QUAKER HOUGHTON ANNOUNCES SECOND QUARTER 2025 RESULTS
Q2'25 net sales of $483.4 million, an increase of 4% Y/Y
Organic sales volumes increased 2% Y/Y driven by new business wins of approximately 5%
Q2'25 net loss of $66.6 million and loss per diluted share of $3.78, which includes an $88.8 million impairment charge
Q2'25 non-GAAP net income of $30.0 million and non-GAAP earnings per diluted share of $1.71
Delivered adjusted EBITDA and adjusted EBITDA margins of $75.5 million and 15.6%, respectively, in Q2'25
Share repurchases totaled $32.7 million in Q2'25 and the Company raised its quarterly cash dividend by approximately 5%
CONSHOHOCKEN, Pa., July 31, 2025 /PRNewswire/ -- Quaker Houghton ("the Company") (NYSE:KWR), the global leader in industrial process fluids, announced its second quarter 2025 results today.
Three Months EndedJune 30,
Six Months EndedJune 30,
($ in thousands, except per share data)
2025
2024
2025
2024
Net sales
$ 483,400
$ 463,567
$ 926,314
$ 933,326
Net (loss) income attributable to Quaker Chemical Corporation
(66,580)
34,885
(53,658)
70,112
Net (loss) income attributable to Quaker Chemical Corporation common shareholders, diluted
(3.78)
1.94
(3.04)
3.89
Non-GAAP net income *
30,000
38,232
58,029
75,905
Non-GAAP Earnings per diluted share *
1.71
2.13
3.29
4.22
Adjusted EBITDA *
75,479
84,291
144,527
167,573
* Refer to the Non-GAAP Measures and Reconciliations section below for additional information
Second Quarter 2025 Consolidated ResultsNet sales in the second quarter of 2025 were $483.4 million, an increase of 4% compared to $463.6 million in the second quarter of 2024. This increase was primarily driven by an increase in sales volumes of 2% and a contribution from acquisitions of approximately 6%, partially offset by a decline in selling price and product mix of approximately 4%. The increase in sales volumes compared to the prior year was primarily a result of continued growth in the Asia/Pacific segment and approximately 5% growth from new business wins, which more than offset a continuation of soft end market conditions including the impact from uncertainty caused by tariffs, particularly in the Americas and EMEA segments. The decrease in selling price and product mix was primarily attributable to the impact of the mix of products, services and geographies and the impact of our index-based customer contracts. Organic sales volumes increased 4% compared to the first quarter of 2025.
The Company reported a net loss in the second quarter of 2025 of $66.6 million, or $3.78 per diluted share, compared to net income of $34.9 million, or $1.94 per diluted share, in the second quarter of 2024. The Company's reported net loss primarily reflects an $88.8 million non-cash goodwill impairment charge associated with the Company's EMEA reportable segment. Excluding non-recurring and non-core items in each period, the Company's non-GAAP net income and non-GAAP earnings per diluted share were $30.0 million and $1.71 respectively in the second quarter of 2025 compared to $38.2 million and $2.13 respectively in the second quarter of the prior year. The Company generated adjusted EBITDA of $75.5 million in the second quarter of 2025, a decrease of approximately 10% compared to $84.3 million in the second quarter of 2024, as the increase in net sales was offset by lower operating margins. See the Non-GAAP Measures and Reconciliations section below for additional information.
Joe Berquist, Chief Executive Officer and President, commented, "Quaker Houghton executed well in the second quarter of 2025. We generated 2% year-over-year organic volume growth in the quarter, delivering above market growth due to strong new business wins across all segments. The momentum in our Asia/Pacific segment continued, generating 8% organic volume growth compared to the prior year. I am proud of how the team adapted to the challenging macroeconomic environment, particularly in the U.S. and Europe, while maintaining a clear focus on our customers. We also made progress in the quarter advancing our enterprise strategy while effectively managing costs.
"Economic conditions are likely to remain tepid in the second half of 2025. While this challenging environment of uncertainty persists, we have meaningful opportunities across our portfolio to gain profitable new business. We have also initiated actions that we expect will deliver approximately $20 million of additional run-rate cost savings by the end of 2026. We expect to achieve a stronger performance from our business in the second half, positioning us to deliver full year 2025 revenue and earnings in the range of 2024. Our strong balance sheet and consistent cash flow generation will enable us to continue to execute the capital allocation levers at our disposal and create value for shareholders."
