reportable segment’s net sales and earnings for all periods presented in the above tables. The following table summarizes inter-segment revenues for the three months ended March 31, 2024 and 2023:


		Three Months Ended September 30,				Nine Months Ended September 30,
		2023		2022		2023		2022
Inter-segment revenues

Inter-segment revenues

Inter-segment revenues
Americas
Americas
Americas	Americas	$	1,772	$	2,702	$	6,778	$	9,200
EMEA	EMEA	5,161		9,448		18,718		37,259
EMEA
EMEA
Asia/Pacific	Asia/Pacific	793		327		1,329		739
Asia/Pacific
Asia/Pacific

Note 5 – Net Sales and Revenue Recognition

Arrangements Resulting in Net Reporting

As part of the Company’s FluidcareTM business, certain third-party product sales to customers are managed by the Company. The Company transferred third-party products under arrangements recognized on a net reporting basis of ~~$21.6~~$19.8 million and ~~$63.2~~$20.7 million for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2024 and 2023, ~~respectively, and $21.4 million and $61.7 million for the three and nine months ended September 30, 2022,~~ respectively.

Customer Concentration

A significant portion of the Company’s revenues are realized from the sale of process fluids and services to manufacturers of steel, aluminum, automobiles, aerospace, industrial and agricultural equipment, and durable goods. As previously disclosed in the Company’s ~~2022~~2023 Form 10-K, the Company’s five largest customers combined (each composed of multiple subsidiaries or divisions with semiautonomous purchasing authority) accounted for approximately ~~11%~~12% of consolidated net sales for 2023, with its largest customer accounting for approximately 3% of consolidated net sales.

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~~Quaker Chemical Corporation~~

~~Notes to Condensed Consolidated Financial Statements - Continued~~

~~(Unaudited; Dollars in thousands, except per share amounts, unless otherwise stated)~~

Contract Assets and Liabilities

The Company had no material contract assets recorded on its Condensed Consolidated Balance Sheets as of ~~September 30, 2023~~March 31, 2024 or December 31, ~~2022.~~2023.

The Company had approximately ~~$2.8~~$4.0 million and ~~$5.7~~$4.5 million of deferred revenue as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, respectively. For the ~~nine~~three months ended ~~September 30, 2023,~~March 31, 2024, the Company satisfied materially all of the associated performance obligations and recognized into revenue ~~the~~materially all advance payments received and recorded as of December 31, ~~2022.~~2023.

Disaggregated Revenue

The Company sells its various industrial process fluids, its specialty chemicals and its technical expertise as a global product portfolio. The Company generally manages and evaluates its performance by reportable segment first, and then by customer industries. Net sales of each of the Company’s major product lines are generally spread throughout all three of the Company’s geographic regions, and in most cases, are approximately proportionate to the level of total sales in each region.

The following tables disaggregate the Company’s net sales by ~~geographic region,~~segment and customer industries, and timing of revenue recognized. Prior period information has been recast to reflect the Company’s current period customer industry disaggregation. See Note 1 of Notes to Condensed Consolidated Financial Statements.industry.


		Three Months Ended September 30, 2023
		Americas			EMEA		Asia/Pacific		Consolidated Total
			Three Months Ended March 31, 2024												Three Months Ended March 31, 2024
Customer Industries	Customer Industries										Customer Industries	Americas	EMEA	Asia/Pacific		Consolidated Total
Metals	Metals	$	67,957		$	32,630	$	49,320	$	149,907
Metalworking and other	Metalworking and other	177,942			106,990		55,773		340,705

				$
		$	245,899		$	139,620	$	105,093	$	490,612
				$

Timing of Revenue Recognized
Product sales at a point in time		$	235,209		$	128,586	$	102,305	$	466,100
Services transferred over time		10,690			11,034		2,788		24,512
		$	245,899		$	139,620	$	105,093	$	490,612
				$


		Nine Months Ended September 30, 2023
		Americas			EMEA		Asia/Pacific		Consolidated Total
			Three Months Ended March 31, 2023												Three Months Ended March 31, 2023
Customer Industries	Customer Industries										Customer Industries	Americas	EMEA	Asia/Pacific		Consolidated Total
Metals	Metals	$	204,834		$	104,376	$	144,109	$	453,319
Metalworking and other	Metalworking and other	545,697			331,226		155,962		1,032,885

		$	750,531		$	435,602	$	300,071	$	1,486,204
				$

Timing of Revenue Recognized
Product sales at a point in time		$	718,187		$	402,508	$	291,740	$	1,412,435
Services transferred over time		32,344			33,094		8,331		73,769
		$	750,531		$	435,602	$	300,071	$	1,486,204
				$

				$

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Table of Contents

Quaker Chemical Corporation

Notes to Condensed Consolidated Financial Statements - Continued

(Unaudited; Dollars in thousands, except per share amounts, unless otherwise stated)

Three Months Ended September 30, 2022
Americas EMEA Asia/Pacific Consolidated
Total
Customer Industries
Metals $ 67,943 $ 32,748 $ 51,341 $ 152,032
Metalworking and other 186,735 101,638 51,813 340,186
$ 254,678 $ 134,386 $ 103,154 $ 492,218
Timing of Revenue Recognized
Product sales at a point in time $ 243,699 $ 124,566 $ 99,929 $ 468,194
Services transferred over time 10,979 9,820 3,225 24,024
$ 254,678 $ 134,386 $ 103,154 $ 492,218

Nine Months Ended September 30, 2022
Americas EMEA Asia/Pacific Consolidated
Total
Customer Industries
Metals $ 185,784 $ 107,163 $ 163,239 $ 456,186
Metalworking and other 516,796 319,576 166,219 1,002,591
$ 702,580 $ 426,739 $ 329,458 $ 1,458,777
Timing of Revenue Recognized
Product sales at a point in time $ 669,945 $ 396,944 $ 321,031 $ 1,387,920
Services transferred over time 32,635 29,795 8,427 70,857
$ 702,580 $ 426,739 $ 329,458 $ 1,458,777

Note 6 - Leases

The Company has operating leases for certain facilities, vehicles, and machinery and equipment with remaining lease terms up to 811 years. Operating lease expense is recognized on a straight-line basis over the lease term. In addition, the Company has certain land use leases with remaining lease terms up to 9291 years.

The Company had no material variable lease costs, sublease income, or finance leases for the three ~~and nine~~ months ended ~~September 30, 2023~~March 31, 2024 and ~~2022.~~2023. The components of the Company’s lease expense are as follows:

Three Months Ended
September 30, Nine Months Ended
September 30,
2023 2022 2023 2022
Operating lease expense $ 3,886 $ 3,664 $ 11,532 $ 10,592
Short-term lease expense 193 201 587 625

~~Table of Contents~~

~~Quaker Chemical Corporation~~

~~Notes to Condensed Consolidated Financial Statements - Continued~~

~~(Unaudited; Dollars in thousands, except per share amounts, unless otherwise stated)~~



	2024		2023
Operating lease expense	$	3,743	$	3,936
Short-term lease expense	199		211

Supplemental cash flow information related to the Company’s leases for the three months ended March 31, 2024 and 2023 is as follows:


		Three Months Ended September 30,				Nine Months Ended September 30,
		2024
		2023		2022		2023		2022
		2024

		2024
Cash paid for amounts included in the measurement of lease liabilities:
Cash paid for amounts included in the measurement of lease liabilities:
Cash paid for amounts included in the measurement of lease liabilities:	Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	Operating cash flows from operating leases	$	3,917	$	3,768	$	11,547	$	10,575
Operating cash flows from operating leases
Operating cash flows from operating leases

Non-cash lease liabilities activity:

Non-cash lease liabilities activity:

Non-cash lease liabilities activity:	Non-cash lease liabilities activity:
Leased assets obtained in exchange for new operating lease liabilities	Leased assets obtained in exchange for new operating lease liabilities	2,910		2,599		6,566		10,672
Leased assets obtained in exchange for new operating lease liabilities
Leased assets obtained in exchange for new operating lease liabilities

Supplemental balance sheet information related to the Company’s leases is as follows:


		September 30, 2023			December 31, 2022
	March 31, 2024										March 31, 2024			December 31, 2023
Right of use lease assets	Right of use lease assets	$	38,595		$	43,766

Other current liabilities
Other current liabilities
Other current liabilities	Other current liabilities	12,113			12,024
Long-term lease liabilities	Long-term lease liabilities	22,163			26,967
Total operating lease liabilities	Total operating lease liabilities	$	34,276		$	38,991

Weighted average remaining lease term (years)	Weighted average remaining lease term (years)	4.82			5.10
Weighted average remaining lease term (years)
Weighted average remaining lease term (years)									5.0			5.1
Weighted average discount rate	Weighted average discount rate	4.67		%	4.36		%	Weighted average discount rate	5.21	%		4.91	%

Maturities of operating lease liabilities as of March 31, 2024 were as follows:


	September 30, 2023
For the remainder of ~~2023~~2024	$	~~3,691~~10,341
~~For the year ended December 31, 2024~~	~~12,589~~
For the year ended December 31, 2025	~~8,417~~9,864
For the year ended December 31, 2026	~~6,286~~7,552
For the year ended December 31, 2027	~~3,051~~4,165
For the year ended December 31, 2028	2,402
For the year ended December 31, 2029 and beyond	~~5,614~~5,262
Total lease payments	~~39,648~~39,586
Less: imputed interest	~~(5,372)~~(4,949)
Present value of lease liabilities	$	~~34,276~~34,637

Note 7 – Restructuring and Related Activities

In the third quarter of 2019, the Company’s management approved a global restructuring plan (the “QH Program”) as part of its initial plan to realize certain cost synergies associated with the Combination. As of December 31, 2022, the Company ~~substantially completed all of the initiatives under the QH Program with only an immaterial amount of remaining severance still to be paid, which has been paid as of September 30, 2023.~~

~~In the fourth quarter of 2022, the Company’s management~~ initiated a global cost and optimization program to improve its cost structure and drive a more profitable and productive organization. As of ~~September 30, 2023,~~March 31, 2024, the program included restructuring and associated severance costs to reduce headcount by approximately ~~100~~120 positions globally. These headcount reductions began in the fourth quarter of 2022 and are expected to ~~continue throughout 2023. The exact timing to complete all actions and final costs associated will depend on a number of factors that are subject to change.~~be completed in 2024.

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Table of Contents

Quaker Chemical Corporation

Notes to Condensed Consolidated Financial Statements - Continued

(Unaudited; Dollars in thousands, except per share amounts, unless otherwise stated)

Employee separation benefits vary depending on local regulations within certain foreign countries and include severance and other benefits. The exact timing to complete, and final costs associated with, all actions will depend on a number of factors and are subject to change. Restructuring costs incurred during the three months ended March 31, 2024 and 2023 include employee severance and facility closure costs ~~to reduce headcount, including customary and routine adjustments to initial estimates for employee separation costs, as well as costs to close certain facilities under the QH Program. These costs~~that are recorded in Restructuring and related charges, net in the Company’s Condensed Consolidated Statements of Operations. ~~As described in Note 4 of Notes to Consolidated Financial Statements, Restructuring and related charges are not included~~

Changes in the Company’s ~~calculation of reportable segments’ measure of operating earnings and therefore these costs~~accruals for its restructuring program are ~~not reviewed by or recorded to reportable segments.~~as follows:


Accrued restructuring as of December 31, 2023	$	3,350
Restructuring and related charges, net	1,857
Cash payments	(3,666)
Currency translation adjustments	(25)
Accrued restructuring as of March 31, 2024	$	1,516

In connection with the plans for closure of certain manufacturing and non-manufacturing facilities, the Company has made available for sale certain facilities and property. ~~During the three months ended September 30, 2023,~~As of March 31, 2024, the Company classified certain properties with aggregate book value of approximately ~~$6.9~~$3.7 million as ~~held-for-sale that~~held-for-sale. These assets are recorded in Prepaid expenses and other current assets on the Company’s Condensed Consolidated Balance Sheets. The Company expects to complete the sale of these properties over the next 12 months.

~~Changes in the Company’s accruals for its restructuring programs are as follows:~~

Restructuring Programs
Accrued restructuring as of December 31, 2022 $ 5,483
Restructuring and related charges, net 6,034
Cash payments (7,914)
Currency translation adjustments (13)
Accrued restructuring as of September 30, 2023 $ 3,590

Note 8 – Share-Based Compensation

The Company recognized the following share-based compensation expense in its Condensed Consolidated Statements of ~~Operations:~~

Three Months Ended
September 30, Nine Months Ended
September 30,
2023 2022 2023 2022
Stock options $ 203 $ 533 $ 837 $ 1,269
Non-vested stock awards and restricted stock units 2,429 1,783 7,192 4,998
Director stock ownership plan 30 9 56 53
Performance stock units 1,113 875 3,104 2,314
Total share-based compensation expense $ 3,775 $ 3,200 $ 11,189 $ 8,634

~~Share-based compensation expense is recorded in SG&A, except for $0.1 million and $0.2 million~~Operations for the three ~~and nine~~ months ended ~~September 30, 2022, respectively, recorded within Combination, integration~~March 31, 2024 and ~~other acquisition-related expenses.~~2023:


	2024		2023
Stock options	$	175	$	431
Non-vested stock awards and restricted stock units	2,535		2,171
Director stock ownership plan	30		10
Performance stock units	1,144		915
Total share-based compensation expense	$	3,884	$	3,527

Stock Options

As of ~~September 30, 2023,~~March 31, 2024, unrecognized compensation expense related to unvested stock options was ~~$0.5~~$0.1 million, to be recognized over a weighted average remaining period of ~~0.9 years.~~1.0 year.

Restricted Stock Awards ~~and Restricted Stock Units~~

During the ~~nine~~three months ended ~~September 30, 2023,~~March 31, 2024, the Company granted ~~38,894~~872 non-vested restricted ~~shares and 6,675 non-vested restricted stock units~~share awards under its long-term incentive plan (“LTIP”), which are subject to time-based vesting, generally over one to three years. As of March 31, 2024, unrecognized compensation expense related to the non-vested restricted shares was $4.3 million, to be recognized over a weighted average remaining period of 1.3 years.

Restricted Stock Units

During the three months ended March 31, 2024, the Company granted 41,093 restricted stock units under its LTIP, which are subject to time-based vesting, generally over one to three years. The fair value of these grants is based on the ~~last sale~~closing price of the Company’s common stock on the date of grant. As of ~~September 30, 2023,~~March 31, 2024, unrecognized compensation expense related to ~~the~~ non-vested restricted ~~shares~~stock units was ~~$8.0~~$8.8 million, to be recognized over a weighted average remaining period of ~~1.4 years, and unrecognized compensation expense related to non-vested restricted stock units was $1.6 million, to be recognized over a weighted average remaining period of 1.5~~1.9 years.

~~Table of Contents~~

~~Quaker Chemical Corporation~~

~~Notes to Condensed Consolidated Financial Statements - Continued~~

~~(Unaudited; Dollars in thousands, except per share amounts, unless otherwise stated)~~

Performance Stock Units

As a component of its LTIP, the Company grants performance-based stock unit awards (“PSUs”)~~, which will be settled in a certain number of shares subject to market-based or performance-based and time-based vesting conditions.~~. The number of ~~fully vested~~ shares that may ultimately be issued as settlement for each award may range from 0% up to 200% of the target award, subject to the achievement of the Company’s market-based total shareholder return (“TSR”) metric relative to the performance of ~~the Company’s~~a selected peer ~~group, the S&P Midcap 400 Materials~~ group, and separately the achievement of a performance-based return on invested capital (“ROIC”) measure. The service vesting period required for the PSUs is generally three years and the measurement period of the market-based and performance objectives is generally from January 1 of the year of grant through December 31 of the year prior to issuance of the shares.

Table of Contents

Quaker Chemical Corporation

Notes to Condensed Consolidated Financial Statements - Continued

(Unaudited; Dollars in thousands, except per share amounts, unless otherwise stated)

As mentioned above, a portion of the Company’s PSU valuation is subject to the achievement of the Company’s TSR relative to the performance of a selected peer group. For PSUs granted prior to 2024, the Company’s peer group was the S&P Midcap 400 Materials group. For the 2024 annual LTIP grants, the Company made an election to change peer groups to the S&P 1500 Chemical group to measure the Company’s relative TSR.

Compensation expense for PSUs is measured based on the grant date fair value and is recognized on a straight-line vesting method basis over the applicable vesting period. ~~The fair value~~In the first quarter of 2024, the Company granted 17,970 PSUs ~~granted~~ with a ROIC condition isat a grant date fair value of $200.16 per unit, which was based on the closing trading price of the Company’s common stock on the date of grant. PSUs granted with a relative TSR condition are valued using a Monte Carlo simulation on the date of grant. The grant-date fair value of the PSUs valued using a Monte Carlo simulation was $234.19 per unit, which ~~included~~incorporated the ~~following~~ assumptions set forth in the table below:


			~~2023~~2024 Grants
Number of PSUs granted			~~16,861~~17,850
Risk-free interest rate			~~3.85%~~4.55%
Dividend yield			~~0.96%~~0.91%
Expected term (years)			3.0

Based on the conditions of the PSUs and performance to date for each of the outstanding PSU awards as of September 30, 2023, the Company estimates that it will issue 25,613 fully vested shares as of the applicable settlement date for such outstanding PSUs awards. As of ~~September 30, 2023,~~March 31, 2024, there was approximately ~~$8.0~~$13.4 million of total unrecognized compensation cost related to PSUs, which the Company expects to recognize over a weighted-average period of ~~2.2~~2.5 years.

