What changed in this filing

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Item 1. Financial Statements

2023-05-04 compared with 2022-11-03 · 413 added, 1524 removed, 240 unchanged (89% of the section changed)

1 unchanged sentence

Quaker Chemical Corporation

Condensed Consolidated Statements of Income

Condensed Consolidated Statements of Operations

Dollars in thousands, except per share data)

Three Months Ended

Nine Months Ended

September 30,

Cost of goods sold (

excluding amortization expense - See Note 13

Net sales $ 500,148 $ 474,171

Cost of goods sold (excluding amortization expense - See Note 13) 326,698 328,100

Gross profit 173,450 146,071

Selling, general and administrative expenses 119,549 111,795

Restructuring and related (credits) charges, net

Restructuring and related charges, net 3,972 820

Combination, integration and other acquisition-related expenses — 4,053

Operating income 49,929 29,403

Other income (expense), net

Other expense, net ( 2,239 ) ( 2,206 )

Interest expense, net ( 13,242 ) ( 5,345 )

Income before taxes and equity in net income of

associated companies

Taxes on income before

equity in net income of associated

Income before equity in net income of associated

Equity in net (loss) income of associated companies

Income before taxes and equity in net income of associated companies 34,448 21,852

Taxes on income before equity in net income of associated Companies 9,533 2,866

Income before equity in net income of associated Companies 24,915 18,986

Equity in net income of associated companies 4,626 835

Net income 29,541 19,821

Net income attributable to noncontrolling interest 7 5

1 unchanged sentence

Per share data:

Net income attributable to Quaker Chemical Corporation

common shareholders – basic

Net income attributable to Quaker Chemical Corporation

common shareholders – diluted

Net income attributable to Quaker Chemical Corporation common shareholders – basic $ 1.64 $ 1.11

Net income attributable to Quaker Chemical Corporation common shareholders – diluted $ 1.64 $ 1.11

Dividends declared $ 0.435 $ 0.415

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

Table of Content

Quaker Chemical Corporation

2 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

Other comprehensive (loss) income, net of tax

Net income $ 29,541 $ 19,821

Other comprehensive income (loss), net of tax

Currency translation adjustments 14,468 ( 6,866 )

1 unchanged sentence

Current period change in fair value of derivatives 390 1,100

Unrealized loss on available-for-sale securities

Other comprehensive loss

Comprehensive (loss) income

Comprehensive

loss attributable to

noncontrolling interest

Comprehensive (loss) income attributable to Quaker Chemical

Unrealized gain (loss) on available-for-sale securities 334 ( 1,000 )

Other comprehensive income (loss) 15,066 ( 6,270 )

Comprehensive income 44,607 13,551

Comprehensive income attributable to noncontrolling interest ( 10 ) ( 6 )

Comprehensive income attributable to Quaker Chemical Corporation $ 44,597 $ 13,545

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

Table of Content

Quaker Chemical Corporation

1 unchanged sentence

Dollars in thousands, except par value)

September 30,

2023 December 31,

Current assets

2 unchanged sentences

Raw materials and supplies 148,119 151,105

Work-in-process

and finished goods

Work-in-process and finished goods 145,375 133,743

Prepaid expenses and other current assets 63,189 55,438

Total current

Property, plant and equipment,

Total current assets 1,029,301 994,137

Property, plant and equipment, at cost 439,367 428,190

Accumulated depreciation ( 236,279 ) ( 229,595 )

Property, plant and equipment,

Property, plant and equipment, net 203,088 198,595

Right of use lease assets 43,344 43,766

Goodwill 517,206 515,008

Other intangible assets, net 936,345 942,925

2 unchanged sentences

Other non-current assets 27,916 27,739

Total assets $ 2,858,463 $ 2,821,622

LIABILITIES AND EQUITY

7 unchanged sentences

Other accrued liabilities 90,513 86,873

Total current

Total current liabilities 369,412 354,786

Long-term debt 921,555 933,561

5 unchanged sentences

Commitments and contingencies (Note 18)

Common stock $

outstanding 2022 –

Common stock $ 1 par value;

authorized 30,000,000 shares;

issued and outstanding March 31, 2023 – 17,981,822 shares;

December 31, 2022 – 17,950,264 shares

17,982 17,950

Capital in excess of par value 929,674 928,288

1 unchanged sentence

Accumulated other comprehensive loss ( 123,177 ) ( 138,240 )

shareholders’ equity

Total Quaker shareholders’ equity 1,316,111 1,277,918

Noncontrolling interest 677 667

Total equity 1,316,788 1,278,585

Total liabilities and equity $ 2,858,463 $ 2,821,622

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

Table of Content

Quaker Chemical Corporation

1 unchanged sentence

Dollars in thousands)

Nine Months Ended

September 30,

Three Months Ended

Cash flows from operating activities

Adjustments to reconcile net income to net cash used in operating activities:

Net income $ 29,541 $ 19,821

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

Amortization of debt issuance costs 353 1,187

1 unchanged sentence

Equity in undistributed earnings of associated companies, net of dividends ( 4,401 ) 2,135

Acquisition-related fair value adjustments related to inventory

Deferred compensation, deferred taxes and other,

Deferred compensation, deferred taxes and other, net ( 2,231 ) ( 3,801 )

Share-based compensation 3,527 2,462

Loss on extinguishment of debt

Gain on disposal of property, plant,

equipment and other assets

Combination and other acquisition-related expenses, net of payments — ( 4,246 )

Restructuring and related (credits) charges

Restructuring and related charges 3,972 820

Pension and other postretirement benefits ( 415 ) ( 1,316 )

(Decrease) increase in cash from changes in current assets and current

liabilities, net of acquisitions:

(Decrease) increase in cash from changes in current assets and current liabilities, net of acquisitions:

Accounts receivable ( 3,974 ) ( 26,270 )

Inventories ( 5,792 ) ( 33,873 )

Prepaid expenses and other current assets ( 6,765 ) ( 6,506 )

1 unchanged sentence

Accounts payable and accrued liabilities 6,468 23,249

Net cash (used in) provided by operating activities

Net cash provided by (used in) operating activities 37,782 ( 6,299 )

Cash flows from investing activities

Investments in property,

plant and equipment

Investments in property, plant and equipment ( 6,161 ) ( 8,847 )

Payments related to acquisitions, net of cash acquired — ( 9,383 )

Proceeds from disposition of assets

Net cash used in investing activities ( 6,161 ) ( 18,230 )

1 unchanged sentence

Payments of long-term debt ( 4,703 ) ( 14,112 )

Proceeds from long-term debt

(Payments) borrowings on revolving credit facilities, net ( 9,776 ) 43,000

Borrowings (payments) on other debt, net

Financing-related debt issuance costs

Payments on other debt, net ( 469 ) ( 102 )

Dividends paid ( 7,809 ) ( 7,428 )

Stock options exercised, other

Net cash provided by (used in) financing activities

Other stock related activity ( 2,109 ) ( 801 )

Net cash (used in) provided by financing activities ( 24,866 ) 20,557

Effect of foreign exchange rate changes on cash 2,154 348

2 unchanged sentences

Cash and cash equivalents at the end of the period $ 189,872 $ 161,552

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

financial statements.

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

Table of Content

Quaker Chemical Corporation

1 unchanged sentence

Dollars in thousands, except per share amounts)

Stock Capital in

Par Value Retained

Earnings Accumulated

Comprehensive

Noncontrolling

Balance at December 31, 2020

Amounts reported in other

comprehensive loss

Share issuance and equity-based

compensation plans

Balance at March 31, 2021

Amounts reported in other

comprehensive gain

Share issuance and equity-based

compensation plans

Balance at June 30, 2021

Amounts reported in other

comprehensive loss

Share issuance and equity-based

compensation plans

Balance at September 30, 2021

Balance at December 31, 2021

Amounts reported in other

comprehensive (loss) income

Share issuance and equity-based

compensation plans

Balance at March 31, 2022

Amounts reported in other

comprehensive loss

Share issuance and equity-based

compensation plans

Balance at June 30, 2022

Amounts reported in other

comprehensive loss

Share issuance and equity-based

compensation plans

Balance at September 30, 2022

The accompanying notes are an integral part

of these unaudited condensed consolidated financial statements.

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

Balance as of December 31, 2022 $ 17,950 $ 928,288 $ 469,920 $ ( 138,240 ) $ 667 $ 1,278,585

Net income — — 29,534 — 7 29,541

Amounts reported in other comprehensive income — — — 15,063 3 15,066

Dividends ($ 0.435 per share)

— — ( 7,822 ) — — ( 7,822 )

Share issuance and equity-based compensation plans 32 1,386 — — — 1,418

Balance as of March 31, 2023 $ 17,982 $ 929,674 $ 491,632 $ ( 123,177 ) $ 677 $ 1,316,788

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

Quaker Chemical Corporation

Notes to Condensed Consolidated Financial Statements

(Dollars in thousands, except per share amounts,

unless otherwise stated)

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

Note 1 – Basis of Presentation and Description of Business

Basis of Presentation

As used in these Notes to Condensed Consolidated Financial Statements of

this Quarterly Report on Form 10-Q for the period

ended September 30, 2022 (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.

As used in these Notes to Condensed Consolidated Financial Statements,

the “Combination” refers to the legacy Quaker combination

with Houghton International, Inc.

As used in these Notes to Condensed Consolidated Financial Statements of this Quarterly Report on Form 10-Q for the period ended March 31, 2023 (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”).

The condensed consolidated financial statements included herein are unaudited

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

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 months ended September 30, 2022 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, 2021 (the “2021 Form 10-K”).

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 three months ended March 31, 2023 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 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;

(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, customer industry disaggregation, and goodwill.

See Notes 4, 5, and 13 of Notes to Condensed Consolidated Financial Statements.

Description of Business

The Company was organized in 1918, incorporated as a Pennsylvania

business corporation in 1930, and in August 2019

completed the Combination with Houghton to form Quaker Houghton.

Quaker Houghton is the global leader in industrial process

With a presence around the world, including

operations in over

countries, the Company’s customers

include thousands of

the world’s most advanced and specialized

steel, aluminum, automotive, aerospace, offshore, can,

mining, and metalworking

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

”) for various heavy industrial and manufacturing

applications throughout its

Europe, Middle East and Africa (“EMEA”);

Asia/Pacific;

Global Specialty

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 TM ”, for various heavy industrial and manufacturing applications.

Hyper-inflationary economies

Based on various indices or index compilations being used to monitor inflation

as well as economic instability,

Argentina’s and

Türkiye’s economies were

considered hyper-inflationary under U.S.

GAAP effective

July 1, 2018 and April 1, 2022, respectively.

of, and for the three and nine months ended September 30, 2022,

the Company's Argentine

and Turkish subsidiaries represented a

% of the Company’s consolidated

total assets and net sales, respectively.

During the three and nine months ended

September 30, 2022, the Company recorded $

million and $

million, respectively,

of remeasurement losses associated with the

applicable currency conversions related to Argentina

Comparatively, during the three

and nine months ended September

30, 2021, the Company recorded less than $

million and $

million, respectively, of

remeasurement losses associated with the

applicable currency conversions related to Argentina.

These losses were recorded within foreign exchange losses, net, which is a

component of other (expense) income, net, in the Company’s

Condensed Consolidated Statements of Income.

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 months ended March 31, 2023, the Company's Argentine and Turkish subsidiaries represented a combined 1 % and 2 % of the Company’s consolidated total assets and net sales, respectively.

During the three months ended March 31, 2023, the Company recorded $ 0.5 million of remeasurement losses associated with the applicable currency conversions related to Argentina and Türkiye.

Comparatively, during the three months ended March 31, 2022, the Company recorded $ 0.2 million of remeasurement losses associated with the applicable currency conversions related to Argentina.

These losses were recorded within foreign exchange losses, net, which is a component of Other expense, net, in the Company’s Condensed Consolidated Statements of Operations.

Note 2 – Business Acquisitions

2022 Acquisitions

Subsequent to the date of these financial statements, in October 2022,

the Company acquired a business that provides pickling and

rinsing products and services, which is part of the EMEA reportable segment,

for approximately

million EUR or approximately

This acquisition, along with the Company’s

January 2022 acquisition in the Americas (described below), which had

similar specializations 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

Quaker Chemical Corporation

Notes to Condensed Consolidated Financial Statements - Continued

(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 $

This business broadens the Company’s

product offerings within its existing metals and metalworking

business in the Americas region.

The Company allocated $

million of the purchase price to intangible assets, comprised of $

million of customer relationships to be amortized over

million of existing product technologies to be amortized

In addition, the Company recorded $

million of goodwill related to expected value not allocated to other acquired

assets, all of which is expected to be tax deductible in various jurisdictions in which

the Company operates.

During the third quarter

of 2022 the Company finalized post-closing adjustments that resulted in

the Company paying less than $

million of additional

purchase consideration.

Factors contributing to the purchase price that resulted in goodwill included

the acquisition of business

processes and personnel that will allow Quaker Houghton to better serve

its customers.

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 Global Specialty Businesses

reportable segment for approximately

million EUR or approximately $

This business expands the Company's

geographic presence in Germany as well as broadens its product offerings

and service capabilities within its existing impregnation

The results of operations of the January 2022 acquisitions subsequent to

the respective acquisition dates are included in the

unaudited Condensed Consolidated Statements of Income for the nine month

period ended September 30, 2022.

transaction expenses associated with these acquisitions are included

in Combination, integration and other acquisition-related

expenses in the Company’s unaudited

Condensed Consolidated Statements of Income.

Certain pro forma and other information is not

presented, as the operations of the acquisitions are not considered material

to the overall operations of the Company for the periods

The results of operations of the October acquisition is not included in the Consolidated Statements of

Operations because

the date of closing was subsequent to September 30, 2022.

Preliminary purchase price allocation of assets acquired and liabilities

assumed for this business acquired has not been presented as that information

is not available as of the date of these Condensed

Consolidated Financial Statements.

Previous Acquisitions

In November 2021, the Company acquired Baron Industries (“Baron”),

a privately held company that provides vacuum

impregnation services of castings, powder metals and electrical components

for its Global Specialty Businesses reportable segment for

million, including an initial cash payment of $

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 $

In September 2022, the Company paid $

million related to certain of these earnout provisions.

The Company recorded an

incremental earn-out expense of $

million during the three and nine months ended September 30, 2022 related to

these earnout

provisions, recorded within the financial

statement caption “Combination, integration and other acquisition-related

expenses” on the

Company’s Condensed Consolidated

Statements of Income.

As of September 30, 2022, the Company has remaining earnout liabilities

recorded on its Condensed Consolidated Balance Sheet of $

The Company allocated $

million of the purchase price to

intangible assets, $

million of property, plant

and equipment and $

million of other assets acquired net of liabilities assumed,

which includes $

million of cash acquired.

In addition, the Company recorded $

million of goodwill, all of which is expected to

be tax deductible.

Intangible assets comprised $

million of customer relationships to be amortized over

of existing product technology to be amortized over

Factors contributing to the purchase price that resulted in goodwill

included the acquisition of business processes and personnel that will allow Quaker

Houghton to better serve its customers.

the third quarter of 2022 the Company finalized post-closing adjustments

that resulted in the Company receiving less than $

In November 2021, the Company acquired a business that provides hydraulic

fluids, coolants, cleaners, and rust preventative oils

in Türkiye for its EMEA reportable segment for

million EUR or approximately $

In September 2021, the Company acquired the remaining interest in Grindaix

GmbH (“Grindaix”), a Germany-based, high-tech

provider of coolant control and delivery systems for its Global Specialty Businesses reportable

million EUR or

approximately $

million, which is gross of approximately $

million of cash acquired.

Previously, in February

Company acquired a

% ownership interest in Grindaix for

million EUR or approximately $

The Company recorded

its initial investment as an equity method investment within the Condensed

Consolidated Financial Statements and accounted for the

purchase of the remaining interest as a step acquisition whereby the Company

remeasured the previously held equity method

investment to its fair value.

In June 2021, the Company acquired certain assets for its chemical milling

maskants product line in the Global Specialty

Businesses reportable segment for

million EUR or approximately $

In October 2022, the Company acquired a business that provides pickling and rinsing products and services, which is part of the EMEA reportable segment, for approximately 3.5 million EUR or approximately $ 3.5 million.

This acquisition, along with the Company’s January 2022 acquisition in the Americas (described below), which had similar specializations 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.

As of March 31, 2023, the allocation of the purchase of this acquisition in October 2022 has not been finalized and the one-year measurement period has not ended.

Further adjustments may be necessary as a result of the Company’s ongoing assessment of additional information related to the fair value of assets acquired and liabilities assumed.

Quaker Chemical Corporation

Notes to Condensed Consolidated Financial Statements - Continued

(Dollars in thousands, except per share amounts,

unless otherwise stated)

In February 2021, the Company acquired a tin-plating solutions business

for the steel end market for $

acquisition is part of each of the Company’s

geographic reportable segments.

The Company allocated $

million of the purchase

price to intangible assets, comprised of $

million of customer relationships, to be amortized over

million of existing

product technology to be amortized over

million of a licensed trademark to be amortized over

the Company recorded $

million of goodwill, all of which is expected to be tax deductible in various jurisdictions

Factors contributing to the purchase price that resulted in goodwill included the

acquisition of business processes and

personnel that will allow Quaker Houghton to better serve its customers.

As of September 30, 2022, the allocation of the purchase price of all of the Company’s

2022 acquisitions, the acquisition in

Türkiye and Baron have not been finalized and the one-year measurement

period has not ended.

Further adjustments may be

necessary as a result of the Company’s

on-going assessment of additional information related to the fair value of

assets acquired and

liabilities assumed.

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 third 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 $

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 has 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 March 31, 2023, the Company has remaining earnout liabilities recorded on its Condensed Consolidated Balance Sheet of $ 1.6 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 quarter 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

Recently Issued Accounting Standards

The FASB issued ASU 2020

Reference Rate Reform (Topic

Facilitation of the Effects of Reference Rate Reform

Financial Reporting

in March 2020.

The FASB subsequently

issued ASU 2021-01,

Reference Rate Reform (Topic

January 2021 which clarified the guidance but did not materially change

the guidance or its applicability to the Company.

amendments provide temporary optional expedients and exceptions

for applying U.S.

GAAP to contract modifications, hedging

relationships and other transactions to ease the potential accounting

and financial reporting burden associated with transitioning away

from reference rates that are expected to be discontinued, including

the London Interbank Offered Rate (“LIBOR”).

ASU 2020-04 is

effective for the Company as of March 12, 2020 and generally can

be applied through December 31, 2022.

On June 17, 2022, the

Company entered into an amendment to its primary credit facility which,

among other things, provided for the use of a USD currency

LIBOR successor rate (the Secured Overnight Financing Rate (“SOFR”)).

See Note 14 of Notes to Condensed Consolidated Financial

There have been no recently issued accounting standards that will have a material impact on the Company’s condensed consolidated financial statements and related footnote disclosures.

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

The Company has

reportable segments:

The Company has three reportable segments:

(i) Americas;

Asia/Pacific;

and (iv) Global Specialty Businesses.

