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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2024
OR
oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to             
Commission file number 001-12019
QUAKER CHEMICAL CORPORATION
(Exact name of registrant as specified in its charter)
Pennsylvania23-0993790
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
901 E. Hector Street,
Conshohocken, Pennsylvania
19428 – 2380
(Address of principal executive offices)(Zip Code)
Registrant’s telephone number, including area code: 610-832-4000
Not Applicable
Former name, former address and former fiscal year, if changed since last report.
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $1 par valueKWR
New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes    x     No    o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes   x     No    o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerxAccelerated filero
Non-accelerated fileroSmaller reporting companyo
Emerging growth companyo
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  o   No  x
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Number of Shares of Common Stock Outstanding on July 31, 2024
17,912,155

Quaker Chemical Corporation
Table of Contents
Page
Condensed Consolidated Balance Sheets as of June 30, 2024 and December 31, 2023
Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2024 and June 30, 2023
Item 5.
1
PART I
FINANCIAL INFORMATION
Item 1.    Financial Statements (Unaudited).
Quaker Chemical Corporation
Condensed Consolidated Statements of Operations
(Unaudited; Dollars in thousands, except per share data)
Three Months Ended
June 30,		Six Months Ended
June 30,
2024202320242023
Net sales$463,567 $495,444 $933,326 $995,592 
Cost of goods sold (excluding amortization expense - See Note 13)287,849 317,753 576,045 644,451 
Gross profit175,718 177,691 357,281 351,141 
Selling, general and administrative expenses116,949 119,853 241,129 239,402 
Restructuring and related charges, net320 1,043 2,177 5,015 
Operating income58,449 56,795 113,975 106,724 
Other income (expense), net422 (3,606)1,502 (5,845)
Interest expense, net(10,754)(12,721)(21,578)(25,963)
Income before taxes and equity in net income of associated companies48,117 40,468 93,899 74,916 
Taxes on income before equity in net income of associated companies15,778 13,830 28,286 23,363 
Income before equity in net income of associated companies32,339 26,638 65,613 51,553 
Equity in net income of associated companies2,571 2,755 4,555 7,381 
Net income34,910 29,393 70,168 58,934 
Less: Net income attributable to noncontrolling interest25 47 56 54 
Net income attributable to Quaker Chemical Corporation$34,885 $29,346 $70,112 $58,880 
Per share data:
Net income attributable to Quaker Chemical Corporation common shareholders – basic$1.94 $1.63 $3.90 $3.28 
Net income attributable to Quaker Chemical Corporation common shareholders – diluted$1.94 $1.63 $3.89 $3.27 
Dividends declared$0.455 $0.435 $0.910 $0.870 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
2
Quaker Chemical Corporation
Condensed Consolidated Statements of Comprehensive Income
(Unaudited; Dollars in thousands)
Three Months Ended
June 30,		Six Months Ended
June 30,
2024202320242023
Net income$34,910 $29,393 $70,168 $58,934 
Other comprehensive (loss) income, net of tax
Currency translation adjustments(18,840)(13,080)(44,229)1,388 
Defined benefit retirement plans125 697 479 571 
Current period change in fair value of derivatives(15)4,173 2,330 4,563 
Unrealized (loss) gain on available-for-sale securities(44)1,241 1 1,575 
Other comprehensive (loss) income(18,774)(6,969)(41,419)8,097 
Comprehensive income16,136 22,424 28,749 67,031 
Less: Comprehensive (income) loss attributable to noncontrolling interest(26)(9)16 (19)
Comprehensive income attributable to Quaker Chemical Corporation$16,110 $22,415 $28,765 $67,012 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
3
Quaker Chemical Corporation
Condensed Consolidated Balance Sheets
(Unaudited; Dollars in thousands, except par value)
June 30,
2024		December 31,
2023
ASSETS
Current assets
Cash and cash equivalents$188,568$194,527
Accounts receivable, net423,906444,950
Inventories
  Raw materials and supplies116,026119,047
  Work-in-process and finished goods123,115114,810
Prepaid expenses and other current assets67,48554,555
Total current assets919,100927,889
Property, plant and equipment, at cost447,808453,419
  Less: Accumulated depreciation(246,985)(245,608)
    Property, plant and equipment, net200,823207,811
Right-of-use lease assets36,69338,614
Goodwill517,582512,518
Other intangible assets, net866,167896,721
Investments in associated companies96,090101,151
Deferred tax assets12,90310,737
Other non-current assets22,83418,770
Total assets$2,672,192$2,714,211
LIABILITIES AND EQUITY
Current liabilities
Short-term borrowings and current portion of long-term debt$32,448$23,444
Accounts payable185,351184,813
Dividends payable8,1638,186
Accrued compensation31,59555,194
Accrued restructuring1,0483,350
Accrued pension and postretirement benefits2,1912,208
Other accrued liabilities89,28190,315
Total current liabilities350,077367,510
Long-term debt703,655730,623
Long-term lease liabilities21,67122,937
Deferred tax liabilities147,100146,957
Non-current accrued pension and postretirement benefits28,10929,457
Other non-current liabilities25,97431,805
Total liabilities1,276,5861,329,289
Commitments and contingencies (Note 18)
Equity
Common stock $1 par value; authorized 30,000,000 shares; issued and outstanding
June 30, 2024 – 17,940,532 shares; December 31, 2023 – 17,991,988 shares
