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
 
July 27, 2016
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 July 27, 2016, Quaker Chemical Corporation announced its results of operations for the second quarter ended June 30, 2016 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 July 27, 2016.  	
 	 	 	
99.2	 	Supplemental Information related to second quarter ended June 30, 2016.	
 
 	-2-	 	

 
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:   July 27, 2016	 	By:	/S/ MARY DEAN HALL	
 	 	 	Mary Dean Hall
Vice President, Chief Financial
Officer and Treasurer	
 
 	-3-	 	

Exhibit 99.1

NEWS
Contact:
Mary Dean Hall
Vice President, Chief Financial Officer and Treasurer
Hallm@quakerchem.com
T. 610.832.4160	 

For Release:   Immediate	
 
QUAKER CHEMICAL ANNOUNCES SECOND QUARTER 2016 RESULTS
 
 	·	Strong operating income of $22.1 million drives 5% increase in adjusted EBITDA	

 	·	Volume growth drives 2% increase in net sales despite FX and end-market headwinds	

 	·	Solid operating cash flow of $25.2 million up 31% from the prior year quarter	
 
July 27, 2016
  
CONSHOHOCKEN, PA - Quaker Chemical Corporation (NYSE: KWR) today announced net sales of $186.9 million in the second quarter of 2016, a 2% increase compared to $183.7 million in the second quarter of 2015, as growth in organic and acquisition volumes continued to outpace negative impacts from foreign currency translation and declines in selling price. This sales growth, coupled with stable gross margins and selling, general and administrative expenses, drove a 3% increase in operating income to $22.1 million in the second quarter of 2016 compared to $21.4 million in the second quarter of 2015 and a 5% increase in adjusted EBITDA to $27.7 million in the second quarter of 2016 compared to $26.2 million in the prior year quarter.
 
The Company’s strong operating performance year-over-year was offset by a higher effective tax rate of 32.6% in the second quarter of 2016 compared to 27.1% in the second quarter of 2015, resulting in earnings per diluted share of $1.13 for both the second quarters of 2016 and 2015, respectively, and a decrease in non-GAAP earnings per diluted share to $1.11 in the second quarter of 2016 compared to $1.15 in the prior year quarter. The Company has recognized a higher effective tax rate during the first half of 2016 while it awaits recertification of a concessionary tax rate in one of its subsidiaries, which the Company expects to receive in the fourth quarter of 2016 and which was available to the Company throughout 2015. The Company’s reported and non-GAAP results in the second quarter of 2016 were also negatively impacted by foreign exchange of approximately 4%, or $0.05 per diluted share. Driven by its strong operating earnings, the Company’s net operating cash flow increased 31% to approximately $25.2 million in the second quarter of 2016 compared to $19.2 million in the second quarter of 2015.
 
Michael F. Barry, Chairman, Chief Executive Officer and President commented, “We are pleased with our second quarter results, despite continued market challenges. We were able to grow our volumes both organically by 2% and from acquisitions by 4%, as well as maintain strong gross margins and stable SG&A levels, which enabled us to generate solid increases in adjusted EBITDA and net operating cash flow. This performance was achieved despite foreign exchange headwinds, which negatively impacted our top and bottom line by 3% and 4%, respectively. In the second half of the year, we expect to see some decline in gross margin due to timing differences between raw material price changes and our product pricing adjustments. However, we also expect to realize benefits from our previously announced restructuring program. In addition, we continue to believe in our ability to take market share and leverage our past acquisitions to help offset market challenges. In summary, our 2016 forecast continues to indicate growth in both the top and bottom lines and we still expect to increase non-GAAP earnings and adjusted EBITDA for the seventh consecutive year.”
 
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

 
 
Second Quarter of 2016 Summary
 
Net sales in the second quarter of 2016 were $186.9 million compared to $183.7 million in the second quarter of 2015. The 2% increase in net sales was primarily due to a 6% increase in volumes, including acquisitions, partially offset by the negative impact of foreign currency translation of $5.3 million, or 3%, and declines in selling price and product mix of 1%.
 
