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QUAKER CHEMICAL CORP

KWR
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Business Summary

Quaker Houghton is the global leader in industrial process fluids, with operations in over 25 countries and customers including thousands of the world's most advanced and specialized steel, aluminum, automotive, aerospace, offshore, can, mining, and metalworking companies. The Company develops, produces, and markets a broad range of formulated specialty chemical products and offers chemical management services (Fluidcare) for various heavy industrial and manufacturing applications throughout its three segments: Americas; Europe, Middle East and Africa (EMEA); and Asia/Pacific. The Company's financial performance is generally correlated to the volume of global production within the industries it serves, rather than directly related to the financial performance of its customers.

The Company estimates it holds the leading global position in the market for industrial process fluids including leading global positions in the markets for process fluids in portions of the automotive and industrial markets, and a leading position in the market for process fluids to produce sheet steel and aluminum. The specialty chemical industry is highly competitive and comprises a number of companies similar in size to Quaker Houghton, as well as companies larger and smaller in size. Competition in the industry is based primarily on the ability to supply products and provide technical services that meet the needs of the customer at an appropriate price and value.

The Company generates revenue through the sale of formulated specialty chemical products and the provision of chemical management services (Fluidcare). The majority of sales worldwide are made directly through its own employees and its Fluidcare programs, with the balance sold through distributors and agents. As part of the Fluidcare business, certain third-party product sales to customers are managed by the Company; where the Company acts as principal, revenues are recognized on a gross reporting basis, and where it acts as an agent, revenue is recognized on a net reporting basis at the amount of the administrative fee earned.

The major product lines of Quaker Houghton include metal removal fluids, cleaning fluids, corrosion inhibitors, metal drawing and forming fluids, die cast mold releases, heat treatment and quenchants, metal forging fluids, hydraulic fluids, surface solutions, specialty greases, offshore sub-sea energy control fluids, rolling lubricants, and rod and wire drawing fluids. For the year ended December 31, 2025, metal removal fluids contributed 19.0% of consolidated net sales, rolling lubricants contributed 18.3% , hydraulic fluids contributed 12.2% , and surface solutions contributed 10.9% . For the year ended December 31, 2024, metal removal fluids contributed 22.4% , rolling lubricants contributed 20.5% , hydraulic fluids contributed 14.2% , and surface solutions contributed 5.2% . For the year ended December 31, 2023, metal removal fluids contributed 23.6% , rolling lubricants contributed 19.5% , hydraulic fluids contributed 14.1% , and surface solutions contributed 5.0% .

In April 2025, the Company acquired Dipsol Chemicals Co., Ltd. and its subsidiaries for approximately $185.6 million (27.7 billion JPY), which included approximately $30.1 million (4.5 billion JPY) of acquired cash for a net purchase price of approximately $155.5 million (23.2 billion JPY). Dipsol is a leading supplier of surface treatment and plating solutions and services primarily for the automotive and other industrial applications end markets. In April 2025, the Company acquired Natech, Ltd. for approximately $6.5 million , which includes an initial cash payment of $6.0 million and a deferred payment of $0.5 million ; Natech is a manufacturer of surface treatment chemicals. In February 2025, the Company acquired Chemical Solutions & Innovations (Pty) Ltd. for approximately $3.9 million ; CSI is a supplier of metalworking fluids and lubricants to the South African market. In July 2024, the Company acquired the Sutai Group for approximately $16.2 million ; Sutai provides impregnation treatment products and services. In February 2024, the Company acquired I.K.V. Tribologie IKVT and its subsidiaries for $35.2 million ; IKV specializes in high-performance lubricants and greases. On February 28, 2024, the Board approved a new share repurchase program authorizing the Company to repurchase up to an aggregate of $150 million of the Company's outstanding common stock. The Company repurchased 364,797 shares under the 2024 Share Repurchase Program for the year ended December 31, 2025. The Board declared cash dividends that totaled $1.99 per share of outstanding common stock or $34.6 million during the year ended December 31, 2025.

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% . 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. The Company generated adjusted EBITDA of $299.2 million compared to $310.9 million in 2024.