17,94117,992
Capital in excess of par value938,436940,101
Retained earnings604,404550,641
Accumulated other comprehensive loss(165,762)(124,415)
Total Quaker shareholders’ equity1,395,0191,384,319
Noncontrolling interest587603
Total equity1,395,6061,384,922
Total liabilities and equity$2,672,192$2,714,211
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4
Quaker Chemical Corporation
Condensed Consolidated Statements of Cash Flows
(Unaudited; Dollars in thousands)
Six Months Ended
June 30,
20242023
Cash flows from operating activities
Net income$70,168 $58,934 
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of debt issuance costs706 706 
Depreciation and amortization41,984 40,824 
Equity in undistributed earnings of associated companies, net of dividends(4,221)(4,207)
Deferred compensation, deferred taxes and other, net(647)154 
Share-based compensation8,128 7,414 
Restructuring and related charges, net2,177 5,015 
Pension and other postretirement benefits(994)(308)
(Decrease) increase in cash from changes in current assets and current liabilities, net of acquisitions:
Accounts receivable10,483 22,017 
Inventories(9,141)11,750 
Prepaid expenses and other current assets(15,646)(8,925)
Accrued restructuring(4,442)(5,410)
Accounts payable and accrued liabilities(25,021)(11,912)
Net cash provided by operating activities73,534 116,052 
Cash flows from investing activities
Investments in property, plant and equipment(11,124)(17,040)
Payments related to acquisitions, net of cash acquired(24,899)— 
Proceeds from disposition of assets2,798 — 
Net cash used in investing activities(33,225)(17,040)
Cash flows from financing activities
Payments of long-term debt(34,169)(9,439)
Borrowings (payments) on revolving credit facilities, net20,533 (62,778)
Payments on other debt, net(37)(456)
Dividends paid(16,372)(15,631)
Shares purchased under share repurchase programs(7,760)— 
Other stock related activity(1,492)(712)
Net cash used in financing activities(39,297)(89,016)
Effect of foreign exchange rate changes on cash(6,971)(1,554)
Net (decrease) increase in cash and cash equivalents(5,959)8,442 
Cash and cash equivalents at the beginning of the period194,527 180,963 
Cash and cash equivalents at the end of the period$188,568 $189,405 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
5
Quaker Chemical Corporation
Condensed Consolidated Statements of Changes in Equity
(Unaudited; Dollars in thousands, except per share amounts)
Common
Stock		Capital in
Excess of
Par Value		Retained
Earnings		Accumulated
Other
Comprehensive
Loss		Noncontrolling
Interest		Total
Balance as of December 31, 2022$17,950 $928,288 $469,920 $(138,240)$667 $1,278,585 
Net income— — 29,534 — 7 29,541 
Amounts reported in other comprehensive income— — — 15,063 3 15,066 
Dividends ($0.435 per share)
— — (7,822)— — (7,822)
Share issuance and equity-based compensation plans32 1,386 — — — 1,418 
Balance as of March 31, 2023$17,982 $929,674 $491,632 $(123,177)$677 $1,316,788 
Net income— — 29,346 — 47 29,393 
Amounts reported in other comprehensive loss— — — (6,931)(38)(6,969)
Dividends ($0.435 per share)
— — (7,830)— — (7,830)
Share issuance and equity-based compensation plans17 5,267 — — — 5,284 
Balance as of June 30, 2023$17,999 $934,941 $513,148 $(130,108)$686 $1,336,666 
Balance as of December 31, 2023$17,992 $940,101 $550,641 $(124,415)$603 $1,384,922 
Net income— — 35,227 — 31 35,258 
Amounts reported in other comprehensive loss— — — (22,572)(73)(22,645)
Dividends ($0.455 per share)
— — (8,186)— — (8,186)
Share issuance and equity-based compensation plans(2)2,445 — — — 2,443 
Balance as of March 31, 2024$17,990 $942,546 $577,682 $(146,987)$561 $1,391,792 
Net income— — 34,885 — 25 34,910 
Amounts reported in other comprehensive loss— — — (18,775)1 (18,774)
Dividends ($0.455 per share)
— — (8,163)— — (8,163)
Shares purchased under share repurchase program    (49)(8,306)— — — (8,355)
Share issuance and equity-based compensation plans— 4,196 — — — 4,196 
Balance as of June 30, 2024$17,941 $938,436 $604,404 $(165,762)$587 $1,395,606 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
6
Quaker Chemical Corporation
Notes to Condensed Consolidated Financial Statements
(Unaudited; Dollars in thousands, except per share amounts, unless otherwise stated)
Note 1 – Basis of Presentation and Description of Business
As used in these Notes to Condensed Consolidated Financial Statements of this Quarterly Report on Form 10-Q for the period ended June 30, 2024 (the “Report”), the terms “Quaker Houghton,” the “Company,” “we,” and “our” refer to Quaker Chemical Corporation (doing business as Quaker Houghton), its subsidiaries, and associated companies, unless the context otherwise requires.
Basis of Presentation
The condensed consolidated financial statements included herein are unaudited and have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”) for interim financial reporting and the United States Securities and Exchange Commission (“SEC”) regulations. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, the financial statements reflect all adjustments, which are of a normal recurring nature, necessary for a fair statement of the financial position, results of operations, and cash flows for the interim periods. The results for the six months ended June 30, 2024 are not necessarily indicative of the results to be expected for the full year. These financial statements should be read in conjunction with the Company’s Annual Report filed on Form 10-K for the year ended December 31, 2023 (as amended, the “2023 Form 10-K”).
Description of Business
The Company was organized in 1918 and incorporated as a Pennsylvania business corporation in 1930. Quaker Houghton is the global leader in industrial process fluids. With a presence around the world, including operations in over 25 countries, the Company’s customers include thousands of the world’s most advanced and specialized steel, aluminum, automotive, aerospace, offshore, container, mining, and metalworking companies. Quaker Houghton develops, produces, and markets a broad range of formulated chemical specialty products and offers chemical management services, which the Company refers to as FluidcareTM, for various heavy industrial and manufacturing applications sold in its three reportable segments: (i) Americas; (ii) Europe, Middle East and Africa (“EMEA”); and (iii) Asia/Pacific.
Hyper-inflationary economies
Argentina’s and Türkiye’s economies were considered hyper-inflationary under U.S. GAAP effective July 1, 2018 and April 1, 2022, respectively. As of, and for the three and six months ended June 30, 2024, the Company's Argentine and Turkish subsidiaries together represented 1% and 2% of the Company’s consolidated total assets and net sales, respectively. During the three and six months ended June 30, 2024, the Company recorded $0.6 million of remeasurement losses and $0.3 million of net remeasurement gains associated with the applicable currency conversions, respectively. Comparatively, during the three and six months ended June 30, 2023, the Company recorded $1.1 million and $1.6 million of remeasurement losses associated with the applicable currency conversions, respectively. These gains and losses were recorded within Other income (expense), net, in the Company’s Condensed Consolidated Statements of Operations.
Note 2 – Business Acquisitions
Subsequent to the date of these financial statements, in July 2024, the Company acquired Sutai Group (“Sutai”), for approximately 2.3 billion Japanese yen, or approximately $14.6 million, subject to routine and customary post-closing adjustments and earn-out provisions. Sutai is based in Japan and provides impregnation treatment products and services to the automotive industry and a variety of other industries. Sutai will be reported as part of the Asia/Pacific reportable segment. This acquisition strengthens Quaker Houghton’s technology portfolio, enabling the Company to better support and optimize production processes for customers across the Japanese, Asia Pacific and global markets.
7
Quaker Chemical Corporation
Notes to Condensed Consolidated Financial Statements - Continued
(Unaudited; Dollars in thousands, except per share amounts, unless otherwise stated)
During February 2024, the Company acquired I.K.V. Tribologie IKVT and its subsidiaries (“IKV”) for 32.6 million EUR, or $35.2 million, including an initial cash payment of 27.6 million EUR, or $29.7 million, subject to routine and customary post-closing adjustments related to working capital and net indebtedness levels as well as earn-out provisions related to the finalization of 2023 earnings. Assets acquired included approximately $4.8 million of cash and cash equivalents. IKV, which is part of the Company’s EMEA segment, specializes in high-performance lubricants and greases, including original equipment manufacturer first-fill greases that are primarily used in the automotive, aerospace, electronics, and other industrial markets. The acquisition of IKV strengthens the Company’s position in first-fill greases. The Company preliminarily allocated $15.0 million of the purchase price to intangible assets, comprised of approximately $11.1 million of customer relationships to be amortized over 16 years; $3.2 million of product technologies to be amortized over 14 years; and $0.7 million of trademarks to be amortized over 5 years. In addition, the Company recognized $16.4 million of goodwill in the EMEA segment, none of which is deductible for tax purposes. The goodwill recognized on the transaction is primarily attributable to expected cost and growth synergies. Subsequent to the date of these financial statements, the 2023 earnings were finalized and the Company made a payment of 5.0 million EUR, or $5.5 million, in connection with the post-closing adjustments and earn-out provision. As of June 30, 2024, the allocation of the purchase price has not been finalized.
The results of operations of IKV subsequent to the acquisition date are included in the unaudited Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2024.
Note 3 – Recently Issued Accounting Standards
Recently Issued Accounting Standards Not Yet Adopted
The Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures in November 2023. This ASU expands on reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses, defined as those expenses that are regularly provided to the chief operating decision maker and included in the reported measure of segment profit or loss. ASU 2023-07 is effective for annual reports for fiscal years beginning after December 15, 2023, with early adoption permitted. The Company is currently evaluating the disclosure requirements of this standard and the impact on its Consolidated Financial Statements.
The FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures in December 2023. This ASU requires public business entities to disclose additional information in specified categories with respect to the reconciliation of the effective tax rate to the statutory rate (the “rate reconciliation”) for federal, state, and foreign income taxes. It also requires greater detail about individual reconciling items in the rate reconciliation to the extent the impact of those items exceeds a specified threshold. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024. The Company is currently evaluating the disclosure requirements of this standard and the impact on its Consolidated Financial Statements.
Note 4 – Business Segments
The Company’s operating segments, which are consistent with its reportable segments, reflect the structure of the Company’s internal organization, the method by which the Company’s resources are allocated, and the manner by which the chief operating decision maker assesses the Company’s performance. The Company has three reportable segments: (i) Americas; (ii) EMEA; and (iii) Asia/Pacific.
Segment operating earnings for each of the Company’s reportable segments are comprised of the segment’s net sales less directly related Cost of goods sold (“COGS”), and Selling, general and administrative expenses (“SG&A”). Operating expenses not directly attributable to the net sales of each respective segment, such as certain corporate and administrative costs and Restructuring and related charges, net, are not included in segment operating earnings. Other items not specifically identified with the Company’s reportable segments include Interest expense, net and Other income (expense), net.