Gross profit in the second quarter of 2016 increased $0.6 million, or 1%, from the second quarter of 2015, primarily driven by the increase in sales volumes, noted above, on relatively consistent gross margins of 38.1% in the second quarter of 2016 compared to 38.4% in the prior year quarter.
 
Selling, general and administrative expenses (“SG&A”) decreased less than $0.1 million during the second quarter of 2016, primarily due to decreases from foreign currency translation, partially offset by incremental costs associated with the Company’s July 2015 acquisition of Verkol S.A (“Verkol”). In addition, overall labor-related costs were relatively flat quarter-over-quarter as annual compensation increases were offset by certain cost savings efforts, including initial modest savings as a result of the 2015 global restructuring program. Related to this restructuring program, the Company did not incur any additional restructuring expenses in the second quarter of 2016 and continues to execute the program as planned. The Company continues to project pre-tax cost savings as a result of this program to approximate $3 million in 2016 and $6 million annually in subsequent years. In addition, the Company still expects to substantially complete this program during 2016.
 
Operating income in the second quarter of 2016 was $22.1 million, which increased 3% compared to $21.4 million in the second quarter of 2015. The increase in operating income was primarily due to the increase in sales volumes in the second quarter of 2016, noted above, on relatively consistent gross margins and SG&A in both quarters.
 
Other income was $0.3 million in the second quarter of 2016 compared to other expense of $0.1 million in the second quarter of 2015. The increase in other income was primarily driven by foreign currency transaction gains realized in the second quarter of 2016 compared to foreign currency transaction losses in the second quarter of 2015.
 
Interest expense was $0.1 million higher in the second quarter of 2016 compared to the second quarter of 2015, primarily due to increased average borrowings outstanding in the second quarter of 2016 as a result of the Verkol acquisition. Interest income was $0.2 million higher in the second quarter of 2016 compared to the second quarter of 2015, primarily due to an increase in the level of the Company’s invested cash in certain regions with higher returns and interest received on certain tax-related credits in the second quarter of 2016.
 
The Company’s effective tax rates for the second quarters of 2016 and 2015 were 32.6% and 27.1%, respectively. The increase in the second quarter of 2016 effective tax rate was primarily due to the Company recording earnings in one of its subsidiaries at a statutory tax rate of 25% while it awaits recertification of a concessionary 15% tax rate, which was available to the Company during the second quarter of 2015. For the same reason, the Company estimates its third quarter of 2016 effective tax rate will be between 29% and 31%. However, the Company still estimates its full year 2016 effective tax rate will approximate 28% to 30%.
 
Equity in net income of associated companies (“equity income”) increased $0.5 million in the second quarter of 2016 compared to the second quarter of 2015, primarily due to higher earnings from the Company’s interest in a captive insurance company in the second quarter of 2016 compared to the prior year quarter.
 
Net income attributable to noncontrolling interest was relatively flat in the second quarter of 2016 compared to the prior year quarter.
 
Changes in foreign exchange rates negatively impacted the Company’s second quarter of 2016 net income by approximately 4%, or $0.05 per diluted share.
 
 	-more-	 	

 
Year-to-Date 2016 Summary
 
Net sales in the first six months of 2016 were $365.0 million compared to $365.1 million in the first six months of 2015. The consistent net sales were the result of a 6% increase in volumes, including acquisitions, offset by the negative impact of foreign currency translation of $13.3 million, or 4%, and declines in selling price and product mix of 2%.
 
Gross profit in the first six months of 2016 increased $2.2 million, or 2%, from the first six months of 2015, primarily driven by the increase in sales volumes, noted above, and an expansion of gross margin to 38.1% in the first six months of 2016 compared to 37.5% in the first six months of 2015. The expansion in gross margin in the first six months of 2016 is due to a continued lag between the timing of certain raw material cost decreases and related selling price changes.
 
SG&A increased $0.1 million during the first six months of 2016, primarily due to incremental costs associated with the Company’s acquisition of Verkol and higher overall labor-related costs, which were partially offset by decreases from foreign currency translation and the cost savings efforts, noted above.
 
