UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
 
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
 
October 29, 2013
Date of Report (Date of earliest event reported)
 
QUAKER CHEMICAL CORPORATION
(Exact name of Registrant as specified in its charter)
 
Commission File Number 001-12019
 
PENNSYLVANIA	 	No. 23-0993790	
(State or other jurisdiction of
incorporation or organization)	 	(I.R.S. Employer
Identification No.)	
 
One Quaker Park
901 E. Hector Street
Conshohocken, Pennsylvania 19428
(Address of principal executive offices)
(Zip Code)
  
(610) 832-4000
(Registrant’s telephone number, including area code)
 
Not Applicable
(Former name or former address, if changed since last report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
 	¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)	
 
 	¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)	
 
 	¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))	
 
 	¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))	

 

 	
 
INFORMATION TO BE INCLUDED IN THE REPORT
 
Item 2.02. 	      Results of Operations and Financial Condition.
 
On October 29, 2013, Quaker Chemical Corporation announced its results of operations for the third quarter ended September 30, 2013, in a press release, the text of which is included as Exhibit 99.1 hereto. Supplemental information related to the same period is also included as Exhibit 99.2 hereto.
 
Item 9.01.	Financial Statements and Exhibits.
 
The following exhibits are included as part of this report:
 
Exhibit No.	 	 	
99.1	 	Press Release of Quaker Chemical Corporation dated October 29, 2013.  	
 	 	 	
99.2	 	Supplemental information related to third quarter ended September 30, 2013.	
 
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SIGNATURE
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 	 	QUAKER CHEMICAL CORPORATION	
 	 	Registrant	
 	 	 	 	
Date:  October 29, 2013	 	By:	/S/ MARGARET M. LOEBL	
 	 	 	Margaret M. Loebl	
 	 	 	Vice President, Chief Financial	
 	 	 	Officer and Treasurer	
 
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NEWS
 
Contact:
Margaret M. Loebl
Vice President, Chief Financial Officer and Treasurer
loeblm@quakerchem.com
T. 610.832.4160	 	
 
For Release: Immediate	
 
QUAKER CHEMICAL ANNOUNCES THIRD QUARTER 2013 RESULTS
 
 	·	14% earnings per share growth despite challenging economic environment	
 	·	Expected $0.08 per share third quarter tax benefit delayed until fourth quarter	
 	·	Strong net operating cash flow of $24.5 million	
 
October 29, 2013
 
CONSHOHOCKEN, PA - Quaker Chemical Corporation (NYSE: KWR) today announced net sales of $184.1 million for the third quarter of 2013, compared to the third quarter of 2012 net sales of $180.9 million. Earnings per diluted share for the third quarter of 2013 were $0.95 compared to $0.83 for the third quarter of 2012. The Company had expected to receive recertification of a prior concessionary tax rate in Asia Pacific, which would have increased earnings an additional $0.08 per share in the third quarter, but the approval was delayed until earlier this month and is expected to be recognized in the fourth quarter. For the first nine months of 2013, the Company reported net sales of $545.1 million, compared to the first nine months of 2012 net sales of $535.4 million. Earnings per diluted share for the first nine months of 2013 were $3.21 compared to earnings per diluted share of $2.63 for the first nine months of 2012. For Non-GAAP results, see the Non-GAAP Measures section below.
 
Michael F. Barry, Chairman, Chief Executive Officer and President, commented, “We are pleased to announce another quarter of strong earnings and cash flow generation given a relatively mixed global economic environment. Despite the weak market conditions in various parts of the world, we continue to produce solid operating results by growing our market share and leveraging our recent acquisitions as well as continuing to align our cost structure to market realities.”
 
Mr. Barry continued, “In the fourth quarter, we expect to continue to produce good operating results, subject to typical negative seasonality impacts around the holidays at year end. In summary, I remain confident in our future and I expect 2013 to be another strong year for Quaker in terms of earnings, cash flow generation, EBITDA growth and shareholder value creation.”
  
Third Quarter of 2013 Summary
 
Net sales for the third quarter of 2013 of $184.1 million increased approximately 2% from net sales of $180.9 million in the third quarter of 2012, which primarily related to an increase in product volumes.
 
