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QC

QUAKER CHEMICAL CORP (KWR)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 delivered Y/Y top-line and earnings growth: net sales $493.8M (+7% Y/Y), non-GAAP EPS $2.08 (+10% Y/Y), adjusted EBITDA $82.9M (+5% Y/Y); organic volumes +3% driven by ~5% net share gains, with standout momentum in Asia/Pacific .
  • Versus Street: revenue and EPS beat consensus (Revenue $475.1M*, EPS $1.985*), while EBITDA was mixed given metric definitions; company-reported adjusted EBITDA was $82.9M vs S&P Global EBITDA consensus $81.8M* .
  • Sequentially, margins improved and cash generation was strong ($51.4M operating cash flow); net leverage fell to 2.4x with ~$61.5M debt reduction QoQ and modest Q3 buybacks ($3.8M) .
  • Outlook catalyst: management expects Y/Y revenue and adjusted EBITDA growth in Q4 and maintains conviction in delivering full-year 2025 earnings within the range of 2024, supported by share gains and cost actions .

What Went Well and What Went Wrong

What Went Well

  • Broad-based organic volume growth and share gains: “We achieved a 7% increase in sales on 3% organic volume growth… driven by new business wins of approximately 5% globally… continued momentum in Asia/Pacific.”
  • Margin and cash execution: adjusted EBITDA rose to $82.9M (16.8% margin) and operating cash flow reached $51.4M; net leverage improved to 2.4x on ~$61.5M gross debt reduction QoQ .
  • Strategic progress and pipeline conversion: CEO highlighted advancing initiatives and confidence in sustaining above-market growth into 2026; “We expect to deliver year-over-year revenue and earnings growth in the fourth quarter.” .

What Went Wrong

  • Price/mix headwinds: consolidated selling price & product mix down ~2% Y/Y; Americas flat volumes with mix-driven margin pressure .
  • Americas margin softness: segment operating earnings -5% Y/Y on higher raw material/manufacturing costs and mix; segment margins flat sequentially .
  • Macro/tariffs continued to weigh on customer operating plans and end-market activity remained soft in Americas/EMEA despite new wins .

Financial Results

MetricQ3 2024Q1 2025Q2 2025Q3 2025
Net Sales ($USD Millions)$462.274 $442.914 $483.400 $493.842
GAAP Diluted EPS ($USD)$1.81 $0.73 $(3.78) $1.75
Non-GAAP Diluted EPS ($USD)$1.89 $1.58 $1.71 $2.08
Adjusted EBITDA ($USD Millions)$78.562 $69.047 $75.479 $82.851
Adjusted EBITDA Margin (%)17.0% 15.6% 15.6% 16.8%

Segment Breakdown (Q3)

Segment MetricQ3 2024Q3 2025
Net Sales – Americas ($USD Millions)$220.275 $222.787
Net Sales – EMEA ($USD Millions)$134.135 $143.900
Net Sales – Asia/Pacific ($USD Millions)$107.864 $127.155
Segment Operating Earnings – Americas ($USD Thousands)$62,121 $58,913
Segment Operating Earnings – EMEA ($USD Thousands)$24,644 $26,479
Segment Operating Earnings – Asia/Pacific ($USD Thousands)$30,656 $35,569

KPIs and Balance Sheet

KPIQ2 2025Q3 2025
Net Debt ($USD Millions)~$734.8 ~$703.2
Leverage Ratio (Net Debt/TTM Adj. EBITDA)~2.6x ~2.4x
Share Repurchases ($USD Millions)$32.7 $3.8
Debt Reduction in Quarter ($USD Millions)—~$61.5
Cost of Debt (%)—~5%
CapEx ($USD Millions)—~$13
Operating Cash Flow ($USD Millions)—$51.4

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueQ4 2025—Expect Y/Y revenue growth in Q4 Introduced qualitative Q4 growth outlook
Adjusted EBITDAQ4 2025—Expect Y/Y adjusted EBITDA growth in Q4 Introduced qualitative Q4 growth outlook
Full-Year Earnings vs 2024FY 2025“Revenue and earnings in the range of 2024” “Within range of last year” reaffirmed Maintained
Effective Tax RateFY 2025—~28% full-year New disclosure
CapExFY 2025—2.5%–3% of sales New disclosure
DividendNext Payment—$0.508/share payable Jan 30, 2026 Announced quarterly dividend

