Quaker Chemical Posts Record Profit as Sales Growth Accelerates
Second-quarter net sales rose 10% to $532.6 million as demand improved across regions.
Quaker Chemical (KWR), the industrial process-fluids maker, posted record adjusted EBITDA as stronger volumes and pricing lifted second-quarter results.
The quarter marked an acceleration from the start of the year. Sales growth increased to 10% from 8% in the first quarter, while underlying markets improved from a low-single-digit decline to flat or slightly positive and the company continued to win new business across all regions.
Revenue increased 10% from a year earlier and about 11% sequentially. Non-GAAP diluted earnings rose 28% to $2.19 a share, compared with 3% growth in the first quarter. GAAP net income was $26.8 million, or $1.55 a share, reversing a year-earlier loss of $66.6 million, or $3.78 a share.
Volume increased 7% and price and product mix added 1%, a shift from the first quarter’s 3% organic volume gain and 3% price-mix decline. Foreign exchange contributed 2%, down from 4%, while acquisitions made no contribution after adding 4% in the prior quarter.
EMEA led regional sales growth at 13%, followed by Asia-Pacific at 12% and the Americas at 7%. EMEA operating earnings rose 31% to $32.7 million and Asia-Pacific earnings increased 27% to $36.6 million. Americas earnings fell 3% despite higher sales as raw-material and selling, general and administrative costs increased.
Adjusted EBITDA rose 13% to $85.2 million, about 17% above the first quarter, and its margin widened sequentially to roughly 16.0%. Non-GAAP gross margin declined to 35.5% as raw-material inflation temporarily ran ahead of price recovery. The company expects gross margin to stabilize near that level in the third quarter and return to its target range by year-end.
Quaker Chemical recorded $4.1 million of business-transformation costs under a program targeting $20 million to $30 million of savings and a $10 million run rate by the end of 2026. It also raised its quarterly dividend about 4.3%, repurchased $24.2 million of stock and established a new $250 million buyback authorization without an expiration date.