Note 9 – Pension and Other Postretirement Benefits

The components of net periodic benefit cost (income) are as ~~follows:~~

Three Months Ended September 30, Nine Months Ended September 30,
Pension Benefits Other Postretirement Benefits Pension Benefits Other Postretirement Benefits
2023 2022 2023 2022 2023 2022 2023 2022
Service cost $ 109 $ 166 $ — $ 1 $ 320 $ 520 $ — $ 1
Interest cost 2,487 1,272 14 8 7,452 3,949 51 19
Expected return on plan assets (2,033) (1,942) — — (6,056) (6,038) — —
Actuarial loss (gain) amortization 103 238 (36) (23) 308 743 (95) (70)
Prior service cost (income) amortization 18 3 (4) (8) 26 8 (12) (17)
Net periodic benefit cost (income) $ 684 $ (263) $ (26) $ (22) $ 2,050 $ (818) $ (56) $ (67)

In July 2023, one of the Company’s pension plans in the U.K. liquidated approximately $50 million of its invested assets and subsequently funded and entered into an insurance annuity contract, which will providefollows for the ~~pension plan’s defined benefit obligations to participants.~~three months ended March 31, 2024 and 2023:


	Pension Benefits				Other Postretirement Benefits
	2024		2023		2024		2023
Service cost	$	109	$	104	$	—	$	—
Interest cost	2,375		2,455		15		19
Expected return on plan assets	(2,030)		(1,997)		—		—
Actuarial loss (gain) amortization	127		101		(29)		(30)
Prior service cost (income) amortization	7		8		—		(4)
Net periodic benefit cost (income)	$	588	$	671	$	(14)	$	(15)

Employer Contributions

As of ~~September 30, 2023, $3.4~~March 31, 2024, $0.9 million and less than $0.1 million of contributions have been made to the Company’s U.S. and foreign pension plans and its other postretirement benefit plans, respectively. Taking into consideration current minimum cash contribution requirements, the Company currently expects to make full year cash contributions of approximately ~~$5.2~~$5.7 million to its U.S. and foreign pension plans and approximately $0.2 million to its other postretirement benefit plans in ~~2023.~~2024.

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Quaker Chemical Corporation

Notes to Condensed Consolidated Financial Statements - Continued

(Unaudited; Dollars in thousands, except per share amounts, unless otherwise stated)

Note 10 – Other income (expense) ~~income,~~, net

The components of Other income (expense) ~~income,~~, net are as ~~follows:~~

Three Months Ended
September 30, Nine Months Ended
September 30,
2023 2022 2023 2022
Income from third party license fees $ 245 $ 253 $ 891 $ 906
Foreign exchange losses, net (2,498) (1,928) (10,049) (5,859)
(Loss) gain on disposals of property, plant, equipment and other assets, net (25) 48 (91) 33
Non-income tax refunds and other related credits (expense) 91 122 1,339 (1,617)
Pension and postretirement benefit (costs) income, non-service components (549) 452 (1,674) 1,406
Facility remediation recoveries, net — 1,104 1,014 1,104
Loss on extinguishment of debt — — — (6,763)
Other non-operating income, net 23 34 12 270
Total other (expense) income, net $ (2,713) $ 85 $ (8,558) $ (10,520)

~~Non-income tax refunds and other related credits (expense) during~~follows for the ~~nine~~three months ended ~~September 30, 2023~~March 31, 2024 and ~~nine months ended September 30, 2022 include adjustments to~~2023:


	2024		2023
Non-income tax refunds and other related credits	$	2,155	$	360
Income from third party license fees	225		325
Gain (loss) on disposals of property, plant, equipment and other assets, net	407		(19)
Foreign exchange losses, net	(448)		(3,326)
Pension and postretirement benefit costs, non-service components	(465)		(552)
Facility remediation recoveries, net	—		827
Product liability claim	(896)		—
Other non-operating income, net	102		146
Total other income (expense), net	$	1,080	$	(2,239)

During 2021, two of the Company’s locations suffered property damages as a ~~Combination-related indemnification asset associated with the settlement~~result of ~~certain income tax audits for tax periods prior to August 1, 2019. See Note 11 of Notes to Condensed Consolidated Financial Statements.~~

flooding and electrical fire, respectively. Facility remediation recoveries, net, during the ~~nine~~three months ended ~~September 30,~~March 31, 2023, ~~and the three and nine months ended September 30, 2022,~~ reflect ~~gains~~recoveries recorded on the payments received from insurers related to previously incurred costs from the remediation and restoration of property ~~damage incurred during the three months ended September 30, 2021.~~damage. See Note 18 of Notes to the Condensed Consolidated Financial Statements.

~~Loss on extinguishment~~Product liability claim costs includes recorded expense related to the payment of ~~debt~~a product liability dispute with one of the Company’s customers during the ~~nine~~three months ended September 30, 2022, represents a write-off of certain previously unamortized deferred financing costs as well as a portion of third party and creditor debt issuance costs incurred to execute an amendment to the Company’s primary credit facility. See Note 14 of Notes to Condensed Consolidated Financial Statements.March 31, 2024.

Note 11 – Income Taxes ~~and Uncertain Income Tax Positions~~

The Company’s effective tax rates for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2024 and 2023 were ~~30.9%~~27.3% and ~~31.1%~~27.7%, ~~respectively, compared to 28.1% and 19.2% for the three and nine months ended September 30, 2022,~~ respectively. The Company’s effective tax rate for the three months ended ~~September 30,~~March 31, 2024 was largely driven by a mix of earnings and withholding taxes, offset by changes in uncertain tax positions. Comparatively, the effective tax rate for the first three months of 2023 was ~~primarily~~largely impacted by foreign tax inclusions, withholding taxes, and foreign tax credits, partially offset with changes in uncertain tax positions and favorable return to provision adjustments, the impact of U.S. Department of Treasury guidance on the usage of foreign tax credits, and the mix of earnings. The effective tax rate for the first nine months of 2023 was further impacted by various other items including changes to the valuation allowance for and the usage of foreign tax credits due to an enacted law change in Brazil, and share-based compensation. Comparatively, the prior year effective tax rates were largely impacted by foreign tax inclusions, changes in the valuation allowance for foreign tax credits, the impact of audit settlements, a reduction in reserves for uncertain tax positions, withholding taxes, and the impact of forecasted earnings and the mix of such earnings. In addition, the Company’s effective tax rates for three and nine months ended September 30, 2022 were impacted by the Company recording earnings of one of its subsidiaries at a statutory tax rate of 25% while the recertification of its concessionary 15% tax rate was pending receipt.adjustments.

As previously reported, Houghton Italia, S.r.l was involved in a corporate income tax audit with the Italian tax authorities covering tax years 2014 through 2018. The Company settled all years 2014 through 2018 for $3.7 million and, accordingly, released all reserves relating to this audit for the settled tax years during the first quarter of 2022. The settlement is to be paid via installments through 2026 and, through September 30, 2023, the Company has paid $1.5 million of such installments. Having received approximately $1.2 million from escrow during the quarter, the Company has a remaining indemnification receivable of $3.2 million in connection with its claim against the former owners of Houghton for any pre-Combination tax liabilities arising from this matter, as well as other audit settlements and tax matters.

~~Table of Contents~~

~~Quaker Chemical Corporation~~

~~Notes to Condensed Consolidated Financial Statements - Continued~~

~~(Unaudited; Dollars in thousands, except per share amounts, unless otherwise stated)~~

In the first quarter of 2023, the Company was notified by the Spanish tax authorities of audits to commence for several of its legal entities operating in Spain and spanning tax years 2018 through 2021. In addition, in July 2023, the Company was notified by the Italian tax authorities of an audit to commence for one of the Company’s Italian subsidiaries for tax year 2019. Both of these audit proceedings are ongoing and the Company has been providing documentation in response to all of their inquiries. The Company has not established any reserves for these matters at this time.

Note 12 – Earnings Per Share

The following table summarizes earnings per share ~~calculations:~~calculations for the three months ended March 31, 2024 and 2023:


		Three Months Ended September 30,				Nine Months Ended September 30,
		2024
		2023		2022		2023		2022
		2024

		2024
Basic earnings per common share
Basic earnings per common share
Basic earnings per common share	Basic earnings per common share
Net income attributable to Quaker Chemical Corporation	Net income attributable to Quaker Chemical Corporation	$	33,670	$	25,867	$	92,550	$	60,026
Net income attributable to Quaker Chemical Corporation
Net income attributable to Quaker Chemical Corporation
Less: income allocated to participating securities
Less: income allocated to participating securities
Less: income allocated to participating securities	Less: income allocated to participating securities	(164)		(115)		(464)		(250)
Net income available to common shareholders	Net income available to common shareholders	$	33,506	$	25,752	$	92,086	$	59,776
Net income available to common shareholders
Net income available to common shareholders
Basic weighted average common shares outstanding	Basic weighted average common shares outstanding	17,908,754		17,847,305		17,889,444		17,835,976
Basic weighted average common shares outstanding
Basic weighted average common shares outstanding
Basic earnings per common share
Basic earnings per common share
Basic earnings per common share	Basic earnings per common share	$	1.87	$	1.44	$	5.15	$	3.35

Diluted earnings per common share	Diluted earnings per common share

Diluted earnings per common share

Diluted earnings per common share
Net income attributable to Quaker Chemical Corporation
Net income attributable to Quaker Chemical Corporation
Net income attributable to Quaker Chemical Corporation	Net income attributable to Quaker Chemical Corporation	$	33,670	$	25,867	$	92,550	$	60,026
Less: income allocated to participating securities	Less: income allocated to participating securities	(164)		(115)		(464)		(250)
Less: income allocated to participating securities
Less: income allocated to participating securities
Net income available to common shareholders
Net income available to common shareholders
Net income available to common shareholders	Net income available to common shareholders	$	33,506	$	25,752	$	92,086	$	59,776
Basic weighted average common shares outstanding	Basic weighted average common shares outstanding	17,908,754		17,847,305		17,889,444		17,835,976
Basic weighted average common shares outstanding
Basic weighted average common shares outstanding
Effect of dilutive securities
Effect of dilutive securities
Effect of dilutive securities	Effect of dilutive securities	12,520		12,566		16,709		15,465
Diluted weighted average common shares outstanding	Diluted weighted average common shares outstanding	17,921,274		17,859,871		17,906,153		17,851,441
Diluted weighted average common shares outstanding
Diluted weighted average common shares outstanding
Diluted earnings per common share	Diluted earnings per common share	$	1.87	$	1.44	$	5.14	$	3.35
Diluted earnings per common share
Diluted earnings per common share

Certain stock options, restricted stock units, and PSUs are not included in the diluted earnings per share calculation when the effect would have been anti-dilutive. The calculated amount of anti-diluted shares not included were ~~11,598~~39,066 and ~~10,453~~15,327 for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2024 and 2023, ~~respectively, and 25,896 and 24,618 for the three and nine months ended September 30, 2022,~~ respectively.

Table of Contents

Quaker Chemical Corporation

Notes to Condensed Consolidated Financial Statements - Continued

(Unaudited; Dollars in thousands, except per share amounts, unless otherwise stated)

Note 13 – Goodwill and Other Intangible Assets

The Company completes its annual goodwill and indefinite-lived intangible asset impairment test during the fourth quarter of each year, or more frequently if triggering events indicate a possible impairment. The Company continually evaluates financial performance, economic conditions and other recent developments, including rising interest rates and the cost of capital among other factors, in assessing if a triggering event indicates that the carrying values of goodwill, indefinite-lived, or long-lived assets are impaired. The Company concluded that during the third quarter the ongoing financial, economic or geopolitical conditions did not represent a triggering event.

In connection with the Company’s reorganization and the associated change in reportable segments and reporting units during the first quarter of 2023, the Company performed the required impairment assessments directly before and immediately after the change in reporting units and concluded that it was not more likely than not that the fair values of any of the Company’s previous or new reporting units were less than their respective carrying amounts.

~~Table of Contents~~

~~Quaker Chemical Corporation~~

~~Notes to Condensed Consolidated Financial Statements - Continued~~

~~(Unaudited; Dollars in thousands, except per share amounts, unless otherwise stated)~~

Changes in the carrying amount of goodwill for the three months ended March 31, 2024 were as ~~follows. Prior period information has been recast to reflect the Company’s current period reportable segments. See Note 1 of Notes to Condensed Consolidated Financial Statements.~~follows:

Americas EMEA Asia/Pacific Global
Specialty
Businesses Total
Balance as of December 31, 2022 $ 215,899 $ 34,567 $ 150,375 $ 114,167 $ 515,008
Reallocation of reporting units 63,697 31,711 18,759 (114,167) —
Balance as of January 1, 2023 279,596 66,278 169,134 — 515,008
Currency translation adjustments 2,561 (805) (12,307) — (10,551)
Balance as of September 30, 2023 $ 282,157 $ 65,473 $ 156,827 $ — $ 504,457


	Americas		EMEA		Asia/Pacific		Total
Balance as of December 31, 2023	$	283,103	$	65,940	$	163,475	$	512,518


Goodwill additions	—		16,011		—		16,011
Currency translation adjustments	(115)		(663)		(5,176)		(5,954)
Balance as of March 31, 2024	$	282,988	$	81,288	$	158,299	$	522,575

Gross carrying amounts and accumulated amortization for definite-lived intangible assets were as follows:


		Gross Carrying Amount				Accumulated Amortization				Net Book Value
		September 30, 2023		December 31, 2022		September 30, 2023		December 31, 2022		September 30, 2023		December 31, 2022
	Gross Carrying Amount																			Gross Carrying Amount					Accumulated Amortization						Net Book Value
	March 31, 2024																March 31, 2024				December 31, 2023			March 31, 2024				December 31, 2023			March 31, 2024			December 31, 2023
Customer lists and rights to sell	Customer lists and rights to sell	$	824,893	$	831,600	$	226,956	$	191,286	$	597,937	$	640,314	Customer lists and rights to sell	$	843,295		$	841,562			$	253,464			$	243,872		$	589,831		$	597,690
Trademarks, formulations and product technology	Trademarks, formulations and product technology	157,362		158,564		52,534		46,281		104,828		112,283		Trademarks, formulations and product technology	163,391			161,613				57,411				55,879			105,980			105,734
Other	Other	5,854		7,576		5,734		6,390		120		1,186		Other	5,864			5,892				5,753				5,776			111			116
Total definite-lived intangible assets	Total definite-lived intangible assets	$	988,109	$	997,740	$	285,224	$	243,957	$	702,885	$	753,783	Total definite-lived intangible assets	$	1,012,550		$	1,009,067			$	316,628			$	305,527		$	695,922		$	703,540

The Company amortizes definite-lived intangible assets on a straight-line basis over their useful lives. The Company recorded amortization expense for the three months ended March 31, 2024 and 2023 as follows:

Three Months Ended
September 30, Nine Months Ended
September 30,
2023 2022 2023 2022
Amortization expense $ 14,529 $ 14,102 $ 43,734 $ 43,343


	2024		2023
Amortization expense	$	14,472	$	14,513

Estimated annual aggregate amortization expense for the current year and subsequent five years ~~and beyond~~ is as follows:


For the remainder of 2023		$	13,455
For the year ended December 31, 2024		56,630
For the remainder of 2024				For the remainder of 2024	$	43,248
For the year ended December 31, 2025	For the year ended December 31, 2025	55,942		For the year ended December 31, 2025	57,158
For the year ended December 31, 2026	For the year ended December 31, 2026	55,650		For the year ended December 31, 2026	56,470
For the year ended December 31, 2027	For the year ended December 31, 2027	55,309		For the year ended December 31, 2027	56,175
For the year ended December 31, 2028				For the year ended December 31, 2028	55,835
For the year ended December 31, 2029				For the year ended December 31, 2029	55,373

As of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, the Company had indefinite-lived intangible assets for trademarks and tradenames totaling ~~$187.6~~$190.2 million and ~~$189.1~~$193.2 million, respectively.

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Quaker Chemical Corporation

Notes to Condensed Consolidated Financial Statements - Continued

(Unaudited; Dollars in thousands, except per share amounts, unless otherwise stated)

Note 14 – Debt

The following table sets forth the components of the Company’s debt:


		As of September 30, 2023			As of December 31, 2022
		Interest Rate	Outstanding Balance		Interest Rate	Outstanding Balance
	As of March 31, 2024								As of March 31, 2024			As of December 31, 2023
	Interest Rate							Interest Rate		Outstanding Balance	Interest Rate		Outstanding Balance
Credit Facilities:	Credit Facilities:
Revolver
Revolver
Revolver	Revolver	6.0%	$	82,838	5.2%	$	195,673
U.S. Term Loan	U.S. Term Loan	6.7%	585,000		5.7%	596,250
Euro Term Loan	Euro Term Loan	5.0%	146,918		3.1%	151,572
Industrial development bonds	Industrial development bonds	5.3%	10,000		5.3%	10,000
Bank lines of credit and other debt obligations	Bank lines of credit and other debt obligations	Various	1,120		Various	1,303
Total debt	Total debt		$	825,876		$	954,798
Less: debt issuance costs	Less: debt issuance costs		(1,657)			(1,992)
Less: short-term and current portion of long-term debts	Less: short-term and current portion of long-term debts		(19,246)			(19,245)
Total long-term debt	Total long-term debt		$	804,973		$	933,561

Credit facilities

During June 2022, the Company, and its wholly owned subsidiary, Quaker Houghton B.V., as borrowers, Bank of America, N.A., as administrative agent, U.S. dollar swing line lender and letter of credit issuer, Bank of America Europe Designated Active Company, as Euro Swing Line Lender, certain guarantors and other lenders entered into an amendment to its primary credit facility. The amended credit facility (the “Credit Facility”) established (A) a $150.0 million Euro equivalent senior secured term loan (the “Euro Term Loan”), (B) a $600.0 million senior secured term loan (the “U.S. Term Loan”), and (C) a $500.0 million senior secured revolving credit facility (the “Revolver”), each maturing in June 2027. The Company has the right to increase the amount of the Credit Facility by an aggregate amount not to exceed the greater of $300.0 million or 100% of Consolidated EBITDA, subject to certain conditions including the agreement to provide financing by any lender providing such increase.

As of ~~September 30, 2023,~~March 31, 2024, the Company was in compliance with all of the Credit Facility covenants. See Note 2019 of Notes to Consolidated Financial Statements in the Company’s ~~2022~~2023 Form 10-K.

The weighted average variable interest ~~rates~~rate incurred on the outstanding borrowings under the Credit Facility during the three ~~and nine~~ months ended ~~September 30, 2023 were~~March 31, 2024 was approximately 6.4% ~~and 6.1%, respectively.~~. As of ~~September 30, 2023,~~March 31, 2024, the interest rate on the outstanding borrowings under the Credit Facility was approximately ~~6.3%~~6.1%. As part of the Credit Facility, in addition to paying interest on outstanding principal, the Company is also required to pay an annual commitment fee ranging from 0.150% to 0.275% related to unutilized commitments under the Revolver, depending on the Company’s consolidated net leverage ratio. The Company had unused capacity under the Revolver of approximately ~~$414~~$445 million, which is net of bank letters of credit of approximately $3 million, as of ~~September 30, 2023.~~March 31, 2024.

In order to manage the Company’s exposure to variable interest rate risk associated with the Credit Facility, in the first quarter of 2023, the Company entered into $300.0 million notional amounts of three year interest rate swaps to convert a portion of the Company’s variable rate borrowings to an average fixed rate of 3.64% plus an applicable margin as provided in the Credit Facility based on the Company’s consolidated net leverage ratio. As of ~~September 30, 2023,~~March 31, 2024, the aggregate interest rate on the swaps, including the fixed base rate plus the applicable margin, was 5.3%. See Note 17 of Notes to Condensed Consolidated Financial Statements.

In connection with executing the original credit facility in 2019 and the amended Credit Facility during the second quarter of 2022, the Company capitalized an aggregate of $2.2 million of certain third-party and creditor debt issuance costs. Approximately $0.7 million of the capitalized costs were attributed to the Euro Term Loan and U.S. Term Loan. These costs were recorded as a direct offset of Long-term debt on the Condensed Consolidated Balance Sheet. Approximately $1.5 million of the capitalized costs were attributed to the Revolver and recorded within Other assets on the Condensed Consolidated Balance Sheet. These capitalized costs will collectively be amortized into Interest expense over the five year term of the Credit Facility. As of ~~September 30, 2023,~~March 31, 2024, the Company had ~~$1.7~~$1.4 million of debt issuance costs recorded as an offset of Long-term debt on the Condensed Consolidated Balance ~~Sheet~~Sheets and ~~$3.6~~$3.1 million of debt issuance costs recorded within Other assets on the Condensed Consolidated Balance Sheet. Comparatively, as of December 31, ~~2022,~~2023, the Company had ~~$2.0~~$1.5 million of debt issuance costs recorded as an offset of Long-term debt on the Condensed Consolidated Balance ~~Sheet~~Sheets and ~~$4.3~~$3.3 million of debt issuance costs recorded within Other assets on the Condensed Consolidated Balance ~~Sheet.~~Sheets.

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Quaker Chemical Corporation

Notes to Condensed Consolidated Financial Statements - Continued

(Unaudited; Dollars in thousands, except per share amounts, unless otherwise stated)

Industrial development bonds

As of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, the Company had fixed rate, industrial development authority bonds totaling $10.0 million in principal amount due in 2028. These bonds have similar covenants to the Credit Facility noted above.

Bank lines of credit and other debt obligations

The Company has certain unsecured bank lines of credit and discounting facilities in certain foreign subsidiaries, which are not collateralized. The Company’s other debt obligations primarily consist of certain domestic and foreign low interest rate or interest-free municipality-related loans, local credit facilities of certain foreign subsidiaries, and capital lease obligations. Total unused capacity under these arrangements as of ~~September 30, 2023~~March 31, 2024 was approximately $34 million.

In addition to the bank letters of credit described in the “Credit facilities” subsection above, the Company’s other off-balance sheet arrangements include certain financial and other guarantees. The Company’s total bank letters of credit and guarantees outstanding as of ~~September 30, 2023~~March 31, 2024 were approximately $5 million.

Interest expense, net

The Company incurred the following debt related expenses included within Interest expense, net, in the Condensed Consolidated Statements of ~~Operations:~~Operations for the three months ended March 31, 2024 and 2023:


		Three Months Ended September 30,				Nine Months Ended September 30,
		2024
		2023		2022		2023		2022
		2024

		2024
Interest expense
Interest expense
Interest expense	Interest expense	$	12,598	$	9,465	$	40,863	$	20,339
Amortization of debt issuance costs	Amortization of debt issuance costs	353		353		1,059		2,589
Amortization of debt issuance costs
Amortization of debt issuance costs
Total	Total	$	12,951	$	9,818	$	41,922	$	22,928
Total
Total

Based on the variable interest rates associated with the Credit Facility, as of ~~September 30, 2023~~March 31, 2024 and as of December 31, ~~2022,~~2023, the amounts at which the Company’s total debt were recorded are not materially different from their fair market value.

Note 15 – Accumulated Other Comprehensive Income

The following tables show the reclassifications from and resulting balances of accumulated other comprehensive income (“AOCI”):


		Currency Translation Adjustments		Defined Benefit Pension Plans		Unrealized (Loss) Gain in Available-for- Sale Securities		Derivative Instruments		Total
Balance at June 30, 2023		$	(130,738)	$	(4,024)	$	91	$	4,563	$	(130,108)
	Currency Translation Adjustments											Currency Translation Adjustments	Defined Benefit Pension Plans	Unrealized (Loss) Gain in Available-for- Sale Securities	Derivative Instruments	Total
Balance as of December 31, 2023
Other comprehensive (loss) income before Reclassifications	Other comprehensive (loss) income before Reclassifications	(25,501)		304		(802)		1,612		(24,387)
Amounts reclassified from AOCI	Amounts reclassified from AOCI	—		71		(4)				67
Related tax amounts	Related tax amounts	—		(94)		169		(371)		(296)
Balance at September 30, 2023		$	(156,239)	$	(3,743)	$	(546)	$	5,804	$	(154,724)
Balance as of March 31, 2024

Balance at June 30, 2022		$	(133,110)	$	(11,269)	$	(1,170)	$	303	$	(145,246)
Other comprehensive (loss) income before Reclassifications		(71,948)		453		(1,006)		(182)		(72,683)
Balance as of December 31, 2022
Balance as of December 31, 2022
Balance as of December 31, 2022
Other comprehensive income (loss) before Reclassifications
Amounts reclassified from AOCI	Amounts reclassified from AOCI	—		210		(30)		—		180
Related tax amounts	Related tax amounts	—		(166)		218		42		94
Balance at September 30, 2022		$	(205,058)	$	(10,772)	$	(1,988)	$	163	$	(217,655)
Balance as of March 31, 2023

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Quaker Chemical Corporation

Notes to Condensed Consolidated Financial Statements - Continued

(Unaudited; Dollars in thousands, except per share amounts, unless otherwise stated)

Currency
Translation
Adjustments Defined
Benefit
Pension
Plans Unrealized
(Loss) Gain in
Available-for-
Sale Securities Derivative
Instruments Total
Balance as of December 31, 2022 $ (132,161) $ (4,595) $ (1,484) $ — $ (138,240)
Other comprehensive income (loss) before reclassifications (24,078) 915 640 7,538 (14,985)
Amounts reclassified from AOCI — 225 547 772
Related tax amounts — (288) (249) (1,734) (2,271)
Balance as of September 30, 2023 $ (156,239) $ (3,743) $ (546) $ 5,804 $ (154,724)
Balance as of December 31, 2021 $ (49,843) $ (13,172) $ 397 $ (1,372) $ (63,990)
Other comprehensive (loss) income before reclassifications (155,215) 2,535 (3,326) 1,993 (154,013)
Amounts reclassified from AOCI — 657 306 — 963
Related tax amounts — (792) 635 (458) (615)
Balance as of September 30, 2022 $ (205,058) $ (10,772) $ (1,988) $ 163 $ (217,655)

All reclassifications related to unrealized (loss) gain in available-for-sale securities relate to the Company’s equity interest in a captive insurance company and are recorded in equity in net income of associated companies. The amounts reported in other comprehensive income for noncontrolling interest are related to currency translation adjustments.

Note 16 – Fair Value Measurements

The Company ~~has valued~~values its company-owned life insurance policies at fair value. During June 2023, the Company surrendered and liquidated $1.9 million of these life insurance policies. ~~The fair values~~As a result, the Company owns an immaterial amount of ~~Company-owned~~company-owned life insurance ~~assets are based on quotes~~policies as of March 31, 2024 and December 31, 2023.

Additionally, see Note 17 for ~~like instruments with similar credit ratings and terms. These assets are subject to fair value measurement as follows:~~

Total
Fair Value Fair Value Measurements as of September 30, 2023
Using Fair Value Hierarchy
Assets Level 1 Level 2 Level 3
Company-owned life insurance $ 285 $ — $ 285 $ —
Total $ 285 $ — $ 285 $ —

Total
Fair Value Fair Value Measurements as of December 31, 2022
Using Fair Value Hierarchy
Assets Level 1 Level 2 Level 3
Company-owned life insurance $ 2,114 $ — $ 2,114 $ —
Total $ 2,114 $ — $ 2,114 $ —
a description of the Company’s derivative instruments.

Note 17 – Hedging Activities

The Company’s ongoing business operations expose it to various risks, including fluctuating foreign exchange rates and interest rate risk. To manage these risks, the Company periodically enters into derivative financial instruments, such as foreign exchange forward contracts and interest rate swap agreements. The Company does not hold or enter into financial instruments for trading or speculative purposes.

~~Table of Contents~~

~~Quaker Chemical Corporation~~

~~Notes to Condensed Consolidated Financial Statements - Continued~~

~~(Unaudited; Dollars in thousands, except per share amounts, unless otherwise stated)~~

Foreign Exchange Forward Contracts

A significant portion of the Company’s revenues and earnings are generated by its foreign operations. These foreign operations also represent a significant portion of the Company’s assets and liabilities. Generally, all of these foreign operations use the local currency as their functional currency and many have operations in currencies other than their functional currency, which creates foreign exchange risk. The Company uses foreign exchange forward contracts to economically hedge the impact of the variability in exchange rates on certain assets and/or liabilities denominated in certain foreign currencies. These forward contracts are marked-to-market at each reporting date. Changes in the fair value of the underlying instrument and settlements are recognized in earnings in Other income (expense) ~~income,~~, net. The fair value of the forward contract is determined from sources independent of the Company, including the financial institutions which are party to the derivative instruments.

~~All open~~Open foreign exchange forward contracts as of ~~September 30, 2023~~March 31, 2024 were entered into as hedges in Japanese yen and Mexican peso against the U.S. ~~dollar.~~dollar and Chinese yuan against the Euro. As of ~~September 30, 2023,~~March 31, 2024, the Company had open foreign exchange forward contracts with a notional U.S. dollar ~~value~~values of the following:


Currency	~~September 30,~~March 31, ~~2023~~2024
Mexican Peso	$	~~41,900~~41,000
Japanese Yen	~~4,500~~7,200
Chinese Yuan	7,800
	$	~~46,400~~56,000

Open foreign exchange forward contracts as of ~~September 30, 2023~~March 31, 2024 had maturities occurring over a period of one month.

Interest Rate Swaps

In order to manage the Company’s exposure to variable interest rate risk associated with the Credit Facility, such as the Secured Overnight Financing Rate (“SOFR”), in the first quarter of 2023, the Company entered into $300.0 million notional amounts of three year interest rate swaps to convert a portion of the Company’s variable rate borrowings into a fixed rate obligation. See Note 14 of Notes to Condensed Consolidated Financial Statements.

These interest rate swaps are designated as cash flow hedges and, as such, the contracts are marked-to-market at each reporting date and any unrealized gains or losses are included in AOCI to the extent effective and reclassified to interest expense in the period during which the transaction affects earnings or it becomes probable that the forecasted transaction will not occur. Interest rate swaps are entered into with a limited number of counterparties within several tranches, each of which allows for net settlement of all contracts through a single payment to participating counterparties in a single currency in the event of a default on or termination of any one contract. As such, in accordance with the Company’s accounting policy, these derivative instruments are recorded on a net basis within the Condensed Consolidated Balance Sheets.

The balance sheet classification and fair values of the Company’s derivative instruments, which are Level 2 measurements, are as follows:

~~Fair Value~~

Condensed Consolidated
Balance Sheet Location

September 30,
2023

December 31,
2022

~~Derivatives designated as cash flow hedges:~~

~~Interest rate swaps~~

~~Other non-current Assets~~

~~7,538~~

—

~~Foreign currency forward contracts~~

~~Other current liabilities~~

~~(564)~~

—

~~6,974~~

—

~~The following table presents the net unrealized (gain) loss deferred to AOCI:~~

September 30,
2023

December 31,
2022

~~Derivatives designated as cash flow hedges:~~

~~Interest rate swaps~~

~~AOCI~~

~~5,804~~

—




Derivatives instruments	Condensed Consolidated Balance Sheets Location	March 31, 2024		December 31, 2023
Interest rate swaps:	Other non-current assets	$	4,873	$	1,828

Foreign currency forward contracts:	Other accrued liabilities	—		159
	Prepaid expenses and other current assets	687		—

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Quaker Chemical Corporation

Notes to Condensed Consolidated Financial Statements - Continued

(Unaudited; Dollars in thousands, except per share amounts, unless otherwise stated)

The following table presents the net unrealized loss deferred to AOCI:


Derivatives designated as cash flow hedges		March 31, 2024		December 31, 2023

Interest rate swaps	AOCI	$	3,752	$	1,407

The following table presents the location and the amount of net gain ~~(loss) reclassified from AOCI~~recognized in the Company’s Condensed Consolidated Statements of Operations related to ~~earnings:~~derivative instruments for the three months ended March 31, 2024 and 2023:


		Location and Amount of Gain (Loss) Recognized in Statements of Operations
			Three Months Ended September 30,				Nine Months Ended September 30,
Derivative instruments

Derivative instruments

Derivative instruments

Interest rate swaps

Interest rate swaps
			2023		2022		2023		2022
Interest rate swaps	Interest rate swaps	Interest expense, net	$	1,198	$	134	$	2,259	$	(882)
Foreign exchange forward contracts	Foreign exchange forward contracts	Other (expense) income, net	(29)		—		2,107		—
			$	1,169	$	134	$	4,366	$	(882)
Foreign exchange forward contracts
Foreign exchange forward contracts
Total
Total
Total

Note 18 – Commitments and Contingencies

The Company previously disclosed in its 2022 Form 10-K that two of the Company’s locations suffered property damage as a result of flooding and electrical fire, respectively. The Company maintains property and flood insurance for all of its locations globally. During the three and nine months ended September 30, 2023, there have been no significant changes to the facts or circumstances of this previously disclosed matter, other than ongoing work with the Company’s insurance adjuster and insurance carrier regarding the insurance claims submitted. Through September 30, 2023, the Company has received cumulative payments from its insurers of $5.9 million associated with these events. During the nine months ended September 30, 2023, the Company recognized a gain on insurance recoveries of $1.0 million. See Note 10 of Notes to the Condensed Consolidated Financial Statements.

As previously disclosed in its ~~2022~~2023 Form 10-K, the Company is party to certain environmental matters and other litigation. See Note 2625 of Notes to Consolidated Financial Statements in the Company’s ~~2022~~2023 Form 10-K. During the three ~~and nine~~ months ended ~~September 30, 2023,~~March 31, 2024, there have been no significant changes to the facts or circumstances of any of the previously disclosed matters. Although there can be no assurance regarding the outcome of any of the ongoing environmental matters or litigation, the Company believes that it has made adequate accruals for costs and liabilities associated with these matters. The Company has accrued approximately $5 million as of both March 31, 2024 and December 31, 2023, respectively, for these ongoing matters.

