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Item 2. Management’s Discussion and Analysis

2026-07-30 compared with 2026-04-30 · 282 added, 146 removed, 195 unchanged (69% of the section changed)

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

Net sales in the first quarter of 2026 were $480.5 million , an increase of 8% co m pared to $442.9 million in the first quarter of 2025.

This increase was primarily driven by an increase in organic volumes of approximately 3%, a contribution from acquisitions of approximately 4%, and a favorable impact from foreign currency translation of approximately 4%, partially offset by a decline in selling price and product mix of approximately 3%.

The increase in organic sales volumes compared to the prior year was primarily a result of continued growth in the Asia/Pacific segment and new business wins across all segments, helping to offset a continuation of soft end market conditions, particularly in the Americas and EMEA segments, including the uncertainty caused by the macroeconomic environment.

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 net income in the first quarter of 2026 of $19.7 million, or $1.13 earnin gs per diluted share, compared to $12.9 million, or $0.73 earnings per diluted share in the first quarter of 2025.

Excluding non-recurring and non-core items in each period, the Company’s first quarter 2026 non-GAAP ne t income and earnings per diluted share were $28.4 million and $1.63 compared to $28.0 million and $1.58, respectively, in the prior year.

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

The Company’s current quarter adjusted EBITDA was $72.5 million compared to $69.0 million in the first quarter of 2025, primarily driven by the increase in net sales, partially offset by lower operating margins.

Net sales in the second quarter of 2026 we re $532.6 million, an increase of 10% compared to $483.4 million in the second quarter of 2025.

This increase was primarily driven by an increase in sales volumes of approximately 7%, a favorable impact from foreign currency translation of approximately 2%, and an increase in selling price and product mix of approximately 1%.

The increase in sales volumes in all segments compared to the prior year was primarily a result of new business wins across all segments.

The increase in selling price and product mix reflects pricing actions taken to offset higher raw material costs, as well as changes in the mix of products and services, and the impact of our index-based customer contracts.

The Company reported net income in the second quarte r of 2026 of $26.8 million, or $1.55 earnings per diluted share, compared to a net loss of $66.6 million, or $3.78 loss per diluted share in the second quarter of 2025.

Excluding non-recurring and non-core items in each period, the Company’s second quarter 2026 non-GAAP ne t income and earnings per diluted share were $37.9 million and $2.19 compared to $30.0 million and $1.71, respectively, in the prior year.

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

The C ompany’s current quarter adjusted EBITDA was $85.2 million compared to $75.5 million in the second quarter of 2025, primarily driven by the increase in net sales, partially offset by higher SG&A.

See the Non-GAAP Measures and Consolidated Operations Review sections of this Item below for additional details.

The Company’s first quarter 2026 operating performance in each of its three reportable segments:

The Company’s second quarter 2026 operating performance in each of its three reportable segments:

(i) Americas;

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Operating earnings for the EMEA and Asia/Pacific segments increased compared to the prior year quarter, primarily due to an increase in net sales and an improvement in segment gross margins, partially offset by higher SG&A.

Operating earnings for the Americas segment decreased primarily due to lower segment gross margins and higher SG&A.

Operating earnings for the Americas segment decreased compared to the prior year quarter primarily due to lower segment gross margins and higher SG&A, partially offset by an increase in net sales.

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 $3.8 million in the first three months of 2026 compared to $3.1 million of net cash flows used in operating activities the first three months of 2025.

The higher operating cash inflow year-over-year reflects improved operating performance and lower cash outflows from restructuring activities and working capital in the first three months of 2026 compared to the first three months of 2025.

Net cash flows provided by operating activities were $33.2 million in the first six months of 2026 compared to $38.5 million of net cash flows provided by operating activities the first six months of 2025.

The lower operating cash inflow year-over-year reflects higher net cash outflows from working capital, partially offset by improved operating performance and lower outflows from restructuring activities in the first six months of 2026 compared to the first six months of 2025.

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 below.

Overall, the Company’s results in the first quarter of 2026 reflect an increase in net sales in all segments, driven by acquisitions and new business wins, despite a continuation of challenging end market conditions, and the Company’s continued focus on delivering on its long-term financial and strategic initiatives.

Overall, the Company’s results in the second quarter of 2026 reflect an increase in net sales in all segments compared to the prior quarter and the prior year quarter, driven by new business wins, and the Company’s continued focus on delivering on its long-term financial and strategic initiatives.

Recent geopolitical developments, including the escalation of the military conflict involving Iran, have increased uncertainty in the Middle East and global markets.

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Liquidity and Capital Resources

We had cash and cash equivalents of $169.7 million and $179.8 million as of March 31, 2026 and December 31, 2025, respectively.

Cash held by subsidiaries in foreign countries was approximately $162.5 million and $171.4 million at March 31, 2026 and December 31, 2025, respectively.

The $10.1 million decrease in cash and cash equivalents was the net result of $9.5 million of cas h used in investing activities , $3.4 million of cash used in financing activi ties, and a $0.9 million unfavorable impact of foreign currency translation, partially offset b y $3.8 million of cash provided by operating activities.

Net cash flows provided by operating activities were $3.8 million in the first three months of 2026 compared to net cash flows used in operating activities of $3.1 million in the first three months of 2025.

The increase in net operating cash flow year-over-year reflects improved operating performance, lower outflows from restructuring activities, and lower net cash outflows from working capital.

The lower net cash outflows from working capital were primarily due to higher inflows from the timing of payments of accounts payable.

This is partially offset by higher net cash outflows from accounts receivable due to an increase in net sales and timing of collections and higher net cash outflows for the purchases of inventory due to higher working capital needs including strategic inventory builds at production sites in advance of planned manufacturing transitions and in response to global supply chain risks in connection with the conflict in the Middle East.

Net c ash flows used in investing activities were $9.5 million in the first three months of 2026 compared to $13.4 million in the first three months of 2025.

The decrease in cash used in investing activities year-over-year is primarily the result of $4.0 million of payments, net of cash acquired, in the prior year related to the acquisition of Chemical Solutions & Innovations (Pty) Ltd, and a $1.7 million decrease in payments related to capital expenditures.

This is partially offset by $2.9 million proceeds from asset dispositions in the prior year.

We had cash and cash equivalen ts of $155.1 million and $179.8 million as of June 30, 2026 and December 31, 2025 , respectively.

Cash held by subsidiaries in foreign countries was approximately $146.8 million and $171.4 million at June 30, 2026 and December 31, 2025, respectively.

The $24.7 million decrease in cash and cash equivalents was the net r esult of $38.4 million of cash used in financing activities, $18.8 million of cash used in investing activitie s, and a $0.7 million unfavorable impact of foreign currency translation, partially offset by $33.2 million of cash provided by operating activities.

Net c ash flows provided by operating activities were $33.2 million in the first six months of 2026 compared to net cash flows provided by operating activities of $38.5 million in the first six months of 2025.

The decrease in net operating cash flow year-over-year reflects higher net cash outflows from working capital, partially offset by improved operating performance and lower outflows from restructuring activities.

