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
 
March 6, 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 March 6, 2013, Quaker Chemical Corporation announced its results of operations for the fourth quarter and full year ended December 31, 2012 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 March 6, 2013.	
 	 	
99.2	Supplemental Information related to fourth quarter and full year ended December 31, 2012.	
 
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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: March 6, 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 & Treasurer
loeblm@quakerchem.com
T. 610.832.4160	 	
 
For Release: Immediate	
 
QUAKER CHEMICAL ANNOUNCES FOURTH QUARTER AND FULL YEAR 2012 RESULTS
 
 	·	Record full year 2012 revenue and net income despite challenging environment	
 	·	Full year 2012 record cash flow generation enhances strong balance sheet	
 	·	41% shareholder return in the full year 2012	
 
March 6, 2013
 
CONSHOHOCKEN, PA - Quaker Chemical Corporation (NYSE: KWR) today announced net sales and earnings per diluted share of $172.9 million and $0.99 per diluted share for the fourth quarter of 2012, respectively, compared to fourth quarter 2011 net sales and earnings per diluted share of $173.3 million and $0.80 per diluted share, respectively. Net income for the fourth quarter of 2012 was $13.0 million compared to net income of $10.4 million for the fourth quarter of 2011.
 
Full year net sales and earnings per diluted share were $708.2 million and $3.63 per diluted share for 2012, respectively, compared to net sales and earnings per diluted share of $683.2 million and $3.66 per diluted share for 2011, respectively. Full year 2012 net income was $47.4 million compared to 2011 net income of $45.9 million. Changes in foreign exchange rates negatively impacted the full year 2012 net sales by $26.8 million, or 4%, and net income by $1.7 million or $0.13 per diluted share.
 
Michael F.  Barry, Chairman, Chief Executive Officer and President, commented, "We are pleased to report solid results in the fourth quarter despite weak market conditions in Europe and Brazil as well as typical seasonal trends at year end.  Overall, we experienced gross margin improvement based on stabilizing raw material costs.  On balance, we are continuing to offset challenging market conditions, including foreign exchange, and to grow our business profitably through taking market share and leveraging our recent acquisitions."
 
Mr. Barry continued, "2012 was a record year for Quaker in terms of revenue, net income, and net operating cash flow despite a challenging global environment.   Also, our shareholder value creation was 41% as we continued with both dividend and share price appreciation.   At the close of the year, our balance sheet remains very strong, as our cash position exceeds our debt, which provides us the financial flexibility to pursue acquisitions as appropriate."
 
Mr. Barry also noted, "Going into 2013, we will continue to face challenging economic environments in various parts of the world, especially Europe.  In addition, we are likely to see higher raw material costs from current levels due to increasing crude oil pricing.  However, we also expect a continued recovery in North America and China, as well as growth due to our strategic initiatives and further leverage from our acquisitions.  In summary, I remain confident in our future and expect 2013 to be another good year for Quaker."
 
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

 	
 
Key items to note related to the fourth quarter of 2012 are as follows. The fourth quarters of 2012 and 2011 include equity income in associated companies of $0.4 million and $0.6 million, respectively, or earnings per diluted share of $0.03 and $0.05, respectively, from the Company’s ownership in a captive insurance company described in the Change in Accounting Method section below. The Company’s low effective tax rate in the fourth quarter of 2012 reflects a reduction of valuation allowances on certain domestic deferred tax assets and other contributing factors. As it relates to our 2010 Summit Lubricants acquisition, the fourth quarter of 2012 included higher other income related to the change in fair value of a contingent consideration liability of $1.7 million, or $0.09 per diluted share, compared to $0.6 million, or $0.03 per diluted share, in the fourth quarter of 2011. In addition, the fourth quarter results include other uncommon expenses totaling $0.06 per diluted share largely consisting of severance and related items and costs associated with the launch of the Company’s new revitalized Brand.
 
Key items to note related to the full year 2012 are as follows. The full years of 2012 and 2011 include equity income from the Company’s investment in the captive insurance company, noted above, of $1.8 million and $2.3 million, respectively, or earnings per diluted share of $0.14 and $0.19, respectively. The Company’s low effective tax rate for the full year 2012 reflects a decrease in the reserves for uncertain tax positions, a reduction of valuation allowances on certain domestic deferred tax assets and other contributing factors. The full year 2011 results include other income of $2.7 million, or $0.22 per diluted share, related to the revaluation of the Company’s previously held ownership interest in its Mexican affiliate to its fair value. As it relates to our Summit Lubricants acquisition, the full year 2012 included higher other income related to the change in fair value of a contingent consideration liability of $1.7 million, or $0.09 per diluted share, compared to $0.6 million, or $0.03 per diluted share, in 2011. The full year 2012 results also include other previously disclosed uncommon expenses largely consisting of severance and related items, certain customer bankruptcies, CFO transition costs and costs associated with the launch of the Company’s new revitalized Brand.
 