The Company previously disclosed in its 2023 Form 10-K that one of its locations suffered property damage as a result of an electrical fire. The Company and its insurance carrier continue to review the impact of the electrical fire on the production facility’s operations as it relates to a potential business interruption insurance claim; however, as of the date of this Report, the Company cannot reasonably estimate any probable amount of business interruption insurance claim recoverable. Therefore, the Company has not recorded a gain contingency for a possible business interruption insurance claim as of March 31, 2024.

In December 2021, the Company completed its acquisition of Coral Chemical Company (“Coral”), a privately held, U.S.-based provider of metal finishing fluid solutions. Subsequent to the acquisition, the Company and the sellers of Coral (the “Sellers”) have worked to finalize certain post-closing adjustments. During the second quarter of 2022, after failing to reach resolution, the Sellers filed suit asserting certain amounts owed related to tax attributes of the acquisition. Since the second quarter of 2022, there have been no material changes to the facts and circumstances of the claim asserted by the Sellers, and the Company continues to believe the potential range of exposure for this claim is $0 to $1.5 million.

In addition, during the three ~~and nine~~ months ended ~~September 30, 2023,~~March 31, 2024, there are no new environmental matters or litigation that the Company believes will have a material adverse effect on the Company’s results of operations, cash flows, or financial condition. Although there can be no assurance regarding the outcome of any of the ongoing environmental matters or litigation the Company is party to, the Company believes that it has made adequate accruals for costs and liabilities associated with environmental matters or provisions for ongoing litigation for which it is aware. The Company has accrued approximately $6 million as of both September 30, 2023 and December 31, 2022, respectively, for these ongoing matters.

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Quaker Chemical Corporation

Management’s Discussion and Analysis

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

As used in this Report, the terms “Quaker Houghton,” the “Company,” “we” and “our” refer to Quaker Chemical Corporation (doing business as Quaker Houghton), its subsidiaries, and associated companies, unless the context otherwise requires. ~~The term the “Combination” refers to the legacy Quaker combination with Houghton International, Inc. (“Houghton”) on August 1, 2019.~~

Executive Summary

Quaker Houghton is the global leader in industrial process fluids. With a presence around the world, including operations in over 25 countries, our customers include thousands of the world’s most advanced and specialized steel, aluminum, automotive, aerospace, offshore, container, mining, and metalworking companies. Our high-performing, innovative and sustainable solutions are backed by best-in-class technology, deep process knowledge, and customized services. Quaker Houghton is headquartered in Conshohocken, Pennsylvania, located near Philadelphia in the U.S.

~~Despite a continued challenging economic environment, the Company~~Quaker Houghton delivered strong results in the ~~third~~first quarter of ~~2023.~~2024. Net sales in the ~~third~~first quarter of ~~2023~~2024 were ~~$490.6~~$469.8 million, a decrease of ~~less than 1%~~6% compared to ~~$492.2~~$500.1 million in the ~~third~~first quarter of ~~2022.~~2023. This was primarily driven by ~~an increase~~a decrease in selling price and product mix of approximately 2%5% and a ~~favorable impact of foreign currency translation of 2%, offset by a 4%~~1% decrease in sales volumes. The ~~increase~~decrease in selling price and product mix was primarily ~~the result of value-based pricing initiatives implemented, primarily in 2022,~~attributable to ~~offset ongoing inflationary pressures.~~our index-based customer contracts. The decline in sales volumes was ~~primarily attributable to~~a result of soft end market conditions compared to the prior year, primarily in the Americas and EMEA segments, partially offset by a broad improvement in end market activity in the Asia/Pacific segment as well as new business ~~wins.~~wins across all segments.

The Company generated net income in the ~~third~~first quarter of ~~2023~~2024 of ~~$33.7~~$35.2 million, or ~~$1.87~~$1.95 per diluted share, compared to net income of ~~$25.9~~$29.5 million, or ~~$1.44~~$1.64 per diluted share in the ~~third~~first quarter of ~~2022.~~2023. Excluding non-recurring and non-core items in each period, the Company’s ~~third~~first quarter ~~of 2023~~2024 non-GAAP earnings per diluted share ~~were $2.05~~was $2.09 compared to ~~$1.74~~$1.89 in the prior year quarter and the Company’s current quarter adjusted EBITDA was ~~$84.4~~$83.3 million compared to ~~$70.3~~$78.8 million in the ~~third~~first quarter of ~~2022. These~~2023. The increase in current quarter earnings ~~were~~was primarily driven by ~~a recovery~~an improvement in gross margins related to a reduction in raw material costs compared to the prior year quarter, partially offset by lower net sales and higher selling, general and administrative expenses (“SG&A”) as a result of year-over-year inflationary pressures and higher labor-related costs. See the Non-GAAP Measures section of this Item below, as well as other items discussed in the Company’s Consolidated Operations Review in the Operations section of this Item, below.

~~During the~~The Company’s first quarter 2024 operating performance in each of ~~2023, the Company reorganized~~ its ~~executive management team to align with its new business structure. The Company’s new structure includes~~ three reportable segments: (i) Americas; (ii) Europe, Middle East and Africa (“EMEA”); and (iii) Asia/~~Pacific. The Company’s third quarter of 2023 operating performance in each of its three reportable segments reflect~~Pacific, reflects similar drivers to that of its consolidated performance. Operating earnings for all segments increased compared to the prior year quarter, driven by an improvement in margins in all three segments. Additional details of each segment’s operating performance are further discussed in the Company’s Reportable Segments Review, in the Operations section of this Item, below.

Net cash flows provided by operating activities were ~~$199.5~~$27.2 million in the first ~~nine~~three months of ~~2023~~2024 compared to ~~net cash flows used in operating activities of $26.3~~$37.8 million in the first ~~nine~~three months of ~~2022.~~2023. The ~~net~~lower operating cash ~~inflow~~flow year-over-year reflects ~~higher operating performance in 2023 compared to 2022 as well as a favorable shift from a working capital investment~~an increase in the ~~prior year to positive~~net cash ~~flows~~outflows from working capital in the first ~~nine~~three months of 2024 partially offset by higher operating performance in the first three months of 2024 compared to 2023. The key drivers of the Company’s operating cash flow and working capital are further discussed in the Company’s Liquidity and Capital Resources section of this Item, below.

Overall, the Company delivered strong results in the ~~third~~first quarter of ~~2023 including relatively stable net sales~~2024 highlighted by margin improvement and ~~an improvement in gross margins. These factors contributed to the Company’s current quarter~~ earnings growth, ~~despite ongoing inflationary pressures,~~notwithstanding the macroeconomic and geopolitical challenges, continued soft end market conditions and other factors that have impacted the Company’s customers and end markets. Looking at the remainder of ~~2023,~~2024, the Company remains focused on executing on items within its control as it manages through a ~~continued uneven and uncertain macroeconomic, geopolitical and~~dynamic end market ~~environment, as well as the potential impact of the automotive industry labor dispute in the Americas segment.~~environment. The Company is encouraged by its continued execution on its financial and operational ~~priorities and the positive momentum built through the first nine months of 2023 and continues to expect to deliver higher earnings and cash flow in 2023 as compared to 2022.~~priorities.

Critical Accounting Policies and Estimates

Our significant accounting policies are described in “Management’s Discussion and Analysis” and “Note 1 – Significant Accounting Policies” to the Consolidated Financial Statements in our ~~2022~~2023 Form 10-K. There have been no material changes to the critical accounting policies and estimates previously disclosed in its ~~2022~~2023 Form 10-K remain materially consistent.

Recently Issued Accounting Standards

See Note 3 of Notes to Condensed Consolidated Financial Statements in ~~Part I,~~ Item 1 of this Report for a discussion regarding recently issued accounting standards.

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Quaker Chemical Corporation

Management’s Discussion and Analysis

Liquidity and Capital Resources

As of ~~September 30, 2023,~~March 31, 2024, we had cash and cash equivalents of ~~$198.4~~$195.8 million. Total cash and cash equivalents ~~was $181.0~~were $194.5 million as of December 31, ~~2022.~~2023. The ~~$17.4~~approximately $1.2 million increase in cash and cash equivalents was the net result of ~~$199.5~~$27.2 million of cash provided by operating activities ~~partially offset by $150.5~~and $6.6 million of cash ~~used in~~provided financing activities, ~~$25.8~~offset by $29.3 million of cash used in investing activities and an unfavorable impact due to the effect of foreign currency translation of approximately ~~$5.8~~$3.3 million.

Net cash flows provided by operating activities were ~~$199.5~~$27.2 million in the first ~~nine~~three months of ~~2023~~2024 compared to ~~net cash flows used in operating activities of $26.3~~$37.8 million in the first ~~nine~~three months of ~~2022.~~2023. The ~~increase~~decrease in net operating cash flow year-over-year reflects higher ~~year-over-year operating performance as well as a~~ cash ~~inflow~~outflows from working capital ~~notably reductions~~ in ~~accounts receivable~~2024, driven by higher Accounts payable and ~~inventory,~~accrued liabilities outflows due primarily to higher incentive compensation payments in the current year ~~demonstrating the Company’s ongoing focus on cash conversion. Comparatively, during the first nine months~~due to our improved 2023 results and a lower inflow from accounts payable due to timing of ~~2022,~~spend and payments. The decrease in net operating cash ~~flow~~flows was ~~negatively impacted~~partially offset by ~~a significant working capital investment due~~higher operating performance in 2024 compared to ~~inflationary impacts on inventory and related pricing impacts on accounts receivable.~~2023.

Net cash flows used in investing activities were ~~$25.8~~$29.3 million in the first ~~nine~~three months of ~~2023~~2024 compared to ~~$29.6~~$6.2 million in the first ~~nine~~three months of ~~2022.~~2023. The ~~lower level of~~increase in cash used in investing activities year-over-year is the result of ~~lower~~increased payments in the current year related to ~~acquisitions which~~ the ~~Company had in the prior year, partially offset by higher capital expenditures in the current year.~~IKV acquisition. See Note 2 of Notes to Condensed Consolidated Financial Statements in Item 1 of this ~~Report.~~Report for further information about business acquisitions.

Net cash flows provided by financing activities were $6.6 million in the first three months of 2024 compared to net cash flows used in financing activities ~~were $150.5~~of $24.9 million in the first ~~nine~~three months of ~~2023 compared to net cash flows provided by financing activities of $46.6 million in the first nine months of 2022.~~2023. The increase in ~~net~~ cash ~~outflows~~inflows was primarily related to net ~~repayments of~~ borrowings on the Company’s revolving credit facility in the first ~~nine~~three months of ~~2023,~~2024, primarily under the Company’s Credit Facility as described further below, as compared to net ~~borrowings~~repayments in the first ~~nine~~three months of ~~2022, which included the impact of new borrowings, net of repayments of old borrowings and debt issuance costs, related to the June 2022 credit facility amendment, described further below.~~2023. In addition, the Company paid ~~$23.5~~$8.2 million of cash dividends during the first ~~nine~~three months of ~~2023,~~2024, a ~~$1.2~~$0.4 million, or 5% increase ~~in cash dividends~~ compared to the prior year quarter.

~~As of~~ ~~September 30, 2023, the Company had Credit Facility borrowings outstanding of~~ ~~$814.8 million. As of~~ ~~December 31, 2022~~, the Company had Credit Facility borrowings outstanding of $943.5 million. The Company’s other debt obligations are primarily industrial development bonds, bank lines of credit and municipality-related loans, which totaled ~~$11.1 million~~ ~~as of~~ ~~September 30, 2023~~ ~~and $11.3 million as of~~ ~~December 31, 2022. Total unused capacity under these arrangements as of~~ ~~September 30, 2023~~ ~~was approximately~~ ~~$34 million. The Company’s total net debt as of~~ ~~September 30, 2023, which consists of total borrowings of $825.9 million less cash and cash equivalents of $198.4 million,~~ ~~was~~ ~~$627.5 million~~. The Credit Facility contains affirmative and negative covenants, financial covenants and events of default. Financial covenants contained in the Credit Facility include a consolidated interest coverage ratio test and a consolidated net leverage ratio test. As of ~~September 30, 2023,~~March 31, 2024, the Company was in compliance with all of the Credit Facility covenants. Refer to the description of the Company’s primary Credit Facility in Note 2019 of Notes to Consolidated Financial Statements in its ~~2022~~2023 Form 10-K and in Note 14 of Notes to Condensed Consolidated Financial Statements in Item 1 of this Report for more information about the covenants and events of default.

As of March 31, 2024, the Company had Credit Facility borrowings outstanding of $757.3 million. As of December 31, 2023, the Company had Credit Facility borrowings outstanding of $744.5 million. The Company’s other debt obligations are primarily industrial development bonds, bank lines of credit and municipality-related loans, which totaled $12.3 million as of March 31, 2024 and $11.1 million as of December 31, 2023. Total unused capacity under these arrangements as of March 31, 2024 was approximately $34 million. The Company’s total net debt as of March 31, 2024, which consists of total borrowings of $769.6 million less cash and cash equivalents of $195.8 million, was approximately $573.8 million.

The weighted average variable interest rate incurred on the outstanding borrowings under the Credit Facility during the three ~~and nine~~ months ended ~~September 30, 2023~~March 31, 2024 was approximately 6.4% ~~and 6.1%, respectively.~~. As of ~~September 30, 2023,~~March 31, 2024, the interest rate on the outstanding borrowings under the Credit Facility was approximately ~~6.3%~~6.1%. As part of the Credit Facility, in addition to paying interest on the outstanding principal, the Company is also required to pay an annual commitment fee ranging from 0.150% to 0.275% related to unutilized commitments under the Revolver, depending on the Company’s consolidated net leverage ratio. The Company had unused capacity under the Revolver of approximately ~~$414~~$445 million, which is net of bank letters of credit of approximately $3 million, as of ~~September 30, 2023.~~March 31, 2024.

~~Table of Contents~~

~~Quaker Chemical Corporation~~

~~Management’s Discussion and Analysis~~

In order to manage the Company’s exposure to variable interest rate risk associated with the Credit Facility, such as SOFR, in the first quarter of 2023, the Company entered into $300.0 million notional amounts of three-year interest rate swaps to convert a portion of the Company’s variable rate borrowings into an average fixed rate obligation of 3.64% plus an applicable margin as provided in the Credit Facility based on the Company’s consolidated net leverage ratio. As of ~~September 30, 2023,~~March 31, 2024, the aggregate interest rate on the swaps, including the fixed base rate plus the applicable margin, was 5.3%. See Note 17 of Notes to Condensed Consolidated Financial ~~Statements.~~Statements in Item 1 of this Report for further information.

Table of Contents

Quaker Chemical Corporation

Management’s Discussion and Analysis

In connection with executing the original credit facility in 2019 and the amended Credit Facility during the second quarter of 2022, the Company capitalized certain third-party and creditor debt issuance costs. Costs attributed to the Euro Term Loan and U.S. Term Loan were recorded as a direct offset of Long-term debt on the Condensed Consolidated Balance Sheet. Costs attributed to the Revolver were recorded within Other assets on the Condensed Consolidated Balance Sheet. These capitalized costs ~~will~~are collectively bebeing amortized into Interest expense over the five-year term of the Credit Facility. As of ~~September 30, 2023,~~March 31, 2024, the Company had ~~$1.7~~$1.4 million of debt issuance costs recorded as an offset of Long-term debt on the Condensed Consolidated Balance ~~Sheet~~Sheets and ~~$3.6~~$3.1 million of debt issuance costs recorded within Other assets on the Condensed Consolidated Balance Sheet. Comparatively, as of December 31, ~~2022,~~2023, the Company had ~~$2.0~~$1.5 million of debt issuance costs recorded as an offset of Long-term debt on the Condensed Consolidated Balance ~~Sheet~~Sheets and ~~$4.3~~$3.3 million of debt issuance costs recorded within Other assets on the Condensed Consolidated Balance ~~Sheet.~~Sheet in Item 1 of this Report.

The Company uses foreign exchange forward contracts to economically hedge the impact of the variability in exchange rates on certain assets and/or liabilities denominated in certain foreign currencies. During the first ~~nine~~three months ~~ended 2023,~~of 2024, the Company entered into and settled forward contracts resulting in ~~cash proceeds~~other income of ~~$2.1~~$0.9 million as compared to $0.3 million during first three months of 2023. See Note 17 of Notes to Condensed Consolidated Financial ~~Statements.~~

~~In the first~~Statements ~~nine months of 2022, the Company incurred~~ ~~$8.0 million~~ ~~of total Combination, integration and other acquisition-related expenses, described~~ in ~~the Non-GAAP Measures section~~Item 1 of this ~~Item below. The Company had net cash outflows related to the Combination, integration and other acquisition-related expenses during the first~~ ~~nine months of 2022 of~~ ~~$4.3 million. The Company had no~~ ~~Combination, integration and other acquisition-related expenses in the first~~ ~~nine months of 2023, except~~Report for ~~$0.5 million in other income related to changes for an indemnification asset related to the Combination~~further information.

~~During the first~~ ~~nine months of 2023, the Company incurred $3.8 million of strategic planning expenses as compared to $4.5 million during the first~~ ~~nine months of 2022~~. The Company expects to incur additional operating costs and associated cash flows, as well as higher capital expenditures related to strategic planning, process optimization and the next phase of the Company’s long-term integration to further optimize its footprint, processes and other function~~s in 2023 and thereafter.~~

The Company’s management approved, and the Company initiated, a global restructuring plan (the “QH Program”) in 2019 as part of its planned cost synergies associated with the Combination. As of December 31, 2022, the Company had substantially completed all of the initiatives under the QH Program with only an immaterial amount of remaining severance still to be paid, which has been paid as of September 30, 2023. In the fourth quarter of 2022, the Company’s management initiated a global cost and optimization program to improve its cost structure and drive a more profitable and productive organization. The exact timing to complete all actions and final associated costs ~~associated~~ will depend on a number of factors and are subject to change. The Company is continuing to evaluate and expects to implement further actions under this program, and as a result, additional headcount reductions and restructuring costs may be incurred in the future. The Company expects to generate full run-rate cost savings from the global cost and optimization program of approximately $20 million by the end of 2024. The Company expects total cash costs of this program to be approximately 1 to 1.5 times annualized savings. The Company recognized Restructuring and related charges of ~~$6.0~~$1.9 million and ~~$0.6~~$4.0 million for the ~~nine~~three months ended ~~September 30,~~March 31, 2024, and 2023, ~~and 2022,~~ respectively, ~~as a result of these programs.~~under this program. The Company made cash payments related to the settlement of restructuring liabilities under the restructuring ~~programs~~program during the first ~~nine~~three months of ~~2023~~2024 of approximately ~~$7.9~~$3.7 million compared to ~~$0.4~~$2.7 million in the first ~~nine~~three months of ~~2022.~~2023. The Company has remaining restructuring accruals, as of ~~September 30, 2023,~~March 31, 2024, for this program of ~~$3.6~~$1.5 million, which the Company expects to settle over the next twelve months. See Note 7 of Notes to Condensed Consolidated Financial Statements in Item 1 of this ~~Report.~~Report for further information.

As of ~~September 30, 2023,~~March 31, 2024, the Company’s gross liability for uncertain tax positions, including interest and penalties, was ~~$20.4~~$18.4 million. The Company cannot determine a reliable estimate of the timing of cash flows by period related to its uncertain tax position liability. However, should the entire liability be paid, the amount of the payment may be reduced by up to ~~$6.5~~$5.7 million as a result of offsetting benefits in other tax jurisdictions.

As previously disclosed in the Company’s 2023 Form 10-K, on February 28, 2024, the Board of Directors of the Company approved a new share repurchase program (“2024 Share Repurchase Program”), authorizing the Company to repurchase up to an aggregate of $150 million of the Company’s outstanding common stock and replacing the prior share repurchase program. The 2024 Share Repurchase Program is effective immediately and has no expiration date. There were no shares repurchased during the firstthree months of 2024.

The Company previously disclosed in its 2023 Form 10-K that one of its locations suffered property damage as a result of an electrical fire. The Company and its insurance carrier continue to review the impact of the electrical fire on the production facility’s operations as it relates to a potential business interruption insurance claim; however, as of the date of this Report, the Company cannot reasonably estimate the probable amount of business interruption insurance claim recoverable, if any. Therefore, the Company has not recorded a gain contingency for a possible business interruption insurance claim as of March 31, 2024.

Table of Contents

Quaker Chemical Corporation

Management’s Discussion and Analysis

The Company previously disclosed in its 2022 Form 10-K that two of the Company’s locations suffered property damage as a result of flooding and electrical fire, respectively. The Company maintains property and flood insurance for all of its locations globally. During the three and nine months ended September 30, 2023, there have been no significant changes to the facts or circumstances of this previously disclosed matter, other than ongoing work with the Company’s insurance adjuster and insurance carrier regarding the insurance claims submitted. Through September 30, 2023, the Company has received cumulative payments from its insurers of $5.9 million associated with these events. During the nine months ended September 30, 2023, the Company recognized a gain on insurance recoveries of $1.0 million. See Notes 10 and 18 of Notes to the Condensed Consolidated Financial Statements, in Item 1 of this report.

The Company believes that its existing cash, anticipated cash flows from operations and available liquidity will be sufficient to support its operating requirements and fund its business objectives for at least the next twelve months, including but not limited to, payments of dividends to shareholders, capital expenditures, other growth opportunities (including potential acquisitions), pension plan contributions, implementing actions to achieve the Company’s sustainability goals and other potential known or anticipated contingencies. The Company also believes it has sufficient additional liquidity to support its operating requirements and to fund its business obligations for the period beyond the next twelve months, including the aforementioned items which are expected to recur annually, as well as future principal and interest payments on the Company’s Credit Facility, tax obligations and other long-term liabilities. The Company’s liquidity is affected by many factors, some based on normal operations of our business and others related to the impact of the pandemic and other global events on our business and on global economic conditions as well as industry uncertainties, which we cannot predict. We also cannot predict economic conditions and industry downturns or the timing, strength or duration of recoveries. We may seek, as we believe appropriate, additional debt or equity financing that would provide capital for corporate purposes, working capital funding, additional liquidity needs or to fund future growth opportunities, including possible acquisitions and organic investments. The timing and amount of potential capital requirements cannot be determined at this time and will depend on a number of factors, including the actual and projected demand for our products, specialty chemical industry conditions, competitive factors, and the condition of financial markets, among others.

Non-GAAP Measures

The information in this Form 10-Q includes non-GAAP (unaudited) financial information that includes EBITDA, adjusted EBITDA, adjusted EBITDA margin, non-GAAP operating income, non-GAAP operating margin, non-GAAP net income and non-GAAP earnings per diluted share. The Company believes these non-GAAP financial measures provide meaningful supplemental information as they enhance a reader’s understanding of the financial performance of the Company, are indicative of future operating performance of the Company, and facilitate a comparison among fiscal periods, as the non-GAAP financial measures exclude items that are not considered indicative of future operating performance or not considered core to the Company’s operations. Non-GAAP results are presented for supplemental informational purposes only and should not be considered a substitute for the financial information presented in accordance with GAAP. In addition, our definitions of EBITDA, adjusted EBITDA, adjusted EBITDA margin, non-GAAP operating income, non-GAAP operating margin, non-GAAP net income and non-GAAP earnings per diluted share, as discussed and reconciled below to the most comparable respective GAAP measures, may not be comparable to similarly named measures reported by other companies.

The Company presents EBITDA, which is calculated as net income attributable to the Company before depreciation and amortization, interest expense, net, and taxes on income before equity in net income of associated companies. The Company also presents adjusted EBITDA, which is calculated as EBITDA plus or minus certain items that are not considered indicative of future operating performance or not considered core to the Company’s operations. In addition, the Company presents non-GAAP operating income, which is calculated as operating income plus or minus certain items that are not considered indicative of future operating performance or not considered core to the Company’s operations. Adjusted EBITDA margin and non-GAAP operating margin are calculated as the percentage of adjusted EBITDA and non-GAAP operating income to consolidated net sales, respectively. The Company believes these non-GAAP measures provide transparent and useful information and are widely used by investors, analysts, and peers in our industry as well as by management in assessing the operating performance of the Company on a consistent basis.

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 before equity in net income of associated companies, in each case adjusted, as applicable, for any depreciation, amortization, interest or tax impacts resulting from the non-core items identified in the reconciliation of net income attributable to the Company to adjusted EBITDA. Non-GAAP earnings per diluted share is calculated as non-GAAP net income per diluted share as accounted for under the “two-class share method.” The Company believes that non-GAAP net income and non-GAAP earnings per diluted share provide transparent and useful information and are widely used by investors, analysts, and peers in our industry as well as by management in assessing the operating performance of the Company on a consistent basis.

2622

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Quaker Chemical Corporation

Management’s Discussion and Analysis

Certain of the prior period non-GAAP financial measures presented in the following tables have been adjusted to conform with current period presentation. The following tables reconcile the Company’s non-GAAP financial measures (unaudited) to their most directly comparable GAAP (unaudited) financial measures (dollars in thousands unless otherwise noted, except per share amounts):

Non-GAAP Operating Income and Margin Reconciliations Three Months Ended
September 30, Nine Months Ended
September 30,
2023 2022 2023 2022
Operating income $ 59,518 $ 44,609 $ 166,242 $ 105,915
Combination, integration and other acquisition-related expenses (a) — 2,107 — 7,992
Restructuring and related charges (credits), net (b) 1,019 (1,423) 6,034 (609)
Strategic planning expenses (c) 1,093 4,545 3,759 10,745
Russia-Ukraine conflict related expenses (d) — 88 — 2,183
Other charges (e) 206 1,016 855 2,681
Non-GAAP operating income $ 61,836 $ 50,942 $ 176,890 $ 128,907
Non-GAAP operating margin (%) (l) 12.6 % 10.3 % 11.9 % 8.8 %


Non-GAAP Operating Income and Margin Reconciliations	Three Months Ended March 31,
	2024			2023
Operating income	$	55,526		$	49,929

Restructuring and related charges, net (a)	1,857			3,972
Strategic planning (credits) expenses (b)	(109)			2,087

Customer insolvency costs (g)	1,522			—
Other charges (d)	446			305
Non-GAAP operating income	$	59,242		$	56,293
Non-GAAP operating margin (%) (l)	12.6		%	11.3		%


EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin and Non-GAAP Net Income Reconciliations	EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin and Non-GAAP Net Income Reconciliations	Three Months Ended September 30,						Nine Months Ended September 30,
		2023			2022			2023			2022
EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin and Non-GAAP Net Income Reconciliations
EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin and Non-GAAP Net Income Reconciliations
		2024
		2024
		2024
Net income attributable to Quaker Chemical Corporation
Net income attributable to Quaker Chemical Corporation
Net income attributable to Quaker Chemical Corporation	Net income attributable to Quaker Chemical Corporation	$	33,670		$	25,867		$	92,550		$	60,026
Depreciation and amortization (j)	Depreciation and amortization (j)	20,866			19,908			62,210			61,491
Depreciation and amortization (j)
Depreciation and amortization (j)
Interest expense, net
Interest expense, net
Interest expense, net	Interest expense, net	12,781			8,389			38,744			20,228
Taxes on income before equity in net income of associated companies (k)	Taxes on income before equity in net income of associated companies (k)	13,593			10,185			36,956			14,425
Taxes on income before equity in net income of associated companies (k)
Taxes on income before equity in net income of associated companies (k)
EBITDA	EBITDA	80,910			64,349			230,460			156,170
Equity (income) loss in a captive insurance company (f)		(756)			174			(748)			2,199
Combination, integration and other acquisition-related expenses (credits) (a)		—			2,107			(475)			10,387
Restructuring and related charges (credits), net (b)		1,019			(1,423)			6,034			(609)
Strategic planning expenses (c)		1,093			4,545			3,759			10,745
EBITDA
EBITDA
Equity income in a captive insurance company (e)
Equity income in a captive insurance company (e)
Equity income in a captive insurance company (e)

Russia-Ukraine conflict related expenses (d)		—			88			—			2,183
Restructuring and related charges, net (a)

Currency conversion impacts of hyper-inflationary economies (g)		1,229			991			2,869			1,216
Loss on extinguishment of debt (i)		—			—			—			6,763
Other charges (credits) (e)		886			(540)			1,515			172
Restructuring and related charges, net (a)

Restructuring and related charges, net (a)
Strategic planning (credits) expenses (b)
Strategic planning (credits) expenses (b)
Strategic planning (credits) expenses (b)

Customer insolvency costs (g)

Customer insolvency costs (g)

Customer insolvency costs (g)
Facility remediation recoveries (c)
Facility remediation recoveries (c)
Facility remediation recoveries (c)
Product liability claim costs (h)
Product liability claim costs (h)
Product liability claim costs (h)
Currency conversion impacts of hyper-inflationary economies (f)
Currency conversion impacts of hyper-inflationary economies (f)
Currency conversion impacts of hyper-inflationary economies (f)

Other charges (d)

Other charges (d)

Other charges (d)
Adjusted EBITDA	Adjusted EBITDA	$	84,381		$	70,291		$	243,414		$	189,226
Adjusted EBITDA
Adjusted EBITDA
Adjusted EBITDA margin (%) (l)
Adjusted EBITDA margin (%) (l)
Adjusted EBITDA margin (%) (l)	Adjusted EBITDA margin (%) (l)	17.2		%	14.3		%	16.4		%	13.0		%

Adjusted EBITDA	Adjusted EBITDA	$	84,381		$	70,291		$	243,414		$	189,226

Adjusted EBITDA

Adjusted EBITDA
Less: Depreciation and amortization (j)
Less: Depreciation and amortization (j)
Less: Depreciation and amortization (j)	Less: Depreciation and amortization (j)	20,866			19,908			62,210			61,491
Less: Interest expense, net	Less: Interest expense, net	12,781			8,389			38,744			20,228
Less: Taxes on income before equity in net income of associated companies - adjusted (a)(k)		13,806			10,821			36,766			27,189
Less: Interest expense, net
Less: Interest expense, net
Less: Taxes on income before equity in net income of associated companies - adjusted (k)
Less: Taxes on income before equity in net income of associated companies - adjusted (k)
Less: Taxes on income before equity in net income of associated companies - adjusted (k)
Non-GAAP net income	Non-GAAP net income	$	36,928		$	31,173		$	105,694		$	80,318
Non-GAAP net income
Non-GAAP net income

2723

Table of Contents

Quaker Chemical Corporation

Management’s Discussion and Analysis

Non-GAAP Earnings per Diluted Share Reconciliations Three Months Ended
September 30, Nine Months Ended
September 30,
2023 2022 2023 2022
GAAP earnings per diluted share attributable to Quaker Chemical Corporation common shareholders $ 1.87 $ 1.44 $ 5.14 $ 3.35
Equity (income) loss in a captive insurance company per diluted share (f) (0.04) 0.01 (0.04) 0.12
Combination, integration and other acquisition-related expenses (credits) per diluted share (a) — 0.09 (0.03) 0.47
Restructuring and related charges (credits), net per diluted share (b) 0.04 (0.05) 0.25 (0.02)
Strategic planning expenses per diluted share (c) 0.04 0.19 0.17 0.46
Russia-Ukraine conflict related expenses per diluted share (d) — 0.01 — 0.11
Currency conversion impacts of hyper-inflationary economies per diluted share (g) 0.07 0.06 0.16 0.07
Loss on extinguishment of debt per diluted share (i) — — — 0.29
Other charges (credits) per diluted share (e) 0.04 (0.03) 0.06 —
Impact of certain discrete tax items per diluted share (h) 0.03 0.02 0.16 (0.37)
Non-GAAP earnings per diluted share (m) $ 2.05 $ 1.74 $ 5.87 $ 4.48


Non-GAAP Earnings per Diluted Share Reconciliations	Three Months Ended March 31,
	2024		2023
GAAP earnings per diluted share attributable to Quaker Chemical Corporation common shareholders	$	1.95	$	1.64
Equity income in a captive insurance company per diluted share (e)	(0.03)		(0.02)

Restructuring and related charges, net per diluted share (a)	0.08		0.17
Strategic planning (credits) expenses per diluted share (b)	—		0.10
Customer insolvency costs per diluted share (g)	0.06		—

Facility remediation recoveries per diluted share (c)	—		(0.04)
Product liability claim costs per diluted share (h)	0.04		—
Currency conversion impacts of hyper-inflationary economies per diluted share (f)	(0.05)		0.03

Other charges per diluted share (d)	0.04		0.02
Impact of certain discrete tax items per diluted share (i)	—		(0.01)
Non-GAAP earnings per diluted share (m)	$	2.09	$	1.89

(a)Combination, integration and other acquisition-related expenses (credits) in 2022 included certain legal, financial, and other advisory and consultant costs incurred in connection with the Combination integration activities and similar expenses associated with the Company's other recent acquisitions. These costs are not indicative of the future operating performance of the Company. Approximately $0.3 million and $0.5 million for the three and nine months ended September 30, 2022 of these pre-tax costs were considered non-deductible for the purpose of determining the Company’s effective tax rate, and, therefore, taxes on income before equity in net income of associated companies - adjusted reflects the impact of these items. During the nine months ended September 30, 2023, the Company recorded $0.5 million of other income due to changes in an indemnification asset related to the Combination. Similarly, during the nine months ended September 30, 2022, the Company recorded $2.4 million, respectively, of other expense due to changes in a Combination-related indemnification asset. The amounts recorded that are related to the changes in indemnification assets are included in the caption “Combination, integration and other acquisition-related (credits) expenses” in the reconciliation of GAAP earnings per diluted share attributed to Quaker Chemical Corporation common shareholders to Non-GAAP earnings per diluted share as well as the reconciliation of net income attributable to Quaker Chemical Corporation to Adjusted EBITDA and Non-GAAP net income. See Notes 2, 10, and 11 of Notes to Condensed Consolidated Financial Statements, which appear in Item 1 of this Report.

~~(b)~~Restructuring and related charges, ~~(credits),~~ net represent the costs ~~(credits)~~ incurred by the Company associated with the Company’s restructuring ~~programs.~~program. These costs ~~(credits)~~ are not indicative of the future operating performance of the Company. See Note 7 of Notes to Condensed Consolidated Financial Statements, which ~~appear~~appears in Item 1 of this Report.

