What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-10-31 compared with 2024-08-05 · 183 added, 140 removed, 539 unchanged (37% of the section changed)

4 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

24 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

Net income $ 32,372 $ 33,710 $ 102,540 $ 92,644

Other comprehensive (loss) income, net of tax

Other comprehensive income (loss), net of tax

Currency translation adjustments 41,529 ( 25,504 ) ( 2,700 ) ( 24,116 )

1 unchanged sentence

Current period change in fair value of derivatives ( 4,024 ) 1,241 ( 1,694 ) 5,804

Unrealized (loss) gain on available-for-sale securities ( 44 ) 1,241 1 1,575

Other comprehensive (loss) income ( 18,774 ) ( 6,969 ) ( 41,419 ) 8,097

Unrealized gain (loss) on available-for-sale securities 325 ( 637 ) 326 938

Other comprehensive income (loss) 37,308 ( 24,619 ) ( 4,111 ) ( 16,522 )

Comprehensive income 69,680 9,091 98,429 76,122

Comprehensive (income) loss attributable to noncontrolling interest ( 26 ) ( 9 ) 16 ( 19 )

Comprehensive income attributable to noncontrolling interest ( 20 ) ( 36 ) ( 4 ) ( 55 )

Comprehensive income attributable to Quaker Chemical Corporation $ 69,660 $ 9,055 $ 98,425 $ 76,067

4 unchanged sentences

Dollars in thousands, except par value)

September 30,

2024 December 31,

36 unchanged sentences

issued and outstanding

June 30, 2024 – 17,940,532 shares;

September 30, 2024 – 17,852,066 shares;

December 31, 2023 – 17,991,988 shares

12 unchanged sentences

Dollars in thousands)

Six Months Ended

Nine Months Ended

September 30,

Cash flows from operating activities

4 unchanged sentences

Equity in undistributed earnings of associated companies, net of dividends 1,045 ( 7,486 )

Deferred compensation, deferred taxes and other, net ( 647 ) 154

Deferred income taxes ( 7,934 ) ( 1,591 )

Deferred compensation and other, net ( 1,428 ) 1,076

Share-based compensation 12,413 11,189

16 unchanged sentences

Borrowings (payments) on revolving credit facilities, net 30,500 ( 112,835 )

Payments on other debt, net ( 37 ) ( 456 )

(Payments) borrowings on other debt, net ( 842 ) 797

Dividends paid ( 24,523 ) ( 23,459 )

3 unchanged sentences

Effect of foreign exchange rate changes on cash ( 1,124 ) ( 5,746 )

Net (decrease) increase in cash and cash equivalents ( 5,959 ) 8,442

Net increase in cash and cash equivalents 17,547 17,395

Cash and cash equivalents at the beginning of the period 194,527 180,963

5 unchanged sentences

Dollars in thousands, except per share amounts)

Stock Capital in

Par Value Retained

Earnings Accumulated

Comprehensive

Loss Noncontrolling

Stock Capital in Excess of Par Value Retained

Earnings Accumulated Other

Comprehensive Loss Noncontrolling

Interest Total

12 unchanged sentences

Balance as of June 30, 2023 $ 17,999 $ 934,941 $ 513,148 $ ( 130,108 ) $ 686 $ 1,336,666

Net income — — 33,670 — 40 33,710

Amounts reported in other comprehensive loss — — — ( 24,616 ) ( 3 ) ( 24,619 )

Dividends ($ 0.455 per share)

— — ( 8,190 ) — — ( 8,190 )

Share issuance and equity-based compensation plans 2 3,532 — — — 3,534

Balance as of September 30, 2023 $ 18,001 $ 938,473 $ 538,628 $ ( 154,724 ) $ 723 $ 1,341,101

Balance as of December 31, 2023 $ 17,992 $ 940,101 $ 550,641 $ ( 124,415 ) $ 603 $ 1,384,922

12 unchanged sentences

Balance as of June 30, 2024 $ 17,941 $ 938,436 $ 604,404 $ ( 165,762 ) $ 587 $ 1,395,606

Net income — — 32,346 — 26 32,372

Amounts reported in other comprehensive income — — — 37,314 ( 6 ) 37,308

Dividends ($ 0.485 per share)

— — ( 8,647 ) — — ( 8,647 )

Shares purchased under share repurchase program ( 89 ) ( 14,462 ) — — — ( 14,551 )

Excise tax on shares purchased under share repurchase program — ( 162 ) — — — ( 162 )

Share issuance and equity-based compensation plans — 4,344 — — — 4,344

Balance as of September 30, 2024 $ 17,852 $ 928,156 $ 628,103 $ ( 128,448 ) $ 607 $ 1,446,270

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

3 unchanged sentences

Note 1 – Basis of Presentation and Description of Business

As used in these Notes to Condensed Consolidated Financial Statements of this Quarterly Report on Form 10-Q for the period ended June 30, 2024 (the “Report”), the terms “Quaker Houghton,” the “Company,” “we,” and “our” refer to Quaker Chemical Corporation (doing business as Quaker Houghton), its subsidiaries, and associated companies, unless the context otherwise requires.