The three geographic segments are composed of the net sales and operations in

each respective region, excluding net sales and operations managed globally

by the Global Specialty Businesses segment.

Specialty Businesses segment includes the Company’s

container, metal finishing,

mining, offshore, specialty coatings, specialty

grease and Norman Hay businesses.

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,

are not included in segment operating earnings.

items not specifically identified with the Company’s

reportable segments include Interest expense, net and Other (expense) income,

and (iii) Asia/Pacific.

The three geographic 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, 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, net.

Quaker Chemical Corporation

Notes to Condensed Consolidated Financial Statements - Continued

(Dollars in thousands, except per share amounts,

unless otherwise stated)

The following table presents information about the performance of the Company’s

reportable segments for the three and nine

months ended September 30, 2022 and 2021.

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

Nine Months Ended

September 30,

Global Specialty Businesses

Americas $ 251,413 $ 212,091

EMEA 152,449 146,819

Asia/Pacific 96,286 115,261

Total net sales $ 500,148 $ 474,171

Segment operating earnings

Global Specialty Businesses

Total segment operating

Americas $ 66,125 $ 45,022

EMEA 27,571 23,247

Asia/Pacific 27,652 24,501

Total segment operating earnings 121,348 92,770

Combination, integration and other acquisition-related expenses — ( 4,053 )

Restructuring and related credits (charges), net

Fair value step up of acquired inventory sold

Restructuring and related charges, net ( 3,972 ) ( 820 )

Non-operating and administrative expenses ( 51,771 ) ( 43,305 )

1 unchanged sentence

Operating income 49,929 29,403

Other income (expense), net

Other expense, net ( 2,239 ) ( 2,206 )

Interest expense, net ( 13,242 ) ( 5,345 )

Income before taxes and equity in net income of

associated companies

Inter-segment revenues for the three and nine months ended September

30, 2022, were $

million and $

million for EMEA, $

million and $

million for Asia/Pacific, and $

million and $

for Global Specialty Businesses, respectively.

Inter-segment revenues

for the three and nine months ended September 30, 2021, were

million and $

million for Americas, $

million and $

million for EMEA, $

million and $

million for Asia/Pacific,

million and $

million for Global Specialty Businesses, respectively.

However, all inter-segment

transactions have been

eliminated from each reportable operating segment’s

net sales and earnings for all periods presented in the above tables.

Income before taxes and equity in net income of associated companies $ 34,448 $ 21,852

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.

Three Months Ended

Americas 2,827 3,056

EMEA 6,093 12,176

Asia/Pacific 59 297

Note 5 – Net Sales and Revenue Recognition

Arrangements Resulting in Net Reporting

As part of the Company’s Fluidcare

business, certain third-party product sales to customers are managed by the

Company transferred third-party products under arrangements recognized

on a net reporting basis of $

million and $

for the three and nine months ended September 30, 2022, respectively,

million and $

million for the three and nine

months ended September 30, 2021, respectively.

As part of the Company’s Fluidcare TM 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 $ 20.7 million and $ 19.8 million for the three months ended March 31, 2023 and 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 2021 Form 10-K, for

the year ended December 31, 2021, the Company’s

five largest customers (each composed of

multiple subsidiaries or divisions with semiautonomous purchasing authority)

accounted for approximately

% of consolidated net

sales, with its largest customer accounting for approximately

% of consolidated net sales.

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 Form 10-K, for the year ended December 31, 2022, the Company’s five largest customers (each composed of multiple subsidiaries or divisions with semiautonomous purchasing authority) accounted for approximately 11 % of consolidated net sales, with its largest customer accounting for approximately 3 % of consolidated net sales.

Contract Assets and Liabilities

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

Quaker Chemical Corporation

Notes to Condensed Consolidated Financial Statements - Continued

(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, 2022

or December 31, 2021.

The Company had approximately $

million and $

million of deferred revenue as of September 30, 2022 and December 31,

2021, respectively.

For the nine months ended September 30, 2022, the Company satisfied all of the

associated performance

obligations and recognized into revenue the advance payments received

and recorded as of December 31, 2021.

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

The Company had approximately $ 3.5 million and $ 5.7 million of deferred revenue as of March 31, 2023 and December 31, 2022, respectively.

For the three months ended March 31, 2023, the Company satisfied all of the associated performance obligations and recognized into revenue the advance payments received and recorded as of December 31, 2022.

Disaggregated Revenue

The Company sells its various industrial process fluids, its specialty chemicals

and its technical expertise as a global product

The Company generally manages and evaluates its performance by segment

first, and then by customer industry,

by individual product lines.

Also, 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 segment, geographic region, customer industry,

and timing of

revenue recognized for the three and nine months ended September 30, 2022

Three Months Ended September 30, 2022

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, 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.

Three Months Ended March 31, 2023

Americas EMEA Asia/Pacific Consolidated

Customer Industries

Metals $ 68,134 $ 39,103 $ 46,660 $ 153,897

Metalworking and other 183,279 113,346 49,626 346,251

Global Specialty Businesses

$ 251,413 $ 152,449 $ 96,286 $ 500,148

Timing of Revenue Recognized

1 unchanged sentence

Services transferred over time 10,932 10,943 2,363 24,238

Three Months Ended September 30, 2021

$ 251,413 $ 152,449 $ 96,286 $ 500,148

Three Months Ended March 31, 2022

Americas EMEA Asia/Pacific Consolidated

Customer Industries

Metals $ 55,317 $ 36,793 $ 55,682 $ 147,792

Metalworking and other 156,774 110,026 59,579 326,379

Global Specialty Businesses

$ 212,091 $ 146,819 $ 115,261 $ 474,171

Timing of Revenue Recognized

1 unchanged sentence

Services transferred over time 10,316 10,016 2,713 23,045

$ 212,091 $ 146,819 $ 115,261 $ 474,171

Note 6 - Leases

The Company has operating leases for certain facilities, vehicles and machinery and equipment with remaining lease terms up to 9 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 92 years.

Quaker Chemical Corporation

Notes to Condensed Consolidated Financial Statements - Continued

(Dollars in thousands, except per share amounts,

unless otherwise stated)

Nine Months Ended September 30, 2022

Customer Industries

Metalworking and other

Global Specialty Businesses

Timing of Revenue Recognized

Product sales at a point in time

Services transferred over time

Nine Months Ended September

Customer Industries

Metalworking and other

Global Specialty Businesses

Timing of Revenue Recognized

Product sales at a point in time

Services transferred over time

Note 6 - Leases

The Company has operating leases for certain facilities, vehicles and machinery

and equipment with remaining lease terms up to

Operating lease expense is recognized on a straight-line basis over the

In addition, the Company has certain land

use leases with remaining lease terms up to

The Company has

material variable lease costs, sublease income or finance leases for three and nine

months ended September

30, 2022 and 2021.

The following table sets forth the components of

the Company’s lease cost for three and nine

September 30, 2022 and 2021:

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

The Company has no material variable lease costs, sublease income, or finance leases for the three months ended March 31, 2023 and 2022.

The components of the Company’s lease expense are as follows:

Three Months Ended

Nine Months Ended

September 30,

Operating lease expense $ 3,936 $ 3,409

Short-term lease expense 211 219

Quaker Chemical Corporation

Notes to Condensed Consolidated Financial Statements - Continued

(Dollars in thousands, except per share amounts,

unless otherwise stated)

Supplemental cash flow information related to the Company’s

leases is as follows:

Supplemental cash flow information related to the Company’s leases is as follows:

Three Months Ended

Nine Months Ended

September 30,

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 $ 3,857 $ 3,365

Non-cash lease liabilities activity:

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,

Leased assets obtained in exchange for new operating lease liabilities 2,833 4,689

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

2023 December 31,

Right of use lease assets $ 43,344 $ 43,766

2 unchanged sentences

Total operating lease liabilities $ 38,738 $ 38,991

Weighted average

remaining lease term (years)

Weighted average

discount rate

Weighted average remaining lease term (years) 4.96 5.10

Weighted average discount rate 4.50 % 4.36 %

Maturities of operating lease liabilities were as follows:

September 30,

For the remainder of 2023 $ 10,749

8 unchanged sentences

Note 7 – Restructuring and Related Activities

The Company’s management approved a global restructuring plan (the “QH Program”) as part of its plan to realize certain cost

synergies associated with the Combination in the third quarter of 2019.

The QH Program included restructuring and associated

severance costs to reduce total headcount by approximately 400 people globally, as well as the closure of certain manufacturing and

non-manufacturing facilities.

The exact timing to complete all actions and final costs associated with the QH Program depend on a

number of factors and are subject to change;

however, the Company had reduction in headcount and site closures under the QH

Program in 2022 and expects final headcount reductions to continue into 2023.

Employee separation benefits varied depending on

local regulations within certain foreign countries and included severance and other benefits.

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 is expected to be completed during 2023.

Quaker Chemical Corporation

Notes to Condensed Consolidated Financial Statements - Continued

(Dollars in thousands, except per share amounts,

unless otherwise stated)

All costs incurred related to severance costs to reduce headcount, including customary

and routine adjustments to initial estimates

for employee separation costs, as well as costs to close certain facilities are recorded

in Restructuring and related (credits) charges in

the Company’s Condensed

Consolidated Statements of Income.

The credits recognized in the nine months ended September 30, 2022

reflect customary and routine adjustments to initial estimates for

employee separation costs.

At this time, the Company does not

expect to incur material additional costs under the QH Program.

As described in Note 4 of the Notes to Condensed Consolidated

Financial Statements, restructuring and related charges

are not included in the Company’s calculation of

reportable segments’ measure

of operating earnings and therefore these costs are not reviewed by or recorded

to reportable segments.