Operating income in the first six months of 2016 was $41.3 million, which increased 5% as compared to $39.3 million in the first six months of 2015. The increase in operating income was primarily due to the increase in sales volumes and the expansion of gross margin in the first six months of 2016, noted above, on a consistent level of SG&A year-over-year.
 
Other income was $1.0 million in the first six months of 2016 compared to other expense of $0.3 million in the first six months of 2015. The increase in other income was primarily driven by foreign currency transaction gains realized in the first six months of 2016 compared to foreign currency transaction losses in the first six months of 2015.
 
Interest expense was $0.3 million higher in the first six months of 2016 compared to the first six months of 2015, primarily due to increased average borrowings outstanding in the first six months of 2016 as a result of the Verkol acquisition. Interest income was $0.2 million higher in the first six months of 2016 compared to the first six months of 2015, primarily due to an increase in the level of the Company’s invested cash in certain regions with higher returns in the first six months of 2016.
 
The Company’s effective tax rates for the first six months of 2016 and 2015 were 32.5% and 28.8%, respectively. The increase in the first six months of 2016 effective tax rate was primarily due to the Company recording earnings in one of its subsidiaries at a statutory tax rate of 25% while it awaits recertification of a concessionary 15% tax rate, which was available to the Company during the first six months of 2015, as noted above.
 
Equity income increased $2.0 million in the first six months of 2016 compared to the first six months of 2015. The increase in equity income was primarily due to a smaller currency conversion charge recorded at the Company’s Venezuela affiliate during the first six months of 2016 compared to the first six months of 2015, related to changes in Venezuela’s foreign exchange markets and currency controls in both periods. In addition, equity income includes earnings from the Company’s interest in a captive insurance company, which was lower in the first six months of 2016 compared to the first six months of 2015.
 
The Company had a $0.2 million increase in net income attributable to noncontrolling interest in the first six months of 2016 compared to the first six months of 2015, primarily due to stronger performance at its India affiliate.
 
Changes in foreign exchange rates, excluding the currency conversion impacts of the Venezuelan bolivar fuerte, noted above, negatively impacted the Company’s first six months of 2016 net income by approximately 3%, or $0.07 per diluted share.
 
 	-more-	 	

 
Balance Sheet and Cash Flow Items
 
The Company’s net operating cash flow of approximately $25.2 million in the second quarter of 2016 increased its year-to-date net operating cash flow to $36.0 million, a 32% increase compared to $27.3 million in the first six months of 2015. The increase was driven by solid operating performance and lower cash invested in the Company’s working capital. In addition, the Company paid approximately $4.3 million in cash dividends during the second quarter of 2016, increasing its total dividends paid to $8.5 million in the first six months of 2016, and also repurchased approximately 84,000 shares of its common stock for $5.9 million in the first six months of 2016. Overall, the Company’s liquidity and balance sheet remain strong, as its cash position exceeded its debt at June 30, 2016 and the Company’s consolidated leverage ratio continued to be less than one times EBITDA.
 
Non-GAAP Measures
 
Included in this public release are two non-GAAP (unaudited) financial measures: non-GAAP earnings per diluted share and adjusted EBITDA. The Company believes these non-GAAP financial measures provide meaningful supplemental information as they enhance a reader’s understanding of the financial performance of the Company, are more indicative of future operating performance of the Company, and facilitate a better comparison among fiscal periods, as the non-GAAP financial measures exclude 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 tables reconcile non-GAAP earnings per diluted share (unaudited) and adjusted EBITDA (unaudited) to their most directly comparable GAAP (unaudited) financial measures:
 