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

Basis of Presentation

4 unchanged sentences

In the opinion of management, the financial statements reflect all adjustments, which are of a normal recurring nature, necessary for a fair statement of the financial position, results of operations, and cash flows for the interim periods.

The results for the six months ended June 30, 2024 are not necessarily indicative of the results to be expected for the full year.

The results for the nine months ended September 30, 2024 are not necessarily indicative of the results to be expected for the full year.

These financial statements should be read in conjunction with the Company’s Annual Report filed on Form 10-K for the year ended December 31, 2023 (as amended, the “2023 Form 10-K”).

Certain prior year amounts in the Condensed Consolidated Statements of Cash Flows have been reclassified to conform to the current year presentation.

Description of Business

9 unchanged sentences

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

As of, and for the three and six months ended June 30, 2024, the Company's Argentine and Turkish subsidiaries together represented 1 % and 2 % of the Company’s consolidated total assets and net sales, respectively.

During the three and six months ended June 30, 2024, the Company recorded $ 0.6 million of remeasurement losses and $ 0.3 million of net remeasurement gains associated with the applicable currency conversions, respectively.

Comparatively, during the three and six months ended June 30, 2023, the Company recorded $ 1.1 million and $ 1.6 million of remeasurement losses associated with the applicable currency conversions, respectively.

As of, and for the three and nine months ended September 30, 2024, the Company's Argentine and Turkish subsidiaries together represented approximately 1 % and 2 % of the Company’s consolidated total assets and net sales, respectively.

During the three and nine months ended September 30, 2024, the Company recorded $ 0.6 million and $ 0.3 million of net remeasurement losses associated with the applicable currency conversions, respectively.

Comparatively, during the three and nine months ended September 30, 2023, the Company recorded $ 1.2 million and $ 2.9 million of remeasurement losses associated with the applicable currency conversions, respectively.

These gains and losses were recorded within Other income (expense), net, in the Company’s Condensed Consolidated Statements of Operations.

Note 2 – Business Acquisitions

Subsequent to the date of these financial statements, in July 2024, the Company acquired Sutai Group (“Sutai”), for approximately 2.3 billion Japanese yen, or approximately $ 14.6 million, subject to routine and customary post-closing adjustments and earn-out provisions.

Sutai is based in Japan and provides impregnation treatment products and services to the automotive industry and a variety of other industries.

Sutai will be reported as part of the Asia/Pacific reportable segment.

In July 2024, the Company acquired the Sutai Group (“Sutai”), for approximately $ 16.2 million, including an initial cash payment of $ 14.6 million, subject to routine and customary post-closing adjustments related to working capital and net indebtedness levels, as well as earn-out provisions with an initial estimated payout of $ 1.6 million related to the finalization of 2024 and 2025 earnings.

Assets acquired included cash and cash equivalents of $ 5.5 million.

The Company recorded incremental income of $ 0.4 million during the three and nine months ended September 30, 2024 relating to adjustments to these earnout provisions in Other income (expense), net on the Condensed Consolidated Statements of Operations.

As of September 30, 2024, the Company has remaining earnout liabilities recorded on its Condensed Consolidated Balance Sheet of $ 1.2 million.

Sutai is based in Japan and provides impregnation treatment products and services to the automotive and other industries.

Sutai is reported as part of the Asia/Pacific reportable segment.

This acquisition strengthens Quaker Houghton’s technology portfolio, enabling the Company to better support and optimize production processes for customers across the Japanese, Asia Pacific and global markets.

The Company allocated $ 3.1 million of the purchase price to intangible assets and recognized $ 5.5 million of goodwill in the Asia/Pacific segment, none of which is deductible for tax purposes.

The goodwill is primarily attributable to expected growth synergies.

As of September 30, 2024, the allocation of the purchase price has not been finalized.

Quaker Chemical Corporation

2 unchanged sentences

During February 2024, the Company acquired I.K.V.

Tribologie IKVT and its subsidiaries (“IKV”) for 32.6 million EUR, or $ 35.2 million, including an initial cash payment of 27.6 million EUR, or $ 29.7 million, subject to routine and customary post-closing adjustments related to working capital and net indebtedness levels as well as earn-out provisions related to the finalization of 2023 earnings.

Tribologie IKVT and its subsidiaries (“IKV”) for $ 35.2 million, including an initial cash payment of $ 29.7 million, subject to routine and customary post-closing adjustments related to working capital and net indebtedness levels as well as earn-out provisions related to the finalization of 2023 earnings.

Assets acquired included approximately $ 4.8 million of cash and cash equivalents.

1 unchanged sentence

The acquisition of IKV strengthens the Company’s position in first-fill greases.

The Company preliminarily allocated $ 15.0 million of the purchase price to intangible assets, comprised of approximately $ 11.1 million of customer relationships to be amortized over 16 years;

The Company allocated $ 15.0 million of the purchase price to intangible assets, comprised of approximately $ 11.1 million of customer relationships to be amortized over 16 years;

$ 3.2 million of product technologies to be amortized over 14 years;

1 unchanged sentence

In addition, the Company recognized $ 16.4 million of goodwill in the EMEA segment, none of which is deductible for tax purposes.