Activity in the Company’s accrual

for restructuring under the QH Program for the nine months ended September 30, 2022

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

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 March 31, 2023, the program included restructuring and associated severance costs to reduce headcount by approximately 75 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.

Employee separation benefits vary depending on local regulations within certain foreign countries and include severance and other benefits.

Restructuring costs include severance 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 are recorded in Restructuring and related charges in the Company’s Consolidated Statements of Operations.

As described in Note 4 of Notes to Consolidated Financial Statements, Restructuring and related charges are not included in the Company’s calculation of reportable segments’ measure of operating earnings and therefore these costs are not reviewed by or recorded to reportable segments.

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 (credits)

Restructuring and related charges, net 3,972

Cash payments ( 2,747 )

Currency translation adjustments 101

Accrued restructuring as of September 30, 2022

Accrued restructuring as of March 31, 2023 $ 6,809

Note 8 – Share-Based Compensation

The Company recognized the following share-based compensation expense

in its Condensed Consolidated Statements of Income

for the three and nine months ended September 30, 2022 and 2021:

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

Three Months Ended

Nine Months Ended

September 30,

Stock options $ 431 $ 267

Non-vested stock awards and restricted stock units 2,171 1,548

Non-elective and elective 401(k) matching contribution in stock

Director stock ownership plan 10 24

Performance stock units 915 623

Total share-based

compensation expense

Share-based compensation expense is recorded in SG&A, except for less than

million and $

million for the three and nine

months ended September 30, 2022, respectively,

million and $

million for the three and nine months ended September 30,

respectively, recorded within

Combination, integration and other acquisition-related expenses.

Total share-based compensation expense $ 3,527 $ 2,462

Share-based compensation expense is recorded in SG&A, except for less than $ 0.1 million for the three months ended March 31, 2022, recorded within Combination, integration and other acquisition-related expenses.

Stock Options

During the first nine months of 2022, the Company granted stock options

under its long-term incentive plan (“LTIP”)

subject only to time vesting over a

For the purposes of determining the fair value of stock option awards, the

Company used a Black-Scholes option pricing model and the assumptions set forth

in the table below:

Number of options granted

Dividend yield

Expected volatility

Risk-free interest rate

Expected term (years)

The fair value of these options is amortized on a straight-line basis over the

vesting period.

As of September 30, 2022,

unrecognized compensation expense related to all stock options granted was $

million, to be recognized over a weighted average

remaining period of

As of March 31, 2023, unrecognized compensation expense related to unvested stock options was $ 0.9 million, to be recognized over a weighted average remaining period of 1.3 years.

Restricted Stock Awards and Restricted Stock Units

During the three months ended March 31, 2023, the Company granted 29,862 non-vested restricted shares and 6,675 non-vested restricted stock units under its long-term incentive plan (“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 price of the Company’s common stock on the date of grant.

As of March 31, 2023, unrecognized compensation expense related to the non-vested restricted shares was $ 10.6 million, to be recognized over a weighted average remaining period of 2.6 years, and unrecognized compensation expense related to non-vested restricted stock units was $ 2.5 million, to be recognized over a weighted average remaining period of 1.8 years.

Quaker Chemical Corporation

Notes to Condensed Consolidated Financial Statements - Continued

(Dollars in thousands, except per share amounts,

unless otherwise stated)

Restricted Stock Awards

and Restricted Stock Units

During the nine months ended September 30, 2022, the Company granted

non-vested restricted shares and

vested restricted stock units under its LTIP,

which are subject to time-based vesting, generally over a

The fair value

of these grants is based on the trading price of the Company’s

common stock on the date of grant.

The Company adjusts the grant

date fair value of these awards for expected forfeitures based on historical experience.

As of September 30, 2022, unrecognized

compensation expense related to the non-vested restricted

million, to be recognized over a weighted average

remaining period of

years, and unrecognized compensation expense related to non-vested restricted

stock units was $

to be recognized over a weighted average remaining period of

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

Performance Stock Units

The Company grants performance-dependent stock awards (“PSUs”) as a component

which will be settled in a

certain number of shares subject to market-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

% of the target award, subject to the achievement of

the Company’s total shareholder

return (“TSR”) relative to the performance of the Company’s

peer group, the S&P Midcap 400

Materials group.

The service period required for the PSUs is three years and the TSR measurement

period for the PSUs is generally

from January 1 of the year of grant through December 31 of the year prior

to issuance of the shares upon settlement.

Compensation expense for PSUs is measured based on their grant date fair value

and is recognized on a straight-line basis over

the three year vesting period.

The grant-date fair value of the PSUs was estimated using a Monte Carlo

simulation on the grant date

and using the following assumptions set forth in the table below:

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 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 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.

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 of PSUs granted with a ROIC condition is based on the 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, which included the following assumptions set forth in the table below:

Number of PSUs granted 15,707

2 unchanged sentences

Expected term (years) 3.0

As of September 30, 2022, based on the conditions of the PSUs and performance

to date for each award, the Company estimates

t issue any fully vested shares as of the applicable settlement date of all outstanding

As of September 30,

2022, there was approximately $

million of total unrecognized compensation cost related to PSUs which the Company

recognize over a weighted-average period of

Defined Contribution Plan

The Company has a 401(k) plan with an employer match covering a majority

The Company matches

% of compensation that is contributed to the plan, with a maximum matching contribution of

% of compensation.

Additionally, the plan

provides for non-elective nondiscretionary contributions on behalf of participants

who have completed one year

of service equal to

% of the eligible participants’ compensation.

Beginning in April 2020 and continuing through March 2021, the

Company matched both non-elective and elective 401(k) contributions

in fully vested shares of the Company’s common

matching contributions in stock for the three and nine months ended September 30, 2022.

months ended September 30, 2021, total contributions were $

Quaker Chemical Corporation

Notes to Condensed Consolidated Financial Statements - Continued

(Dollars in thousands, except per share amounts,

unless otherwise stated)

Note 9 – Pension and Other Postretirement

The components of net periodic benefit (income) cost for the three and

nine months ended September 30, 2022 and 2021 are as

Three Months Ended September 30,

Nine Months Ended September 30,

Postretirement

Pension Benefits

Service cost (income)

Interest cost (income)

Based on the conditions of the PSUs and performance to date for each of the outstanding PSU awards as of March 31, 2023, the Company estimates that it will issue 47,203 fully vested shares as of the applicable settlement date for such outstanding PSUs awards.

As of March 31, 2023, there was approximately $ 9.9 million of total unrecognized compensation cost related to PSUs, which the Company expects to recognize over a weighted-average period of 2.6 years.

Note 9 – Pension and Other Postretirement Benefits

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

Three Months Ended March 31,

Pension Benefits Other Postretirement Benefits

2023 2022 2023 2022

Service cost $ 104 $ 180 $ — $ ( 8 )

Interest cost 2,455 1,360 19 9

Expected return on plan assets ( 1,997 ) ( 2,084 ) — —

Actuarial loss (gain)

Prior service cost (income)

Net periodic benefit (income)

Actuarial loss (gain) amortization 101 257 ( 30 ) ( 24 )

Prior service cost (income) amortization 8 2 ( 4 ) 1

Net periodic benefit (income) cost $ 671 $ ( 285 ) $ ( 15 ) $ ( 22 )

Employer Contributions

As of September 30, 2022, $

million and $

million of contributions have been made to the Company’s

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 $

million to its U.S.

foreign pension plans and approximately $

million to its other postretirement benefit plans in 2022

Note 10 – Other Income (Expense), Net

The components of other income (expense), net, for the three and nine months

ended September 30, 2022 and 2021 are as

As of March 31, 2023, $ 1.0 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 $ 5.3 million to its U.S.

and foreign pension plans and approximately $ 0.2 million to its other postretirement benefit plans in 2023.

Quaker Chemical Corporation

Notes to Condensed Consolidated Financial Statements - Continued

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

Note 10 – Other expense, net

The components of Other expense, net are as follows:

Three Months Ended

Nine Months Ended

September 30,

Income from third party license fees $ 325 $ 404

Foreign exchange (losses) gain, net

Gain (loss) on disposals of property,

plant, equipment and other

Foreign exchange losses, net ( 3,326 ) ( 1,905 )

Non-income tax refunds and other related credits (expense) 360 ( 1,322 )

Pension and postretirement benefit income,

non-service components

Loss on extinguishment of debt

Gain on insurance recoveries

Pension and postretirement benefit (costs) income, non-service components ( 552 ) 479

Facility remediation recovery, net 827 —

Other non-operating income, net 127 138

Total other income

(expense), net

Gain (loss) on disposals of property,

plant, equipment and other assets, net, during the three months ended September 30, 2021,

includes losses related to certain fixed asset disposals resulting from property

See Note 18 of Notes to Condensed

Consolidated Financial Statements.

During the nine months ended September 30, 2021, this caption also includes

the gain on the sale

of certain held-for-sale real property assets related to

the Combination.

Quaker Chemical Corporation

Notes to Condensed Consolidated Financial Statements - Continued

(Dollars in thousands, except per share amounts,

unless otherwise stated)

Non-income tax refunds and other related credits (expense) during

the nine months ended September 30, 2022, includes

adjustments to Combination-related indemnification assets associated with the

settlement of certain income tax audits at certain of the

Company’s Italian and German

affiliates for tax periods prior to August 1, 2019.

See Note 11 of Notes to Condensed Consolidated

Financial Statements.

During the nine months ended September 30, 2021 this caption includes certain

non-income tax credits for the

Company’s Brazilian subsidiaries.

