Financial Analysis

Business Acquisitions Previous Acquisitions Dipsol In April 2025, the Company acquired 100% of the outstanding equity interests of Dipsol Chemicals Co., Ltd. and its subsidiaries, (Dipsol) 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). In July 2025, the Company satisfied all routine and customary post-closing conditions and finalized the purchase price with no adjustments. The Company funded the acquisition purchase price with borrowings under the Companys Credit Facility. In connection with the acquisition of Dipsol, the Company entered into foreign currency forward contracts, which resulted in a $187.0 million cash payment in April 2025 and a $0.6 million foreign exchange gain and a $1.4 million foreign exchange loss, respectively, during the three and six months ended June 30, 2025. Dipsol is headquartered in Japan and is a leading supplier of surface treatment and plating solutions and services primarily for the automotive and other industrial applications end markets. Dipsol has operations in several countries and these operations are reported within the Companys respective Americas, EMEA, and Asia/Pacific segments. This acquisition expands the Companys advanced solutions businesses in attractive end markets with solid growth characteristics. Dipsol also provides significant cross-selling opportunities and enhanc …

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Commitments and Contingencies As previously disclosed in its 2025 Form 10-K, the Company is party to certain environmental matters and other litigation. See Note 25, Commitments and Contingencies , in the Companys 2025 Form 10-K for more information. During the three and six months ended June 30, 2026, there have been no significant changes to the facts or circumstances of any of the previously disclosed matters. Although there can be no assurance regarding the outcome of any of the ongoing environmental matters or litigation, the Company believes that it has made adequate accruals for costs and liabilities associated with these matters. The Company has accrued approximately $4.9 million and $5.2 million, respectively, as of June 30, 2026 and December 31, 2025 for these ongoing matters. In addition, during the three and six months ended June 30, 2026, there are no new environmental matters or litigation that the Company believes will have a material adverse effect on the Companys results of operations, cash flows, or financial condition. …

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Debt The following table sets forth the components of the Companys debt: As of June 30, 2026 As of December 31, 2025 Interest Rate Outstanding Balance Interest Rate Outstanding Balance Credit Facilities: Revolver 4.87% $ 70,000 4.95% $ 229,088 U.S. Term Loan 4.87% 550,000 5.10% 482,144 Euro Term Loan 3.25% 244,696 3.13% 148,477 Industrial development bonds 5.26% 10,000 5.26% 10,000 Bank lines of credit and other debt obligations Various 1,453 Various 1,501 Total debt $ 876,149 $ 871,210 Less: debt issuance costs (2,705) (652) Less: short-term and current portion of long-term debts (15,654) (35,657) Total long-term debt $ 857,790 $ 834,901 Credit facilities 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. 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) estab …

DebtDisclosureTextBlock · excerpt; the full note is in the filing

The following tables disaggregate the Companys net sales by segment and customer industry. Three Months Ended June 30, 2026 Customer Industries Americas EMEA Asia/Pacific Consolidated Total Metals $ 71,560 $ 39,091 $ 57,580 $ 168,231 Metalworking and other 164,953 119,345 80,021 364,319 $ 236,513 $ 158,436 $ 137,601 $ 532,550 Six Months Ended June 30, 2026 Customer Industries Americas EMEA Asia/Pacific Consolidated Total Metals $ 136,420 $ 75,017 $ 108,719 $ 320,156 Metalworking and other 313,821 225,502 153,550 692,873 $ 450,241 $ 300,519 $ 262,269 $ 1,013,029 Three Months Ended June 30, 2025 Customer Industries Americas EMEA Asia/Pacific Consolidated Total Metals $ 62,825 $ 36,348 $ 55,782 $ 154,955 Metalworking and other 158,237 103,575 66,633 328,445 $ 221,062 $ 139,923 $ 122,415 $ 483,400 Six Months Ended June 30, 2025 Customer Industries Americas EMEA Asia/Pacific Consolidated Total Metals $ 127,121 $ 69,308 $ 105,649 $ 302,078 Metalworking and other 307,652 199,893 116,691 624,236 $ 434,773 $ 269,201 $ 222,340 $ 926,314 …

