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Item 7. Management’s Discussion and Analysis

2026-02-23 compared with 2025-02-24 · 269 added, 243 removed, 244 unchanged (68% of the section changed)

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Quaker Houghton is headquartered in Conshohocken, Pennsylvania, located near Philadelphia in the U.S.

Net sales of $1,839.7 million in 2024 decreased 6% compared to $1,953.3 million in 2023, primarily due to a decrease in selling price and product mix of approximately 4%, a decrease in sales volumes of approximately 2%, and an unfavorable impact from foreign currency translation of approximately 1%, partially offset by an increase in sales from acquisitions of approximately 1%.

The decrease in selling price and product mix was attributable to the impact of our index-based customer contracts and the mix of products and services.

The decline in sales volumes was primarily a result of the continuation of soft end market conditions compared to the prior year in the Americas and Europe, Middle East and Africa (“EMEA”) segments, partially offset by an increase in sales volumes in the Asia/Pacific segment, continued business wins across all segments and a contribution from acquisitions in the EMEA and Asia/Pacific segments.

The Company generated net income of $116.6 million or $6.51 per diluted share in 2024, compared to a net income of $112.7 million or $6.26 per diluted share in 2023.

The increase in current year earnings was primarily driven by lower interest expense and lower foreign exchange losses, partially offset by lower operating income.

Net sales of $1,888.6 million in 2025 increased 3% compared to $1,839.7 million in 2024.

The net sales increase of $48.9 million, or 3%, is primarily due to contributions from acquisitions of approximately 4% and favorable foreign currency translation of approximately 1%, partially offset by decreases in selling price and product mix of approximately 2%.

Organic sales volumes remained consistent in 2025 compared to 2024, primarily as a result of continued new business wins across all segments, particularly Asia/Pacific, which was offset by a continuation of soft end market conditions including the uncertainty caused by tariffs, particularly in the Americas and EMEA segments.

The decrease in selling price and product mix was primarily attributable to the impact of the mix of products, services and geographies and the impact of our index-based customer contracts.

The Company reported a net loss of $2.5 million or $0.14 net loss per diluted share in 2025, compared to a net income of $116.6 million or $6.51 earnings per diluted share in 2024.

The net loss primarily reflects an $88.8 million non-cash impairment charge to write down the remaining value of goodwill associated with the Company’s EMEA reportable segment.

Excluding non-recurring and non-core items, the Company’s current year non-GAAP net income and non-GAAP earnings per diluted share were $123.2 million and $7.02, respectively, compared to $133.5 million and $7.44, respectively, in 2024.

The decrease in current year non-GAAP earnings was primarily driven by a decrease in net sales, partially offset by an improvement in gross margins, lower interest expense, and an increase in other income (expense), net.

The Company generated adjusted EBITDA of $310.9 million compared to $320.4 million in 2023, a decrease of 3%.

The decrease in adjusted EBITDA was primarily a result of a decrease in net sales, partially offset by an increase in other income (expense), net.

See the Non-GAAP Measures section of this Item below.

The Company’s 2024 operating performance in the Americas and EMEA reportable segments reflect similar drivers to that of the Company’s consolidated performance.

Operating earnings for the Americas and EMEA segments decreased compared to the prior year, primarily driven by a decrease in net sales, partially offset by an increase in segment operating margins.

Asia/Pacific segment operating earnings increased compared to the prior year, primarily driven by an increase in net sales, partially offset by a decrease in segment operating margins.

Additional details of each segment’s operating performance are further discussed in the Company’s reportable segments review, in the Operations section of this Item 7, below.

The decrease in current year Non-GAAP earnings was primarily driven by lower gross margins and an increase in selling, general and administrative expenses (“SG&A”), partially offset by an increase in net sales.

The Company generated adjusted EBITDA of $299.2 million compared to $310.9 million in 2024, as the increase in net sales was offset by lower operating margins and an increase in SG&A.

Non-GAAP net income, non-GAAP earnings per diluted share and adjusted EBITDA are non-GAAP measures.

Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations—Consolidated—Use of Non-GAAP Financial Measures” for the definition and reconciliation of these measures to their most comparable GAAP measures.

The Company’s 2025 operating performance in each of its three reportable segments:

(i) Americas;

and (iii) Asia/Pacific, reflects similar drivers to that of the Company’s consolidated performance.

The increase in operating earnings for the Asia/Pacific segment compared to the prior year was primarily driven by an increase in net sales and further contribution from acquisitions, partially offset by lower segment operating margins.

The decrease in operating earnings for the EMEA segment compared to the prior year was primarily driven by lower segment operating margins, partially offset by an increase in net sales.

The decrease in operating earnings for the America segment compared to the prior year was primarily driven by a decrease in net sales and a decrease in segment operating margins.

Additional details of segment operating performance are provided in the Reportable Segments Review in the Operations section of this Item below.

Net cash flows provided by operating activities were $136.5 million in 2025 compared to $204.6 million in 2024.

The decrease in net operating cash flows was primarily driven by a reduction in cash inflow from working capital in the current year.

The key drivers of the Company’s operating cash flow and overall liquidity are further discussed in the Company’s Liquidity and Capital Resources section of this Item 7, below.

Overall, the Company’s results in 2024 reflect the Company’s continued execution on its financial and operational priorities despite a continuation of soft end market conditions that have impacted the Company’s customers.

Looking ahead to 2025, we believe Quaker Houghton is well positioned to continue to deliver above market growth rates through new business wins, by delivering value-added solutions and services to its customers.

The Company expects to continue to advance its enterprise growth strategy, including investing in its long-term growth initiatives, further strengthening its focus on customer intimacy, progressing with its sustainability program and positioning the Company to deliver earnings growth in 2025 and beyond.

The decrease in net operating cash flows was primarily driven by lower operating performance, higher cash outflows from restructuring activities and higher outflows from working capital in 2025 compared to 2024.

The key drivers of the Company’s operating cash flow and working capital are further discussed in the Company’s Liquidity and Capital Resources section of this Item 7, below.

The Company performed well in 2025, making progress on its long-term financial and strategic initiatives.

In addition, the Company results in 2025 reflect an increase in sales volumes in the Asia/Pacific segment and new business wins across all segments, despite a continuation of challenging end market conditions, particularly in the Americas and EMEA segments.

On July 4, 2025, H.R.

1, commonly known as the One Big Beautiful Bill Act (the “OBBB”), was signed into law.

The OBBB 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 legislation has multiple effective dates, with certain provisions effective in 2025 and other provisions implemented through 2027.

The provisions effective in 2025 do not have a material impact to our consolidated financial statements.

The Company is continuing to evaluate the potential impacts of the provisions effective in 2026 and 2027.

Critical Accounting Policies and Estimates

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Also, the Company nets its liability for unrecognized tax benefits against deferred tax assets related to net operating losses or other tax credit carryforward on the basis that the uncertain tax position is settled for the presumed amount at the balance sheet date.

The Company also records valuation allowances when necessary to reduce its deferred tax assets to the amount that is more likely than not to be realized.

While the Company has considered future taxable income and assesses the need for a valuation allowance, in the event Quaker Houghton were to determine that it would be able to realize its deferred tax assets in the future in excess of its net recorded amount, an adjustment to the deferred tax asset would increase income in the period such determination was made.

The Company also records valuation allowances on a quarterly basis to reduce its deferred tax assets to the amount that is more likely than not to be realized.

While the Company has considered future taxable income and assesses the need for a valuation allowance, in the event the Company were to determine that it would be able to realize its deferred tax assets in the future in excess of its net recorded amount, an adjustment to the deferred tax asset would increase income in the period such determination was made.

Likewise, should the Company determine that it would not be able to realize all or part of its net deferred tax assets in the future, an adjustment to the deferred tax asset would be charged to income in the period such determination was made.

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subsidiaries.

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

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

As of December 31, 2025, the $15.5 million transition liability has been fully paid.

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.

As of December 31, 2025, the Company has a deferred tax liability of $8.5 million, which primarily represents the estimate of the non-U.S.

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The amount of such undistributed earnings at December 31, 2025 was approximately $429.2 million.

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.

Any tax liability which might result from ultimate remittance of these earnings is expected to be substantially offset by foreign tax credits (“FTCs”) (subject to certain limitations), however, certain withholding taxes could apply.

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

See Note 10, Income Taxes , to the Consolidated Financial Statements for more information.

Goodwill and other intangible assets:

Business Combinations:

The Company accounts for business combinations under the acquisition method of accounting.

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For non-observable market values, the Company may determine fair value using acceptable valuation principles, including the excess earnings, relief from royalty, lost profit or cost methods.