The higher net cash outflows from working capital are due to higher net cash outflows from accounts receivable due to an increase in net sales and timing of collections and higher net cash outflows for purchases of inventory due to higher raw material costs and strategic inventory builds at production sites in advance of planned manufacturing transitions and in response to global supply chain risks in connection with the conflict in the Middle East.

This is partially offset by higher inflows from the timing of payments of accounts payable.

Net c ash flows used in investing activities were $18.8 million in the first six months of 2026 compared to $180.7 million in the first six months of 2025.

The decrease in cash used in investing activities year-over-year is primarily the result of $164.1 million of payments, net of cash acquired, in the prior year related to the acquisitions of Chemical Solutions & Innovations (Pty) Ltd.

(“CSI”), Dipsol Chemicals Co., Ltd., (“Dipsol”) and Natech, Ltd., (“Natech”).

This is partially offset by $3.0 million proceeds from asset dispositions in the prior year and $0.7 million increase in payments related to capital expenditures.

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

Net cash flows used in financing activities were $3.4 million in the first three months of 2026 compared to $11.0 million cash provided by financing activities in the first three months of 2025.

The decrease in finan cing cash inflows is primarily driven by a $15.9 million decrease of net borrowings on the Company’s revolving credit facility in the first three months of 2026 compared to the prior year.

This is partially offset by a $2.4 million increase of borrowings of other debt in the first three months of 2026 compared to the prior year.

Net cash flows used in financing activities were $38.4 million in the first six months of 2026 compared to $147.5 million cash provided by financing activities in the first six months of 2025.

The decrease in net cash inflows from financing activities is primarily driven by a $901.8 million increase in payments on the Company’s U.S.

and Euro Term Loan and Revolver loans, which is primarily related to repaying in full all outstanding loan commitments under the existing Credit Facility in connection with amending the Credit Facility in April 2026.

Proceeds from the Revolver decreased by $85.7 million, which is primarily related to a revolver borrowing during the first six months of 2025 to fund the purchase price of the Dipsol acquisition, partially offset by a revolver borrowing upon executing the Amended Credit Facility in April 2026.

The f irst six months of 2026 also includes a $6.2 million net cash outflow relating to financing-related debt issuance costs associated with the Amended Credit Facility.

This is partially offset by $800.0 million increase in proceeds from the U.S.

and Euro Term Loan debt upon executing the Amended Credit Facility in April 2026 and a $8.5 million decrease in share repurchases compared to the prior year.

The Company, along with its wholly owned subsidiary, Quaker Houghton B.V., as borrowers, maintain a credit facility with Bank of America, N.A., as administrative agent, U.S.

dollar swing line lender and letter of credit issuer, Bank of America Europe Designated Active Company, as Euro Swing Line Lender, certain guarantors and other lenders.

The credit facility, as amended in June 2022 (the “Credit Facility”), established (A) a $150.0 million Euro equivalent senior secured term loan, (B) a $600.0 million senior secured term loan, and (C) a $500.0 million senior secured revolving credit facility, each maturing in June 2027.

Quaker Chemical Corporation

Management’s Discussion and Analysis

In June 2022, the Company, and its wholly owned subsidiary, Quaker Houghton B.V., as borrowers, Bank of America, N.A., as administrative agent, U.S.

dollar swing line lender and letter of credit issuer, Bank of America Europe Designated Active Company, as Euro Swing Line Lender, certain guarantors and other lenders entered into an amendment to its primary credit facility.

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

Term Loan”), and (C) a $500.0 million senior secured revolving credit facility (the “Revolver”), each maturing in June 2027.

The Company has the right to increase the amount of the Credit Facility by an aggregate amount not to exceed the greater of $300.0 million or 100% of Consolidated EBITDA, subject to certain conditions including the agreement to provide financing by any lender providing such increase.

The Credit Facility contains affirmative and negative covenants, financial covenants and events of default.

Financial covenants contained in the Credit Facility include a consolidated interest coverage ratio test and a consolidated net leverage ratio test.

As of March 31, 2026, the Company was in compliance with all of the Credit Facility covenants.

Refer to the description of the Company’s primary Credit Facility in Note 19, Debt , to the Consolidated Financial Statements in its 2025 Form 10-K.

Subsequent to the first quarter of 2026, in April 2026, the Company, and its wholly owned subsidiary, Quaker Houghton B.V., as borrowers, Bank of America, N.A., as administrative agent, U.S.

The amended credit facility (the “Amended Credit Facility”) established (A) a $250.0 million Euro equivalent senior secured term loan (B) a $550.0 million senior secured term loan and (C) a $800.0 million senior secured revolving credit facility, each maturing in April 2031.

The Company primarily used the proceeds from the Amended Credit Facility to repay in full all outstanding loans under the existing Credit Facility and to terminate the revolving credit commitments under the existing Credit Facility.

In April 2026, the Company and Quaker Houghton B.V., as borrowers, entered into a fourth amendment to the Credit Facility with the lenders.

As amended, the Credit Facility (the “Amended Credit Facility”) established (A) a $250.0 million Euro equivalent senior secured term loan (the “Euro Term Loan”) (B) a $550.0 million senior secured term loan (the “U.S.

Term Loan”) and (C) an $800.0 million senior secured revolving credit facility (the “Revolver”), each maturing in April 2031.

The Company used the proceeds from the Amended Credit Facility to, among other things, repay in full all outstanding loans and terminate the revolving credit commitments under the existing Credit Facility.

The Company has the right to increase the amount of the Amended Credit Facility by an aggregate amount not to exceed (a) the greater of (i) $331.0 million and (ii) 100% of Consolidated EBITDA, subject to certain conditions including the agreement to provide financing by any lender providing such increase.

As o f March 31, 2026 and December 31, 2025, the Company had Credit Facility borrowings outstanding of $861.8 million and $859.7 million, respectively.

The Company’s other debt obligations are primarily industrial development bonds, bank lines of credit and municipality-related loans, which totaled $13.2 million and $11.5 million as of March 31, 2026 and December 31, 2025.

Total unused capacity under these arrangements, excluding the Credit Facility, as of March 31, 2026 was approximately $58 million.

The Company’s total net debt as of March 31, 2026, which consists of total borrowings of $875.0 million less cash and cash equivalents of $169.7 million, was approximately $705.3 million.

The weighted average variable interest rate incurred on the outstanding borrowings under the Credit Facility during the three months ended March 31, 2026 was approximately 4.8%.

As of March 31, 2026, the weighted average variable interest rate on the outstanding borrowings under the Credit Facility was approximately 4.7%.

As part of the Credit Facility, in addition to paying interest on outstanding principal, the Company is also required to pay an annual commitment fee ranging from 0.150% to 0.275% related to unutilized commitments under the Revolver, depending on the Company’s consolidated net leverage ratio.

As of March 31, 2026, the Company had unused capacity under the Revolver of approximately $255 million, which is net of bank letters of credit of approximately $2 million.

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

In March 2026, the Company’s interest rate swap contracts expired.

In April 2026, the Company entered into $400.0 million notional amounts of four-year interest rate swaps, converting a portion of the Company’s variable rate borrowings into an average fixed rate of 3.58% plus the applicable margin.