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Share-Based Compensation The Company recognized $3.7 million and $6.9 million, respectively, of share-based compensation expense in its Condensed Consolidated Statements of Operations for each of the three and six months ended June 30, 2026 and 2025, respectively. Restricted Stock Awards During the six months ended June 30, 2026, the remaining unrecognized compensation expense related to non-vested restricted shares was fully recognized. Restricted Stock Units During the six months ended June 30, 2026, the Company granted 76,884 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 Companys common stock on the date of grant. As of June 30, 2026, unrecognized compensation expense related to non-vested restricted stock units was $11.7 million, to be recognized over a weighted average remaining period of 1.5 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 Companys 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 gene …

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The Company values its company-owned life insurance policies at fair value. The Company owns an immaterial amount of company-owned life insurance policies as of June 30, 2026 and December 31, 2025. The Company values its long-term debt at fair value based on quoted market prices for the same or similar issues, or on current rates offered to the company for debt of the same remaining maturities and terms. Due to the infrequency of trades, these inputs are considered to be Level 2 inputs. Based on the variable interest rates associated with the Amended Credit Facility and the Credit Facility, as of June 30, 2026 and December 31, 2025, the amounts at which the Companys total debt were recorded are not materially different from their fair market value. See Note 17, Hedging Activities , for a description of the Companys derivative instruments including the valuation techniques used to determine fair value and support for their classification within Level 2 of the fair value hierarchy …

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Goodwill and Other Intangible Assets Changes in the carrying amount of goodwill for the six months ended June 30, 2026 were as follows: Americas EMEA Asia/Pacific Total Balance as of December 31, 2025 $ 287,028 $ $ 214,692 $ 501,720 Currency translation adjustments 624 1,377 2,001 Balance as of June 30, 2026 $ 287,652 $ $ 216,069 $ 503,721 Jun 30, 2026 Dec 31, 2025 Goodwill, gross $ 692,547 $ 694,311 Accumulated impairment losses (1) (188,826) (192,591) Goodwill, net $ 503,721 $ 501,720 (1) Accumulated impairment losses are attributable to the non-cash impairment charges of $88.8 million and $93.0 million to write down the carrying value of the EMEA reporting unit during the second quarter of 2025 and the fourth quarter of 2022, respectively. These amounts include the impact of currency translation. The Company completes its annual goodwill and indefinite-lived intangible asset impairment tests during the fourth quarter of each year, or more frequently if triggering events indicate a possible impairment in one or more of its reporting units. The Company continually evaluates financial performance, economic conditions and other recent developments in assessing if a triggering event indicates that the carrying value of goodwill, indefinite-lived, or long-lived assets might be impaired. During the second quarter of 2025, the Company concluded that the negative impacts of the lower than projected financial performance, driven by the continuation of soft end market conditions, as …

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Income Taxes The Companys effective tax rates for the three and six months ended June 30, 2026 were 35.9% and 33.4%, respectively, compared to (8.3)% and (26.8)%, respectively, for the three and six months ended June 30, 2025. The Companys effective tax rate for the three and six months ended June 30, 2026 was largely driven by our mix of pre-tax earnings and withholding taxes. Comparatively, the effective tax rate for the three months ended June 30, 2025 was largely driven by our mix of pre-tax earnings, goodwill impairment and withholding taxes offset by return to provision adjustments and net favorable reductions in uncertain tax positions, while the effective tax rate for the six months ended June 30, 2025 was largely driven by our mix of pre-tax earnings, goodwill impairment, return to provision adjustments and withholding taxes offset by net favorable reductions in uncertain tax positions. On July 4, 2025, H.R. 1, commonly known as the One Big Beautiful Bill Act (the OBBB), was signed into law. The OBBB includes significant changes to the federal corporate tax provisions and extends certain otherwise expiring provisions of the 2017 Tax Cuts and Jobs Act. Among other things, the legislation restores 100% bonus depreciation for eligible property, reinstates expensing for domestic research and experimental expenditures, imposes new limitations on interest expense deductibility, and expands disallowed deductions for certain employee remuneration. The legislation has multipl …