Total other expense, net $ ( 2,239 ) $ ( 2,206 )

Non-income tax refunds and other related credits (expense) during the three months ended March 31, 2022, includes adjustments to a Combination-related indemnification asset associated with the settlement of certain income tax audits at one of the Company’s Italian for tax periods prior to August 1, 2019.

See Note 11 of Notes to Condensed Consolidated Financial Statements.

Loss on extinguishment of debt during the nine months ended September

30, 2022 includes the write-off of certain previously

unamortized deferred financing costs as well as a portion of the third

party and creditor debt issuance costs incurred to execute an

amendment to the Company’s primary

credit facility.

Facility remediation recovery, net, during the three months ended March 31, 2023, reflects a gain recorded on the payments received from insurers related to previously incurred costs from the remediation and restoration of property damage.

See Note 18 of Notes to the Condensed Consolidated Financial Statements.

Gain on insurance recoveries during the three and nine months ended September

30, 2022, reflects payments received from

insurers related to the property damage incurred during the three

months ended September 2021, noted above.

See Note 18 of Notes

to the Condensed Consolidated Financial Statements.

Note 11 – Income Taxes

and Uncertain Income Tax

The Company’s effective

tax rates for the three and nine months ended September 30, 2022 were

%, respectively,

% for the three and nine months ended September 30, 2021, respectively.

The Company’s effective

rate for the nine months ended September 30, 2022 was impacted by various

items including a decline in forecasted profits and

earnings mix, foreign tax inclusions, changes in the valuation allowance

for foreign tax credits, the impact of audit settlements reached

with Italian tax authorities, a reduction in reserves for uncertain tax positions

and withholding taxes.

In addition, the Company

incurred higher tax expense during the three and nine months ended

September 30, 2022 at one of its subsidiaries as it accrued taxes at

a statutory tax rate of

% while it awaits recertification of a concessionary

% tax rate, which was available to the Company during

Comparatively, the prior year

effective tax rates were largely impacted by changes in permanent

reinvestment assertions,

changes in foreign tax credit valuation allowances, tax law changes in a foreign

jurisdiction, deferred tax benefits related to an

intercompany intangible asset transfer and the income tax impacts of certain

non-income tax credits recorded by the Company’s

Brazilian subsidiaries.

As of December 31, 2021, the Company had a deferred tax liability of $

million on certain undistributed foreign earnings,

which primarily represents the Company’s

estimate of non-U.S.

income taxes the Company will incur to ultimately remit certain

earnings to the U.S.

As of September 30, 2022 this deferred tax liability balance was $

As of September 30, 2022, the

Company’s cumulative liability

for gross unrecognized tax benefits was $

million, a decrease of approximately $

the cumulative liability accrued as of December 31, 2021.

The Company continues to recognize interest and penalties associated with uncertain

tax positions as a component of taxes on

income before equity in net income of associated companies in its Condensed

Consolidated Statements of Income.

recognized an expense for interest of $

million and a benefit for interest of $

million and a benefit of less than $

million for penalties in its Condensed Consolidated Statement of Income for

the three and nine months ended September 30,

2022, respectively,

and recognized an expense for interest of approximately $

million and $

million and a benefit of less than

million and $

million for penalties in its Condensed Consolidated Statement of Income for the

three and nine months ended

September 30, 2021, respectively.

As of September 30, 2022, the Company had accrued $

million for cumulative interest and $

million for cumulative penalties in its Condensed Consolidated

Balance Sheets, compared to $

million for cumulative interest and

million for cumulative penalties accrued at December 31, 2021.

During the nine months ended September 30, 2022 and 2021, the Company

recognized decreases of $

million and $

million, respectively,

in its cumulative liability for gross unrecognized tax benefits due to the settlement of

income tax audits with

both the Italian and German tax authorities, as well as the expiration of the

applicable statutes of limitations for certain tax years.

The Company estimates that during the year ending December 31, 202

it will reduce its cumulative liability for gross

unrecognized tax benefits by approximately $

million due to the settlement of income tax audits and the expiration of the statute of

limitations with regard to certain tax positions.

This estimated reduction in the cumulative liability for unrecognized

tax benefits does

not consider any increase in liability for unrecognized tax benefits with regard

to existing tax positions or any increase in cumulative

liability for unrecognized tax benefits with regard to new tax positions for

the year ending December 31, 2022.

The Company and its subsidiaries are subject to U.S.

Federal income tax,

as well as the income tax of various state and foreign

tax jurisdictions.

Tax years that remain subject

to examination by major tax jurisdictions include Italy from

, Brazil from

the Netherlands from

, Canada, China, Mexico and the U.S.

, Germany, Spain and the United

India from fiscal year beginning April 1, 2017 and ending March 31,

, and various U.S.

state tax jurisdictions from

Note 11 – Income Taxes and Uncertain Income Tax Positions

The Company’s effective tax rates for the three months ended March 31, 2023 and 2022 were 27.7 % and 13.1 %, respectively.

The Company’s effective tax rate for the three months ended March 31, 2023 was impacted by various items including foreign tax inclusions, withholding taxes, foreign tax credits, and net tax expense related to share-based compensation, partially offset with changes in uncertain tax positions and favorable return to provision adjustments.

Comparatively, the prior year effective tax rate was largely impacted by changes in the valuation allowance for foreign tax credits due to legislative guidance issued and audit settlements reached with Italian tax authorities.

In addition, the Company incurred higher tax expense during the three months ended March 31, 2022 related to one of the Company’s subsidiaries recording earnings at a statutory tax rate of 25% while the recertification of its concessionary 15% tax rate was pending receipt.

As previously reported, the Italian tax authorities assessed additional tax due from the Company’s subsidiary, Quaker Italia S.r.l., relating to the tax years 2007 through 2015.

The Company filed for and obtained competent authority relief under the Mutual Agreement Procedures (“MAP”) of the Organization for Economic Co-Operation and Development for all years except 2007.

In the first quarter of 2022, the Company settled the $ 2.6 million assessment due to the Italian tax authorities, while having already received $ 1.6 million in refunds from the Netherlands and Spain.

As of March 31, 2023, the Company paid the full settlement, of which approximately $ 0.2 million was refunded.

Houghton Italia, S.r.l was also 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 March 31, 2023, the Company paid $ 1.1 million of such installments.

The Company has an indemnification receivable of $ 3.9 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.

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.

The Company arranged introductory meetings with the taxing authorities and has begun to provide documentation in response to their inquiries.

The Company has not established any reserves for this matter at this time.

Quaker Chemical Corporation

Notes to Condensed Consolidated Financial Statements - Continued

(Dollars in thousands, except per share amounts,

unless otherwise stated)

As previously reported, the Italian tax authorities have assessed additional

tax due from the Company’s subsidiary,

Quaker Italia

S.r.l., relating to the tax years

The Company has filed for competent authority relief from these assessments under

the Mutual Agreement Procedures (“MAP”) of the Organization

for Economic Co-Operation and Development for all years except

In 2020, the respective tax authorities in Italy,

Spain and the Netherlands reached agreement with respect to the MAP

proceedings which the Company had accepted.

As of September 30, 2022, the Company received $

million in refunds from the

Netherlands and Spain.

In February 2022, the Company received a settlement notice from the Italian taxing

authorities confirming the

amount due of $

million, having granted the Company’s request

to utilize its remaining net operating losses to partially offset

As of September 30, 2022, the Company has paid the full settlement amount,

of which approximately $

confirmed to be refundable.

Houghton Italia, S.r.l was involved

in a corporate income tax audit with the Italian tax authorities covering tax years

During the fourth quarter of 2021, the Company settled a portion of the Houghton

Italia, S.r.l.

corporate income tax audit

the Italian tax authorities for the tax years 2014 and 2015.

During the nine months ended September 30, 2022, the Company settled

tax years 2016 through 2018 for a total of $

In total, the Company has now settled all years 2014 through 2018 for $

Accordingly, the Company has

released all reserves relating to this audit for the settled tax years.

As a result of the

settlement and reserve release the Company recognized a net benefit

to the tax provision of $

million during the first nine months

The Company has an indemnification receivable of approximately $

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

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

Note 12 – Earnings Per Share

The following table summarizes earnings per share calculations for

the three and nine months ended September 30, 2022 and

The following table summarizes earnings per share calculations:

Three Months Ended

Nine Months Ended

September 30,

Basic earnings per common share

12 unchanged sentences

Diluted earnings per common share $ 1.64 $ 1.11

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

for the three

and nine months ended September 30, 2022, respectively,

for the three and nine months ended September 30,

2021, respectively.

Quaker Chemical Corporation

Notes to Condensed Consolidated Financial Statements - Continued

(Dollars in thousands, except per share amounts,

unless otherwise stated)

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 15,327 and 12,260 for the three months ended March 31, 2023 and 2022, respectively.

Note 13 – Goodwill and Other Intangible Assets

Changes in the carrying amount of goodwill for the nine months ended

September 30, 2022 were as follows:

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 factor s, 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 first 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 its carrying amount.

Changes in the carrying amount of goodwill 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.

Americas EMEA Asia/Pacific Global

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

Goodwill additions (reductions) — — — — —

Currency translation adjustments 1,773 ( 116 ) 541 — 2,198

Balance as of September 30, 2022

Gross carrying amounts and accumulated amortization for definite-lived

intangible assets as of September 30, 2022 and

December 31, 2021 were as follows:

Balance as of March 31, 2023 $ 281,369 $ 66,162 $ 169,675 $ — $ 517,206

Quaker Chemical Corporation

Notes to Condensed Consolidated Financial Statements - Continued

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

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

Gross Carrying

Amount Accumulated

Amortization Net Book Value

March 31, 2023 December 31, 2022 March 31, 2023 December 31, 2022 March 31, 2023 December 31, 2022

Customer lists and rights to sell $ 839,280 $ 831,600 $ 205,800 $ 191,286 $ 633,480 $ 640,314

Trademarks, formulations and product

Total definite-lived

intangible assets

The Company amortizes definite-lived intangible assets on a straight-line basis over

their useful lives.