The Amended Credit Facility contains affirmative and negative covenants, financial covenants and events of default.

Financial covenants contained in the Amended Credit Facility include a consolidated interest coverage ratio test and a consolidated net leverage ratio test.

As of June 30, 2026, the Company was in compliance with all of the Amended Credit Facility covenants.

See Note 14, Debt , to the Condensed Consolidated Financial Statements for additional information.

As of June 30, 2026 and December 31, 2025, the Company had Amended Credit Facility and Credit Facility borrowings outstanding of $864.7 million and $859.7 million, respectively.

The Company’s other debt obligations are primarily industrial development bonds, bank lines of credit and municipality-related loans, which totaled $11.5 million as of June 30, 2026 and December 31, 2025.

Total unused capacity under these arrangements, excluding the Amended Credit Facility, as of June 30, 2026 was approximately $63 million.

The Company’s total net debt as of June 30, 2026, which consists of total borrowings of $876.1 million less cash and cash equivalents of $155.1 million, was approximately $721.0 million.

The weighted average variable interest rate incurred on the outstanding borrowings under the Amended Credit Facility and Credit Facility during the three and six months ended June 30, 2026 was approximately 4.6% and 4.70%, respectively.

As of June 30, 2026, the interest rate on the outstanding borrowings under the Amended Credit Facility was approximately 4.40%.

As part of the Credit Facility, in addition to paying interest on outstanding principal, the Company was also required to pay an annual commitment fee ranging from 0.150% to 0.275% related to unutilized commitments under the senior secured revolving credit facility, depending on the Company’s consolidated net leverage ratio.

As part of the Amended Credit Facility, the range of the annual commitment fee was changed from 0.125% to 0.275%.

As of June 30, 2026, the Company had unused capacity under the Revolver of approximately $727.6 million, which is net of bank letters of credit of approximately $2.4 million.

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

During March 2026, the Company’s interest rate swap contracts expired.

In April 2026, the Company entered into $400.0 million notional amount of four-year interest rate swaps, converting a portion of the Company’s variable rate borrowings relating to the Amended Credit Facility into an average fixed rate of 3.58% plus the applicable margin.

See Note 17, Hedging Activities , to the Condensed Consolidated Financial Statements for further information.

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

Term Loan and Revolver during the second quarter of 2022.

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

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

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

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

As of March 31, 2026 and December 31, 2025, the Company had $0.5 million and $0.7 million, respectively, of debt issuance costs recorded as a reduction of Long-term debt and $1.2 million and $1.4 million, respectively, of debt issuance costs recorded within Other assets.

Prior to executing the Amended Credit Facility, the Company had $0.5 million of debt issuance costs recorded as a reduction of Long-term debt and $1.1 million of debt issuance costs recorded within Other non-current assets on the Condensed Consolidated Balance Sheets.

In connection with executing the Amended Credit Facility, the Company recorded debt modification and extinguishment costs of approximately$1.7 million, which includes the write-off of certain previously unamortized debt issuance costs and a portion of third-party costs that were incurred to execute the Amended Credit Facility.

Also in connection with executing the Amended Credit Facility, during the second quarter of 2026 the Company capitalized $6.2 million of creditor debt issuance costs and certain third-party costs.

Approximately $2.4 million of the capitalized costs were attributed to the Euro Term Loan and U.S.

Term Loan and were recorded as a direct reduction of Long-term debt on the Condensed Consolidated Balance Sheet.

Approximately $3.8 million of the capitalized costs were attributed to the Revolver and recorded within Other non-current assets on the Condensed Consolidated Balance Sheets.

These capitalized costs, as well as the previously capitalized costs that were not written off, will collectively be amortized into Interest expense over the five-year term of the Amended Credit Facility.

As of June 30, 2026, the Company had $2.7 million of debt issuance costs recorded as a reduction of Long-term debt and $4.6 million of debt issuance costs recorded within Other non-current assets.

Quaker Chemical Corporation

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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 .

During the three months ended March 31, 2026, the Company entered into and settled forward contracts resulting in other income of $0.4 million as compared to $1.9 million other expense during the three months ended March 31, 2025.

During the six months ended June 30, 2026, the Company entered into and settled forward contracts resulting in other income of $1.0 million as compared to $0.4 million of other expense during the six months ended June 30, 2025.

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.

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

During the three months ended March 31, 2025, the Company recognized a $1.9 million foreign currency loss in Other expense, net relating to changes in fair value of these instruments as of the settlement date.

During the six months ended June 30, 2025, the Company recognized a $1.4 million foreign currency loss in Other income (expense), net relating to changes in fair value of these instruments as of the settlement date.

See Note 17, Hedging Activities , to the Condensed Consolidated Financial Statements for further information.

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The Company expects the program to generate at least $20 million to $30 million of annualized cost savings.

The Company recognized restructuring and related charges and cash payments relating to the settlement of restructuring liabilities of $4.4 million and $1.0 million during the three months ended March 31, 2026, respectively, under this program.

The Company recognized restructuring and related charges and cash payments relating to the settlement of restructuring liabilities of $8.9 million and $3.9 million during the six months ended June 30, 2026, respectively, under this program.

The Company expects total one-time cash costs of this program to be approximately 1 to 1.5 times annualized savings.

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

The Company recognized restructuring and related charges of $3.0 million and $14.6 million for the three months ended March 31, 2026 and 2025, respectively, under this program.

The Company made cash payments related to the settlement of restructuring liabilities under the 2022 program during the first three months of 2026 of approximately $2.9 million compared to $9.0 million in the first three months of 2025.

The Company recognized restructuring and related charges of $6.6 million and $23.4 million for the six months ended June 30, 2026 and 2025, respectively, under this program.

The Company made cash payments related to the settlement of restructuring liabilities under the 2022 program during the first six months of 2026 of approximately $7.4 million compared to $15.9 million in the first six months of 2025.

The Company expects total one-time cash costs of this program to be approximately 1 to 1.5 times annualized savings.

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

A s of March 31, 2026, the Company’s gross liability for uncertain tax positions, including interest and penalties, was $15.7 million.

A s of June 30, 2026, the Company’s gross liability for uncertain tax positions, including interest and penalties, was $13.9 million.

The Company cannot determine a reliable estimate of the timing of cash flows related to its uncertain tax position liability.

However, should the entire liability be paid, the amount of the payment may be reduced by u p to $7.5 million as a result of offsetting benefits in other tax jurisdictions.

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 and has no expiration date.

The Company did not make any purchases under the 2024 Share Repurchase Program during the three months ended March 31, 2026.

However, should the entire liability be paid, the amount of the payment may be reduced b y up to $6.5 million as a r esult of offsetting benefits in other tax jurisdictions.

The Company maintained its previous share repurchase program (the “2024 Share Repurchase Plan”), which was approved by the Board and announced by the Company on February 28, 2024, which authorized the repurchase of up to $150.0 million of Quaker Chemical Corporation common stock, and had no expiration date.

On May 13, 2026, the Board approved a new share repurchase program (the “2026 Share Repurchase Program”), authorizing the Company to repurchase up to an aggregate of $250.0 million of the Company’s outstanding common stock.

The 2026 Share Repurchase Program was effective immediately, replaced the 2024 Share Repurchase Plan, and has no expiration date.

The Company made purchases under the 2024 Share Repurchase Program and 2026 Share Repurchase Program while each was in effect during the six months ended June 30, 2026.

See Item 2, Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities , within Part II of this Report for further information.

Quaker Chemical Corporation

Management’s Discussion and Analysis

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.

The Company also believes it has sufficient additional liquidity to support its operating requirements and to fund its business obligations for the period beyond the next twelve months, including the aforementioned items which are expected to recur annually, as well as future principal and interest payments on the Company’s Credit Facility, tax obligations and other long-term liabilities.

The Company also believes it has sufficient additional liquidity to support its operating requirements and to fund its business obligations for the period beyond the next twelve months, including the aforementioned items which are expected to recur annually, as well as future principal and interest payments on the Company’s Amended Credit Facility, tax obligations and other long-term liabilities.

The Company’s liquidity is affected by many factors, some based on normal operations of our business and others related to the impact of global events on our business and on global economic conditions as well as industry uncertainties, which we cannot predict.

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The timing and amount of potential additional capital requirements cannot be determined at this time and will depend on a number of factors, including the actual and projected demand for our products, specialty chemical industry conditions, competitive factors, and the condition of financial markets, among others.

Quaker Chemical Corporation

Management’s Discussion and Analysis

Consolidated Operations Review – Comparison of the First Quarter of 2026 with the First Quarter of 2025

Consolidated Operations Review – Comparison of the Second Quarter of 2026 with the Second Quarter of 2025

The following table summarizes the sales variances by reportable segment and consolidated operations from the prior year:

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Consolidated 7 % 1 % 2 % — % 10 %

Net sales in the first quarter of 2026 were $480.5 million , an increase of 8% co m pared to $442.9 million in the first quarter of 2025.

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.

Cost of goods sold (“COGS”) w as $303.7 million in the first quarter of 2026 compared to $281.7 million in the first quarter of 2025, an increase of approximately $22.0 million, or 8%.

The increase in COGS reflects an increase in spend on the increase in current year sales volumes, partially offset by a slight decrease in global raw material costs.

Gross profit wa s $176.7 million in the first quarter of 2026 compared to $161.3 million in the first quarter of 2025, an increase of $15.4 million, or 10% primarily due to an increase in sales and a slight decrease in raw material costs.

The Com pany’s reported gross margin in the first quarter of 2026 w as 36.8% compa red to 36.4% in the first quarter of 2025.

SG&A expense was $135.8 million in the first quarter of 2026 compared to $119.0 million in the first quarter of 2025, an increase of approximately $16.8 million, or 14%, primarily driven by an increase in SG&A expenses related to acquisitions, an increase in incentive compensation, and unfavorable impacts from foreign currency translation.

The Company incurred Restructuring and related charges of $7.4 million and $14.6 million during the first quarter of 2026 and 2025, respectively, primarily related to a lower number of headcount reductions in the first quarter of 2026 compared to the first quarter of 2025 .

Net sales in the second quarter of 2026 we re $532.6 million, an increase of 10% compared to $483.4 million in the second quarter of 2025.

The increase in sales volumes in all segments compared to the prior year was primarily a result of new business wins across all segments.

Cost of goods sold (“COGS”) w as $343.3 million in the second quarter of 2026 compared to $311.7 million in the second quarter of 2025, an increase of approximately $31.6 million, or 10%.

The increase in COGS reflects an increase in spend on the increase in current year sales volumes and an increase in global raw material costs.

Additionally, COGS in the second quarter of 2025 includes a $3.6 million gain related to an out-of-period inventory adjustment, which is partially offset by $6.0 million amortization of the fair value step-up in Dipsol’s inventories as a result of the acquisition.

Gross profit wa s $189.2 million in the second quarter of 2026 compared to $171.7 million in the second quarter of 2025, an increase of $17.5 million, or 10% primarily due to an increase in net sales, an increase in raw material costs, a $3.6 million gain related to an out-of-period inventory adjustment in t he second quarter of 2025, partially offset by $6.0 million amortization of the fair value step-up in Dipsol’s inventories as a result of the acquisition in t he second quarter of 2025.

The Com pany’s reported gross margin in the second quarter of 2026 and 2025 w as each 35.5%.

Th e Company’s non-GAAP gross margin in the second quarter of 2026 was 35.5% compared to 36.0% in the second quarter of 2025.

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

SG&A expens e was $140.5 million in the second quarter of 2026 compared to $126.6 million in the second quarter of 2025, an increase of approximately $13.9 million, or 11%, primarily driven by an increase in incentive compensation, an increase in business transformation costs as part of the 2026 program, and unfavorable impacts from foreign currency translation.

The Company incurred Restructuring and related charges of $8.1 million and $8.8 million during the second quarter of 2026 and 2025, respectively, primarily related to additional reductions in headcount and facility closure costs as part of the 2022 program and 2026 program.

See the Non-GAAP Measures section below and Note 7, Restructuring and Related Activities , to the Condensed Consolidated Financial Statements for additional information.

Operating income in the first quarter of 2026 w as $33.6 million compared to $27.6 million in the first quarter of 2025.

Excluding non-recurring and non-core expenses that are not indicative of the future operating performance of the Company described in the Non-GAAP Measures section of this Item below, the Company’s non-GAAP operating income was $45.3 million in the first quarter of 2026 and $45.8 million in the first quarter of 2025.

The slight decrease in non-GAAP operating income was primarily due to higher SG&A, partially offset by an increase in net sales and higher gross margins, as described above.

The Company had Other expense, net of less than $0.1 million in the first quarter of 2026 as compared to Other expense, net of $0.7 million in the first quarter of 2025 .

Both the first quarter of 2026 and 2025 included foreign exchange transaction losses, which were $2.8 million higher in the prior year.

The prior year also included other income from net gain on disposals of property of $2.1 million.

Interest expense was $9.9 million in the first quarter of 2026 compared to $9.5 million in the first quarter of 2025, an increase of approximately $0.4 million, primarily as a result of higher outstanding borrowings, partially offset by decreases in interest rates.

Quaker Chemical Corporation

Management’s Discussion and Analysis

The Company’s effective tax rates for the first quarters of 2026 and 2025 were 30.2% and 43.4%, respectively.

The Company’s effective tax rate for the first quarter of 2026 was largely driven b y our mix of pre-tax earnings and withholding taxes.

Comparatively, the effective tax rate for the first quarter of 2025 was largely driven by our mix of pre-tax earnings, withholding taxes and return to provision adjustments offset by net favorable reductions in uncertain tax positions.

Excluding the impact of non-core items in each quarter, described in the Non-GAAP Measures section of this Item below, the Company estimates that its effective tax rates for the first quarters of 2026 and 2025 would have been appro ximately 28% and 29%, respe ctively.

There were no impairment charges during the second quarter of 2026.

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 was 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.

See Note 13, Goodwill and Other Intangible Assets , to the Condensed Consolidated Financial Statements for additional information.

Operating income in the second quarter of 2026 was $40.6 million compared to the operating loss of $52.5 million in the second quarter of 2025.