Gross profit increased approximately $6.9 million, or approximately 12%, from the third quarter of 2012. The increase in gross profit was primarily driven by an improvement in gross margin to 35.9% from 32.7% in the third quarter of 2012. The increase in gross margin reflects the return of the Company’s product margins to more acceptable levels.
  
Selling, general and administrative expenses (“SG&A”) increased $3.9 million from the third quarter of 2012, which was primarily driven by higher selling related costs on improved Company performance and higher labor related costs on general year-over-year merit increases. In addition, non-operating related SG&A expenses increased due to certain uncommon costs. For instance, the third quarter of 2013 SG&A includes approximately $0.7 million, or $0.04 per diluted share, of costs related to streamlining certain operations in the Company’s Europe, Middle East and Africa (“EMEA”) region.
  
Quaker Chemical Corporation
One Quaker Park, 901 E. Hector Street, Conshohocken, PA 19428-2380 USA
P: 610.832.4000 F: 610.832.8682
quakerchem.com

 	
  
The increase in other expense in the third quarter of 2013 was primarily driven by foreign exchange transaction losses of approximately $0.6 million and a charge of approximately $0.2 million, or $0.01 per diluted share, related to the cost streamlining initiative, noted above, compared to foreign exchange transaction losses of $0.2 million in the third quarter of 2012.
 
The decrease in interest expense was primarily due to lower average borrowings and lower interest rates experienced in the third quarter of 2013 as compared to the third quarter of 2012.
  
The increase in equity in net income of associated companies from the third quarter of 2012 was primarily due to higher earnings related to the Company’s equity interest in a captive insurance company. Earnings from this affiliate were $1.2 million, or $0.09 per diluted share, in the third quarter of 2013 compared to $0.4 million, or $0.03 per diluted share, in the third quarter of 2012.
 
The Company’s effective tax rates for the third quarters of 2013 and 2012 were 33.8% and 28.6%, respectively. The primary contributor to the higher effective tax rate in the current quarter was an increase in Asia Pacific’s effective tax rate. While recertification of a prior concessionary tax rate in Asia Pacific was pending renewal, the Company recorded tax expense at its statutory tax rate of 25% in the third quarter of 2013 compared to the concessionary tax rate of 15% in the prior year. (See the Recent Developments section below).
 
Year-to-Date Summary
 
Net sales for the first nine months of 2013 of $545.1 million increased approximately 2% from $535.4 million in the first nine months of 2012, which primarily related to an increase in product volumes.
 
Gross profit increased by approximately $16.4 million, or approximately 9%, from the first nine months of 2012. The increase in gross profit was driven by an improvement in gross margin to 35.9% from 33.5% in the first nine months of 2012, reflective of the return of the Company’s product margins to more acceptable levels.
 
SG&A increased approximately $9.9 million from the first nine months of 2012, which was primarily driven by higher selling related costs on improved Company performance, higher labor related costs on general year-over-year merit increases and costs added with our recent acquisitions. In addition, non-operating SG&A expenses increased due to certain uncommon costs. For instance, the nine months of 2013 SG&A includes approximately $1.1 million, or $0.06 per diluted share, of costs related to streamlining certain operations in the Company’s EMEA and South America regions. Partially offsetting these increases to SG&A were the prior year costs associated with the bankruptcies of certain U.S customers of $1.2 million, or $0.06 per diluted share, the prior year costs associated with the Company’s CFO transition of $0.6 million, or $0.03 per diluted share, and lower translation due to changes in foreign exchange rates.
 
Other income for the first nine months of 2013 was $2.0 million, which was primarily driven by a refund of $2.5 million, or $0.14 per diluted share, related to past excise taxes paid on certain mineral oil sales and, also, earnings from third party license fees. Partially offsetting these contributors to other income were expenses related to an increase in the fair value of an acquisition earnout liability of $0.7 million, or $0.03 per diluted share, the cost streamlining initiative, noted above, and foreign exchange transaction losses of $0.8 million. Comparatively, other income for the first nine months of 2012 was $0.5 million, which relates primarily to third party license fees, net of foreign exchange transaction losses of $0.8 million.
 
Interest expense was lower in the first nine months of 2013 compared to the first nine months of 2012 primarily due to lower interest rates and lower average borrowings.
 
The Company’s effective tax rates for the first nine months of 2013 and 2012 were 30.0% and 26.9%, respectively. The primary contributor to the higher effective tax rate in the current year was an increase in Asia Pacific’s effective tax rate, noted above.
 
Equity in net income of associated companies increased due to higher earnings related to the Company’s equity interest in a captive insurance company in the first nine months of 2013 compared to the first nine months of 2012. Earnings attributable to this equity interest increased from approximately $1.4 million, or $0.11 per diluted share, for the first nine months of 2012 to approximately $4.4 million, or $0.33 per diluted share, for the first nine months of 2013, which includes a non-cash out-of-period adjustment of approximately $1.0 million recorded in 2013. Partially offsetting this increase in equity in net income of associated companies was a charge of approximately $0.4 million, or $0.03 per diluted share, related to the devaluation of the Venezuelan Bolivar Fuerte during 2013.
  
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Balance Sheet and Cash Flow Items
 
The Company’s net operating cash flow for the third quarter of 2013 was $24.5 million, which increased its year-to-date 2013 net operating cash flow to $51.9 million as compared to $41.8 million for the first nine months of 2012. The improvement in the Company’s net operating cash flow during the first nine months of 2013 was primarily driven by increased net income and better working capital management. During 2013, the Company revised its credit facility, expanding the amount available for borrowings under this facility from $175.0 million to $300.0 million, which provides the Company further financial flexibility for potential future initiatives. In addition to the revised facility, the Company’s current liquidity remains strong, as its cash position continued to exceed its debt at September 30, 2013 and its consolidated leverage ratio continued to be less than one times EBITDA.
 
Non-GAAP Measures
 
Included in this public release is a non-GAAP financial measure of non-GAAP earnings per diluted share. The Company believes this non-GAAP financial measure provides meaningful supplemental information as it enhances a reader’s understanding of the financial performance of the Company, is more indicative of future operating performance of the Company, and facilitates a better comparison among fiscal periods, as the non-GAAP financial measure excludes items that are not considered core to the Company’s operations. Non-GAAP results are presented for supplemental informational purposes only and should not be considered a substitute for the financial information presented in accordance with GAAP. The following is a reconciliation between the non-GAAP (unaudited) financial measure of non-GAAP earnings per diluted share to its most directly comparable GAAP (unaudited) financial measure:
 
 	 	Three Months Ended
September 30,	 	 	Nine Months Ended
September 30,	 	
 	 	2013	 	 	2012	 	 	2013	 	 	2012	 	
GAAP earnings per diluted share attributable to Quaker Chemical Corporation Common Shareholders	 	$	0.95	 	 	$	0.83	 	 	$	3.21	 	 	$	2.63	 	
CFO transition costs per diluted share	 	 	-	 	 	 	-	 	 	 	-	 	 	 	0.03	 	
Customer bankruptcy costs per diluted share	 	 	-	 	 	 	-	 	 	 	-	 	 	 	0.06	 	
Mineral oil excise tax refund per diluted share	 	 	-	 	 	 	-	 	 	 	(0.14	)	 	 	-	 	
Change in acquisition-related earnout liability per diluted share	 	 	-	 	 	 	-	 	 	 	0.03	 	 	 	-	 	
Cost streamlining initiatives per diluted share	 	 	0.05	 	 	 	-	 	 	 	0.07	 	 	 	-	 	
Devaluation of the Venezuelan Bolivar Fuerte per diluted share	 	 	-	 	 	 	-	 	 	 	0.03	 	 	 	-	 	
Equity income in a captive insurance company per diluted share	 	 	(0.09	)	 	 	(0.03	)	 	 	(0.33	)	 	 	(0.11	)	
Non-GAAP earnings per diluted share	 	$	0.91	 	 	$	0.80	 	 	$	2.87	 	 	$	2.61	 	
 
Recent Developments
 
For the third quarter of 2013, the Company expected to receive recertification of a prior concessionary tax rate in Asia Pacific, which would have increased earnings an additional $0.08 per share, but was delayed until earlier this month due to a period of public notice and comment. As of the date of this release, the period for comment has expired and the Company has not received a notice or comment challenging its approval status, so the change in the Company’s effective tax rate is expected to be recognized in its financial statements in the fourth quarter of 2013, pending no other significant developments. See Note 6 to Notes to Condensed Consolidated Financial Statements in the Company’s Form 10-Q for the quarterly period ended September 30, 2013.
  