The Company engaged an independent third-party valuation specialist to assist with the allocation of the total purchase price for the acquisition of Dipsol Chemicals Co., Ltd.

and its subsidiaries, (“Dipsol”) to the fair value of the net assets acquired.

The preliminary fair value of customer-related intangible assets was determined using the multi-period excess earnings method, while the preliminary fair value of product technology and trademarks were determined using the relief from royalty method.

These valuation methodologies required the use of several assumptions and estimates, including, but not limited to, the customer attrition rate, the discount rate, net sales attributable to existing customers, the economic life, the EBITDA margin, and the contributory asset charge for the customer-related intangible assets, and the discount rate, the projected revenue, the royalty rate, and the economic life for the product technology and trademark intangible assets.

The preliminary fair value of inventory was determined using the net realizable value approach, which includes the use of several estimates, including the selling prices and current replacement cost as of the valuation date.

The preliminary fair value of land was determined using a sales comparison approach, which includes the use of several assumptions and estimates, including reproduction/replacement cost, while the preliminary fair value of building and improvements and personal property was determined using the cost approach, which includes the use of several assumptions and estimates, including the building condition, floor value, physical deterioration, functional and economic obsolescence, reproduction/replacement cost, and remaining useful lives.

For further information see Note 2, Business Combinations , to the Consolidated Financial Statements.

Goodwill and other intangible assets:

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

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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.

As part of annual goodwill impairment testing, the Company has the option to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value.

The Company’s evaluation of qualitative factors includes an assessment of relevant facts, events, and circumstances of a reporting unit including but not limited to macroeconomic conditions, industry and market conditions, overall finance performance, cost factors that have a negative effect on earnings and cash flows, sustained decreases in the Company’s share price, and etc.

The Company will perform a quantitative test when qualitative factors alone are not sufficient to conclude whether it is more likely than not that the fair value of the reporting unit is less than its carrying value.

If the Company performs a quantitative test, an impairment loss will be recognized for the amount by which the carrying value of the reporting unit exceeds its fair value, not to exceed the total amount of goodwill allocated to that reporting unit.

The Company’s consolidated goodwill at December 31, 2025 and 2024 was $501.7 million and $518.9 million, respectively.

As of December 31, 2025 and 2024, the Company had indefinite-lived intangible assets for trademarks and intangibles totaling $201.2 million and $185.3 million, respectively.

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 October 1, 2024 and concluded in each case that no impairment existed.

In completing the annual impairment assessment, the Company used a WACC assumption of approximately 10.5% and holding all other assumptions constant, the WACC would have to increase by approximately 2.6 percentage points before the Company’s EMEA reporting unit’s remaining goodwill would be impaired.

In addition, holding EBITDA margins and all other assumptions constant, the Company’s compound annual revenue growth rate during the entire projection period would need to decline by approximately 1.9 percentage points before the Company’s EMEA reporting unit’s remaining goodwill would be impaired.

Similarly, holding revenue growth rates and all other assumptions constant, the Company’s average EBITDA margins throughout the discreet projection period would need to decline by approximately 9.8 percentage points before the Company’s EMEA reporting unit’s remaining goodwill would be impaired.

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.

See Note 15, Goodwill and Other Intangible Assets , to the Consolidated Financial Statements for more information.

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.

In completing a quantitative goodwill impairment test, the Company compared 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 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 year ended December 31, 2025.

In the fourth quarter of fiscal year 2025, the Company performed its annual impairment assessment by applying the quantitative assessment and concluded that it was more likely than not that the fair value of each reporting unit was greater than its carrying value.

Pension and Postretirement benefits:

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Recently Issued Accounting Standards

See Note 3, Recently Issued Accounting Standards , to the Consolidated Financial Statements for more information for a discussion regarding recently adopted accounting standards and recently issued accounting standards not yet adopted.

See Note 3, Recently Issued Accounting Standards , to the Consolidated Financial Statements for more information and for a discussion regarding recently adopted accounting standards and recently issued accounting standards not yet adopted.

Liquidity and Capital Resources

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Cash held by subsidiaries in foreign countries was approximately $171.4 million and $180.6 million at December 31, 2025 and 2024, respectively.

The $5.6 million decrease in cash and cash equivalents was the net result of $204.6 million of cash provided by operating activities, largely offset by $122.7 million of cash used in financing activities, $76.4 million of cash used in investing activities, and an unfavorable impact of foreign currency translation of approximately $11.1 million.

The $9.1 million decrease in cash and cash equivalents was the net result of $214.1 million of cash used in investing activities, largely offset by $136.5 million of cash provided by operating activities, $61.8 million provided by financing activities, and a favorable impact of foreign currency translation of approximately $6.7 million.

Net cash flows provided by operating activities were $136.5 million in 2025 compared to $204.6 million in 2024.

The decrease in net operating cash flow year-over-year reflects a decrease in cash inflow from working capital, notably due to an approximately $53.0 million decrease in cash flow associated with inventory, as inventory purchases returned to normalized levels after inventory reductions in 2023 due to customer destocking.

The decrease in net operating cash flow year-over-year reflects lower operating performance in 2025 compared to 2024, higher outflows from restructuring activities, and an increase in net cash outflows from working capital, primarily due to higher outflows of accounts payable and accrued liabilities due to timing of payments and higher outflows for the purchases of inventories.

Net cash flows used in investing activities were $214.1 million in 2025 compared to $76.4 million in 2024.

The increase in cash used in investing activities year-over-year is primarily the result of $39.3 million of payments in the current year related to the acquisitions of the Sutai Group (“Sutai”) and I.K.V.

Tribologie IKVT and its subsidiaries (“IKV”), a $3.0 million increase in capital expenditures, and a reduction of proceeds from asset dispositions of $6.5 million.

The increase in cash used in investing activities year-over-year is primarily the result of $164.2 million of payments, net of cash acquired, in the current year related to the acquisitions of Chemical Solutions & Innovations (Pty) Ltd.

(“CSI”), Dipsol, and Natech, Ltd., (“Natech”), a $14.1 million increase in payments relating to capital expenditures, and $3.0 million of interest received from the fixed-for-fixed cross-currency swaps designated as net investment hedges.

The prior year included $39.3 million of payments, net of cash acquired, related to the acquisitions of I.K.V.

Tribologie IKVT and its subsidiaries (“IKV”) and the Sutai Group (“Sutai”).

See Note 2, Business Combinations , to the Consolidated Financial Statements for further information about business acquisitions.

Net cash flows used in financing activities were $122.7 million in 2024 compared to $238.6 million in 2023.

The decrease in net cash outflows was primarily related to $17.9 million of net borrowings on the Company’s revolving credit facility in the current year compared to $164.8 million of net repayments in the prior year.

This was offset by payments of approximately $49.2 million for repurchases of the Company’s common stock under its share repurchase program in the current year and payments of $57.2 million to reduce long-term debt in the current year, an $18.3 million increase compared to the prior year.

In addition, the Company paid $33.2 million of cash dividends to shareholders during 2024, a $1.5 million increase compared to the prior year.

Net cash flows provided by financing activities were $61.8 million in 2025 compared to net cash flows used in financing activities of $122.7 million in 2024.

The increase in net cash inflows was primarily driven by $174.2 million of net borrowings on the Company’s revolving credit facility in the current year, an increase of $156.3 million compared to the prior year, which the Company used for the purpose of funding the purchase price of the Dipsol acquisition as well as for other corporate purposes.

In addition, the Company made term loan debt payments of approximately $34.7 million in 2025, a $22.5 million decrease in payments compared to the prior year.

The Company also made payments of approximately $41.5 million for repurchases of the Company’s common stock under its share repurchase program in the current year, a $7.7 million decrease compared to the prior year.

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.

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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:

(i) eliminated the requirement that material foreign subsidiaries must guaranty the Original Euro Term Loan;

(ii) replaced the U.S.

Dollar borrowings reference rate from LIBOR to SOFR;

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

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

As of December 31, 2025, the Company had Credit Facility borrowings outstanding of $859.7 million.

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See Note 24, Hedging Activities , to the Consolidated Financial Statements for more 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.

Term Loan and Revolver during the second quarter of 2022.

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

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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.

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

As of December 31, 2025 and 2024, the Company had $0.7 million and $1.1 million, respectively, of debt issuance costs recorded as a reduction of Long-term debt and $1.4 million and $2.4 million, respectively, of debt issuance costs recorded within Other assets.

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

During the year ended December 31, 2024, the Company entered into and settled forward contracts resulting in other expense of $2.0 million compared to other income of $2.1 million in the prior year.

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

Additionally, in connection with the Dipsol acquisition, in March 2025, the Company entered into foreign exchange forward contracts with various financial institutions with an aggregate notional amount of $155.3 million to hedge the variability in U.S.

dollar-Japanese yen exchange rates associated with the purchase price.