The Company recorded

million and $

million of amortization expense for the three and nine months ended September

30, 2022, respectively.

Comparatively,

the Company recorded $

million and $

million of amortization expense for the three and nine months ended

September 30, 2021, respectively.

Estimated annual aggregate amortization expense for the current year

and subsequent five years and beyond is as follows:

For the year ended December 31, 2022

Trademarks, formulations and product technology 160,149 158,564 48,856 46,281 111,293 112,283

Other 6,168 7,576 5,848 6,390 320 1,186

Total definite-lived intangible assets $ 1,005,597 $ 997,740 $ 260,504 $ 243,957 $ 745,093 $ 753,783

The Company amortizes definite-lived intangible assets on a straight-line basis over their useful lives.

The Company recorded amortization expense as follows:

Three Months Ended

Amortization expense $ 14,513 $ 14,553

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

For the remainder of 2023 $ 43,829

For the year ended December 31, 2024 57,734

2 unchanged sentences

For the year ended December 31, 2027 56,410

For the year ended December 31, 2027 and beyond

The Company had four indefinite-lived intangible assets totaling

million as of September 30, 2022, including $

million of indefinite-lived intangible assets for trademarks and tradenames associated

with the Combination.

Comparatively, the

Company had four indefinite-lived intangible assets for trademarks and

tradenames totaling $

million as of December 31, 2021.

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 in

assessing if a triggering event indicates that the carrying values

of goodwill, indefinite-lived, or long-lived assets are impaired.

The Company continues to monitor various financial, economic and

geopolitical conditions impacting the Company,

including the ongoing Russia-Ukraine war and the Company’s

decision to cease

operations in Russia, continued raw material cost escalation, supply chain

constraints and disruptions, as well as rising interest rates

and the cost of capital among other factors.

The Company concluded that these and other factors, which have and continue to

the Company, did not

represent a triggering event during the third quarter of 2022, except for

the Company’s EMEA reporting unit

and the associated goodwill, as well as the related asset group.

The Company concluded that during the third quarter of 2022 the

escalation of these events adversely impacted EMEA’s

financial performance and represented a triggering event.

As a result of this conclusion, the Company completed an interim impairment

assessment for its EMEA reporting unit, as well as

the related asset group, during the third quarter of 2022.

The Company concluded that the undiscounted cash flows exceeded the

carrying value of the long-lived assets, and it is not more likely than not that

an impairment exists.

In completing a quantitative

goodwill impairment test, the Company compares the reporting unit

’s fair value, primarily based on future

discounted cash flows, to

its carrying value in order to determine if an impairment charge is warranted.

The estimates of future discounted cash flows involve

considerable management judgment and are based upon certain significant

assumptions including the weighted average cost of capital

Quaker Chemical Corporation

Notes to Condensed Consolidated Financial Statements - Continued

(Dollars in thousands, except per share amounts,

unless otherwise stated)

as well as projected EBITDA, which includes assumptions related to revenue

growth rates, gross margin levels and operating

As a result of this interim impairment assessment,

the estimated fair value of the EMEA reporting unit exceeded its

carrying value by approximately

% and the Company concluded no impairment was warranted.

Notwithstanding the results of the Company’s

interim impairment assessment, if the Company is unable to successfully

implement selling price increases aimed at more than offsetting

raw material costs and ongoing inflationary pressures and the financial

performance of the EMEA reporting unit declines further,

or interest rates continue to rise and this leads to an increase in the cost of

then it is possible these financial, economic and geopolitical conditions could

result in another triggering event for the EMEA

reporting unit in the future and could lead to a potential impairment

In addition, if any of these financial, economic or geopolitical

conditions has a more significant adverse effect on the Company,

these could lead to a potential impairment of the Company’s

goodwill or other indefinite-lived or long-lived assets.

As of March 31, 2023 and December 31, 2022, the Company had indefinite-lived intangible assets for trademarks and tradenames totaling $ 191.3 million and $ 189.1 million, respectively.

Note 14 – Debt

Debt as of September 30, 2022 and December 31, 2021 includes the following:

As of September 30, 2022

As of December 31, 2021

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

As of March 31, 2023 As of December 31, 2022

Rate Outstanding

Balance Interest

Rate Outstanding

Credit Facilities:

Original Revolver

Original U.S.

Original Euro Term

Amended Revolver

Amended Euro Term

Revolver 6.0 % $ 185,897 5.2 % $ 195,673

Term Loan 6.3 % 592,500 5.7 % 596,250

Euro Term Loan 4.1 % 153,072 3.1 % 151,572

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 1,317 Various 1,303

Total debt $ 942,786 $ 954,798

debt issuance costs ( 1,881 ) ( 1,992 )

1 unchanged sentence

Total long-term debt $ 921,555 $ 933,561

Credit facilities

The Company, its wholly

owned subsidiary,

Quaker Chemical B.V.,

as borrowers, Bank of America, N.A., as administrative

Dollar swing line lender and letter of credit issuer,

and the other lenders party thereto, entered into a credit agreement on

August 1, 2019, as amended (the “Original Credit Facility”).

The Original Credit Facility was comprised of a $

multicurrency revolver (the “Original Revolver”), a $

million term loan (the “Original U.S.

Loan”), each with the

Company as borrower, and a $

million (as of August 1, 2019) Euro equivalent term loan (the “Original Euro Term

Quaker Chemical B.V.,

a Dutch subsidiary of the Company as borrower,

term, maturing in

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 the Original Credit Facility

(the “Amended Credit Facility”).

The Amended Credit Facility established

million Euro equivalent senior secured

term loan (the “Amended Euro Term

Loan”), (B) a new $

million senior secured term loan (the “Amended U.S.

and (C) a new $

million senior secured revolving credit facility (the “Amended Revolver”).

The Company has the right to

increase the amount of the Amended Credit Facility by an aggregate amount

not to exceed the greater of $

Consolidated EBITDA, subject to certain conditions including the agreement

to provide financing by any lender providing such

In addition, the Amended Credit Facility also:

(i) eliminated

the requirement that material foreign subsidiaries must guaranty the Original Euro

(ii) replaced

Dollar borrowings reference rate from LIBOR to SOFR;

(iii) extended the maturity date of the Original Credit Facility from

(iv) effected certain other changes to the Original Credit

Facility as set forth in the Amended Credit Facility.

Quaker Chemical Corporation

Notes to Condensed Consolidated Financial Statements - Continued

(Dollars in thousands, except per share amounts,

unless otherwise stated)

The Company used the proceeds of the Amended Credit Facility to repay

all outstanding loans under the Original Credit Facility,

unpaid accrued interest and fees on the closing date under the Original

Credit Facility and certain expenses and fees.

borrowings under the Amended Credit Facility bear interest, at the Company’s

election, at the base rate or term SOFR

plus an applicable rate ranging from

% for term SOFR loans and from

% for base rate loans, depending

upon the Company’s consolidated

net leverage ratio.

Loans based on term SOFR also include a spread adjustment equal to

Borrowings under the Amended Credit Facility denominated

in currencies other than U.S.

Dollars bear interest at the

alternative currency term rate plus the applicable rate ranging from

The Amended Credit Facility contains affirmative

and negative covenants, financial covenants and events of default, including

without limitation restrictions on (a) the incurrence of additional

indebtedness;

(b) investments in and acquisitions of other businesses,

lines of business and divisions;

and (d) dispositions of assets.

Dividends and

share repurchases are permitted in annual amounts not exceeding the greater

million annually and

% of consolidated

EBITDA if there is no default.

If the consolidated net leverage ratio is less than

, then the Company is no longer subject to

restricted payments.

Financial covenants contained in the Amended Credit Facility include

a consolidated interest coverage ratio test and a

consolidated net leverage ratio test.

The consolidated net leverage ratio at the end of a quarter may not be

subject to a permitted increase during a four-quarter

period after certain acquisitions.

The Company has the option of replacing the

consolidated net leverage ratio test with a consolidated senior net leverage ratio

test if the Company issues certain types of unsecured

notes, subject to certain limitations.

Events of default in the Amended Credit Facility include without limitation

defaults for non-

payment, breach of representations and warranties, non-performance

of covenants, cross-defaults, insolvency,

and a change of control

in certain circumstances.

The occurrence of an event of default under the Amended Credit Facility could result

in all loans and other

obligations becoming immediately due and payable and the Amended

Credit Facility being terminated.

As of September 30, 2022, the

Company was in compliance with all of the Amended Credit Facility covenants.

The weighted average variable interest rate incurred on the outstanding

borrowings under the Original Credit Facility and the

Amended Credit Facility during the nine months ended September

30, 2022 was approximately

As of September 30, 2022, the

interest rate on the outstanding borrowings under the Amended Credit

Facility was approximately

In addition to paying interest

on outstanding principal under the Original Credit Facility,

the Company was required to pay a commitment fee ranging from

% depending on the Company’s consolidated

net leverage ratio under the Original Revolver in respect of the unutilized

commitments thereunder.

As part of the Amended Credit Facility,

the Company is required to pay a commitment fee ranging from

% related to unutilized commitments under the Amended Revolver,

depending on the Company’s consolidated

leverage ratio.

The Company had unused capacity under the Amended Revolver of approximately

million, which is net of bank

letters of credit of approximately $

million, as of September 30, 2022.

The Company previously capitalized $

million of certain third-party debt issuance costs in connection with executing the

Original Credit Facility.

