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
 
May 1, 2017
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))	
 
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
 
Emerging growth company ¨
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to section 13(a) of the exchange Act.  ¨ 

 

 
 
INFORMATION TO BE INCLUDED IN THE REPORT

 	Item 2.02.	Results of Operations and Financial Condition.	
 
On May 1, 2017, Quaker Chemical Corporation announced its results of operations for the first quarter ended March 31, 2017 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 May 1, 2017.  	
 	 	
99.2	Supplemental Information related to first quarter ended March 31, 2017.	

 
 
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:   May 1, 2017	By:	/S/ MARY DEAN HALL	 	
 	 	Mary Dean Hall	 	
 	 	Vice President, Chief Financial	 	
 	 	Officer and Treasurer	 	

 
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 FIRST QUARTER 2017 RESULTS
 
 	·	Strong organic volume growth of 10% drives a net sales increase of 9% despite continued FX headwinds	

 	·	Net income of $7.0 million and earnings per diluted share of $0.52 reflect costs related to the Houghton combination, which was previously announced on April 5, 2017	

 	·	Non-GAAP earnings per diluted share increases 20% to $1.18	

 	·	Solid operating leverage drives a 13% increase in adjusted EBITDA to $28.2 million	
 
May 1, 2017
 
CONSHOHOCKEN, PA - Quaker Chemical Corporation (NYSE: KWR) today announced a net sales increase of 9% to $194.9 million in the first quarter of 2017 compared to $178.1 million in the first quarter of 2016, as its organic and acquisition volume growth of 10% and 1%, respectively, overcame a negative impact from foreign currency translation of 2%. These strong volumes drove higher gross profit quarter-over-quarter, despite lower gross margin in the first quarter of 2017, primarily attributable to certain raw material cost increases. In addition, the current quarter operating margin benefited from the Company’s ability to maintain a consistent level of selling, general and administrative expenses (“SG&A”) on strong volume growth.
 
The Company’s first quarter of 2017 net income was $7.0 million and its earnings per diluted share was $0.52, which includes $9.1 million or $0.69 per diluted share of costs incurred with the Company’s previously announced combination with Houghton International, Inc (“Houghton”). Excluding the current quarter combination-related costs and other non-core items, the Company’s solid operating performance drove non-GAAP earnings per diluted share to $1.18 in the first quarter of 2017, a 20% increase compared to $0.98 in the prior year period. In addition, the Company’s adjusted EBITDA increased 13% to $28.2 million in the first quarter of 2017 compared to $25.0 million in the prior year period. The Company was able to achieve these reported and non-GAAP results in the first quarter of 2017 despite negative foreign exchange impacts of $0.04 per diluted share, or 3%.
 
Michael F. Barry, Chairman, Chief Executive Officer and President, commented, “We are pleased with our first quarter results, despite continued foreign exchange headwinds. We were able to grow our organic volumes by 10% on continued market share gains, as well as from increased production in some of our end markets. While our gross margins declined due to raw material price increases, we were able to partially offset the decline with savings realized from our previously announced restructuring program and other cost streamlining initiatives. Overall, we achieved a 13% increase in adjusted EBITDA and a 20% increase in non-GAAP earnings despite foreign exchange negatively impacting earnings by 3%. ”
 
Mr. Barry continued, “Looking forward, we expect foreign exchange and raw materials to continue to be headwinds that may ratably decline as the year progresses. We remain committed to our strategy and believe our ability to take market share and leverage our past acquisitions will continue to help offset market challenges. Our 2017 plans continue to indicate growth in both the top and bottom lines, despite expected currency headwinds, with earnings growth in all regions. Overall, I continue to remain confident in our future and expect 2017 to be another good year for Quaker, as we expect to increase non-GAAP earnings and adjusted EBITDA for the eighth consecutive year. In addition, we believe our previously announced intention to combine with Houghton will create long-term sustainable value for our customers and shareholders, and we continue to expect closing by the end of the year or in the first quarter of 2018.”

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	

 
First Quarter of 2017 Summary
 
Net sales in the first quarter of 2017 were $194.9 million compared to $178.1 million in the first quarter of 2016. The $16.8 million or 9% increase in net sales was primarily due to a 10% increase in organic volumes and a 1% increase from acquisitions, partially offset by a negative impact from foreign currency translation of 2% or $2.7 million.
 
