Quaker Chemical Corporation Q1 FY2026 earnings call

• Strong first quarter with organic volumes up 3% YOY, third consecutive quarter of adjusted EBITDA growth. • Performance driven by new business wins in all regions, double-digit organic volume growth in Asia Pacific. • Adjusted EBITDA increased 5% YOY, gross margins improved sequentially and YOY. • Market conditions soft overall, hostilities in Strait of Hormuz create inflationary pressure. • Announced new transformation program to reduce cost and complexity, optimize manufacturing network, strengthen sales and technical capabilities. • Closure of Dortmund, Germany facility on track, planned closure of Songjiang, China facility with new facility in Zhongzhigang. • Local for local operating model and deep customer relationships differentiate the company.

Asia Pacific: Organic sales volumes grew for the 11th consecutive quarter, with double-digit organic volume growth, new business wins, and operating margins expanding due to recent organic investments in localized manufacturing. EMEA: Organic volumes grew 2% in Q1 with new business wins outpacing tough end markets. Americas: Volumes declined slightly year-over-year due to customer outage, tariff uncertainty, and weather disruptions, but March had highest volume in 16 months. Net sales: $480 million, 8% increase year-over-year, driven by net share gains of 4% and acquisitions. Adjusted EBITDA: $73 million, margin 15.1% declined year-over-year due to higher SG&A costs.

• View on macro trends consistent with prior expectations, flat end market conditions for full year with slightly better demand in second half. • Expect sequential volume and revenue growth in Q2 due to seasonal improvement and new business wins. • Anticipate temporary gross margin pressure in Q2 related to higher input costs, expect to recover within 1-2 quarters. • Continue to expect revenue and adjusted EBITDA growth in 2026 assuming no significant further deterioration in end markets because of Middle East conflict.

• Hostilities in Strait of Hormuz creating inflationary pressure on raw materials and input costs. • Potential prolonged conflict could influence broader economic activity including forward demand and further cost inflation. • Lingering customer outage, tariff uncertainty, and weather-related disruptions in Americas affecting volumes.

Q: Mike Harrison asked about raw material picture and new transformation program.

A: Raw material costs up, price increases in place. New transformation program to address org structure, master data, business process optimization.

Q: John Tan Wang Tang asked about expanded credit agreement and capital allocation.

A: Credit agreement extended maturity, added capacity, provides flexibility for growth and return of capital.

Q: Dan Rizwan asked about EBITDA margins and cost plan.

A: Pathway to 18%+ EBITDA margin through cost and complexity reduction in G&A, manufacturing, supply chain.

Q: Arun Liswanathan asked about gross margin compression and demand.

A: Expect to recover gross margins by end of year, demand environment strong so far.

Q: David Silver asked about recouping cost pressures and reshoring.

A: Use surcharges, have playbook for reshoring and onshoring, involved in early phases of new installations.

Q: John Tan Wang Tang asked about demand destruction from Mideast conflict.

A: Not expecting catastrophic demand disruption at this point, but possibility exists.