The goodwill recognized on the transaction is primarily attributable to expected cost and growth synergies.

Subsequent to the date of these financial statements, the 2023 earnings were finalized and the Company made a payment of 5.0 million EUR, or $ 5.5 million, in connection with the post-closing adjustments and earn-out provision.

As of June 30, 2024, the allocation of the purchase price has not been finalized.

The results of operations of IKV subsequent to the acquisition date are included in the unaudited Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2024.

The goodwill is primarily attributable to expected cost and growth synergies.

In July 2024, the 2023 earnings were finalized and the Company made a payment of $ 5.5 million in connection with the post-closing adjustments and earn-out provision.

As of September 30, 2024, the allocation of the purchase price has been finalized.

The results of operations of Sutai and IKV subsequent to the acquisition dates are included in the unaudited Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2024.

Note 3 – Recently Issued Accounting Standards

2 unchanged sentences

Improvements to Reportable Segment Disclosures in November 2023.

This ASU expands on reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses, defined as those expenses that are regularly provided to the chief operating decision maker and included in the reported measure of segment profit or loss.

This ASU expands on reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses, defined as those expenses that are regularly provided to the chief operating decision maker (“CODM”) and included in the reported measure of segment profit or loss.

ASU 2023-07 is effective for annual reports for fiscal years beginning after December 15, 2023, with early adoption permitted.

The Company is currently evaluating the disclosure requirements of this standard and the impact on its Consolidated Financial Statements.

The Company continues to assess the impact of ASU 2023-07.

As part of its preliminary assessment, the Company is in the process of identifying the significant segment expenses and other information regularly provided to the CODM and included in the reported measure of segment profitability.

The FASB issued ASU 2023-09, Income Taxes (Topic 740) :

5 unchanged sentences

Note 4 – Business Segments

The Company’s operating segments, which are consistent with its reportable segments, reflect the structure of the Company’s internal organization, the method by which the Company’s resources are allocated, and the manner by which the chief operating decision maker assesses the Company’s performance.

The Company has three reportable segments:

9 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

Net sales 2024 2023 2024 2023

18 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

Inter-segment revenues 2024 2023 2024 2023

5 unchanged sentences

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 $ 19.2 million and $ 39.0 million for the three and six months ended June 30, 2024, respectively, and $ 21.0 million and $ 41.7 million for the three and six months ended June 30, 2023, respectively.

The Company transferred third-party products under arrangements recognized on a net reporting basis of $ 19.4 million and $ 58.5 million for the three and nine months ended September 30, 2024, respectively, and $ 21.6 million and $ 63.2 million for the three and nine months ended September 30, 2023, respectively.

Customer Concentration

2 unchanged sentences

Contract Assets and Liabilities

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

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

Quaker Chemical Corporation

1 unchanged sentence

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

The Company had approximately $ 3.2 million and $ 4.5 million of deferred revenue as of June 30, 2024 and December 31, 2023, respectively.

For the six months ended June 30, 2024, the Company satisfied materially all of the associated performance obligations and recognized into revenue materially all advance payments received and recorded as of December 31, 2023.

The Company had approximately $ 3.7 million and $ 4.5 million of deferred revenue as of September 30, 2024 and December 31, 2023, respectively.

For the nine months ended September 30, 2024, the Company satisfied materially all of the associated performance obligations and recognized into revenue materially all advance payments received and recorded as of December 31, 2023.

Disaggregated Revenue

The Company sells its various industrial process fluids, its specialty chemicals and its technical expertise as a global product portfolio.

The Company sells its industrial process fluids, specialty chemicals and technical expertise as a global product portfolio.

The Company generally manages and evaluates its performance by reportable segment first, and then by customer industries.

1 unchanged sentence

The following tables disaggregate the Company’s net sales by segment and customer industry.

Three Months Ended June 30, 2024

Three Months Ended September 30, 2024

Customer Industries Americas EMEA Asia/Pacific Consolidated

2 unchanged sentences

$ 220,275 $ 134,135 $ 107,864 $ 462,274

Six Months Ended June 30, 2024

Nine Months Ended September 30, 2024

Customer Industries Americas EMEA Asia/Pacific Consolidated

2 unchanged sentences

$ 673,546 $ 410,558 $ 311,496 $ 1,395,600

Three Months Ended June 30, 2023

Three Months Ended September 30, 2023

Customer Industries Americas EMEA Asia/Pacific Consolidated

2 unchanged sentences

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

Six Months Ended June 30, 2023

Nine Months Ended September 30, 2023

Customer Industries Americas EMEA Asia/Pacific Consolidated

6 unchanged sentences

In addition, the Company has certain land use leases with remaining lease terms up to 91 years.

The Company had no material variable lease costs, sublease income, or finance leases for the three and six months ended June 30, 2024 and 2023.

The Company had no material variable lease costs, sublease income, or finance leases for the three and nine months ended September 30, 2024 and 2023.

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

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

6 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

4 unchanged sentences

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

September 30,

2024 December 31,

5 unchanged sentences

Weighted average discount rate 5.40 % 4.91 %

Maturities of operating lease liabilities as of June 30, 2024 were as follows:

Maturities of operating lease liabilities as of September 30, 2024 were as follows:

For the remainder of 2024 $ 3,620

9 unchanged sentences

In 2022, the Company initiated a global cost and optimization program to improve its cost structure and drive a more profitable and productive organization.