The operating loss in the second quarter of 2025 was primarily driven by the $88.8 million non-cash impairment charge described above.

Excluding non-recurring and non-core expenses that are not indicative of the future operating performance of the Company described in the Non-GAAP Measures section of this Item below, the Company’s non-GAAP operating income was $55.3 million in the second quarter of 2026 and $50.6 million in the second quarter of 2025.

The increase in non-GAAP operating income was primarily due to an increase in net sales, partially offset by higher SG&A and slightly lower non-GAAP gross margins, as described above.

The Company had Other income, net of $0.4 million in the second quarter of 2026 as compared to Other expense, net of $0.7 million in the second quarter of 2025 .

The second quarter of 2026 included foreign exchange transaction gains of $0.7 million compared to foreign exchange translation losses of $1.1 million in the prior year.

Additionally, the second quarter of 2026 included debt extinguishment and modification costs of $1.7 million and a product liability claim reimbursement of $1.0 million, while the second quarter of 2025 included an earnout liability adjustment of $0.3 million.

Interest expense was $9.9 million in the second quarter of 2026 compared to $12.8 million in the second quarter of 2025, a decrease of approximately $2.9 million, primarily as a result of lower outstanding borrowings and decreases in interest rates.

The Company’s effective tax rates for the second quarters of 2026 and 2025 wer e 35.9% an d (8.3)%, respectively.

The Company’s effective tax rate for the second quarter of 2026 was largely driven by our mix of pre-tax earnings and withholding taxes.

Comparatively, the effective tax rate for the second quarter of 2025 was largely driven by our mix of pre-tax earnings, goodwill impairment charges and withholding taxes, offset by return to provision adjustments and net favorable reductions in uncertain tax positions.

Excluding the impact of non-core items in each quarter, described in the Non-GAAP Measures section of this Item below, the Company estimates that its effective tax rates would have been appro ximately 28% for each of the second quarters of 2026 and 2025 .

The Company may experience continued volatility in its effective tax rates due to several factors, including the timing of tax audits, the expiration of applicable statutes of limitations as they relate to uncertain tax positions, the unpredictability of 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 factors, including forecasted mix of earnings, which may vary.

Equity in net income of associated companies was $3.2 million in the first quarter of 2026 compared to $3.1 million in the first quarter of 2025, an increase of $0.1 million, primarily due to recognizing earnings from SKT, a 30% equity method investment the Company acquired as part of the Dipsol acquisition.

Net income attributable to noncontrolling interest was less than $0.1 million in the first quarter of 2026 and 2025.

Reportable Segments Review - Comparison of the First Quarter of 2026 with the First Quarter of 2025

Equity in net income of associated companies was $6.8 million in the second quarter of 2026 compared to $4.9 million in the second quarter of 2025, an increase of $1.9 million, 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 (loss) income attributable to noncontrolling interest was immaterial in the second quarter of 2026 and 2025.

Quaker Chemical Corporation

Management’s Discussion and Analysis

Consolidated Operations Review – Comparison of the First Six Months of 2026 with the First Six Months of 2025

The following table summarizes the sales variances by reportable segment and consolidated operations from the prior year:

Sales volumes Selling price & product mix Foreign currency Acquisition & other Total

Americas 2 % — % 1 % 1 % 4 %

EMEA 5 % (1) % 7 % 1 % 12 %

Asia/Pacific 10 % — % 2 % 6 % 18 %

Consolidated 5 % (1) % 3 % 2 % 9 %

Net sales were $1,013.0 million in the first six months of 2026 compared to $926.3 million in the first six months of 2025.

The net sales increase of $86.7 million, or 9%, year-over-year reflects an increase in organic sales volumes of approximately 5%, contributions from acquisitions of approximately 2%, and favorable foreign currency of approximately 3%, partially offset by decreases in selling price and product mix of approximately 1%.

The increase in organic sales volumes, which was led by the Asia/Pacific segment, was primarily a result of continued new business wins across all segments.

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

COGS was $647.1 million in the first six months of 2026 compared to $593.3 million in the first six months of 2025.

The increase in COGS of approximately $53.8 million, or 9%, primarily reflects an increase in spend on the increase in current year sales volumes.

Additionally, COGS in the first six months of 2025 includes a $3.6 million gain related to an out-of-period inventory adjustment, which is partially offset by $6.0 million amortization of the fair value step-up in Dipsol’s inventories as a result of the Dipsol acquisition.

Gross profit was $365.9 million in the first six months of 2026 compared to $333.0 million in the first six months of 2025, an increase of approximately $32.9 million, or 10%, primarily due to an increase in net sales, 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 in the first six months of 2025, partially offset by a $3.6 million gain related to an out-of-period inventory adjustment in the first six months of 2025.

The Company’s reported gross margin in the first six months of 2026 was 36.1% compared to 35.9% in the first six months of 2025.

The Company’s non-GAAP gross margin in the first six months of 2026 was 36.1% compared to 36.2% in the first six months of 2025.

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

SG&A w as $276.3 million in the first six months of 2026 compared to $245.6 million in the first six months of 2025, an increase of $30.7 million, or 12%, primarily driven by an increase in SG&A relating to acquisitions, an increase in incentive compensation, an increase in business transformation costs under the 2026 program, and unfavorable impacts from foreign currency translation.

The Company incurred Restructuring and related charges of $15.5 million and $23.4 million during the first six months of 2026 and 2025, respectively, related to additional reductions in headcount and facility closure costs under the Company’s restructuring programs.

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

There were no impairment charges during the second quarter of 2026.

See Note 13, Goodwill and Other Intangible Assets , to the Condensed Consolidated Financial Statements for additional information.

Operating income in the first six months of 2026 was $74.2 million compared to the operating loss of $24.9 million in the first six months of 2025.

The operating loss in the first six months of 2025 was primarily driven by the $88.8 million non-cash impairment charge described above.

Excluding non-recurring and non-core expenses that are not indicative of the future operating performance of the Company described in the Non-GAAP Measures section of this Item, below, the Company’s current year non-GAAP operating income increased to $100.6 million for the first six months of 2026 compared to $96.4 million in the prior year’s first six months primarily due an increase in net sales, partially offset by an increase in SG&A.

Quaker Chemical Corporation

Management’s Discussion and Analysis

The Company had Other income, net of $0.4 million in the first six months of 2026 compared to Other expense, net of $1.4 million in the first six months of 2025.

The first six months of 2026 included foreign exchange transaction gains of less than $0.1 million compared to foreign exchange translation losses of $4.6 million in the prior year.

The first six months of 2026 also included $1.7 million of debt extinguishment and modification costs and a $1.0 million product liability claim reimbursement.

In contrast, the first six months of 2025 included a $2.1 million gain on disposals of property and a $0.3 million earnout liability adjustment.

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

Interest expense of $19.8 million decreased $2.5 million in the first six months of 2026 compared to $22.3 million in the first six months of 2025 primarily as a result of lower outstanding borrowings and decreases in interest rates.

The Company’s effective tax rates for the first six months of 2026 and 2025 were 33.4% and (26.8)%, respectively.