Second Quarter 2025 Segment ResultsThe Company's second quarter and the first six months of 2025 operating performance for each of its three reportable segments: (i) Americas; (ii) EMEA; and (iii) Asia/Pacific, is further described below.
Three Months EndedJune 30,
Six Months EndedJune 30,
2025
2024
2025
2024
Net Sales *
Americas
$ 221,062
$ 223,517
$ 434,773
$ 453,271
EMEA
139,923
138,001
269,201
276,423
Asia/Pacific
122,415
102,049
222,340
203,632
Total net sales
$ 483,400
$ 463,567
$ 926,314
$ 933,326
Segment operating earnings *
Americas
$ 58,976
$ 64,137
$ 117,438
$ 130,906
EMEA
24,995
26,652
48,388
56,223
Asia/Pacific
28,715
31,000
54,645
61,377
Total segment operating earnings
$ 112,686
$ 121,789
$ 220,471
$ 248,506
* Refer to the Segment Measures and Reconciliations section below for additional information
The following table summarizes the sales variances by reportable segment and consolidated operations in the second quarter of 2025 compared to the second quarter of 2024:
Sales volumes
Selling price & product mix
Foreign currency
Acquisition & other
Total
Americas
(2) %
1 %
(2) %
2 %
(1) %
EMEA
1 %
(7) %
4 %
3 %
1 %
Asia/Pacific
8 %
(5) %
— %
17 %
20 %
Consolidated
2 %
(4) %
— %
6 %
4 %
Net sales in the Asia/Pacific segment increased 20% in the second quarter of 2025 compared to the same period in 2024, as an increase in sales volumes and a further contribution in sales from acquisitions, primarily Dipsol and Sutai, was partially offset by a decrease in selling price and product mix. Net sales in the EMEA segment increased approximately 1% in the second quarter of 2025 compared to the same period in 2024, due to an increase in sales volumes, a further increase in sales from acquisitions, and a favorable impact of foreign currency translation, partially offset by a decline in selling price and product mix. Net sales in the Americas segment declined approximately 1% in the second quarter of 2025 compared to the same period in 2024, primarily due to a decrease in sales volumes and an unfavorable impact of foreign currency translation, partially offset by a modest increase in selling price and product mix and a contribution in sales from acquisitions.
Underlying end market activity in the second quarter of 2025 remained below prior year levels, amplified by uncertainty related to tariffs, especially in the Americas and EMEA segments, while end market activity in Asia/Pacific improved. New business wins were strong across all segments. The decline in selling price and product mix in the second quarter of 2025 compared to the same period in 2024 reflects changes in the mix of products, services and geographies, and the impact of our index-based customer contracts.
Consolidated net sales increased approximately 9% compared to the first quarter of 2025, driven by an increase in organic sales volumes, a further contribution from acquisitions, and a favorable impact from foreign currency translation, partially offset by a decline in selling price and product mix. Net sales and sales volumes increased in all segments compared to the first quarter of 2025 driven by new business wins, despite a continuation of soft underlying end market activity, whereas selling price and product mix declined. Acquisitions and foreign currency translation was favorable to sales across all segments in the second quarter of 2025 compared to the first quarter of 2025.
Operating earnings decreased in all segments in the second quarter of 2025 compared to the prior year, primarily due to lower segment operating margins as a result of higher raw material and manufacturing costs and SG&A expenses. Segment operating earnings increased in all segments in the second quarter of 2025 compared to the first quarter of 2025, primarily driven by an increase in net sales.
Cash Flow and Liquidity Highlights
Net cash provided by operating activities was $38.5 million for the six months ended June 30, 2025, compared to $73.5 million for the same period in 2024. The Company's operating cash flow reflects lower operating performance and higher cash outflows from restructuring activities, partially offset by a modest improvement in working capital management.
As of June 30, 2025, the Company's total gross debt was $936.7 million and its cash and cash equivalents was $201.9 million, which resulted in net debt of approximately $734.8 million. The Company's net debt divided by its trailing twelve months adjusted EBITDA was approximately 2.6x, primarily reflecting the acquisition of Dipsol, which was completed in April 2025 and was funded with borrowings under the Company's existing credit facility. In the second quarter of 2025, the Company repurchased 296,113 shares for $32.7 million.
Non-GAAP Measures and Reconciliations
The information in this press release 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, 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. The Company also presents adjusted EBITDA, which is calculated as EBITDA plus or minus certain items that management believes are not indicative of future operating performance or considered core to the Company's operations. In addition, the Company presents non-GAAP operating income, which is calculated as operating income plus or minus certain items that management believes are not indicative of future operating performance or considered core to the Company's operations. Additionally, the Company presents non-GAAP gross profit, which is calculated as gross profit plus or minus certain items that management believes are not indicative of future operating performance or considered core to the Company's operations. In addition, the Company presents non-GAAP Adjusted EBITDA margin, non-GAAP operating margin, and non-GAAP gross margin, which are calculated as the percentage of adjusted EBITDA, non-GAAP operating income, and non-GAAP gross profit to consolidated net sales, respectively. The Company believes these non-GAAP measures provide transparent and useful information and are widely used by analysts, investors, and competitors in our industry as well as by management in assessing the operating performance of the Company on a consistent basis.
Additionally, the Company presents non-GAAP net income and non-GAAP earnings per diluted share as additional performance measures. Non-GAAP net income is calculated as adjusted EBITDA, defined above, less depreciation and amortization, interest expense, and taxes on income before equity in net income of associated companies, in each case adjusted, as applicable, for any depreciation, amortization, interest or tax impacts resulting from the non-core items identified in the reconciliation of net income attributable to the Company to adjusted EBITDA. Non-GAAP earnings per diluted share is calculated as non-GAAP net income per diluted share as accounted for under the "two-class share method." The Company believes that non-GAAP net income and non-GAAP earnings per diluted share provide transparent and useful information and are widely used by analysts, investors, and competitors in our industry as well as by management in assessing the performance of the Company on a consistent basis.
As it relates to future projections for the Company as well as other forward-looking information contained in this press release, the Company has not provided guidance for comparable GAAP measures or a quantitative reconciliation of forward-looking non-GAAP financial measures to the most directly comparable U.S. GAAP measure because it is unable to determine with reasonable certainty the ultimate outcome of certain significant items necessary to calculate such measures without unreasonable effort. These items include, but are not limited to, certain non-recurring or non-core items the Company may record that could materially impact net income. These items are uncertain, depend on various factors, and could have a material impact on the U.S. GAAP reported results for the guidance period.
The Company's reference to trailing twelve months adjusted EBITDA within this press release refers to the twelve month period ended June 30, 2025 adjusted EBITDA of $287.8 million, which consists of (i) the six months ended June 30, 2025 adjusted EBITDA of $144.5 million, as presented in the non-GAAP reconciliations below, and (ii) the twelve months ended December 31, 2024 adjusted EBITDA of $310.9 million, as presented in the non-GAAP reconciliations included in the Company's fourth quarter and full year 2024 results press release dated February 24, 2025, less (iii) the six months ended June 30, 2024 adjusted EBITDA of $167.6 million, as presented in the non-GAAP reconciliations below.
Certain of the prior period non-GAAP financial measures presented in the following tables have been adjusted to conform with current period presentation. 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 EndedJune 30,
Six Months EndedJune 30,
2025
2024
2025
2024
Gross profit
$ 171,723
$ 175,718
$ 332,983
$ 357,281
Acquisition-related step-up inventory amortization
6,022
—
6,022
—
Gain on inventory and other adjustments
(3,604)
—
(3,604)
—
Non-GAAP gross profit
$ 174,141
$ 175,718
$ 335,401
$ 357,281
Non-GAAP profit margin (%)
36.0 %
37.9 %
36.2 %
38.3 %
Non-GAAP Operating Income and Margin Reconciliations
Three Months EndedJune 30,
Six Months EndedJune 30,
2025
2024
2025
2024
Operating (loss) income
$ (52,510)
$ 58,449
$ (24,886)
$ 113,975
Acquisition-related step-up inventory amortization