Fourth Quarter 2012 Summary
 
Net sales for the fourth quarter of 2012 were $172.9 million, a decrease of less than 1% from $173.3 million in the fourth quarter of 2011. Product volumes, including acquisitions, increased revenues by approximately 3%, which were offset by decreases due to foreign exchange rate translation of $3.7 million, or 2%, and a slight decrease due to selling and price mix of less than 1%.
 
Gross profit increased approximately $2.5 million, or 4%, from the fourth quarter of 2011. The increase in gross profit on consistent sales was due to an improvement in gross margin to 34.2% compared to 32.7% for the fourth quarter of 2011 and 32.7% for the third quarter of 2012. The increase in gross margin is primarily the result of some stabilization in raw material costs experienced in the fourth quarter of 2012, allowing margins to return to more acceptable levels.
 
Selling, general and administrative expenses (“SG&A”) increased approximately $0.2 million compared to the fourth quarter of 2011, primarily related to acquisitions and higher selling, inflationary and other labor related costs which were partially offset by a decrease in foreign exchange rate translation and lower incentive compensation. SG&A for the fourth quarter of 2012 also includes certain uncommon expenses totaling $0.06 per diluted share largely consisting of severance and related items and costs associated with the launch of the Company’s new revitalized Brand. SG&A, as a percentage of sales, was slightly up at 26.3% for the fourth quarter of 2012 compared to 26.1% for the fourth quarter of 2011.
 
The decrease in interest expense was primarily due to lower average borrowings and lower interest rates in the fourth quarter of 2012 as compared to the fourth quarter of 2011.
 
The increase in other income in the fourth quarter of 2012 was primarily due to higher other income related to the change in fair value of a contingent consideration liability of $1.7 million, or $0.09 per diluted share, compared to $0.6 million, or $0.03 per diluted share, in the fourth quarter of 2011 and, also, a separate increase to other income of approximately $1.0 million, or $0.08 per diluted share, related to the change in fair value of an acquisition-related liability, was recorded in the fourth quarter of 2012.
 
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The increase in equity in net income of associated companies was caused by improved performance over the majority of the Company’s equity affiliates in the fourth quarter of 2012 as compared to the fourth quarter of 2011, in particular in our Japanese affiliate, partially offset by lower income from the Company’s equity investment in its captive insurance company.
 
Changes in foreign exchange rates negatively impacted the fourth quarter of 2012 net income by approximately $0.3 million, or $0.02 per diluted share.
 
Full Year Summary
 
Net sales for 2012 were $708.2 million, an increase of 4% from $683.2 million in 2011. Product volumes, including acquisitions, increased revenues by approximately 5% and selling and price mix increased revenues by approximately 3%, while foreign exchange rate translation decreased revenues by approximately $26.8 million, or 4%.
 
Gross profit increased by approximately $16.1 million, or 7%, from 2011, with gross margin improving to 33.7% from 32.6% for 2011, reflecting some stabilization in raw material costs experienced primarily at the end of 2012, allowing margins to return to more acceptable levels.
 
SG&A increased by approximately $10.7 million, or 7%, compared to 2011, primarily related to acquisitions and higher selling, inflationary and other costs on increased business activity, which were partially offset by decreases due to foreign exchange rate translation and lower incentive compensation. Also, SG&A for 2012 includes charges of $0.06 per diluted share for certain customer bankruptcies in the U.S., $0.03 per diluted share related to CFO transition costs and certain uncommon charges of $0.11 per diluted share that largely consists of severance and related items and costs associated with the launch of the Company’s new revitalized Brand. As a result, SG&A, as a percentage of sales, slightly increased to 24.8% from 24.1% in 2011.
 
The decrease in interest expense was primarily due to lower average borrowings and lower interest rates in 2012 as compared to 2011, and the decrease in interest income from 2011 to 2012 was primarily caused by lower cash levels invested in higher interest rate jurisdictions.
 
