What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-02-24 compared with 2024-02-29 · 507 added, 498 removed, 1289 unchanged (44% of the section changed)

18 unchanged sentences

Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control over Financial Reporting appearing under Item 9A.

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control over Financial Reporting appearing under Item 9A.

Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits.

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The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Annual Goodwill Impairment Assessments for the EMEA and Asia/Pacific Reporting Units

As described in Notes 1, 15, and 23 to the consolidated financial statements, the Company’s consolidated goodwill balance was $513 million as of December 31, 2023, of which $66 million relates to the EMEA reporting unit and $163 million relates to the Asia/Pacific reporting unit.

Annual Goodwill Impairment Assessment for the EMEA Reporting Unit

As described in Notes 1, 15, and 23 to the consolidated financial statements, the Company’s consolidated goodwill balance was $519 million as of December 31, 2024, of which $80 million relates to the EMEA reporting unit.

Management completes its annual goodwill impairment test during the fourth quarter of each year, or more frequently if triggering events indicate a possible impairment in one or more of its reporting units.

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Management completed its annual impairment assessment as of October 1, 2024, and concluded no impairment existed.

The principal considerations for our determination that performing procedures relating to the annual goodwill impairment assessments for the EMEA and Asia/Pacific reporting units is a critical audit matter are (i) the significant judgment by management when developing the fair value estimates of the EMEA and Asia/Pacific reporting units;

(ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to revenue growth rates, gross margin levels, and operating expenses used in the valuation of the EMEA reporting unit and revenue growth rates used in the valuation of the Asia/Pacific reporting unit;

The principal considerations for our determination that performing procedures relating to the annual goodwill impairment assessment for the EMEA reporting unit is a critical audit matter are (i) the significant judgment by management when developing the fair value estimate of the EMEA reporting unit;

and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to management’s goodwill impairment assessment, including controls over the valuation of the EMEA and Asia/Pacific reporting units.

These procedures also included, among others, (i) testing management’s process for developing the fair value estimates of the EMEA and Asia/Pacific reporting units;

These procedures included testing the effectiveness of controls relating to management’s goodwill impairment assessment, including controls over the valuation of the EMEA reporting unit.

These procedures also included, among others, (i) testing management’s process for developing the fair value estimate of the EMEA reporting unit;

(ii) evaluating the appropriateness of the discounted cash flow model used by management;

(iii) testing the completeness and accuracy of underlying data used in the discounted cash flow model;

and (iv) evaluating the reasonableness of significant assumptions used by management related to the revenue growth rates, gross margin levels, and operating expenses used in the valuation of the EMEA reporting unit and the revenue growth rates used in the valuation of the Asia/Pacific reporting unit.

Evaluating management’s assumptions related to the revenue growth rates, gross margin levels, and operating expenses involved evaluating whether the assumptions used by management were reasonable considering (i) the current and past performance of the EMEA and Asia/Pacific reporting units;

and (iv) evaluating the reasonableness of significant assumptions used by management related to the revenue growth rates and gross margin levels.

Evaluating management’s assumptions related to the revenue growth rates and gross margin levels, involved evaluating whether the assumptions used by management were reasonable considering (i) the current and past performance of the EMEA reporting unit;

(ii) whether the assumptions were consistent with evidence obtained in other areas of the audit;

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Restructuring and related charges, net 6,530 7,588 3,163

Combination, integration and other acquisition-related expenses — 8,779 23,885

Operating income 194,706 214,495 52,304

Other (expense) income, net ( 10,672 ) ( 12,607 ) 18,851

Other income (expense), net 1,354 ( 10,672 ) ( 12,607 )

Interest expense, net ( 41,002 ) ( 50,699 ) ( 32,579 )

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Net income (loss) $ 116,729 $ 112,872 $ ( 15,842 )

Other comprehensive income (loss), net of tax

Other comprehensive (loss) income, net of tax

Currency translation adjustments ( 77,496 ) 16,725 ( 82,368 )

Defined benefit retirement plans

Net (loss) gain arising during the period, other ( 5,792 ) 8,177 9,210

Amortization of actuarial loss ( 385 ) 628 1,078

Net gain (loss) arising during the period, other 105 ( 5,792 ) 8,177

Amortization of actuarial loss (gain) 301 ( 385 ) 628

Amortization of prior service cost (gain) 19 34 ( 228 )

Current period change in fair value of derivatives ( 159 ) 1,407 1,372

Unrealized gain (loss) on available-for-sale securities 1,817 ( 1,881 ) ( 2,945 )

Other comprehensive income (loss) 13,806 ( 74,300 ) ( 37,376 )

Unrealized (loss) gain on available-for-sale securities ( 46 ) 1,817 ( 1,881 )

Other comprehensive (loss) income ( 77,276 ) 13,806 ( 74,300 )

Comprehensive income (loss) 39,453 126,678 ( 90,142 )

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Accounts receivable, net 400,126 444,950

Inventories, net 233,857 284,848

Inventories 227,472 233,857

Prepaid expenses and other current assets 59,939 54,555

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Equity in undistributed earnings of associated companies, net of dividends ( 2,733 ) ( 11,149 ) 1,005

Acquisition-related fair value adjustments related to inventory — — 801

Deferred income taxes ( 10,033 ) ( 11,442 ) ( 10,552 )

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Impairment charges — — 93,000

Combination and other acquisition-related expenses, net of payments — ( 4,460 ) ( 1,974 )

Restructuring and related charges 6,530 7,588 3,163

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Prepaid expenses and other current assets ( 6,242 ) ( 21 ) 3,705

Change in restructuring liabilities ( 9,786 ) ( 1,532 ) ( 5,266 )

Accrued restructuring ( 7,595 ) ( 9,786 ) ( 1,532 )

Accounts payable and accrued liabilities ( 8,637 ) 5,937 ( 27,899 )

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Proceeds from long-term debt — — 750,000

(Repayments) borrowings on revolving credit facilities, net ( 164,769 ) ( 16,281 ) 53,031

Repayments on other debt, net ( 506 ) ( 1,629 ) ( 776 )

Borrowings (payments) on revolving credit facilities, net 17,916 ( 164,769 ) ( 16,281 )

Borrowings (payments) on other debt, net 1,441 ( 506 ) ( 1,629 )

Financing-related debt issuance costs — — ( 3,734 )

Dividends paid ( 33,170 ) ( 31,650 ) ( 30,103 )

Stock options exercised, other ( 2,749 ) ( 378 ) 890

Shares purchased under share repurchase program ( 49,247 ) — —

Other stock related activity ( 2,383 ) ( 2,749 ) ( 378 )

Net cash (used in) provided by financing activities ( 122,664 ) ( 238,606 ) 24,672

Effect of foreign exchange rate changes on cash ( 11,141 ) 771 ( 10,488 )

Net increase (decrease) in cash and cash equivalents 13,564 15,787 ( 16,719 )

Net (decrease) increase in cash and cash equivalents ( 5,647 ) 13,564 15,787

Cash and cash equivalents at the beginning of the period 194,527 180,963 165,176

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Balance as of December 31, 2021 $ 17,897 $ 917,053 $ 516,334 $ ( 63,990 ) $ 628 $ 1,387,922

Net income — — 121,369 — 62 121,431

Amounts reported in other comprehensive (loss) income — — — ( 37,392 ) 16 ( 37,376 )

Dividends declared ($ 1.62 per share)

— — ( 28,975 ) — — ( 28,975 )

Shares issued upon exercise of stock options and other 17 1,677 — — — 1,694

Share-based compensation plans 29 10,205 — — — 10,234

Balance as of December 31, 2021 17,897 917,053 516,334 ( 63,990 ) 628 1,387,922

Net (loss) income — — ( 15,931 ) — 89 ( 15,842 )

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— — ( 30,483 ) — — ( 30,483 )

Shares issued upon exercise of stock options and other 1 ( 355 ) — — — ( 354 )

Share-based compensation plans 52 11,590 — — — 11,642

Share issuance and equity-based compensation plans, net 53 11,235 — — — 11,288

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

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Distributions to noncontrolling interest affiliate shareholders — — — — ( 169 ) ( 169 )

Shares issued upon exercise of stock options and other 3 ( 2,836 ) — — — ( 2,833 )

Share-based compensation plans 39 14,649 — — — 14,688

Share issuance and equity-based compensation plans, net 42 11,813 — — — 11,855

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

Net income — — 116,644 — 85 116,729

Amounts reported in other comprehensive (loss) income — — — ( 77,204 ) ( 72 ) ( 77,276 )

Dividends declared ($ 1.88 per share)

— — ( 33,554 ) — — ( 33,554 )

Shares purchased under share repurchase program, net of excise taxes ( 313 ) ( 49,346 ) — — — ( 49,659 )

Share issuance and equity-based compensation plans, net ( 5 ) 13,026 — — — 13,021

Balance as of December 31, 2024 $ 17,674 $ 903,781 $ 633,731 $ ( 201,619 ) $ 616 $ 1,354,183

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

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

Basis of Presentation and Significant Accounting Policies

Business Combinations

Recently Issued Accounting Standards

Business Segments

Net Sales and Revenue Recognition

Restructuring and Related Activities

Other Income (Expense), net

Earnings Per Share

Accounts Receivable and Allowance for Credit Losses

Property, Plant and Equipment

Goodwill and Other Intangible Assets

Investments in Associated Companies

Other Non-Current Assets

Other Accrued Liabilities

Pension and Other Postretirement Benefits

Other Non-Current Liabilities

Accumulated Other Comprehensive Loss

Fair Value Measures

Hedging Activities

Commitments and Contingencies

QUAKER CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Note 1 – Basis of Presentation and Significant Accounting Policies

As used in these Notes to Consolidated Financial Statements, the terms “Quaker,” “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 Quaker combination with Houghton International, Inc.

(“Houghton”).

Basis of presentation:

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Principles of consolidation:

All majority-owned subsidiaries are included in the Company’s consolidated financial statements, with appropriate elimination of intercompany balances and transactions .

We consolidate all entities we control, which generally applies to entities in which we own a majority of the voting interests.

Intercompany transactions and balances are eliminated in consolidation.

For consolidated subsidiaries in which the Company’s ownership is less than 100%, the outside shareholders’ interests are reflected as non-controlling interests within the consolidated financial statements.

The Company is not the primary beneficiary of any variable interest entities (“VIEs”) and therefore the Company’s consolidated financial statements do not include the accounts of any VIEs.

Equity method investments:

The Company applies the equity method of accounting to investments in which the Company has significant influence but does not control the operating and financial decisions of the investee.

This generally applies when the Company’s ownership interest in common stock of the investee is between 20% and 50%.

Such investments are presented on the Consolidated Balance Sheet at “Investments in associated companies.” We initially record our investment at cost and subsequently adjust the investment to recognize our share of net earnings and losses and distributions received.

Such investments are presented in “Investments in associated companies” on the Consolidated Balance Sheets.

We initially record our investment at cost and subsequently adjust the investment to recognize our share of net earnings and losses and distributions received.

The Company’s share of net income or losses in these investments in associated companies is included in the Consolidated Statements of Operations.

The Company reviews these investments for impairments when events of changes in circumstances indicate that the carrying amount of the investment may be other-than-temporarily impaired.

See Note 16 for additional information.

The Company is not the primary beneficiary of any variable interest entities (“VIEs”) and therefore the Company’s consolidated financial statements do not include the accounts of any VIEs.

The Company reviews these investments for impairments when events or changes in circumstances indicate that the carrying amount of the investment may be other-than-temporarily impaired.

See Note 16, Investments in Associated Companies , for additional information.

Accounting estimates:

The preparation of financial statements in conformity with U.S.

GAAP requires management to make estimates and assumptions that affect the amounts reported in the Company’s consolidated financial statements and the accompanying notes.

GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and the accompanying notes.

Actual results could differ from such estimates.

Translation of foreign currency:

Assets and liabilities of non-U.S.

Foreign currency:

Since we do business in many foreign countries, fluctuations in currency exchange rates affect our financial position and result of operations.

In most of our non-U.S.

operations, the local currency is considered the functional currency.

The assets and liabilities of non-U.S.

subsidiaries and associated companies are translated into U.S.

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Income and expense accounts are translated at average exchange rates prevailing during the year.

Translation adjustments resulting from this process are recorded directly in equity as accumulated other comprehensive (loss) income (“AOCI”) and will be included as income or expense only upon sale or substantial liquidation of the underlying entity or asset.

Generally, all of the Company’s non-U.S.

subsidiaries use their local currency as their functional currency.

Translation adjustments resulting from this process are recorded directly in equity as accumulated other comprehensive income (“AOCI”).

Some transactions are made in currencies different from an entity’s functional currency.

Gains and losses from remeasurement of these foreign currency transactions, and the impact of related hedges, are generally reflected in “Other income (expense), net” in the consolidated income statements as they occur.

See Note 9, Other Income (Expense), Net , and our policy on accounting for hyperinflation below, for additional information.

Hyper-inflationary accounting:

Economies that have a cumulative three-year rate of inflation exceeding 100 % are considered hyper-inflationary.

A legal entity that operates within an economy deemed to be hyper-inflationary is required to remeasure its monetary assets and liabilities to the applicable published exchange rates and record the associated gains or losses resulting from the remeasurement directly to the Consolidated Statements of Operations.

Argentina’s and Türkiye’s economies were considered hyper-inflationary effective July 1, 2018 and April 1, 2022, respectively.

