Quaker Houghton Q4 and Full Year 2025 Results: Key Details for Investors

Summary of Results and Key Financials

• Q4 2025 Net Sales: \$468.5 million (up 5.5% year-over-year)
• Full Year 2025 Net Sales: \$1,888.6 million (up 2.7% year-over-year)
• Q4 2025 Adjusted EBITDA: \$71.9 million (up 11% year-over-year)
• Full Year 2025 Adjusted EBITDA: \$299.2 million (down 3.8% year-over-year)
• Q4 2025 Non-GAAP Earnings per Diluted Share: \$1.65 (up 24% year-over-year)
• Full Year 2025 Non-GAAP Earnings per Diluted Share: \$7.02 (down 5.6% year-over-year)
• Q4 2025 Operating Cash Flow: \$47 million
• Full Year 2025 Operating Cash Flow: \$136 million
• Total Debt as of Dec 31, 2025: \$871 million
• Cash and Cash Equivalents: \$180 million
• Net Debt: \$691 million
• Leverage Ratio: 2.3x (well within bank covenants, no significant maturities until June 2027)
• Share Repurchases in 2025: \$42 million

Operational Highlights and Segment Performance

• Sales volumes were slightly down in Q4 2025 compared to Q4 2024, primarily due to softer underlying end market activity, but this was partially offset by new business wins across all regions and continued growth in the Asia/Pacific segment.
• Segment operating earnings for Q4 2025:
  • Americas: \$51.2 million
  • EMEA: \$21.8 million
  • Asia/Pacific: \$34.0 million
• Full year segment operating earnings:
  • Americas: \$227.6 million
  • EMEA: \$96.6 million
  • Asia/Pacific: \$124.2 million
• Gross profit margin remained stable at 35.3% in Q4 2025 (vs. 35.2% in Q4 2024), but declined to 36.1% for the full year 2025 (from 37.3% in 2024).
• Adjusted EBITDA margin for Q4 2025 was 15.3% (up from 14.6% in Q4 2024).

Key Non-GAAP Adjustments and One-Off Items

• Significant non-GAAP adjustments in 2025 included:
  • Restructuring and related charges: \$35.1 million (full year)
  • Acquisition-related expenses: \$12.0 million (full year)
  • Impairment charges: \$88.8 million (full year)
  • Acquisition-related step-up inventory amortization: \$6.0 million
• The company funded the Dipsol acquisition in April 2025 using its existing credit facility.
• Adjusted EBITDA and non-GAAP EPS exclude these and other one-off items, which include strategic planning expenses, executive transition costs, and hyper-inflationary currency impacts.

Leverage, Liquidity, and Capital Management

• The leverage ratio of 2.3x (net debt/trailing twelve months adjusted EBITDA) remains well below the maximum permitted leverage of 4.5x under bank covenants.
• Q4 2025 cost of debt on the credit facility was approximately 5.1%.
• The company maintains a healthy balance sheet and ample liquidity, with no significant debt maturities due until June 2027.

Forward-Looking Statements and Risks

• The company cautions investors about several macroeconomic and operational risks, including:
  • Potential effects of economic downturns, inflationary pressures, and global supply chain constraints.
  • Tariffs, trade restrictions, and uncertainties related to geopolitical events, including wars in Ukraine and the Middle East.
  • Regulatory and legislative changes, including tax law impacts.
  • Risks from customer financial instability, high interest rates, and acts of war or terrorism.
  • Possible impacts from industry consolidation, climate change, natural disasters, and cyber-security threats.
• The company has not provided guidance for GAAP measures or a quantitative reconciliation of forward-looking non-GAAP financial measures due to the uncertainty and potential materiality of certain significant items.

Shareholder Considerations and Potential Price Sensitivity

• Impairment Charges: The company recorded a substantial impairment charge of \$88.8 million in 2025, a significant non-cash item that reduced GAAP net income and could be interpreted as a negative signal regarding certain assets or business lines.
• Restructuring and Acquisition-Related Costs: Elevated restructuring expenses (\$35.1 million) and acquisition-related costs (\$12.0 million) signal ongoing transformation and integration activities, which may affect near-term profitability but potentially enhance long-term value.
• Business Growth and Shareholder Returns: Despite challenging end markets, the company managed to increase Q4 profitability and cash flow, repurchased \$42 million of shares, and maintained strong liquidity and manageable leverage, all of which could be viewed positively by investors.
• