Quaker Chemical (KWR) Q1 2025 earnings summary

Executive summary

• Q1 2025 net sales were $442.9 million, down 6% year-over-year, reflecting soft end market demand, FX headwinds, and lower volumes, partially offset by acquisitions.

• Adjusted EBITDA was $69.0 million, with a margin of 15.6%, down from $83.3 million and 17.7% in Q1 2024, as cost actions partially offset lower sales and higher raw material costs.

• Non-GAAP diluted EPS was $1.58, GAAP diluted EPS was $0.73, both down significantly year-over-year.

• Three acquisitions (Dipsol Chemicals, Natech, CSI) in 2025 expanded the portfolio and global reach, funded through existing credit facilities.

• Operating cash flow was negative $3.1 million, reflecting seasonality, working capital outflows, and lower earnings.

Financial highlights

• Gross profit was $161.3 million (36.4% margin), down from $181.6 million (38.7%) year-over-year.

• Operating income dropped to $27.6 million, with operating margin at 6.2%; non-GAAP operating income was $45.8 million.

• Interest expense was $9.5 million, down from $10.8 million; effective tax rate rose to 43.4% from 27.3%.

• Capital expenditures were $12 million in Q1, with full-year capex expected at 2.5%-3.5% of sales.

• Restructuring and related charges were $14.6 million, up from $1.9 million, as cost optimization accelerated.

Outlook and guidance

• Revenue and earnings for 2025 are expected to be in line with 2024, with ongoing uncertainty in end market demand, tariffs, and macroeconomic factors.

• The $20 million cost optimization program is expected to be completed in H1 2025, generating annualized savings.

• Management expects continued benefits from acquisitions and cost actions, with liquidity sufficient for at least the next twelve months.

• No quantitative GAAP guidance provided due to uncertainty around non-recurring items.

• Long-term EBITDA margin targets remain high teens, aiming for 20% or above.