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Forward-Looking Statements
 
This release contains forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected in such statements. A major risk is that the Company’s demand is largely derived from the demand for its customers’ products, which subjects the Company to downturns in a customer’s business and unanticipated customer production shutdowns. Other major risks and uncertainties include, but are not limited to, significant increases in raw material costs, customer financial stability, worldwide economic and political conditions, foreign currency fluctuations, future terrorist attacks and other acts of violence. Other factors could also adversely affect us. Therefore, we caution you not to place undue reliance on our forward-looking statements. This discussion is provided as permitted by the Private Securities Litigation Reform Act of 1995.
 
Conference Call
 
As previously announced, Quaker Chemical’s investor conference call to discuss the third quarter of 2013 results is scheduled for October 30, 2013 at 8:30 a.m. (ET). A live webcast of the conference call, together with supplemental information, can be accessed through the Company’s Investor Relations website at  http://www.quakerchem.com . You can also access the conference call by dialing 877-269-7756.
 
About Quaker
 
Quaker Chemical is a leading global provider of process fluids, chemical specialties, and technical expertise to a wide range of industries, including steel, aluminum, automotive, mining, aerospace, tube and pipe, cans, and others.  For nearly 100 years, Quaker has helped customers around the world achieve production efficiency, improve product quality, and lower costs through a combination of innovative technology, process knowledge, and customized services. Headquartered in Conshohocken, Pennsylvania USA, Quaker serves businesses worldwide with a network of dedicated and experienced professionals whose mission is to make a difference.
  
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Quaker Chemical Corporation
Condensed Consolidated Statement of Income
(Dollars in thousands, except per share data)
 
 	 	(Unaudited)	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Three Months Ended September 30,	 	 	Nine Months Ended September 30,	 	
 	 	2013	 	 	2012	 	 	2013	 	 	2012	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Net sales	 	$	184,059	 	 	$	180,923	 	 	$	545,098	 	 	$	535,358	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Cost of goods sold	 	 	118,069	 	 	 	121,797	 	 	 	349,186	 	 	 	355,801	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Gross profit	 	 	65,990	 	 	 	59,126	 	 	 	195,912	 	 	 	179,557	 	
%	 	 	35.9	%	 	 	32.7	%	 	 	35.9	%	 	 	33.5	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Selling, general and administrative expenses	 	 	47,183	 	 	 	43,263	 	 	 	139,901	 	 	 	130,009	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Operating income	 	 	18,807	 	 	 	15,863	 	 	 	56,011	 	 	 	49,548	 	
%	 	 	10.2	%	 	 	8.8	%	 	 	10.3	%	 	 	9.3	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Other (expense) income, net	 	 	(685	)	 	 	322	 	 	 	1,962	 	 	 	529	 	
Interest expense	 	 	(717	)	 	 	(1,034	)	 	 	(2,223	)	 	 	(3,359	)	
Interest income	 	 	267	 	 	 	149	 	 	 	665	 	 	 	409	 	
Income before taxes and equity in net income of associated companies	 	 	17,672	 	 	 	15,300	 	 	 	56,415	 	 	 	47,127	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Taxes on income before equity in net income of associated companies	 	 	5,972	 	 	 	4,373	 	 	 	16,933	 	 	 	12,692	 	
Income before equity in net income of associated companies	 	 	11,700	 	 	 	10,927	 	 	 	39,482	 	 	 	34,435	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Equity in net income of associated companies	 	 	1,605	 	 	 	696	 	 	 	4,689	 	 	 	2,038	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income	 	 	13,305	 	 	 	11,623	 	 	 	44,171	 	 	 	36,473	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Less: Net income attributable to noncontrolling interest	 	 	754	 	 	 	698	 	 	 	1,918	 	 	 	2,075	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income attributable to Quaker Chemical Corporation	 	$	12,551	 	 	$	10,925	 	 	$	42,253	 	 	$	34,398	 	
%	 	 	6.8	%	 	 	6.0	%	 	 	7.8	%	 	 	6.4	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Per share data:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income attributable to Quaker Chemical Corporation Common Shareholders - basic	 	$	0.95	 	 	$	0.84	 	 	$	3.21	 	 	$	2.65	 	
Net income attributable to Quaker Chemical Corporation Common Shareholders - diluted	 	$	0.95	 	 	$	0.83	 	 	$	3.21	 	 	$	2.63	 	
 