 	 	Three Months Ended
June 30,	 	 	Six Months Ended
June 30,	 	
 	 	2016	 	 	2015	 	 	2016	 	 	2015	 	
GAAP earnings per diluted share attributable to Quaker Chemical Corporation common shareholders	 	$	1.13	 	 	$	1.13	 	 	$	2.11	 	 	$	1.90	 	
Equity (income) loss in a captive insurance company per diluted share	 	 	(0.02	)	 	 	0.01	 	 	 	(0.03	)	 	 	(0.05	)	
U.S. customer bankruptcy per diluted share	 	 	-	 	 	 	0.01	 	 	 	-	 	 	 	0.01	 	
Cost streamlining initiatives per diluted share	 	 	-	 	 	 	-	 	 	 	-	 	 	 	0.01	 	
Currency conversion impact of the Venezuelan bolivar fuerte per diluted share	 	 	-	 	 	 	-	 	 	 	0.01	 	 	 	0.21	 	
Non-GAAP earnings per diluted share	 	$	1.11	 	 	$	1.15	 	 	$	2.09	 	 	$	2.08	 	
 
 	 	Three Months Ended
June 30,	 	 	Six Months Ended
June 30,	 	
 	 	2016	 	 	2015	 	 	2016	 	 	2015	 	
Net income attributable to Quaker Chemical Corporation	 	$	15,015	 	 	$	15,038	 	 	$	27,961	 	 	$	25,416	 	
Depreciation and amortization	 	 	4,986	 	 	 	4,666	 	 	 	9,920	 	 	 	9,364	 	
Interest expense	 	 	727	 	 	 	607	 	 	 	1,468	 	 	 	1,194	 	
Taxes on income before equity in net income of associated companies	 	 	7,238	 	 	 	5,724	 	 	 	13,543	 	 	 	11,083	 	
Equity (income) loss in a captive insurance company	 	 	(303	)	 	 	100	 	 	 	(355	)	 	 	(695	)	
U.S. customer bankruptcy	 	 	-	 	 	 	111	 	 	 	-	 	 	 	111	 	
Cost streamlining initiatives	 	 	-	 	 	 	-	 	 	 	-	 	 	 	173	 	
Currency conversion impact of the Venezuelan bolivar fuerte	 	 	-	 	 	 	-	 	 	 	88	 	 	 	2,806	 	
Adjusted EBITDA	 	$	27,663	 	 	$	26,246	 	 	$	52,625	 	 	$	49,452	 	
 
 	-more-	 	

 
Forward-Looking Statements
 
This release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements 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 demand for the Company’s products and services is largely derived from the demand for its customers’ products, which subjects the Company to uncertainties related 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 second quarter of 2016 results is scheduled for July 28, 2016 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.
 
 	-more-	 	

 
Quaker Chemical Corporation
Condensed Consolidated Statements of Income
(Dollars in thousands, except share and per share data)
 
 	 	(Unaudited)	 	
 	 	Three Months Ended June 30	 	 	Six Months Ended June 30	 	
 	 	2016	 	 	2015	 	 	2016	 	 	2015	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Net sales	 	$	186,915	 	 	$	183,726	 	 	$	364,992	 	 	$	365,056	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Cost of goods sold	 	 	115,680	 	 	 	113,109	 	 	 	225,882	 	 	 	228,111	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Gross profit	 	 	71,235	 	 	 	70,617	 	 	 	139,110	 	 	 	136,945	 	
%	 	 	38.1	%	 	 	38.4	%	 	 	38.1	%	 	 	37.5	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Selling, general and administrative expenses	 	 	49,142	 	 	 	49,172	 	 	 	97,783	 	 	 	97,636	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Operating income	 	 	22,093	 	 	 	21,445	 	 	 	41,327	 	 	 	39,309	 	
%	 	 	11.8	%	 	 	11.7	%	 	 	11.3	%	 	 	10.8	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Other income (expense), net	 	 	271	 	 	 	(88	)	 	 	977	 	 	 	(282	)	
Interest expense	 	 	(727	)	 	 	(607	)	 	 	(1,468	)	 	 	(1,194	)	
Interest income	 	 	545	 	 	 	375	 	 	 	893	 	 	 	695	 	
Income before taxes and equity in net income of associated companies	 	 	22,182	 	 	 	21,125	 	 	 	41,729	 	 	 	38,528	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Taxes on income before equity in net income of associated companies	 	 	7,238	 	 	 	5,724	 	 	 	13,543	 	 	 	11,083	 	
Income before equity in net income of associated companies	 	 	14,944	 	 	 	15,401	 	 	 	28,186	 	 	 	27,445	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Equity in net income (loss) of associated companies	 	 	461	 	 	 	11	 	 	 	563	 	 	 	(1,426	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income	 	 	15,405	 	 	 	15,412	 	 	 	28,749	 	 	 	26,019	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Less: Net income attributable to noncontrolling interest	 	 	390	 	 	 	374	 	 	 	788	 	 	 	603	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income attributable to Quaker Chemical Corporation	 	$	15,015	 	 	$	15,038	 	 	$	27,961	 	 	$	25,416	 	
%	 	 	8.0	%	 	 	8.2	%	 	 	7.7	%	 	 	7.0	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Share and per share data:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Basic weighted average common shares outstanding	 	 	13,126,134	 	 	 	13,220,264	 	 	 	13,121,470	 	 	 	13,204,599	 	
Diluted weighted average common shares outstanding	 	 	13,144,713	 	 	 	13,239,675	 	 	 	13,136,653	 	 	 	13,223,850	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income attributable to Quaker Chemical Corporation Common Shareholders - basic	 	$	1.13	 	 	$	1.13	 	 	$	2.11	 	 	$	1.91	 	
Net income attributable to Quaker Chemical Corporation Common Shareholders - diluted	 	$	1.13	 	 	$	1.13	 	 	$	2.11	 	 	$	1.90	 	
 