Other income for 2012 included increases due to changes in the fair value of the contingent consideration liability of $1.7 million, or $0.09 per diluted share, and the fair value of the acquisition-related liability of $1.0 million, or $0.08 per diluted share, noted above. Other income for 2011 included a lower adjustment to the fair value of the contingent consideration liability of $0.6 million, or $0.03 per diluted share, noted above, and, also, approximately $2.7 million, or $0.22 per diluted share, of other income related to the revaluation of the Company’s previously held ownership interest in its Mexican affiliate to its fair value, which was related to the Company’s 2011 purchase of the remaining ownership interest in this entity. In addition, the Company experienced higher foreign exchange losses in 2012 and, also, received lower third party license fees in 2012, primarily as a result of the prior year purchase of the remaining ownership interest in the Company’s Mexican affiliate.
 
The Company’s 2012 and 2011 effective tax rates of 24.7% and 24.0%, respectively, reflect decreases in reserves for uncertain tax positions due to the expiration of applicable statutes of limitations for certain tax years of approximately $0.17 and $0.16 per diluted share, respectively. The Company has experienced and expects to further experience volatility in its effective tax rates due to the varying timing of tax audits and the expiration of applicable statutes of limitations as they relate to uncertain tax positions, among other factors. The Company estimates its 2013 effective tax rate to be in the high twenty percent range.
 
The decrease in equity in net income of associated companies was primarily caused by lower income from the Company’s equity investment in its captive insurance company, partially offset by improved performance over the majority of the Company’s other equity affiliates in 2012 as compared to 2011, in particular in our Japanese affiliate.
 
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Earnings per diluted share for 2012 of $3.63 reflect an approximate $0.11 per share dilutive effect as a result of the Company’s equity offering in May of 2011. Changes in foreign exchange rates negatively impacted the 2012 net income by approximately $1.7 million, or $0.13 per diluted share.
 
Balance Sheet and Cash Flow Items
 
The Company’s 2012 record level of operating cash flow of $62.9 million was approximately $43.2 million higher than 2011, primarily led by improved working capital management and increased net income. The Company’s consolidated leverage ratio remains strong at less than one times EBITDA. In July 2012, the Company acquired NP Coil Dexter Industries, S.r.l. for net cash consideration of approximately $2.7 million.
 
Change in Accounting Method
 
During 2012, the Company’s ownership percentage in Primex, Ltd. (“Primex”), a captive insurance company, increased following the exit of one of its shareholders. Due to the increased ownership percentage and other factors, the Company changed its method of accounting for its investment in Primex from the cost method to the equity method of accounting. As a result, the Company recast its Consolidated Balance Sheet, its Consolidated Statement of Income and its Consolidated Statement of Cash Flows for the fourth quarter and year ended December 31, 2011. The change in accounting method increased net income attributable to Quaker Chemical Corporation by $0.4 million and $0.6 million for the fourth quarters of 2012 and 2011, respectively, and by $1.8 million and $2.3 million for the full years 2012 and 2011, respectively.
 
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 fourth quarter and full year 2012 results is scheduled for March 7, 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 December 31,	 	 	Twelve Months Ended December 31,	 	
 	 	2012	 	 	2011	 	 	2012	 	 	2011	 	
 	 	 	 	 	(re-cast)	 	 	 	 	 	(re-cast)	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Net sales	 	$	172,868	 	 	$	173,261	 	 	$	708,226	 	 	$	683,231	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Cost of goods sold	 	 	113,714	 	 	 	116,597	 	 	 	469,515	 	 	 	460,581	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Gross profit	 	 	59,154	 	 	 	56,664	 	 	 	238,711	 	 	 	222,650	 	
%	 	 	34.2	%	 	 	32.7	%	 	 	33.7	%	 	 	32.6	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Selling, general and administrative expenses	 	 	45,478	 	 	 	45,297	 	 	 	175,487	 	 	 	164,738	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Operating income	 	 	13,676	 	 	 	11,367	 	 	 	63,224	 	 	 	57,912	 	
%	 	 	7.9	%	 	 	6.6	%	 	 	8.9	%	 	 	8.5	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Other income, net	 	 	2,886	 	 	 	980	 	 	 	3,415	 	 	 	5,050	 	
Interest expense	 	 	(924	)	 	 	(1,082	)	 	 	(4,283	)	 	 	(4,666	)	
Interest income	 	 	183	 	 	 	276	 	 	 	592	 	 	 	1,081	 	
Income before taxes and equity in net income of associated companies	 	 	15,821	 	 	 	11,541	 	 	 	62,948	 	 	 	59,377	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Taxes on income before equity in net income of associated companies	 	 	2,883	 	 	 	1,295	 	 	 	15,575	 	 	 	14,256	 	
 	 	 	12,938	 	 	 	10,246	 	 	 	47,373	 	 	 	45,121	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Equity in net income of associated companies	 	 	829	 	 	 	664	 	 	 	2,867	 	 	 	3,102	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income	 	 	13,767	 	 	 	10,910	 	 	 	50,240	 	 	 	48,223	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Less: Net income attributable to noncontrolling interest	 	 	760	 	 	 	540	 	 	 	2,835	 	 	 	2,331	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income attributable to Quaker Chemical Corporation	 	$	13,007	 	 	$	10,370	 	 	$	47,405	 	 	$	45,892	 	
%	 	 	7.5	%	 	 	6.0	%	 	 	6.7	%	 	 	6.7	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Per share data:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income attributable to Quaker Chemical Corporation Common Shareholders - basic	 	$	0.99	 	 	$	0.80	 	 	$	3.64	 	 	$	3.71	 	
Net income attributable to Quaker Chemical Corporation Common Shareholders - diluted	 	$	0.99	 	 	$	0.80	 	 	$	3.63	 	 	$	3.66	 	
 
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Quaker Chemical Corporation
Condensed Consolidated Balance Sheet
(Dollars in thousands, except par value and share amounts)
 
 	 	(Unaudited)	 	
 	 	December 31,	 	 	December 31,	 	
 	 	2012	 	 	2011	 	
 	 	 	 	 	(re-cast)	 	
ASSETS	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	
Current assets	 	 	 	 	 	 	 	 	
Cash and cash equivalents	 	$	32,547	 	 	$	16,909	 	
Accounts receivable, net	 	 	154,197	 	 	 	150,676	 	
Inventories, net	 	 	72,471	 	 	 	74,758	 	
Current deferred tax assets	 	 	6,401	 	 	 	6,338	 	
Prepaid expenses and other current assets	 	 	12,194	 	 	 	10,868	 	
Total current assets	 	 	277,810	 	 	 	259,549	 	
 	 	 	 	 	 	 	 	 	
Property, plant and equipment, net	 	 	85,112	 	 	 	82,916	 	
Goodwill	 	 	59,169	 	 	 	58,152	 	
Other intangible assets, net	 	 	32,809	 	 	 	31,783	 	
Investments in associated companies	 	 	16,603	 	 	 	14,073	 	
Deferred income taxes	 	 	30,673	 	 	 	29,823	 	
Other assets	 	 	34,458	 	 	 	34,856	 	
Total assets	 	$	536,634	 	 	$	511,152	 	
 	 	 	 	 	 	 	 	 	
LIABILITIES AND EQUITY	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	
Current liabilities	 	 	 	 	 	 	 	 	
Short-term borrowings and current portion of long-term debt	 	$	1,468	 	 	$	636	 	
Accounts payable	 	 	67,586	 	 	 	65,026	 	
Dividends payable	 	 	3,208	 	 	 	3,099	 	
Accrued compensation	 	 	16,842	 	 	 	16,987	 	
Accrued pension and postretirement benefits	 	 	2,188	 	 	 	2,038	 	
Current deferred tax liabilities	 	 	253	 	 	 	238	 	
Other current liabilities	 	 	16,247	 	 	 	18,625	 	
Total current liabilities	 	 	107,792	 	 	 	106,649	 	
Long-term debt	 	 	30,000	 	 	 	46,701	 	
Deferred income taxes	 	 	6,383	 	 	 	7,094	 	
Accrued pension and postretirement benefits	 	 	49,916	 	 	 	34,533	 	
Other non-current liabilities	 	 	52,867	 	 	 	54,818	 	
Total liabilities	 	 	246,958	 	 	 	249,795	 	
 	 	 	 	 	 	 	 	 	
Equity	 	 	 	 	 	 	 	 	
Common stock, $1 par value; authorized 30,000,000 shares; issued 2012 - 13,094,901 shares	 	 	13,095	 	 	 	12,912	 	
Capital in excess of par value	 	 	94,470	 	 	 	89,725	 	
Retained earnings	 	 	215,390	 	 	 	180,710	 	
Accumulated other comprehensive loss	 	 	(41,855	)	 	 	(28,967	)	
Total Quaker shareholders' equity	 	 	281,100	 	 	 	254,380	 	
Noncontrolling interest	 	 	8,576	 	 	 	6,977	 	
Total shareholders' equity	 	 	289,676	 	 	 	261,357	 	
Total liabilities and equity	 	$	536,634	 	 	$	511,152	 	
 
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Quaker Chemical Corporation
Condensed Consolidated Statement of Cash Flows
For the twelve months ended December 31,
(Dollars in thousands)
 
 	 	(Unaudited)	 	
 	 	2012	 	 	2011	 	
 	 	 	 	 	(re-cast)	 	
Cash flows from operating activities	 	 	 	 	 	 	 	 	
Net income	 	$	50,240	 	 	$	48,223	 	
Adjustments to reconcile net income to net cash provided by operating activities:	 	 	 	 	 	 	 	 	
Depreciation	 	 	12,252	 	 	 	11,455	 	
Amortization	 	 	3,106	 	 	 	2,338	 	
Equity in undistributed earnings of associated companies, net of dividends	 	 	(2,350	)	 	 	(2,365	)	
Deferred income taxes	 	 	2,354	 	 	 	2,431	 	
Uncertain tax positions (non-deferred portion)	 	 	(1,407	)	 	 	3,673	 	
Acquisition related fair value adjustments	 	 	(1,909	)	 	 	(2,624	)	
Deferred compensation and other, net	 	 	(156	)	 	 	566	 	
Stock-based compensation	 	 	3,807	 	 	 	3,513	 	
Gain on disposal of property, plant and equipment	 	 	(108	)	 	 	(86	)	
Insurance settlement realized	 	 	(1,391	)	 	 	(1,840	)	
Pension and other postretirement benefits	 	 	(1,427	)	 	 	(4,239	)	
Increase (decrease) in cash from changes in current assets and current liabilities, net of acquisitions:	 	 	 	 	 	 	 	 	
Accounts receivable	 	 	779	 	 	 	(31,558	)	
Inventories	 	 	3,228	 	 	 	(9,281	)	
Prepaid expenses and other current assets	 	 	504	 	 	 	(2,505	)	
Accounts payable and accrued liabilities	 	 	(2,562	)	 	 	4,442	 	
Estimated taxes on income	 	 	(2,067	)	 	 	(2,477	)	
Net cash provided by operating activities	 	 	62,893	 	 	 	19,666	 	
 	 	 	 	 	 	 	 	 	
Cash flows from investing activities	 	 	 	 	 	 	 	 	
Investments in property, plant and equipment	 	 	(12,735	)	 	 	(12,117	)	
Payments related to acquisitions, net of cash acquired	 	 	(5,635	)	 	 	(25,477	)	
Proceeds from disposition of assets	 	 	245	 	 	 	393	 	
Insurance settlement received and interest earned	 	 	69	 	 	 	80	 	
Change in restricted cash, net	 	 	1,322	 	 	 	1,760	 	
Net cash used in investing activities	 	 	(16,734	)	 	 	(35,361	)	
 	 	 	 	 	 	 	 	 	
Cash flows from financing activities	 	 	 	 	 	 	 	 	
Net decrease in short-term borrowings	 	 	(315	)	 	 	(254	)	
Repayments of long-term debt	 	 	(17,632	)	 	 	(27,364	)	
Dividends paid	 	 	(12,616	)	 	 	(11,586	)	
Stock options exercised, other	 	 	(924	)	 	 	1,105	 	
Excess tax benefit related to stock option exercises	 	 	2,045	 	 	 	109	 	
Proceeds from sale of common stock, net of related expenses	 	 	-	 	 	 	48,143	 	
Distributions to noncontrolling shareholders	 	 	(1,099	)	 	 	(1,000	)	
Net cash (used in) provided by financing activities	 	 	(30,541	)	 	 	9,153	 	
 	 	 	 	 	 	 	 	 	
Effect of exchange rate changes on cash	 	 	20	 	 	 	(2,315	)	
Net increase (decrease) in cash and cash equivalents	 	 	15,638	 	 	 	(8,857	)	
Cash and cash equivalents at the beginning of the period	 	 	16,909	 	 	 	25,766	 	
Cash and cash equivalents at the end of the period	 	$	32,547	 	 	$	16,909	 	

1 Quaker Chemical Corporation Investor Conference Call March 7, 2013 Fourth Quarter and Full Year 2012 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 consiste nt with similar measures provided by other Companies. This data should be read in conjunction with the Company’s fourth quarter and full year earnings news release dated March 6, 2013, which has been furnished to the SEC on Form 8-K, and the Company’s Form 10-K for the year ended December 31, 2012, 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 differ materiall y 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 Full Year 2012 Headlines • Record full year 2012 revenue and net income despite challenging environment • Full year 2012 record cash flow generation enhances strong balance sheet • 41% shareholder return in full year 2012 Memo: Change in Accounting Method During 2012, the Company acquired an increased ownership percent age in Primex, Ltd. (“Primex”), a captive insurance company. Due to the increased ownership percentage and other factors, the Company changed its method of accounting for its investment in Primexfrom the cost method to the equity method of accounting. As a result, the Company recast its Consolidated Balance Sheet, its Consolidated Statement of Income and its Consolidated Statement of Cash Flows for the fourth quarter and year ended December 31, 2011. The change in accounting method increased net income attributable to Quaker Chemical Corporation by $0.4 million and $0.6 million for the fourth quarters of 2012 and 2011, respectively, and by $1.8 million and $2.3 million for the full years 2012 and 2011, respectively. Chart #2

 	

5 Chairman Comments ▪ Positives x Gross margin strength / raw material stabilization x Diversification with geographic footprint x Taking market share x Leveraging acquisitions ▪ Negatives x Typical seasonal trends x Weak market conditions in Europe and Brazil x Foreign exchange Fourth Quarter 2012 Chart #3

 	

6 Product Volume by Quarter 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 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 Metalworking Process Chemicals Segment Chart #4

 	

7 Financial Snapshot Q4 2011 Recast Q4 2012 Full Year 2011 Recast Full Year 2012 Net Sales ($Mils.) 173.3 172.9 683.2 708.2 Gross Margin (%) 32.7 34.2 32.6 33.7 Operating Margin (%) 6.6 7.9 8.5 8.9 Net Income attributable to Quaker Chemical Corporation ($Mils.) * 10.4 13.0 45.9 47.4 Adjusted EBITDA ($Mils.) – Trailing Twelve Months 73.0 80.9 73.0 80.9 Adjusted EBITDA Margin (%) 10.7 11.4 10.7 11.4 Earnings Per Diluted Share * 0.80 0.99 3.66 3.63 Debt ($Mils.) 47.3 31.5 47.3 31.5 Equity ($Mils.) * 261.4 289.7 261.4 289.7 * Note: Includes equity income from the Company’s investment in a captive insurance company. Chart #5

 	

8 Gross Margin Percentage 32.7% 34.2% 32.6% 33.7% 30.0% 31.0% 32.0% 33.0% 34.0% 35.0% Q4 2011 Q4 2012 2011 2012 Gross Margin Percentage Chart #6

 	

9 Baseline Historical Performance $40.1 $44.2 $66.5 $73.0 $80.9 6.90% 9.80% 12.20% 10.70% 11.40% 2008 2009 2010 2011 2012 Adjusted EBITDA ($ Mils.) Adjusted EBITDA Margin (%) Chart #7

 	

10 Balance Sheet Net Cash / (Debt) -$100 -$80 -$60 -$40 -$20 $0 $20 $40 2008 2009 2010 2011 2012 $ Millions Cash ST/LT Debt Net Debt Chart #8

 	

11 Net Cash Flow From Operations 13.4 41.6 37.5 19.7 62.9 0 10 20 30 40 50 60 70 2008 2009 2010 2011 2012 $ Millions Chart #9

 	

12 APPENDIX

 	

13 Adjusted EBITDA Reconciliation 2008 2009 2010 2011 2012 Net income 9,833 16,058 32,120 45,892 47,405 Depreciation 10,879 9,525 9,867 11,455 12,252 Amortization 1,177 1,078 988 2,338 3,106 Interest expense 5,509 5,533 5,225 4,666 4,283 Taxes 4,977 7,065 12,616 14,256 15,575 Restructuring 2,916 2,289 - - - Non-income tax contingency - - 4,132 - - Equity affiliate out of period charge - - 564 - - CEO transition costs 3,505 2,443 1,317 - - TQM purchase gain - - - (2,718) - Change in fair value of a contingent consideration liability - - - (595) (1,737) Equity loss (income) from a captive insurance company 1,299 162 (313) (2,323) (1,812) Customer bankruptcy - - - - 1,254 CFO transition - - - - 609 Adjusted EBITDA 40,095 44,153 66,516 72,971 80,935 Adjusted EBITDA Margin 6.9% 9.8% 12.2% 10.7% 11.4% Chart #10