8
Quaker Chemical Corporation
Notes to Condensed Consolidated Financial Statements - Continued
(Unaudited; Dollars in thousands, except per share amounts, unless otherwise stated)
The following table presents information about the performance of the Company’s reportable segments:
Three Months Ended
June 30,		Six Months Ended
June 30,
Net sales2024202320242023
Americas$223,517 $253,219 $453,271 $504,632 
EMEA138,001 143,533 276,423 295,982 
Asia/Pacific102,049 98,692 203,632 194,978 
Total net sales$463,567 $495,444 $933,326 $995,592 
Segment operating earnings
Americas$64,137 $69,007 $130,906 $135,132 
EMEA26,652 25,583 56,223 53,154 
Asia/Pacific31,000 27,989 61,377 55,641 
Total segment operating earnings121,789 122,579 248,506 243,927 
Restructuring and related charges, net(320)(1,043)(2,177)(5,015)
Non-operating and administrative expenses(47,584)(49,950)(101,760)(101,721)
Depreciation of corporate assets and amortization(15,436)(14,791)(30,594)(30,467)
Operating income58,449 56,795 113,975 106,724 
Other income (expense), net422 (3,606)1,502 (5,845)
Interest expense, net(10,754)(12,721)(21,578)(25,963)
Income before taxes and equity in net income of associated companies$48,117 $40,468 $93,899 $74,916 
The following table summarizes inter-segment revenues. All inter-segment transactions have been eliminated from each reportable segment’s net sales and earnings for all periods presented in the above tables.
Three Months Ended
June 30,		Six Months Ended
June 30,
Inter-segment revenues2024202320242023
Americas$2,385 $2,179 $4,898 $5,006 
EMEA5,479 7,463 12,539 13,556 
Asia/Pacific1,945 476 3,076 536 
Note 5 – Net Sales and Revenue Recognition
Arrangements Resulting in Net Reporting
As part of the Company’s FluidcareTM business, certain third-party product sales to customers are managed by the Company. The Company transferred third-party products under arrangements recognized on a net reporting basis of $19.2 million and $39.0 million for the three and six months ended June 30, 2024, respectively, and $21.0 million and $41.7 million for the three and six months ended June 30, 2023, respectively.
Customer Concentration
A significant portion of the Company’s revenues are realized from the sale of process fluids and services to manufacturers of steel, aluminum, automobiles, aerospace, industrial and agricultural equipment, and durable goods. As previously disclosed in the Company’s 2023 Form 10-K, the Company’s five largest customers combined (each composed of multiple subsidiaries or divisions with semiautonomous purchasing authority) accounted for approximately 12% of consolidated net sales for 2023, with its largest customer accounting for approximately 3% of consolidated net sales.
Contract Assets and Liabilities
The Company had no material contract assets recorded on its Condensed Consolidated Balance Sheets as of June 30, 2024 or December 31, 2023.
9
Quaker Chemical Corporation
Notes to Condensed Consolidated Financial Statements - Continued
(Unaudited; Dollars in thousands, except per share amounts, unless otherwise stated)
The Company had approximately $3.2 million and $4.5 million of deferred revenue as of June 30, 2024 and December 31, 2023, respectively. For the six months ended June 30, 2024, the Company satisfied materially all of the associated performance obligations and recognized into revenue materially all advance payments received and recorded as of December 31, 2023.
Disaggregated Revenue
The Company sells its various industrial process fluids, its specialty chemicals and its technical expertise as a global product portfolio. The Company generally manages and evaluates its performance by reportable segment first, and then by customer industries. Net sales of each of the Company’s major product lines are generally spread throughout all three of the Company’s geographic regions, and in most cases, are approximately proportionate to the level of total sales in each region.
The following tables disaggregate the Company’s net sales by segment and customer industry.
Three Months Ended June 30, 2024
Customer IndustriesAmericasEMEAAsia/PacificConsolidated
Total
Metals$63,753 $35,307 $50,150 $149,210 
Metalworking and other159,764 102,694 51,899 314,357 
$223,517 $138,001 $102,049 $463,567 
Six Months Ended June 30, 2024
Customer IndustriesAmericasEMEAAsia/PacificConsolidated
Total
Metals$129,779 $68,127 $101,061 $298,967 
Metalworking and other323,492 208,296 102,571 634,359 
$453,271 $276,423 $203,632 $933,326 
Three Months Ended June 30, 2023
Customer IndustriesAmericasEMEAAsia/PacificConsolidated
Total
Metals$68,743 $32,643 $48,129 $149,515 
Metalworking and other184,476 110,890 50,563 345,929 
$253,219 $143,533 $98,692 $495,444 
Six Months Ended June 30, 2023
Customer IndustriesAmericasEMEAAsia/PacificConsolidated
Total
Metals$136,877 $71,746 $94,789 $303,412 
Metalworking and other367,755 224,236 100,189 692,180 
$504,632 $295,982 $194,978 $995,592 
Note 6 - Leases
The Company has operating leases for certain facilities, vehicles, and machinery and equipment with remaining lease terms up to 11 years. Operating lease expense is recognized on a straight-line basis over the lease term. In addition, the Company has certain land use leases with remaining lease terms up to 91 years.