As of June 30, 2024, the program included restructuring and associated severance costs to reduce headcount by approximately 120 positions globally.

These headcount reductions began in the fourth quarter of 2022 and are expected to be completed in 2024.

As of September 30, 2024, the program included restructuring and associated severance costs to reduce headcount by approximately 175 positions globally.

The program is expected to be substantially complete by the end of the first quarter of 2025.

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

The exact timing to complete, and final costs associated with, all actions will depend on a number of factors and are subject to change.

Restructuring costs incurred during the three and six months ended June 30, 2024 and 2023 include employee severance and facility closure costs that are recorded in Restructuring and related charges, net in the Company’s Condensed Consolidated Statements of Operations.

In addition to the program described above, the Company continues to take actions to optimize its facilities’ footprint.

Restructuring costs incurred during the three and nine months ended September 30, 2024 and 2023 include employee severance, asset related and facility closure costs that are recorded in Restructuring and related charges, net in the Company’s Condensed Consolidated Statements of Operations.

Quaker Chemical Corporation

1 unchanged sentence

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

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

Changes in the Company’s accruals for its restructuring program and facility closure actions are as follows:

Accrued restructuring as of December 31, 2023 $ 3,350

2 unchanged sentences

Currency translation adjustments ( 13 )

Accrued restructuring as of June 30, 2024 $ 1,048

In connection with the plans for closure of certain manufacturing and non-manufacturing facilities, the Company has made available for sale certain facilities and property.

As of June 30, 2024, the Company classified certain properties with aggregate book value of approximately $ 2.1 million as held-for-sale.

Accrued restructuring as of September 30, 2024 $ 1,727

In connection with the plans for closure of certain manufacturing and non-manufacturing facilities, the Company has made available for sale certain facilities and properties.

As of September 30, 2024, the Company classified properties in the Americas and EMEA segments with an aggregate book value of approximately $ 2.2 million as held-for-sale.

These assets are recorded in Prepaid expenses and other current assets on the Company’s Condensed Consolidated Balance Sheets.

The Company expects to complete the sale of these properties over the next 12 months.

During the three and six months ended June 30, 2024, the Company completed the sale of certain facilities previously classified as held for sale for a net gain of $ 0.5 million, which is recorded in Other income (expenses), net in the Company’s Condensed Consolidated Statements of Operations.

During the three and nine months ended September 30, 2024, the Company completed the sale of certain facilities previously classified as held for sale for a net gain of $ 0.5 million, which is recorded in Other income (expenses), net in the Company’s Condensed Consolidated Statements of Operations.

Note 8 – Share-Based Compensation

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

5 unchanged sentences

Stock Options

As of June 30, 2024, unrecognized compensation expense related to unvested stock options was $ 0.1 million, to be recognized over a weighted average remaining period of 0.8 years.

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

Restricted Stock Awards

During the six months ended June 30, 2024, the Company granted 872 non-vested restricted share awards under its long-term incentive plan (“LTIP”) , which are subject to time-based vesting, generally over one to three years .

As of June 30, 2024, unrecognized compensation expense related to non-vested restricted shares was $ 2.8 million, to be recognized over a weighted average remaining period of 1.2 years.

During the nine months ended September 30, 2024, the Company granted 872 non-vested restricted share awards under its long-term incentive plan (“LTIP”) , which are subject to time-based vesting, generally over one to three years .

As of September 30, 2024, unrecognized compensation expense related to non-vested restricted shares was $ 2.1 million, to be recognized over a weighted average remaining period of 1.0 year.

Restricted Stock Units

During the six months ended June 30, 2024, the Company granted 55,227 restricted stock units under its LTIP , which are subject to time-based vesting, generally over one to three years .

During the nine months ended September 30, 2024, the Company granted 59,678 restricted stock units under its LTIP , which are subject to time-based vesting, generally over one to three years .

The fair value of these grants is based on the closing price of the Company’s common stock on the date of grant.

As of June 30, 2024, unrecognized compensation expense related to non-vested restricted stock units was $ 9.4 million, to be recognized over a weighted average remaining period of 1.7 years.

As of September 30, 2024, unrecognized compensation expense related to non-vested restricted stock units was $ 7.9 million, to be recognized over a weighted average remaining period of 1.5 years.

Performance Stock Units

5 unchanged sentences

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

As mentioned above, a portion of the Company’s PSU valuation is subject to the achievement of the Company’s TSR relative to the performance of a selected peer group.

As mentioned above, a portion of the Company’s PSUs are subject to the achievement of the Company’s TSR relative to the performance of a selected peer group.

For PSUs granted prior to 2024, the Company’s peer group was the S&P Midcap 400 Materials group.

For the 2024 annual LTIP grants, the Company made an election to change peer groups to the S&P 1500 Chemical group to measure the Company’s relative TSR.

For PSUs subject to relative TSR performance granted in 2024, the Company made an election to change peer groups to the S&P 1500 Chemical group.

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.