Gross profit in the first quarter of 2017 increased $2.9 million or 4% from the first quarter of 2016, primarily due to the increase in sales volumes, noted above, partially offset by a lower gross margin of 36.4% in the first quarter of 2017 compared to 38.2% in the prior year quarter. The decrease in the Company’s first quarter of 2017 gross margin was attributable to product mix and certain raw material cost increases.
 
SG&A decreased $0.1 million during the first quarter of 2017 due to the net impact of several factors. Specifically, the Company’s SG&A decreased as a result of certain cost savings efforts, including the 2015 global restructuring program, and decreases due to foreign currency translation, partially offset by additional SG&A quarter-over-quarter associated with the Company’s prior year Lubricor Inc. acquisition and an increase in labor-related costs primarily due to annual compensation increases.
 
During the first quarter of 2017, the Company incurred $9.1 million or $0.69 per diluted share of costs related to its previously announced combination with Houghton, including certain legal, regulatory, environmental, financial, and other advisory and consultant expenses. There were no similar combination-related costs incurred in the first quarter of 2016.
 
Operating income in the first quarter of 2017 was $13.8 million compared to $19.8 million in the first quarter of 2016. The decrease in operating income was due to the Houghton combination expenses, noted above, which offset strong volume and gross profit increases on relatively consistent levels of SG&A not related to the Houghton combination.
 
Other expense was $0.1 million in the first quarter of 2017 compared to other income of $0.1 million in the first quarter of 2016. The increase in other expense was primarily driven by foreign currency transaction losses realized in the first quarter of 2017 compared to foreign currency transaction gains in the first quarter of 2016, partially offset by higher receipts of local municipality-related grants in one of the Company’s regions in the current quarter.
 
Interest expense was $0.1 million lower in the first quarter of 2017 compared to the first quarter of 2016, primarily due to lower average borrowings outstanding in the first quarter of 2017. Interest income was $0.2 million higher in the first quarter of 2017 compared to the first quarter of 2016, primarily due to an increase in the level of the Company’s invested cash in certain regions with higher returns.
 
The Company’s effective tax rates for the first quarters of 2017 and 2016 were 50.8% and 32.3%, respectively. The Company’s first quarter of 2017 effective tax rate includes the impact of the Houghton combination-related expenses, noted above, which were considered non-deductible for the purpose of determining the Company’s current quarter effective tax rate. Excluding these non-deductible costs, the Company’s current quarter effective tax rate would have been approximately 30%. Comparatively, the first quarter of 2016 effective tax rate was also elevated, as it reflected earnings taxed at one of the Company’s subsidiaries at a statutory rate of 25% while awaiting recertification of a concessionary 15% tax rate, which the Company received and recorded the full year benefit of during the fourth quarter of 2016. This concessionary tax rate was available to the Company during the first quarter of 2017. Currently, the Company continues to estimate its full year 2017 effective tax rate will approximate 28% to 30%, excluding the impact of non-deductible Houghton combination-related expenses, noted above.
 
 	- more-	 	

 
Equity in net income of associated companies (“equity income”) increased $0.9 million in the first quarter of 2017 compared to the first quarter of 2016. The increase was primarily due to higher earnings from the Company’s interest in a captive insurance company in the current quarter.
 
The Company had a $0.2 million increase in net income attributable to noncontrolling interest in the first quarter of 2017 compared to the first quarter of 2016, primarily due to an increase in performance from certain consolidated affiliates in the Company’s Asia/Pacific region.
 
Changes in foreign exchange rates negatively impacted the Company’s first quarter of 2017 non-GAAP earnings per diluted share by approximately 3%, or $0.04 per diluted share.
 
Balance Sheet and Cash Flow Items
 
The Company’s net operating cash flow was $8.3 million in the first quarter of 2017 as compared to $10.9 million in the first quarter of 2016. The decrease in net operating cash flow was primarily due to higher cash invested in the Company’s working capital as a result of the Company’s strong operating performance and volume growth in the current quarter. In addition, the Company paid a $4.6 million cash dividend during the first quarter of 2017. Overall, the Company’s liquidity and balance sheet remain strong, as its cash position exceeded its debt at March 31, 2017 by $24.2 million and the Company’s total debt continued to be less than one times its trailing twelve month adjusted EBITDA.
 