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Quaker Chemical Corporation
Condensed Consolidated Balance Sheet
(Dollars in thousands, except par value and share amounts)
 
 	 	(Unaudited)	 	
 	 	 	 	 	 	 	
 	 	September 30,	 	 	December 31,	 	
 	 	2013	 	 	2012	 	
ASSETS	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	
Current assets	 	 	 	 	 	 	 	 	
Cash and cash equivalents	 	$	53,945	 	 	$	32,547	 	
Accounts receivable, net	 	 	166,584	 	 	 	154,197	 	
Inventories, net	 	 	76,670	 	 	 	72,471	 	
Prepaid expenses and other current assets	 	 	16,870	 	 	 	18,595	 	
Total current assets	 	 	314,069	 	 	 	277,810	 	
 	 	 	 	 	 	 	 	 	
Property, plant and equipment, net	 	 	84,268	 	 	 	85,112	 	
Goodwill	 	 	58,511	 	 	 	59,169	 	
Other intangible assets, net	 	 	32,028	 	 	 	32,809	 	
Investments in associated companies	 	 	17,789	 	 	 	16,603	 	
Deferred income taxes	 	 	27,284	 	 	 	30,673	 	
Other assets	 	 	36,038	 	 	 	34,458	 	
Total assets	 	$	569,987	 	 	$	536,634	 	
 	 	 	 	 	 	 	 	 	
LIABILITIES AND EQUITY	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	
Current liabilities	 	 	 	 	 	 	 	 	
Short-term borrowings and current portion of long-term debt	 	$	1,432	 	 	$	1,468	 	
Accounts and other payables	 	 	81,289	 	 	 	70,794	 	
Accrued compensation	 	 	17,027	 	 	 	16,842	 	
Other current liabilities	 	 	27,399	 	 	 	18,688	 	
Total current liabilities	 	 	127,147	 	 	 	107,792	 	
Long-term debt	 	 	17,765	 	 	 	30,000	 	
Deferred income taxes	 	 	6,127	 	 	 	6,383	 	
Other non-current liabilities	 	 	94,105	 	 	 	102,783	 	
Total liabilities	 	 	245,144	 	 	 	246,958	 	
 	 	 	 	 	 	 	 	 	
Equity	 	 	 	 	 	 	 	 	
Common stock, $1 par value; authorized 30,000,000 shares; issued 13,187,320 shares	 	 	13,187	 	 	 	13,095	 	
Capital in excess of par value	 	 	97,816	 	 	 	94,470	 	
Retained earnings	 	 	247,833	 	 	 	215,390	 	
Accumulated other comprehensive loss	 	 	(43,238	)	 	 	(41,855	)	
Total Quaker shareholders' equity	 	 	315,598	 	 	 	281,100	 	
Noncontrolling interest	 	 	9,245	 	 	 	8,576	 	
Total equity	 	 	324,843	 	 	 	289,676	 	
Total liabilities and equity	 	$	569,987	 	 	$	536,634	 	
 
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Quaker Chemical Corporation
Condensed Consolidated Statement of Cash Flows
For the nine months ended September 30,
(Dollars in thousands)
 
 	 	(Unaudited)	 	
 	 	2013	 	 	2012	 	
Cash flows from operating activities	 	 	 	 	 	 	 	 	
Net income	 	$	44,171	 	 	$	36,473	 	
Adjustments to reconcile net income to net cash provided by operating activities:	 	 	 	 	 	 	 	 	
Depreciation	 	 	9,219	 	 	 	9,001	 	
Amortization	 	 	2,621	 	 	 	2,283	 	
Equity in undistributed earnings of associated companies, net of dividends	 	 	(2,525	)	 	 	(1,854	)	
Deferred compensation and other, net	 	 	(50	)	 	 	1,848	 	
Stock-based compensation	 	 	3,133	 	 	 	2,954	 	
Loss (gain) on disposal of property, plant and equipment	 	 	193	 	 	 	(75	)	
Insurance settlement realized	 	 	(731	)	 	 	(1,074	)	
Pension and other postretirement benefits	 	 	(561	)	 	 	(1,823	)	
(Decrease) increase in cash from changes in current assets and current liabilities, net of acquisitions:	 	 	 	 	 	 	 	 	
Accounts receivable	 	 	(13,222	)	 	 	(1,381	)	
Inventories	 	 	(4,569	)	 	 	(875	)	
Prepaid expenses and other current assets	 	 	1,017	 	 	 	(1,976	)	
Accounts payable and accrued liabilities	 	 	13,256	 	 	 	(1,731	)	
Net cash provided by operating activities	 	 	51,952	 	 	 	41,770	 	
 	 	 	 	 	 	 	 	 	
Cash flows from investing activities	 	 	 	 	 	 	 	 	
Capital expenditures	 	 	(7,330	)	 	 	(8,757	)	
Payments related to acquisitions , net of cash acquired	 	 	(2,478	)	 	 	(2,635	)	
Proceeds from disposition of assets	 	 	391	 	 	 	193	 	
Insurance settlement interest earned	 	 	40	 	 	 	53	 	
Change in restricted cash, net	 	 	691	 	 	 	1,021	 	
Net cash used in investing activities	 	 	(8,686	)	 	 	(10,125	)	
 	 	 	 	 	 	 	 	 	
Cash flows from financing activities	 	 	 	 	 	 	 	 	
Repayments of long-term debt	 	 	(12,289	)	 	 	(9,672	)	
Dividends paid	 	 	(9,721	)	 	 	(9,410	)	
Stock options exercised, other	 	 	(510	)	 	 	(828	)	
Excess tax benefit related to stock option exercises	 	 	815	 	 	 	2,164	 	
Distributions to noncontrolling shareholders	 	 	(30	)	 	 	(30	)	
Net cash used in financing activities	 	 	(21,735	)	 	 	(17,776	)	
 	 	 	 	 	 	 	 	 	
Effect of exchange rate changes on cash	 	 	(133	)	 	 	(606	)	
Net increase in cash and cash equivalents	 	 	21,398	 	 	 	13,263	 	
Cash and cash equivalents at the beginning of the period	 	 	32,547	 	 	 	16,909	 	
Cash and cash equivalents at the end of the period	 	$	53,945	 	 	$	30,172	 	
 
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1 Quaker Chemical Corporation Investor Conference Call October 30, 2013 Third Quarter 2013 Results

 	

2 Regulation G The attached charts include Company information that does not conform to generally accepted accounting principles (GAAP). Management believes that an analysis of this data is meaningful to investors because it provides insight with respect to ongoing operating results of the Company and allows investors to better evaluate the financial results of the Company. These measures should not be viewed as an alternative to GAAP measures of performance. Furthermore, these measures may not be consistent with similar measures provided by other companies. This data should be read in conjunction with the Company’s third quarter earnings news release dated October 29, 2013, which has been furnished to the SEC on Form 8-K, and the Company’s Form 10-Q for the quarterly period ended September 30, 2013, which has been filed with the SEC. Forward-Looking Statements This presentation may contain forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to d iffer materially from those projected in such statements. A major risk is that the Company’s demand is largely derived from the demand for its customers’ products, which subjects the Company to downturns in a customer’s business and unanticipated customer production shutdowns. Other major risks and uncertainties include, but are not limited to, significant increases in raw material costs, customer financial stability, worldwide economic and political conditions, foreign currency fluctuations, future terrorist attacks and other acts of violence. Other factors could also adversely affect us. Therefore, we caution you not to place undue reliance on our forward-looking statements. This discussion is provided as permitted by the Private Securities Litigation Reform Act of 1995. Risks and Uncertainties Statement

 	

3 Speakers Michael F. Barry Chairman of the Board, Chief Executive Officer & President Margaret M. Loebl Vice President, Chief Financial Officer & Treasurer Robert T. Traub General Counsel Chart #1

 	

4 Third Quarter 2013 Headlines ▪ 14% earnings per share growth despite challenging economic environment ▪ Expected $0.08 per share third quarter tax benefit delayed until fourth quarter ▪ Strong net operating cash flow of $24.5 million in Q3 2013 Chart #2

 	

5 Chairman Comments ▪ Q3 2013 x Solid sales / margins in a difficult economy x Gaining share & leveraging acquisitions x Earnings growth and strong cash flow generation x Growing TTM Adjusted EBITDA x Liquidity remains a Company strength ▪ Q4 2013 Outlook x Expect good operating results x Subject to typical negative seasonality impacts around the holidays at year end Third Quarter 2013 Chart #3 We remain confident in our future and expect 2013 to be another strong year for Quaker in terms of earnings, cash flow generation, EBITDA growth and shareholder value creation.