During the six months ended June 30, 2024, the Company granted 20,205 PSUs with a ROIC condition at a grant date fair value of $ 200.16 per unit, which was based on the closing trading price of the Company’s common stock on the date of grant.

PSUs granted with a relative TSR condition are valued using a Monte Carlo simulation on the date of grant.

The grant-date fair value of the PSUs valued using a Monte Carlo simulation was $ 234.19 per unit, which incorporated the assumptions set forth in the table below:

Number of PSUs granted 20,078

During the nine months ended September 30, 2024, the Company granted 21,019 PSUs with a ROIC condition at a grant date fair value of $ 200.16 per unit, which was based on the closing trading price of the Company’s common stock on the date of grant.

During the nine months ended September 30, 2024, the Company granted 20,883 PSUs with a relative TSR condition.

These PSUs are valued using a Monte Carlo simulation on the grant date and had a grant-date fair value of $ 234.19 per unit, which was developed based on the assumptions set forth in the table below:

Risk-free interest rate 4.55 %

1 unchanged sentence

Expected term (years) 3.0

As of June 30, 2024, there was approximately $ 12.0 million of total unrecognized compensation cost related to PSUs, which the Company expects to recognize over a weighted-average period of 2.3 years.

As of September 30, 2024, there was approximately $ 10.7 million of total unrecognized compensation cost related to PSUs, which the Company expects to recognize over a weighted-average period of 2.1 years.

Note 9 – Pension and Other Postretirement Benefits

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

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Pension Benefits Other Postretirement Benefits Pension Benefits Other Postretirement Benefits

7 unchanged sentences

Employer Contributions

During the six months ended June 30, 2024, $ 1.9 million of contributions have been made to the Company’s U.S.

During the nine months ended September 30, 2024, $ 5.3 million of contributions have been made to the Company’s U.S.

and foreign pension plans.

Contributions to other postretirement benefit plans were not material.

Contributions to other postretirement benefit plans were $ 0.1 million.

Taking into consideration current minimum cash contribution requirements, the Company currently expects to make full year cash contributions of approximately $ 6.5 million to its U.S.

6 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

1 unchanged sentence

Income from third party license fees 158 245 $ 553 $ 891

Gain on disposals of property, plant, equipment and other assets, net 510 — 917 —

(Loss) gain on disposals of property, plant, equipment and other assets, net ( 56 ) ( 25 ) 861 ( 91 )

Foreign exchange losses, net ( 949 ) ( 2,498 ) ( 2,124 ) ( 10,049 )

1 unchanged sentence

Facility remediation recoveries, net — — — 1,014

Business interruption insurance proceeds 1,000 — 1,000 —

Product liability claim — — ( 896 ) —

Other non-operating income (expense), net 65 ( 204 ) 167 ( 77 )

Earnout liability adjustment 400 — 400 —

Other non-operating (expense) income, net ( 33 ) 23 134 12

Total other income (expense), net $ 783 $ ( 2,713 ) $ 2,285 $ ( 8,558 )

Gain on disposals of property, plant, equipment and other assets, net includes the net gains recognized for the sale of certain facilities previously classified as held for sale during the three and six months ended June 30, 2024.

(Loss) gain on disposals of property, plant, equipment and other assets, net, includes the net gains recognized for the sale of certain facilities previously classified as held for sale during the three and nine months ended September 30, 2024.

See Note 7 of Notes to the Condensed Consolidated Financial Statements.

Facility remediation recoveries, net, during the three and six months ended June 30, 2023, reflect insurance recoveries of costs for remediation and restoration of property damage.

See Note 18 for discussion regarding the Company’s related business interruption claims.

Product liability claim represents expense related to the payments by the Company in connection with a product liability dispute with a customer during the six months ended June 30, 2024.

Business interruption insurance proceeds during the three and nine months ended September 30, 2024 reflects an insurance recovery of $ 1.0 million related to production losses due to an electrical fire in 2021 that resulted in temporary shutdown of production at one of the Company’s production facilities.

See Note 18 for additional discussion regarding the Company’s business interruption claims.

Facility remediation recoveries, net, during the nine months ended September 30, 2023, reflect insurance recoveries of costs for remediation and restoration of property damage.

See Note 18 for additional discussion regarding the Company’s insurance recoveries for facility remediation and property damage.

Product liability claim costs represents expense related to the payments by the Company in connection with a product liability dispute with a customer during the nine months ended September 30, 2024.

Note 11 – Income Taxes

The Company’s effective tax rates for the three and six months ended June 30, 2024 were 32.8 % and 30.1 %, respectively, compared to 34.2 % and 31.2 % for the three and six months ended June 30, 2023, respectively.

The Company’s effective tax rates for the three and six months ended June 30, 2024 were largely driven by the mix of pre-tax earnings, certain one-time charges related to an intercompany intangible asset transfer, and withholding taxes, offset by changes in uncertain tax positions.

Comparatively, the effective tax rates for the three and six months ended June 30, 2023 were largely impacted by the mix of pre-tax earnings, changes to the valuation allowance for and the usage of certain foreign tax credits, and withholding taxes, partially offset by changes in uncertain tax positions and favorable return to provision adjustments.

The Company’s effective tax rates for the three and nine months ended September 30, 2024 were 28.9 % and 29.7 %, respectively, compared to 30.9 % and 31.1 % for the three and nine months ended September 30, 2023, respectively.

The Company’s effective tax rates for the three months ended September 30, 2024 was largely driven by the mix of pre-tax earnings, withholding taxes, and changes in uncertain tax positions offset by return to provision adjustments.

The effective tax rate for the nine months ended September 30, 2024 was further impacted by certain one-time charges related to an intercompany intangible asset transfer offset by changes in uncertain tax positions.

Comparatively, the effective tax rates for the three and nine months ended September 30, 2023 were largely impacted by the mix of pre-tax earnings, changes to the valuation allowance for and the usage of certain foreign tax credits, return to provision adjustments and withholding taxes, partially offset by changes in uncertain tax positions .

Quaker Chemical Corporation

4 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

13 unchanged sentences

Diluted earnings per common share $ 1.81 $ 1.87 $ 5.70 $ 5.14

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 16,098 and 31,000 for the three and six months ended June 30, 2024, respectively, and 8,232 and 10,940 for the three and six months ended June 30, 2023, respectively .

Certain stock options, restricted stock units, and PSUs are not included in the diluted earnings per share calculation when the effect would be anti-dilutive.

The number of anti-dilutive shares was 19,374 and 31,377 for the three and nine months ended September 30, 2024, respectively, and 11,598 and 10,453 for the three and nine months ended September 30, 2023, respectively .

Note 13 – Goodwill and Other Intangible Assets

Changes in the carrying amount of goodwill for the six months ended June 30, 2024 were as follows:

Changes in the carrying amount of goodwill for the nine months ended September 30, 2024 were as follows:

Americas EMEA Asia/Pacific Total

2 unchanged sentences

Currency translation adjustments ( 3,748 ) ( 215 ) 2,009 ( 1,954 )

Balance as of June 30, 2024 $ 280,176 $ 81,572 $ 155,834 $ 517,582

Balance as of September 30, 2024 $ 279,355 $ 82,173 $ 170,995 $ 532,523

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

2 unchanged sentences

Amortization Net Book Value

June 30, 2024 December 31, 2023 June 30, 2024 December 31, 2023 June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023 September 30, 2024 December 31, 2023 September 30, 2024 December 31, 2023

Customer lists and rights to sell $ 856,919 $ 841,562 $ 281,935 $ 243,872 $ 574,984 $ 597,690

8 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30,

Nine Months Ended

September 30,

2024 2023 2024 2023

7 unchanged sentences

For the year ended December 31, 2029 56,397

As of June 30, 2024 and December 31, 2023, the Company had indefinite-lived intangible assets for trademarks and tradenames totaling $ 189.3 million and $ 193.2 million, respectively.

As of September 30, 2024 and December 31, 2023, the Company had indefinite-lived intangible assets for trademarks and tradenames totaling $ 194.7 million and $ 193.2 million, respectively.

Note 14 – Debt

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

As of June 30, 2024 As of December 31, 2023

As of September 30, 2024 As of December 31, 2023

Rate Outstanding

12 unchanged sentences

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.

In 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.

2 unchanged sentences

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 June 30, 2024, the Company was in compliance with all of the Credit Facility covenants.

As of September 30, 2024, the Company was in compliance with all of the Credit Facility covenants.

See Note 19 of Notes to Consolidated Financial Statements in the Company’s 2023 Form 10-K.

2 unchanged sentences

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

The weighted average variable interest rate incurred on the outstanding borrowings under the Credit Facility during the three and six months ended June 30, 2024 were approximately 6.2 % and 6.3 %, respectively.

As of June 30, 2024, the interest rate on the outstanding borrowings under the Credit Facility was approximately 6.1 %.

The weighted average variable interest rates incurred on the outstanding borrowings under the Credit Facility during the three and nine months ended September 30, 2024 were approximately 6.1 % and 6.2 %, respectively.

As of September 30, 2024, the interest rate on the outstanding borrowings under the Credit Facility was approximately 5.8 %.

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 $ 445 million, which is net of bank letters of credit of approximately $ 3 million, as of June 30, 2024.

The Company had unused capacity under the Revolver of approximately $ 436 million, which is net of bank letters of credit of approximately $ 3 million, as of September 30, 2024.

In order to manage the Company’s exposure to variable interest rate risk associated with the Credit Facility, in the first quarter of 2023, the Company entered into $ 300.0 million notional amounts of three-year interest rate swaps to convert a portion of the Company’s variable rate borrowings to an average fixed rate of 3.64 % plus an applicable margin as provided in the Credit Facility based on the Company’s consolidated net leverage ratio.

As of June 30, 2024, the aggregate interest rate on the swaps, including the fixed base rate plus the applicable margin, was 5.3 %.

As of September 30, 2024, the aggregate interest rate on the swaps, including the fixed base rate plus the applicable margin, was approximately 4.9 %.

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 offset of Long-term debt on the Condensed Consolidated Balance Sheet.

Approximately $ 1.5 million of the capitalized costs were attributed to the Revolver and recorded within Other assets on the Condensed Consolidated Balance Sheet.