~~(c)~~(b)Strategic planning (credits) expenses include certain consultant and advisory expenses and credits for the Company’s long-term strategic planning, ~~phase of its long-term~~as well as process optimization and the next phase of the Company’s long-term integration ~~projects~~ to further optimize its footprint, processes and other functions. These ~~planning phase~~credits and costs ~~are one-time in nature and not indicative of the future operating performance of the Company.~~

~~(d)~~Russia-Ukraine conflict related expenses represent the direct costs associated with the Company’s exit of operations in Russia during 2022, including costs for employee separation benefits, as well as costs associated with establishing specific reserves or changes to existing reserves for trade accounts receivable within the Company’s EMEA reportable segment for certain customers who filed for bankruptcy protection and were directly impacted by the conflict between Russia and Ukraine. These expenses are not indicative of the future operating performance of the Company.

~~(e)~~(c)Facility remediation recoveries represent the net gain associated with the insurance receipts from remediation, cleaning and subsequent restoration of property damage to certain of the Company’s facilities. These are non-recurring and are not indicative of the future operating performance of the Company. There were no such gains recognized for the three months ended March 31, 2024. See Note 10 of Notes to Condensed Consolidated Financial Statements, which appears in Item 1 of this Report.

(d)Other charges ~~(credits)~~ include executive transition costs ~~facility remediation insurance recoveries, net,~~incurred during 2023, charges incurred by an inactive subsidiary of the Company as a result of the termination of restrictions on insurance settlement reserves, ~~and~~ non-service components of the Company’s pension and postretirement net periodic benefit income and ~~expense.~~expense, and certain legal, financial, and other advisory and consultant costs incurred in connection with the Company's recent acquisitions. See Notes 2, 9, and 1810 of Notes to Condensed Consolidated Financial Statements, which appear in Item 1 of this Report.

~~Table of Contents~~

~~Quaker Chemical Corporation~~

~~Management’s Discussion and Analysis~~

~~(f)~~(e)Equity ~~(income) loss~~income in a captive insurance company represents the after-tax income attributable to the Company’s interest in Primex, Ltd. (“Primex”), a captive insurance company. The Company holds a 32% investment in and has significant influence over Primex, and therefore accounts for this interest under the equity method of accounting. The ~~(income) loss~~income attributable to Primex is not indicative of the future operating performance of the Company and is not considered core to the Company’s operations.

~~(g)~~(f)Currency conversion impacts of hyper-inflationary economies represents the foreign currency remeasurement impacts associated with the Company’s affiliates in Argentina and Türkiye whose local economies are designated as hyper-inflationary under U.S. GAAP. ~~During~~These pre-tax foreign currency remeasurement impacts are not deductible for tax purposes for both the three ~~and nine~~ months ended ~~September 30, 2023~~March 31, 2024 and ~~2022, the Company incurred non-deductible, pre-tax charges related to the Company’s Argentina and Türkiye affiliates.~~2023. The (credits) charges incurred ~~related~~relate to the immediate recognition of foreign currency remeasurement in the Condensed Consolidated Statements of ~~Income associated with these entities~~Operations and are not indicative of the future operating performance of the Company. See Note 1 of Notes to Condensed Consolidated Financial Statements, which appears in Item 1 of this Report.

(g)Customer insolvency costs represent charges associated with a specific reserve for trade accounts receivable within the Company’s EMEA reportable segment related to a specific customer who filed for bankruptcy protection. These expenses are not indicative of the future operating performance of the Company.

(h)~~The impacts of certain discrete tax items include changes in valuation allowances~~Product liability claim costs includes recorded on certain Brazilian branch foreign tax credits and the related deferred taxes. These discrete items relate to tax law changes occurring in 2022 and 2023, both in the United States and Brazil which impacted the creditability of Brazilian foreign taxes in the U.S. Additionally, the Company has discrete itemsexpense related to the ~~remeasurement~~payment of ~~deferred taxes on the transfer of intellectual property and the release~~a product liability dispute with one of the ~~reserves for uncertain tax positions.~~Company’s customers during the three months ended March 31, 2024. See Note 1110 of Notes to Condensed Consolidated Financial Statements, which appears in Item 1 of this Report.

Table of Contents

Quaker Chemical Corporation

Management’s Discussion and Analysis

(i)In connection with executing the Amended Credit Facility, the Company recorded a loss on extinguishment of debt of approximately $6.8 million during the period ended September 30, 2022 which includes the write-offThe impacts of certain ~~previously unamortized deferred financing costs as well as a portion~~discrete tax items include certain impacts of tax law changes, valuation allowance adjustments, uncertain tax positions and prior year true-ups, and the ~~third-party and creditor debt issuance costs incurred to execute the Amended Credit Facility. These expenses~~impact on certain intercompany asset transfers. The Company does not believe these items are ~~not~~core or indicative of ~~the~~ future ~~operating~~ performance of the Company. See Note 1411 of Notes to Condensed Consolidated Financial Statements, which appears in Item 1 of this Report.

(j)Depreciation and amortization for both the three ~~and nine~~ months ended ~~September 30,~~March 31, 2024 and 2023 ~~and September 30, 2022~~ includes approximately $0.3 million ~~and $0.8 million, respectively,~~ of amortization expense recorded within equity in net income of associated companies in the Company’s Condensed Consolidated Statements of Operations, which is attributable to the amortization of the fair value step up for the Company’s 50% interest in a joint venture in Korea as a result of required purchase ~~accounting.~~accounting adjustments.

(k)Taxes on income before equity in net income of associated companies – adjusted presents the impact of any current and deferred income tax expense (benefit), as applicable, of the reconciling items presented in the reconciliation of net income attributable to Quaker Chemical Corporation to adjusted EBITDA and was determined utilizing the applicable rates in the taxing jurisdictions in which these adjustments occurred, subject to deductibility. Combination, integration and other acquisition-related expenses (credits) described in (a) resulted in an incremental tax expense of $0.5 million and $1.9 million for the three and nine months ended September 30, 2022, respectively. Restructuring and related charges (credits), net described in (b) above resulted in incremental taxes of $0.2 million and $1.5 million for the three and nine months ended September 30, 2023, respectively, compared to an incremental benefit of $0.3 million and $0.1 million for the three and nine months ended September 30, 2022, respectively. Strategic planning expenses described in (c) above resulted in incremental taxes of $0.3 million and $0.9 million for the three and nine months ended September 30, 2023, respectively, compared to incremental taxes of $1.0 million and $2.5 million for the three and nine months ended September 30, 2022, respectively. Russia-Ukraine conflict related expenses described in (d) resulted in incremental taxes of less than $0.1 million and $0.5 million for the three and nine months ended September 30, 2022, respectively. Other charges described in (e) resulted in incremental taxes of $0.2 million and $0.4 million for the three and nine months ended September 30, 2023, compared to incremental taxes of $0.1 million and a tax benefit of $0.1 million for the three and nine months ended September 30, 2022, respectively. The impact of certain discrete items described in (h) resulted in a tax benefit of $0.5 million and $2.9 million for the three and nine months ended September 30, 2023, respectively, compared to a tax benefit of $0.5 million and incremental taxes of $6.4 million for the three and nine months ended September 30, 2022, respectively. Loss on extinguishment of debt described in (i) resulted in incremental taxes of $1.6 million during the nine months ended September 30, 2022.

(l)The Company calculates adjusted EBITDA margin and non-GAAP operating margin as the percentage of adjusted EBITDA and non-GAAP operating income to consolidated net sales.

(m)The Company calculates non-GAAP earnings per diluted share as non-GAAP net income attributable to the Company ~~per~~divided by the weighted average number of diluted shares outstanding using the “two-class share ~~method” to calculate such in each given period.~~method.”

~~Table of Contents~~

~~Quaker Chemical Corporation~~

~~Management’s Discussion and Analysis~~

Off-Balance Sheet Arrangements

The Company had no material off-balance sheet commitments or obligations as of ~~September 30, 2023.~~March 31, 2024. The Company’s off-balance sheet items outstanding as of ~~September 30, 2023~~March 31, 2024 includes approximately $5 million of total bank letters of credit and guarantees. The bank letters of credit and guarantees are not significant to the Company’s liquidity or capital resources. See Note 14 of Notes to Condensed Consolidated Financial Statements in Item 1 of this Report.

Operations

Consolidated Operations Review – Comparison of the ~~Third~~First Quarter of ~~2023~~2024 with the ~~Third~~First Quarter of ~~2022~~2023

Net sales were ~~$490.6~~$469.8 million in the ~~third~~first quarter of ~~2023~~2024 compared to ~~$492.2~~$500.1 million in the ~~third~~first quarter of ~~2022.~~2023. The net sales decrease of ~~$1.6~~$30.3 million, or ~~less than 1%~~6%, ~~quarter-over-quarter~~year-over-year reflects ~~an increase~~a decrease in selling price and product mix of approximately 2%5%, and ~~a favorable impact of foreign currency translation of 2%, offset by~~ a decline in sales volumes of approximately 4%1%. The ~~increase~~decrease in selling price and product mix was primarily ~~driven by year-over-year impact of~~attributable to our ~~value-based pricing initiatives.~~index-based customer contracts. The decline in sales volumes was primarily attributable to ~~softer~~a continuation of soft end market conditions across the Company’s EMEA and Americas segments, ~~and the Company’s value-based pricing initiatives,~~ partially offset by an increase in sales volumes in the Asia/Pacific segment and a positive contribution from new business wins in all segments.

COGS ~~were $307.3~~was $288.2 million in the ~~third~~first quarter of 2024 compared to $326.7 million in the first quarter of 2023, ~~compared to $331.5 million in the third quarter of 2022,~~ a decrease of ~~$24.2 million.~~$38.5 million or 12%. The decrease in COGS reflects lower spend on the decline in current year sales volumes and to a ~~lesser extent softening~~decline in the Company’s global raw material costs.

Gross profit was ~~$183.3~~$181.6 million in the ~~third~~first quarter of ~~2023~~2024 compared to ~~$160.7~~$173.5 million in the ~~third~~first quarter of ~~2022,~~2023, an increase of approximately ~~$22.6~~$8.1 million or ~~14%~~5%. The Company’s reported gross margin in the ~~third~~first quarter of 2024 was 38.7% compared to 34.7% in the first quarter of 2023 ~~was 37.4% compared to 32.7% in the third quarter of 2022~~ primarily driven by ~~the year-over-year impact of our value-based pricing initiatives, primarily implemented in 2022, which offset significant increases~~a reduction in raw material ~~and other input~~ costs.

SG&A was ~~$122.8~~$124.2 million in the ~~third~~first quarter of ~~2023~~2024 compared to ~~$115.5~~$119.5 million in the ~~third~~first quarter of ~~2022,~~2023, an increase of approximately ~~$7.3~~$4.7 million or 6%4%, driven by higher labor-related costs ~~including year-over-year inflationary increases,~~ and higher ~~levels of~~ incentive compensation due to improved Company ~~performance.~~

~~The Company incurred $2.1 million of Combination, integration~~performance and ~~other acquisition-related operating expenses in the third quarter of 2022, primarily due to various professional fees~~a charge related to ~~legal, financial and other advisory and consultant expenses for Combination integration activities. There were no similar expenses incurred in the third quarter of 2023.~~a customer insolvency.

The Company incurred Restructuring and related charges of ~~$1.0~~$1.9 million and ~~a credit of $1.4~~$4.0 million during the ~~third~~first quarters of ~~2023~~2024 and ~~2022,~~2023, respectively, related to reductions in headcount and site closures under the Company’s restructuring ~~programs.~~program. See the Non-GAAP Measures section of this Item, above.

Operating income in the ~~third~~first quarter of ~~2023~~2024 was ~~$59.5~~$55.5 million compared to ~~$44.6~~$49.9 million in the ~~third~~first quarter of ~~2022.~~2023. Excluding non-recurring and non-core expenses that are not indicative of the future operating performance of the Company described in the Non-GAAP Measures section of this Item, above, the Company’s non-GAAP operating income increased to ~~$61.8~~$59.2 million in the ~~third~~first quarter of ~~2023~~2024 as compared to ~~$50.9~~$56.3 million in the ~~third~~first quarter of ~~2022~~2023 primarily due to higher gross profit partially offset by higher SG&A, as described above.

The Company had Other expense, net of $2.7 million in the third quarter of 2023 as compared to other income, net of $0.1 million in the third quarter of 2022. Both the third quarter of 2023 and 2022 included foreign exchange transaction losses, which were higher in the current year. The third quarter of 2022 also included facility remediation recoveries, net of $1.1 million. The Company had no such facility remediation recoveries during the third quarter of 2023. See the Non-GAAP Measures section of this Item, above.

Interest expense, net, was $12.8 million in the third quarter of 2023 compared to $8.4 million in the third quarter of 2022, an increase of $4.4 million as a result of an increase in interest rates partially offset by a reduction in borrowings outstanding.

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Quaker Chemical Corporation

Management’s Discussion and Analysis

The Company had Other income, net of $1.1 million in the first quarter of 2024 as compared to Other expense of $2.2 million in the first quarter of 2023. Both the first quarter of 2024 and 2023 included foreign exchange transaction losses, which were higher in the prior year. The first quarter of 2023 also included facility remediation recoveries, net of $0.8 million. The Company had no such facility remediation recoveries during the first quarter of 2024. Additionally, the Company had Other income from non-income tax credits, partially offset by a non-recurring product liability claim expense in the first quarter of 2024. See the Non-GAAP Measures section of this Item, above.

Interest expense, net, was $10.8 million in the first quarter of 2024 compared to $13.2 million in the first quarter of 2023, a decrease of $2.4 million as a result of lower borrowings outstanding in 2024 as compared to 2023.

The Company’s effective tax rates for the ~~third~~first quarters of 2024 and 2023 were 27.3% and ~~2022 were 30.9% and 28.1%~~27.7%, respectively. The Company’s effective tax rate for the ~~third~~first quarter of ~~2023~~2024 was ~~primarily impacted~~largely driven by ~~foreign tax inclusions,~~a mix of earnings and withholding taxes, ~~return to provision adjustments, the impact of U.S Department of Treasury guidance on the usage of foreign~~offset by changes in uncertain tax ~~credits, and the impact of forecasted pre-tax earnings and the mix of such earnings.~~positions. Comparatively, the effective tax rate for the ~~third~~first quarter of ~~2022~~2023 was largely driven by foreign tax inclusions, ~~a reduction~~withholding taxes, foreign tax credits, and net tax expense related to share-based compensation, partially offset by changes in ~~reserves for~~ uncertain tax positions ~~withholding taxes,~~ and the impact of forecasted pre-tax earnings and the mix of such earnings. In addition, the effective tax rate for the third quarter of 2022 was impacted by the Company recording earnings of one of its subsidiaries at a statutory tax rate of 25% while the recertification of its concessionary 15% tax rate was pending receipt.favorable return to provision adjustments. Excluding the impact of non-core items in each quarter, described in the Non-GAAP Measures section of this Item above, the Company estimates that its effective tax ~~rates~~rate for both the ~~third~~first quarters of 2024 and 2023 ~~and 2022 would have been~~was approximately ~~28% and 26%, respectively.~~27%. The Company ~~expects~~may experience continued volatility in its effective tax rates due to several factors, including the timing ~~and scope~~ of tax audits, ~~and~~ the expiration of applicable statutes of limitations as they relate to uncertain tax positions, the unpredictability of ~~the~~ timing and amount of certain incentives in various tax jurisdictions, ~~the treatment of certain acquisition-related costs~~ and the timing and amount of certain share-based compensation-related tax benefits, among other factors. In addition, the foreign tax credit valuation allowance, or absence thereof, is based on a number of variables, including forecasted mix of earnings, which may vary.

Equity in net income of associated companies was ~~$3.3~~$2.0 million in the ~~third~~first quarter of 2024 compared to $4.6 million in the first quarter of 2023, ~~compared to~~ a ~~net loss~~decrease of ~~$0.2 million in the third quarter of 2022, an increase of $3.5~~$2.6 million, primarily due to higher current year income from the Company’s interest in a captive insurance company as well as from the Company’s 50% interest in a joint venture in Korea. See the Non-GAAP Measures section of this Item, above.

~~Net income attributable to noncontrolling interest was less than $0.1 million in both the third quarter of 2023 and 2022.~~

Foreign exchange negatively impacted the Company’s third quarter of 2023 results by approximately 1% compared to the third quarter of 2022 driven by the impact from foreign currency translation on earnings as well as higher foreign exchange transaction losses in the current quarter as compared to the prior year third quarter.

~~Consolidated Operations Review – Comparison of the First Nine Months of 2023 with the First Nine Months of 2022~~

Net sales were $1,486.2 million in the first nine months of 2023 compared to $1,458.8 million in the first nine months of 2022. The net sales increase of $27.4 million or 2% year-over-year reflects increases in selling price and product mix of approximately 11%, partially offset by a decline in sales volumes of approximately 9%. The increase in selling price and product mix was primarily driven by year-over-year impact of our value-based pricing initiatives. The decline in sales volumes was primarily attributable to softer end market conditions across all regions, the Company’s value-based pricing initiatives and customer order patterns, as well as the impacts of the ongoing war in Ukraine in the EMEA segment, and the wind-down of the tolling agreement for products previously divested related to the Combination, partially offset by new business wins, as mentioned above.