 	-more-	 	

 
Quaker Chemical Corporation
Condensed Consolidated Balance Sheets
(Dollars in thousands, except par value and share amounts)
 
 	 	(Unaudited)	 	
 	 	June 30,	 	 	December 31,	 	
 	 	2016	 	 	2015	 	
ASSETS	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	
Current assets	 	 	 	 	 	 	 	 	
Cash and cash equivalents	 	$	96,245	 	 	$	81,053	 	
Accounts receivable, net	 	 	184,306	 	 	 	188,297	 	
Inventories, net	 	 	78,269	 	 	 	75,099	 	
Prepaid expenses and other current assets	 	 	23,905	 	 	 	21,404	 	
Total current assets	 	 	382,725	 	 	 	365,853	 	
Property, plant and equipment, net	 	 	85,094	 	 	 	87,619	 	
Goodwill	 	 	79,324	 	 	 	79,111	 	
Other intangible assets, net	 	 	71,530	 	 	 	73,287	 	
Investments in associated companies	 	 	22,324	 	 	 	20,354	 	
Non-current deferred tax assets	 	 	19,082	 	 	 	23,468	 	
Other assets	 	 	32,217	 	 	 	32,218	 	
Total assets	 	$	692,296	 	 	$	681,910	 	
 	 	 	 	 	 	 	 	 	
LIABILITIES AND EQUITY	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	
Current liabilities	 	 	 	 	 	 	 	 	
Short-term borrowings and current portion of long-term debt	 	$	672	 	 	$	662	 	
Accounts and other payables	 	 	75,569	 	 	 	71,543	 	
Accrued compensation	 	 	14,456	 	 	 	19,166	 	
Accrued restructuring	 	 	4,080	 	 	 	6,303	 	
Other current liabilities	 	 	24,536	 	 	 	26,881	 	
Total current liabilities	 	 	119,313	 	 	 	124,555	 	
Long-term debt	 	 	83,601	 	 	 	81,439	 	
Non-current deferred tax liabilities	 	 	11,748	 	 	 	11,400	 	
Other non-current liabilities	 	 	77,401	 	 	 	83,273	 	
Total liabilities	 	 	292,063	 	 	 	300,667	 	
 	 	 	 	 	 	 	 	 	