These contracts settled on April 1, 2025 in connection with the Dipsol acquisition.

The Company recognized a $1.4 million foreign currency loss during the year ended December 31, 2025 in Other (expense) income, net relating to the change in fair value of these instruments as of the settlement date.

See Note 24, Hedging Activities , to the Consolidated Financial Statements for more information.

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

The Company has achieved its initial full run-rate cost savings goal from the global cost and optimization program of approximately $20 million.

In the first quarter of 2025, the Company approved additional actions under the program, which are expected to generate additional run-rate cost savings of at least $20 million.

The program is expected to be substantially complete in the first half of 2025.

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

The Company has achieved its annualized cost savings goal from this program of at least $20 million.

In 2025, the Company approved additional actions under the program, which are expected to generate approximately an additional $40 million of annualized cost savings.

These actions are expected to be substantially complete by the end of 2026.

The Company recognized $35.1 million, $6.5 million and $7.6 million of restructuring and related charges for the years ended December 31, 2025, 2024 and 2023, respectively, as a result of these programs and other facility closure actions.

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See Note 10, Income Taxes , to the Consolidated Financial Statements for more information.

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.

As previously disclosed, the Board of Directors of the Company has approved a share repurchase program (“2024 Share Repurchase Program”), authorizing the Company to repurchase up to an aggregate of $150 million of the Company’s outstanding common stock and replacing the prior share repurchase program.

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

The Company made certain repurchases under the 2024 Repurchase Program during the year ended December 31, 2024, as mentioned above.

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, 2025, there was approximately $59.2 million of capacity remaining under the 2024 Share Repurchase Program.

See Note 8, Equity , to the Consolidated Financial Statements for more information.

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.

See Note 25, Commitments and Contingencies , to the Consolidated Financial Statements for more information.

The Company repurchased 364,797 and 312,997 shares under the 2024 Share Repurchase Program for the year ended December 31, 2025 and 2024, respectively.

See Item 5, Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities , within Part II of this Report for further information.

The Company believes that its existing cash, anticipated cash flows from operations and available liquidity will be sufficient to support its operating requirements and fund its business objectives for at least the next twelve months, including but not limited to, payments of dividends to shareholders, share repurchases, capital expenditures, other growth opportunities (including potential acquisitions), pension plan contributions, implementing actions to achieve the Company’s sustainability goals and other potential known or anticipated contingencies.

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Pension and postretirement plan contributions beyond 2026 are not determinable since the amount of any contribution is heavily dependent on the future economic environment and investment returns on pension trust assets.

The timing of payments related to other long-term liabilities which consists primarily of deferred compensation agreements and environmental reserves, also cannot be readily determined due to their uncertainty.

The timing of payments related to other long-term liabilities which consist primarily of deferred compensation agreements and environmental reserves, also cannot be readily determined due to their uncertainty.

Interest obligations on the Company’s long-term debt and capital leases assume the current debt levels will be outstanding for the entire respective period and apply the interest rates in effect as of December 31, 2025.

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Non-GAAP results are presented for supplemental informational purposes only and should not be considered a substitute for the financial information presented in accordance with GAAP.

In addition, our definitions of EBITDA, adjusted EBITDA, adjusted EBITDA margin, non-GAAP operating income, non-GAAP operating margin, non-GAAP net income, and non-GAAP earnings per share, as discussed and reconciled below to the most comparable GAAP measures, may not be comparable to similarly named measures reported by other companies.

The Company presents EBITDA which is calculated as net income attributable to the Company before depreciation and amortization, interest expense, net, and taxes on income before equity in net income of associated companies.

The Company also presents adjusted EBITDA which is calculated as EBITDA plus or minus certain items that management believes are not indicative of future operating performance or not considered core to the Company’s operations.

In addition, the Company presents non-GAAP operating income which is calculated as operating income plus or minus certain items that management believes are not indicative of future operating performance or considers core to the Company’s operations.

Adjusted EBITDA margin and non-GAAP operating margin are calculated as the percentage of adjusted EBITDA and non-GAAP operating income to consolidated net sales, respectively.

In addition, our definitions of EBITDA, adjusted EBITDA, adjusted EBITDA margin, non-GAAP operating income, non-GAAP operating margin, non-GAAP gross profit, non-GAAP gross margin, taxes on income before equity in net income of associated companies – adjusted, non-GAAP net income, and non-GAAP earnings per share, as discussed and reconciled below to the most comparable GAAP measures, may not be comparable to similarly named measures reported by other companies.

The Company presents EBITDA, which is calculated as net income attributable to the Company before depreciation and amortization, interest expense, and taxes on income before equity in net income of associated companies.

The Company also presents adjusted EBITDA, which is calculated as EBITDA plus or minus certain items that management believes are not indicative of future operating performance or core to the Company’s operations.

The Company presents non-GAAP operating income, which is calculated as operating income plus or minus certain items that management believes are not indicative of future operating performance or core to the Company’s operations.

Additionally, the Company presents non-GAAP gross profit, which is calculated as gross profit plus or minus certain items that management believes are not indicative of future operating performance or core to the Company’s operations.

Adjusted EBITDA margin, non-GAAP operating margin, and non-GAAP gross margin are calculated as the percentage of adjusted EBITDA, non-GAAP operating income, and non-GAAP gross profit to consolidated net sales, respectively.

The Company believes these non-GAAP measures provide transparent and useful information and are widely used by analysts, investors, and competitors in our industry as well as by management in assessing the operating performance of the Company on a consistent basis.

Additionally, the Company presents non-GAAP net income and non-GAAP earnings per diluted share as additional performance measures.

Non-GAAP net income is calculated as adjusted EBITDA, defined above, less depreciation and amortization, interest expense, net, and taxes on income before equity in net income of associated companies, in each case adjusted, as applicable, for any depreciation, amortization, interest or tax impacts resulting from the non-core items identified in the reconciliation of net income attributable to the Company to adjusted EBITDA.

Non-GAAP net income is calculated as adjusted EBITDA, defined above, less depreciation and amortization, interest expense, and taxes on income before equity in net income of associated companies, in each case adjusted, as applicable, for any depreciation, amortization, interest or tax impacts resulting from the non-core items identified in the reconciliation of net income attributable to the Company to adjusted EBITDA.

Non-GAAP earnings per diluted share is calculated as non-GAAP net income per diluted share as accounted for under the “two-class share method.” The Company believes that non-GAAP net income and non-GAAP earnings per diluted share provide transparent and useful information and are widely used by analysts, investors, and competitors in our industry as well as by management in assessing the performance of the Company on a consistent basis.

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The following tables reconcile the Company’s non-GAAP financial measures (unaudited) to their most directly comparable GAAP financial measures (dollars in thousands, unless otherwise noted, except per share amounts):

Non-GAAP Gross Profit and Margin Reconciliations For the years ended December 31,

2025 2024 2023

Gross profit $ 679,372 $ 686,030 $ 705,644

Acquisition-related step-up inventory amortization (a) 6,022 — —

Gain on inventory and other adjustments (o) (2,933) — —

Non-GAAP gross profit $ 682,461 $ 686,030 $ 705,644

Non-GAAP gross margin (%) (u) 36.1 % 37.3 % 36.1 %

Non-GAAP Operating Income and Margin Reconciliations For the years ended December 31,

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Operating income $ 52,986 $ 194,706 $ 214,495

Acquisition-related expenses (a) 1,854 — 8,812

Acquisition-related step-up inventory amortization (a) 6,022 — —

Restructuring and related charges, net (b) 35,130 6,530 7,588

Strategic planning (credits) expenses (c) (290) 4,704 14,446

Executive transition costs (d) 7,288 688 2,813

Customer insolvency costs (e) 3,213 — —

Impairment charges (k) — — 93,000

Russia-Ukraine conflict related expenses (l) — — 2,487

Other charges (n) 399 299 866

Acquisition-related expenses (credits) (c) 12,031 1,854 —

Strategic planning expenses (credits) (d) 579 (290) 4,704

Executive transition costs (f) — 7,288 688

Customer insolvency costs (g) — 3,213 —

Gain on inventory and other adjustments (o) (3,256) — —

Impairment charges (i) 88,840 — —

Acquisition-related depreciation and amortization (j) 4,975 — —

Other charges (credits) (p) 2,098 399 299

Non-GAAP operating income $ 199,405 $ 213,700 $ 227,774

Non-GAAP operating margin (%) (r) 11.6 % 11.7 % 9.2 %

Non-GAAP operating margin (%) (u) 10.6 % 11.6 % 11.7 %

EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin and Non-GAAP Net Income Reconciliations For the years ended December 31,

2025 2024 2023

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

Depreciation and amortization (p) 85,108 83,020 81,514

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

Taxes on income (loss) before equity in net income of associated companies (q) 49,300 55,585 24,925