~~COGS were $951.7 million in the first nine months of 2023 compared to $1,002.4 million in the first nine months of 2022. The decrease in COGS of $50.7 million or 5% reflects~~ lower spend on the decline in current year sales volumes, which more than offset higher costs due to inflationary pressures in the Company’s global raw material, manufacturing and supply chain and logistics costs compared to the prior year.

Gross profit in the first nine months of 2023 increased $78.1 million or 17% from the first nine months of 2022. The Company’s reported gross margin in the first nine months of 2023 was 36.0% compared to 31.3% in the first nine months of 2022. The Company’s current year improvement in gross margin was primarily driven by the year-over-year impact of our value-based pricing initiatives and, to a lesser extent, decreases in raw material and other input costs.

SG&A in the first nine months of 2023 increased $19.1 million or 6% compared to the first nine months of 2022 driven by higher labor-related costs including year-over-year inflationary increases and higher levels of incentive compensation on improved Company performance, partially offset by lower SG&A due to foreign currency translation compared to the prior year.

The Company incurred $8.0 million of Combination, integration and other acquisition related operating expenses in the first nine months of 2022, primarily due to various professional fees related to legal, financial and other advisory and consultant expenses for integration activities including internal control remediation. There were no similar costs in the first nine months of 2023. See the Non-GAAP Measures section of this Item, above.

The Company incurred Restructuring and related charges of $6.0 million and credits of $0.6 million during the first nine months of 2023 and 2022, respectively, related to reductions in headcount and site closures under the Company’s previous and current restructuring programs. See the Non-GAAP Measures section of this Item, above.

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~~Quaker Chemical Corporation~~

~~Management’s Discussion and Analysis~~

Operating income in the first nine months of 2023 was $166.2 million compared to $105.9 million in the first nine months of 2022. Excluding non-recurring and non-core expenses that are not indicative of the future operating performance of the Company described in the Non-GAAP Measures section of this Item, above, the Company’s current year non-GAAP operating income increased to $176.9 million for the first nine months of 2023 compared to $128.9 million in the prior year’s first nine months primarily due to higher gross profit partially offset by higher SG&A, described above.

The Company had Other expense of $8.6 million in the first nine months of 2023 compared to $10.5 million in the first nine months of 2022. The first nine months of 2023 and 2022 results include $1.0 million and $1.1 million, respectively, of facility remediation recoveries, while the prior year’s first nine months of 2022 Other expense also includes a $6.8 million of loss on extinguishment of debt related to the Company’s refinancing the Original Credit Facility. See the Non-GAAP Measures section of this Item, above. Also, there was higher foreign currency transaction losses in 2023 compared to 2022.

Interest expense, net, increased $18.5 million in the first nine months of 2023 compared to the first nine months of 2022, due to an increase in interest rates in the current year partially offset by lower borrowings outstanding as compared to the prior year.

The Company’s effective tax rates for the first nine months of 2023 and 2022 were 31.1% and 19.2%, respectively. The Company’s effective tax rate for the nine months ended September 30, 2023 was primarily impacted by changes to the valuation allowance for and the usage of foreign tax credits due to an enacted law change in Brazil and additional guidance from the U.S Department of Treasury, foreign tax inclusions, withholding taxes, share-based compensation, state income taxes, and the impact of forecasted pre-tax earnings and the mix of such earnings. Comparatively, the effective tax rate for the nine months ended September 30, 2022 was impacted by foreign tax inclusions, changes in the valuation allowance for foreign tax credits, the impact of audit settlements, a reduction in reserves for uncertain tax positions, withholding taxes, and the impact of forecasted pre-tax earnings and the mix of such earnings. In addition, the effective tax rate during the nine months ended September 30, 2022 was impacted by the Company recording earnings of one of its subsidiaries at a statutory tax rate of 25% while the recertification of its concessionary 15% tax rate was pending receipt. Excluding the impact of non-core items in each period, described in the Non-GAAP Measures section of this Item, above, the Company estimates that its effective tax rates for the first nine months of 2023 and 2022 would have been approximately 28% and 26%, respectively. The Company expects continued volatility in its effective tax rates due to several factors, including the timing and scope of tax audits and the expiration of applicable statutes of limitations as they relate to uncertain tax positions, the unpredictability of the timing and amount of certain incentives in various tax jurisdictions, the treatment of certain acquisition-related costs and the timing and amount of certain share-based compensation-related tax benefits, among other factors.

Equity in net income (loss) of associated companies increased $11.3 million in the first nine months of 2023 compared to the first nine months of 2022, primarily due to higher current year income from the Company’s interest in a captive insurance company (see the Non-GAAP Measures section of this Item, above), as well as higher current year income from the Company’s 50% interest in a joint venture in Korea.

Net income attributable to noncontrolling interest was less than $0.1 million in both the first ~~nine months~~quarter of ~~2023~~2024 and ~~2022.~~2023.

Foreign exchange ~~unfavorably~~negatively impacted the Company’s first ~~nine months~~quarter of ~~2023~~2024 results by approximately 3%1% compared to the first quarter of 2023 driven by the impact from foreign currency translation on earnings as well as higher foreign exchange transaction losses in the current ~~year~~quarter as compared to the prior ~~year’s~~year first ~~nine months.~~quarter.

Reportable Segments Review - Comparison of the ~~Third~~First Quarter of ~~2023~~2024 with the ~~Third~~First Quarter of ~~2022~~2023

The Company’s reportable segments reflect the structure of the Company’s internal organization, the method by which the Company’s resources are allocated and the manner by which the chief operating decision maker of the Company assesses ~~its~~ performance. ~~During the first quarter of 2023, the~~The Company ~~reorganized its executive management team to align with its new business structure. The Company’s new structure includes~~has three reportable segments: (i) Americas; (ii) EMEA; and (iii) Asia/Pacific.

The three segments are comprised of the assets and operations in each respective region, including assets and operations formerly included in the Global Specialty Businesses segment. Prior to the Company’s reorganization, the Company’s historical reportable segments were: (i) Americas; (ii) EMEA; (iii) Asia/Pacific; and (iv) Global Specialty Businesses. ~~All prior period information has been recast to reflect the Company’s new reportable segments.~~

Segment operating earnings for the Company’s reportable segments are comprised of net sales less COGS and SG&A directly related to the respective segment’s product sales. Operating expenses not directly attributable to the ~~net sales of each respective segment,~~segments, such as certain corporate and administrative costs ~~Combination, integration and other acquisition-related expenses~~ and Restructuring and related charges, ~~(credits),~~ net, are excluded from segment results. . Other items not specifically identified with the Company’s reportable segments include Interest expense, net, and Other income (expense) ~~income,~~, net.

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~~Quaker Chemical Corporation~~

~~Management’s Discussion and Analysis~~

Americas

Americas represented approximately ~~50%~~49% of the Company’s consolidated net sales in the ~~third~~first quarter of ~~2023.~~2024. The segment’s net sales were ~~$245.9~~$229.8 million, a decrease of ~~$8.8~~$21.7 million or 3%9%, compared to the ~~third~~first quarter of ~~2022.~~2023. This was driven by a decrease in sales volumes of approximately ~~8%, partially offset by higher~~5% and lower selling price and product mix of approximately ~~3% and~~5%, partially offset by a favorable impact offrom foreign currency translation of 2%1%. The current quarter decline in sales volumes compared to the prior year was primarily driven by softer market conditions and customer order patterns, ~~and the Company’s value-based pricing initiatives,~~ partially offset by new business wins. The ~~increase~~decrease in selling price and product mix was primarily ~~driven by the year-over-year impact of price increases.~~attributable to our index-based customer contracts. The favorable foreign exchange impact was primarily due to the weakening of the U.S. dollar against the Mexican peso ~~as this exchange rate averaged 17.06 Mexican peso per U.S. dollar~~ in the ~~third~~first quarter of ~~2023~~2024 compared to ~~20.23 Mexican peso~~ ~~per U.S. dollar in~~ the ~~third~~first quarter of ~~2022.~~2023. This segment’s operating earnings were ~~$69.1~~$66.8 million, an increase of ~~$2.4~~$0.6 million or 4%1%, compared to the ~~third~~first quarter of ~~2022~~2023, primarily driven by an improvement in the segment’s operating ~~margins.~~margins for the reasons described in our consolidated results.

Table of Contents

Quaker Chemical Corporation

Management’s Discussion and Analysis

EMEA

EMEA represented approximately 29% of the Company’s consolidated net sales in the ~~third~~first quarter of ~~2023~~2024. The segment’s net sales were ~~$139.6~~$138.4 million, ~~an increase~~a decrease of ~~$5.2~~$14.0 million or 4%9%, compared to the ~~third~~first quarter of ~~2022~~2023. This was driven by ~~higher~~lower selling price and product mix of approximately 6% and a decrease in sales volumes of 4%, partially offset by a favorable impact from foreign currency translation of ~~7%, partially offset by a decrease in sales volumes of 9%~~1%. The ~~increase~~decrease in selling price and product mix was primarily attributable to our index-based customer contracts. The decline in sales volumes was primarily driven by ~~the year-over-year impact of price increases.~~ softer market conditions and customer order patterns, partially offset by new business wins. The favorable foreign currency translation impact was primarily due to the weakening of the U.S. dollar against the euro ~~as this exchange rate averaged 1.09 U.S. dollars per euro~~ in the ~~third~~first quarter of ~~2023~~2024 compared to ~~1.01 U.S. dollars per euro~~ in the ~~third~~first quarter of 2022. The decline in sales volumes was primarily driven by softer market conditions, the Company’s value-based pricing initiatives, customer order patterns and the impacts of the wind-down of the tolling agreement for products previously divested related to the Combination as well as the ongoing war in Ukraine, partially offset by new business wins.2023. This segment’s operating earnings were ~~$27.9~~$29.6 million, an increase of ~~$12.4~~$2.0 million or ~~80%~~7%, compared to the ~~third~~first quarter of ~~2022~~2023 primarily driven by an ~~increase in net sales and an~~ improvement in operating ~~margins.~~margins for the reasons described in our consolidated results.

Asia/Pacific

Asia/Pacific represented approximately ~~21%~~22% of the Company’s consolidated net sales in the ~~third~~first quarter of ~~2023.~~2024. The segment’s net sales were ~~$105.1~~$101.6 million, an increase of ~~$1.9~~$5.3 million or 2%6%, compared to the ~~third~~first quarter of ~~2022.~~2023. This was driven by higher sales volumes of 6%15%, partially offset by a decrease in selling price and product mix of 5% and an unfavorable impact from foreign currency translation of 4%. The increase in sales volumes was primarily driven by an increase in end market activity ~~albeit at lower levels~~compared to the prior year period and new business ~~wins, partially offset by the impacts of the Company’s value-based pricing initiatives.~~wins. The ~~increase~~decrease in selling price and product mix was primarily ~~driven by year-over-year impact of price increases.~~attributable to our index-based customer contracts. The unfavorable foreign exchange impact was primarily due to the strengthening of the U.S. dollar against the Chinese renminbi ~~as this exchange rate averaged 7.24 Chinese renminbi per U.S. dollar~~ in the ~~third~~first quarter of ~~2023~~2024 compared to ~~6.84 Chinese~~ ~~renminbi per U.S. dollar in~~ the ~~third~~first quarter of ~~2022.~~2023. This segment’s operating earnings were ~~$31.0~~$30.4 million, an increase of ~~$4.2~~$2.7 million or ~~16%~~10% compared to the ~~third~~first quarter of ~~2022~~2023 primarily driven by an increase in net sales and an improvement in operating margins ~~as well as slightly lower levels of SG&A.~~

~~Reportable Segments Review - Comparison of~~for the ~~First Nine Months of 2023 with the First Nine Months of 2022~~

~~Americas~~

~~Americas represented approximately~~ ~~50%~~ ~~of the Company’s~~reasons described in our consolidated ~~net sales in the first nine months of 2023. The segment’s net sales were~~ ~~$750.5 million, an increase of~~ ~~$48.0 million~~ or 7% ~~compared to the first nine months of~~ ~~2022. This was driven by higher selling price and product mix of~~ ~~12% and a favorable impact of foreign currency translation of 1%, partially offset by a decrease in sales volumes of~~ 6%~~. The increase in selling price and product mix was primarily driven by the year-over-year impact of price increases.~~ ~~The favorable foreign currency impact was primarily due to the weakening of the U.S. dollar against the Mexican peso as this exchange rate averaged 17.78 Mexican peso per U.S. dollar in~~ ~~the first nine months of 2023~~ ~~compared to 20.25 Mexican peso~~ ~~per U.S. dollar in~~ ~~the first nine months of~~ 2022. The decline in sales volumes compared to the prior year was primarily driven by softer market conditions, the Company’s value-based pricing initiatives, customer order patterns, and the wind-down of the tolling agreement for products previously divested related to the Combination, partially offset by new business win~~s, as mentioned above. This segment’s operating earnings were~~ ~~$204.3 million, an increase of~~ ~~$40.2 million~~ or ~~25%~~ ~~compared to the first nine~~ ~~months of 2022~~ ~~primarily driven by higher net sales coupled with an improvement in operating margins, as mentioned above.~~

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~~Quaker Chemical Corporation~~

~~Management’s Discussion and Analysis~~

~~EMEA~~

~~EMEA represented approximately 30% of the Company’s consolidated net sales in the first~~ ~~nine~~ ~~months of~~ ~~2023. The segment’s net sales were $435.6 million, an increase of $8.9 million or 2% compared to the first~~ ~~nine~~ months of 2022. This was a result of higher selling price and product mix of 13% and a favorable impact of foreign currency translation of approximately 1%, partially offset by a decrease in sales volumes of 12%. ~~The increase in selling price and product mix was primarily driven by the year-over-year impact of price increases.~~ ~~The favorable foreign curren~~cy impact was primarily due to the weakening of the U.S. dollar against the euro as this exchange rate averaged 1.08 U.S. dollars per euro in the first nine months of 2023 compared to 1.07 U.S. dollars per euro ~~in the first~~ ~~nine~~ months of 2022. The decline in sales volumes was primarily driven by softer market conditions, the Company’s value-based pricing initiatives, customer order patterns, the impacts of the ongoing war in Ukraine and the wind-down of the tolling agreement for products previously divested related to the Combination, partially offset by new business wins. This segment’s operating earnings were $81.1 million, an increase of $22.3 million or 38% compared to the first ~~nine~~ ~~months of 2022 primarily driven by higher net sales coupled with an improvement in operating margins, as mentioned above~~.

~~Asia/Pacific~~

~~Asia/Pacific represented approximately~~ ~~20%~~ ~~of the Company’s consolidated net sales in the first nine months of 2023. The segment’s net sales were~~ ~~$300.1 million,~~ ~~a decrease of~~ ~~$29.4 million~~ or 9% ~~compared to the first nine months of~~ ~~2022. This was driven by lower sales volumes of~~ ~~10%~~ ~~and an unfavorable impact of foreign currency translation of~~ ~~5%, partially offset by~~ ~~higher selling price and product mix of~~ ~~6%.~~The decline in sales volumes was primarily driven by softer market conditions, customer order patterns, including the impact of COVID-19 lockdown measures, primarily in China, and the Company’s value-based pricing initiatives, partially offset by new business wins.~~The unfavorable foreign exchange impact was primarily due to the strengthening of the U.S. dollar against the Chinese renminbi as this exchange rate averaged 7.02 Chinese renminbi per U.S. dollar in the first nine~~ ~~months of~~ ~~2023 compared to 6.59 Chinese~~ ~~renminbi per U.S. dollar in~~ ~~the first nine~~ ~~months of 2022. The increase in selling price and product mix was primarily driven by year-over-year impact of price increases, as mentioned above. This segment’s operating earnings were~~ ~~$86.6 million, an increase of~~ ~~$10.5 million~~ or ~~14%~~ ~~compared to the first nine~~ ~~months of 2022. This was primarily driven by a~~ ~~recovery in operating margins as well as slightly lower levels of SG&A, which more than offset the decline in net sales, as mentioned above.~~results.

Factors That May Affect Our Future Results

~~(Cautionary Statements Under the Private Securities Litigation Reform Act of 1995)~~

Certain information included in this Report and other materials filed or to be filed by us with the SEC, as well as information included in oral statements or other written statements made or to be made by us, contain or may contain forward-looking statements ~~within~~that fall under the ~~meaning~~safe harbor provisions of ~~Section 27A~~the Private Securities Litigation Reform Act of 1995 and the Securities Act of 1933, ~~as amended, and Section 21E of the Securities Exchange Act of 1934,~~ as amended. These statements can be identified by the fact that they do not relate strictly to historical or current ~~facts.~~facts and can generally be identified by words such as “may,” “could,” “should,” “would,” “believe,” “expect,” “anticipate,” “estimate,” “intend,” “outlook,” “target,” “possible,” “potential,” “plan” or similar expressions, but these terms are not the exclusive means of identifying such statements. We have based these forward-looking statements on ~~our current~~assumptions, projections and expectations about future events that we believe are reasonable based on currently available information, including statements regarding the potential effects of the ~~COVID-19 pandemic,~~conflicts in Ukraine and the ~~conflict between Russia~~Middle East, inflation, and ~~Ukraine, inflation, bank failures, higher interest rate environment,~~ global supply chain constraints on the Company’s business, results of operations, and financial ~~condition,~~condition; our expectation that we will maintain sufficient liquidity and remain in compliance with the terms of the Company’s credit ~~facility,~~facility; expectations about future demand and raw material ~~costs~~costs; and statements regarding the impact of increased raw material costs and pricing initiatives.