Equity	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	
Common stock, $1 par value; authorized 30,000,000 shares; issued and outstanding 2016 - 13,249,759 shares; 2015 - 13,288,113 shares	 	 	13,250	 	 	 	13,288	 	
Capital in excess of par value	 	 	109,751	 	 	 	106,333	 	
Retained earnings	 	 	340,127	 	 	 	326,740	 	
Accumulated other comprehensive loss	 	 	(71,790	)	 	 	(73,316	)	
Total Quaker shareholders' equity	 	 	391,338	 	 	 	373,045	 	
Noncontrolling interest	 	 	8,895	 	 	 	8,198	 	
Total equity	 	 	400,233	 	 	 	381,243	 	
Total liabilities and equity	 	$	692,296	 	 	$	681,910	 	
 
 	-more-	 	

 
Quaker Chemical Corporation
Condensed Consolidated Statements of Cash Flows
(Dollars in thousands)
 
 	 	(Unaudited)	 	
 	 	Six Months Ended June 30,	 	
 	 	2016	 	 	2015	 	
Cash flows from operating activities	 	 	 	 	 	 	 	 	
Net income	 	$	28,749	 	 	$	26,019	 	
Adjustments to reconcile net income to net cash provided by operating activities:	 	 	 	 	 	 	 	 	
Depreciation	 	 	6,331	 	 	 	6,117	 	
Amortization	 	 	3,589	 	 	 	3,247	 	
Equity in undistributed (earnings) losses of associated companies, net of dividends	 	 	(488	)	 	 	1,487	 	
Deferred compensation and other, net	 	 	3,609	 	 	 	1,325	 	
Stock-based compensation	 	 	3,423	 	 	 	3,169	 	
Loss (gain) on disposal of property, plant, equipment and other assets	 	 	45	 	 	 	(69	)	
Insurance settlement realized	 	 	(614	)	 	 	(301	)	
Pension and other postretirement benefits	 	 	(2,896	)	 	 	1,019	 	
Increase (decrease) in cash from changes in current assets and current liabilities, net of acquisitions:	 	 	 	 	 	 	 	 	
Accounts receivable	 	 	3,801	 	 	 	(2,344	)	
Inventories	 	 	(2,387	)	 	 	(1,993	)	
Prepaid expenses and other current assets	 	 	(3,164	)	 	 	(4,057	)	
Accounts payable and accrued liabilities	 	 	(1,642	)	 	 	(6,301	)	
Change in restructuring liabilities	 	 	(2,330	)	 	 	-	 	
Net cash provided by operating activities	 	 	36,026	 	 	 	27,318	 	
 	 	 	 	 	 	 	 	 	
Cash flows from investing activities	 	 	 	 	 	 	 	 	
Investments in property, plant and equipment	 	 	(4,377	)	 	 	(4,277	)	
Payments related to acquisitions, net of cash acquired	 	 	(3,284	)	 	 	528	 	
Proceeds from disposition of assets	 	 	48	 	 	 	102	 	
Insurance settlement interest earned	 	 	16	 	 	 	20	 	
Change in restricted cash, net	 	 	598	 	 	 	281	 	
Net cash used in investing activities	 	 	(6,999	)	 	 	(3,346	)	
 	 	 	 	 	 	 	 	 	
Cash flows from financing activities	 	 	 	 	 	 	 	 	
Proceeds from long-term debt	 	 	1,736	 	 	 	-	 	
Repayment of long-term debt	 	 	(286	)	 	 	(12,699	)	
Dividends paid	 	 	(8,480	)	 	 	(7,991	)	
Stock options exercised, other	 	 	(95	)	 	 	534	 	
Payments for repurchase of common stock	 	 	(5,859	)	 	 	(1,630	)	
Excess tax benefit related to stock option exercises	 	 	136	 	 	 	378	 	
Net cash used in financing activities	 	 	(12,848	)	 	 	(21,408	)	
 	 	 	 	 	 	 	 	 	
Effect of foreign exchange rate changes on cash	 	 	(987	)	 	 	(1,511	)	
Net increase in cash and cash equivalents	 	 	15,192	 	 	 	1,053	 	
Cash and cash equivalents at the beginning of the period	 	 	81,053	 	 	 	64,731	 	
Cash and cash equivalents at the end of the period	 	$	96,245	 	 	$	65,784	 	

 
Exhibit 99.2