The Company had no material variable lease costs, sublease income, or finance leases for the three and six months ended June 30, 2024 and 2023. The components of the Company’s lease expense are as follows:
Three Months Ended
June 30,		Six Months Ended
June 30,
2024202320242023
Operating lease expense$3,727 $3,710 $7,470 $7,646 
Short-term lease expense193 183 392 394 
10
Quaker Chemical Corporation
Notes to Condensed Consolidated Financial Statements - Continued
(Unaudited; Dollars in thousands, except per share amounts, unless otherwise stated)
Supplemental cash flow information related to the Company’s leases is as follows:
Three Months Ended
June 30,		Six Months Ended
June 30,
2024202320242023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases$3,736 $3,773 $7,397 $7,630 
Non-cash lease liabilities activity:
Leased assets obtained in exchange for new operating lease liabilities2,130 823 5,364 3,656 
Supplemental balance sheet information related to the Company’s leases is as follows:
June 30,
2024		December 31,
2023
Right-of-use lease assets$36,693 $38,614 
Other current liabilities11,477 11,965 
Long-term lease liabilities21,671 22,937 
Total operating lease liabilities$33,148 $34,902 
Weighted average remaining lease term (years)4.95.1
Weighted average discount rate5.32 %4.91 %
Maturities of operating lease liabilities as of June 30, 2024 were as follows:
For the remainder of 2024$6,994 
For the year ended December 31, 202510,747 
For the year ended December 31, 20268,088 
For the year ended December 31, 20274,420 
For the year ended December 31, 20282,486 
For the year ended December 31, 2029 and beyond5,288 
  Total lease payments38,023 
    Less: imputed interest(4,875)
Present value of lease liabilities$33,148 
Note 7 – Restructuring and Related Activities
In 2022, the Company initiated a global cost and optimization program to improve its cost structure and drive a more profitable and productive organization. As of June 30, 2024, the program included restructuring and associated severance costs to reduce headcount by approximately 120 positions globally. These headcount reductions began in the fourth quarter of 2022 and are expected to be completed in 2024.
Employee separation benefits vary depending on local regulations within certain foreign countries and include severance and other benefits. The exact timing to complete, and final costs associated with, all actions will depend on a number of factors and are subject to change. Restructuring costs incurred during the three and six months ended June 30, 2024 and 2023 include employee severance and facility closure costs that are recorded in Restructuring and related charges, net in the Company’s Condensed Consolidated Statements of Operations.
11
Quaker Chemical Corporation
Notes to Condensed Consolidated Financial Statements - Continued
(Unaudited; Dollars in thousands, except per share amounts, unless otherwise stated)
Changes in the Company’s accruals for its restructuring program are as follows:
Accrued restructuring as of December 31, 2023$3,350
Restructuring and related charges, net2,177 
Cash payments(4,442)
Currency translation adjustments(37)
Accrued restructuring as of June 30, 2024$1,048
In connection with the plans for closure of certain manufacturing and non-manufacturing facilities, the Company has made available for sale certain facilities and property. As of June 30, 2024, the Company classified certain properties with aggregate book value of approximately $2.1 million as held-for-sale. These assets are recorded in Prepaid expenses and other current assets on the Company’s Condensed Consolidated Balance Sheets. The Company expects to complete the sale of these properties over the next 12 months. During the three and six months ended June 30, 2024, the Company completed the sale of certain facilities previously classified as held for sale for a net gain of $0.5 million, which is recorded in Other income (expenses), net in the Company’s Condensed Consolidated Statements of Operations.
Note 8 – Share-Based Compensation
The Company recognized the following share-based compensation expense in its Condensed Consolidated Statements of Operations:
Three Months Ended
June 30,		Six Months Ended
June 30,
2024202320242023
Stock options$39$203$214$634
Non-vested stock awards and restricted stock units2,5932,5925,1284,763
Director stock ownership plan30166026
Performance stock units1,5821,0762,7261,991
  Total share-based compensation expense$4,244$3,887$8,128$7,414
Stock Options
As of June 30, 2024, unrecognized compensation expense related to unvested stock options was $0.1 million, to be recognized over a weighted average remaining period of 0.8 years.
Restricted Stock Awards
During the six months ended June 30, 2024, the Company granted 872 non-vested restricted share awards under its long-term incentive plan (“LTIP”), which are subject to time-based vesting, generally over one to three years. As of June 30, 2024, unrecognized compensation expense related to non-vested restricted shares was $2.8 million, to be recognized over a weighted average remaining period of 1.2 years.
Restricted Stock Units
During the six months ended June 30, 2024, the Company granted 55,227 restricted stock units under its LTIP, which are subject to time-based vesting, generally over one to three years. The fair value of these grants is based on the closing price of the Company’s common stock on the date of grant. As of June 30, 2024, unrecognized compensation expense related to non-vested restricted stock units was $9.4 million, to be recognized over a weighted average remaining period of 1.7 years.
Performance Stock Units
As a component of its LTIP, the Company grants performance-based stock unit awards (“PSUs”). The number of shares that may ultimately be issued as settlement for each award may range from 0% up to 200% of the target award, subject to the achievement of the Company’s market-based total shareholder return (“TSR”) metric relative to the performance of a selected peer group, and separately the achievement of a performance-based return on invested capital (“ROIC”) measure. The service vesting period required for the PSUs is generally three years and the measurement period of the market-based and performance objectives is generally from January 1 of the year of grant through December 31 of the year prior to issuance of the shares.
12
Quaker Chemical Corporation
Notes to Condensed Consolidated Financial Statements - Continued
(Unaudited; Dollars in thousands, except per share amounts, unless otherwise stated)
As mentioned above, a portion of the Company’s PSU valuation is subject to the achievement of the Company’s TSR relative to the performance of a selected peer group. For PSUs granted prior to 2024, the Company’s peer group was the S&P Midcap 400 Materials group. For the 2024 annual LTIP grants, the Company made an election to change peer groups to the S&P 1500 Chemical group to measure the Company’s relative TSR.