Net income attributable to Quaker Chemical Corporation $ (2,488) $ 116,644 $ 112,748

Depreciation and amortization (s) 94,402 85,108 83,020

Interest expense 44,048 41,002 50,699

Taxes on income before equity in net income of associated companies (t) 24,607 49,300 55,585

EBITDA 160,569 292,054 302,052

Equity (income) loss in a captive insurance company (h) (2,930) (2,090) 1,427

Acquisition-related expenses (credits) (a) 1,454 (475) 10,990

Equity income in a captive insurance company (q) (4,272) (2,930) (2,090)

Acquisition-related step-up inventory amortization (a) 6,022 — —

Restructuring and related charges, net (b) 35,130 6,530 7,588

Strategic planning (credits) expenses (c) (290) 4,704 14,446

Executive transition costs (d) 7,288 688 2,813

Customer insolvency costs (e) 3,213 — —

Facility remediation recoveries, net (f) — (2,141) (1,804)

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

Business interruption insurance proceeds (i) (1,000) — —

Currency conversion impacts of hyper-inflationary economies (j) 811 7,849 1,617

Impairment charges (k) — — 93,000

Russia-Ukraine conflict related expenses (l) — — 2,487

Loss on extinguishment of debt (m) — — 6,763

Other charges (credits) (n) 1,748 2,204 (839)

Acquisition-related expenses (credits) (c) 12,031 1,454 (475)

Strategic planning expenses (credits) (d) 579 (290) 4,704

Gain on inventory and other adjustments (o) (3,256) — —

Pension and postretirement benefit costs, non-service components (e) 1,676 1,827 2,033

Executive transition costs (f) — 7,288 688

Customer insolvency costs (g) — 3,213 —

Currency conversion impacts of hyper-inflationary economies (h) 2,216 811 7,849

Impairment charges (i) 88,840 — —

Loss on acquisition-related hedges (k) 1,351 — —

Gain on sale of assets (l) (2,534) (492) —

Multiemployer plan withdrawal charge (m) 923 — —

Brazilian non-income tax credits (n) (1,762) — —

Other charges (credits) (p) 1,725 1,453 (1,970)

Adjusted EBITDA $ 299,238 $ 310,918 $ 320,379

Adjusted EBITDA margin (%) (r) 16.9 % 16.4 % 13.2 %

Adjusted EBITDA margin (%) (u) 15.8 % 16.9 % 16.4 %

Adjusted EBITDA $ 299,238 $ 310,918 $ 320,379

Depreciation and amortization - adjusted (p) 85,108 83,020 81,514

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

Taxes on income (loss) before equity in net income of associated companies - adjusted (o)(q) 51,352 49,017 37,737

Depreciation and amortization - adjusted (s) 94,402 85,108 83,020

Interest expense 44,048 41,002 50,699

Taxes on income (loss) before equity in net income of associated companies - adjusted (r)(t) 42,608 51,352 49,017

Acquisition-related depreciation and amortization (j) 4,975 — —

Non-GAAP net income $ 123,155 $ 133,456 $ 137,643

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2025 2024 2023

GAAP earnings (loss) per diluted share attributable to Quaker Chemical Corporation common shareholders $ 6.51 $ 6.26 $ (0.89)

Equity (income) loss in a captive insurance company per diluted share (h) (0.16) (0.12) 0.08

Acquisition-related expenses (credits) per diluted share (a) 0.06 (0.03) 0.49

Restructuring and related charges, net per diluted share (b) 0.28 0.32 0.13

Strategic planning (credits) expenses per diluted share (c) (0.01) 0.21 0.63

Executive transition costs per diluted share (d) 0.31 0.03 0.12

Customer insolvency costs per diluted share (e) 0.13 — —

Facility remediation recoveries, net per diluted share (f) — (0.09) (0.08)

Product liability claim costs, net per diluted share (g) 0.09 — —

Business interruption insurance proceeds per diluted share (i) (0.04) — —

Currency conversion impacts of hyper-inflationary economies per diluted share (j) 0.05 0.44 0.09

Impairment charges per diluted share (k) — — 5.19

Russia-Ukraine conflict related expenses per diluted share (l) — — 0.12

Loss on extinguishment of debt per diluted share (m) — — 0.29

Other charges (credits) per diluted share (n) 0.05 0.09 (0.04)

Impact of certain discrete tax items per diluted share (o) 0.17 0.54 (0.26)

Non-GAAP earnings per diluted share (s) $ 7.44 $ 7.65 $ 5.87

(a) Acquisition-related expenses (credits) include expense associated with the Company's recent and potential acquisitions, including legal, financial, consulting and other costs.

For the year ended December 31, 2022, these amounts also include costs incurred in connection with integration activities relating to the Houghton acquisition.

GAAP earnings per diluted share attributable to Quaker Chemical Corporation common shareholders $ (0.14) $ 6.51 $ 6.26

Equity income in a captive insurance company (q) (0.24) (0.16) (0.12)

Acquisition-related step-up inventory amortization (a) 0.25 — —

Restructuring and related charges, net (b) 1.49 0.28 0.32

Acquisition-related expenses (credits) (c) 0.53 0.06 (0.03)

Strategic planning expenses (credits) (d) 0.03 (0.01) 0.21

Pension and postretirement benefit costs, non-service components (e) 0.07 0.05 0.09

Executive transition costs (f) — 0.31 0.03

Customer insolvency costs (g) — 0.13 —

Currency conversion impacts of hyper-inflationary economies (h) 0.13 0.05 0.44

Impairment charges (i) 4.91 — —

Acquisition-related depreciation and amortization (j) 0.20 — —

Loss on acquisition-related hedges (k) 0.06 — —

Gain on sale of assets (l) (0.11) (0.02) —

Multiemployer plan withdrawal charge (m) 0.04 — —

Brazilian non-income tax credits (n) (0.08) — —

Gain on inventory and other adjustments (o) (0.14) — —

Other charges (credits) (p) 0.08 0.07 (0.09)

Impact of certain discrete tax items (r) (0.06) 0.17 0.54

Non-GAAP earnings per diluted share (v) $ 7.02 $ 7.44 $ 7.65

(a) Acquisition-related step-up inventory amortization represents the amortization of the fair value step-up in Dipsol’s inventories as a result of the acquisition which is recorded within Cost of goods sold in the Company’s Consolidated Statements of Operations.

See Note 2, Business Combinations , to the Consolidated Financial Statements for additional information.

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See Note 7, Restructuring and Related Activities , to the Consolidated Financial Statements for additional information.

(c) Strategic planning (credits) expenses include certain consultant and advisory expenses for the Company's long-term strategic planning, as well as process optimization and the next phase of the Company's long-term integration to further optimize its footprint, processes and other functions.

(d) Executive transition costs represent the costs related to the Company’s transition of executive officers.

(e) Customer insolvency costs represent charges associated with specific reserves for trade accounts receivable within the Company’s EMEA and America’s reportable segments related to two specific customers that filed for bankruptcy protection.

(f) Facility remediation recoveries, net represent insurance recoveries received for remediation and restoration of property damage to certain of the Company’s facilities and are recorded in Other income (expense).

There were no gains recognized during the year ended December 31, 2024.

See Note 25, Commitments and Contingencies , to the Consolidated Financial Statements for additional information.

(g) Product liability claim costs, net represents expenses related to the payments by the Company in connection with product liability disputes with customers, net of insurance recoveries during 2024.

See Note 9, Other Income (Expense), net to the Consolidated Financial Statements for additional information.

(h) Equity income (loss) in a captive insurance company represents the after-tax income attributable to the Company’s equity interest in Primex, Ltd.

(“Primex”), a captive insurance company.

The Company holds a 32% investment in and has significant influence over Primex, and therefore accounts for this investment under the equity method of accounting.

See Note 16, Investments in Associated Companies , to the Consolidated Financial Statements for additional information.

(i) Business interruption insurance proceeds reflects an insurance claim settlement receipt for the for the year ended December 31, 2024 related to production losses due to an electrical fire in 2021 that resulted in the temporary shutdown of production at one of the Company’s production facilities.

See Note 25, Commitments and Contingencies , to the Consolidated Financial Statements for additional information.

(j) Currency conversion impacts of hyper-inflationary economies represent the foreign currency remeasurement impacts associated with the Company’s affiliates in Argentina and Türkiye whose local economies are designated as hyper-inflationary under U.S.

(c) Acquisition-related expenses (credits) include expense associated with the Company's recent and potential acquisitions, including legal, financial, consulting and other costs.

See Note 2, Business Combinations , to the Consolidated Financial Statements for additional information.