Approximately $

million of the capitalized costs were attributed to the Original Term

recorded as a direct reduction of Long-term debt on the Condensed

Consolidated Balance Sheet.

Approximately $

million of the

capitalized costs were attributed to the Original Revolver and recorded

within Other assets on the Condensed Consolidated Balance

These capitalized costs were being amortized into Interest expense over

term of the Original Credit Facility.

of December 31, 2021, the Company had $

million of debt issuance costs recorded as a reduction of Long-term debt attributable

the Original Credit Facility.

As of December 31, 2021, the Company had $

million of debt issuance costs recorded within Other

assets attributable to the Original Credit Facility.

Prior to executing the Amended Credit Facility,

the Company had $

debt issuance costs recorded as a reduction of Long-term debt attributable

to the Original Credit Facility and $

million of debt

issuance costs recorded within Other assets attributable to the Original

Credit Facility.

In connection with executing the Amended Credit Facility,

the Company recorded a loss on extinguishment of debt of

approximately $

million which includes the write-off of certain previously

unamortized deferred financing costs as well as a

portion of the third-party and creditor debt issuance costs incurred

to execute the Amended Credit Facility.

Also in connection with

executing the Amended Credit Facility,

during the second quarter of 2022, the Company capitalized $

million of certain third-party

and creditor debt issuance costs.

Approximately $

million of the capitalized costs were attributed to the Amended Euro Term

and Amended U.S.

These costs were recorded as a direct reduction of Long-term debt on the

Condensed Consolidated

Balance Sheet.

Approximately $

million of the capitalized costs were attributed to the Amended Revolver and

recorded within

Other assets on the Condensed Consolidated Balance Sheet.

These capitalized costs, as well as the previously capitalized costs that

were not written off will collectively be amortized into Interest expense

term of the Amended Credit Facility.

September 30, 2022, the Company had $

million of debt issuance costs recorded as a reduction of Long-term debt on the

Condensed Consolidated Balance Sheet and $

million of debt issuance costs recorded within Other assets on the Condensed

Consolidated Balance Sheet.

Quaker Chemical Corporation

Notes to Condensed Consolidated Financial Statements - Continued

(Dollars in thousands, except per share amounts,

unless otherwise stated)

The Original Credit Facility required the Company to fix its variable interest

rates on at least

% of its total Original Term

In order to satisfy this requirement as well as to manage the Company’s

exposure to variable interest rate risk associated with

the Original Credit Facility,

in November 2019, the Company entered into $

million notional amounts of three-year interest rate

swaps at a base rate of

% plus an applicable margin as provided in the Original Credit Facility,

based on the Company’s

consolidated net leverage ratio.

At the time the Company entered into the swaps, and as of September 30,

2022, the aggregate interest

rate on the swaps, including the fixed base rate plus an applicable margin,

The Amended Credit Facility does not require

the Company to fix variable interest rates on any portion of its borrowings.

As of September 30, 2022, the Company had not amended

its current interest rate swaps.

In October 2022, the Company’s interest

rate swap contracts expired.

Upon expiration, the Company is

entitled to a cash payment from the counterparties, which is materially consistent

with the fair value as of September 30, 2022.

Note 17 of Notes to Condensed Consolidated Financial Statements.

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

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 March 31, 2023, the Company was in compliance with all of the Credit Facility covenants.

See Note 20 of Notes to Consolidated Financial Statements in the Company’s 2022 Form 10-K.

The weighted average variable interest rate incurred on the outstanding borrowings under the Credit Facility during the three months ended March 31, 2023 was approximately 5.8 %.

As of March 31, 2023, the interest rate on the outstanding borrowings under the Credit Facility was approximately 5.9 %.

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 $ 311 million, which is net of bank letters of credit of approximately $ 3 million, as of March 31, 2023.

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 March 31, 2023, the aggregate interest rate on the swaps, including the fixed base rate plus the applicable margin, was 5.2 %.

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.

These costs were recorded as a direct reduction 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 March 31, 2023, the Company had $ 1.9 million of debt issuance costs recorded as a reduction of Long-term debt on the Condensed Consolidated Balance Sheet and $ 4.1 million of debt issuance costs recorded within Other assets on the Condensed Consolidated Balance Sheet.

Comparatively, as of December 31, 2022, the Company had $ 2.0 million of debt issuance costs recorded as a reduction of Long-term debt on the Condensed Consolidated Balance Sheet and $ 4.3 million of debt issuance costs recorded within Other assets on the Condensed Consolidated Balance Sheet.

Industrial development bonds

As of September 30, 2022 and December 31, 2021, the Company had fixed

rate, industrial development authority bonds totaling

million in principal amount due in

These bonds have similar covenants to the Amended Credit Facility noted above.

As of March 31, 2023 and December 31, 2022, 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.

capacity under these arrangements as of September 30, 2022 was approximately

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, 2022 were approximately $ 5 million.

The Company incurred the following debt related expenses included

within Interest expense, net, in the Condensed Consolidated

Statements of Income:

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 March 31, 2023 was approximately $ 35 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 March 31, 2023 were approximately $ 5 million.

Quaker Chemical Corporation

Notes to Condensed Consolidated Financial Statements - Continued

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

Interest expense, net

The Company incurred the following debt related expenses included within Interest expense, net, in the Condensed Consolidated Statements of Operations:

Three Months Ended

Nine Months Ended

September 30,

Interest expense $ 13,876 $ 4,746

Amortization of debt issuance costs 353 1,187

Based on the variable interest rates associated with the Amended Credit Facility,

as of September 30, 2022 and the Original

Credit Facility as of December 31, 2021, the amounts at which the Company’s

total debt were recorded are not materially different

from their fair market value.

On September 30, 2022, annual maturities on the Amended Credit Facility in the

next five fiscal years (excluding the reduction to

long-term debt attributed to capitalized and unamortized debt issuance

costs) are as follows:

September 30,

For the remainder of 2022

For the year ended December 31, 2023

For the year ended December 31, 2024

For the year ended December 31, 2025

For the year ended December 31, 2026

For the year ended December 31, 2027

Total payments

Quaker Chemical Corporation

Notes to Condensed Consolidated Financial Statements - Continued

(Dollars in thousands, except per share amounts,

unless otherwise stated)

Total $ 14,229 $ 5,933

Based on the variable interest rates associated with the Credit Facility, as of March 31, 2023 and as of December 31, 2022, 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”) for the three and nine months ended September 30, 2022 and 2021:

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

Adjustments Defined

Plans Unrealized

(Loss) Gain in

Available-for-

Sale Securities

Balance at June 30, 2022

Other comprehensive (loss) income before

Reclassifications

Amounts reclassified from AOCI

Related tax amounts

Balance at September 30, 2022

Balance at June 30, 2021

Other comprehensive (loss) income before

Reclassifications

Amounts reclassified from AOCI

Related tax amounts

Balance at September 30, 2021

Gain (Loss) in

Available-for-

Sale Securities

Balance at December 31, 2021

Other comprehensive (loss) income before

reclassifications

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 14,465 ( 243 ) 462 506 15,190

Amounts reclassified from AOCI — 76 ( 40 ) — 36

Related tax amounts — 41 ( 88 ) ( 116 ) ( 163 )

Balance at September 30, 2022

Balance at December 31, 2020

Other comprehensive (loss) income before

reclassifications

Balance as of March 31, 2023 $ ( 117,696 ) $ ( 4,721 ) $ ( 1,150 ) $ 390 $ ( 123,177 )

Balance as of December 31, 2021 $ ( 49,843 ) $ ( 13,172 ) $ 397 $ ( 1,372 ) $ ( 63,990 )

Other comprehensive (loss) income before reclassifications ( 6,867 ) 432 ( 1,277 ) 1,429 ( 6,283 )

Amounts reclassified from AOCI — 229 11 — 240

Related tax amounts — ( 165 ) 266 ( 329 ) ( 228 )

Balance at September 30, 2021

All reclassifications related to unrealized gain (loss) 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.

Balance as of March 31, 2022 $ ( 56,710 ) $ ( 12,676 ) $ ( 603 ) $ ( 272 ) $ ( 70,261 )

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.

Quaker Chemical Corporation

Notes to Condensed Consolidated Financial Statements - Continued

(Dollars in thousands, except per share amounts,

unless otherwise stated)

Note 16 – Fair Value

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

Note 16 – Fair Value Measurements

The Company has valued its company-owned life insurance policies at fair value.

These assets are subject to fair value

measurement as follows:

Measurements at September 30, 2022

Using Fair Value

The fair values of Company-owned life insurance assets are based on quotes for like instruments with similar credit ratings and terms.

These assets are subject to fair value measurement as follows:

Fair Value Fair Value Measurements as of March 31, 2023

Using Fair Value Hierarchy

Assets Level 1 Level 2 Level 3

Company-owned life insurance $ 2,204 $ — $ 2,204 $ —

Measurements at December 31, 2021

Using Fair Value

Total $ 2,204 $ — $ 2,204 $ —

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 $ —

The fair values of Company-owned life insurance assets are based on quotes

for like instruments with similar credit ratings and

The Company did

t hold any Level 3 investments as of September 30, 2022 or December 31,

2021, respectively, so related

disclosures have not been included.

Total $ 2,114 $ — $ 2,114 $ —

Note 17 – Hedging Activities

In order to satisfy certain requirements of the Original Credit Facility as well as to manage

the Company’s exposure to

interest rate risk associated with the Original Credit Facility,

in November 2019, the Company entered into $

million notional

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.

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 some 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.

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.

During the three months ended March 31, 2023, the Company entered into and settled forward contracts with an aggregate notional amount totaling $ 16.0 million, resulting in cash proceeds of $ 0.3 million.