Compensation expense for PSUs is measured based on the grant date fair value and is recognized on a straight-line vesting method basis over the applicable vesting period. During the six months ended June 30, 2024, the Company granted 20,205 PSUs with a ROIC condition at a grant date fair value of $200.16 per unit, which was based on the closing trading price of the Company’s common stock on the date of grant. PSUs granted with a relative TSR condition are valued using a Monte Carlo simulation on the date of grant. The grant-date fair value of the PSUs valued using a Monte Carlo simulation was $234.19 per unit, which incorporated the assumptions set forth in the table below:
2024
Grants
Number of PSUs granted20,078
Risk-free interest rate4.55%
Dividend yield0.91%
Expected term (years)3.0
As of June 30, 2024, there was approximately $12.0 million of total unrecognized compensation cost related to PSUs, which the Company expects to recognize over a weighted-average period of 2.3 years.
Note 9 – Pension and Other Postretirement Benefits
The components of net periodic benefit cost (income) are as follows:
Three Months Ended June 30,Six Months Ended June 30,
Pension BenefitsOther Postretirement BenefitsPension BenefitsOther Postretirement Benefits
20242023202420232024202320242023
Service cost$108$107$—$— $217$211$—$—
Interest cost2,3642,5111519 4,7384,9733138
Expected return on plan assets(2,020)(2,026)——(4,050)(4,023)——
Actuarial loss (gain) amortization127103(29)(30)255205(59)(60)
Prior service cost (income) amortization7—— (4)14—— (8)
Net periodic benefit cost (income)$586 $695$(14)$(15)$1,174 $1,366$(28)$(30)
Employer Contributions
During the six months ended June 30, 2024, $1.9 million of contributions have been made to the Company’s U.S. and foreign pension plans. Contributions to other postretirement benefit plans were not material. Taking into consideration current minimum cash contribution requirements, the Company currently expects to make full year cash contributions of approximately $5.7 million to its U.S. and foreign pension plans and approximately $0.2 million to its other postretirement benefit plans.
13
Quaker Chemical Corporation
Notes to Condensed Consolidated Financial Statements - Continued
(Unaudited; Dollars in thousands, except per share amounts, unless otherwise stated)
Note 10 – Other income (expense), net
The components of Other income (expense), net are as follows:
Three Months Ended
June 30,		Six Months Ended
June 30,
2024202320242023
Non-income tax refunds and other related credits$868$8883,023 1,248
Income from third party license fees170321$395$646
Gain on disposals of property, plant, equipment and other assets, net510— 917—
Foreign exchange losses, net(727)(4,225)(1,175)(7,551)
Pension and postretirement benefit costs, non-service components(464)(573)(929)(1,125)
Facility remediation recoveries, net— 187—1,014
Product liability claim— —(896)—
Other non-operating income (expense), net65(204)167(77)
  Total other income (expense), net$422$(3,606)$1,502 $(5,845)
Gain on disposals of property, plant, equipment and other assets, net includes the net gains recognized for the sale of certain facilities previously classified as held for sale during the three and six months ended June 30, 2024. See Note 7 of Notes to the Condensed Consolidated Financial Statements.
Facility remediation recoveries, net, during the three and six months ended June 30, 2023, reflect insurance recoveries of costs for remediation and restoration of property damage. See Note 18 for discussion regarding the Company’s related business interruption claims.
Product liability claim represents expense related to the payments by the Company in connection with a product liability dispute with a customer during the six months ended June 30, 2024.
Note 11 – Income Taxes
The Company’s effective tax rates for the three and six months ended June 30, 2024 were 32.8% and 30.1%, respectively, compared to 34.2% and 31.2% for the three and six months ended June 30, 2023, respectively. The Company’s effective tax rates for the three and six months ended June 30, 2024 were largely driven by the mix of pre-tax earnings, certain one-time charges related to an intercompany intangible asset transfer, and withholding taxes, offset by changes in uncertain tax positions. Comparatively, the effective tax rates for the three and six months ended June 30, 2023 were largely impacted by the mix of pre-tax earnings, changes to the valuation allowance for and the usage of certain foreign tax credits, and withholding taxes, partially offset by changes in uncertain tax positions and favorable return to provision adjustments.
14
Quaker Chemical Corporation
Notes to Condensed Consolidated Financial Statements - Continued
(Unaudited; Dollars in thousands, except per share amounts, unless otherwise stated)
Note 12 – Earnings Per Share
The following table summarizes earnings per share calculations:
Three Months Ended
June 30,		Six Months Ended
June 30,
2024202320242023
Basic earnings per common share
Net income attributable to Quaker Chemical Corporation$34,885 $29,346 $70,112 $58,880 
Less: income allocated to participating securities(118)(154)(276)(299)
Net income available to common shareholders$34,767 $29,192 $69,836 $58,581 
Basic weighted average common shares outstanding17,921,39517,892,44417,915,10417,879,629
Basic earnings per common share$1.94 $1.63 $3.90 $3.28 
Diluted earnings per common share
Net income attributable to Quaker Chemical Corporation$34,885 $29,346 $70,112 $58,880 
Less: income allocated to participating securities(118)(154)(276)(299)
Net income available to common shareholders$34,767 $29,192 $69,836 $58,581 
Basic weighted average common shares outstanding17,921,39517,892,44417,915,10417,879,629
Effect of dilutive securities18,76128,97019,84630,277
Diluted weighted average common shares outstanding17,940,15617,921,41417,934,95017,909,906
Diluted earnings per common share$1.94 $1.63 $3.89 $3.27 
Certain stock options, restricted stock units, and PSUs are not included in the diluted earnings per share calculation when the effect would have been anti-dilutive. The calculated amount of anti-diluted shares not included were 16,098 and 31,000 for the three and six months ended June 30, 2024, respectively, and 8,232 and 10,940 for the three and six months ended June 30, 2023, respectively.