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 2025)Previous Mentions (Q2 2025)Current Period (Q3 2025)Trend
Tariffs/MacroExpect uncertainty to persist into H2; aim to be in-line with 2024 Tariff uncertainty weighed on demand; tepid H2 outlook Tariffs continue to weigh on customer operating plans; soft macro Continuing headwind
Asia/Pacific GrowthAsia volumes up Y/Y; acquisitions support growth Momentum in APAC; +20% sales Y/Y; organic +8% APAC +18% sales; organic +8% volumes; sequential margin improvement Strengthening
Advanced Solutions & DipsolAcquired Dipsol/Natech/CSI to expand portfolio Dipsol performing in line; contributes to APAC Strong new wins; Dipsol integration progressing; early innings of globalizing tech Scaling
Cost Actions/SG&AMargin/cost optimization underway Initiated actions targeting ~$20M run-rate savings by end 2026 Organic SG&A down ~3% YTD; network optimization; plant closure in Americas Progressing
Manufacturing Footprint——Closed one facility YTD; evaluating further footprint optimization Accelerating
R&D/Innovation Network——New Brazil R&D lab; China facility online in H2’26 Investing in capabilities
Pricing/MixIndex-based contracts impacting price/mix Price/mix -4% Y/Y Price/mix -2% Y/Y; moderating sequentially Moderating headwind
EV vs ICE Exposure——Growing with EV “new winners” in Asia; similar overall opportunity vs ICE Evolving exposure
Capital Allocation/LeverageNet debt ~1.9x Leverage ~2.6x post Dipsol; buybacks raised dividend Net leverage 2.4x; $62M debt reduction; continued buybacks/dividends Improving balance sheet

Management Commentary

  • CEO prepared remarks: “Third quarter results were strong… new business wins of approximately 5% globally and amplified by continued momentum in Asia/Pacific… We expect to deliver year-over-year revenue and earnings growth in the fourth quarter… to sustain above market growth in 2026 and beyond.”
  • CFO prepared remarks: “Gross margins increased sequentially due to modest raw material cost favorability and productivity actions… adjusted EBITDA of $83M (+5% Y/Y, +10% QoQ)… effective tax rate ~28%… CapEx 2.5%–3% of sales in 2025.” .

Q&A Highlights

  • Asia-Pacific margins: Sequential margin improvement driven by slight raw material deflation and absence of non-recurring Q2 acquisition items; ongoing pricing lag in oleochemicals expected to improve .
  • Advanced solutions share gains: Early innings of globalizing acquired technologies (e.g., Dipsol, Norman Hay); opportunities in surface treatment and specialty greases for robotics/additive manufacturing .
  • Q4 outlook clarity: Normal seasonality expected; stability in margins; Dipsol contribution vs prior year; confidence in Y/Y revenue/EBITDA growth .
  • Pricing/mix trajectory: Q3 price/mix impact ~2% (half price, half mix); expectation for impact to lessen into 2026 as effects wrap .
  • EV vs ICE: Intentional growth with EV leaders in Asia; overall opportunity comparable across ICE/EV, with hybrid using slightly more fluids; portfolio additions position well for EV .

Estimates Context

MetricConsensus (S&P Global)*Actual (Reported)Surprise
Revenue ($USD Millions)475.056*493.842 +18.786
Primary EPS ($USD)1.985*2.08 (Non-GAAP diluted EPS) +0.095
EBITDA ($USD Millions)81.816*82.851 (Adjusted EBITDA) +1.035
  • Note: S&P Global “EBITDA” may reference a standardized EBITDA definition and not company’s “Adjusted EBITDA”; company also disclosed GAAP EBITDA of $75.1M .
  • Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Mix of beat/miss vs consensus with stronger revenue/EPS and improving sequential margin/cash conversion; APAC momentum and share gains provide a durable tailwind .
  • Americas margin softness and price/mix headwinds remain watch items; management is offsetting through cost actions and footprint optimization .
  • Q4 Y/Y revenue and adjusted EBITDA growth guide is a near-term positive catalyst; normal seasonality expected, but margins viewed as stable .
  • Balance sheet de-risking continues: net leverage to 2.4x, debt reduced ~$61.5M QoQ, ongoing dividends ($0.508/share declared) and targeted buybacks .
  • Advanced solutions (Dipsol, specialty greases, Ultraseal) broaden exposure to higher-growth applications (EV, robotics, additive manufacturing), supporting medium-term mix and margin improvement .
  • Watch pricing/index dynamics and raw material costs into 2026; management expects price/mix impact to moderate as effects wrap and targeted pricing actions continue .
  • For positioning: near-term favor on solid Q4 setup and cash discipline; medium-term thesis hinges on execution in APAC, advanced solutions scaling, and cost/footprint optimization.

Citations: Earnings press release and 8-K (including Item 2.02 and reconciliations) ; Earnings call transcript (prepared remarks and Q&A) ; Prior quarters for trend analysis ; Dividend press release .