The Company’s effective tax rate for the six months ended June 30, 2026 was largely driven by the mix of pre-tax earnings and withholding taxes.

Comparatively, the effective tax rate for the first six months ended June 30, 2025 was primarily impacted by the mix of pre-tax earnings, goodwill impairment charges, return to provision adjustments and withholding taxes offset by net favorable reductions in uncertain tax positions.

Excluding the impact of non-core items in each period, described in the Non-GAAP Measures section of this Item, below, the Company estimates that its effective tax rates for the first six months of 2026 and 2025 would have been approximately 28% and 29%, respectively.

The Company expects continued volatility in its effective tax rates due to several factors, including the timing and scope of tax audits and the expiration of applicable statutes of lim itations as they relate to uncertain tax positions, the unpredictability of the timing and amount of certain incentives in various tax jurisdictions, the treatment of certain acquisition-related costs 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 factors, including forecasted mix of earnings, which may vary.

Equity in net income of associated companies was $10.0 million in the first six months of 2026 compared to $7.9 million in the first six months of 2025.

The increase of $2.1 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 less than $0.1 million in the first six months of 2026 and 2025.

Reportable Segments Review - Comparison of the Second Quarter of 2026 with the Second Quarter of 2025

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 performance.

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Operating expenses not directly attributable to the net sales of each respective segment, such as certain corporate and administrative costs and restructuring charges, are not included in segment operating earnings.

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

Americas represented approximately 44% of the Company’s consolidated net sales in the first quarter of 2026.

This segment’s net sales were $213.7 million, which was consistent compared to the first quarter of 2025.

This was driven by an increase in net sales from the acquisition of Dipsol of approximately 2%, a favorable foreign exchange impact of 1%, partially offset by a decrease in organic sales volumes of approximately 2% and a decrease in selling price and product mix of approximately 1%.

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

Americas represented approximately 44% of the Company’s consolidated net sales in the second quarter of 2026.

This segment’s net sales were $236.5 million, an increase of $15.5 million, or 7%, compared to the second quarter of 2025.

This was driven by an increase in sales volumes of approximately 4%, a favorable foreign exchange impact of approximately 2%, and an increase in selling price and product mix of approximately 1%.

Sales volumes increased compared to the prior year primarily due to new business wins.

The increase in selling price and product mix was primarily attributable to pricing actions taken to offset higher raw material costs, as well as changes in the mix of products and services, and the impact of our index-based customer contracts.

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

dollar against the Mexican peso and Brazilian real.

Sales volumes declined compared to the prior year due to a continuation of soft end market conditions further impacted by the uncertainty of the macroeconomic environment, 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.

Segment operating earnings were $53.9 million, a decrease of $4.5 million, or 8%, compared to the first quarter of 2025, primarily driven by lower segment margins and higher SG&A.

EMEA represented approximate ly 30% of the Company’s consolidated net sales in the first quarter of 2026.

This segment’s net sales were $142.1 million, an increase of $12.8 million, or 10%, compared to the first quarter of 2025.

This was driven by an increase in organic sales volumes of approximately 2%, an increase in net sales from the acquisitions of Dipsol and Natech of approximately 2%, and a favorable impact from foreign currency translation of approximately 10%, partially offset by a decrease in selling price and product mix of approximately 4%.

The increase in organic sales volumes was primarily driven by new business wins, which helped offset a continuation of soft end market conditions, which were further impacted by the uncertainty of the macroeconomic environment.

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

dollar against the Euro.

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 were $25.6 million, an increase of $2.2 million, or 9%, compared to the first quarter of 2025, primarily due to an increase in net sales and an improvement in segment gross margins, partially offset by higher SG&A.

dollar against the Brazilian real.

Segment operating earnings were $57.2 million, a decrease of $1.7 million, or 3%, compared to the second quarter of 2025, primarily driven by lower segment gross margins and higher SG&A, partially offset by an increase in net sales.

Quaker Chemical Corporation

Management’s Discussion and Analysis

Asia/Pacific represented approximately 26% of the Company’s consolidated net sales in the first quarter of 2026.

This segment’s net sales were $124.7 million, an increase of $24.7 million, or 25%, compared to the first quarter of 2025.

This was driven by an increase in net sales from the acquisition of Dipsol of approximately 14%, an increase in organic sales volumes of approximately 10%, and a favorable impact from foreign currency translation of approximately 3%, partially offset by a decrease in selling price and product mix of approximately 2%.

The increase in organic sales volumes was primarily driven by new business wins despite a modest decrease in underlying market conditions.

EMEA represented approximate ly 30% of the Company’s consolidated net sales in the second quarter of 2026.

This segment’s net sales were $158.4 million, an increase of $18.5 million, or 13%, compared to the second quarter of 2025.

This was driven by an increase in organic sales volumes of approximately 7%, an increase in selling price and product mix of approximately 4% and a favorable impact from foreign currency translation of approximately 2%.

The increase in organic sales volumes was primarily driven by new business wins.

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

dollar against the Euro.

Segment operating earnings were $32.7 million, an increase of $7.7 million, or 31%, compared to the second quarter of 2025, primarily due to an increase in net sales and an improvement in segment gross margins, partially offset by higher SG&A.

Asia/Pacific represented approximately 26% of the Company’s consolidated net sales in the second quarter of 2026.

This segment’s net sales were $137.6 million, an increase of $15.2 million, or 12%, compared to the second quarter of 2025.

This was driven by an increase in organic sales volumes of approximately 10%, an increase in selling price and product mix of approximately 1%, and a favorable impact from foreign currency translation of approximately 1%.

The increase in organic sales volumes was primarily driven by new business wins.

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

dollar against the Chinese renminbi.

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 were $34.3 million, an increase of $8.3 million, or 32%, compared to the first quarter of 2025, primarily due to an increase in net sales and an improvement in segment gross margins, partially offset by higher SG&A.

Segment operating earnings were $36.6 million, an increase of $7.8 million, or 27%, compared to the second quarter of 2025, primarily due to an increase in net sales and an improvement in segment gross margins, partially offset by higher SG&A.

Reportable Segments Review - Comparison of the First Six Months of 2026 with the First Six Months of 2025

Americas represented approximately 44% of the Company’s consolidated net sales in the first six months of 2026.

This segment’s net sales were $450.2 million, an increase of $15.5 million, or 4%, compared to the first six months of 2025.

This was driven by an increase in organic sales volumes of approximately 2%, an increase in sales from the acquisition of Dipsol of approximately 1%, and a favorable impact of foreign currency translation of approximately 1%.

Selling price and product mix remained consistent compared to the prior year.

Sales volumes increased compared to the prior year due to new business wins.

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

dollar against the Brazilian real during the first six months of 2026 compared to 2025.

The Americas segment’s operating earnings were $111.2 million, a decrease of $6.3 million, or 5%, compared to the first six months of 2025 primarily driven by lower segment gross margins and higher SG&A, partially offset by an increase in net sales.

EMEA represented approximately 30% of the Company’s consolidated net sales in the first six months of 2026.

This segment’s net sales were $300.5 million, an increase of $31.3 million, or 12% , compared to the first six months of 2025.

This was the result of an increase in organic sales volumes of approximately 5%, a favorable foreign currency translation impact of approximately 7%, and sales from acquisitions of approximately 1%, partially offset by a decrease in selling price and product mix of approximately 1%.

Sales volumes increased compared to the prior year due to new business wins.

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

dollar against the Euro.

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

The EMEA segment’s operating earnings were $58.3 million, an increase of $9.9 million, or 20%, compared to the first six months of 2025, primarily driven by an increase in net sales and higher segment gross margins, partially offset by higher SG&A.

Asia/Pacific represented approximately 26% of the Company’s consolidated net sales in the first six months of 2026.

This segment’s net sales were $262.3 million, an increase of $39.9 million, or 18%, compared to the first six months of 2025.

This was driven by an increase in organic sales volumes of approximately 10%, contributions from the acquisition of Dipsol of approximately 6%, and a favorable impact of foreign currency translation of approximately 2%.

Selling price and product mix remained consistent compared to the prior year.

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

dollar against the Chinese renminbi.

The Asia/Pacific segment’s operating earnings were $70.8 million, an increase of $16.2 million, or 30%, compared to the first six months of 2025 primarily due to an increase in net sales and an increase in segment gross margins and higher SG&A.

Quaker Chemical Corporation

Management’s Discussion and Analysis

Non-GAAP Measures

The information in this Form 10-Q includes non-GAAP (unaudited) financial information that includes EBITDA, adjusted EBITDA, adjusted EBITDA margin, non-GAAP operating income, non-GAAP operating margin, taxes on income before equity in net income of associated companies – adjusted, non-GAAP net income and non-GAAP earnings per diluted share.

The information in this Form 10-Q includes non-GAAP (unaudited) financial information that includes 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 diluted share.

The Company believes these non-GAAP financial measures provide meaningful supplemental information as they enhance a reader’s understanding of the financial performance of the Company, facilitate a comparison among fiscal periods, and exclude items that management believes are not indicative of future operating performance or considered core to the Company’s operations.

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, taxes on income before equity in net income of associated companies – adjusted, non-GAAP net income, and non-GAAP earnings per diluted share, as discussed and reconciled below to the most comparable GAAP measures, may not be comparable to similarly named measures reported by other companies.

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 diluted 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.

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The Company presents non-GAAP operating income, which is calculated as operating income plus or minus certain items that are not considered indicative of future operating performance or considered 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.

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

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

Non-GAAP Gross Profit and Margin Reconciliations Three Months Ended

June 30, Six Months Ended

2026 2025 2026 2025

Gross profit $ 189,204 $ 171,723 $ 365,939 $ 332,983

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

Gain on inventory and other adjustments (m) — (3,604) — (3,604)

Non-GAAP gross profit $ 189,204 $ 174,141 $ 365,939 $ 335,401

Non-GAAP gross margin (%) (t) 35.5 % 36.0 % 36.1 % 36.2 %

Quaker Chemical Corporation

1 unchanged sentence

Non-GAAP Operating Income and Margin Reconciliations Three Months Ended

Operating income $ 33,589 $ 27,624

June 30, Six Months Ended

2026 2025 2026 2025

Operating income (loss) $ 40,603 $ (52,510) $ 74,192 $ (24,886)

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

Restructuring and related charges, net (a) 8,116 8,793 15,497 23,383

Acquisition-related expenses (b) 219 803 934 4,133

Gain on inventory and other adjustments (m) — (3,927) — (3,927)

Business transformation costs (c) 4,113 — 5,772 —

Impairment charges (o) — 88,840 — 88,840

Duplicate headquarter lease costs (q) 564 — 886 —

Acquisition-related depreciation and amortization (k) 1,586 1,681 3,194 1,681

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Non-GAAP operating income $ 55,287 $ 50,641 $ 100,636 $ 96,411

Non-GAAP operating margin (%) (n) 9.4 % 10.3 %

Non-GAAP operating margin (%) (t) 10.4 % 10.5 % 9.9 % 10.4 %

Quaker Chemical Corporation

Management’s Discussion and Analysis

EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin and Non-GAAP Net Income Reconciliations Three Months Ended

Net income attributable to Quaker Chemical Corporation $ 19,669 $ 12,922

Depreciation and amortization (l) 25,870 20,830

June 30, Six Months Ended

2026 2025 2026 2025

Net income (loss) attributable to Quaker Chemical Corporation $ 26,835 $ (66,580) $ 46,504 $ (53,658)

Depreciation and amortization (r) 25,595 23,921 51,465 44,751

Interest expense 9,873 12,779 19,752 22,324

Taxes on income before equity in net income of associated companies (m) 7,145 7,542

Taxes on income before equity in net income of associated companies (s) 11,172 5,472 18,317 13,014

EBITDA 73,475 (24,408) 136,038 26,431

Equity income in a captive insurance company (f) (3,028) (2,075) (3,635) (2,746)

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

Restructuring and related charges, net (a) 8,116 8,793 15,497 23,383

Acquisition-related expenses (b) 219 803 934 4,133

Gain on inventory and other adjustments (m) — (3,927) — (3,927)

Business transformation costs (c) 4,113 — 5,772 —

Pension and postretirement benefit costs, non-service components (d) 326 449 577 882

Impairment charges (o) — 88,840 — 88,840

Product liability claim reimbursement (p) (1,000) — (1,000) —

Currency conversion impacts of hyper-inflationary economies (g) 584 652 755 1,187

Loss on acquisition-related hedges (h) — 1,943

(Gain) loss on acquisition-related hedges (h) — (592) — 1,351

Gain on sale of assets (i) — (357) — (2,534)

Debt modification and extinguishment costs (n) 1,711 — 1,711 —

Duplicate headquarter lease costs (q) 564 — 886 —

Other charges (e) 86 1,279 161 1,505

Adjusted EBITDA $ 85,166 $ 75,479 $ 157,696 $ 144,527

Adjusted EBITDA margin (%) (n) 15.1 % 15.6 %

Adjusted EBITDA margin (%) (t) 16.0 % 15.6 % 15.6 % 15.6 %

Adjusted EBITDA $ 85,166 $ 75,479 $ 157,696 $ 144,527

Depreciation and amortization (l) 25,870 20,830

Depreciation and amortization (r) 25,595 23,921 51,465 44,751

Interest expense 9,873 12,779 19,752 22,324

Taxes on income before equity in net income of associated companies - adjusted (m) 10,015 10,644

Taxes on income before equity in net income of associated companies - adjusted (s) 13,381 10,460 23,396 21,104

Acquisition-related depreciation and amortization (k) 1,586 1,681 3,194 1,681

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Non-GAAP Earnings per Diluted Share Reconciliations Three Months Ended

GAAP earnings per diluted share attributable to Quaker Chemical Corporation common shareholders $ 1.13 $ 0.73

June 30, Six Months Ended

2026 2025 2026 2025

GAAP earnings (loss) per diluted share attributable to Quaker Chemical Corporation common shareholders $ 1.55 $ (3.78) $ 2.68 $ (3.04)

Equity income in a captive insurance company (f) (0.18) (0.12) (0.21) (0.16)