Note 13 – Goodwill and Other Intangible Assets
Changes in the carrying amount of goodwill for the six months ended June 30, 2024 were as follows:
AmericasEMEAAsia/PacificTotal
Balance as of December 31, 2023$283,103$65,940$163,475$512,518
Goodwill additions— 16,448 — 16,448
Currency translation adjustments(2,927)(816)(7,641)(11,384)
Balance as of June 30, 2024$280,176$81,572$155,834$517,582
Gross carrying amounts and accumulated amortization for definite-lived intangible assets were as follows:
Gross Carrying
Amount		Accumulated
Amortization		Net Book Value
June 30, 2024December 31, 2023June 30, 2024December 31, 2023June 30, 2024December 31, 2023
Customer lists and rights to sell$837,946$841,562$264,378$243,872$573,568$597,690
Trademarks, formulations and product technology162,620161,61359,42155,879103,199105,734
Other5,8145,8925,7085,776106116
Total definite-lived intangible assets$1,006,380$1,009,067$329,507$305,527$676,873$703,540
15
Quaker Chemical Corporation
Notes to Condensed Consolidated Financial Statements - Continued
(Unaudited; Dollars in thousands, except per share amounts, unless otherwise stated)
The Company amortizes definite-lived intangible assets on a straight-line basis over their useful lives. The Company recorded amortization expense as follows:
Three Months Ended
June 30,		Six Months Ended
June 30,
2024202320242023
Amortization expense$14,744 $14,692 $29,215 $29,205 
Estimated annual aggregate amortization expense for the current year and subsequent five years is as follows:
For the remainder of 2024$28,986
For the year ended December 31, 202557,855
For the year ended December 31, 202657,168
For the year ended December 31, 202756,875
For the year ended December 31, 202856,535
For the year ended December 31, 202956,020
As of June 30, 2024 and December 31, 2023, the Company had indefinite-lived intangible assets for trademarks and tradenames totaling $189.3 million and $193.2 million, respectively.
Note 14 – Debt
The following table sets forth the components of the Company’s debt:
As of June 30, 2024As of December 31, 2023
Interest
Rate		Outstanding
Balance		Interest
Rate		Outstanding
Balance
Credit Facilities:
Revolver4.75%$51,437 5.13%$30,904 
U.S. Term Loan6.55%529,008 6.71%561,250 
Euro Term Loan4.75%146,024 5.13%152,366 
Industrial development bonds5.26%10,000 5.26%10,000 
Bank lines of credit and other debt obligationsVarious956 Various1,092 
Total debt$737,425 $755,612 
Less: debt issuance costs(1,322)(1,545)
Less: short-term and current portion of long-term debts(32,448)(23,444)
Total long-term debt$703,655 $730,623 
Credit facilities
During June 2022, the Company, and its wholly owned subsidiary, Quaker Houghton B.V., as borrowers, Bank of America, N.A., as administrative agent, U.S. dollar swing line lender and letter of credit issuer, Bank of America Europe Designated Active Company, as Euro Swing Line Lender, certain guarantors and other lenders entered into an amendment to its primary credit facility. The amended credit facility (the “Credit Facility”) established (A) a $150.0 million Euro equivalent senior secured term loan (the “Euro Term Loan”), (B) a $600.0 million senior secured term loan (the “U.S. Term Loan”), and (C) a $500.0 million senior secured revolving credit facility (the “Revolver”), each maturing in June 2027. The Company has the right to increase the amount of the Credit Facility by an aggregate amount not to exceed the greater of $300.0 million or 100% of Consolidated EBITDA, subject to certain conditions including the agreement to provide financing by any lender providing such increase.
As of June 30, 2024, the Company was in compliance with all of the Credit Facility covenants. See Note 19 of Notes to Consolidated Financial Statements in the Company’s 2023 Form 10-K.
16
Quaker Chemical Corporation
Notes to Condensed Consolidated Financial Statements - Continued
(Unaudited; Dollars in thousands, except per share amounts, unless otherwise stated)
The weighted average variable interest rate incurred on the outstanding borrowings under the Credit Facility during the three and six months ended June 30, 2024 were approximately 6.2% and 6.3%, respectively. As of June 30, 2024, the interest rate on the outstanding borrowings under the Credit Facility was approximately 6.1%. As part of the Credit Facility, in addition to paying interest on outstanding principal, the Company is also required to pay an annual commitment fee ranging from 0.150% to 0.275% related to unutilized commitments under the Revolver, depending on the Company’s consolidated net leverage ratio. The Company had unused capacity under the Revolver of approximately $445 million, which is net of bank letters of credit of approximately $3 million, as of June 30, 2024.