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Leases The Company has operating leases for certain facilities, vehicles, and machinery and equipment with remaining lease terms up to 15 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 89 years. The Company had no material variable lease costs, sublease income, or finance leases for the three and six months ended June 30, 2026 and 2025. The components of the Companys lease expense are as follows: Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Operating lease expense $ 4,423 $ 4,302 $ 8,514 $ 8,010 Short-term lease expense 226 140 448 284 Supplemental cash flow information related to the Companys leases is as follows: Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 4,245 $ 4,261 $ 8,292 $ 7,845 Non-cash lease liabilities activity: Leased assets obtained in exchange for new operating lease liabilities 19,898 6,605 23,976 10,482 Supplemental balance sheet information related to the Companys leases is as follows: June 30, 2026 December 31, 2025 Right-of-use lease assets $ 53,650 $ 38,737 Other accrued liabilities 12,734 12,536 Long-term lease liabilities 37,628 22,759 Total operating lease liabilities $ 50,362 $ 35,295 Weighted average remaining lease term (years) 8.8 5.7 Weighted aver …

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Recently Issued Accounting Standards Not Yet Adopted The FASB issued ASU 2024-03, Income Statement- Reporting Comprehensive Income- Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses in November 2024 . This ASU requires PBEs to disclose, in interim and annual reporting periods, additional information about certain expenses in the notes to the financial statements, including disclosing the amounts of purchases of inventory, employee compensation, depreciation, and intangible asset amortization in each relevant expense caption. It also requires PBEs to disclose a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively and to disclose the total amount of selling expenses, and in the annual reporting periods, an entitys definition of selling expenses. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, with early adoption permitted. The Company is currently evaluating the disclosure requirements of this standard and the impact on its condensed consolidated financial statements. The FASB issued ASU 2025-06, Intangibles- Goodwill and Other- Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software in September 2025. This ASU removes all references to prescriptive and sequential software development stages and will now require PBEs to start capitalizing software costs when management has au …

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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 Benefits Other Postretirement Benefits Pension Benefits Other Postretirement Benefits 2026 2025 2026 2025 2026 2025 2026 2025 Service cost $ 104 $ 108 $ $ $ 207 $ 210 $ $ Interest cost 2,313 2,379 13 14 4,560 4,663 25 28 Expected return on plan assets (2,156) (2,076) (4,320) (4,059) Actuarial loss (gain) amortization 169 150 (20) (26) 338 290 (39) (52) Prior service cost amortization 7 7 13 12 Net periodic benefit cost (income) $ 437 $ 568 $ (7) $ (12) $ 798 $ 1,116 $ (14) $ (24) Employer Contributions During the six months ended June 30, 2026, $1.5 million of contributions have been made to the Companys U.S. and foreign pension plans. Contributions to other postretirement benefit plans were less than $0.1 million. Taking into consideration current minimum cash contribution requirements, the Company currently expects to make full year cash contributions of approximately $4.4 million to its U.S. and foreign pension plans and approximately $0.2 million to its other postretirement benefit plans. …

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Restructuring and Related Activities The Company records restructuring liabilities that represent nonrecurring charges in connection with simplifying certain organizational structures and operations. Restructuring costs incurred during the three and six months ended June 30, 2026 and 2025 include employee severance and asset-related and facility closure costs, including non-cash asset write-offs, which are recorded in Restructuring and related charges, net in the Companys Condensed Consolidated Statements of Operations. Restructuring activity primarily consists of the following programs: 2026 Global Business Transformation Program In 2026, the Company initiated a global business transformation program (the 2026 program), encompassing several strategic transformation and restructuring initiatives. The 2026 program primarily involves simplifying the organizational structure of legal entities, projects associated with information technology infrastructure initiatives, the optimization of specific product portfolios through targeted rationalization efforts, the optimization of certain supply chain activities and related workforce reductions. The 2026 program began in the first quarter of 2026 and is expected to be complete in 2028. Costs relating to employee termination benefits costs and asset related charges are expected to be recognized in Restructuring and related charges, net in the Companys Condensed Consolidated Statements of Operations. Costs relating to other transformat …