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

Restructuring and related charges, net (a) 0.34 0.38 0.66 1.00

Acquisition-related expenses (b) 0.01 0.05 0.04 0.19

Gain on inventory and other adjustments (m) — (0.16) — (0.16)

Business transformation costs (c) 0.18 — 0.25 —

Pension and postretirement benefit costs, non-service components (d) 0.01 0.02 0.02 0.04

Impairment charges (o) — 4.91 — 4.91

Product liability claim reimbursement (p) (0.04) — (0.04) —

Currency conversion impacts of hyper-inflationary economies (g) 0.03 0.04 0.04 0.07

Loss on acquisition-related hedges (h) — 0.08

(Gain) loss on acquisition-related hedges (h) — (0.02) — 0.06

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

Debt modification and extinguishment costs (n) 0.08 — 0.08 —

Duplicate headquarter lease costs (q) 0.03 — 0.04 —

Other charges (e) 0.01 0.04 0.01 0.04

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Acquisition-related depreciation and amortization (k) 0.07 0.07 0.13 0.07

Non-GAAP earnings per diluted share (o) $ 1.63 $ 1.58

Non-GAAP earnings per diluted share (u) $ 2.19 $ 1.71 $ 3.82 $ 3.29

(a) Restructuring and related charges, net represent the costs incurred by the Company associated with the Company’s restructuring programs and facility closure actions.

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(d) 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 9, Pension and Other Postretirement Benefits, and Note 10, Other expense, net, to the Condensed Consolidated Financial Statements for additional information.

See Note 9, Pension and Other Postretirement Benefits, and Note 10, Other Income (Expense), net, to the Condensed Consolidated Financial Statements for additional information.

(e) Other charges include professional fees incurred in connection with tax audits, certain consultant and advisory expenses for the Company’s long-term strategic planning, and other items.

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(g) Currency conversion impacts of hyper-inflationary economies represents 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 both the three months ended March 31, 2026 and 2025.

These pre-tax foreign currency remeasurement impacts are not deductible for tax purposes for both the three and six months ended June 30, 2026 and 2025.

The charges incurred relate to the immediate recognition of foreign currency remeasurement in the Condensed Consolidated Statements of Operations.

(h) 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.

Quaker Chemical Corporation

Management’s Discussion and Analysis

(h) (Gain) 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 Acquisitions , and Note 17, Hedging Activities , to the Condensed Consolidated Financial Statements for additional information.

(i) Gain on sale of assets represents the gain recognized on the sale of certain property previously classified as held for sale.

(i) 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 Condensed Consolidated Financial Statements for additional information.

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See Note 11, Income Taxes , to the Condensed Consolidated Financial Statements for more information.

Quaker Chemical Corporation

Management’s Discussion and Analysis

(k) 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 Acquisitions , and Note 13, Goodwill and Other Intangible Assets , for more information.

(l) Depreciation and amortization for the three months ended March 31, 2026 and 2025 each includes approximately $0.2 million of amortization expense recorded within equity in net income of associated companies in the Company’s Condensed Consolidated Statements of Operations.

(l) 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 was recorded within Cost of goods sold in the Company’s Condensed Consolidated Statements of Operations during the three and six months ended June 30, 2025.

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

(m) Gain on inventory and other adjustments represents immaterial out-of-period adjustments for inventory and other items and was recorded within Cost of goods sold and SG&A in the Company’s Condensed Consolidated Statements of Operations during the three and six months ended June 30, 2025 .

(n) Debt modification and extinguishment costs includes the write-off of certain previously unamortized deferred financing costs as well as a portion of the third-party costs incurred to execute an amendment to the Company’s Credit Facility.

See Note 14, Debt , to the Condensed Consolidated Financial Statements for additional information.

(o) Impairment charges represents the non-cash charge taken to write down the remaining carrying value of goodwill in the EMEA reportable segment during the three and six months ended June 30, 2025 .

See Note 13, Goodwill and Other Intangible Assets , to the Condensed Consolidated Financial Statements for additional information.

(p) Product liability claim reimbursement reflects insurance recoveries relating to a previous payment by the Company in connection with a product liability dispute with a customer.

See Note 10, Other Income (Expense), net , to the Condensed Consolidated Financial Statements for additional information.

(q) Duplicate headquarter lease costs represent operating lease expenses and variable lease costs associated with the new Radnor, Pennsylvania laboratory and Headquarters lease, a non-recurring event, during the transition period.

These costs are incurred concurrently with the Company's existing Conshohocken, Pennsylvania laboratory and Headquarters lease.

Once the Company’s old lease agreement expires during the first quarter of 2027, adjustments for the new headquarter lease costs will not be necessary.

See Note 6, Leases , to the Condensed Consolidated Financial Statements for additional information.

(r) Depreciation and amortization for the three and six months ended June 30, 2026 and 2025 each includes approximately $0.2 million and $0.5 million, respectively, of amortization expense recorded within equity in net income of associated companies in the Company’s Condensed Consolidated Statements of Operations.

This is attributable to the amortization of the fair value purchase accounting step-up in connection with the acquisition of the Company’s 50% equity interest in Korea Houghton Corporation.

(m) 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 the adjustments occurred, subject to deductibility.

This caption also includes the impact of specific tax charges and benefits for the three months ended March 31, 2026 and 2025.

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

(o) In each given period, 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”.

(s) 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 the adjustments occurred, subject to deductibility.

This caption also includes the impact of specific tax charges and benefits for the three and six months ended June 30, 2026 and 2025.

(t) 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.

(u) In each given period, 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”.

Quaker Chemical Corporation

Management’s Discussion and Analysis

Off-Balance Sheet Arrangements

The Company’s off-balance sheet items outstanding as of March 31, 2026 include approximately $7 million of bank letters of credit and guarantees.

The Company’s off-balance sheet items outstanding as of June 30, 2026 include approximately $7 million of bank letters of credit and guarantees.

The bank letters of credit and guarantees are not significant to the Company’s liquidity or capital resources.

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• the potential timing, impacts, benefits and other uncertainties of acquisitions and divestitures, including our ability to finance any acquisition on commercially reasonable terms or to realize synergies, integrate acquisitions and acquired businesses or separate divested assets and businesses;

Quaker Chemical Corporation

Management’s Discussion and Analysis

• broader macroeconomic factors, including potential for changes in global and regional economic conditions, the possibility of global or regional slowdowns or recessions, other macroeconomic stresses and uncertainties, including potential impacts related to the recent actions of the federal government and responses thereto, as well as other political and geopolitical events, civil disturbances and endemics/pandemics or extreme weather events and other natural disasters that may adversely affect regional economic conditions and housing market;

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Furthermore, the Company is subject to the same business cycles as those experienced by our customers in the steel, automotive, aerospace, industrial equipment, aluminum, and durable goods industries.

Quaker Chemical Corporation

Management’s Discussion and Analysis

Any or all of the forward-looking statements in this Report, in the Company’s 2025 Form 10-K and in any other public statements we make may prove to be incorrect due to inaccurate assumptions or unforeseen risks and uncertainties.

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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-Q

Item 2. Management’s Discussion and Analysis