Subsequent Event
 
On April 4, 2017, Quaker entered into a share purchase agreement with Gulf Houghton Lubricants, Ltd. to purchase the entire issued and outstanding share capital of Houghton (“the Combination”). The shares will be bought for aggregate purchase consideration consisting of: (i) $172.5 million in cash; (ii) a number of shares of common stock, $1.00 par value per share, of the Company comprising 24.5% of the common stock outstanding upon the closing of the Combination; and (iii) the Company’s assumption of Houghton’s net indebtedness as of the closing of the Combination, which is estimated to be approximately $690 million. The total purchase consideration reflects an enterprise value for Houghton of approximately $1.42 billion. The Company has secured approximately $1.15 billion in commitments from Bank of America Merrill Lynch and Deutsche Bank to fund the Combination and provide additional liquidity. The Company expects to replace these commitments with a syndicated bank agreement with customary terms and conditions during the second quarter of 2017. In addition, the issuance of the Company’s shares at closing of the Combination is subject to approval by Quaker’s shareholders under the rules of the New York Stock Exchange. The Company expects to seek such approval of the share issuance at a meeting of the Company’s shareholders in the near future. Also, the Combination is subject to regulatory approval in the United States, Europe and certain countries in Asia/Pacific. Depending on shareholder and regulatory approval noted above, as well as other customary terms and conditions set forth in the share purchase agreement, Quaker currently estimates closing of the Combination to occur either in the fourth quarter of 2017 or the first quarter of 2018.
 
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.
 
 	- more-	 	

 
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
March 31,	 	
 	 	2017	 	 	2016	 	
GAAP earnings per diluted share attributable to Quaker Chemical Corporation common shareholders	 	$	0.52	 	 	$	0.98	 	
Equity income in a captive insurance company per diluted share	 	 	(0.04	)	 	 	(0.01	)	
Houghton combination-related expenses per diluted share	 	 	0.69	 	 	 	-	 	
Cost streamlining initiative per diluted share	 	 	0.01	 	 	 	-	 	
Currency conversion impact of the Venezuelan bolivar fuerte per diluted share	 	 	-	 	 	 	0.01	 	
Non-GAAP earnings per diluted share	 	$	1.18	 	 	$	0.98	 	
 
 	 	Three Months Ended
March 31,	 	
 	 	2017	 	 	2016	 	
Net income attributable to Quaker Chemical Corporation	 	$	6,992	 	 	$	12,946	 	
Depreciation and amortization	 	 	4,930	 	 	 	4,934	 	
Interest expense	 	 	656	 	 	 	741	 	
Taxes on income before equity in net income of associated companies	 	 	6,865	 	 	 	6,305	 	
Equity income in a captive insurance company	 	 	(592	)	 	 	(52	)	
Houghton combination-related expenses	 	 	9,075	 	 	 	-	 	
Cost streamlining initiative	 	 	286	 	 	 	-	 	
Currency conversion impact of the Venezuelan bolivar fuerte	 	 	-	 	 	 	88	 	
Adjusted EBITDA	 	$	28,212	 	 	$	24,962	 	
Adjusted EBITDA margin (%)	 	 	14.5	%	 	 	14.0	%	
 
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, significant changes in applicable tax rates and regulations, future terrorist attacks and other acts of violence. Other factors, including those related to the previously announced Houghton combination, could also adversely affect us. For more information regarding these risks and uncertainties as well as certain additional risks that we face, you should refer to the Risk Factors detailed in Item 1A of our 2016 Form 10-K, and in our quarterly and other reports filed from time to time with the Commission. 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.
 