 	

6 Crude Steel Output Thousand Metric Tons Chart #4 Jan - Sept Jan - Sept % 2013 2012 Change EU-27 123,779 129,208 -4.2 Other Europe 27,239 28,706 -5.1 CIS 81,513 84,415 -3.4 N. America 88,882 92,663 -4.1 S. America 34,773 35,190 -1.2 Africa 11,402 11,410 -0.1 Middle East 19,321 18,096 +6.8 Asia 795,080 750,723 +5.9 Oceania 4,225 4,378 -3.5 Source: WSA

 	

7 Product Volume by Quarter Thousand Kilograms 25,000 30,000 35,000 40,000 45,000 50,000 55,000 4Q08 YTD Avg. 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q112Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 Metalworking Process Chemicals Segment Chart #5

 	

8 Financial Snapshot Q3 2013 Q3 2012 YTD 2013 YTD 2012 Net Sales ($Mils.) 184.1 180.9 545.1 535.4 Gross Margin (%) 35.9 32.7 35.9 33.5 Operating Margin (%) 10.2 8.8 10.3 9.3 Net Income attributable to Quaker Chemical Corporation ($Mils.) 12.6 10.9 42.3 34.4 Adjusted EBITDA ($Mils.) – Trailing Twelve Months 87.5 77.3 -- -- Adjusted EBITDA Margin (%) 12.2 10.9 -- -- Earnings Per Diluted Share 0.95 0.83 3.21 2.63 Non - GAAP Earnings Per Diluted Share 0.91 0.80 2.87 2.61 Debt ($Mils.) 19.2 38.6 -- -- Equity ($Mils.) 324.8 293.4 -- -- Net Operating Cash Flow ($Mils.) 24.5 19.8 51.9 41.8 Chart #6

 	

9 Gross Margin Percentage 32.7% 34.2% 35.5% 36.4% 35.9% 20.0% 25.0% 30.0% 35.0% 40.0% Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Gross Margin Percentage Chart #7 28.0% 34.7% 35.4% 32.6% 33.7% 35.9% 20.0% 25.0% 30.0% 35.0% 40.0% 2008 2009 2010 2011 2012 2013 YTD Gross Margin Percentage

 	

10 Adjusted EBITDA Baseline Historical Performance $40.1 $44.2 $66.8 $73.0 $80.9 $91.5 6.90% 9.80% 12.30% 10.70% 11.40% 12.60% 2008 2009 2010 2011 2012 Q3 2013 Annualized Adjusted EBITDA ($ Mils.) Adjusted EBITDA Margin (%) Chart #8 CAGR: 17.9% +570 Margin bps 2008 – 2013 Annualized

 	

11 Balance Sheet Net Cash / (Debt) -$100 -$80 -$60 -$40 -$20 $0 $20 $40 $60 $80 2008 2009 2010 2011 2012 Q3 2013 $ Millions Cash ST/LT Debt Net Debt Chart #9

 	

12 Net Cash Flow From Operations 19.8 21.1 11.3 16.2 24.5 0 10 20 30 40 50 60 70 80 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Operating Cash Flow ($ Millions) Chart #10 13.4 41.6 37.5 19.7 62.9 51.9 0 10 20 30 40 50 60 70 80 2008 2009 2010 2011 2012 YTD 2013 Operating Cash Flow ($ Millions)

 	

13 APPENDIX

 	