These forward-looking statements include statements with respect to our beliefs, plans, objectives, goals, expectations, anticipations, intentions, financial condition, results of operations, future performance, and business, ~~including:~~

•~~the impacts on our business as a result~~which may differ materially from expectations, estimates and projections of ~~the COVID-19 pandemic;~~many factors, including, but not limited to:

•the timing and extent of the projected impacts on our business ~~as a result~~ of acts of war or terrorism, including the ~~Ukrainian~~conflicts in Ukraine and ~~Russian conflict~~the Middle East, and actions taken by various governments and governmental organizations in response;

•~~the potential impacts of the automotive industry labor dispute~~

•inflationary pressures, cost increases and the impacts of constraints and disruptions in the global supply chain;

•the potential timing, impacts, benefits and other uncertainties of ~~acquisitions;~~acquisitions and divestitures, including our ability to realize synergies, integrate acquisitions or separate divested assets and businesses;

•the potential for changes in global and regional economic conditions and for a variety of macroeconomic events, including the possibility of global or regional slowdowns or recessions, a global pandemic, interest rate changes, inflation, ~~generally, continued~~deflation or ~~accelerated cost increases in prices of~~stagflation and its impact on our business, raw materials ~~such as oil and increasing interest rates, to~~purchases and/or profitability of our business impact the value of our ~~assets or result in asset impairments or otherwise adversely affect our business;~~assets; and

•our ~~current and~~ future results and plans including our sustainability ~~goals;~~goals and enterprise strategy

•~~statements that include the words “may,” “could,” “should,” “would,” “believe,” “expect,” “anticipate,” “estimate,” “intend,” “plan” or similar expressions.~~

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~~Quaker Chemical Corporation~~

~~Management’s Discussion and Analysis~~

Such statements include information relating to current and future business activities, operational matters, capital spending, and financing sources. From time to time, forward-looking statements are also included in the Company’s other periodic reports on Forms 10-K, 10-Q and 8-K, press releases, and other materials released to, or statements made to, the public.

Table of Contents

Quaker Chemical Corporation

Management’s Discussion and Analysis

Any or all of the forward-looking statements in this Report, in the Company’s ~~2022~~2023 Form 10-K and in any other public statements we make may turn out to be wrong. This can occur as a result of inaccurate assumptions or as a consequence of known or unknown risks and uncertainties. Many factors discussed in this Report will be important in determining our future performance. Consequently, actual results may differ materially from those that might be anticipated from our forward-looking statements.

We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise. However, any further disclosures made on related subjects in the Company’s subsequent reports on Forms 10-K, 10-Q, 8-K and other related filings should be consulted. A major risk is that demand for the Company’s products and services is largely derived from the demand for our customers’ products, which subjects the Company to uncertainties related to downturns in a customer’s business and unanticipated customer production slowdowns and ~~shutdowns, including as is currently being experienced by many automotive industry companies as a result of supply chain disruptions and labor disputes.~~shutdowns.

Other major risks and uncertainties include, but are not limited to, ~~the primary and secondary impacts of the COVID-19 pandemic, as well as~~ inflationary pressures, including the potential for continued significant increases in raw material ~~costs,~~costs; supply chain ~~disruptions,~~disruptions; customer financial ~~instability,~~instability; rising interest rates and the possibility of economic ~~recession, worldwide~~recession; economic and political disruptions including the impacts of the military conflicts between Russia and Ukraine and between Israel and ~~Hamas,~~Hamas; tariffs, trade restrictions and the economic and other sanctions imposed by other nations on Russia and/or other government organizations; suspensions of activities in Russia by many multinational companies and the potential expansion of military ~~activity,~~activity; foreign currency ~~fluctuations,~~fluctuations; significant changes in applicable tax rates and ~~regulations,~~regulations; future terrorist attacks and other acts of ~~violence,~~violence; the ~~impact~~impacts of consolidation in our industry, including loss or consolidation of a major ~~customer~~customer; and the potential occurrence of cyber-security breaches, cyber-security attacks and other security incidents.

Furthermore, the Company is subject to the same business cycles as those experienced by our customers in the steel, automobile, aircraft, industrial equipment, aluminum, and durable goods industries. Other factors could also adversely affect us, including those related to acquisitions and the integration of acquired businesses.

Therefore, we caution you not to place undue reliance on our forward-looking statements. For more information regarding these risks and uncertainties as well as certain additional risks that we face, refer to the Risk Factors section, which appears in Item 1A in our ~~2022~~2023 Form 10-K and in our quarterly and other reports filed from time to time with the SEC. This discussion is provided as permitted by the Private Securities Litigation Reform Act of 1995.

Quaker Houghton on the Internet

Financial results, news and other information about Quaker Houghton can be accessed from the Company’s website at https://www.quakerhoughton.com. This site includes important information on the Company’s locations, products and services, financial reports, news releases and career opportunities. The Company’s periodic and current reports on Forms 10-K, 10-Q, 8-K, and other filings, including exhibits and supplemental schedules filed therewith, and amendments to those reports, filed with the SEC are available on the Company’s website, free of charge, as soon as reasonably practicable after they are electronically filed with or furnished to the SEC. Information contained on, or that may be accessed through, the Company’s website is not incorporated by reference in this Report and, accordingly, you should not consider that information part of this Report.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk.

We have evaluated the information required under this Item that was disclosed in Part II, Item 7A, of our Annual Report on Form 10-K for the year ended December 31, ~~2022,~~2023, and we believe there has been no material change to that ~~information, except the interest rate risk noted below.~~

~~Interest Rate Risk~~

~~During June 2022, the Company entered into an amendment to its primary credit facility (the “Original Credit Facility”, or as amended, the “Credit Facility”). See~~ ~~Note 20 of Notes to Consolidated Financial Statements included in Item 8 of our 2022~~ Form 10-K and Note 14 of Notes to Condensed Consolidated Financial Statements, which appears in Item 1 of this Report. As of December 31, 2022, borrowings under the Credit Facility bear interest at either term Secured Overnight Financing Rate (“SOFR”) or a base rate, in each case, plus an applicable margin based upon the Company’s consolidated net leverage ratio, and, in the case of term SOFR, a spread adjustment equal to 0.10% per annum. As a result of the variable interest rates applicable under the Credit Facility, if interest rates rise significantly, the cost of debt to the Company will increase. This may have an adverse effect on the Company, depending on the extent of the Company’s borrowings outstanding throughout a given year. As of December 31, 2022, and ~~September 30, 2023~~, the Company had outstanding borrowings under the Credit Facility of approximately $943.5 million and $814.8 million, respectively. The weighted average interest rate applicable on outstanding borrowings under the Credit Facility was approximately 4.9% and ~~6.3%~~ ~~as of December 31, 2022, and~~ ~~September 30, 2023~~, respectively. The weighted average interest rate applicable on outstanding borrowings under the Original Credit Facility and the Credit Facility during the year ended December 31, 2022 was approximately 3.0% and the nine months ended ~~September 30, 2023~~ ~~was approximately~~ ~~6.1%~~. An interest rate change of 100 basis points would result in an approximate $9.4 million and $8.1 million increase or decrease to interest expense for the year ended December 31, 2022 and the year ended December 31, 2023, respectively.

In order to manage the Company’s exposure to variable interest rate risk associated with the Credit Facility, such as SOFR, in the first quarter of 2023, the Company entered into $300.0 million notional amounts of three year interest rate swaps to convert a portion of the Company’s variable rate borrowings into an average fixed rate obligation of 3.64% plus an applicable margin as provided in the Credit Facility based on the Company’s consolidated net leverage ratio. As of September 30, 2023, the aggregate interest rate on the swaps, including the fixed base rate plus the applicable margin, was 5.3%. These interest rate swaps are designated and qualify as cash flow hedges. The Company has previously used derivative financial instruments primarily for the purpose of hedging exposures to fluctuations in interest rates.information.

Item 4. Controls and Procedures.

Evaluation of disclosure controls and procedures. As required by Rule 13a-15(b) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), our management, including our principal executive officer and principal financial officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this Report. Based on that evaluation, our principal executive officer and our principal financial officer have concluded that, as of ~~September 30, 2023,~~March 31, 2024, the end of the period covered by this Report, our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) were effective.

Changes in internal control over financial reporting. As required by Rule 13a-15(d) under the Exchange Act, our management, including our principal executive officer and principal financial officer, has evaluated our internal control over financial reporting to determine whether any changes to our internal control over financial reporting occurred during the quarter ended ~~September 30, 2023~~March 31, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Based on that evaluation, there were no changes that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting during the quarter ended ~~September 30, 2023.~~March 31, 2024.

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PART II.

OTHER INFORMATION

Items 3 and 4 of Part II are inapplicable and have been omitted.

Item 1. Legal Proceedings.

Incorporated by reference is the information in Note 18 of Notes to the Condensed Consolidated Financial Statements in Part I, Item 1, of this Report.

Item 1A. Risk Factors.

The Company’s business, financial condition, results of operations and cash flows are subject to various risks that could cause actual results to vary materially from recent results or from anticipated future results. In addition to the other information set forth in this Report, you should carefully consider the risk factors previously disclosed in Part I, Item 1A of ~~our 2022~~the Company’s 2023 Form 10-K. There have been no material changes to the risk factors described therein.

Item 2. Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities.

The following table sets forth information concerning shares of the Company’s common stock acquired by the Company during the period covered by this Report:

Period (a)
Total Number
of Shares
Purchased (1) (b)
Average
Price Paid
Per Share (2) (c)
Total Number of
Shares Purchased as part of Publicly Announced Plans or Programs (d)
Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs (3)
July 1 - July 31 2,661 $ 195.06 — $ 86,865,026
August 1 - August 31 130 $ 204.79 — $ 86,865,026
September 1 - September 30 — $ — — $ 86,865,026
Total 2,791 $ 195.37 — $ 86,865,026


Period	(a) Total Number of Shares Purchased (1)	(b) Average Price Paid Per Share (2)		(c) Total Number of Shares Purchased as part of Publicly Announced Plans or Programs	(d) Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs (3)
January 1 - January 31	281	$	206.14	—	$	150,000,000
February 1 - February 29	357	$	197.96	—	$	150,000,000
March 1 - March 31	6,479	$	200.16	—	$	150,000,000
Total	7,117	$	200.29	—	$	150,000,000

(1)All of these shares were acquired from employees related to the surrender of Quaker Chemical Corporation shares in payment of the exercise price of employee stock options exercised or for the payment of taxes upon exercise of employee stock options or the vesting of restricted stock awards or units.

(2)The price paid for shares acquired from employees pursuant to employee benefit and share-based compensation plans is based on the closing price of the Company’s common stock on the date of exercise or vesting as specified by the plan pursuant to which the applicable option, restricted stock award, or restricted stock unit was granted.

(3)On ~~May 6, 2015,~~February 28, 2024, the Board of Directors of the Company approved, and the Company announced, a share repurchase program, pursuant to which the Company is authorized to repurchase up to ~~$100,000,000~~$150,000,000 of Quaker Chemical Corporation common stock (the ~~“2015~~“2024 Share Repurchase Program”), and it has no expiration date. There were no shares acquired by the Company pursuant to the ~~2015~~2024 Share Repurchase Program during the quarter ended ~~September 30, 2023.~~March 31, 2024.

Limitation on the Payment of Dividends

The Credit Facility has certain limitations on the payment of dividends and other so-called restricted payment covenants. See Note 14 of Notes to Condensed Consolidated Financial Statements, in Part I, Item 1, of this Report.

Item 5. Other Information.

Insider Trading Arrangements and Policies

No director or officer (as defined in Rule 16a-1(f) promulgated under the Exchange Act) of the Company adopted or terminated any Rule 10b5-1 trading arrangement or any non-Rule 10b5-1 trading arrangement (as such terms are defined in Item 408 of Regulation S-K) during the period covered by this ~~Report except as follows:~~

On August 31, 2023, Jeewat Bijlani, Executive Vice President, Chief Strategy Officer, entered into a Rule 10b5-1 written trading arrangement intended to satisfy the affirmative defense of Rule 10b5-1(c) under the Securities Exchange Act of 1934, as amended. Mr. Bijlani’s trading arrangement covers the sale of up to 2,900 shares of Company common stock and the exercise and sale of up to 6,338 shares of Company common stock upon the exercise of incentive and non-qualified stock options from December 1, 2023 until July 31, 2024.Report.

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Item 6. Exhibits.

(a) Exhibits


3.1	–	Amended and Restated Articles of Incorporation (as amended through July 24, 2019). Incorporated by reference to Exhibit 3.1 as filed by the Registrant with its quarterly report on Form 10-Q filed on August 1, 2019.
3.2	–	Amended and Restated By-laws (effective December 19, 2022). Incorporated by reference to Exhibit 3.1 as filed by the Registrant within its current report on Form 8-K on December 20, 2022.
31.1	–	Certification of Chief Executive Officer of the Company pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934.*
31.2	–	Certification of Chief Financial Officer of the Company pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934.*
32.1	–	Certification of Chief Executive Officer of the Company Pursuant to 18 U.S. C. Section 1350.**
32.2	–	Certification of Chief Financial Officer of the Company Pursuant to 18 U.S. C. Section 1350.**
101.INS	–	Inline XBRL Instance Document*
101.SCH	–	Inline XBRL Taxonomy Schema Document*
101.CAL	–	Inline XBRL Taxonomy Calculation Linkbase Document*
101.DEF	–	Inline XBRL Taxonomy Definition Linkbase Document*
101.LAB	–	Inline XBRL Taxonomy Label Linkbase Document*
101.PRE	–	Inline XBRL Taxonomy Presentation Linkbase Document*
104	–	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101.INS)*

* Filed herewith.

** Furnished herewith.

*********

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Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


			QUAKER CHEMICAL CORPORATION
			(Registrant)

			/s/ Shane W. Hostetter
Date: ~~November~~May 2, ~~2023~~2024			Shane W. Hostetter, Executive Vice President, Chief Financial Officer (officer duly authorized on behalf of, and principal financial officer of, the Registrant)

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	Three Months Ended September 30, 2022
	Americas		EMEA		Asia/Pacific		Consolidated Total
Customer Industries
Metals	$	67,943	$	32,748	$	51,341	$	152,032
Metalworking and other	186,735		101,638		51,813		340,186



	$	254,678	$	134,386	$	103,154	$	492,218

Timing of Revenue Recognized
Product sales at a point in time	$	243,699	$	124,566	$	99,929	$	468,194
Services transferred over time	10,979		9,820		3,225		24,024
	$	254,678	$	134,386	$	103,154	$	492,218


	Nine Months Ended September 30, 2022
	Americas		EMEA		Asia/Pacific		Consolidated Total
Customer Industries
Metals	$	185,784	$	107,163	$	163,239	$	456,186
Metalworking and other	516,796		319,576		166,219		1,002,591


	$	702,580	$	426,739	$	329,458	$	1,458,777

Timing of Revenue Recognized
Product sales at a point in time	$	669,945	$	396,944	$	321,031	$	1,387,920
Services transferred over time	32,635		29,795		8,427		70,857
	$	702,580	$	426,739	$	329,458	$	1,458,777


	Restructuring Programs
Accrued restructuring as of December 31, 2022	$	5,483
Restructuring and related charges, net	6,034
Cash payments	(7,914)
Currency translation adjustments	(13)
Accrued restructuring as of September 30, 2023	$	3,590


	Three Months Ended September 30,								Nine Months Ended September 30,
	Pension Benefits				Other Postretirement Benefits				Pension Benefits				Other Postretirement Benefits
	2023		2022		2023		2022		2023		2022		2023		2022
Service cost	$	109	$	166	$	—	$	1	$	320	$	520	$	—	$	1
Interest cost	2,487		1,272		14		8		7,452		3,949		51		19
Expected return on plan assets	(2,033)		(1,942)		—		—		(6,056)		(6,038)		—		—
Actuarial loss (gain) amortization	103		238		(36)		(23)		308		743		(95)		(70)
Prior service cost (income) amortization	18		3		(4)		(8)		26		8		(12)		(17)
Net periodic benefit cost (income)	$	684	$	(263)	$	(26)	$	(22)	$	2,050	$	(818)	$	(56)	$	(67)


	Total Fair Value		Fair Value Measurements as of September 30, 2023 Using Fair Value Hierarchy
Assets			Level 1		Level 2		Level 3
Company-owned life insurance	$	285	$	—	$	285	$	—
Total	$	285	$	—	$	285	$	—


	Total Fair Value		Fair Value Measurements as of December 31, 2022 Using Fair Value Hierarchy
Assets			Level 1		Level 2		Level 3
Company-owned life insurance	$	2,114	$	—	$	2,114	$	—
Total	$	2,114	$	—	$	2,114	$	—