In order to manage the Company’s exposure to variable interest rate risk associated with the Credit Facility, in the first quarter of 2023, the Company entered into $300.0 million notional amounts of three-year interest rate swaps to convert a portion of the Company’s variable rate borrowings to an average fixed rate of 3.64% plus an applicable margin as provided in the Credit Facility based on the Company’s consolidated net leverage ratio. As of June 30, 2024, the aggregate interest rate on the swaps, including the fixed base rate plus the applicable margin, was 5.3%. See Note 17 of Notes to Condensed Consolidated Financial Statements.
In connection with executing the original credit facility in 2019 and the amended Credit Facility during the second quarter of 2022, the Company capitalized an aggregate of $2.2 million of certain third-party and creditor debt issuance costs. Approximately $0.7 million of the capitalized costs were attributed to the Euro Term Loan and U.S. Term Loan. These costs were recorded as a direct offset of Long-term debt on the Condensed Consolidated Balance Sheet. Approximately $1.5 million of the capitalized costs were attributed to the Revolver and recorded within Other assets on the Condensed Consolidated Balance Sheet. These capitalized costs will collectively be amortized into Interest expense over the five-year term of the Credit Facility. As of June 30, 2024, the Company had $1.3 million of debt issuance costs recorded as an offset of Long-term debt on the Condensed Consolidated Balance Sheets and $2.9 million of debt issuance costs recorded within Other assets on the Condensed Consolidated Balance Sheet. Comparatively, as of December 31, 2023, the Company had $1.5 million of debt issuance costs recorded as an offset of Long-term debt on the Condensed Consolidated Balance Sheets and $3.3 million of debt issuance costs recorded within Other assets on the Condensed Consolidated Balance Sheets.
Industrial development bonds
As of June 30, 2024 and December 31, 2023, the Company had fixed rate, industrial development authority bonds totaling $10.0 million in principal amount due in 2028. These bonds have similar covenants to the Credit Facility noted above.
Bank lines of credit and other debt obligations
The Company has certain unsecured bank lines of credit and discounting facilities in certain foreign subsidiaries, which are not collateralized. The Company’s other debt obligations primarily consist of certain domestic and foreign low interest rate or interest-free municipality-related loans, local credit facilities of certain foreign subsidiaries, and finance lease obligations. Total unused capacity under these arrangements as of June 30, 2024 was approximately $34 million.
In addition to the bank letters of credit described in the “Credit facilities” subsection above, the Company’s other off-balance sheet arrangements include certain financial and other guarantees. The Company’s total bank letters of credit and guarantees outstanding as of June 30, 2024 were approximately $4 million.
Interest expense, net
The Company incurred the following debt related expenses included within Interest expense, net, in the Condensed Consolidated Statements of Operations:
Three Months Ended
June 30,		Six Months Ended
June 30,
2024202320242023
Interest expense$11,530 $14,389 $22,812 $28,265 
Amortization of debt issuance costs353 353 706 706 
  Total$11,883 $14,742 $23,518 $28,971 
Based on the variable interest rates associated with the Credit Facility, as of June 30, 2024 and as of December 31, 2023, the amounts at which the Company’s total debt were recorded are not materially different from their fair market value.
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Quaker Chemical Corporation
Notes to Condensed Consolidated Financial Statements - Continued
(Unaudited; Dollars in thousands, except per share amounts, unless otherwise stated)
Note 15 – Accumulated Other Comprehensive Income
The following tables show the reclassifications from and resulting balances of accumulated other comprehensive income (“AOCI”):
Currency
Translation
Adjustments		Defined
Benefit
Pension
Plans		Unrealized
(Loss) Gain in
Available-for-
Sale Securities		Derivative
Instruments		Total
Balance as of March 31, 2024$(140,733)$(10,384)$378 $3,752 $(146,987)
Other comprehensive (loss) income before Reclassifications(18,841)113 (58)(19)(18,805)
Amounts reclassified from AOCI— 59 3 — 62 
Related tax amounts— (47)11 4 (32)
Balance as of June 30, 2024$(159,574)$(10,259)$334 $3,737 $(165,762)
Balance as of March 31, 2023$(117,696)$(4,721)$(1,150)$390 $(123,177)
Other comprehensive (loss) income before Reclassifications(13,042)854 979 5,420 (5,789)
Amounts reclassified from AOCI— 78 591 — 669 
Related tax amounts— (235)(329)(1,247)(1,811)
Balance as of June 30, 2023$(130,738)$(4,024)$91 $4,563 $(130,108)
Currency
Translation
Adjustments		Defined
Benefit
Pension
Plans		Unrealized
(Loss) Gain in
Available-for-
Sale Securities		Derivative
Instruments		Total
Balance as of December 31, 2023$(115,417)$(10,738)$333 $1,407 $(124,415)
Other comprehensive (loss) income before reclassifications(44,157)433 5 3,026 (40,693)
Amounts reclassified from AOCI— 209 (4)— 205 
Related tax amounts— (163)— (696)(859)
Balance as of June 30, 2024$(159,574)$(10,259)$334 $3,737 $(165,762)
Balance as of December 31, 2022$(132,161)$(4,595)$(1,484)$— $(138,240)
Other comprehensive income before reclassifications1,423 611 1,442 5,926 9,402 
Amounts reclassified from AOCI— 154 551 — 705 
Related tax amounts— (194)(418)(1,363)(1,975)
Balance as of June 30, 2023$(130,738)$(4,024)$91 $4,563 $(130,108)
All reclassifications related to unrealized (loss) gain in available-for-sale securities relate to the Company’s equity interest in a captive insurance company and are recorded in equity in net income of associated companies. The amounts reported in other comprehensive income for noncontrolling interest are related to currency translation adjustments.
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