As of, and for the year ended December 31, 2024, the Company's Argentine and Turkish subsidiaries represented a combined 1 % and 2 % of the Company’s consolidated total assets and net sales, respectively.

For the years ended December 31, 2024, 2023 and 2022, the Company recorded $ 0.8 million, $ 7.8 million, and $ 1.6 million, respectively, of remeasurement losses associated with the applicable currency conversions related to Argentina and Türkiye.

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

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.

QUAKER CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

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

During the first quarter of 2023, the Company reorganized its executive management team to align with its new business structure.

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and (iv) Global Specialty Businesses.

Prior period segment financial information has been recast to align with segment change, including reportable segments and customer industry disaggregation.

Prior period information has been recast to align with the Company’s business structure as of January 1, 2023, including reportable segments and customer industry disaggregation.

As a result of the Company’s new organizational structure effective January 1, 2023, the Company reallocated goodwill previously held by the former Global Specialty Businesses segment to the remaining business segments as of January 1, 2023.

However, the Company did not recast the carrying amount of goodwill for the year ended December 31, 2022.

See Notes 4, 5, and 15 for additional information.

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Based on the assessment of additional information during the measurement period, which may be up to one year from the acquisition date, the Company may record adjustments to the estimated fair value of assets acquired and liabilities assumed.

See Note 2 for additional information.

See Note 2, Business Combinations , for additional information.

Revenue recognition:

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(iv) allocate the transaction price to the performance obligations in the contract;

and (v) recognize revenue when, or as, the Company satisfies a performance obligation.

QUAKER CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

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

and (v) recognize revenue when, or as, the Company satisfies the performance obligation.

The Company identifies a contract with a customer when a sales agreement indicates approval and commitment of the parties;

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The Company does not have standard payment terms for all customers;

however, the Company’s general payment terms require customers to pay for products or services provided after the performance obligation is satisfied.

however, the Company’s general payment terms require customers to pay for products or services once the performance obligation is satisfied.

The Company does not have significant financing arrangements with its customers.

Therefore, the Company does not adjust the promised amount of consideration for the effects of a significant financing component as the Company expects, at contract inception, that the period between when the Company transfers a promised good or service to the customer and when the customer pays for that good or service will be one year or less.

In addition, the Company expenses costs to obtain a contract as incurred when the expected period of benefit, and therefore the amortization period, is one year or less.

In addition, the Company excludes from the measurement of the transaction price all taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction and collected by the entity from a customer, including sales, use, value added, excise and various other taxes.

Lastly, the Company has elected to account for shipping and handling activities that occur after the customer has obtained control of a good as a fulfillment cost, rather than an additional promised service.

The Company does not have significant amounts of variable consideration in its contracts with customers and where applicable, the Company’s estimates of variable consideration are not constrained.

The Company records certain third-party license fees in Other (expense) income, net, in its Consolidated Statement of Operations, which generally include sales-based royalties in exchange for the license of intellectual property.

Lastly, the Company has elected to account for shipping and handling costs incurred after the customer has obtained control of a good as a fulfillment cost, rather than an additional promised service.

The Company does not have significant amounts of variable consideration in its contracts with customers.

QUAKER CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

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

The Company records license fees received from third-parties in Other income (expense), net, in its Consolidated Statements of Operations, which generally include sales-based royalties in exchange for the license of intellectual property.

These license fees are recognized in accordance with their agreed-upon terms and when performance obligations are satisfied, which is generally when the third party has a subsequent sale.

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A contract liability is the Company’s obligation to transfer goods or services to a customer for which the Company has received consideration, or a specified amount of consideration is due, from the customer.

See Note 5 for additional information.

See Note 5, Net Sales and Revenue Recognition , for additional information.

Right-of-use lease assets and lease liabilities:

The Company determines if an arrangement is a lease at its inception.

This determination generally depends on whether the arrangement conveys the right to control the use of an identified fixed asset explicitly or implicitly for a period of time in exchange for consideration.

Control of an underlying asset is conveyed if the Company obtains the rights to direct the use of, and obtains substantially all of the economic benefits from the use of, the underlying asset.

This determination generally depends on whether the arrangement conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

Control of an underlying asset is conveyed if the Company obtains the right to direct the use of the asset, and obtains substantially all of the economic benefits from its use.

Lease expense for variable leases and short-term leases is recognized when the obligation is incurred.

QUAKER CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

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

The lease term for all of the Company’s leases includes the non-cancellable period of the lease plus any additional periods covered by an option to extend the lease that the Company is reasonably certain it will exercise.

The lease term for all of the Company’s leases includes the non-cancellable period of the lease, adjusted for any renewal and termination options that the Company is reasonably certain it will exercise.

Operating leases are included in right-of-use lease assets, other accrued liabilities and long-term lease liabilities on the Consolidated Balance Sheet.

Right of use lease assets and liabilities are recognized at each lease’s commencement date based on the present value of its lease payments over its respective lease term.

Right-of-use lease assets and liabilities are recognized on the lease commencement date based on the present value of lease payments over the respective lease term.

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

The Company uses the stated borrowing rate for a lease when readily determinable.

When a stated borrowing rate is not available in a lease agreement, the Company uses its incremental borrowing rate based on information available at the lease’s commencement date to determine the present value of its lease payments.

In determining the incremental borrowing rate used to present value each of its leases, the Company considers certain information including fully secured borrowing rates readily available to the Company and its subsidiaries.

The Company includes finance leases in PP&E, current portion of long-term debt and long-term debt on the Consolidated Balance Sheet.

See Note 6 for additional information.

When a stated borrowing rate is not available in a lease agreement, the Company uses its incremental borrowing rate at the lease commencement date to determine the present value of its lease payments.

In determining the incremental borrowing rate, the Company considers information including fully secured borrowing rates readily available to the Company and its subsidiaries.

The Company includes finance leases in property, plant and equipment (“PP&E”), current portion of long-term debt and long-term debt on the Consolidated Balance Sheet.

See Note 6, Leases , for additional information.

Restructuring activities:

Restructuring programs consist of employee severance, rationalization of manufacturing or other facilities and other related items.

To account for such programs, the Company recognizes a liability for a cost associated with an exit or disposal activity, when the liability is incurred, is estimable, and payment is probable.

See Note 7 for additional information.

To account for such programs, the Company recognizes a liability for the cost associated with an exit or disposal activity, when the liability is incurred, is estimable, and payment is probable.

See Note 7, Restructuring and Related Activities , for additional information.

Share-based compensation:

The Company recognizes the fair value of share-based compensation as a component of expense.

The Company has a long-term incentive program (“LTIP”) for key employees which provides for the granting of options to purchase stock at prices not less than its market value on the date of the grant.

Most options become exercisable within three years after the date of the grant for a period of time determined by the Company, but not to exceed seven years from the date of grant.

The Company did not grant any stock options during 2023.

Restricted stock awards and restricted stock units issued under the LTIP program are subject to time vesting generally over a one to three year period.

In addition, as part of the Company’s Annual Incentive Plan, non-vested shares may be issued to key employees, which generally would vest over a two to five year period.

Prior to 2023, the Company generally has assumed a forfeiture rate of 13 % based on historical experience.

Beginning in 2023, the Company elected to account for forfeitures on new awards as they occur for service condition aspects of certain share-based awards.

The Company also issues various performance-dependent stock awards as a component of its LTIP.

For performance-dependent stock units for which the performance target is market-based and tied to Total Shareholder Return, the grant date fair value is based on grant-date stock price adjusted for the likelihood of attaining certain predetermined performance goals and is calculated by utilizing a Monte Carlo simulation model.

For performance-dependent stock units for which payout is linked to the achievement of a performance-based return on invested capital, the grant date fair value is based on the trading price of the Company’s stock on the grant date.

Compensation expense for the performance-dependent is recognized on a straight-line basis over the vesting period, generally three years .

See Note 8 for additional information.

The Company has long-term incentive programs (“LTIP”) for key employees which provides for the granting of stock options, restricted stock units (“RSU”), restricted stock awards (“RSAs”), and performance-based stock awards (“PSUs”).

Share-based awards may also be granted under other equity compensation plans.

Share-based compensation cost for awards under LTIP and equity compensation plans is measured at the grant date based on the fair value and is recognized as expense over the requisite service period, which is the vesting period.

The fair value of stock options granted is determined using the Black-Scholes option valuation model on the grant date.

The fair value of time-based RSAs, time-based RSUs, and performance-based PSUs, for which the performance measure is return on investment capital (“ROIC”), is based on the trading price of the Company’s common stock on the date of grant.

The fair value of market-based PSUs, for which the performance measure is total shareholder return (“TSR”), is determined using a Monte Carlo simulation model.

Prior to 2023, the Company elected to assume an estimated forfeiture rate of 13 % based on historical experience.

Beginning in 2023, the Company elected to account for forfeitures on new awards as they occur.

See Note 8, Equity , for additional information.

Research and development costs:

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Research and development expenses were $ 57.3 million, $ 50.3 million and $ 46.0 million for the years ended December 31, 2024, 2023 and 2022, respectively.

Hyper-inflationary accounting:

Economies that have a cumulative three year rate of inflation exceeding 100 % are considered hyper-inflationary.

Argentina’s and Türkiye’s economies were considered hyper-inflationary effective July 1, 2018 and April 1, 2022, respectively.

As of, and for the year ended December 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.

For the years ended December 31, 2023, 2022 and 2021, the Company recorded $ 7.8 million, $ 1.6 million, and $ 0.6 million, respectively, of remeasurement losses associated with the applicable currency conversions related to Argentina and Türkiye.

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

QUAKER CHEMICAL CORPORATION

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income tax on its undistributed earnings of non-U.S.

subsidiaries, however, the Company is subject to and will incur other taxes, such as withholding taxes and dividend distribution taxes, if these undistributed earnings were ultimately remitted to the U.S.

subsidiaries.

However, the Company is subject to and will incur other taxes, such as withholding taxes and dividend distribution taxes, if these undistributed earnings were ultimately remitted to the U.S.

The Company currently intends to reinvest its future undistributed earnings of non-U.S.

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income taxes it would incur to ultimately remit these earnings to the U.S.

See Note 10 for additional information.

See Note 10, Income Taxes , for additional information.

Earnings per share:

The Company calculates earnings per share for non-vested stock awards with rights to non-forfeitable dividends, which requires non-vested stock awards with rights to non-forfeitable dividends to be included as part of the basic weighted average share calculation under the two-class method.

See Note 11 for additional information.

In the Company’s earnings per share calculation, non-vested stock awards with rights to non-forfeitable dividends are included as part of the basic weighted average share calculation under the two-class method.

See Note 11, Earnings per Share , for additional information.

Comprehensive income (loss):

The Company presents Other comprehensive income (loss) in its Statements of Comprehensive Income (Loss).

The Company presents Other comprehensive (loss) income in its Statements of Comprehensive Income (Loss).

The Company discloses significant amounts reclassified from each component of AOCI, the related tax amounts and the income statement line items affected by such reclassifications.

See Note 22 for additional information.

See Note 22, Accumulated Other Comprehensive Loss , for additional information.

Cash and cash equivalents:

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The Company recognizes an allowance for credit losses, which represents the portion of the receivable that the Company does not expect to collect over its contractual life, considering past events and reasonable and supportable forecasts of future economic conditions.

The Company’s allowance for credit losses on its trade accounts receivable is based on specific collectability facts and circumstances for each outstanding receivable and customer, the aging of outstanding receivables, and the associated collection risk the Company estimates for certain past due aging categories, and also, the general risk to all outstanding accounts receivable based on historical amounts determined to be uncollectible.

The Company’s allowance for credit losses on its trade accounts receivable is based on specific collectability facts and circumstances, the aging of outstanding receivables, and the associated collection risk the Company estimates for certain past due aging categories, and also, the general risk to all outstanding accounts receivable based on historical amounts determined to be uncollectible.

The Company does not have any off-balance-sheet credit exposure related to its customers.

See Note 12 for additional information.

See Note 12, Accounts Receivable and Allowance for Credit Losses , for additional information.

Inventories are valued at the lower of cost or net realizable value, and are valued using the first-in, first-out method.

See Note 13 for additional information.

See Note 13, Inventories , for additional information.

QUAKER CHEMICAL CORPORATION

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Depreciation is computed using the straight-line method on an individual asset basis over the following estimated useful lives:

buildings and improvements, 10 to 33 years, or the remaining term of the lease;

and machinery and equipment, 4 to 10 years, or the remaining term of the lease.

buildings and improvements, 10 to 33 years (for finance leases, the remaining term of the lease);

and machinery and equipment, 4 to 10 years (for financing leases, the remaining term of the lease).

The carrying values of long-lived assets are evaluated whenever changes in circumstances or current events indicate the carrying amount of such assets may not be recoverable.

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Fair value is based on current and anticipated future cash flows.

Upon sale or other dispositions of long-lived assets, the applicable amounts of asset cost and accumulated depreciation are removed from the accounts and the net amount, less proceeds from disposals, is recorded in the Consolidated Statements of Operations.

Expenditures for renewals or improvements that increase the estimated useful life or capacity of the assets are capitalized, whereas expenditures for repairs and maintenance are expensed when incurred.

See Notes 9 and 14 for additional information.

Upon sale or other disposition of long-lived assets, the applicable asset cost and accumulated depreciation are removed from the accounts and the net amount, less proceeds from disposals, is recorded in the Consolidated Statements of Operations.

Expenditures for improvements that increase the estimated useful life or capacity of the assets are capitalized, whereas expenditures for repairs and maintenance are expensed when incurred.

See Note 14, Property, Plant, and Equipment , for additional information.

Capitalized software:

The Company capitalizes certain costs in connection with developing or obtaining software for internal use, depending on the associated project.

These costs are amortized over a period of 3 to 5 years once the assets are ready for their intended use.

In connection with the implementations and upgrades to the Company’s global transaction, consolidation and other related systems, approximately $ 4.5 million and $ 3.5 million of net costs were capitalized in PP&E on the Company’s Consolidated Balance Sheets as of December 31, 2023 and 2022, respectively.

The Company capitalizes certain costs in connection with developing or obtaining software for internal use.

These costs are amortized over the expected useful life of the software- generally 3 to 5 years once the assets are ready for their intended use.

In connection with implementations and upgrades to the Company’s global transaction, consolidation and other related systems, approximately $ 2.9 million and $ 4.5 million of net costs were capitalized in PP&E on the Company’s Consolidated Balance Sheets as of December 31, 2024 and 2023, respectively.

The Company capitalizes costs incurred with the implementation of a cloud computing arrangement that is a service contract, consistent with its policy for software for internal use.

The capitalized costs are reflected in "Other non-current assets" on its Consolidated Balance Sheets and expensed over the term of the related hosting arrangement.

Goodwill and other intangible assets:

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The Company continually evaluates the reasonableness of the useful lives of these assets, consistent with the discussion of long-lived assets, above.

See Notes 15 and 23 for additional information.

See Note 15, Goodwill and Other Intangible Assets , and Note 23, Fair Value Measures , for additional information.

Fair value measurements:

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subsidiaries are, for the most part, either fully insured or integrated with the local governments’ plans.

The Company recognizes on a prospective basis the funded status of the defined benefit pension and other postretirement plans on its Consolidated Balance Sheets and, also, recognizes as a component of AOCI, net of tax, the gains or losses and prior service costs or credits that arise during the period but are not recognized as components of net periodic benefit cost.

The Company recognizes the funded status of defined benefit pension and other postretirement plans on its Consolidated Balance Sheets and also, recognizes as a component of AOCI, net of tax, the gains or losses and prior service costs that arise during the period but are not recognized as components of net periodic benefit cost.

In addition, the Company recognizes a settlement charge in its Consolidated Statements of Operations when certain events occur, including plan termination or the settlement of certain plan liabilities.

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The Company’s pension committee, as authorized by the Company’s Board, has discretion to manage the assets within established asset allocation ranges approved by senior management of the Company.

See Note 20 for additional information.

The Company is exposed to the impact of changes in interest rates, foreign currency fluctuations, changes in commodity prices and credit risk.

Historically, the Company has utilized interest rate swap agreements to enhance its ability to manage risk, including exposure to variability in interest payments associated with its variable rate debt.

Derivative instruments are entered into for periods consistent with the related underlying exposures and do not constitute positions independent of those exposures.

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

The Company records these instruments on a net basis within the Consolidated Balance Sheets.

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.

See Note 24 for additional information.

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 translate their assets and liabilities into U.S.

dollars at current exchange rates in effect on the balance sheet date.

The gains and losses that result from this process are shown as translation adjustments in Accumulated Other Comprehensive Income in the equity section of the balance sheet.

Many of these operations have transactions in currencies other than their functional currency, which creates foreign exchange remeasurement 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, with changes in the fair value of the underlying instruments, as well as gains and losses on the hedged foreign currency transactions recognized in earnings in Other (expense) income, net.

The fair value of the forward contract is determined from sources independent of the Company, including the financial institutions which are party to the derivative instruments.

See Note 24 for additional information.

See Note 20, Pension and Other Postretirement Benefits , for additional information.

The Company uses interest rate swap agreements to manage risk, including exposure to variability in interest payments associated with its variable rate debt.

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.

The Company uses foreign exchange forward contracts to economically hedge the impact of variability in exchange rates on certain assets and/or liabilities denominated in foreign currencies.

Forward contracts are marked-to-market at each reporting date, with changes in the fair value of the underlying instruments, as well as gains and losses on the hedged foreign currency transactions, recognized in earnings in Other income (expense), net.

The fair value of forward contracts are determined from sources independent of the Company, including the financial institutions which are party to the derivative instruments.

See Note 24, Hedging Activities , for additional information .

Environmental liabilities and expenditures:

Accruals for environmental matters are recorded when it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated.

Accruals for environmental matters are recorded when it is probable that a liability has been incurred and the amount of the liability can be reasonably estimable.

If there is a range of estimated liability and no amount in that range is considered more probable than another, then the Company records the lowest amount in the range.

Environmental costs and remediation costs are capitalized if the costs extend the life, increase the capacity or improve safety or efficiency of the property from the date acquired or constructed, and/or mitigate or prevent contamination in the future.

See Note 25 for additional information.

Asset retirement obligations:

The Company assesses whether it has legal or conditional obligations associated with the retirement of tangible long-lived assets that result from the acquisition, construction, or development and/or the normal operation of a long-lived asset, including any legal obligations that require disposal of a replaced part that is a component of a tangible long-lived asset.

As of December 31, 2023 and 2022, the Company had no significant exposure or liabilities recorded on its Consolidated Balance Sheets.

See Note 25, Commitments and Contingencies , for additional information.

Note 2 – Business Combinations

Recent Acquisition Activity

Subsequent to the date of these financial statements, in February 2025, the Company acquired Chemical Solutions & Innovations (Pty) Ltd.

(“CSI”), for approximately $ 3.9 million, subject to routine and customary post-closing adjustments.

CSI is based in South Africa and is a supplier of metalworking fluids and lubricants to the South African market.

CSI will be reported as part of the EMEA reportable segment.

This acquisition strengthens Quaker Houghton’s position in South Africa and expands the Company’s presence in that region.

As of the date of this Report, purchase accounting has not been finalized.

QUAKER CHEMICAL CORPORATION

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

Note 2 – Business Combinations

Recent Acquisitions

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 year ended December 31, 2024 relating to adjustments to these earnout provisions in Other income (expense), net on the Consolidated Statements of Operations.

As of December 31, 2024, the Company has remaining earnout liabilities recorded on its Consolidated Balance Sheets 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 synergies.

As of December 31, 2024, the allocation of the purchase price has not been finalized.

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

Tribologie IKVT and its subsidiaries (“IKVT”) for approximately 27.0 million EUR, or $ 29.1 million, subject to routine and customary post-closing adjustments related to working capital and net indebtedness levels.

IKVT will be part of the Company’s EMEA segment and specializes in high-performance lubricants and greases, including original equipment manufacturer first-fill greases that are primarily used in the automotive, aerospace, electronics, and other industrial markets.

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

The results of operations of this acquisition are not included in the Consolidated Statements of Operations presented, because the date of closing was subsequent to December 31, 2023.

Preliminary purchase price allocation of assets acquired and liabilities assumed have not been presented as that information is not available as of the date of these Consolidated Financial Statements.

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.

IKV, which is part of the Company’s EMEA segment, specializes in high-performance lubricants and greases, including original equipment manufacturer first-fill greases that are primarily used in the automotive, aerospace, electronics and other industrial markets.

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

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;

and $ 0.7 million of trademarks to be amortized over 5 years.

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

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 December 31, 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 Consolidated Statements of Operations for the year ended December 31, 2024.

Previous Acquisitions

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.

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.

The Company allocated $ 2.8 million of the purchase price to intangible assets, comprised of $ 2.3 million of customer relationships to be amortized over 10 years;

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In addition, the Company recorded $ 1.8 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 2023 the Company finalized post-closing adjustments that resulted in the Company paying less than $ 0.1 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 EMEA reportable segment for approximately 1.2 million EUR or approximately $ 1.4 million.

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 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.

In September 2022, the Company paid $ 2.5 million related to certain of these earnout provisions.

As of December 31, 2023, the Company has remaining earnout liabilities recorded on its Consolidated Balance Sheet of $ 1.0 million.

The Company allocated $ 8.0 million of the purchase price to intangible assets, $ 1.1 million of property, plant and equipment and $ 1.5 million of other assets acquired net of liabilities assumed, which includes $ 0.3 million of cash acquired.

In addition, the Company recorded $ 0.4 million of goodwill, none of which is expected to be tax deductible.

Intangible assets comprised $ 7.2 million of customer relationships to be amortized over 15 years;

and $ 0.8 million of existing product technology to be amortized over 13 years.

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.

During the third quarter of 2022, the Company finalized post-closing adjustments that resulted in the Company receiving less than $ 0.1 million.

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 3.2 million EUR or approximately $ 3.7 million.

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 EMEA reportable segment for 2.4 million EUR or approximately $ 2.9 million, which is gross of approximately $ 0.3 million of cash acquired.

Previously, in February 2021, the Company acquired a 38 % ownership interest in Grindaix for 1.4 million EUR or approximately $ 1.7 million.

The Company recorded its initial investment as an equity method investment within the 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 EMEA reportable segment for 2.3 million EUR or approximately $ 2.8 million.

The results of operations of each acquisition completed prior to December 31, 2024 and subsequent to the respective acquisition dates are included in the Consolidated Statements of Operations.

Applicable transaction expenses associated with these acquisitions are included in SG&A in the Company’s Consolidated Statements of Operations.

Certain pro forma and other information is not presented, as the operations of the acquired assets and businesses are not considered material to the overall operations of the Company for the periods presented.

QUAKER CHEMICAL CORPORATION

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(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 $ 25.0 million.

This acquisition is part of each of the Company’s geographic reportable segments.

The Company allocated $ 19.6 million of the purchase price to intangible assets, comprised of $ 18.3 million of customer relationships, to be amortized over 19 years;

$ 0.9 million of existing product technology to be amortized over 14 years;

and $ 0.4 million of a licensed trademark to be amortized over 3 years.

In addition, the Company recorded $ 5.0 million of goodwill, all of which is expected to be tax deductible in various jurisdictions in which we operate.

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.

The acquired assets and liabilities were assigned to the Americas reportable segment.

The original purchase price was approximately $ 54.1 million, subject to routine and customary post-closing adjustments related to working capital and net indebtedness levels.

Subsequent to the acquisition, the Company and the sellers of Coral (the “Sellers”) have worked to finalize certain post-closing adjustments.

During the second quarter of 2022, after failing to reach resolution, the Sellers filed suit asserting certain amounts owed related to tax attributes of the acquisition.

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

As of December 31, 2023, the allocations of the purchase prices for all acquisitions, except IKVT, were finalized and the one year measurement periods have all ended.

The results of operations of each acquisition completed prior to December 31, 2023 and subsequent to the respective acquisition dates are included in the Consolidated Statements of Operations.

Applicable transaction expenses associated with these acquisitions are included in Combination, integration and other acquisition-related expenses in the Company’s Consolidated Statements of Operations.

Note 3 – Recently Issued Accounting Standards

Recently Adopted Accounting Standards

The Company adopted Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures in this Report and will adopt the interim reportable segment disclosure requirements in the first quarter of 2025.

This ASU expands 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.

The Company disclosed that the CODM, which is the Chief Executive Officer, assesses segment performance and makes decisions about allocating resources to its operating segments using segment operating earnings.

Based on the Company’s assessment, the Company determined that product costs are significant segment expenses that are regularly provided to the CODM and included in segment operating earnings.

The Company disclosed product costs and other operating expenses included in segment operating earnings by reportable segment.

See Note 4, Business Segments , for additional information.

Recently Issued Accounting Standards Not Yet Adopted

The Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures in November 2023.

This ASU expands on reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.

The required disclosure, which is on an annual and interim basis, specifies that significant segment expenses are expenses that are regularly provided to the chief operating decision maker and are used to evaluate performance by segment to make decisions about resource allocations.

ASU 2023-07 is effective for 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 and related disclosures.

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

Improvements to Income Tax Disclosures in December 2023.

It also requires greater detail about individual reconciling items in the rate reconciliation to the extent the impact of those items exceeds a specified threshold.

This ASU requires public business entities to disclose additional information in specified categories with respect to the reconciliation of the effective tax rate to the statutory rate (the “rate reconciliation”) for federal, state, and foreign income taxes, requiring greater detail about individual reconciling items in the rate reconciliation to the extent the impact of those items exceeds a specified threshold.

The ASU also requires public business entities to disclose income taxes paid disaggregated by federal, state, and foreign taxes.

Further disaggregation is also required in jurisdictions where income taxes paid exceeds a certain threshold.

ASU 2023-09 is effective for fiscal years beginning after December 15, 2024.

The Company is currently evaluating the disclosure requirements of this standard and the impact on its consolidated financial statements.

The FASB issued ASU 2024-03, Income Statement- Reporting Comprehensive Income- Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses in November 2024 .

This ASU requires public business entities (“PBEs”) to disclose, in interim and annual reporting periods, additional information about certain expenses in the notes to the financial statements, including disclosing the amounts of purchases of inventory, employee compensation, depreciation, and intangible asset amortization in each relevant expense caption.

It also requires PBEs to disclose a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively and to disclose the total amount of selling expenses, and in the annual reporting periods, an entity’s definition of selling expenses.

ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, with early adoption permitted.

The Company is currently evaluating the disclosure requirements of this standard and the impact on its consolidated financial statements.

Note 4 – Business Segments

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

During the first quarter of 2023, the Company reorganized certain of its executive management team to align with its new business structure, which reflects the method by which the Company currently assesses its performance and allocates its resources.

The Company has three reportable segments:

(i) Americas;

and (iii) Asia/Pacific.

The three segments are composed of the net sales and operations in each respective region.

The three geographic segments are composed of the net sales and operations in each respective region, including net sales and operations formerly included in the Global Specialty Businesses segment.

Prior period information has been recast to reflect the Company’s new reportable segments.

However, the Company did not recast the carrying amount of goodwill for the years ended December 31, 2022 and 2021.

See Notes 1, 4, 5, and 15 for additional information.

The Company’s operating segments, which are consistent with its reportable segments, reflect the structure of the Company’s internal organization and the manner by which the Chief Operating Decision Maker, which is the Company’s Chief Executive Officer, allocates resources and assesses performance.

The Chief Operating Decision Maker evaluates performance for the Company’s operating segments based on segment operating earnings.

Segment operating earnings for each of the Company’s reportable segments are comprised of the segment’s net sales less directly related product costs and other operating expenses.

Operating expenses not directly attributable to the net sales of each respective segment, such as certain corporate and administrative costs, impairment charges, and restructuring 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 income (expense), net.

The Chief Operating Decision Maker uses segment operating earnings to allocate resources for each segment predominantly in the annual budget and forecasting process.

The Chief Operating Decision Maker considers budget-to-actual variances on a monthly basis for segment operating earnings when making decisions about allocating capital and personnel to the segments.

The Chief Operating Decision Maker also uses segment operating earnings to assess the performance for each segment and in the compensation of certain employees.

QUAKER CHEMICAL CORPORATION

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

Segment operating earnings for each of the Company’s reportable segments are comprised of the segment’s net sales less directly related COGS and 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) income, net.

The following tables present information about the performance of the Company’s reportable segments for the years ended December 31, 2023, 2022 and 2021.

The following table presents information about the performance of the Company’s reportable segments for the years ended December 31, 2024, 2023 and 2022.

Americas EMEA Asia/Pacific Totals

Net sales $ 882,131 $ 536,435 $ 421,120 $ 1,839,686

Americas $ 977,095 $ 946,516 $ 762,211

EMEA 571,347 562,508 564,128

Asia/Pacific 404,871 434,561 434,819

Total net sales $ 1,953,313 $ 1,943,585 $ 1,761,158

Significant segment expenses

Product costs (1)

427,399 286,330 216,432 930,161

Other operating expenses (2)

210,775 150,679 81,950 443,404

Segment operating earnings $ 243,957 $ 99,426 $ 122,738 $ 466,121

Americas $ 266,036 $ 223,629 $ 176,253

EMEA 104,811 76,364 110,981

Asia/Pacific 118,458 105,842 109,233

Total segment operating earnings 489,305 405,835 396,467

Combination, integration and other acquisition-related expenses — ( 8,779 ) ( 23,885 )

Net sales $ 977,095 $ 571,347 $ 404,871 $ 1,953,313

Significant segment expenses

Product costs (1)

497,690 318,279 209,422 1,025,391

Other operating expenses (2)

213,369 148,257 76,991 438,617

Segment operating earnings $ 266,036 $ 104,811 $ 118,458 $ 489,305

Net sales $ 946,516 $ 562,508 $ 434,561 $ 1,943,585

Significant segment expenses

Product costs (1)

519,705 340,864 249,493 1,110,062

Other operating expenses (2)

203,182 145,280 79,226 427,688

Segment operating earnings $ 223,629 $ 76,364 $ 105,842 $ 405,835

(1) Product costs include the costs of raw materials and are recorded in Cost of goods sold in the Company’s Consolidated Statements of Operations.

(2) Other operating expenses include overhead costs of operating the Company’s production facilities and providing chemical management services to customers and direct SG&A costs.

The following table presents a reconciliation of the Company’s segment operating earnings to income before taxes and equity in net income of associated companies in the Company’s Consolidated Statements of Operations for the years ended December 31, 2024, 2023 and 2022.

2024 2023 2022

Segment operating earnings $ 466,121 $ 489,305 $ 405,835

Restructuring and related charges, net ( 6,530 ) ( 7,588 ) ( 3,163 )

Fair value step up of acquired inventory sold — — ( 801 )

Impairment charges — — ( 93,000 )

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Operating income $ 194,706 $ 214,495 $ 52,304

Other (expense) income, net ( 10,672 ) ( 12,607 ) 18,851

Other income (expense), net 1,354 ( 10,672 ) ( 12,607 )

Interest expense, net ( 41,002 ) ( 50,699 ) ( 32,579 )

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Total segment assets $ 2,091,755 $ 2,201,693 $ 2,306,614

QUAKER CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

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

Segment long-lived assets 2024 2023 2022

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Total segment long-lived assets $ 379,024 $ 366,349 $ 358,334

QUAKER CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

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

The following tables present information regarding the Company’s reportable segments’ capital expenditures and depreciation for identifiable assets for the years ended December 31, 2024, 2023 and 2022:

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Total segment depreciation $ 25,895 $ 23,833 $ 22,924

The following table summarizes net sales and long-lived assets, respectively, attributable to non-U.S.

The following tables summarize net sales and long-lived assets attributable to U.S.

domiciled operations for the years ended December 31, 2024, 2023 and 2022:

operations 2023 2022 2021

Net sales 2024 2023 2022

United States $ 637,755 $ 718,742 $ 696,885

China 230,622 231,331 265,418

Other foreign operations 971,309 1,003,240 981,282

Total net sales $ 1,839,686 $ 1,953,313 $ 1,943,585

Long-lived assets 2024 2023 2022

United States $ 217,687 $ 217,834 $ 201,960

Foreign operations 161,337 148,515 156,374

Total long-lived assets $ 379,024 $ 366,349 $ 358,334

Total net sales and operating earnings by segment include inter-segment sales which are generally recorded at cost-plus a specified fee or at a negotiated fixed price.

All inter-segment transactions have been eliminated from each reportable segment’s net sales and earnings for all periods presented in the above tables.

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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 resulting in net reporting of $ 81.8 million, $ 83.8 million and $ 71.7 million for the years ended December 31, 2023, 2022 and 2021, respectively.

The Company transferred third-party products under arrangements recognized on a net reporting basis of $ 75.5 million, $ 81.8 million and $ 83.8 million for the years ended December 31, 2024, 2023 and 2022, respectively.

QUAKER CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

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

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, aircraft, industrial equipment, and durable goods.

A significant portion of the Company’s revenues are realized from the sale of process fluids and services to manufacturers of steel, aluminum, automotive, aerospace, industrial and agricultural equipment, and durable goods.

During the year ended December 31, 2024, the Company’s five largest customers (each composed of multiple subsidiaries or divisions with semiautonomous purchasing authority) accounted for approximately 12 % of consolidated net sales, with its largest customer accounting for approximately 3 % of consolidated net sales.

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The Company had approximately $ 4.2 million and $ 4.5 million of deferred revenue as of December 31, 2024 and 2023, respectively.

During the years ended December 31, 2023 and 2022, respectively, the Company satisfied all of the associated performance obligations and recognized into revenue the advance payments received and recorded as of December 31, 2022 and 2021, respectively.

QUAKER CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

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

During the years ended December 31, 2024 and 2023, the Company satisfied materially all of the associated performance obligations and recognized into revenue the advance payments received and recorded as of December 31, 2023 and 2022, respectively.

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.

Net sales of each of the Company’s major product lines are generally spread throughout all three of the Company’s segments, and in most cases, approximately proportionate to the level of total sales in each segment.

The following tables present disaggregated information regarding the Company’s net sales, first by major product lines that represent more than 10 % of the Company’s consolidated net sales for any of the years ended December 31, 2023, 2022 and 2021, and followed then by a disaggregation of the Company’s net sales by segment and customer industry for the years ended December 31, 2023, 2022 and 2021.

The following tables present disaggregated information regarding the Company’s net sales, first by major product lines that represent more than 10 % of the Company’s consolidated net sales for the years ended December 31, 2024, 2023 and 2022, and followed then by a disaggregation of the Company’s net sales by segment and customer industry for the years ended December 31, 2024, 2023 and 2022.

Major Product Line 2024 2023 2022

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Note 6 – Leases

The Company has operating leases for certain facilities, vehicles and machinery and equipment with remaining lease terms up to 11 years.

In addition, the Company has certain land use leases with remaining lease terms up to 92 years.

The Company’s finance leases are included in PP&E each of the Consolidated Balance Sheets.

See Note 14 for additional information.

The Company has operating leases for facilities, vehicles, and machinery and equipment with remaining lease terms up to 10 years.

In addition, the Company has land use leases with remaining lease terms up to 90 years.

QUAKER CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

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

The Company’s finance leases are included in PP&E in the Consolidated Balance Sheets.

See Note 14, Property, Plant and Equipment , for additional information.

The Company has no material variable lease costs or sublease income for the years ended December 31, 2024, 2023 and 2022.

The following table sets forth the components of the Company’s lease cost for the years ended December 31, 2023, 2022 and 2021:

During the year ended December 31, 2024, the Company entered into a new lease agreement for office and laboratory space in Radnor, PA for the purposes of relocating its global headquarters.

The lease is expected to commence in the third quarter of 2025 with a total lease commitment of $ 79.7 million.

The components of the Company’s lease expense for the years ended December 31, 2024, 2023 and 2022 are as follows:

December 31, 2024 December 31, 2023 December 31, 2022

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Short-term lease expense 807 760 816

QUAKER CHEMICAL CORPORATION

NOTES TO 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:

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Present value of lease liabilities (1)

Note 7 – Restructuring and Related Activities

The Company approved a global restructuring plan (the “QH Program”) as part of its initial plan to realize certain cost synergies associated with the Combination in the third quarter of 2019.

The Company completed all of the initiatives and paid all remaining severance related to the QH Program as of the year ended December 31, 2023.

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

This program includes certain restructuring activities to further simplify, optimize and strengthen the Company’s footprint, go-to-market strategy, portfolio and organization.

As of December 31, 2023, 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.

Under the Company’s restructuring programs, employee separation benefits varied depending on local regulations within certain foreign countries and included severance and other benefits.

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

Restructuring costs incurred during the years ended December 31, 2023, 2022 and 2021 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 and are recorded in Restructuring and related charges in the Company’s Consolidated Statements of Operations.

(1) The $ 79.7 million of future lease commitments for the office and laboratory lease that is expected to commence in the third quarter of 2025 was not included in the lease liabilities balance as of December 31, 2024.

QUAKER CHEMICAL CORPORATION

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

Activity in the Company’s accrual for its restructuring programs for the years ended December 31, 2023 and 2022 are as follows:

Note 7 – Restructuring and Related Activities

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 December 31, 2024, the program included restructuring and associated severance costs to reduce headcount by approximately 200 positions globally.

These actions are expected to be substantially complete in the first half 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.

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

Restructuring costs incurred during the years ended December 31, 2024, 2023 and 2022 include employee severance, asset related and facility closure costs, including non-cash asset write-offs, that are recorded in Restructuring and related charges, net in the Company’s Consolidated Statements of Operations.

Activity in the Company’s accrual for its restructuring program and facility closure actions for the years ended December 31, 2024 and 2023 are as follows:

Accrued restructuring as of December 31, 2022 $ 5,483

Restructuring and related charges 3,163

Severance costs

Asset-related charges 426

Cash payments ( 9,786 )

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Accrued restructuring as of December 31, 2023 3,350

Restructuring and related charges 7,588

Severance costs 3,259

Asset-related charges

Cash payments ( 7,595 )

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Accrued restructuring as of December 31, 2024 $ 2,297

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

During the years ended December 31, 2023, 2022 and 2021, certain of these facilities were sold and the Company recognized a gain of $ 1.4 million, $ 0.2 million and $ 5.4 million, respectively, which is included within Other (expense) income, net on the Consolidated Statements of Operations.

Additionally, certain properties with an aggregate book value of approximately $ 1.6 million continue to be held-for-sale as of December 31, 2023 and are recorded in Prepaid expenses and other current assets on the Company’s Consolidated Balance Sheets.

The Company expects to complete the sale of these properties in 2024.

The Company will continue to evaluate its existing facilities and footprint, which may include making certain other facilities or property available for sale in the future.

As described in Note 4, Restructuring and related charges are not included in the Company’s reportable segments’ measure of operating earnings.

Note 8 – Share-Based Compensation

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

During the years ended December 31, 2024, 2023 and 2022, the Company completed the sale of certain facilities previously classified as held-for-sale for a net gain of $ 0.4 million, $ 1.4 million and $ 0.2 million, respectively, which is recorded in Other income (expense), net on the Consolidated Statements of Operations.

As of December 31, 2024, the Company classified a property in the EMEA segment with an aggregate book value of approximately $ 0.7 million as held-for-sale and recorded it in Prepaid expenses and other current assets on the Company’s Consolidated Balance Sheets.

The Company expects to complete the sale of this property over the next twelve months.

The Company will continue to evaluate its existing facilities and footprint, which may include making other facilities or property available for sale in the future.

Note 8 – Equity

Share-based Compensation

The Company recognized the following share-based compensation expense in its Consolidated Statements of Operations for the years ended December 31, 2024, 2023 and 2022:

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Non-vested stock awards and restricted stock units 9,996 9,305 6,679

Non-elective and elective 401(k) matching contribution in stock — — 1,553

Director stock ownership plan 138 86 63

Performance stock units 4,642 4,175 3,150

Total share-based compensation expense $ 14,605 $ 11,666 $ 11,038

Share-based compensation expense is recorded in SG&A, except for $ 0.2 million and $ 0.9 million during the years ended December 31, 2022 and 2021, respectively, recorded within Combination, integration and other acquisition-related expenses.

Before-tax share-based compensation expense $ 14,991 $ 14,605 $ 11,666

Income tax benefit ( 2,222 ) ( 2,742 ) ( 2,007 )

After-tax share-based compensation expense $ 12,769 $ 11,863 $ 9,659

Before-tax share-based compensation expense is primarily included in SG&A in the Consolidated Statements of Operations.

No cost was capitalized during the years ended December 31, 2024, 2023 and 2022.

QUAKER CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

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

Stock Options

Stock options granted under the LTIP program are subject to time vesting and generally become exercisable within three years after the date of the grant for a period of time determined by the Company, but not to exceed seven years from the date of grant.

The Company has not granted stock options since fiscal year 2022.

Share-based compensation for stock options is recognized using the graded vesting method over the vesting periods.

Stock option activity under all plans is as follows:

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Options exercisable as of December 31, 2024 51,579 $ 194.91 3.1 $ —

QUAKER CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

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

The total intrinsic value of options exercised during the years ended December 31, 2023, 2022 and 2021 was approximately $ 3.6 million, $ 0.8 million and $ 2.7 million, respectively.

Intrinsic value is calculated as the difference between the current market price of the underlying security and the strike price of a related option.

A summary of the Company’s outstanding stock options as of December 31, 2023 is as follows:

Exercise Prices Number

Outstanding Weighted

Term (years) Weighted

Exercise Price

(per option) Number

Exercisable Weighted

Exercise Price

$ 120.01 - $ 150.00 15,481 3.7 137.76 12,660 136.73

$ 150.01 - $ 180.00 25,652 4.8 174.77 10,236 169.46

$ 220.01 - $ 250.00 21,720 4.2 245.10 20,201 245.49

62,853 4.3 214.40 43,097 195.48

As of December 31, 2023, unrecognized compensation expense related to options granted during 2022 and 2021 was $ 0.2 million and $ 0.1 million, respectively, to be recognized over a weighted average period of 0.8 years.

The Company granted stock options under its LTIP plan that are subject only to time vesting generally over a three year period during 2022 and 2021.

The Company granted no stock options during the year ended December 31, 2023.

For the purposes of determining the fair value of stock option awards, the Company used a Black-Scholes option pricing model and primarily used the assumptions set forth in the table below:

July 2022 Grant March 2022 Grant March 2021 Grant

The total intrinsic value of stock options exercised during the years ended December 31, 2024, 2023 and 2022 was approximately $ 0.1 million, $ 3.6 million and $ 0.8 million, respectively.

The intrinsic value is calculated as the difference between the current market price of the underlying security and the strike price of a related option.

As of December 31, 2024, unrecognized compensation expense related to stock options was an inconsequential amount to be recognized over a weighted average period of 0.2 years.

The Company used a Black-Scholes option pricing model to determine the fair value of stock option awards and used the assumptions set forth in the table below:

July 2022 Grant March 2022 Grant

Number of stock options granted 4,837 27,077

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Expected term (years) 4.0 4.0

The fair value of these options is being amortized on a straight-line basis over the respective vesting period of each award.

The Company recognized the following share-based compensation expense on each award during the years ended December 31, 2023, 2022 and 2021:

2023 2022 2021

2022 Stock option awards 494 783 —

2021 Stock option awards 446 521 429

2020 Stock option awards 99 443 516

2019 Stock option awards — 27 234

2018 Stock option awards — — 56

Total 1,039 1,774 1,235

QUAKER CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

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

Restricted Stock Awards

Activity of non-vested restricted stock awards granted under the Company’s LTIP plan is shown below:

RSAs granted under the LTIP program are subject to time vesting generally over a one to three-year period.

In addition, as part of the Company’s Annual Incentive Plan, non-vested shares may be issued to key employees, which generally would vest over a period of two -to five-years .

Share-based compensation for RSAs is recognized using the graded vesting method over the vesting periods.

Activity of restricted stock awards granted under the Company’s LTIP plan is shown below:

Shares Weighted Average Grant Date Fair Value (per share)

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Non-vested restricted stock awards, December 31, 2024 29,751 $ 177.12

QUAKER CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

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

The fair value of the non-vested stock 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 for expected forfeitures based on historical experience for similar awards.

As of December 31, 2024, unrecognized compensation expense related to these awards was $ 1.1 million, to be recognized over a weighted average remaining period of 0.8 years.

Restricted Stock Units

Activity of non-vested restricted stock units granted under the Company’s LTIP plan is shown below:

As a component of its LTIP, the Company granted RSUs subject to time vesting generally over a one to three year period.

Share-based compensation for time-based RSUs is recognized on a graded basis over the vesting periods.

Additionally, during the fourth quarter of 2024, the Company granted 9,820 time-based RSUs subject to a performance modifier based on the Company’s relative TSR compared to the S&P 1500 Chemicals Index that vest on the third anniversary of the grant.

The target number of RSUs that vest may range from 75 % to 125 % of the target number of RSUs depending on the achievement of the relative TSR performance criteria measured at the end of the three-year performance period.

Share-based compensation expense for these awards is recognized on a straight-line basis over the vesting period.

Activity of restricted stock units granted under the Company’s LTIP plan is shown below:

Units Weighted Average Grant Date Fair Value (per unit)

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Non-vested restricted stock units, December 31, 2024 68,630 $ 182.90

The fair value of the non-vested restricted stock units 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 for expected forfeitures based on historical experience for similar awards.

As of December 31, 2023, unrecognized compensation expense related to these awards was $ 1.2 million, to be recognized over a weighted average remaining period of 1.4 years.

The fair value of the time-based non-vested RSUs is based on the trading price of the Company’s common stock on the date of grant.

The fair value of RSUs subject to a performance modifier is valued using a Monte Carlo simulation on the grant date and used the following assumptions set below:

December 2024 Grant

Risk-free interest rate 4.21 %

Dividend yield 0.00 %

Expected term (years) 3.0

As of December 31, 2024, unrecognized compensation expense related to RSUs was $ 6.9 million, to be recognized over a weighted average remaining period of 1.5 years.

Performance Stock Units

The Company grants performance-dependent stock awards (“PSUs”) as a component of its LTIP, 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 0 % up to 200 % 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, and separately the achievement of a performance-based return on invested capital (“ROIC”) measure.

The service period required for the PSUs is 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 issuances of the shares upon settlement.

The Company grants PSUs as a component of its LTIP and other equity compensation plans.

The number of 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 TSR relative to the performance of a selected peer 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 issuances of the shares.

Share-based compensation for PSUs subject to time vesting is recognized on a straight-line basis over the vesting period.

As mentioned above, a portion of the Company’s PSUs are subject to 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 PSUs subject to relative TSR performance granted in 2024, the Company made an election to change peer groups to the S&P 1500 Chemicals Group .

QUAKER CHEMICAL CORPORATION

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

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.

Activity of performance stock units granted under the Company’s LTIP plan is shown below:

Units Weighted Average Grant Date Fair Value (per unit)

Non-vested performance stock units, December 31, 2023 51,491 $ 212.85

Granted 42,485 217.12

Forfeited 38,283 212.26

Non-vested performance stock units, December 31, 2024 55,693 $ 216.51

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 grant date.

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:

2023 2022 CEO Grant 2021 (1) 2021

Number of PSUs granted 16,984 18,462 3,775 12,103

The grant-date fair value of the PSUs valued using a Monte Carlo simulation included the following assumptions set forth in the table below:

March 2024 Grant March 2023 Grant March 2022 Grant

Risk-free interest rate 4.55 % 3.85 % 2.11 %

1 unchanged sentence

Expected term (years) 3.0 3.0 3.0

(1) On September 2, 2021, the Board appointed Andrew Tometich to serve as CEO and entered into an Employment Agreement, which included an equity award consisting of a mix of time-based restricted stock and PSUs.

As of December 31, 2024, there was approximately $ 4.5 million of total unrecognized compensation cost related to PSUs which the Company expects to recognize over a weighted-average period of 1.7 years.

Defined Contribution Plan

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 stock rather than cash.

There were no matching contributions in stock for the years ended December 31, 2023 and 2022.

For the year ended December 31, 2021, total contributions in stock were $ 1.5 million.

2023 Director Stock Ownership Plan

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The annual retainer is approximately $ 0.1 million and the retainer payment date is June 1.

Note 9 – Other (Expense) Income, net

Other (expense) income, net for the years ended December 31, 2023, 2022 and 2021 are as follows:

Common Stock and Preferred Stock

The Company has 30,000,000 shares of common stock authorized with a par value of $ 1.00 , and 17,673,607 and 17,991,988 shares issued and outstanding as of December 31, 2024 and 2023, respectively.

The change in shares issued and outstanding during 2024 was primarily related to 312,997 shares repurchased by the Company under the share repurchase program described below, 12,784 shares surrendered from employees in payment of the vesting of restricted stock awards or units, 7,294 shares forfeited by employees under equity compensation plans, offset by 14,694 share issuances relating to equity compensation plans.

The Company is authorized to issue 10,000,000 shares of preferred stock with $ 1.00 par value, subject to approval by the Board.

The Board may designate one or more series of preferred stock and the number of shares, rights, preferences, and limitations of each series.

As of December 31, 2024, no preferred stock had been issued.

QUAKER CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

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

Share Repurchase Program

On February 28, 2024, the Board approved a new share repurchase program (“2024 Share Repurchase Program”), authorizing the Company to repurchase up to an aggregate of $ 150 million of the Company’s outstanding common stock and replacing the prior share repurchase program, under which no repurchases were made in 2024.

The 2024 Share Repurchase Program was effective immediately upon approval and has no expiration date.

The number of shares to be repurchased and the timing of such transactions depend on a variety of factors, including market conditions.

As of December 31, 2024, there was approximately $ 100.8 million of capacity remaining under the 2024 Share Repurchase Program.

The Company repurchased 312,997 shares under the 2024 Share Repurchase Program for the year ended December 31, 2024.

The Company did not repurchase any shares in 2024 under the prior repurchase program or for the years ended December 31, 2023 and 2022.

Under the 2024 Share Repurchase Program, the Company is authorized to repurchase shares through open market purchases, privately-negotiated transactions, accelerated share repurchases or otherwise in accordance with applicable federal securities laws, including through Rule 10b5-1 and under Rule 10b-18 of the Securities Exchange Act of 1934, as amended.

The Company currently expects to employ trading plans for the repurchase of shares pursuant to the 2024 Share Repurchase Program, which would permit the Company to purchase shares, at predetermined price targets, when it may otherwise be precluded from doing so.

The repurchases may be suspended or discontinued at any time.

The specific timing and amount of repurchases will vary based on available capital resources and other financial and operational performance, market conditions, securities law limitations, and other factors.

Note 9 – Other Income (Expense), net

Other income (expense), net for the years ended December 31, 2024, 2023 and 2022 are as follows:

2024 2023 2022

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Facility remediation recoveries, net — 2,141 1,804

Business interruption insurance proceeds 1,000 — —

Product liability claim costs, net ( 2,040 ) — —

Earnout liability adjustment 400 — —

Other non-operating income, net 242 149 224

Total other (expense) income, net $ ( 10,672 ) $ ( 12,607 ) $ 18,851

Total other income (expense), net $ 1,354 $ ( 10,672 ) $ ( 12,607 )

Foreign exchange losses, net, during the years ended December 31, 2024, 2023 and 2022, include foreign currency transaction losses of approximately $ 0.8 million, $ 7.8 million and $ 1.6 million, respectively, related to hyper-inflationary accounting.

See Note 1 for additional information.

See Note 1, Basis of Presentation and Significant Accounting Policies , for additional information.

Gain on disposals of property, plant, equipment and other assets, net, includes losses related to certain fixed asset disposals resulting from the property damage caused by flooding of the Company’s Conshohocken, Pennsylvania headquarters in 2022, as described in Note 25, Commitments and Contingencies .

This caption also includes gains recognized in 2024, 2023 and 2022 for the sale of certain facilities previously classified as held-for-sale, as described in Note 7, Restructuring and Related Activities.

Business interruption insurance proceeds for the year ended December 31, 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 25, Commitments and Contingencies, for additional discussion regarding the Company’s business interruption claims.

Product liability claim costs, net represents expense related to payments by the Company in connection with product liability disputes with customers, net of insurance recoveries during the year ended December 31, 2024.

Facility remediation recoveries, net, for the years ended December 31, 2023 and 2022 reflects insurance recoveries of costs for remediation and restoration of property damage.

See Note 25, Commitments and Contingencies, for additional discussion regarding the Company’s insurance recoveries for facility remediation and property damage.

QUAKER CHEMICAL CORPORATION

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

Gain on disposals of property, plant, equipment and other assets, net, includes losses related to certain fixed asset disposals resulting from the property damage caused by flooding of the Company’s Conshohocken, Pennsylvania headquarters in 2021, described in Note 25 of Notes to Consolidated Financial Statements.

This caption also includes gains in 2023, 2022 and 2021 on the sale of certain held-for-sale real property assets, described in Note 7 of Notes to Consolidated Financial Statements.

Non-income tax refunds and other related credits (expense) during the year ended December 31, 2023 and 2022 includes adjustments to a Combination-related indemnification asset 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, whereas during the year ended December 31, 2021, this includes certain non-income tax credits for the Company’s Brazilian subsidiaries described in Note 25 of Notes to Consolidated Financial Statements.

Loss on extinguishment of debt during the year ended December 31, 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.

See Note 19 for additional information.

Facility remediation recoveries, net for the years ended December 31, 2023 and 2022 reflects payments received from insurers related to the property damage incurred during 2021, noted above.

See Notes 18 and 25 for additional information.

Note 10 – Taxes on Income

See Note 19, Debt , for additional information.

Note 10 – Income Taxes

On December 22, 2017, the U.S.

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subsidiaries.

As of December 31, 2023, $ 8.5 million in installments have been paid with the remaining $ 7.0 million to be paid through installments in future years.

As of December 31, 2024, $ 11.6 million in installments have been paid with the remaining $ 3.9 million to be paid in 2025.

The Company may also be subject to other taxes, such as withholding taxes and dividend distribution taxes, if these undistributed earnings are ultimately remitted to the U.S.

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Any tax liability which might result from ultimate remittance of these earnings is expected to be substantially offset by foreign tax credits (subject to certain limitations);

however, certain withholding taxes could apply.

It is currently impractical to estimate any such incremental tax expense.

The Company has $ 6.1 million of deferred tax assets related to state net operating losses.

Management analyzed the expected impact of the reversal of existing taxable temporary differences, considered expiration dates, analyzed current state tax laws, and determined that $ 1.9 million of state net operating loss carryforwards is expected to be realized as a future benefit based on the reversal of deferred tax liabilities.

Management analyzed the expected impact of the reversal of existing taxable temporary differences, considered expiration dates, analyzed current state tax laws, and determined that $ 1.4 million of state net operating loss carryforwards is expected to be realized as a future benefit.

Accordingly, a partial valuation allowance of $ 4.7 million has been established.

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Management analyzed the expected impact of the utilization of foreign tax credits based on certain assumptions such as projected U.S.

taxable income, overall domestic loss recapture, and annual limitations due to the ownership change under the Internal Revenue Code.

taxable income, overall domestic loss recapture, and applicable limitations if any.

The Company had a foreign tax credit carry forward of $ 19.2 million and $ 13.0 million as of December 31, 2024 and 2023, respectively, with a $ 17.2 million and $ 12.5 million valuation allowance as of December 31, 2024 and 2023, respectively, reflecting the amount of credits that are not expected to be utilized before expiration.

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tax on foreign operations 9,625 9,014 4,864

Pension settlement — — —

Foreign derived intangible income ( 1,336 ) ( 1,147 ) ( 917 )

Non-deductible acquisition expenses — 45 129

Withholding taxes 8,418 11,193 7,785

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State income tax provisions, net 1,905 2,158 432

Non-deductible meals and entertainment 416 146 426

Non-deductible expenses 341 416 190

Intercompany transfer of intangible assets 2,295 ( 584 ) ( 1,932 )

Goodwill impairment — — 19,550

Provision to return and other adjustments 2,655 ( 930 ) 21

Miscellaneous items, net 414 1,080 ( 416 )

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The Company continues to recognize interest and penalties associated with uncertain tax positions as a component of tax expense on income before equity in net income of associated companies in its Consolidated Statements of Operations.

The Company recognized a benefit of $ 0.4 million for penalties and an expense of $ 0.1 million for interest (net of expirations and settlements) in its Consolidated Statement of Income for the year ended December 31, 2023, a benefit of $ 1.7 million for penalties and a benefit of $ 0.3 million for interest (net of expirations and settlements) in its Consolidated Statement of Income for the year ended December 31, 2022, and a benefit of $ 0.5 million for penalties and a benefit of $ 0.3 million for interest (net of expirations and settlements) in its Consolidated Statement of Income for the year ended December 31, 2021.

The Company recognized a benefit of $ 0.2 million for penalties and a benefit of $ 0.2 million for interest (net of expirations and settlements) in its Consolidated Statements of Operations for the year ended December 31, 2024, a benefit of $ 0.4 million for penalties and an expense of $ 0.1 million for interest (net of expirations and settlements) in its Consolidated Statement of Operations for the year ended December 31, 2023, and a benefit of $ 1.7 million for penalties and a benefit of $ 0.3 million for interest (net of expirations and settlements) in its Consolidated Statement of Operations for the year ended December 31, 2022.

The Company estimates that during the year ending December 31, 2024, it will reduce its cumulative liability for gross unrecognized tax benefits by approximately $ 3.6 million due to the expiration of the statute of limitations with regard to certain tax positions.

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Unrecognized tax benefits as of January 1 $ 15,659 $ 16,340 $ 22,464

(Decrease) increase in unrecognized tax benefits taken in prior periods ( 147 ) ( 1,174 ) 1,002

Decrease in unrecognized tax benefits taken in prior periods ( 88 ) ( 147 ) ( 1,174 )

Increase in unrecognized tax benefits taken in current period 2,684 1,799 953

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2024 2023 2022

Basic earnings per common share

Basic earnings (loss) per common share

Net income (loss) attributable to Quaker Chemical Corporation $ 116,644 $ 112,748 $ ( 15,931 )

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Basic earnings (loss) per common share $ 6.51 $ 6.27 $ ( 0.89 )

Diluted earnings per common share

Diluted earnings (loss) per common share

Net income (loss) attributable to Quaker Chemical Corporation $ 116,644 $ 112,748 $ ( 15,931 )

5 unchanged sentences

Diluted earnings (loss) per common share $ 6.51 $ 6.26 $ ( 0.89 )

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 10,621 in 2023, 28,222 in 2022 and 4,070 in 2021.

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 were 32,353 , 10,621 , and 28,222 for the years ended December 31, 2024, 2023 and 2022, respectively.

Note 12 – Accounts Receivable and Allowance for Credit Losses

9 unchanged sentences

Note 13 – Inventories

Inventories, net, as of December 31, 2023 and 2022 were as follows:

Inventories as of December 31, 2024 and 2023 were as follows:

Raw materials and supplies $ 112,457 $ 119,047

Work in process, finished goods and reserves 115,015 114,810

Total inventories, net $ 233,857 $ 284,848

Total inventories $ 227,472 $ 233,857

QUAKER CHEMICAL CORPORATION

11 unchanged sentences

As of December 31, 2024, PP&E includes $ 1.0 million of finance lease assets and future minimum lease payments.

Property with an aggregate book value of approximately $ 1.6 million is held-for-sale as of December 31, 2023 and is recorded in Prepaid expenses and other current assets on the Company’s Consolidated Balance Sheets.

See Note 7 for additional information.

See Note 6, Leases , for additional information.

Note 15 – Goodwill and Other Intangible Assets

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 reallocated goodwill previously held by the former Global Specialty Businesses segment to the remaining business segments as of January 1, 2023.

Changes in the carrying amount of goodwill for the years ended December 31, 2024 and 2023 were as follows:

1 unchanged sentence

Balance as of December 31, 2022 $ 215,899 $ 34,567 $ 150,375 $ 114,167 $ 515,008

Goodwill additions 1,853 251 — ( 59 ) 2,045

Goodwill impairments — ( 93,000 ) — — ( 93,000 )

Currency translation and other adjustments 23 ( 8,204 ) ( 12,083 ) ( 4,967 ) ( 25,231 )

Balance as of December 31, 2022 215,899 34,567 150,375 114,167 515,008

Reallocation of reporting units (1)

63,697 31,711 18,759 ( 114,167 ) —

Balance as of January 1, 2023 279,596 66,278 169,134 — 515,008

1 unchanged sentence

Balance as of December 31, 2023 283,103 65,940 163,475 — 512,518

Goodwill from acquisitions — 16,448 5,511 — 21,959

Currency translation and other adjustments ( 6,228 ) ( 1,984 ) ( 7,371 ) — ( 15,583 )

Balance as of December 31, 2024 $ 276,875 $ 80,404 $ 161,615 $ — $ 518,894

(1) 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 reallocated goodwill previously held by the former Global Specialty Businesses segment to the remaining business segments as of January 1, 2023.

2024 2023 2022

Goodwill, gross $ 611,498 $ 609,571 $ 608,008

Accumulated impairment losses (1)

( 92,604 ) ( 97,053 ) ( 93,000 )

Goodwill, net $ 518,894 $ 512,518 $ 515,008

(1) Accumulated impairment losses are attributable to the non-cash impairment charge of $ 93.0 million to write down the carrying value of the EMEA reporting unit during the fourth quarter of 2022 and includes the impact of currency translation.

QUAKER CHEMICAL CORPORATION

NOTES TO 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 as of December 31, 2024 and 2023 were as follows:

7 unchanged sentences

Total definite-lived intangible assets $ 995,271 $ 1,009,067 $ 353,486 $ 305,527 $ 641,785 $ 703,540

QUAKER CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

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

The Company recorded $ 58.2 million, $ 58.2 million and $ 57.5 million of amortization expense during the years ended December 31, 2024, 2023 and 2022, respectively.

Amortization is recorded within SG&A in the Company’s Consolidated Statements of Operations.

Amortization expense is recorded within SG&A in the Company’s Consolidated Statements of Operations.

Estimated annual aggregate amortization expense for the subsequent five years is as follows:

4 unchanged sentences

For the year ended December 31, 2029 54,320

The Company has four indefinite-lived intangible assets totaling $ 193.2 million as of December 31, 2023, including $ 192.1 million of indefinite-lived intangible assets for trademarks and tradename associated with the Combination.

Comparatively, the Company had four indefinite-lived intangible assets for trademarks and tradename totaling $ 189.1 million as of December 31, 2022.

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 in one or more of its reporting units.

As of December 31, 2024 and December 31, 2023, the Company had indefinite-lived intangible assets for trademarks and tradenames totaling $ 185.3 million and $ 193.2 million, re spectively.

The Company completes its annual goodwill and indefinite-lived intangible asset impairment tests during the fourth quarter of each year, or more frequently if triggering events indicate a possible impairment in one or more of its reporting units.

During the fourth quarter of 2022, the Company recorded a non-cash impairment charge of $ 93.0 million to write down the carrying value of the EMEA reporting unit goodwill to its estimated fair values.

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

Additionally, the Company completed its annual impairment assessment as of October 1, 2023 and concluded no impairment existed.

See Note 23 for additional information.

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 might be impaired.

Notwithstanding the results of the Company’s impairment assessments during 2023, if the Company is unable to maintain the actions aimed at improving the financial performance of the EMEA reporting unit, or interest rates continue to rise, which leads to an increase in the cost of capital, then these conditions could result in a triggering event for the EMEA reporting unit.

Additionally, the Company completed its annual impairment assessment as of October 1, 2023 and October 1, 2024 and concluded in each case that no impairment existed.

See Note 23, Fair Value Measures , for additional information.

The Company continually evaluates financial performance, economic conditions and other recent developments in assessing if a triggering event indicates that the carrying value of goodwill, indefinite-lived, or long-lived assets might be impaired.

Notwithstanding the results of the Company’s impairment assessments during 2023 and 2024, if the Company is unable to maintain the actions aimed at improving the financial performance of the EMEA reporting unit, or interest rates rise, which leads to an increase in the cost of capital, then these conditions could result in a triggering event for the EMEA reporting unit.

This assessment could result in an impairment of the EMEA reporting unit’s remaining goodwill, indefinite-lived intangible assets, or long-lived assets.

7 unchanged sentences

and $ 0.5 million in Kelko Panama.

The carrying amount of the Company’s equity investments as of December 31, 2023 was $ 101.2 million, which includes investments of $ 72.0 million in Houghton Korea;

$ 22.1 million in Primex;

$ 6.6 million in Nippon Japan;

and $ 0.5 million in Kelko Panama.

Dividends and distributions received from associated companies by investment were $ 9.1 million, $ 4.2 million, and $ 3.0 million in the years ended December 31, 2024, 2023 and 2022.

QUAKER CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

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

The following table is a summary of equity income in associated companies by investment for the years ending December 31, 2024, 2023 and 2022:

3 unchanged sentences

Kelko Panama 321 309 425

Grindaix (1) — — ( 37 )

Primex 2,930 2,090 ( 1,427 )

Total equity in net income of associated companies $ 10,971 $ 15,333 $ 1,965

(1) In February 2021, the Company acquired a 38 % ownership interest in Grindaix.

From that date through September 2021 when the Company purchased the remaining interest of Grindaix, the Company accounted for its 38 % interest under the equity method of accounting and recorded equity in net income of associated companies.

See Note 2 for additional information.

QUAKER CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

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

Note 17 – Other Non-Current Assets

7 unchanged sentences

Indemnification assets (See Notes 10 and 21) 405 430

Bad debt and bad debt provisions (See Note 12) 302 440

Supplemental retirement income program (See Notes 20 and 23) 297 286

1 unchanged sentence

Total other non-current assets $ 17,360 $ 18,770

As of December 31, 2023 and 2022, one of the Company’s foreign pension plan’s fair value of plan assets exceeded its gross benefit obligation and was therefore over-funded, which is represented by the line Pension assets in the table above.

Approximately 1.0 million of payments related to this plan have been made to escrow and are excluded from the plan’s Net benefit obligation as of December 31, 2023.

As of December 31, 2024, two of the Company’s foreign pension plans’ fair value of plan assets exceeded its gross benefit obligation and were therefore over-funded, which is represented by the line Pension assets in the table above.

As of December 31, 2023, one of the Company’s foreign pension plans’ fair value of plan assets exceeded its gross benefit obligation and was therefore over-funded.

Approximately $ 1.0 million of payments related to the foreign pension plan’s have been made to escrow and are excluded from the plan’s net benefit obligation as of December 31, 2023.

No such payments related to this plan has been made to escrow as of December 31, 2024.

See Note 20 for additional information.

As of December 31, 2022, Indemnification assets relates to certain Houghton foreign subsidiaries for which the Company expects it will incur additional tax amounts which are subject to indemnification under the terms of the Combination share and purchase agreement.

A portion of these indemnification assets have a corresponding uncertain tax position recorded in other non-current liabilities.

See Notes 10 and 21 for additional information.

Note 18 – Other Accrued Liabilities

9 unchanged sentences

Accrued environmental reserves (See Note 25) 1,235 1,187

Earnout liability (See Note 2) 1,160 —

Accrued rent and facilities 1,129 1,104

Accrued non-pension benefits 833 581

Interest rate swap (See Note 24) 159 —

Foreign currency forward contracts (See Note 24) 67 159

Other 157 12,444

21 unchanged sentences

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 “Credit Facility”).

The Credit Facility established (A) a new $ 150.0 million Euro equivalent senior secured term loan (the “Euro Term Loan”), (B) a new $ 600.0 million senior secured term loan (the “U.S.

Term Loan”), and (C) a new $ 500.0 million senior secured revolving credit facility (the “Revolver”).

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 earnings before interest, taxes, depreciation and amortization (“EBITDA”), subject to certain conditions including the agreement to provide financing by any lender providing such increase.

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 “ Original Credit Facility”).

The amended credit facility (“Credit Facility”) established (A) a new $ 150.0 million Euro equivalent senior secured term loan (the “Euro Term Loan”), (B) a new $ 600.0 million senior secured term loan (the “U.S.

Term Loan”), and (C) a new $ 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.

In addition, the Credit Facility also:

3 unchanged sentences

(iii) extended the maturity date of the Original Credit Facility from August 2024 to June 2027;

(iv) effected certain other changes to the Original Credit Facility as set forth in the Credit Facility.

(iv) effected other less significant changes to the Original Credit Facility.

The Company used the proceeds of the 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.

19 unchanged sentences

The weighted average variable interest rate incurred on the outstanding borrowings under the Credit Facility during the twelve months ended December 31, 2024 was approximately 6.1 %.

As of December 31, 2023, the weighted interest rate on the outstanding borrowings under the Credit Facility was approximately 6.3 %.

In addition to paying interest on outstanding principal under the Original Credit Facility, the Company was required to pay a commitment fee ranging from 0.2 % to 0.3 % depending on the Company’s consolidated net leverage ratio under the Original Revolver in respect of the unutilized commitments thereunder.

As part of the Credit Facility, the Company is required to pay a 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.

As of December 31, 2024, the interest rate on the outstanding borrowings under the Credit Facility was approximately 5.2 %.

As part of the Credit Facility, the Company is 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 $ 448.7 million, which is net of bank letters of credit of approximately $ 2.4 million, as of December 31, 2024.

The Company previously capitalized $ 23.7 million of certain third-party debt issuance costs in connection with executing the Original Credit Facility.

Approximately $ 15.5 million of the capitalized costs were attributed to the Original Term Loans and recorded as a direct reduction of Long-term debt on the Company’s Consolidated Balance Sheet.

Approximately $ 8.3 million of the capitalized costs were attributed to the Original Revolver and recorded within Other assets on the Company’s Consolidated Balance Sheet.

These capitalized costs are being amortized into interest expense over the five year term of the Original Credit Facility.

Prior to executing the Credit Facility, as of December 31, 2021, the Company had $ 8.0 million of debt issuance costs recorded as a reduction of Long-term debt attributable to the Original Credit Facility and $ 4.3 million of debt issuance costs recorded within Other assets attributable to the Original Credit Facility.

In connection with executing the Credit Facility, the Company recorded a loss on extinguishment of debt of approximately $ 6.8 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 Credit Facility.

Also in connection with executing the Credit Facility, during the second quarter of 2022, the Company capitalized $ 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 Consolidated Balance Sheet.

Approximately $ 1.5 million of the capitalized costs were attributed to the Revolver and recorded within Other assets on the 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 over the five year term of the Credit Facility.

As of December 31, 2023, the Company had $ 1.5 million of debt issuance costs recorded as a reduction of Long-term debt on the Consolidated Balance Sheet and $ 3.3 million of debt issuance costs recorded within Other assets on the Consolidated Balance Sheet.

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 interest 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 December 31, 2023, the aggregate interest rate on the swaps, including the fixed base rate plus an applicable margin, was 5.3 %.

See Note 24 for additional information.

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 into an average fixed rate obligation of 3.64 % plus an applicable margin as provided in the Credit Facility based on the Company’s consolidated net leverage ratio.

As of December 31, 2024, the aggregate interest rate on the swaps, including the fixed base rate plus the applicable margin, was 4.9 %.

See Note 24, Hedging Activities , for additional information.

In connection with executing the Credit Facility, the Company recorded a loss on extinguishment of debt of approximately $ 6.8 million in Other income (expense), net on the Consolidated Statement of Operations during the year ended December 31, 2022.

The loss on extinguishment of debt included 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 Credit Facility.

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 to Long-term debt on the Consolidated Balance Sheets.

Capitalized costs attributed to the Revolver are recorded within Other assets on the Consolidated Balance Sheets.

These capitalized costs will collectively be amortized into Interest expense over the five year term of the Credit Facility.

As of December 31, 2024 and 2023, the Company had $ 1.1 million and $ 1.5 million, respectively, of debt issuance costs recorded as a reduction of Long-term debt and $ 2.4 million and $ 3.3 million, respectively, of debt issuance costs recorded within Other assets.

Industrial development bonds

3 unchanged sentences

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 December 31, 2024, was approximately $ 32.9 million.

In addition to the bank letters of credit described in the “Credit facilities” subsection above, the Company’s only other off-balance sheet arrangements include certain financial and other guarantees.

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 December 31, 2024 were approximately $ 6 million.

QUAKER CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

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

The Company incurred the following debt related expenses included within Interest expense, net, in the Consolidated Statements of Operations for the years ended December 31, 2024, 2023 and 2022:

3 unchanged sentences

Total $ 44,636 $ 54,995 $ 36,633

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

QUAKER CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

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

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

As of December 31, 2024, annual principal maturities on long-term borrowings, including the current portion, are as follows:

15 unchanged sentences

Interest cost 5,817 3,672 9,489 6,083 3,849 9,932 61 69

Employee contributions — — — 20 — 20 — —

Effect of plan amendments — — — — ( 15 ) ( 15 ) — —

Curtailment (gain) loss ( 19 ) — ( 19 ) ( 213 ) — ( 213 ) — —

Plan settlements — — — ( 1,726 ) — ( 1,726 ) — —

Benefits paid ( 6,377 ) ( 6,519 ) ( 12,896 ) ( 6,086 ) ( 6,031 ) ( 12,117 ) ( 156 ) ( 182 )

Plan expenses and premiums paid ( 36 ) — ( 36 ) — — — — —

Actuarial loss (gain) 7,809 2,146 9,955 ( 77,244 ) ( 20,688 ) ( 97,932 ) ( 150 ) ( 263 )

Actuarial (gain) loss ( 6,589 ) ( 2,845 ) ( 9,434 ) 7,809 2,146 9,955 ( 61 ) ( 150 )

Translation differences and other ( 6,198 ) ( 1 ) ( 6,199 ) 6,233 — 6,233 26 —

11 unchanged sentences

Employer contributions 2,043 3,751 5,794 1,566 2,767 4,333 156 182

Employee contributions — — — 20 — 20 — —

Plan settlements — — — ( 1,726 ) — ( 1,726 ) — —

Benefits paid ( 6,377 ) ( 6,519 ) ( 12,896 ) ( 6,086 ) ( 6,031 ) ( 12,117 ) ( 156 ) ( 182 )

9 unchanged sentences

Amounts not yet reflected in net periodic benefit costs and included in accumulated other comprehensive loss:

Prior service (cost) credit ( 353 ) — ( 353 ) ( 333 ) ( 36 ) ( 369 ) — 16

Prior service cost ( 265 ) — ( 265 ) ( 353 ) — ( 353 ) — —

Accumulated (loss) gain ( 19,775 ) 3,905 ( 15,870 ) ( 19,117 ) 2,248 ( 16,869 ) 1,199 1,241

4 unchanged sentences

and $ 126.5 million Foreign) and $ 217.5 million ($ 79.1 million U.S.

and approximately $ 125.4 million Foreign) as of December 31, 2023 and 2022, respectively.

and $ 138.4 million Foreign) as of December 31, 2024 and 2023, respectively.

Information for pension plans with an accumulated benefit obligation in excess of plan assets:

2 unchanged sentences

Fair value of plan assets 66,838 59,548 126,386 69,419 60,967 130,386

QUAKER CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

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

Information for pension plans with a projected benefit obligation in excess of plan assets:

2 unchanged sentences

Fair value of plan assets 66,838 59,548 126,386 81,507 60,967 142,474

QUAKER CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

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

Components of net periodic benefit costs – pension plans:

3 unchanged sentences

Expected return on plan assets ( 5,571 ) ( 2,562 ) ( 8,133 ) ( 5,271 ) ( 2,799 ) ( 8,070 )

Settlement gain — — — ( 71 ) — ( 71 )

Curtailment (gain) loss ( 19 ) — ( 19 ) ( 213 ) 15 ( 198 )

1 unchanged sentence

Prior service cost amortization 27 ( 1 ) 26 28 6 34

Net periodic benefit cost (income) $ 1,414 $ 1,121 $ 2,535 $ ( 131 ) $ ( 987 ) $ ( 1,118 )

Net periodic benefit cost $ 1,152 $ 1,133 $ 2,285 $ 1,414 $ 1,121 $ 2,535

Service cost $ 465 $ 47 $ 512

1 unchanged sentence

Expected return on plan assets ( 4,472 ) ( 3,509 ) ( 7,981 )

Settlement loss 35 — 35

Settlement gain ( 71 ) — ( 71 )

Curtailment charge 207 — 207

Actuarial loss amortization 658 323 981

Prior service credit amortization 3 7 10

Net periodic benefit (income) cost $ ( 360 ) $ 932 $ 572

Net periodic benefit income $ ( 131 ) $ ( 987 ) $ ( 1,118 )

Other changes recognized in other comprehensive income – pension plans:

Total Foreign U.S.

Net (gain) loss arising during the period $ 8,605 $ 398 $ 9,003 $ ( 7,008 ) $ ( 3,555 ) $ ( 10,563 )

Net loss (gain) arising during the period $ 1,985 $ ( 1,631 ) $ 354 $ 8,605 $ 398 $ 9,003

Settlement loss — ( 24 ) ( 24 ) — ( 23 ) ( 23 )

Prior service (cost) credit — ( 15 ) ( 15 ) 303 ( 7 ) 296

Actuarial (loss) gain ( 388 ) ( 92 ) ( 480 ) ( 587 ) 1,247 660

Prior service cost — — — — ( 15 ) ( 15 )

Actuarial loss ( 481 ) — ( 481 ) ( 388 ) ( 92 ) ( 480 )

Curtailment recognition ( 27 ) — ( 27 ) ( 28 ) — ( 28 )

5 unchanged sentences

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

Net (gain) loss arising during period $ ( 388 ) $ ( 448 ) $ ( 836 )

Net gain arising during period $ ( 7,008 ) $ ( 3,555 ) $ ( 10,563 )

Settlement loss — ( 323 ) ( 323 )

Prior service credit — ( 7 ) ( 7 )

Prior service credit (cost) 303 ( 7 ) 296

Actuarial (loss) gain ( 587 ) 1,247 660

1 unchanged sentence

Effect of exchange rates on amounts included in AOCI ( 1,169 ) — ( 1,169 )

Total recognized in other comprehensive loss ( 2,818 ) ( 9,632 ) ( 12,450 )

Total recognized in net periodic benefit cost and other comprehensive loss $ ( 3,178 ) $ ( 8,700 ) $ ( 11,878 )

Total recognized in other comprehensive income ( 8,464 ) ( 2,638 ) ( 11,102 )

Total recognized in net periodic benefit cost and other comprehensive income $ ( 8,595 ) $ ( 3,625 ) $ ( 12,220 )

Components of net periodic benefit costs – other postretirement plan:

7 unchanged sentences

2024 2023 2022

Net (gain) loss arising during period $ ( 150 ) $ ( 263 ) $ ( 992 )

Net gain arising during period $ ( 61 ) $ ( 150 ) $ ( 263 )

Recognition of amortizations in net periodic benefit cost — — ( 2 )

1 unchanged sentence

Actuarial gain amortization 102 127 79

Total recognized in other comprehensive (income) loss ( 7 ) ( 154 ) ( 957 )

Total recognized in net periodic benefit cost and other comprehensive (income) loss $ ( 82 ) $ ( 228 ) $ ( 1,042 )

Total recognized in other comprehensive loss (income) 41 ( 7 ) ( 154 )

Total recognized in net periodic benefit cost and other comprehensive loss (income) $ — $ ( 82 ) $ ( 228 )

Weighted-average assumptions used to determine benefit obligations as of December 31, 2024 and 2023:

14 unchanged sentences

Expected long-term return on plan assets 5.50 % 5.50 % 5.75 % N/A N/A N/A

Rate of compensation increase N/A N/A 6.00 % N/A N/A N/A

Rate of compensation increase N/A N/A N/A N/A N/A N/A

Foreign Plans

3 unchanged sentences

The long-term rates of return on assets were selected from within the reasonable range of rates determined by (a) historical real returns for the asset classes covered by the investment policy and (b) projections of inflation over the long-term period during which benefits are payable to plan participants.

