QUAKER CHEMICAL CORP 10-Q

Item 1. Financial Statements (Unaudited). Quaker Chemical Corporation Condensed Consolidated Statements of Operations (Unaudited; Dollars in thousands, except per share data) Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Net sales $ 483,400 $ 463,567 $ 926,314 $ 933,326 Cost of goods sold (excluding amortization expense - See Note 13) 311,677 287,849 593,331 576,045 Gross profit 171,723 175,718 332,983 357,281 Selling, general and administrative expenses 126,600 116,949 245,646 241,129 Impairment charges 88,840 — 88,840 — Restructuring and related charges, net 8,793 320 23,383 2,177 Operating (loss) income ( 52,510 ) 58,449 ( 24,886 ) 113,975 Other (expense) income, net ( 653 ) 422 ( 1,362 ) 1,502 Interest expense ( 12,779 ) ( 10,754 ) ( 22,324 ) ( 21,578 ) (Loss) income before taxes and equity in net income of associated companies ( 65,942 ) 48,117 ( 48,572 ) 93,899 Taxes on income before equity in net income of associated companies 5,472 15,778 13,014 28,286 (Loss) income before equity in net income of associated companies ( 71,414 ) 32,339 ( 61,586 ) 65,613 Equity in net income of associated companies 4,851 2,571 7,940 4,555 Net (loss) income ( 66,563 ) 34,910 ( 53,646 ) 70,168 Less: Net income attributable to noncontrolling interest 17 25 12 56 Net (loss) income attributable to Quaker Chemical Corporation $ ( 66,580 ) $ 34,885 $ ( 53,658 ) $ 70,112 Per share data: Net (loss) income attributable to Quaker Chemical Corporation common shareholders – basic $ ( 3.78 ) $ 1.94 $ ( 3.04 ) $ 3.90 Net (loss) income attributable to Quaker Chemical Corporation common shareholders – diluted $ ( 3.78 ) $ 1.94 $ ( 3.04 ) $ 3.89 Dividends declared $ 0.485 $ 0.455 $ 0.970 $ 0.910 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 2 Table of Content Quaker Chemical Corporation Condensed Consolidated Statements of Comprehensive Income (Unaudited; Dollars in thousands) Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Net (loss) income $ ( 66,563 ) $ 34,910 $ ( 53,646 ) $ 70,168 Other comprehensive income (loss), net of tax Currency translation adjustments 62,012 ( 18,840 ) 89,141 ( 44,229 ) Defined benefit retirement plans ( 1,104 ) 125 ( 1,369 ) 479 Current period change in fair value of derivatives ( 100 ) ( 15 ) ( 692 ) 2,330 Unrealized (loss) gain on available-for-sale securities ( 207 ) ( 44 ) ( 511 ) 1 Other comprehensive income (loss) 60,601 ( 18,774 ) 86,569 ( 41,419 ) Comprehensive (loss) income ( 5,962 ) 16,136 32,923 28,749 Less: Comprehensive (income) loss attributable to noncontrolling interest ( 144 ) ( 26 ) ( 143 ) 16 Comprehensive (loss) income attributable to Quaker Chemical Corporation $ ( 6,106 ) $ 16,110 $ 32,780 $ 28,765 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 3 Table of Content Quaker Chemical Corporation Condensed Consolidated Balance Sheets (Unaudited; Dollars in thousands, except par value) June 30, 2025 December 31, 2024 ASSETS Current assets Cash and cash equivalents $ 201,918 $ 188,880 Accounts receivable, net 437,411 400,126 Inventories Raw materials and supplies 123,854 112,457 Work-in-process and finished goods 140,493 115,015 Prepaid expenses and other current assets 70,431 59,939 Total current assets 974,107 876,417 Property, plant and equipment, at cost 564,462 483,033 Less: Accumulated depreciation ( 277,951 ) ( 253,501 ) Property, plant and equipment, net 286,511 229,532 Right-of-use lease assets 40,610 34,120 Goodwill 502,438 518,894 Other intangible assets, net 908,297 827,098 Investments in associated companies 104,488 98,012 Deferred tax assets 9,251 9,216 Other non-current assets 23,108 17,360 Total assets $ 2,848,810 $ 2,610,649 LIABILITIES AND EQUITY Current liabilities Short-term borrowings and current portion of long-term debt $ 37,867 $ 37,554 Accounts payable 203,606 198,137 Dividends payable 8,436 8,572 Accrued compensation 36,398 50,212 Accrued restructuring 7,646 2,297 Accrued pension and postretirement benefits 2,253 2,328 Other accrued liabilities 83,853 80,668 Total current liabilities 380,059 379,768 Long-term debt 897,953 669,614 Long-term lease liabilities 24,315 20,028 Deferred tax liabilities 151,038 138,828 Non-current accrued pension and postretirement benefits 24,491 23,783 Other non-current liabilities 25,499 24,445 Total liabilities 1,503,355 1,256,466 Commitments and contingencies (Note 18) Equity Common stock $ 1 par value; authorized 30,000,000 shares; issued and outstanding June 30, 2025 – 17,394,128 shares; December 31, 2024 – 17,673,607 shares 17,394 17,674 Capital in excess of par value 876,969 903,781 Retained earnings 563,063 633,731 Accumulated other comprehensive loss ( 115,181 ) ( 201,619 ) Total Quaker shareholders’ equity 1,342,245 1,353,567 Noncontrolling interest 3,210 616 Total equity 1,345,455 1,354,183 Total liabilities and equity $ 2,848,810 $ 2,610,649 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 4 Table of Content Quaker Chemical Corporation Condensed Consolidated Statements of Cash Flows (Unaudited; Dollars in thousands) Six Months Ended June 30, 2025 2024 Cash flows from operating activities Net (loss) income $ ( 53,646 ) $ 70,168 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 44,278 41,984 Equity in undistributed earnings of associated companies, net of dividends ( 44 ) ( 4,221 ) Deferred income taxes ( 15,634 ) ( 3,728 ) Share-based compensation 6,903 8,128 Impairment charges 88,840 — Restructuring and related charges, net 23,383 2,177 Inventory step-up amortization 6,022 — Gain on disposal of property, plant and equipment and other assets ( 2,108 ) ( 509 ) Other adjustments ( 5,228 ) 3,302 Increase (decrease) in cash from changes in current assets and current liabilities, net of acquisitions: Accounts receivable 3,022 10,483 Inventories ( 11,826 ) ( 9,141 ) Prepaid expenses and other current assets ( 3,943 ) ( 15,646 ) Accrued restructuring ( 15,946 ) ( 4,442 ) Accounts payable and accrued liabilities ( 25,551 ) ( 25,021 ) Net cash provided by operating activities 38,522 73,534 Cash flows from investing activities Investments in property, plant and equipment ( 20,289 ) ( 11,124 ) Payments related to acquisitions, net of cash acquired ( 164,078 ) ( 24,899 ) Proceeds from disposition of assets 2,950 2,798 Other investing activities 697 — Net cash used in investing activities ( 180,720 ) ( 33,225 ) Cash flows from financing activities Payments of long-term debt ( 17,205 ) ( 34,169 ) Borrowings on revolving credit facilities, net 216,000 20,533 Payments on other debt, net ( 101 ) ( 37 ) Dividends paid ( 17,146 ) ( 16,372 ) Shares purchased under share repurchase programs ( 32,693 ) ( 7,760 ) Other stock related activity ( 1,301 ) ( 1,492 ) Net cash provided by (used in) financing activities 147,554 ( 39,297 ) Effect of foreign exchange rate changes on cash 7,682 ( 6,971 ) Net increase (decrease) in cash and cash equivalents 13,038 ( 5,959 ) Cash and cash equivalents at the beginning of the period 188,880 194,527 Cash and cash equivalents at the end of the period $ 201,918 $ 188,568 Supplemental cash flow disclosures: Non-cash activities: Change in accrued purchases of property, plant and equipment, net $ ( 5,391 ) $ 878 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 5 Quaker Chemical Corporation Condensed Consolidated Statements of Changes in Equity (Unaudited; Dollars in thousands, except per share amounts) Common Stock Capital in Excess of Par Value Retained Earnings Accumulated Other Comprehensive Loss Noncontrolling Interest Total Balance as of December 31, 2023 $ 17,992 $ 940,101 $ 550,641 $ ( 124,415 ) $ 603 $ 1,384,922 Net income — — 35,227 — 31 35,258 Amounts reported in other comprehensive loss — — — ( 22,572 ) ( 73 ) ( 22,645 ) Dividends ($ 0.455 per share) — — ( 8,186 ) — — ( 8,186 ) Share issuance and equity-based compensation plans, net ( 2 ) 2,445 — — — 2,443 Balance as of March 31, 2024 $ 17,990 $ 942,546 $ 577,682 $ ( 146,987 ) $ 561 $ 1,391,792 Net income — — 34,885 — 25 34,910 Amounts reported in other comprehensive loss — — — ( 18,775 ) 1 ( 18,774 ) Dividends ($ 0.455 per share) — — ( 8,163 ) — — ( 8,163 ) Shares purchased under share repurchase program, net of excise taxes ( 49 ) ( 8,306 ) — — — ( 8,355 ) Share issuance and equity-based compensation plans, net — 4,196 — — — 4,196 Balance as of June 30, 2024 $ 17,941 $ 938,436 $ 604,404 $ ( 165,762 ) $ 587 $ 1,395,606 Balance as of December 31, 2024 $ 17,674 $ 903,781 $ 633,731 $ ( 201,619 ) $ 616 $ 1,354,183 Net income — — 12,922 — ( 5 ) 12,917 Amounts reported in other comprehensive income — — — 25,964 4 25,968 Dividends ($ 0.485 per share) — — ( 8,574 ) — — ( 8,574 ) Share issuance and equity-based compensation plans, net 6 2,000 — — — 2,006 Balance as of March 31, 2025 $ 17,680 $ 905,781 $ 638,079 $ ( 175,655 ) $ 615 $ 1,386,500 Net (loss) income — — ( 66,580 ) — 17 ( 66,563 ) Amounts reported in other comprehensive income — — — 60,474 127 60,601 Noncontrolling interest from acquisition — — — — 2,451 2,451 Dividends ($ 0.485 per share) — — ( 8,436 ) — — ( 8,436 ) Shares purchased under share repurchase program, net of excise taxes ( 296 ) ( 32,686 ) — — — ( 32,982 ) Share issuance and equity-based compensation plans, net 10 3,874 — — — 3,884 Balance as of June 30, 2025 $ 17,394 $ 876,969 $ 563,063 $ ( 115,181 ) $ 3,210 $ 1,345,455 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 6 Table of Contents Quaker Chemical Corporation Notes to Condensed Consolidated Financial Statements (Unaudited; Dollars in thousands, except per share amounts, unless otherwise stated) Page Note 1 Basis of Presentation and Description of Business 8 Note 2 Business Acquisitions 8 Note 3 Recently Issued Accounting Standards 11 Note 4 Business Segments 11 Note 5 Net Sales and Revenue Recognition 13 Note 6 Leases 14 Note 7 Restructuring and Related Activities 15 Note 8 Share-Based Compensation 16 Note 9 Pension and Other Postretirement Benefits 17 Note 10 Other ( E xpense) I ncome, net 17 Note 11 Income Taxes 18 Note 12 Earnings Per Share 18 Note 13 Goodwill and Other Intangible Assets 19 Note 14 Debt 20 Note 15 Accumulated Other Comprehensive Income 22 Note 16 Fair Value Measurements 23 Note 17 Hedging Activities 23 Note 18 Commitments and Contingencies 25 7 Table of Contents Quaker Chemical Corporation Notes to Condensed Consolidated Financial Statements (Unaudited; Dollars in thousands, except per share amounts, unless otherwise stated) Note 1 – Basis of Presentation and Description of Business As used in these Notes to Condensed Consolidated Financial Statements of this Quarterly Report on Form 10-Q for the period ended June 30, 2025 (the “Report”), the terms “Quaker Houghton,” the “Company,” “we,” and “our” refer to Quaker Chemical Corporation (doing business as Quaker Houghton), its subsidiaries, and associated companies, unless the context otherwise requires. Basis of Presentation The condensed consolidated financial statements included herein are unaudited and have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”) for interim financial reporting and the United States Securities and Exchange Commission (“SEC”) regulations. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, the financial statements reflect all adjustments, which are of a normal recurring nature, necessary for a fair statement of the financial position, results of operations, and cash flows for the interim periods. The results for the six months ended June 30, 2025 are not necessarily indicative of the results to be expected for the full year. These financial statements should be read in conjunction with the Company’s Annual Report filed on Form 10-K for the year ended December 31, 2024 (the “2024 Form 10-K”). Certain prior year amounts have been reclassified to conform to the current year presentation. Description of Business The Company was organized in 1918 and incorporated as a Pennsylvania business corporation in 1930. Quaker Houghton is the global leader in industrial process fluids. With a presence around the world, including operations in over 25 countries, the Company’s customers include thousands of the world’s most advanced and specialized steel, aluminum, automotive, aerospace, offshore, container, mining, and metalworking companies. Quaker Houghton develops, produces, and markets a broad range of formulated chemical specialty products and offers chemical management services, which the Company refers to as Fluidcare TM , for various heavy industrial and manufacturing applications sold in its three reportable segments: (i) Americas; (ii) Europe, Middle East and Africa (“EMEA”); and (iii) Asia/Pacific. Hyper-inflationary economies Argentina’s and Türkiye’s economies were considered hyper-inflationary under U.S. GAAP effective July 1, 2018 and April 1, 2022, respectively. As of and for the three and six months ended June 30, 2025, the Company’s Argentine and Turkish subsidiaries together represented approximately 1 % and 2 % of the Company’s consolidated total assets and net sales, respectively. During the three and six months ended June 30, 2025, the Company recorded $ 0.7 million and $ 1.2 million of remeasurement losses associated with the applicable currency conversions, respectively. Comparatively, during the three and six months ended June 30, 2024, the Company recorded $ 0.6 million of remeasurement losses and $ 0.3 million of remeasurement gains associated with the applicable currency conversions, respectively. These losses and gains were recorded within Other (expense) income, net, in the Company’s Condensed Consolidated Statements of Operations. Note 2 – Business Acquisitions Dipsol In April 2025, the Company acquired Dipsol Chemicals Co., Ltd. and its subsidiaries, (“Dipsol”) for approximately $ 185.6 million ( 27.7 billion JPY), which included approximately $ 30.1 million ( 4.5 billion JPY) of acquired cash for a net purchase price of approximately $ 155.5 million ( 23.2 billion JPY). In July 2025, the Company satisfied all routine and customary post-closing conditions and finalized the purchase price with no adjustments. The Company funded the acquisition purchase price with borrowings under its existing credit facility. In connection with the acquisition of Dipsol, the Company entered into foreign currency forward contracts, which resulted in a $ 187.0 million cash payment and a $ 1.4 million foreign currency loss recognized during the six months ended June 30, 2025. Dipsol is headquartered in Japan and is a leading supplier of surface treatment and plating solutions and services primarily for the automotive and other industrial applications end markets. Dipsol has operations in several countries and these operations are reported within the Company’s respective Americas, EMEA, and Asia/Pacific segments. This acquisition expands the Company’s advanced solutions businesses in attractive end markets with solid growth characteristics and high barriers to entry. Dipsol also provides significant cross-selling opportunities and enhances the Company’s ability to meet the needs of our customers across the globe. 8 Table of Contents Quaker Chemical Corporation Notes to Condensed Consolidated Financial Statements - Continued (Unaudited; Dollars in thousands, except per share amounts, unless otherwise stated) The following table presents the preliminary estimated fair values of Dipsol assets acquired and liabilities assumed: Dipsol Assets Acquired and Liabilities Assumed on April 1, 2025 Dollars in thousands Fair value of assets acquired Cash and cash equivalents $ 30,084 Accounts receivable, net 16,481 Inventories 17,962 Prepaid expenses and other current assets 1,411 Property, plant and equipment, net 39,450 Right-of-use lease assets 2,534 Other intangible assets, net 55,000 Investments in associated companies 5,096 Other non-current assets 4,687 Total Assets Acquired $ 172,706 Fair value of liabilities assumed Accounts payable $ 6,763 Accrued compensation 1,528 Other accrued liabilities 1,869 Long-term lease liabilities 1,446 Deferred income tax liabilities 25,898 Total Liabilities Assumed $ 37,504 Noncontrolling interest ( 2,451 ) Goodwill 52,862 Total Consideration $ 185,613 As of June 30, 2025, the allocation of the purchase price has not been finalized and the one-year measurement period has not ended. Further adjustments may be necessary as a result of the Company’s ongoing assessment of additional information related to the fair value of assets acquired and liabilities assumed. The Company allocated $ 55.0 million of the purchase price to intangible assets across the Americas, EMEA, and Asia/Pacific segments. Customer relationships, product technologies, and trademarks will be amortized over 14 years, 8 years, and 13 years, respectively. The following table presents the intangible assets recognized for each reportable segment: Americas EMEA Asia/Pacific Total Customer Relationships $ 3,500 $ 200 $ 26,300 $ 30,000 Product Technologies — — 18,000 18,000 Trademarks — — 7,000 7,000 Total Intangibles $ 3,500 $ 200 $ 51,300 $ 55,000 The Company recognized $ 52.9 million of goodwill, comprised of $ 47.2 million in the Asia/Pacific segment, $ 5.3 million in the Americas segment, and $ 0.4 million in the EMEA segment. The goodwill is not deductible for tax purposes. The goodwill is primarily attributable to expected synergies. Total sales included in the Condensed Consolidated Statement of Operations for the three and six months ended June 30, 2025 are $ 20.9 million. 9 Table of Contents Quaker Chemical Corporation Notes to Condensed Consolidated Financial Statements - Continued (Unaudited; Dollars in thousands, except per share amounts, unless otherwise stated) Natech In April 2025, the Company acquired Natech, Ltd., (“Natech”) for approximately $ 6.5 million, which includes an initial cash payment of $ 6.0 million and a deferred payment of $ 0.5 million, subject to routine and customary post-closing adjustments. Assets acquired included cash and cash equivalents of $ 1.5 million. Natech is based in the United Kingdom and is a manufacturer of surface treatment chemicals for a variety of industrial applications. Natech is reported as part of the EMEA reportable segment. This acquisition strengthens Quaker Houghton’s overall surface treatment product and application capabilities within Europe. The Company allocated $ 2.1 million of the purchase price to intangible assets and recognized $ 2.6 million of goodwill in the EMEA segment, none of which is deductible for tax purposes. The goodwill is primarily attributable to expected growth synergies. As of June 30, 2025, the allocation of the purchase price has not been finalized. CSI 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 is 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. The Company allocated $ 1.4 million of the purchase price to intangible assets and recognized $ 1.7 million of goodwill in the EMEA segment, none of which is deductible for tax purposes. The goodwill is primarily attributable to expected growth synergies. As of June 30, 2025, the allocation of the purchase price has not been finalized. Previous 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. As of June 30, 2025, the Company has remaining earnout liabilities recorded on its Condensed Consolidated Balance Sheet of $ 0.8 million which we expect to settle by the end of 2025. 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 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. During the first quarter of 2025, the Company finalized the working capital settlements for an immaterial amount which impacted the residual goodwill recorded. The goodwill is primarily attributable to expected growth synergies. As of June 30, 2025, the allocation of the purchase price has been finalized. During February 2024, the Company acquired I.K.V. 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 June 30, 2025, the allocation of the purchase price has been finalized. The results of operations of Dipsol, Natech, CSI, Sutai and IKV subsequent to the acquisition dates are included in the unaudited Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2025. During the three and six months ended June 30, 2025, the Company recognized $ 0.8 million and $ 4.1 million, respectively, of acquisition-related expenses including legal, financial, consulting and other costs, compared to $ 0.2 million and $ 0.5 million, respectively, during the three and six months ended June 30, 2024. These costs are included in Selling, general and administrative expenses (“SG&A”) in the Condensed Consolidated Statements of Operations. 10 Table of Contents Quaker Chemical Corporation Notes to Condensed Consolidated Financial Statements - Continued (Unaudited; Dollars in thousands, except per share amounts, unless otherwise stated) Note 3 – Recently Issued Accounting Standards Recently Adopted Accounting Standards The Company has adopted Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures beginning with the 2024 Form 10-K and the Form 10-Q for the period ended March 31, 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, who is our 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 FASB issued ASU 2023-09, Income Taxes (Topic 740) : Improvements to Income Tax Disclosures in December 2023. This ASU requires public business entities (“PBEs”) 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 PBEs 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 condensed 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 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 condensed 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 and the manner by which the CODM, which is the Company’s Chief Executive Officer, allocates resources and assesses performance. The CODM 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 and restructuring charges, are not included in segment operating earnings. Other items not specifically identified with the Company’s reportable segments include Interest expense and Other (expense) income, net. The CODM uses segment operating earnings to allocate resources for each segment predominantly in the annual budget and forecasting process. The CODM 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 CODM also uses segment operating earnings to assess the performance for each segment and in the compensation of certain employees. Segment asset information is not regularly provided to or reviewed by the CODM. Therefore, the Company does not disclose segment asset information for each reportable segment. 11 Table of Contents Quaker Chemical Corporation Notes to Condensed Consolidated Financial Statements - Continued (Unaudited; Dollars in thousands, except per share amounts, unless otherwise stated) The following table presents information about the performance of the Company’s reportable segments for the three and six months ended June 30, 2025 and 2024: Americas EMEA Asia/Pacific Totals Three Months Ended June 30, 2025 Net sales $ 221,062 $ 139,923 $ 122,415 $ 483,400 Significant segment expenses Product costs (1) (3) (4) 109,500 74,739 67,731 251,970 Other operating expenses (2) 52,586 40,189 25,969 118,744 Segment operating earnings $ 58,976 $ 24,995 $ 28,715 $ 112,686 Six Months Ended June 30, 2025 Net sales $ 434,773 $ 269,201 $ 222,340 $ 926,314 Significant segment expenses Product costs (1) (3) (4) 214,005 144,841 120,829 479,675 Other operating expenses (2) 103,330 75,972 46,866 226,168 Segment operating earnings $ 117,438 $ 48,388 $ 54,645 $ 220,471 Americas EMEA Asia/Pacific Totals Three Months Ended June 30, 2024 Net sales $ 223,517 $ 138,001 $ 102,049 $ 463,567 Significant segment expenses Product costs (1) 107,973 72,391 51,427 231,791 Other operating expenses (2) 51,407 38,958 19,622 109,987 Segment operating earnings $ 64,137 $ 26,652 $ 31,000 $ 121,789 Six Months Ended June 30, 2024 Net sales $ 453,271 $ 276,423 $ 203,632 $ 933,326 Significant segment expenses Product costs (1) 219,048 143,763 102,802 465,613 Other operating expenses (2) 103,317 76,437 39,453 219,207 Segment operating earnings $ 130,906 $ 56,223 $ 61,377 $ 248,506 (1) Product costs include the costs of raw materials and are recorded in Cost of goods sold in the Company’s Condensed 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. (3) Product costs includes the $ 6.0 million amortization of the fair value step-up in Dipsol's inventories as a result of the acquisition, which is comprised of approximately $ 2.6 million in the Americas segment, $ 3.0 million in the Asia/Pacific segment, and $ 0.4 million in the EMEA segment. (4) Product costs includes a $ 3.6 million gain related to immaterial out-of-period adjustments for inventory, which is comprised of approximately $ 1.4 million in the Americas segment and $ 2.2 million in the EMEA segment. 12 Table of Contents Quaker Chemical Corporation Notes to Condensed Consolidated Financial Statements - Continued (Unaudited; Dollars in thousands, except per share amounts, unless otherwise stated) The following table presents a reconciliation of the Company’s segment operating earnings to (loss) income before taxes and equity in net income of associated companies in the Company’s Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2025 and 2024: Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Segment operating earnings $ 112,686 $ 121,789 $ 220,471 $ 248,506 Restructuring and related charges, net ( 8,793 ) ( 320 ) ( 23,383 ) ( 2,177 ) Impairment charges ( 88,840 ) — ( 88,840 ) — Non-operating and administrative expenses ( 50,860 ) ( 47,584 ) ( 101,577 ) ( 101,760 ) Depreciation of corporate assets and amortization ( 16,703 ) ( 15,436 ) ( 31,557 ) ( 30,594 ) Operating (loss) income ( 52,510 ) 58,449 ( 24,886 ) 113,975 Other (expense) income, net ( 653 ) 422 ( 1,362 ) 1,502 Interest expense ( 12,779 ) ( 10,754 ) ( 22,324 ) ( 21,578 ) (Loss) income before taxes and equity in net income of associated companies $ ( 65,942 ) $ 48,117 $ ( 48,572 ) $ 93,899 The following table presents information regarding the Company’s reportable segments’ depreciation for the three and six months ended June 30, 2025 and 2024: Three Months Ended June 30, Six Months Ended June 30, Depreciation 2025 2024 2025 2024 Americas $ 2,903 $ 2,720 $ 5,558 $ 5,495 EMEA 2,076 1,910 3,953 3,756 Asia/Pacific 1,996 1,115 3,210 2,138 Total segment depreciation $ 6,975 $ 5,745 $ 12,721 $ 11,389 Note 5 – Net Sales and Revenue Recognition 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, automotive, aerospace, industrial and agricultural equipment, and durable goods. As previously disclosed in the Company’s 2024 Form 10-K, the Company’s five largest customers combined (each composed of multiple subsidiaries or divisions with semiautonomous purchasing authority) accounted for approximately 12 % of consolidated net sales for 2024, with its largest customer accounting for approximately 3 % of consolidated net sales. Contract Assets and Liabilities The Company had no material contract assets recorded on its Condensed Consolidated Balance Sheets as of June 30, 2025 or December 31, 2024. The Company had approximately $ 2.3 million and $ 4.2 million of deferred revenue as of June 30, 2025 and December 31, 2024, respectively. For the six months ended June 30, 2025, the Company satisfied materially all of the associated performance obligations and recognized into revenue materially all advance payments received and recorded as of December 31, 2024. Disaggregated Revenue 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 reportable segments, and in most cases, are approximately proportionate to the level of total sales in each reportable segment. 13 Table of Contents Quaker Chemical Corporation Notes to Condensed Consolidated Financial Statements - Continued (Unaudited; Dollars in thousands, except per share amounts, unless otherwise stated) The following tables disaggregate the Company’s net sales by segment and customer industry. Three Months Ended June 30, 2025 Customer Industries Americas EMEA Asia/Pacific Consolidated Total Metals $ 62,825 $ 36,348 $ 55,782 $ 154,955 Metalworking and other 158,237 103,575 66,633 328,445 $ 221,062 $ 139,923 $ 122,415 $ 483,400 Six Months Ended June 30, 2025 Customer Industries Americas EMEA Asia/Pacific Consolidated Total Metals $ 127,121 $ 69,308 $ 105,649 $ 302,078 Metalworking and other 307,652 199,893 116,691 624,236 $ 434,773 $ 269,201 $ 222,340 $ 926,314 Three Months Ended June 30, 2024 Customer Industries Americas EMEA Asia/Pacific Consolidated Total Metals $ 63,753 $ 35,307 $ 50,150 $ 149,210 Metalworking and other 159,764 102,694 51,899 314,357 $ 223,517 $ 138,001 $ 102,049 $ 463,567 Six Months Ended June 30, 2024 Customer Industries Americas EMEA Asia/Pacific Consolidated Total Metals $ 129,779 $ 68,127 $ 101,061 $ 298,967 Metalworking and other 323,492 208,296 102,571 634,359 $ 453,271 $ 276,423 $ 203,632 $ 933,326 Note 6 - Leases The Company has operating leases for certain facilities, vehicles, and machinery and equipment with remaining lease terms up to 10 years. Operating lease expense is recognized on a straight-line basis over the lease term. In addition, the Company has certain land use leases with remaining lease terms up to 90 years. The Company had no material variable lease costs, sublease income, or finance leases for the three and six months ended June 30, 2025 and 2024. The components of the Company’s lease expense are as follows: Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Operating lease expense $ 4,302 $ 3,727 $ 8,010 $ 7,470 Short-term lease expense 140 193 284 392 14 Table of Contents Quaker Chemical Corporation Notes to Condensed Consolidated Financial Statements - Continued (Unaudited; Dollars in thousands, except per share amounts, unless otherwise stated) Supplemental cash flow information related to the Company’s leases is as follows: Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 4,261 $ 3,736 $ 7,845 $ 7,397 Non-cash lease liabilities activity: Leased assets obtained in exchange for new operating lease liabilities 6,605 2,130 10,482 5,364 Supplemental balance sheet information related to the Company’s leases is as follows: June 30, 2025 December 31, 2024 Right-of-use lease assets $ 40,610 $ 34,120 Other accrued liabilities 12,830 10,619 Long-term lease liabilities 24,315 20,028 Total operating lease liabilities $ 37,145 $ 30,647 Weighted average remaining lease term (years) 9.5 5.0 Weighted average discount rate 6.16 % 5.63 % Maturities of operating lease liabilities as of June 30, 2025 were as follows: For the remainder of 2025 $ 8,028 For the year ended December 31, 2026 12,475 For the year ended December 31, 2027 7,905 For the year ended December 31, 2028 5,284 For the year ended December 31, 2029 3,402 For the year ended December 31, 2030 and beyond 6,707 Total lease payments 43,801 Less: imputed interest ( 6,656 ) Present value of lease liabilities (1) $ 37,145 (1) During the year ended December 31, 2024, the Company entered into a new lease agreement for office and laboratory space in Radnor, Pennsylvania 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 $ 79.7 million of future lease commitments relating to this lease were not included in the lease liabilities balance as of June 30, 2025. 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 June 30, 2025, the program included restructuring and associated severance costs to reduce headcount by approximately 380 positions globally. These actions are expected to be substantially complete by the end of 2025. Employee separation benefits vary depending on local regulations across countries. The timing to finalize costs associated with all actions will depend on a number of factors and is subject to change. In addition to the global cost and optimization program described above, the Company continues to take actions to optimize its facility footprint. Restructuring costs incurred during the three and six months ended June 30, 2025 and 2024 include employee severance and asset-related and facility closure costs, including non-cash asset write-offs, which are recorded in Restructuring and related charges, net in the Company’s Condensed Consolidated Statements of Operations. 15 Table of Contents Quaker Chemical Corporation Notes to Condensed Consolidated Financial Statements - Continued (Unaudited; Dollars in thousands, except per share amounts, unless otherwise stated) Activity in the Company’s accrual for its restructuring program and facility closure actions are as follows: Accrued restructuring as of December 31, 2024 $ 2,297 Severance costs 20,922 Asset-related and facility closure charges 2,461 Cash payments ( 15,946 ) Reductions against the reserve ( 2,204 ) Currency translation adjustments 116 Accrued restructuring as of June 30, 2025 $ 7,646 During the six months ended June 30, 2025, the Company completed the sale of certain property previously classified as held for sale for a gain of $ 2.2 million, which is recorded in Other (expense) income, net in the Company’s Condensed Consolidated Statements of Operations. Note 8 – Share-Based Compensation The Company recognized $ 3.7 million and $ 6.9 million, respectively, of share-based compensation expense in its Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2025, compared to $ 4.2 million and $ 8.1 million, respectively, for the three and six months ended June 30, 2024. Restricted Stock Awards As of June 30, 2025, unrecognized compensation expense related to non-vested restricted shares was $ 0.4 million, to be recognized over a weighted average remaining period of 0.6 years. Restricted Stock Units During the six months ended June 30, 2025, the Company granted 67,319 restricted stock units under its LTIP , which are subject to time-based vesting, generally over one to three years . The fair value of these grants is based on the closing price of the Company’s common stock on the date of grant. As of June 30, 2025, unrecognized compensation expense related to non-vested restricted stock units was $ 12.1 million, to be recognized over a weighted average remaining period of 1.7 years. Performance Stock Units As a component of its LTIP, the Company grants performance-based stock unit awards (“PSUs”). 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 total shareholder return (“TSR”) metric 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 vesting period required for the PSUs is generally three years and the measurement period of the market-based and performance objectives is generally from January 1 of the year of grant through December 31 of the year prior to issuance of the shares. As mentioned above, a portion of the Company’s PSUs are subject to the achievement of the Company’s TSR relative to the performance of a selected peer group. For PSUs subject to relative TSR performance granted in 2025 and 2024, the Company’s peer group was the S&P Composite 1500 Chemicals index. Compensation expense for PSUs is measured based on the grant date fair value and is recognized on a straight-line vesting method basis over the applicable vesting period. During the six months ended June 30, 2025, the Company granted 26,389 PSUs with a ROIC condition. The fair value of these grants is based on the closing trading price of the Company’s common stock on the date of grant. During the six months ended June 30, 2025, the Company granted 26,343 PSUs with a relative TSR condition. These PSUs are valued using a Monte Carlo simulation on the grant date and had a grant-date fair value of $ 150.90 per unit, which was developed based on the assumptions set forth in the table below: 2025 Grants Risk-free interest rate 3.96 % Dividend yield 1.51 % Expected term (years) 3.0 As of June 30, 2025, there was approximately $ 9.4 million of total unrecognized compensation cost related to PSUs, which the Company expects to recognize over a weighted-average period of 2.3 years. 16 Table of Contents Quaker Chemical Corporation Notes to Condensed Consolidated Financial Statements - Continued (Unaudited; Dollars in thousands, except per share amounts, unless otherwise stated) Note 9 – Pension and Other Postretirement Benefits The components of net periodic benefit cost (income) are as follows: Three Months Ended June 30, Six Months Ended June 30, Pension Benefits Other Postretirement Benefits Pension Benefits Other Postretirement Benefits 2025 2024 2025 2024 2025 2024 2025 2024 Service cost $ 108 $ 108 $ — $ — $ 210 $ 217 $ — $ — Interest cost 2,379 2,364 14 15 4,663 4,738 28 31 Expected return on plan assets ( 2,076 ) ( 2,020 ) — — ( 4,059 ) ( 4,050 ) — — Actuarial loss (gain) amortization 150 127 ( 26 ) ( 29 ) 290 255 ( 52 ) ( 59 ) Prior service cost amortization 7 7 — — 12 14 — — Net periodic benefit cost (income) $ 568 $ 586 $ ( 12 ) $ ( 14 ) $ 1,116 $ 1,174 $ ( 24 ) $ ( 28 ) Employer Contributions During the six months ended June 30, 2025, $ 2.6 million of contributions have been made to the Company’s U.S. and foreign pension plans. Contributions to other postretirement benefit plans were $ 0.2 million. Taking into consideration current minimum cash contribution requirements, the Company currently expects to make full year cash contributions of approximately $ 7.0 million to its U.S. and foreign pension plans and approximately $ 0.2 million to its other postretirement benefit plans. Note 10 – Other (Expense) Income, net The components of Other (expense) income, net are as follows: Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Non-income tax refunds and other related credits $ 132 $ 868 $ 300 $ 3,023 (Loss) gain on disposals of property, plant, equipment and other assets, net ( 40 ) 510 2,108 917 Foreign exchange losses, net ( 1,083 ) ( 727 ) ( 4,601 ) ( 1,175 ) Pension and postretirement benefit costs, non-service components ( 448 ) ( 464 ) ( 882 ) ( 929 ) Product liability claim costs, net — — — ( 896 ) Earnout liability adjustment ( 340 ) — ( 340 ) — Interest income 752 — 1,412 — Other non-operating income, net 374 235 641 562 Total other (expense) income, net $ ( 653 ) $ 422 $ ( 1,362 ) $ 1,502 (Loss) gain on disposals of property, plant, equipment and other assets, net, includes the gain of $ 2.2 million recognized for the sale of certain property previously classified as held for sale during the six months ended June 30, 2025. See Note 7, Restructuring and Related Activities , for more information. Foreign exchange losses, net includes a $ 0.6 million foreign exchange gain and a $ 1.4 million foreign exchange loss, respectively, during the three and six months ended June 30, 2025 relating to the change in fair value of the foreign exchange forward contracts entered into in connection with the acquisition of Dipsol. See Note 17, Hedging Activities , for more information. Product liability claim costs, net represents expense related to payments to the Company in connection with a product liability dispute with a customer, net of insurance recoveries during the six months ended June 30, 2024. 17 Table of Contents Quaker Chemical Corporation Notes to Condensed Consolidated Financial Statements - Continued (Unaudited; Dollars in thousands, except per share amounts, unless otherwise stated) Note 11 – Income Taxes The Company’s effective tax rates for the three and six months ended June 30, 2025 were ( 8.3 )% and ( 26.8 )%, respectively, compared to 32.8 % and 30.1 %, respectively, for the three and six months ended June 30, 2024. The Company’s effective tax rate for the three months ended June 30, 2025 was largely driven by our mix of pre-tax earnings, goodwill impairment and withholding taxes offset by return to provision adjustments and net favorable reductions in uncertain tax positions. The Company’s effective tax rate for the six months ended June 30, 2025 was largely driven by our mix of pre-tax earnings, goodwill impairment, return to provision adjustments and withholding taxes offset by net favorable reductions in uncertain tax positions. Comparatively, the effective tax rates for the three and six months ended June 30, 2024 were largely driven by the mix of pre-tax earnings, certain one-time charges related to an intercompany intangible asset transfer, and withholding taxes, offset by changes in uncertain tax positions. On July 4, 2025, H.R. 1, commonly known as the One Big Beautiful Bill Act (the “OBBB”), was signed into law. This includes significant changes to the federal corporate tax provisions and extends certain otherwise expiring provisions of the 2017 Tax Cuts and Jobs Act. Among other things, the legislation restores 100% bonus depreciation for eligible property, reinstates expensing for domestic research and experimental expenditures, imposes new limitations on interest expense deductibility, and expands disallowed deductions for certain employee remuneration. The OBBB also includes provisions that could impact our international business and which are still being evaluated. ASU 2023-09 Income Taxes (Topic 740) requires the effects of changes in tax rates and laws on deferred tax balances to be recognized in the period in which the relevant legislation is enacted. The OBBB was passed subsequent to the date of our financial statements and may affect the Company’s tax assets and liabilities in future periods. The legislation has multiple effective dates, with certain provisions effective in 2025 and other provisions implemented through 2027. The Company continues to assess the potential impact of the OBBB on our Condensed Consolidated Financial Statements. Note 12 – Earnings Per Share The following table summarizes earnings (loss) per share calculations: Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Basic earnings per common share Net (loss) income attributable to Quaker Chemical Corporation $ ( 66,580 ) $ 34,885 $ ( 53,658 ) $ 70,112 Less: loss (income) allocated to participating securities 82 ( 118 ) 91 ( 276 ) Net (loss) income available to common shareholders $ ( 66,498 ) $ 34,767 $ ( 53,567 ) $ 69,836 Basic weighted average common shares outstanding 17,572,447 17,921,395 17,605,920 17,915,104 Basic (loss) earnings per common share $ ( 3.78 ) $ 1.94 $ ( 3.04 ) $ 3.90 Diluted earnings per common share Net (loss) income attributable to Quaker Chemical Corporation $ ( 66,580 ) $ 34,885 $ ( 53,658 ) $ 70,112 Less: loss (income) allocated to participating securities 82 ( 118 ) 90 ( 276 ) Net (loss) income available to common shareholders $ ( 66,498 ) $ 34,767 $ ( 53,568 ) $ 69,836 Basic weighted average common shares outstanding 17,572,447 17,921,395 17,605,920 17,915,104 Effect of dilutive securities 20,524 18,761 24,621 19,846 Diluted weighted average common shares outstanding 17,592,971 17,940,156 17,630,541 17,934,950 Diluted (loss) earnings per common share $ ( 3.78 ) $ 1.94 $ ( 3.04 ) $ 3.89 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 60,117 and 67,575 , respectively, for the three and six months ended June 30, 2025, compared to 16,098 and 31,000 , respectively, for the three and six months ended June 30, 2024 . 18 Table of Contents Quaker Chemical Corporation Notes to Condensed Consolidated Financial Statements - Continued (Unaudited; Dollars in thousands, except per share amounts, unless otherwise stated) Note 13 – Goodwill and Other Intangible Assets Changes in the carrying amount of goodwill for the six months ended June 30, 2025 were as follows: Americas EMEA Asia/Pacific Total Balance as of December 31, 2024 $ 276,875 $ 80,404 $ 161,615 $ 518,894 Goodwill recognized for Dipsol acquisition 5,276 380 47,206 52,862 Goodwill recognized for Natech acquisition — 2,625 — 2,625 Goodwill recognized for CSI acquisition — 1,721 — 1,721 Goodwill recognized for Sutai acquisition (1) — — ( 233 ) ( 233 ) Currency translation adjustments 3,454 3,710 8,245 15,409 Goodwill impairments — ( 88,840 ) — ( 88,840 ) Balance as of June 30, 2025 $ 285,605 $ — $ 216,833 $ 502,438 (1) During the six months ended June 30, 2025, the Company finalized the working capital settlements which impacted the goodwill recorded. See Note 2, Business Acquisitions , for additional information. Jun 30, 2025 Dec 31, 2024 Goodwill, gross $ 694,922 $ 611,498 Accumulated impairment losses (1) ( 192,484 ) ( 92,604 ) Goodwill, net $ 502,438 $ 518,894 (1) Accumulated impairment losses are attributable to the non-cash impairment charges of $ 88.8 million and $ 93.0 million to write down the carrying value of the EMEA reporting unit during the second quarter of 2025 and the fourth quarter of 2022, respectively. These amounts include the impact of currency translation. 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. 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. During the second quarter of 2025, the Company concluded that the negative impacts of the lower than projected financial performance, driven by the continuation of soft end market conditions, as well as an increase in the Company’s cost of capital, driven by uncertainty around the potential negative impacts of tariffs, represented a triggering event for the Company’s EMEA reporting unit and the associated goodwill, as well as the related asset group. As a result of this conclusion, the Company completed an interim impairment assessment as of June 30, 2025 for its EMEA reporting unit and the related asset group. The Company concluded that the undiscounted cash flows exceeded the carrying value of the EMEA asset group, and therefore that the long-lived assets are not impaired. In completing a quantitative goodwill impairment test, the Company compares the reporting unit’s fair value, based on future discounted cash flows, to its carrying value in order to determine if an impairment of goodwill exists. The estimates of future discounted cash flows involve considerable judgment and are based upon certain significant assumptions including the weighted average cost of capital (“WACC”) as well as projected EBITDA, which includes assumptions related to revenue growth rates, gross margin levels and operating expenses. As a result of the impact of the uncertainty around tariffs, and continued soft end market conditions driving lower current year EMEA earnings and a decline in projected future EMEA earnings, as well as an increase in the WACC assumption utilized in the Company’s 2024 annual impairment assessment, the Company concluded that the estimated fair value of the EMEA reporting unit was less than its carrying value. As a result, a pre-tax, non-cash impairment charge of $ 88.8 million ($ 86.7 million after-tax) to write down the remaining carrying value amount of the EMEA reporting unit Goodwill was recorded in the second quarter of 2025, reflected in “Impairment charges” in the Consolidated Statements of Operations for the three and six months ended June 30, 2025. 19 Table of Contents Quaker Chemical Corporation Notes to Condensed Consolidated Financial Statements - Continued (Unaudited; Dollars in thousands, except per share amounts, unless otherwise stated) Gross carrying amounts and accumulated amortization for definite-lived intangible assets were as follows: Gross Carrying Amount Accumulated Amortization Net Book Value June 30, 2025 December 31, 2024 June 30, 2025 December 31, 2024 June 30, 2025 December 31, 2024 Customer lists and rights to sell $ 901,686 $ 829,255 $ 324,711 $ 285,450 $ 576,975 $ 543,805 Trademarks, formulations and product technology 201,453 160,257 71,439 62,373 130,014 97,884 Other 5,856 5,759 5,769 5,663 87 96 Total definite-lived intangible assets $ 1,108,995 $ 995,271 $ 401,919 $ 353,486 $ 707,076 $ 641,785 The Company amortizes definite-lived intangible assets on a straight-line basis over their useful lives. The Company recorded amortization expense as follows: Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Amortization expense $ 16,088 $ 14,744 $ 30,325 $ 29,215 Estimated annual aggregate amortization expense for the current year and subsequent five years is as follows: For the remainder of 2025 $ 33,109 For the year ended December 31, 2026 63,917 For the year ended December 31, 2027 63,577 For the year ended December 31, 2028 63,105 For the year ended December 31, 2029 61,969 For the year ended December 31, 2030 59,665 As of June 30, 2025 and December 31, 2024, the Company had indefinite-lived intangible assets for trademarks and tradenames totaling $ 201.2 million and $ 185.3 million, respectively. Note 14 – Debt The following table sets forth the components of the Company’s debt: As of June 30, 2025 As of December 31, 2024 Interest Rate Outstanding Balance Interest Rate Outstanding Balance Credit Facilities: Revolver 4.93 % $ 277,063 4.00 % $ 48,820 U.S. Term Loan 5.54 % 495,504 5.62 % 508,863 Euro Term Loan 3.00 % 152,694 4.00 % 138,767 Industrial development bonds 5.26 % 10,000 5.26 % 10,000 Bank lines of credit and other debt obligations Various 1,434 Various 1,817 Total debt $ 936,695 $ 708,267 Less: debt issuance costs ( 875 ) ( 1,099 ) Less: short-term and current portion of long-term debts ( 37,867 ) ( 37,554 ) Total long-term debt $ 897,953 $ 669,614 20 Table of Contents Quaker Chemical Corporation Notes to Condensed Consolidated Financial Statements - Continued (Unaudited; Dollars in thousands, except per share amounts, unless otherwise stated) Credit facilities In June 2022, the Company, and its wholly owned subsidiary, Quaker Houghton B.V., as borrowers, Bank of America, N.A., as administrative agent, U.S. dollar swing line lender and letter of credit issuer, Bank of America Europe Designated Active Company, as Euro Swing Line Lender, certain guarantors and other lenders entered into an amendment to its primary credit facility. The amended credit facility (the “Credit Facility”) established (A) a $ 150.0 million Euro equivalent senior secured term loan (the “Euro Term Loan”), (B) a $ 600.0 million senior secured term loan (the “U.S. Term Loan”), and (C) a $ 500.0 million senior secured revolving credit facility (the “Revolver”), each maturing in June 2027. The Company has the right to increase the amount of the Credit Facility by an aggregate amount not to exceed the greater of $ 300.0 million or 100 % of Consolidated EBITDA, subject to certain conditions including the agreement to provide financing by any lender providing such increase. As of June 30, 2025, the Company was in compliance with all of the Credit Facility covenants. See Note 19, Debt, to Consolidated Financial Statements in the Company’s 2024 Form 10-K. The weighted average variable interest rate incurred on the outstanding borrowings under the Credit Facility during the three and six months ended June 30, 2025 was approximately 5.2 % for both periods. As of June 30, 2025, the interest rate on the outstanding borrowings under the Credit Facility was approximately 4.9 %. As part of the Credit Facility, in addition to paying interest on outstanding principal, the Company is also required to pay an annual commitment fee ranging from 0.150 % to 0.275 % related to unutilized commitments under the Revolver, depending on the Company’s consolidated net leverage ratio. The Company had unused capacity under the Revolver of approximately $ 220 million, which is net of bank letters of credit of approximately $ 2 million, as of June 30, 2025. In order to manage the Company’s exposure to variable interest rate risk associated with the Credit Facility, in the first quarter of 2023, the Company entered into $ 300.0 million notional amounts of three-year interest rate swaps to convert a portion of the Company’s variable rate borrowings to an average fixed rate of 3.64 % plus an applicable margin as provided in the Credit Facility based on the Company’s consolidated net leverage ratio. As of June 30, 2025, the aggregate interest rate on the swaps, including the fixed base rate plus the applicable margin, was 4.9 %. See Note 17, Hedging Activities , for more information. The Company capitalized third-party and credit debt issuance costs attributed to the Euro Term Loan, U.S. Term Loan and Revolver 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 Condensed Consolidated Balance Sheets. Capitalized costs attributed to the Revolver are recorded within Other assets on the Condensed Consolidated Balance Sheets. These capitalized costs are amortized into Interest expense over the five-year term of the Credit Facility. As of June 30, 2025 and December 31, 2024, the Company had $ 0.9 million and $ 1.1 million, respectively, of debt issuance costs recorded as a reduction of Long-term debt and $ 1.9 million and $ 2.4 million, respectively, of debt issuance costs recorded within Other assets. Industrial development bonds As of June 30, 2025 and December 31, 2024, the Company had fixed rate, industrial development authority bonds totaling $ 10.0 million in principal amount due in 2028. These bonds have similar covenants to the Credit Facility noted above. Bank lines of credit and other debt obligations The Company has certain unsecured bank lines of credit and discounting facilities in certain foreign subsidiaries, which are not collateralized. The Company’s other debt obligations primarily consist of certain domestic and foreign low interest rate or interest-free municipality-related loans, local credit facilities of certain foreign subsidiaries, and finance lease obligations. Total unused capacity under these arrangements as of June 30, 2025 was approximately $ 40 million. In addition to the bank letters of credit described in the “Credit facilities” subsection above, the Company’s other off-balance sheet arrangements include certain financial and other guarantees. The Company’s total bank letters of credit and guarantees outstanding as of June 30, 2025 were approximately $ 7 million. 21 Table of Contents Quaker Chemical Corporation Notes to Condensed Consolidated Financial Statements - Continued (Unaudited; Dollars in thousands, except per share amounts, unless otherwise stated) Interest expense The Company incurred the following debt related expenses included within Interest expense in the Condensed Consolidated Statements of Operations: Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Interest expense $ 12,426 $ 11,530 $ 21,618 $ 22,812 Amortization of debt issuance costs 353 353 706 706 Total $ 12,779 $ 11,883 $ 22,324 $ 23,518 Based on the variable interest rates associated with the Credit Facility, as of June 30, 2025 and as of December 31, 2024, the amounts at which the Company’s total debt were recorded are not materially different from their fair market value. Note 15 – Accumulated Other Comprehensive Income The following tables show the reclassifications from and resulting balances of accumulated other comprehensive income (“AOCI”): Currency Translation Adjustments (1) Defined Benefit Pension Plans Unrealized Gain (Loss) in Available-for- Sale Securities Derivative Instruments Total Balance as of March 31, 2025 $ ( 165,716 ) $ ( 10,578 ) $ ( 17 ) $ 656 $ ( 175,655 ) Other comprehensive income (loss) before Reclassifications 62,129 ( 1,601 ) ( 267 ) ( 130 ) 60,131 Amounts reclassified from AOCI — 131 4 — 135 Related tax amounts ( 244 ) 366 56 30 208 Balance as of June 30, 2025 $ ( 103,831 ) $ ( 11,682 ) $ ( 224 ) $ 556 $ ( 115,181 ) Balance as of March 31, 2024 $ ( 140,733 ) $ ( 10,384 ) $ 378 $ 3,752 $ ( 146,987 ) Other comprehensive (loss) income before Reclassifications ( 18,841 ) 113 ( 58 ) ( 19 ) ( 18,805 ) Amounts reclassified from AOCI — 59 3 — 62 Related tax amounts — ( 47 ) 11 4 ( 32 ) Balance as of June 30, 2024 $ ( 159,574 ) $ ( 10,259 ) $ 334 $ 3,737 $ ( 165,762 ) (1) Includes mark-to-market impacts associated with net investment hedges. See Note 17, Hedging Activities , for more information. 22 Table of Contents Quaker Chemical Corporation Notes to Condensed Consolidated Financial Statements - Continued (Unaudited; Dollars in thousands, except per share amounts, unless otherwise stated) Currency Translation Adjustments 1 Defined Benefit Pension Plans Unrealized Gain (Loss) in Available-for- Sale Securities Derivative Instruments Total Balance as of December 31, 2024 $ ( 192,841 ) $ ( 10,313 ) $ 287 $ 1,248 $ ( 201,619 ) Other comprehensive income (loss) before reclassifications 89,254 ( 2,073 ) ( 658 ) ( 899 ) 85,624 Amounts reclassified from AOCI — 252 11 — 263 Related tax amounts ( 244 ) 452 136 207 551 Balance as of June 30, 2025 $ ( 103,831 ) $ ( 11,682 ) $ ( 224 ) $ 556 $ ( 115,181 ) Balance as of December 31, 2023 $ ( 115,417 ) $ ( 10,738 ) $ 333 $ 1,407 $ ( 124,415 ) Other comprehensive (loss) income before reclassifications ( 44,157 ) 433 5 3,026 ( 40,693 ) Amounts reclassified from AOCI — 209 ( 4 ) — 205 Related tax amounts — ( 163 ) — ( 696 ) ( 859 ) Balance as of June 30, 2024 $ ( 159,574 ) $ ( 10,259 ) $ 334 $ 3,737 $ ( 165,762 ) (1) Includes mark-to-market impacts associated with net investment hedges. See Note 17, Hedging Activities , for more information. All reclassifications related to unrealized gain (loss) in available-for-sale securities relate to the Company’s equity interest in Primex, a captive insurance company, and are recorded in equity in net income of associated companies. The amounts reported in other comprehensive income for noncontrolling interest are related to currency translation adjustments. Note 16 – Fair Value Measurements The Company values its company-owned life insurance policies at fair value. The Company owns an immaterial amount of company-owned life insurance policies as of June 30, 2025 and December 31, 2024. See Note 17, Hedging Activities , for a description of the Company’s derivative instruments. Note 17 – Hedging Activities The Company’s ongoing business operations expose it to various risks, including fluctuating foreign exchange rates and interest rate risk. To manage these risks, the Company periodically enters into derivative financial instruments, such as foreign exchange forward contracts, interest rate swap agreements, and cross-currency swap agreements. The Company does not hold or enter into derivative financial instruments for trading or speculative purposes. Foreign Exchange Forward Contracts The Company uses foreign exchange forward contracts to economically hedge the impact of the variability in exchange rates on certain assets and/or liabilities denominated in 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 (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. Open foreign exchange forward contracts as of June 30, 2025 were entered into as hedges of the Japanese yen and Mexican peso against the U.S. dollar and had the following notional U.S. dollar values (in millions) : Currency June 30, 2025 Mexican Peso $ 12,300 Japanese Yen 23,200 $ 35,500 23 Table of Contents Quaker Chemical Corporation Notes to Condensed Consolidated Financial Statements - Continued (Unaudited; Dollars in thousands, except per share amounts, unless otherwise stated) In connection with the acquisition of Dipsol as described in Note 2, Business Acquisitions , in March 2025, the Company entered into multiple foreign exchange forward contracts with various financial institutions with an aggregate notional amount totaling $ 155.3 million to hedge the variability of exchange rate impacts between the U.S. Dollar and Japanese yen. These foreign exchange forward contracts settled on April 1, 2025. The Company recognized a $ 0.6 million foreign currency gain and a $ 1.4 million foreign currency loss, respectively, during the three and six months ended June 30, 2025 in Other (expense) income, net relating to the change in fair value of these instruments as of the settlement date. Open foreign exchange forward contracts as of June 30, 2025 had maturities occurring over a period of up to one month . Interest Rate Swaps In order to manage the Company’s exposure to variable interest rate risk associated with the Credit Facility, such as the Secured Overnight Financing Rate (“SOFR”), in the first quarter of 2023, the Company entered into $ 300.0 million notional amounts of three-year interest rate swaps to convert a portion of the Company’s variable-rate borrowings into a fixed-rate obligation. See Note 14, Debt , for additional information. These interest rate swaps are designated as cash flow hedges and, as such, the contracts are marked-to-market at each reporting date with any unrealized gains or losses included in AOCI to the extent effective and reclassified to interest expense in the period during which the hedged transactions affect earnings or it becomes probable that the forecasted transaction will not occur. Net Investment Hedges In June 2025, the Company entered into a fixed-for-fixed cross currency swap for a notional amount of $ 75.0 million to hedge the variability of exchange rate impacts between the U.S. Dollar and the European euro. Under the terms of the cross-currency swap agreement, the Company notionally exchanged $ 75.0 million at an interest rate of 1.9 % for 65.8 million EUR at an interest rate of 0.0 %. The cross-currency swap is designated as a net investment hedge on a pre-tax basis and expires in June 2027. In April 2025, the Company entered into fixed-for-fixed cross currency swaps with an aggregate notional amount totaling $ 100.0 million to hedge the variability of exchange rate impacts between the U.S. Dollar and Japanese yen. Under the terms of the cross-currency swap agreements, the Company notionally exchanged $ 100.0 million at a weighted average interest rate of 3.1 % for 14.3 billion JPY at a weighted average interest rate of 0.0 %. The cross-currency swaps are designated as net investment hedges on an after-tax basis and expire in April 2028. The fixed-for-fixed cross-currency swaps are marked to market at each reporting date and any unrealized gains or losses are included in unrealized currency translation adjustments, within AOCI. The Company uses the spot method to evaluate the effectiveness of the net investment hedges. The balance sheet classification and fair values of the Company’s derivative instruments, which are Level 2 measurements, are as follows: Derivative instruments Condensed Consolidated Balance Sheets Location June 30, 2025 December 31, 2024 Net investment hedges Other non-current assets $ 1,048 $ — Net investment hedges Other non-current liabilities 2,111 — Interest rate swaps Other non-current assets 722 1,621 Foreign currency forward contracts Other accrued liabilities 13 67 The following table presents the net unrealized (loss) gain deferred to AOCI: Derivative instruments: Condensed Consolidated Balance Sheets Location June 30, 2025 December 31, 2024 Net investment hedges AOCI $ ( 818 ) $ — Interest rate swaps AOCI 556 1,248 24 Table of Contents Quaker Chemical Corporation Notes to Condensed Consolidated Financial Statements - Continued (Unaudited; Dollars in thousands, except per share amounts, unless otherwise stated) The following table presents the location and the amount of net gain (loss) recognized in the Company’s Condensed Consolidated Statements of Operations related to derivative instruments: Three Months Ended June 30, Six Months Ended June 30, Derivative instruments Condensed Consolidated Statements of Operations 2025 2024 2025 2024 Net investment hedges Interest expense $ 697 $ — $ 697 $ — Interest rate swaps Interest expense 518 1,273 1,041 2,559 Foreign exchange forward contracts Other (expense) income, net 1,441 ( 1,675 ) ( 415 ) ( 732 ) Total $ 2,656 $ ( 402 ) $ 1,323 $ 1,827 Note 18 – Commitments and Contingencies As previously disclosed in its 2024 Form 10-K, the Company is party to certain environmental matters and other litigation. See Note 25, Commitments and Contingencies , in the Company’s 2024 Form 10-K for more information. During the three and six months ended June 30, 2025, there have been no significant changes to the facts or circumstances of any of the previously disclosed matters. Although there can be no assurance regarding the outcome of any of the ongoing environmental matters or litigation, the Company believes that it has made adequate accruals for costs and liabilities associated with these matters. The Company has accrued approximately $ 5.6 million and $ 5.3 million as of June 30, 2025 and December 31, 2024, respectively, for these ongoing matters. In addition, during the three and six months ended June 30, 2025, there are no new environmental matters or litigation that the Company believes will have a material adverse effect on the Company’s results of operations, cash flows, or financial condition. 25 Table of Contents Quaker Chemical Corporation Management’s Discussion and Analysis