 	- more-	 	

 
Conference Call
 
As previously announced, Quaker Chemical’s investor conference call to discuss the first quarter of 2017 results is scheduled for May 2, 2017 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  https://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 March 31,	 	
 	 	2017	 	 	2016	 	
 	 	 	 	 	 	 	
Net sales	 	$	194,909	 	 	$	178,077	 	
 	 	 	 	 	 	 	 	 	
Cost of goods sold	 	 	124,022	 	 	 	110,096	 	
 	 	 	 	 	 	 	 	 	
Gross profit	 	 	70,887	 	 	 	67,981	 	
%	 	 	36.4	%	 	 	38.2	%	
 	 	 	 	 	 	 	 	 	
Selling, general and administrative expenses	 	 	48,054	 	 	 	48,143	 	
Combination-related expenses	 	 	9,075	 	 	 	-	 	
 	 	 	 	 	 	 	 	 	
Operating income	 	 	13,758	 	 	 	19,838	 	
%	 	 	7.1	%	 	 	11.1	%	
 	 	 	 	 	 	 	 	 	
Other (expense) income, net	 	 	(105	)	 	 	102	 	
Interest expense	 	 	(656	)	 	 	(741	)	
Interest income	 	 	523	 	 	 	348	 	
Income before taxes and equity in net income of associated companies	 	 	13,520	 	 	 	19,547	 	
 	 	 	 	 	 	 	 	 	
Taxes on income before equity in net income of associated companies	 	 	6,865	 	 	 	6,305	 	
Income before equity in net income of associated companies	 	 	6,655	 	 	 	13,242	 	
 	 	 	 	 	 	 	 	 	
Equity in net income of associated companies	 	 	959	 	 	 	102	 	
 	 	 	 	 	 	 	 	 	
Net income	 	 	7,614	 	 	 	13,344	 	
 	 	 	 	 	 	 	 	 	
Less: Net income attributable to noncontrolling interest	 	 	622	 	 	 	398	 	
 	 	 	 	 	 	 	 	 	
Net income attributable to Quaker Chemical Corporation	 	$	6,992	 	 	$	12,946	 	
%	 	 	3.6	%	 	 	7.3	%	
 	 	 	 	 	 	 	 	 	
Share and per share data:	 	 	 	 	 	 	 	 	
Basic weighted average common shares outstanding	 	 	13,176,096	 	 	 	13,116,807	 	
Diluted weighted average common shares outstanding	 	 	13,221,061	 	 	 	13,129,394	 	
 	 	 	 	 	 	 	 	 	
Net income attributable to Quaker Chemical Corporation Common Shareholders - basic	 	$	0.53	 	 	$	0.98	 	
Net income attributable to Quaker Chemical Corporation Common Shareholders - diluted	 	$	0.52	 	 	$	0.98	 	
 
 	- more-	 	

 
Quaker Chemical Corporation  
Condensed Consolidated Balance Sheets
(Dollars in thousands, except par value and share amounts)
 
 	 	(Unaudited)	 	
 	 	March 31,	 	 	December 31,	 	
 	 	2017	 	 	2016	 	
ASSETS	 	 	 	 	 	 	
 	 	 	 	 	 	 	
Current assets	 	 	 	 	 	 	
Cash and cash equivalents	 	$	90,593	 	 	$	88,818	 	
Accounts receivable, net	 	 	201,929	 	 	 	195,225	 	
Inventories, net	 	 	87,117	 	 	 	77,082	 	
Prepaid expenses and other current assets	 	 	15,237	 	 	 	15,343	 	
Total current assets	 	 	394,876	 	 	 	376,468	 	
 	 	 	 	 	 	 	 	 	
Property, plant and equipment, net	 	 	85,233	 	 	 	85,734	 	
Goodwill	 	 	81,683	 	 	 	80,804	 	
Other intangible assets, net	 	 	71,850	 	 	 	73,071	 	
Investments in associated companies	 	 	24,063	 	 	 	22,817	 	
Non-current deferred tax assets	 	 	22,460	 	 	 	24,382	 	
Other assets	 	 	28,841	 	 	 	28,752	 	
Total assets	 	$	709,006	 	 	$	692,028	 	
 	 	 	 	 	 	 	 	 	