See Note 1 for additional information.

See Note 1, Basis of Presentation and Significant Accounting Policies , for additional information.

Assumed health care cost trend rates as of December 31, 2024, 2023 and 2022:

118 unchanged sentences

Changes in the fair value of the plans’ Level 3 investments during the years ended December 31, 2024 and 2023 were as follows:

Contract Real Estate Alternative

Investments Total

Contract Real Estate Total

Balance as of December 31, 2022 $ 59,963 $ 8,902 $ 68,865

Purchases ( 1,136 ) ( 122 ) ( 6,979 ) ( 8,237 )

Unrealized losses ( 32,305 ) ( 1,842 ) — ( 34,147 )

Purchases (Sales) 47,640 ( 303 ) 47,337

Unrealized gains (losses) 7,621 ( 2,867 ) 4,754

Currency translation adjustment 3,169 186 3,355

Balance as of December 31, 2023 118,393 5,918 124,311

Purchases 47,640 ( 303 ) — 47,337

Unrealized gains (losses) 7,621 ( 2,867 ) — 4,754

Sales ( 1,310 ) ( 2,952 ) ( 4,262 )

Unrealized losses ( 4,620 ) ( 128 ) ( 4,748 )

Currency translation adjustment ( 4,666 ) ( 27 ) ( 4,693 )

11 unchanged sentences

The Employee Retirement Income Security Act of 1974, as amended by the Multi-Employer Pension Plan Amendments Act of 1980, imposes certain contingent liabilities upon an employer who is a contributor to a multiemployer pension plan if the employer withdraws from the plan or the plan is terminated or experiences a mass withdrawal.

In connection with a site closure, the Company intends to withdraw from the multiemployer pension plan during the first half of 2025 and will be charged for its share of the multiemployer pension plan’s unfunded liability.

The Company will record a withdrawal liability once an amount is determined and reasonably estimable in 2025.

While the Company may also have additional liabilities imposed by law as a result of its participation in the multiemployer defined benefit pension plan, there is no liability as of December 31, 2024.

17 unchanged sentences

Benefits payable under the plan are based on a combination of years of service and existing postretirement benefits.

Included in total pension costs are charges of $ 0.6 million, $ 0.7 million and $ 3.0 million for the years ended December 31, 2023, 2022 and 2021, respectively, representing the annual accrued benefits under this plan.

Included in total pension costs are charges of $ 0.6 million for both the years ended December 31, 2024 and 2023, respectively, and $ 0.7 million for the year ended December 31, 2022, representing the annual accrued benefits under this plan.

QUAKER CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

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

Defined Contribution Plan

5 unchanged sentences

Beginning in April 2020 and continuing through March 2021, the Company matched both non-elective and elective 401(k) contributions in fully vested shared of the Company’s common stock rather than cash.

See Note 8 for additional information.

See Note 8, Equity , for additional information.

Total Company contributions under this U.S.

401(k) plan were $ 6.6 million, $ 6.1 million and $ 7.2 million for the years ended December 31, 2024, 2023 and 2022, respectively.

QUAKER CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

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

Note 21 – Other Non-Current Liabilities

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Total other non-current liabilities $ 24,445 $ 31,805

Note 22 – Equity and Accumulated Other Comprehensive Loss

The Company has 30,000,000 shares of common stock authorized with a par value of $ 1 , and 17,991,988 and 17,950,264 shares issued and outstanding as of December 31, 2023 and 2022, respectively.

The change in shares issued and outstanding during 2023 was primarily related to 38,522 shares issued for share-based compensation plans and 3,202 shares issued for the exercise of stock options and other share activity.

The Company is authorized to issue 10,000,000 shares of preferred stock with $ 1 par value, subject to approval by the Board.

The Board may designate one or more series of preferred stock and the number of shares, rights, preferences, and limitations of each series.

As of December 31, 2023, no preferred stock had been issued.

The 2024 Share Repurchase Program is effective immediately and has no expiration date.

In connection with the 2024 Share Repurchase Program, the Company’s previous share repurchase program (“2015 Share Repurchase Program”), which was approved by the Board in 2015 and had no expiration date, was terminated.

The 2015 Share Repurchase Program was approved for the repurchase of up to $ 100 million of Quaker Chemical Corporation common stock.

As of December 31, 2023, there was approximately $ 86.9 million of common stock remaining under the 2015 Share Repurchase Program.

The Company did not repurchase any shares under any programs for the years ended December 31, 2023, 2022 and 2021.

The Company plans to employ trading plans for the repurchase of shares pursuant to the 2024 Share Repurchase Program, which would permit the Company to purchase shares, at predetermined price targets, when it may otherwise be precluded from doing so.

The repurchases may be suspended or discontinued completely at any time.

QUAKER CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

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

Note 22 – Accumulated Other Comprehensive Loss

The following table shows the reclassifications from and resulting balances of AOCI for the years ended December 31, 2024, 2023 and 2022:

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

Other comprehensive (loss) income before reclassifications ( 82,318 ) 10,789 ( 3,276 ) — ( 74,805 )

Other comprehensive income (loss) before reclassifications 16,744 ( 7,702 ) 1,753 1,828 12,623

Amounts reclassified from AOCI — ( 464 ) 547 — 83

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Balance as of December 31, 2024 $ ( 192,841 ) $ ( 10,313 ) $ 287 $ 1,248 $ ( 201,619 )

All reclassifications related to Unrealized gain (loss) on 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 (loss) for non-controlling interest are related to Currency translation adjustments.

All reclassifications related to Unrealized (loss) gain on 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 (loss) income for non-controlling interest are related to currency translation adjustments.

Note 23 – Fair Value Measures

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• Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities.

QUAKER CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

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

• Level 2 - Inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the asset or liability.

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As a result, the Company owns an immaterial remaining amount of company-owned life insurance policies as of the year ended December 31, 2024.

These assets were subject to fair value measurement as follows:

Fair Value Measurements at December 31, 2022

Total Fair Value Using Fair Value Hierarchy

Assets Level 1 Level 2 Level 3

Company-owned life insurance $ 2,114 $ — $ 2,114 $ —

Total $ 2,114 $ — $ 2,114 $ —

The Company did not hold any Level 3 investments as of December 31, 2023 or 2022, respectively .

QUAKER CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

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

The Company did not own any Level 3 investments as of December 31, 2024 and 2023, respectively.

Items Measured at Fair Value on Nonrecurring Basis

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Significant unobservable inputs used to estimate the fair values as of the Company’s October 1, 2024 goodwill impairment assessment included WACCs of 10.0 %, 10.5 % and 10.0 % for the Company’s Americas, EMEA and Asia/Pacific reporting units, respectively.

See Note 15 for additional information.

See Note 15, Goodwill and Other Intangible Assets , for additional information.

Note 24 – Hedging Activities

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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

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, these foreign operations have the local currency as their functional currency and many have transactions 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 monetary assets and 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.

Changes in the fair value of the underlying instrument and settlements are recognized in earnings in Other non-operating income, net.

Changes in the fair value of the underlying instrument and settlements are recognized in earnings in Other income (expense), net.

The fair value of the forward contract is determined from sources independent of the Company, including the financial institutions which are party to the derivative instruments.

All open foreign exchange forward contracts as of December 31, 2023 were entered into as hedges against the U.S.

As of December 31, 2023, the Company had open foreign exchange forward contracts with a notional U.S.

dollar value of the following:

Open foreign exchange forward contracts as of December 31, 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 December 31,

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See Note 19 for additional information.

Interest rate swaps are entered into with a limited number of counterparties within several tranches, each of which allows for net settlement of all contracts through a single payment to participating counterparties in a single currency in the event of a default 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 Consolidated Balance Sheets.

Prior to expiration in October 2022, the interest rate swaps associated with the Original Credit Facility were entered into with a limited number of counterparties, each of which allowed for net settlement of all contracts through a single payment in a single currency in the event of a default or termination of any one contract.

As such, in accordance with the Company’s accounting policy, these derivative instruments were recorded on a net basis within the Consolidated Balance Sheets.

See Note 19, Debt , for additional information.

QUAKER CHEMICAL CORPORATION

1 unchanged sentence

(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 hedged transaction affects earnings or it becomes probable that the forecasted transaction will not occur.

As such, in accordance with the Company’s accounting policy, these derivative instruments are recorded on a net basis within the Consolidated Balance Sheets.

The fair value of the Company’s interest rate swaps and forward exchange contracts is determined from sources independent of the Company, including the financial institutions which are party to the derivative instruments, using standard pricing models that consider the value of future cash flows as of the balance sheet date, discounted to a present value using discount factors that match both the time to maturity and currency of the underlying instruments.

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Interest rate swaps AOCI $ 1,248 $ 1,407

The following table presents the net gain recognized in the Company’s Consolidated Statements of Operations for the years ended December 31, 2023, 2022 and 2021:

Derivative instruments Consolidated Statement of Operations Location 2023 2022 2021

The following table presents the net gain or loss recognized in the Company’s Consolidated Statements of Operations for the years ended December 31, 2024, 2023 and 2022:

Derivative instruments Consolidated Statements of Operations Location 2024 2023 2022

Interest rate swaps Interest expense, net $ 4,770 $ 3,555 $ —

Foreign exchange forward contracts Other income, net 2,134 — —

Foreign exchange forward contracts Other (expense) income, net ( 2,026 ) 2,134 —

Total $ 2,744 $ 5,689 $ —

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In 2020, the Santa Ana Regional Water Quality Control Board asked that ACP conduct some additional indoor and outdoor soil vapor testing on and near the ACP site to confirm that ACP continues to meet the applicable local standards.

ACP began to perform such testing program work in 2022, and testing is expected to continue into 2024.

ACP began to perform such testing program work in 2022, and an additional round of testing is expected to commence in 2025.

As of December 31, 2024, ACP believes it is close to meeting the conditions for closure of the remaining groundwater treatment system but continues to operate this system while in discussions with the relevant authorities.

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Additionally, the Company is party to environmental matters related to certain domestic and foreign properties.

These environmental matters primarily require the Company to perform long-term monitoring, as well as operating and maintenance at each of the applicable sites.

During the year ended December 31, 2023, there have been no significant changes to the facts or circumstances of these matters, aside from ongoing monitoring and maintenance activities and routine payments associated with each of these sites.

Based on the Company’s current obligations, historical costs incurred, and projected costs to be incurred over the next 26 years, the Company estimated the present value range of costs for all of these environmental matters, on a discounted basis, to be between approximately $ 5.0 million and $ 6.0 million as of December 31, 2023, for which $ 5.1 million is accrued within other accrued liabilities and other non-current liabilities on the Company’s Consolidated Balance Sheet as of December 31, 2023.

These environmental matters primarily require the Company to perform ongoing monitoring and maintenance at each of the applicable sites.

During the year ended December 31, 2024, there have been no significant changes to the facts or circumstances of these matters.

Based on the Company’s current obligations, historical costs incurred, and projected costs to be incurred over the next 24 years, the Company estimated the present value range of costs for all of these environmental matters, on a discounted basis, to be between approximately $ 3.5 million and $ 6.0 million as of December 31, 2024, for which $ 3.6 million is accrued within other accrued liabilities and other non-current liabilities on the Company’s Consolidated Balance Sheets as of December 31, 2024.

Comparatively, as of December 31, 2023, the Company had $ 5.1 million accrued for these matters.

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Approximately $ 0.6 million and $ 0.2 million were accrued as of December 31, 2024 and 2023, respectively, to provide for such anticipated future environmental assessments and remediation costs.

During 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, 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.

As a result of these court rulings, during 2021, the Company recognized non-income tax credits of 67.0 million BRL or approximately $ 13.3 million, which was recorded within Prepaid and other current assets on the Company’s Consolidated Balance Sheet.

As of December 31, 2023 and 2022, the Company used the full amount of credits.

During 2021, two of the Company’s locations suffered property damages as a result of flooding and electrical fire, respectively.

The Company maintains property insurance for all of its facilities globally.

In Conshohocken, Pennsylvania, the Company’s global headquarters, as well as its laboratory, experienced property damages as a result of flooding from Hurricane Ida.

Also, one of the Company’s North American production facilities experienced an electrical fire that resulted in damage and the temporary shutdown of production, and also required remediation, cleaning, and subsequent restoration.

The Company, its insurance adjuster and insurance carrier actively managed the remediation and restoration activities associated with each of these events and have settled both claims.

Through December 31, 2023, the Company received payments from its insurers of $ 7.2 million associated with these events after an aggregate deductible of $ 2.0 million.

For the years ended December 31, 2023 and 2022, the Company recognized a gain on insurance recoveries of $ 2.1 million and $ 1.8 million, respectively.

The Company has no remaining insurance receivable associated with these events as of December 31, 2023.

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

however, as of the date of this Report, the Company cannot reasonably estimate any probable amount of business interruption insurance claim recoverable.

Therefore, the Company has not recorded a gain contingency for a possible business interruption insurance claim as of December 31, 2023.

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.

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

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.

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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-K

Item 8. Financial Statements and Supplementary Data