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Net Sales and Revenue Recognition Customer Concentration A significant portion of the Companys revenues are realized from the sale of process fluids and services to manufacturers of steel, aluminum, automotive, aerospace, industrial and agricultural equipment, and durable goods. As previously disclosed in the Companys 2025 Form 10-K, the Companys five largest customers combined (each composed of multiple subsidiaries or divisions with semiautonomous purchasing authority) accounted for approximately 11% of consolidated net sales for 2025, 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, 2026 or December 31, 2025. The Company had approximately $4.2 million and $3.6 million of deferred revenue as of June 30, 2026 and December 31, 2025, respectively. For the six months ended June 30, 2026, 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, 2025. Disaggregated Revenue The Company sells its industrial process fluids, specialty chemicals and 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 Companys major product lines are generally …

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Business Segments The Companys operating segments, which are consistent with its reportable segments, reflect the structure of the Companys internal organization and the manner by which the Chief Operating Decision Maker (CODM), which is the Companys Chief Executive Officer, allocates resources and assesses performance. The CODM evaluates performance for the Companys operating segments based on segment operating earnings. Segment operating earnings for each of the Companys reportable segments are comprised of the segments net sales less directly related product costs and other segment items. Operating expenses not directly attributable to the net sales of each respective segment, such as certain corporate and administrative costs and restructuring charges, are not included in segment operating earnings. Other items not specifically identified with the Companys reportable segments include Interest expense and Other income (expense), net. The CODM uses segment operating earnings to allocate resources for each segment predominantly in the annual budget and forecasting process. The CODM considers budget-to-actual variances on a monthly basis for segment operating earnings when making decisions about allocating capital and personnel to the segments. The CODM also uses segment operating earnings to assess the performance for each segment and in the compensation of certain employees. Segment asset information is not regularly provided to or reviewed by the CODM. Therefore, the Compa …

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Accumulated Other Comprehensive Income The following tables show the reclassifications from and resulting balances of accumulated other comprehensive income (AOCI): Currency Translation Adjustments (1) Defined Benefit Pension Plans Unrealized Gain (Loss) in Available-for- Sale Securities Derivative Instruments Total Balance as of March 31, 2026 $ (114,619) $ (10,831) $ 91 $ $ (125,359) Other comprehensive income (loss) before Reclassifications 1,024 102 313 3,686 5,125 Amounts reclassified from AOCI 92 (4) 88 Related tax amounts (380) (49) (65) (848) (1,342) Balance as of June 30, 2026 $ (113,975) $ (10,686) $ 335 $ 2,838 $ (121,488) Balance as of March 31, 2025 $ (165,716) $ (10,578) $ (17) $ 656 $ (175,655) Other comprehensive income (loss) before Reclassifications 62,129 (1,601) (267) (130) 60,131 Amounts reclassified from AOCI 131 4 135 Related tax amounts (244) 366 56 30 208 Balance as of June 30, 2025 $ (103,831) $ (11,682) $ (224) $ 556 $ (115,181) (1) Includes mark-to-market impacts associated with net investment hedges. See Note 17, Hedging Activities , for more information. Currency Translation Adjustments 1 Defined Benefit Pension Plans Unrealized Gain (Loss) in Available-for- Sale Securities Derivative Instruments Total Balance as of December 31, 2025 $ (104,697) $ (11,234) $ 257 $ 13 $ (115,661) Other comprehensive (loss) income before reclassifications (8,402) 483 103 3,686 (4,130) Amounts reclassified from AOCI 249 (4) (13) 232 Related tax amounts (876) (184) ( …

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