Business Outlook

The Company expects total one-time cash costs of its global cost and optimization program to be approximately 1 to 1.5 times annualized savings. 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 acquisition of Dipsol expands the Company's advanced solutions businesses in attractive end markets with solid growth characteristics and provides significant cross-selling opportunities and enhances the Company's ability to meet the needs of customers across the globe. The acquisition of Natech strengthens Quaker Houghton's overall surface treatment product and application capabilities within Europe. The acquisition of CSI strengthens Quaker Houghton's position in South Africa and expands the Company's presence in that region. The acquisition of Sutai strengthens Quaker Houghton's technology portfolio, enabling the Company to better support and optimize production processes for customers across the Japanese, Asia Pacific and global markets. The acquisition of IKV strengthens the Company's position in first-fill greases.

The Company's non-GAAP operating income was $199.4 million in 2025 compared to $213.7 million in 2024. The decrease in non-GAAP operating income was primarily due to lower gross profit and an increase in SG&A primarily relating to acquisitions. The Company's reported gross margin in 2025 was 36.0% compared to 37.3% in 2024. Excluding non-core items, the Company estimates that the 2025 and 2024 effective tax rates would have been approximately 28% and 29% , respectively.

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 its global cost and optimization program and other facility closure actions. The Company made cash payments related to the settlement of restructuring liabilities under the program of $26.6 million and $7.6 million during the years ended December 31, 2025 and 2024, respectively. As of December 31, 2025, the program included restructuring and associated severance costs to reduce headcount by approximately 440 positions globally.

Research and development expenses during the years ended December 31, 2025, 2024 and 2023 were $60.7 million , $57.3 million and $50.3 million , respectively. Investments in property, plant and equipment were $55.9 million in 2025 compared to $41.8 million in 2024. As of December 31, 2025, there was approximately $59.2 million of capacity remaining under the 2024 Share Repurchase Program. The Board declared cash dividends that totaled $1.99 per share of outstanding common stock or $34.6 million during the year ended December 31, 2025.

The Company's 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. 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 index-based customer contracts. The Company's earnings have been and could continue to be affected by market changes in raw material prices. The Company is subject to the same business cycles as those experienced by its customers in the steel, automotive, aerospace, industrial equipment, aluminum, and durable goods industries.

The Company's financial results are affected by currency fluctuations, particularly between the U.S. dollar and the Euro, the Brazilian real, the Mexican peso, the Chinese renminbi, the British pound sterling and the Indian rupee. Trade policies and tariffs, including those affecting the Company's key markets, could further impact exchange rates and economic stability, influencing both the cost of raw materials and the competitiveness of the Company's products in international markets. The Company's non-U.S. subsidiaries accounted for approximately 63% to 67% of consolidated net sales during the past three years.

Risk Factors

A major risk is that demand for the Company's products and services is largely derived from the demand for customers' products, subjecting the Company to uncertainties related to downturns in customers' businesses and unanticipated production slowdowns. The specialty chemical industry is highly competitive, and competitors may offer more favorable pricing or better adapt to changes in raw material costs, potentially resulting in reduced profitability or loss of market share. The Company's global operations expose it to political and economic risks, including trade protection measures, tariffs, and currency fluctuations; sales by non-U.S. subsidiaries accounted for approximately 63% to 67% of consolidated net sales during the past three years. The Company relies on approximately 3,000 raw materials, many derived from crude oil and natural gas, and significant fluctuations in the price of crude oil can have a material impact on costs. The Company recognized an $88.8 million non-cash impairment charge in the second quarter of 2025 related to the EMEA reporting unit, highlighting the risk of further impairment if projected financial performance or market conditions deteriorate.

Management Priorities

Management's message emphasizes that the Company performed well in 2025, making progress on its long-term financial and strategic initiatives. 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. The Company's strategic priorities include executing on its global cost and optimization program, with additional actions approved in 2025 expected to generate approximately an additional $40 million of annualized cost savings, and integrating recent acquisitions such as Dipsol, Natech, and CSI to expand its advanced solutions businesses and strengthen its market positions.

View Source Annual Report on SEC.gov ↗

References

  1. [1] Item 1, Business — Major Product Lines
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  12. [12] Item 1, Business — Major Product Lines
  13. [13] Item 8, Note 2 — Business Combinations
  14. [14] Item 8, Note 2 — Business Combinations
  15. [15] Item 8, Note 2 — Business Combinations
  16. [16] Item 8, Note 2 — Business Combinations
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  20. [20] Item 8, Note 2 — Business Combinations
  21. [21] Item 8, Note 2 — Business Combinations
  22. [22] Item 5, Market for Registrant's Common Equity — Issuer Purchases of Equity Securities
  23. [23] Item 8, Note 8 — Equity
  24. [24] Item 5, Market for Registrant's Common Equity — Related Stockholder Matters
  25. [25] Item 5, Market for Registrant's Common Equity — Related Stockholder Matters
  26. [26] Item 7, MD&A — Executive Summary
  27. [27] Item 7, MD&A — Executive Summary
  28. [28] Item 7, MD&A — Executive Summary
  29. [29] Item 7, MD&A — Executive Summary
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  40. [40] Item 7, MD&A — Executive Summary
  41. [41] Item 7, MD&A — Liquidity and Capital Resources
  42. [42] Item 7, MD&A — Non-GAAP Measures
  43. [43] Item 7, MD&A — Non-GAAP Measures
  44. [44] Item 7, MD&A — Consolidated Operations Review
  45. [45] Item 7, MD&A — Consolidated Operations Review
  46. [46] Item 7, MD&A — Consolidated Operations Review
  47. [47] Item 7, MD&A — Consolidated Operations Review
  48. [48] Item 7, MD&A — Liquidity and Capital Resources
  49. [49] Item 7, MD&A — Liquidity and Capital Resources
  50. [50] Item 7, MD&A — Liquidity and Capital Resources
  51. [51] Item 7, MD&A — Liquidity and Capital Resources
  52. [52] Item 7, MD&A — Liquidity and Capital Resources
  53. [53] Item 8, Note 7 — Restructuring and Related Activities
  54. [54] Item 1, Business — Research and Development
  55. [55] Item 1, Business — Research and Development
  56. [56] Item 1, Business — Research and Development
  57. [57] Item 8, Consolidated Statements of Cash Flows
  58. [58] Item 8, Consolidated Statements of Cash Flows
  59. [59] Item 8, Note 8 — Equity
  60. [60] Item 5, Market for Registrant's Common Equity — Related Stockholder Matters
  61. [61] Item 5, Market for Registrant's Common Equity — Related Stockholder Matters
  62. [62] Item 1, Business — Raw Materials
  63. [63] Item 7, MD&A — Executive Summary
  64. [64] Item 7, MD&A — Liquidity and Capital Resources
  65. [65] Item 8, Consolidated Statements of Operations
  66. [66] Item 8, Consolidated Statements of Operations
  67. [67] Item 8, Consolidated Statements of Operations
  68. [68] Item 8, Consolidated Statements of Operations
  69. [69] Item 8, Consolidated Statements of Operations
  70. [70] Item 8, Consolidated Statements of Operations
  71. [71] Item 8, Consolidated Statements of Operations
  72. [72] Item 8, Consolidated Statements of Operations
  73. [73] Item 8, Consolidated Statements of Operations
  74. [74] Item 8, Consolidated Statements of Operations
  75. [75] Item 7, MD&A — Consolidated Operations Review
  76. [76] Item 7, MD&A — Consolidated Operations Review
  77. [77] Item 7, MD&A — Non-GAAP Measures
  78. [78] Item 7, MD&A — Non-GAAP Measures
  79. [79] Item 8, Consolidated Balance Sheets
  80. [80] Item 8, Consolidated Balance Sheets
  81. [81] Item 8, Consolidated Balance Sheets
  82. [82] Item 8, Consolidated Balance Sheets
  83. [83] Item 8, Consolidated Balance Sheets
  84. [84] Item 8, Consolidated Balance Sheets
  85. [85] Item 7, MD&A — Executive Summary
  86. [86] Item 8, Note 4 — Business Segments
  87. [87] Item 8, Note 4 — Business Segments
  88. [88] Item 8, Note 4 — Business Segments

Analysis on 9/27/2026