14 Chart #11 Q3 2013 Q3 2012 YTD 2013 YTD 2012 GAAP Earnings Per Diluted Share 0.95$ 0.83$ 3.21$ 2.63$ CFO transition costs per diluted Share -$ -$ -$ 0.03$ Customer bankruptcies per diluted share -$ -$ -$ 0.06$ Cost streamlining inititiatives per diluted share 0.05$ -$ 0.07$ -$ Mineral oil excise tax refund per diluted share -$ -$ (0.14)$ -$ Change in acquisition-related earnout liability per diluted share -$ -$ 0.03$ -$ Devaluation of the Venezuelan Bolivar per diluted share -$ -$ 0.03$ -$ Equity income in a captive insurance company per diluted share (0.09)$ (0.03)$ (0.33)$ (0.11)$ Non-GAAP Earnings Per Diluted Share 0.91$ 0.80$ 2.87$ 2.61$ Non - GAAP Earnings Per Diluted Share Reconciliation

 	

15 Annualized Adjusted EBITDA Reconciliation Chart #12 2008 2009 2010 2011 2012 YTD Q3 2013 Net income 9,833 16,058 32,120 45,892 47,405 42,253 Depreciation 10,879 9,525 9,867 11,455 12,252 9,219 Amortization 1,177 1,078 988 2,338 3,106 2,621 Interest expense 5,509 5,533 5,225 4,666 4,283 2,223 Taxes on income 4,977 7,065 12,616 14,256 15,575 16,933 Restructuring and related activities 2,916 2,289 - - - - Non-income tax contingency charge - - 4,132 - - - Equity affiliate out of period charge - - 564 - - - Mineral oil excise tax refund - - - - - (2,540) Transition costs related to key employees 3,505 2,443 1,317 - 609 - Non-cash gain from the purchase of an equity affiliate - - - (2,718) - - Change in acquisition-related earnout liability - - - (595) (1,737) 675 Equity loss (income) from a captive insurance company 1,299 162 (313) (2,323) (1,812) (4,378) Devaluation of the Venezuelan Bolivar - - 322 - - 357 U.S customer bankruptcies - - - - 1,254 - Cost streamlining initiatives - - - - - 1,277 Adjusted EBITDA 40,095 44,153 66,838 72,971 80,935 68,640 Adjusted EBITDA Margin 6.9% 9.8% 12.3% 10.7% 11.4% 12.6% Multiply Adjusted EBITDA by Annual Run Rate 1 1 1 1 1 1 1/3 Annualized Adjusted EBITDA 40,095 44,153 66,838 72,971 80,935 91,520

 	

16 Trailing Twelve Months Adjusted EBITDA Reconciliation Chart #13 I = G + H H G = F - D F E = C + D D C = B - A B A Q3 2013 Trailing Twelve Months Q3 2013 YTD Q3 2013 Last Three Months 2012 YTD 2012 Trailing Twelve Months Q3 2012 YTD Q3 2012 Last Three Months 2011 YTD 2011 YTD Q3 2011 Net income 12,551 55,260 42,253 13,007 47,405 44,768 34,398 10,370 45,892 35,522 Depreciation 3,094 12,470 9,219 3,251 12,252 11,929 9,001 2,928 11,455 8,527 Amortization 858 3,444 2,621 823 3,106 3,025 2,283 742 2,338 1,596 Interest expense 717 3,147 2,223 924 4,283 4,441 3,359 1,082 4,666 3,584 Taxes on income 5,972 19,816 16,933 2,883 15,575 13,987 12,692 1,295 14,256 12,961 Mineral oil excise tax refund - (2,540) (2,540) - - - - - - Non-cash gain from the purchase of an equity affiliate - - - - - - - - (2,718) (2,718) Change in acquisition-related earnout liability - (1,062) 675 (1,737) (1,737) (595) - (595) (595) - Equity loss (income) from a captive insurance company (1,247) (4,764) (4,378) (386) (1,812) (2,026) (1,426) (600) (2,323) (1,723) Devaluation of the Venezuelan Bolivar - 357 357 - - - - - - - U.S. customer bankruptcies - 98 - 98 1,254 1,156 1,156 - - - Transition costs related to key employees - (0) - (0) 609 609 609 - - - Cost streamlining initiatives 875 1,277 1,277 - - - - - - - Adjusted EBITDA 22,820 87,503 68,640 18,863 80,935 77,294 62,072 15,222 72,971 57,749 Adjusted EBITDA Margin 12.4% 12.2% 12.6% 10.9% 11.4% 10.9% 11.6% 8.8% 10.7% 11.3%