The following table displays the notional amounts of the net foreign exchange hedge positions outstanding:

Currency March 31,

Mexican Peso $ 18,000

Interest Rate Swaps

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.

In June 2022, the Company amended the Original Credit Facility.

See Note 14 of Notes to the Condensed Consolidated Financial

The Amended Credit Facility does not require the Company to fix variable

interest rates on any portion of its borrowings.

In October 2022, the Company’s

interest rate swap contracts expired.

Upon expiration, the Company is entitled to a cash payment

from the counterparties, which is materially consistent with the fair value as of

September 30, 2022.

The balance sheet classification and fair values of the Company’s

derivative instruments, which are Level 2 measurements, are as

Quaker Chemical Corporation

Notes to Condensed Consolidated Financial Statements - Continued

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

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, each of which allows for net settlement of all contracts through a single payment 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:

Condensed Consolidated

September 30,

Balance Sheet Location

Balance Sheet Location March 31,

2023 December 31,

Derivatives designated as cash flow hedges:

Interest rate swaps

Prepaid expenses and other current assets

Other accrued liabilities

Interest rate swaps Other non-current Assets $ 506 $ —

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

September 30,

2023 December 31,

Derivatives designated as cash flow hedges:

Interest rate swaps

Quaker Chemical Corporation

Notes to Condensed Consolidated Financial Statements - Continued

(Dollars in thousands, except per share amounts,

unless otherwise stated)

Interest rate swaps AOCI $ 390 $ —

The following table presents the net gain (loss) reclassified from AOCI to earnings:

Location and Amount of Gain (Loss) Recognized in

Statements of Operations

Three Months Ended

Nine Months Ended

September 30,

Amount and location of expense reclassified

Interest income

from AOCI into expense (effective portion)

(expense), net

Interest rate swaps are entered into with a limited number of counterparties,

each of which allows for net settlement of all

contracts through a single payment in a single currency in the event

of a default on or termination of any one contract.

accordance with the Company’s accounting

policy, these derivative instruments

are recorded on a net basis within the Condensed

Consolidated Balance Sheets.

Interest rate swaps Interest expense, net $ — $ ( 637 )

Foreign exchange forward contracts Other expense, net 293 —

$ 293 $ ( 637 )

Note 18 – Commitments and Contingencies

The Company previously disclosed in its 2021 Form 10-K that AC Products, Inc.

(“ACP”), a wholly owned subsidiary,

agreed to operate two groundwater treatment systems, so as to hydraulically

contain groundwater contamination emanating from

ACP’s site until such time as the concentrations

of contaminants are below the current Federal maximum contaminant

level for four

consecutive quarterly sampling events.

In 2014, ACP ceased operation

at one of its two groundwater treatment systems, as it had met

the above condition for closure.

As of September 30, 2022, ACP continues

to operate the second groundwater treatment system, while

the Company discusses with the relevant authorities whether the second

groundwater treatment system meets the conditions for

In addition, the Santa Ana Regional Water

Quality Control Board requested that ACP conduct additional indoor

soil vapor testing on and near the ACP site to confirm that ACP continues to meet the applicable

local soil vapor standards.

September 30, 2022, ACP performed such testing and is awaiting the review

of the results from the Santa Ana Regional Water

Control Board.

As of September 30, 2022, the Company believes that the range of pot

ential-known liabilities associated with the balance of the

ACP water remediation program is approximately $

The low and high ends of the range are based on the

length of operation of the treatment system as determined by groundwater

Costs of operation include the operation and

maintenance of the extraction well, groundwater monitoring and

program management.

The Company previously disclosed in its 2021 Form 10-K that an inactive

subsidiary of the Company that was acquired in 1978

sold certain products containing asbestos, primarily on an installed basis, and

is among the defendants in numerous lawsuits alleging

injury due to exposure to asbestos.

During the three and nine months ended September 30, 2022, there have been

no significant

changes to the facts or circumstances of this previously disclosed matter,

aside from on-going claims and routine payments associated

with this litigation.

Based on a continued analysis of the existing and anticipated future claims against this subsidiary,

it is currently

projected that the subsidiary’s total

liability over the next 50 years for these claims is approximately $

million (excluding costs of

The Company previously disclosed in its 2021 Form 10-K that it is party to certain environmental

matters related to certain

domestic and foreign properties.

These environmental matters primarily require the Company

to perform long-term monitoring and

maintenance at each of the applicable sites.

During the three and nine months ended September 30, 2022, there have

significant changes to the facts or circumstances of these previously disclosed

matters, aside from on-going monitoring and

maintenance activities and routine payments associated with each of

The Company continually evaluates its obligations

related to such matters, and based on historical costs incurred and

projected costs to be incurred over the next approximately 30 years,

has estimated the range of costs for all of these environmental matters, on

a discounted basis, to be between approximately $

million and $

million as of September 30, 2022, for which $

million was accrued within other accrued liabilities and other non-

current liabilities on the Company’s

Condensed Consolidated Balance Sheet as of September 30, 2022.

Comparatively, as of

December 31, 2021, the Company had $

million accrued for with respect to these matters.

Although there can be no assurance regarding the outcome of other

unrelated environmental matters, the Company believes that it

has made adequate accruals for costs associated with other environmental matters

for which it is aware, and has accrued $

as of both September 30, 2022 and December 31, 2021, respectively,

to provide for such anticipated future environmental assessments

and remediation costs.

Quaker Chemical Corporation

Notes to Condensed Consolidated Financial Statements - Continued

(Dollars in thousands, except per share amounts,

unless otherwise stated)

The Company previously disclosed in its 2021 Form 10-K that during the first nine

months of 2021, one of the Company’s

Brazilian subsidiaries received a notice that it had prevailed on an existing legal

claim in regard to certain non-income (indirect) taxes

that had been previously charged and paid.

The matter specifically related to companies’ rights to exclude the state tax on goods

circulation (a valued-added-tax or VAT

equivalent, known in Brazil as “ICMS”) from the calculation of certain additional indirect

taxes (specifically the program of social integration (“PIS”) and contribution

for the financing of social security (“COFINS”)) levied

by the Brazilian States on the sale of goods.

In May 2021, the Brazilian Supreme Court concluded that ICMS should

not be included

in the tax base of PIS and COFINS, and confirmed the methodology for calculating the

PIS and COFINS tax credit claims to which

taxpayers are entitled.

The Company’s Brazilian entities had previously

filed legal or administrative disputes on this matter and are

entitled to receive tax credits and interest dating back five years preceding the

date of their legal claims.

As a result of these court

rulings in the first nine months of 2021, the Company recognized non-income

tax credits of

million BRL or approximately $

million, which includes approximately $

million for the PIS and COFINS tax credits as well as interest on these tax credits of $

The tax credits to which the Company’s

Brazilian subsidiaries are entitled are claimable once registered with the Brazilian

tax authorities which the Company subsequently completed.

These tax credits can be used to offset future Brazilian federal taxes

the Company currently anticipates using the full amount of credits during the

five year period of time permitted.

In connection with obtaining regulatory approvals for the Combination,

certain steel and aluminum related product lines of

Houghton were divested in August 2019.

The Company previously disclosed

in its 2021 Form 10-K that in July 2021, the entity that

acquired these divested product lines submitted an indemnification claim

for certain alleged breaches of representation made by

Houghton in the agreement pursuant to which such assets had been divested.

The Company responded to the subject matters of the

indemnification claim and during the first quarter of 2022, the

matter was resolved consistent with the Company’s

expectations and

position that there were

amounts owed by the Company.

The Company previously disclosed in its 2021 Form 10-K that two of the Company’s

locations suffered property damages as a

result of flooding and electrical fire, respectively.

The Company maintains property and flood insurance for all of its facilities

During the nine months ended September 30, 2022, there have been no significant changes

to the facts or circumstances of

these previously disclosed matters, aside from the on-going restoration

of both sites.

The Company, its insurance

insurance carrier are actively managing the remediation and restoration

activities associated with these events and at this time the

Company has concluded, based on all available information and discussions

with its insurance adjuster and insurance carrier,

losses were covered under the Company’s

property and flood insurance coverage, net of an aggregate deductible of $

Through September 30, 2022, the Company has received payments from

its insurers of $

million associated with these events.

During the three months ended September 30, 2022, the Company recognized

a gain on insurance recoveries of $

Company has recorded an insurance receivable of $

million as of September 30, 2022.

See Note 10 of Notes to the Condensed

Consolidated Financial Statements.

The Company is party to other litigation which management currently

believes will not have a material adverse effect on the

Company’s results of operations,

cash flows or financial condition.

In addition, the Company has an immaterial amount of contractual

purchase obligations.

The Company previously disclosed in its 2022 Form 10-K that two of the Company’s locations suffered property damages 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 months ended March 31, 2023, there have been no significant changes to the facts or circumstances of this previously disclosed matter, other than the ongoing work with the Company’s insurance adjuster and insurance carrier regarding the insurance claims submitted.

Through March 31, 2023, the Company has received cumulative payments from its insurers of $ 5.7 million associated with these events.

During the three months ended March 31, 2023, the Company recognized a gain on insurance recoveries of $ 0.8 million.

See Note 10 of Notes to the Condensed Consolidated Financial Statements.

As previously disclosed in its 2022 Form 10-K, the Company is party to certain environmental matters and other litigation.

See Note 26 of Notes to Consolidated Financial Statements in the Company’s 2022 Form 10-K.

During the three months ended March 31, 2023, there have been no significant changes to the facts or circumstances of any of the previously disclosed matters.

In addition, during the three months ended March 31, 2023, 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 March 31, 2023 and December 31, 2022, respectively, for these ongoing matters.

Quaker Chemical Corporation

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements