Quaker Chemical Corporation Q4 FY2025 earnings call

• Second consecutive quarter of year-over-year EBITDA improvement; adjusted EBITDA up 11%, adjusted earnings per share up 24%. - Strong organic volume growth in Asia Pacific; net share gains of approx 4% mitigated soft market. - Closure of German manufacturing facility in Dortmund, anticipating cost savings. - Booked approx $7 million of costs related to assessment of multiple acquisition opportunities. - Continued execution of cost savings initiatives, with $25 million of run rate savings for full year. - Plan to streamline global business processes, rationalize manufacturing network, and finish integration of past acquisitions. - Investments in emerging markets like China, opening new manufacturing facility in China later this year. - Development of Fluid Intelligence offering, an evolution of service offering with new tools.

Asia Pacific: Fourth quarter sales increased 15% y-o-y, organic volume grew 4%; full year sales up 13%, organic volume up 5%. EMEA: Fourth quarter sales up 7% y-o-y despite market softness; full year segment earnings up. Americas: Fourth quarter net sales flat y-o-y; full year segment earnings flat. Asia Pacific had 10th consecutive quarter of organic volume growth. EMEA segment earnings increased due to higher net sales and improved operating margin. Americas segment earnings flat due to slightly lower sales volumes offset by higher operating margin.

• Anticipate underlying markets to remain flat in 2026 with potential incremental growth in second half. - Confident in delivering net share gains within 2%-4% target range. - Expect third consecutive quarter of year-over-year EBITDA improvement in Q1 2026. - Full year expected to improve top line performance, leading to year-over-year adjusted EBITDA growth. - Anticipate gross margin percentage to be within 36%-37% range for full year. - Plan to partially offset higher SG&A due to variable compensation and inflation by executing transformational initiatives and improving cost structure to sustain EBITDA margins above 18%.

• Persistent tariff uncertainty disrupting global trade flows and influencing customers' operations. - Weather-related operational challenges in December affecting volumes. - Operational issues in U.S. plants in December impacting organic volume. - Higher restructuring costs and negative impacts to working capital affecting operating cash flow. - Uncertainty around M&A pipeline with no imminent transactions from assessed opportunities.

Q: Mike Harrison asked about quantifying weather-related operational issues and Q1 outlook, and pricing/raw material dynamics.

A: Weather-related issues in Dec impacted volume by ~1% and are resolved; Q1 snow event not expected to be impactful; raw materials stabilizing, outlook for Q1-Q2 relatively stable.

Q: Laurence Alexander asked about M&A pipeline and regional mix.

A: M&A pipeline healthy, balance between bolt-on transactions and transformational things; no imminent transactions from assessed opportunities.

Q: David Begleiter asked about characterization of M&A pipeline and regional mix in pipeline, and Americas volume ex customer outage.

A: M&A pipeline had activity in Q4 related to multiple opportunities, not regional; Americas volume ex customer outage would have been flat.

Q: Jonathan Tanwanteng asked about M&A expenses and outlook for M&A this year.

A: No imminent transaction, no costs carrying into Q1.

Q: Arun Viswanathan asked about margins and EBITDA margin goals.

A: Product margin healthy in all regions; still target 18% EBITDA margins, with opportunities in cost initiatives like streamlining business processes and integrating acquisitions to drive margin growth.