The Company capitalized third-party and credit debt issuance costs attributed to the Euro Term Loan, U.S.

Term Loan and Revolver in connection to the amended Credit Facility during the second quarter of 2022.

Capitalized costs attributed to the Euro Term Loan and U.S.

Term Loan are recorded as a direct offset of Long-term debt on the Condensed Consolidated Balance Sheet.

Capitalized costs attributed to the Revolver are 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 June 30, 2024, the Company had $ 1.3 million of debt issuance costs recorded as an offset of Long-term debt on the Condensed Consolidated Balance Sheets and $ 2.9 million of debt issuance costs recorded within Other assets on the Condensed Consolidated Balance Sheet.

Comparatively, as of December 31, 2023, the Company had $ 1.5 million of debt issuance costs recorded as an offset of Long-term debt on the Condensed Consolidated Balance Sheets and $ 3.3 million of debt issuance costs recorded within Other assets on the Condensed Consolidated Balance Sheets.

As of September 30, 2024, the Company had $ 1.2 million of debt issuance costs recorded as an offset of Long-term debt and $ 2.6 million of debt issuance costs recorded within Other assets.

Comparatively, as of December 31, 2023, the Company had $ 1.5 million of debt issuance costs recorded as an offset of Long-term debt and $ 3.3 million of debt issuance costs recorded within Other assets.

Industrial development bonds

As of June 30, 2024 and December 31, 2023, the Company had fixed rate, industrial development authority bonds totaling $ 10.0 million in principal amount due in 2028.

As of September 30, 2024 and December 31, 2023, the Company had fixed rate, industrial development authority bonds totaling $ 10.0 million in principal amount due in 2028.

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

2 unchanged sentences

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 finance lease obligations.

Total unused capacity under these arrangements as of June 30, 2024 was approximately $ 34 million.

Total unused capacity under these arrangements as of September 30, 2024 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 June 30, 2024 were approximately $ 4 million.

The Company’s total bank letters of credit and guarantees outstanding as of September 30, 2024 were approximately $ 7 million.

Interest expense, net

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

Interest expense $ 11,530 $ 14,389 $ 22,812 $ 28,265

Interest expense, net $ 10,774 $ 12,598 $ 33,585 $ 40,863

Amortization of debt issuance costs 353 353 1,059 1,059

Total $ 11,127 $ 12,951 $ 34,644 $ 41,922

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

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

Quaker Chemical Corporation

5 unchanged sentences

Plans Unrealized

(Loss) Gain in

Gain (Loss) in

Available-for-

1 unchanged sentence

Instruments Total

Balance as of March 31, 2024 $ ( 140,733 ) $ ( 10,384 ) $ 378 $ 3,752 $ ( 146,987 )

Other comprehensive (loss) income before Reclassifications ( 18,841 ) 113 ( 58 ) ( 19 ) ( 18,805 )

Balance as of June 30, 2024 $ ( 159,574 ) $ ( 10,259 ) $ 334 $ 3,737 $ ( 165,762 )

Other comprehensive income (loss) before Reclassifications 41,535 ( 858 ) 411 ( 5,226 ) 35,862

Amounts reclassified from AOCI — 164 — — 164

Related tax amounts — 172 ( 86 ) 1,202 1,288

Balance as of September 30, 2024 $ ( 118,039 ) $ ( 10,781 ) $ 659 $ ( 287 ) $ ( 128,448 )

Balance as of June 30, 2023 $ ( 130,738 ) $ ( 4,024 ) $ 91 $ 4,563 $ ( 130,108 )

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

Other comprehensive (loss) income before Reclassifications ( 25,501 ) 304 ( 802 ) 1,612 ( 24,387 )

1 unchanged sentence

Related tax amounts — ( 94 ) 169 ( 371 ) ( 296 )

Balance as of June 30, 2023 $ ( 130,738 ) $ ( 4,024 ) $ 91 $ 4,563 $ ( 130,108 )

Balance as of September 30, 2023 $ ( 156,239 ) $ ( 3,743 ) $ ( 546 ) $ 5,804 $ ( 154,724 )

Adjustments Defined

Plans Unrealized

(Loss) Gain in

Plans Unrealized Gain

Available-for-

5 unchanged sentences

Related tax amounts — 9 ( 86 ) 506 429

Balance as of June 30, 2024 $ ( 159,574 ) $ ( 10,259 ) $ 334 $ 3,737 $ ( 165,762 )

Balance as of September 30, 2024 $ ( 118,039 ) $ ( 10,781 ) $ 659 $ ( 287 ) $ ( 128,448 )

Balance as of December 31, 2022 $ ( 132,161 ) $ ( 4,595 ) $ ( 1,484 ) $ — $ ( 138,240 )

Other comprehensive income before reclassifications 1,423 611 1,442 5,926 9,402

Other comprehensive (loss) income before reclassifications ( 24,078 ) 915 640 7,538 ( 14,985 )

Amounts reclassified from AOCI — 225 547 — 772

Related tax amounts — ( 288 ) ( 249 ) ( 1,734 ) ( 2,271 )

Balance as of June 30, 2023 $ ( 130,738 ) $ ( 4,024 ) $ 91 $ 4,563 $ ( 130,108 )

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.

Balance as of September 30, 2023 $ ( 156,239 ) $ ( 3,743 ) $ ( 546 ) $ 5,804 $ ( 154,724 )

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.

5 unchanged sentences

During June 2023, the Company surrendered and liquidated $ 1.9 million of these life insurance policies.

As a result, the Company owns an immaterial amount of company-owned life insurance policies as of June 30, 2024 and December 31, 2023.

As a result, the Company owns an immaterial amount of company-owned life insurance policies as of September 30, 2024 and December 31, 2023.

See Note 17 for a description of the Company’s derivative instruments.

2 unchanged sentences

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.

The Company does not hold or enter into derivative financial instruments for trading or speculative purposes.

Foreign Exchange Forward Contracts

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.

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 foreign currencies.

These forward contracts are marked-to-market at each reporting date.

1 unchanged sentence

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.

Open foreign exchange forward contracts as of June 30, 2024 were entered into as hedges in Japanese yen, Mexican peso and Chinese yuan against the U.S.

As of June 30, 2024, the Company had open foreign exchange forward contracts with notional U.S.

dollar values of the following:

Currency June 30,

Open foreign exchange forward contracts as of September 30, 2024 were entered into as hedges of Japanese yen and Mexican peso against the U.S.

dollar and had the following notional U.S.

dollar values :

Currency September 30,

Mexican Peso $ 13,700

Japanese Yen 10,000

Chinese Yuan 4,200

Open foreign exchange forward contracts as of June 30, 2024 had maturities occurring over a period of one month .

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

Interest Rate Swaps

1 unchanged sentence

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 these hedged transactions affect earnings or it becomes probable that the forecasted transaction will not occur.

These interest rate swaps are designated as cash flow hedges and, as such, the contracts are marked-to-market at each reporting date with any unrealized gains or losses included in AOCI to the extent effective and reclassified to interest expense in the period during which the hedged transactions affect earnings or it becomes probable that the forecasted transaction will not occur.

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

Derivatives instruments Condensed Consolidated Balance Sheets Location June 30,

Derivatives instruments Condensed Consolidated Balance Sheets Location September 30,

2024 December 31,

Interest rate swaps:

Other accrued liabilities $ 373 $ —

Other non-current assets — 1,828

1 unchanged sentence

Other accrued liabilities 71 159

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

Derivatives designated as cash flow hedges June 30,

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

Derivatives designated as cash flow hedges September 30,

2024 December 31,

5 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

Derivative instruments Condensed Consolidated Statements of Operations 2024 2023 2024 2023

Interest rate swaps Interest expense, net $ 1,295 $ 1,198 $ 3,854 $ 2,259

Foreign exchange forward contracts Other income (expense), net ( 1,675 ) 1,843 ( 732 ) 2,135

Foreign exchange forward contracts Other (expense) income, net ( 1,308 ) ( 29 ) ( 2,040 ) 2,107

Total $ ( 13 ) $ 1,169 $ 1,814 $ 4,366

2 unchanged sentences

See Note 25 of Notes to Consolidated Financial Statements in the Company’s 2023 Form 10-K.

During the three and six months ended June 30, 2024, there have been no significant changes to the facts or circumstances of any of the previously disclosed matters.

During the three and nine months ended September 30, 2024, there have been no significant changes to the facts or circumstances of any of the previously disclosed matters.

Although there can be no assurance regarding the outcome of any of the ongoing environmental matters or litigation, the Company believes that it has made adequate accruals for costs and liabilities associated with these matters.

The Company has accrued approximately $ 5 million as of June 30, 2024 and December 31, 2023, respectively, for these ongoing matters.

The Company previously disclosed in its 2023 Form 10-K that one of its locations suffered property damage as a result of an electrical fire.

The Company has accrued approximately $ 6 million as of September 30, 2024 and December 31, 2023, respectively, for these ongoing matters.

The Company previously disclosed in its 2023 Form 10-K that one of its North American production facilities experienced an electrical fire in 2021 that resulted in property damage and the temporary shutdown of production.

The Company and its insurance carrier reviewed the impact of the electrical fire on the production facility’s operations as it relates to a potential business interruption insurance claim.

Subsequent to the date of these financial statements, in July 2024, the Company and its insurance carrier settled this claim for $1.0 million.

In July 2024, the Company and its insurance carrier settled this claim for $ 1.0 million.

In December 2021, the Company completed its acquisition of Coral Chemical Company (“Coral”), a privately held, U.S.-based provider of metal finishing fluid solutions.

2 unchanged sentences

Since the second quarter of 2022, there have been no material changes to the facts and circumstances of the claim asserted by the Sellers, and the Company continues to believe the potential range of exposure for this claim is $ 0 to $ 1.5 million.

In addition, during the three and six months ended June 30, 2024, there are no new environmental matters or litigation that the Company believes will have a material adverse effect on the Company’s results of operations, cash flows, or financial condition.

In addition, during the three and nine months ended September 30, 2024, there are no new environmental matters or litigation that the Company believes will have a material adverse effect on the Company’s results of operations, cash flows, or financial condition.

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