(d) Strategic planning expenses (credits) include certain consultant and advisory expenses for the Company's long-term strategic planning, as well as process optimization and the next phase of the Company's long-term integration to further optimize its footprint, processes and other functions.

(e) Pension and postretirement benefit costs, non-service components represents the pre-tax, non-service components of the Company’s pension and postretirement net periodic benefit cost in each period.

See Note 20, Pension and Other Postretirement Benefits , and Note 9, Other (expense) income, net, to the Consolidated Financial Statements for additional information.

(f) Executive transition costs represent the costs related to the Company’s transition of executive officers.

(g) Customer insolvency costs represent charges associated with specific reserves for trade accounts receivable within the Company’s EMEA and America’s reportable segments related to two specific customers that filed for bankruptcy protection.

(h) Currency conversion impacts of hyper-inflationary economies represent the foreign currency remeasurement impacts associated with the Company’s affiliates in Argentina and Türkiye whose local economies are designated as hyper-inflationary under U.S.

These pre-tax foreign currency remeasurement impacts are not deductible for tax purposes for each of the years ended December 31, 2025 and 2024 and 2023.

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See Note 1, Basis of Presentation and Significant Accounting Policies , to the Consolidated Financial Statements for additional information.

(k) Impairment charges represent the non-cash charges taken to write down the value of goodwill for the year ended December 31, 2022.

(i) Impairment charges represents the non-cash charge taken to write down the remaining carrying value of goodwill in the EMEA reportable segment during the second quarter of 2025.

See Note 15, Goodwill and Other Intangible Assets, to the Consolidated Financial Statements for additional information.

(l) Expenses related to the Russia-Ukraine conflict represent the direct costs associated with the Company's exit of operations in Russia during 2022.

These costs included employee separation benefits, as well as costs associated with reserves for trade accounts receivable within the Company's EMEA reportable segment, where certain customers were impacted by the conflict between Russia and Ukraine or the Company's decision to end operations in Russia.

(m) 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.

See Note 19, Debt , to the Consolidated Financial Statements for additional information.

(n) Other charges (credits) include charges incurred by an inactive subsidiary of the Company as a result of the termination of restrictions on insurance settlement reserves, non-service components of the Company’s pension and postretirement net periodic benefit income and expense and net gains recognized for the sale of certain facilities previously classified as held-for-sale.

See Note 1, Basis of Presentation and Significant Accounting Policies , Note 7, Restructuring and Related Activities , and Note 20, Pension and Other Postretirement Benefits , to the Consolidated Financial Statements for additional information.

(o) The impacts of certain discrete tax items include certain impacts of tax law changes, valuation allowance adjustments, uncertain tax positions, provision to return and other adjustments, and the impact of certain intercompany asset transfers.

(j) Acquisition-related depreciation and amortization represents amortization expense recorded for definite-lived intangible assets in connection with the Dipsol and Natech acquisitions and depreciation expense recorded in connection with the fair value step-up of Dipsol’s property, plant, and equipment.

See Note 2, Business Combinations , and Note 15, Goodwill and Other Intangible Assets , for more information.

(k) Loss on acquisition-related hedges represents the mark-to-market and settlement of the foreign exchange forward contracts entered into March 2025 for an aggregate notional amount totaling $155.3 million to hedge the variability of exchange rate impacts between the U.S.

Dollar and Japanese yen in connection with the acquisition of Dipsol.

See Note 2, Business Combinations , and Note 24, Hedging Activities , to the Consolidated Financial Statements for additional information.

(l) Gain on sale of assets represents the gain recognized on the sale of certain property previously classified as held for sale and gain on sale of other assets that are not considered core to the Company’s operations.

See Note 7, Restructuring and Related Activities , to the Consolidated Financial Statements for additional information.

(m) Multiemployer plan withdrawal charge represents the expense related to the Company withdrawing from the Cleveland Bakers and Teamsters Pension Fund, a multiemployer defined benefit pension plan, in connection with a site closure under the Company’s restructuring program and facility closure actions.

See Note 7, Restructuring and Related Activities , and Note 9, Other (expense) income, net , to the Consolidated Financial Statements for additional information.

(n) Brazilian non-income tax credits represents indirect tax credits and interest related to the Brazil Supreme Court ruling in regard to certain non-income (indirect) taxes that have been previously charged and paid.

See Note 9, Other (expense) income, net , to the Consolidated Financial Statements for additional information.

(o) Gain on inventory and other adjustments represents immaterial out-of-period adjustments for inventory and other items and is recorded within Cost of goods sold and SG&A in the Company’s Consolidated Statements of Operations.

(p) Other charges (credits) include product liability disputes with customers during the year ended December 31, 2024, an insurance claim settlement receipt related to production losses due to an electrical fire in 2021 that resulted in the temporary shutdown of production at one of the Company’s production facilities during the year ended December 31, 2024, and insurance recoveries received for remediation and restoration of property damage to certain of the Company’s facilities during the year ended December 31, 2023.

Other charges (credits) also includes professional fees incurred in connection with tax audits, charges incurred by an inactive subsidiary of the Company as a result of the termination of restrictions on insurance settlement reserves, and other items.

See Note 9, Other (expense) income, net, and Note 25, Commitments and Contingencies, to the Consolidated Financial Statements for additional information.

(q) Equity income in a captive insurance company represents the after-tax income attributable to the Company’s equity interest in Primex, Ltd.

(“Primex”), a captive insurance company.

The Company holds a 32% investment in and has significant influence over Primex, and therefore accounts for this investment under the equity method of accounting.

See Note 16, Investments in Associated Companies , to the Consolidated Financial Statements for additional information.

(r) The impacts of certain discrete tax items include certain impacts of tax law changes, valuation allowance adjustments, uncertain tax positions, provision to return and other adjustments, and the impact of certain intercompany asset transfers.

For the year ended December 31, 2023, the impacts also included $6.7 million of withholding taxes for the repatriation of non-U.S.

See Note 10, Income Taxes , to the Consolidated Financial Statements for additional information.

(p) Depreciation and amortization includes $1.0 million for each of the years ended December 31, 2024, 2023 and 2022, respectively, of amortization expense recorded within equity in net income of associated companies in the Company’s Consolidated Statements of Operations, which is attributable to amortization of the fair value purchase accounting step-up in connection with acquisition of the Company’s 50% equity interest in Korea Houghton Corporation.

(q) Taxes on income before equity in net income of associated companies – adjusted presents the impact of any current and deferred income tax expense (benefit), as applicable, of the reconciling items presented in the reconciliation of net income attributable to Quaker Chemical Corporation to adjusted EBITDA and was determined utilizing the applicable rates in the taxing jurisdictions in which these adjustments occurred, subject to deductibility.

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

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

(s) Depreciation and amortization includes $0.9 million, $1.0 million and $1.0 million for the years ended December 31, 2025, 2024 and 2023, respectively, of amortization expense recorded within equity in net income of associated companies in the Company’s Consolidated Statements of Operations, which is attributable to amortization of the fair value purchase accounting step-up in connection with acquisition of the Company’s 50% equity interest in Korea Houghton Corporation.

(t) Taxes on income before equity in net income of associated companies – adjusted presents the impact of any current and deferred income tax expense (benefit), as applicable, of the reconciling items presented in the reconciliation of net income attributable to Quaker Chemical Corporation to adjusted EBITDA and was determined utilizing the applicable rates in the taxing jurisdictions in which these adjustments occurred, subject to deductibility.

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

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

Off-Balance Sheet Arrangements

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Consolidated — % (2) % 1 % 4 % 3 %

Net sales of $1,839.7 million in 2024 decreased 6% compared to $1,953.3 million in 2023, primarily due to a decrease in selling price and product mix of approximately 4%, a decrease in sales volumes of approximately 2%, and unfavorable impacts from foreign currency translation of approximately 1%, partially offset by an increase in sales from acquisitions of approximately 1%.

The decrease in selling price and product mix was primarily attributable to the impact of our index-based customer contracts and the mix of products and services.

The decline in sales volumes was primarily a result of continuation of soft end market conditions compared to the prior year, primarily in the Americas and EMEA segments, partially offset by an increase in sales volumes in the Asia/Pacific segment, continued business wins across all segments and a contribution from acquisitions in the EMEA and Asia/Pacific segments.

Cost of goods sold (“COGS”) were $1,153.7 million in 2024 compared to $1,247.7 million in 2023.

The decrease of COGS of $94.0 million, or 8%, reflects lower spend on the decline in current year sales volumes and a modest decline in the Company’s global raw material costs.

Gross profit was $686.0 million in 2024 compared to $705.6 million in 2023, a decrease of approximately $19.6 million, or 3%, primarily as a result of the decline in sales mentioned above, partially offset by a modest reduction in the Company’s global raw material costs.