LIABILITIES AND EQUITY	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	
Current liabilities	 	 	 	 	 	 	 	 	
Short-term borrowings and current portion of long-term debt	 	$	726	 	 	$	707	 	
Accounts and other payables	 	 	90,215	 	 	 	82,164	 	
Accrued compensation	 	 	13,754	 	 	 	19,356	 	
Accrued restructuring	 	 	530	 	 	 	670	 	
Other current liabilities	 	 	33,963	 	 	 	24,514	 	
Total current liabilities	 	 	139,188	 	 	 	127,411	 	
Long-term debt	 	 	65,649	 	 	 	65,769	 	
Non-current deferred tax liabilities	 	 	12,101	 	 	 	12,008	 	
Other non-current liabilities	 	 	70,093	 	 	 	74,234	 	
Total liabilities	 	 	287,031	 	 	 	279,422	 	
 	 	 	 	 	 	 	 	 	
Equity	 	 	 	 	 	 	 	 	
Common stock, $1 par value; authorized 30,000,000 shares; issued and
outstanding 2017- 13,290,807 shares; 2016 - 13,277,832 shares	 	 	13,291	 	 	 	13,278	 	
Capital in excess of par value	 	 	112,838	 	 	 	112,475	 	
Retained earnings	 	 	366,819	 	 	 	364,414	 	
Accumulated other comprehensive loss	 	 	(81,961	)	 	 	(87,407	)	
Total Quaker shareholders' equity	 	 	410,987	 	 	 	402,760	 	
Noncontrolling interest	 	 	10,988	 	 	 	9,846	 	
Total equity	 	 	421,975	 	 	 	412,606	 	
Total liabilities and equity	 	$	709,006	 	 	$	692,028	 	

 	- more-	 	

 
Quaker Chemical Corporation
Condensed Consolidated Statements of Cash Flows
(Dollars in thousands)

 	 	(Unaudited)	 	
 	 	Three Months Ended March 31,	 	
 	 	2017	 	 	2016	 	
Cash flows from operating activities	 	 	 	 	 	 	
Net income	 	$	7,614	 	 	$	13,344	 	
Adjustments to reconcile net income to net cash provided by operating activities:	 	 	 	 	 	 	 	 	
Depreciation	 	 	3,157	 	 	 	3,157	 	
Amortization	 	 	1,773	 	 	 	1,777	 	
Equity in undistributed earnings of associated companies, net of dividends	 	 	(829	)	 	 	(27	)	
Deferred compensation and other, net	 	 	(696	)	 	 	980	 	
Stock-based compensation	 	 	1,153	 	 	 	1,798	 	
Gain on disposal of property, plant and equipment and other assets	 	 	(15	)	 	 	(20	)	
Insurance settlement realized	 	 	(240	)	 	 	(279	)	
Combination-related expenses	 	 	9,075	 	 	 	-	 	
Pension and other postretirement benefits	 	 	(2,263	)	 	 	(2,685	)	
(Decrease) increase in cash from changes in current assets and current liabilities, net of acquisitions:	 	 	 	 	 	 	 	 	
Accounts receivable	 	 	(3,813	)	 	 	2,602	 	
Inventories	 	 	(8,820	)	 	 	(1,800	)	
Prepaid expenses and other current assets	 	 	755	 	 	 	1,183	 	
Accounts payable and accrued liabilities	 	 	2,279	 	 	 	(8,647	)	
Change in combination-related liabilities	 	 	(660	)	 	 	-	 	
Change in restructuring liabilities	 	 	(148	)	 	 	(509	)	
Net cash provided by operating activities	 	 	8,322	 	 	 	10,874	 	
 	 	 	 	 	 	 	 	 	
Cash flows from investing activities	 	 	 	 	 	 	 	 	
Investments in property, plant and equipment	 	 	(2,531	)	 	 	(2,172	)	
Payments related to acquisitions, net of cash acquired	 	 	-	 	 	 	(1,384	)	
Proceeds from disposition of assets	 	 	15	 	 	 	26	 	
Insurance settlement interest earned	 	 	9	 	 	 	8	 	
Change in restricted cash, net	 	 	231	 	 	 	271	 	
Net cash used in investing activities	 	 	(2,276	)	 	 	(3,251	)	
 	 	 	 	 	 	 	 	 	
Cash flows from financing activities	 	 	 	 	 	 	 	 	
Proceeds from long-term debt	 	 	-	 	 	 	14,687	 	
Repayments of long-term debt	 	 	(474	)	 	 	(159	)	
Dividends paid	 	 	(4,583	)	 	 	(4,243	)	
Stock options exercised, other	 	 	(777	)	 	 	(253	)	
Payments for repurchase of common stock	 	 	-	 	 	 	(5,859	)	
Excess tax benefit related to stock option exercises	 	 	-	 	 	 	104	 	
Net cash (used in) provided by financing activities	 	 	(5,834	)	 	 	4,277	 	
 	 	 	 	 	 	 	 	 	
Effect of exchange rate changes on cash	 	 	1,563	 	 	 	1,421	 	
Net increase in cash and cash equivalents	 	 	1,775	 	 	 	13,321	 	
Cash and cash equivalents at the beginning of the period	 	 	88,818	 	 	 	81,053	 	
Cash and cash equivalents at the end of the period	 	$	90,593	 	 	$	94,374	 	

 	

Exhibit 99.2

1 First Quarter 2017 Results Investor Conference Call May 2, 2017 Quaker Chemical Corporation

 	

Regulation G The attached charts include C ompany 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 most recent annual report filed on Form 10-K as well as the first quarter earnings news release dated May 1, 2017, which has been furnished to the SEC on Form 8-K and the Company’s Form 10-Q for the quarterly period ended March 31, 2017, which has been filed with the SEC. Forward-Looking Statements This presentation 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, significant changes in applicable tax rates and regulations, future terrorist attacks and other acts of violence. Other factors, including those related to the previously announced Houghton combination (“the Combination”), could also adversely affect us including, but not limited to: • the risk that Quaker shareholders may not approve the Combination; • the risk that a required regulatory approval will not be obtained or is subject to conditions that are not anticipated or acceptable to us; • the potential for regulatory authorities to require divestitures in connection with the Combination, which would result in a smaller than anticipated combined business; • the risk that a closing condition to the Combination may not be satisfied in a timely manner; • risks associated with the financing of the Combination; • the occurrence of any event, change or other circumstance that could give rise to the termination of the purchase agreement; • potential adverse effects on Quaker Chemical’s business, properties or operations caused by the imple mentation of the Combination; • Quaker Chemical’s ability to promptly, efficiently and effectively integrate Houghton International’s operations into those of Quaker Chemical; • risks related to the disruption of each company’s time from ongoing business operations due to the Combination; and, • the outcome of any legal proceedings that may be instituted against the companies following announcement of the merger agreement and transactions contemplated therein. Therefore, we caution you not to place undue reliance on our forward-looking statements. For more information regarding these risks and uncertainties as well as certain additional risks that we face, you should refer to the Risk Factors detailed in Item 1A of our 2016 Form 10- K, and in our quarterly and other reports filed from time to time with the Commission. We do not intend to, and we disclaim any duty or obligation to, update or revise any forward-looking statements to reflect new information or future events or for any other reason. This discussion is provided as permitted by the Private Securities Litigation Reform Act of 1995. Risks and Uncertainties Statement

 	

Speakers Michael F. Barry Chairman of the Board, Chief Executive Officer & President Mary Dean Hall Vice President, Chief Financial Officer & Treasurer Robert T. Traub Vice President, General Counsel & Corporate Secretary Chart #1

 	

First Quarter 2017 Headlines ▪ Strong organic volume growth of 10% drives a net sales increase of 9% despite continued FX headwinds ▪ Net income of $7.0 million and earnings per diluted share of $0.52 reflect costs related to the Houghton combination, which was previously announced on April 5, 2017 ▪ Non - GAAP earnings per diluted share increases 20% to $1.18 ▪ Solid operating leverage drives a 13% increase in adjusted EBITDA to $28.2 million Chart #2

 	

Chairman Comments First Quarter 2017 ▪ First Quarter 2017 x Net sales growth driven primarily by increases in organic volume as well as contributions from the prior year Lubricor acquisition, which offset the continued negative impact from foreign exchange x Consistent levels of SG&A on strong volume growth helped offset higher raw material costs and the related decline in gross margin quarter - over - quarter x Strong operating performance leads to quarterly non - GAAP EPS increase of 20% and adjusted EBITDA increase of 13%, despite a negative foreign exchange impact of 3% ▪ 2017 Outlook x Positive – Expect market share gains and leveraging of past acquisitions will continue to help offset market challenges x Negative – Expect foreign exchange and raw materials to continue to be headwinds, though these may ratably decline as the year progresses Chart #3 Overall, we remain confident in our future and expect 2017 to be another good year for Quaker, as we expect to increase non - GAAP earnings and adjusted EBITDA for the eighth consecutive year

 	

▪ Net sales growth driven by a 10% increase in organic volume and a 1% increase from Lubricor, partially offset by a negative impact from foreign currency translation of 2% ▪ Gross profit increased 4% due to the increase in sales volumes, partially offset by a lower gross margin of 36.4% compared to 38.2% in the prior period, attributable to product mix and raw material cost increases ▪ Operating margin benefited from a consistent level of SG&A on strong volume growth in the quarter ▪ Net income includes Houghton combination - related expenses of $9.1 million or $0.69 per diluted share, which were considered non - deductible for tax and was the driver of the 50.8% effective tax rate in the quarter ▪ Strong operating performance drove quarterly Non - GAAP earnings per diluted share increase of 20% to $1.18 and adjusted EBITDA increase of 13% to $28.2 million, despite a negative foreign exchange impact of 3% ▪ Net operating cashflow of $8.3 million compared to $10.9 million in the prior period due to higher cash invested in working capital primarily due to improved volumes in the quarter Chart #4 Financial Highlights First Quarter 2017

 	

($ Millions unless otherwise noted) Q1 2017 Q1 2016 Net Sales 194.9 178.1 Gross Margin 36.4% 38.2 % Operating Income 13.8 19.8 Operating Margin 7.1% 11.1 % Net Income Attributable to Quaker Chemical Corporation 7.0 12.9 Earnings Per Diluted Share 0.52 0.98 Non - GAAP Earnings Per Diluted Share 1.18 0.98 Adjusted EBITDA 28.2 25.0 Adjusted EBITDA Margin 14.5% 14.0% Net (Cash) Debt (24.2) 3.9 Net Operating Cash Flow 8.3 10.9 Effective Tax Rate 50.8% 32.3% Chart #5 Financial Snapshot

 	

Chart #6 Strong organic volume increases continue to drive top line growth 115,000 135,000 155,000 175,000 195,000 215,000 235,000 255,000 25,000 30,000 35,000 40,000 45,000 50,000 55,000 60,000 65,000 70,000 Full Year Volume Quarter Volume Quarter Volume Full Year Volume Product Volume by Quarter and Year in Thousands of Kilograms

 	

28.1% 35.0% 35.6% 32.7% 33.8% 35.9% 35.8% 37.7% 37.5% 20.0% 25.0% 30.0% 35.0% 40.0% 2008 2009 2010 2011 2012 2013 2014 2015 2016 Gross Margin Percentage 38.2% 38.2% 37.2% 36.5% 36.4% 20.0% 25.0% 30.0% 35.0% 40.0% Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Gross Margin Percentage Chart #7 Quarterly gross margin lower on product mix and certain raw material cost increases Gross Margin Percentage Trends

 	

$40.1 $44.2 $66.8 $73.0 $80.9 $89.6 $99.8 $101.6 $106.6 $103.3 $109.8 6.9% 9.8% 12.3% 10.7% 11.4% 12.3% 13.0% 13.8% 14.3% 2008 2009 2010 2011 2012 2013 2014 2015 2016 Trailing Twelve Months Q1 2016 Trailing Twelve Months Q1 2017 Adjusted EBITDA ($ Mils.) Adjusted EBITDA Margin (%) 14.1% 14.4% FY 2008 – Q1 2017 CAGR: 13.0% +750 Margin bps Chart #8 Adjusted EBITDA Baseline Historical Performance

 	

-$120 -$80 -$40 $0 $40 $80 $120 2008 2009 2010 2011 2012 2013 2014 2015 2016 Q1 2017 $ Millions Cash ST/LT Debt Net Cash (Debt) Chart #9 Strong cash flow generation and balance sheet continue to support future growth Balance Sheet Cash and Debt

 	

APPENDIX

 	

Chart #10 Non - GAAP EPS Reconciliation Q1 2017 Q1 2016 GAAP earnings per diluted share 0.52$ 0.98$ Equity income in a captive insurance company per diluted share (0.04)$ (0.01)$ Houghton combination-related expenses per diluted share 0.69$ -$ Cost streamlining initiative per diluted share 0.01$ -$ Currency conversion impact of the Venezuelan bolivar fuerte per diluted share -$ 0.01$ Non-GAAP earnings per diluted share 1.18$ 0.98$

 	

Chart #11 Adjusted EBITDA Reconciliation 2008 2009 2010 2011 2012 2013 2014 2015 2016 Net income 9,833 16,058 32,120 45,892 47,405 56,339 56,492 51,180 61,403 Depreciation 10,879 9,525 9,867 11,455 12,252 12,339 12,306 12,395 12,557 Amortization 1,177 1,078 988 2,338 3,106 3,445 4,325 6,811 7,009 Interest expense 5,509 5,533 5,225 4,666 4,283 2,922 2,371 2,585 2,889 Taxes on income before equity in net income of associated companies 4,977 7,065 12,616 14,256 15,575 20,489 23,539 17,785 23,226 Equity loss (income) from a captive insurance company 1,299 162 (313) (2,323) (1,812) (5,451) (2,412) (2,078) (1,688) Non-cash gain from the purchase of an equity affiliate - - - (2,718) - - - - - Equity affiliate out of period charge - - 564 - - - - - - Restructuring expense (credit) 2,916 2,289 - - - - - 6,790 (439) Transition costs related to key employees 3,505 2,443 1,317 - 609 - - - - Houghton combination-related expenses - - - - - - - - 1,531 Verkol transaction-related expenses - - - - - - - 2,813 - U.K. pension plan amendment - - - - - - 902 - - Customer bankruptcy costs - - - - 1,254 - 825 328 - Cost streamlining initiatives - - - - - 1,419 1,166 173 - Non-income tax contingency charge - - 4,132 - - 796 - - - Change in acquisition-related earnout liability - - - (595) (1,737) (497) - - - Mineral oil excise tax refund - - - - - (2,540) - - - Currency conversion impacts of the Venezuelan Bolivar - - 322 - - 357 321 2,806 88 Adjusted EBITDA 40,095 44,153 66,838 72,971 80,935 89,618 99,835 101,588 106,576 Adjusted EBITDA Margin 6.9% 9.8% 12.3% 10.7% 11.4% 12.3% 13.0% 13.8% 14.3%

 	

TTM Adjusted EBITDA Reconciliation Chart #12 I = G + H H G = F - D F E = C + D D C = B - A B A Trailing Twelve Months Q1 2017 YTD Q1 2017 Last Nine Months 2016 FY 2016 Trailing Twelve Months Q1 2016 YTD Q1 2016 Last Nine Months 2015 FY 2015 YTD Q1 2015 Net income 55,449 6,992 48,457 61,403 53,748 12,946 40,802 51,180 10,378 Depreciation 12,557 3,157 9,400 12,557 12,481 3,157 9,324 12,395 3,071 Amortization 7,005 1,773 5,232 7,009 6,961 1,777 5,184 6,811 1,627 Interest expense 2,804 656 2,148 2,889 2,739 741 1,998 2,585 587 Taxes on income before equity in net income of associated companies 23,786 6,865 16,921 23,226 18,731 6,305 12,426 17,785 5,359 Equity income from a captive insurance company (2,228) (592) (1,636) (1,688) (1,335) (52) (1,283) (2,078) (795) Restructuring (credit) expense (439) - (439) (439) 6,790 - 6,790 6,790 - Houghton combination-related expenses 10,606 9,075 1,531 1,531 - - - - - Verkol transaction-related expenses - - - - 2,813 - 2,813 2,813 - Customer bankruptcy costs - - - - 328 - 328 328 - Cost streamlining initiatives 286 286 - - - - - 173 173 Currency conversion impacts of the Venezuelan bolivar fuerte - - - 88 88 88 - 2,806 2,806 Adjusted EBITDA 109,826 28,212 81,614 106,576 103,344 24,962 78,382 101,588 23,206 Adjusted EBITDA Margin 14.4% 14.5% 14.4% 14.3% 14.1% 14.0% 14.1% 13.8% 12.8%