Net sales of $1,888.6 million in 2025 increased 3% compared to $1,839.7 million in 2024.

The decrease in selling price and product mix was primarily attributable to the impact of the mix of products, services and geographies and the impact of our index-based customer contracts.

COGS was $1,209.3 million in 2025 compared to $1,153.7 million in 2024.

The increase of COGS of $55.6 million, or 5%, reflects an increase in spend on the increase in current year sales volumes and an increase in global raw material costs and manufacturing costs.

Additionally, COGS in 2025 includes a $6.0 million amortization of the fair value step-up in Dipsol’s inventories as a result of the Dipsol acquisition, which is partially offset by a $2.9 million gain related to an out-of-period inventory adjustment.

Gross profit was $679.4 million in 2025 compared to $686.0 million in 2024, a decrease of approximately $6.6 million, or 1%, primarily as a result of an increase in the Company’s raw material costs and manufacturing costs, as well as the $6.0 million amortization of the fair value step-up in Dipsol’s inventories as a result of the Dipsol acquisition, partially offset by an increase in net sales and a $2.9 million gain related to an out-of-period inventory adjustment.

The Company’s reported gross margin in 2025 was 36.0% compared to 37.3% in 2024.

The Company’s current year improvement in gross margin was primarily driven by our value-based pricing model and modest improvements in raw material costs.

SG&A was $484.8 million in 2024 compared to $483.6 million in 2023, an increase of $1.2 million, or 0.3%, primarily as a result of higher executive transition costs, higher customer insolvency costs, and SG&A relating to the IKV and Sutai acquisitions, partially offset by lower strategic planning expenses and favorable foreign currency translation compared to the prior year.

The Company incurred Restructuring and related charges of $6.5 million and $7.6 million during 2024 and 2023, respectively, related to reductions in headcount and facility closure costs under the Company’s restructuring program.

SG&A was $502.4 million in 2025 compared to $484.8 million in 2024, an increase of $17.6 million, or 4%, primarily driven by an increase in SG&A relating to acquisitions, partially offset by lower incentive compensation.

The Company incurred Restructuring and related charges of $35.1 million and $6.5 million during 2025 and 2024, respectively, related to additional reductions in headcount and facility closure costs under the Company’s restructuring program.

See the Non-GAAP Measures section of this Item above and Note 7, Restructuring and Related Activities , to the Consolidated Financial Statements for additional information.

During the second quarter of 2025, the Company recorded an $88.8 million non-cash impairment charge to write down the remaining value of goodwill associated with the Company’s EMEA reportable segment.

This non-cash impairment charge is the result of the Company’s conclusion 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.

There were no similar impairment charges during 2024.

See Note 15, Goodwill and Other Intangible Assets , to the Consolidated Financial Statements for additional information.

Operating income in 2025 was $53.0 million compared to $194.7 million in 2024.

The decrease in operating income was primarily driven by the $88.8 million non-cash impairment charge and increase in Restructuring and related charges as described above.

Excluding non-core items that are not indicative of future operating performance, as detailed above, the Company’s current year non-GAAP operating income was $199.4 million compared to $213.7 million in the prior year.

The decrease in non-GAAP operating income was primarily due to lower gross profit, as described above.

The Company had Other income, net of $1.4 million in 2024 compared to Other expense, net of $10.7 million in 2023 due to lower foreign exchange losses of $1.8 million in the current year compared to losses of $14.8 million in the prior year.

Additionally, the Company had higher non-income tax refunds of $3.7 million in the current year compared to non-income tax refunds of $1.3 million in the prior year.

Other income, net in 2024 also included a business interruption insurance recovery of $1.0 million, other income of $0.4 million relating to adjustments to the earnout provisions for the Sutai acquisition, and $2.0 million of product liability claim costs.

Prior year’s Other expense, net included $2.1 million of facility remediation recoveries, net.

Interest expense, net, of $41.0 million decreased $9.7 million in 2024 compared to $50.7 million in 2023, primarily as a result of lower outstanding borrowings and decreases in interest rates.

The decrease in non-GAAP operating income was primarily due to lower gross profit and an increase in SG&A primarily relating to acquisitions.

See the Non-GAAP Measures section of this Item above for additional details.

The Company had Other expense, net of $1.9 million in 2025 compared to Other income, net of $1.4 million in 2024.

2025 and 2024 both included foreign exchange transaction losses, which were $6.6 million higher in the current year and income from non-income tax credits, which were $0.8 million lower in the current year.

2025 also included a $2.2 million net gain on disposals of property, $2.6 million of interest income and a multiemployer plan withdrawal charge of $0.9 million, whereas 2024 included a $2.0 million expense associated with payments related to customer product liability disputes and a $1.0 million business interruption insurance recovery.

Interest expense of $44.0 million increased $3.0 million in 2025 compared to $41.0 million in 2024, primarily as a result of higher outstanding borrowings, partially offset by decreases in interest rates.

The Company’s effective tax rates for 2025 and 2024 were 350.1% and 31.8%, respectively.

The Company’s current year effective tax rate was primarily impacted by the mix of pre-tax earnings, certain one-time charges related to an intercompany intangible asset transfer, provision to return and other adjustments, and withholding taxes, offset by changes in uncertain tax positions.

The Company’s 2023 effective tax rate was primarily impacted by changes to the valuation allowance for and the usage of certain foreign tax credits, withholding taxes and deferred taxes on unremitted earnings, and the mix of pre-tax earnings.

The Company’s current year effective tax rate was largely driven by the non-cash goodwill impairment charge described above.

The 2025 effective tax rate was also driven by the mix of pre-tax earnings, withholding taxes offset by return to provision adjustments, transition loss carryforwards on branch income and net favorable reductions in uncertain tax positions.

The Company’s 2024 effective tax rate was primarily impacted 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 and return to provision adjustments.

Excluding the impact of all non-core items in each year, described in the Non-GAAP Measures section of this Item above, the Company estimates that the 2025 and 2024 effective tax rates would have been approximately 28% and 29%, respectively.

In 2023, the Company recognized $6.7 million of withholding taxes for the repatriation of non-U.S.

earnings that the Company does not believe is core or indicative of future performance and has adjusted these withholding taxes as a Non-GAAP measure.

The Company may experience continued volatility in its effective tax rates due to several factors, including the timing of tax audits and the expiration of applicable statutes of limitations as they relate to uncertain tax positions, the unpredictability of the timing and amount of certain incentives in various tax jurisdictions, and the timing and amount of certain share-based compensation-related tax benefits, among other factors.

In addition, the foreign tax credit valuation allowance, or absence thereof, is based on a number of variables, including forecasted earnings, which may vary.

The Company may experience continued volatility in its effective tax rates due to several factors, including the timing of tax audits and the expiration of applicable statutes of limitations as they relate to uncertain tax positions, the unpredictability of the timing and amount of certain incentives in various tax jurisdictions, the tax impacts of acquisition and related integration activities, and the timing and amount of certain share-based compensation-related tax benefits, among other factors.

In addition, the FTCs valuation allowance, or absence thereof, is based on a number of variables, including forecasted earnings.

Equity in net income of associated companies was $15.2 million in 2025 compared to $11.0 million in 2024.

The decrease of $4.3 million was primarily due to lower current year income from the Company’s 50% equity interest in a joint venture in Korea offset by higher current year income from the Company’s equity interest in Primex.

The increase of $4.2 million was primarily due to higher current year income from the Company’s 50% equity interest in a joint venture in Korea and higher current year income from the Company’s 32% investment in Primex, a captive insurance company.

Net income attributable to noncontrolling interest was approximately $0.1 million for both 2025 and 2024.

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Consolidated (2) % (4) % (1) % 1 % (6) %

Net sales were a record $1,953.3 million in 2023 compared to $1,943.6 million in 2022.

The increase in net sales of approximately $9.7 million or 1% year-over-year was primarily due to an increase in selling price and product mix of 7% and approximately 1% favorable impact of foreign currency translations, partially offset by a decline in sales volumes of approximately 7%.

The increase in selling price and product mix was primarily driven by year-over-year impact of our value-based pricing initiatives.

The decline in sales volumes was primarily attributable to softer end market conditions across all regions, including the direct and indirect impacts of the UAW strike, the Company’s value-based pricing initiatives and customer order patterns, as well as the impacts of the ongoing war in Ukraine in the EMEA segment, and the wind-down of the tolling agreement for products previously divested related to the Quaker combination with Houghton International, Inc.

(“Houghton”), partially offset by new business wins in all segments, as mentioned above.

COGS were $1,247.7 million in 2023 compared to $1,330.9 million in 2022.

The decrease in COGS of 6% reflects lower spend on the decline in current year sales volumes, which more than offset higher costs due to inflationary pressures in the Company’s global raw material, manufacturing and supply chain and logistics costs compared to the prior year.

Gross profit in 2023 of $705.6 million increased $93.0 million or approximately 15% from 2022.

Net sales of $1,839.7 million in 2024 decreased 6% compared to $1,953.3 million in 2023, primarily due to a decrease in selling price and product mix of approximately 4%, a decrease in sales volumes of approximately 2%, and unfavorable impacts from foreign currency translation of approximately 1%, partially offset by an increase in sales from acquisitions of approximately 1%.

The decrease in selling price and product mix was primarily attributable to the impact of our index-based customer contracts and the mix of products and services.

Cost of goods sold (“COGS”) were $1,153.7 million in 2024 compared to $1,247.7 million in 2023.

The decrease of COGS of $94.0 million, or 8%, reflects lower spend on the decline in 2024 sales volumes and a modest decline in the Company’s global raw material costs.

The Company’s reported gross margin in 2024 was 37.3% compared to 36.1% in 2023.

The Company’s current year improvement in gross margin was primarily driven by the year-over-year impact of our value-based pricing and margin improvement initiatives.

SG&A in 2023 increased $28.2 million compared to 2022 driven by higher labor-related costs including year-over-year inflationary increases and higher levels of incentive compensation on improved Company performance, partially offset by lower SG&A due to foreign currency translation compared to the prior year.

During 2022, the Company incurred $8.8 million of Acquisition-related expenses (credits).

See the Non-GAAP Measures section of this Item, above.

There were no similar costs incurred during 2023.

The Company incurred Restructuring and related charges of $7.6 million and $3.2 million during 2023 and 2022, respectively, related to the Company’s previous and current restructuring programs.

See the Non-GAAP Measures section of this Item, above.

In 2022, the Company recorded a $93.0 million non-cash impairment charge to write down the value of goodwill associated with the Company’s EMEA reportable segment.

This non-cash impairment charge was the result of the Company’s trigger based fourth quarter of 2022 impairment assessment.

There were no similar impairment charges in 2023.

See the Critical Accounting Policies and Estimates section as well as the Non-GAAP Measures section, of this Item, above.

The Company’s improvement in gross margin was primarily driven by our value-based pricing model and modest improvements in raw material costs.

See the Non-GAAP Measures section of this Item above and Note 7, Restructuring and Related Activities , to the Consolidated Financial Statements for additional information.

Operating income in 2024 was $194.7 million compared to $214.5 million in 2023.

Excluding the non-cash impairment charge, as well as other non-core items that are not indicative of future operating performance, the Company’s current year non-GAAP operating income was $227.8 million compared to $177.9 million in the prior year.

The increase in non-GAAP operating income was primarily due to higher gross profit partially offset by higher SG&A, as described above.

The Company had Other expense, net of $10.7 million in 2023 compared to $12.6 million in 2022.

The 2023 and 2022 results include $2.1 million and $1.8 million, respectively of facility remediation recoveries, net, while prior year’s Other expense, net also includes $6.8 million of loss on extinguishment of debt related to the Company’s refinancing the Original Credit Facility and $2.4 million of expense related to an indemnification asset.

Also, there were higher foreign currency transaction losses in 2023 compared to 2022.

Interest expense, net, increased $18.1 million compared to 2022, primarily driven by increases in the average borrowings outstanding coupled with an increase in interest rates year-over-year as the weighted average interest rate incurred on borrowings under the Company’s primary credit facility was approximately 6.2% during 2023 compared to approximately 3.0% during 2022.

The Company’s effective tax rates for 2023 and 2022 were an expense of 36.3% and 350.2%, respectively.

The Company’s 2022 effective tax rate was driven by the non-cash impairment charge, the mix of pre-tax earnings, foreign tax inclusions and withholding taxes, partially offset by a reduction in reserves for uncertain tax positions and changes in the valuation allowance for foreign tax credits.

Excluding non-core items that are not indicative of future operating performance, as detailed above, the Company’s 2024 non-GAAP operating income was $213.7 million compared to $227.8 million in the prior year.

The decrease in non-GAAP operating income was primarily due to lower gross profit, as described above.

See the Non-GAAP Measures section of this Item above for additional details.

The Company had Other income, net of $1.4 million in 2024 compared to Other expense, net of $10.7 million in 2023 due to lower foreign exchange losses of $1.8 million in 2024 compared to losses of $14.8 million in the prior year.

Additionally, the Company had higher non-income tax refunds of $3.7 million in 2024 compared to non-income tax refunds of $1.3 million in the prior year.

Prior year’s Other expense, net included $2.1 million of facility remediation recoveries, net.

Interest expense of $41.0 million decreased $9.7 million in 2024 compared to $50.7 million in 2023, primarily as a result of lower outstanding borrowings and decreases in interest rates.

The Company’s effective tax rates for 2024 and 2023 were 31.8% and 36.3%, respectively.

The Company’s 2024 effective tax rate was primarily impacted by the mix of pre-tax earnings, certain one-time charges related to an intercompany intangible asset transfer, provision to return and other adjustments, and withholding taxes, offset by changes in uncertain tax positions.

The Company’s 2023 effective tax rate was primarily impacted by changes to the valuation allowance for and the usage of certain FTCs, withholding taxes and deferred taxes on unremitted earnings, and the mix of pre-tax earnings.

Excluding the impact of all non-core items in each year, described in the Non-GAAP Measures section of this Item, above, the Company estimates that the 2024 and 2023 effective tax rates would have been approximately 29% and 28%, respectively.

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In addition, the foreign tax credit valuation allowance, or absence thereof, is based on a number of variables, including forecasted earnings, which may vary.

Equity in net income of associated companies increased $13.4 million in 2023 compared to 2022, primarily due to higher current year income from the Company’s interest in a captive insurance company (see the Non-GAAP Measures section of this Item, above) due to higher market performance on equity investments and from the Company’s 50% interest in a joint venture in Korea due to overall market improvement.

In addition, the FTC valuation allowance, or absence thereof, is based on a number of variables, including forecasted earnings, which may vary.

Equity in net income of associated companies was $11.0 million in 2024 compared to $15.3 million in 2023.

The decrease of $4.3 million was primarily due to lower 2024 income from the Company’s 50% equity interest in a joint venture in Korea offset by higher 2024 income from the Company’s equity interest in Primex.

Net income attributable to noncontrolling interest was approximately $0.1 million for both 2024 and 2023.

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The Company’s reportable segments reflect the structure of the Company’s internal organization, the method by which the Company’s resources are allocated and the manner by which the Chief Operating Decision Maker of the Company assesses its performance.

During the first quarter of 2023, the 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:

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and (iii) Asia/Pacific.

See Notes 1, 4, 5, and 15 of Notes to Consolidated Financial Statements in Item 8 of this Report.

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.

See Notes 1, 4, 5, and 15 to the Consolidated Financial Statements for more information.

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 segment items.

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.

Other items not specifically identified with the Company’s reportable segments include Interest expense and Other (expense) income, net.

Americas represented approximately 46% of the Company’s consolidated net sales in 2025.

The segment’s net sales were $865.3 million, a decrease of $16.8 million or 2% compared to 2024.

This decrease in net sales was driven by a decline in sales volumes of approximately 2%, a decrease in selling price and product mix of approximately 1% and an unfavorable impact from foreign currency translation of approximately 1%, offset by an increase in sales from the acquisition of Dipsol of approximately 2%.

The decline in organic sales volumes was primarily driven by a continuation of soft market conditions and customer order patterns, partially offset by new business wins.

The decrease in selling price and product mix was primarily attributable to the impact of the mix of products, services and geographies and the impact of our index-based customer contracts.

The unfavorable foreign exchange impact was primarily due to the strengthening of the U.S.

dollar against the Brazilian real and Mexican peso during 2025 compared to 2024.

Segment operating earnings in the Americas were $227.6 million, a decrease of $16.4 million or 7% compared to 2024 primarily driven by lower net sales and lower segment operating margins, primarily due to lower gross margins for the segment.

EMEA represented approximately 29% of the Company’s consolidated net sales in 2025.

The segment’s net sales were $548.1 million, an increase of $11.7 million or 2% compared to 2024.

This was a result of an increase in sales from acquisitions of Dipsol, Natech, CSI, and IKV of approximately 3% and a favorable foreign currency translation impact of approximately 4%, primarily due to the weakening of the U.S.

dollar against the Euro, partially offset by a decrease in selling price and product mix of approximately 3% and a decrease in organic sales volumes of approximately 2%.

The decrease in selling price and product mix was primarily attributable to the impact of the mix of products, services and geographies and the impact of our index-based customer contracts.

The decline in sales volumes was primarily driven by softer market conditions, partially offset by continued new business wins.

Segment operating earnings in EMEA were $96.6 million, a decrease of $2.8 million or 3% compared to 2024 as an increase in net sales was offset by lower segment operating margins, primarily due to higher SG&A related to acquisitions.

Asia/Pacific represented approximately 25% of the Company’s consolidated net sales in 2025.

The segment’s net sales were $475.2 million, an increase of $54.1 million or approximately 13% compared to 2024.

This was driven by contributions from acquisitions of Dipsol and Sutai of approximately 12% and an increase in organic sales volumes of approximately 5%, partially offset by lower selling price and product mix of approximately 4%.

The increase in organic sales volumes was primarily driven by new business wins coupled with a more favorable end market environment compared to the prior year period.

The decrease in selling price and product mix was primarily attributable to the impact of the mix of products, services and geographies and the impact of our index-based customer contracts.

Segment operating earnings in Asia/Pacific were $124.2 million, an increase of $1.5 million, or 1%, compared to 2024 as an increase in net sales was offset by lower segment operating margins, primarily due to lower gross margins and higher SG&A, primarily related to acquisitions.

Reportable Segments Review – Comparison of 2024 with 2023

Americas represented approximately 48% of the Company’s consolidated net sales in 2024.

The segment’s net sales were $882.1 million in 2024, a decrease of $95.0 million or 10% compared to 2023.

This was driven by a decline in sales volumes of 5%, a decline in selling price and product mix of 4% and unfavorable foreign currency impacts of 1%.

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dollar against the Mexican peso and Brazilian real.

Segment operating earnings in the Americas were $244.0 million, a decrease of $22.1 million or 8% compared to 2023 primarily driven by the decrease in net sales, partially offset by an improvement in segment operating margins driven by the Company’s margin improvement initiatives.

Segment operating earnings in the Americas were $244.0 million in 2024, a decrease of $22.1 million or 8% compared to 2023 primarily driven by the decrease in net sales, partially offset by an improvement in segment operating margins driven by the Company’s margin improvement initiatives.

EMEA represented approximately 29% of the Company’s consolidated net sales in 2024.

The segment’s net sales were $536.4 million, a decrease of $34.9 million or 6% compared to 2023.

The segment’s net sales were $536.4 million in 2024, a decrease of $34.9 million or 6% compared to 2023.

This was driven by a decline in sales volumes of 5% and a decline in selling price and product mix of 4%, partially offset by a contribution of sales from the acquisition of IKV of 3%.

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The decline in selling price and product mix was primarily attributable to the impact of our index-based customer contracts and the mix of products and services.

Segment operating earnings in EMEA were $99.4 million, a decrease of $5.4 million or 5% compared to 2023 primarily driven by the decrease in net sales, partially offset by an improvement in segment operating margins driven by the Company’s margin improvement initiatives.

Segment operating earnings in EMEA were $99.4 million in 2024, a decrease of $5.4 million or 5% compared to 2023 primarily driven by the decrease in net sales, partially offset by an improvement in segment operating margins driven by the Company’s margin improvement initiatives.

Asia/Pacific represented approximately 23% of the Company’s consolidated net sales in 2024.

The segment’s net sales were $421.1 million, an increase of 4% or approximately $16.2 million compared to 2023.

The segment’s net sales were $421.1 million in 2024, an increase of 4% or approximately $16.2 million compared to 2023.

This was driven by an increase in sales volumes of 7%, a contribution of sales from the acquisition of Sutai of 2%, partially offset by a decline in selling price and product mix of 3% and unfavorable impact from foreign currency translation of 2%.

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dollar against the Chinese renminbi.

Segment operating earnings in Asia/Pacific were $122.7 million, an increase of $4.3 million, or 4%, compared to 2023 as a result of improvement in net sales, partially offset by a decrease in segment operating margins.

Reportable Segments Review – Comparison of 2023 with 2022

Americas represented approximately 50% of the Company’s consolidated net sales in 2023.

The segment’s net sales were $977.1 million, an increase of $30.6 million or 3% compared to 2022.

The increase in net sales was due to higher selling price and product mix of 8% and favorable foreign currency impacts of 1%, partially offset by a decrease in sales volumes of approximately 6%.

The decline in sales volumes was primarily driven by softer market conditions, customer order patterns, the direct and indirect impacts of the UAW strike, and the Company’s value-based pricing initiatives, partially offset by new business wins.

The increase in selling price and product mix was primarily driven by value-based price increases implemented to offset the significant increases in raw material, manufacturing and other input costs.

The favorable foreign exchange impact was primarily due to the weakening of the U.S.

dollar against the Mexican peso.

This segment’s operating earnings were $266.0 million, an increase of $42.4 million or 19% compared to 2022 primarily driven by an increase in net sales and an improvement in segment operating margins driven by the Company’s ongoing margin improvement initiatives.

EMEA represented approximately 29% of the Company’s consolidated net sales in 2023.

The segment’s net sales were $571.3 million, an increase of $8.8 million or 2% compared to 2022.

The increase in net sales was a result of a 9% increase in selling price and a favorable impact from foreign currency translation of 2%, which was partially offset by a decrease in sales volumes of approximately 9%.

The increase in selling price and product mix was primarily driven by value-based price increases implemented to offset the significant increases in raw material, manufacturing and other input costs.

The favorable foreign currency translation impact was primarily due to the weakening of the U.S.

dollar against the Euro.

The decrease in sales volumes was primarily driven by softer market conditions, the Company’s value-based pricing initiatives, customer order patterns and the impacts of the wind-down of the tolling agreement for products previously divested related to the Combination as well as the ongoing war in Ukraine, partially offset by new business wins.

This segment’s operating earnings were $104.8 million, an increase of $28.4 million or 37% compared to 2022.

The increase in segment operating earnings was primarily driven by an increase in net sales and an improvement in segment operating margins driven by the Company’s ongoing margin improvement initiatives.

Asia/Pacific represented approximately 21% of the Company’s consolidated net sales in 2023.

The segment’s net sales were $404.9 million, a decrease of 7% or approximately $29.7 million compared to 2022.

The decrease in net sales was a result of lower sales volumes of 7% and an unfavorable impact from foreign currency translation of 4%, partially offset by a 4% increase in selling price and product mix.

The decrease in sales volumes was primarily driven by softer end market conditions and the impacts of the Company’s value-based pricing initiatives, partially offset by new business wins.

The increase in selling price and product mix was primarily driven by value-based price increases implemented to offset the significant increases in raw material, manufacturing and other input costs.

The unfavorable foreign exchange impact was primarily due to the strengthening of the U.S.

dollar against the Chinese renminbi.

This segment’s operating earnings were $118.5 million, an increase of $12.6 million or 12% compared to 2022 as a result of higher gross margins reflecting the Company’s value-based pricing initiatives and the Company’s ongoing margin improvement initiatives.

Segment operating earnings in Asia/Pacific were $122.7 million in 2024, an increase of $4.3 million, or 4%, compared to 2023 as a result of improvement in net sales, partially offset by a decrease in segment operating margins.

Environmental Clean-up Activities

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In 2014, ACP ceased operation at one of its two groundwater treatment systems, as it had met the above condition for closure.

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 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.

As of December 31, 2024, the Company believes that the range of potential-known liabilities associated with the balance of the ACP water remediation program is approximately $0.1 million to $1.0 million.

The low and high ends of the range are based on the length of operation of the treatment system as determined by groundwater modeling.

Costs of operation include the operation and maintenance of the extraction well, groundwater monitoring, program management, and soil vapor testing.

In 2020, the Santa Ana Regional Water Quality Control Board asked that ACP conduct periodic indoor and outdoor soil vapor testing on and near the ACP site to confirm that ACP continues to meet the applicable local standards.

ACP has performed such testing program work with an additional round of testing done in 2025.

It is expected that additional testing may occur in 2026.

As of December 31, 2025, ACP believes it has met the conditions for closure of the remaining groundwater treatment system but continues to operate this system while in discussions with the relevant authorities.

The Company is also party to other environmental matters related to certain domestic and foreign properties.

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During the year ended December 31, 2025, 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.

The Company had accrued obligations of $3.4 million and $3.6 million as of December 31, 2025 and 2024, respectively, for these environmental matters.

These obligations are included in other accrued liabilities and other non-current liabilities on the Company’s Consolidated Balance Sheets.

These accrued amounts are inclusive of the Brazilian environmental matter discussed below.

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In 2020, the site submitted a report on the activities completed including the revised site conceptual model and results of the remedial feasibility study and recommended remedial strategy for the site.

The site believes it will achieve the remedial objectives in June 2027, at which time a request for closure of the treatment system will be submitted.

The Company believes that it has made adequate accruals for costs associated with other environmental matters of which it is aware.

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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 7. Management’s Discussion and Analysis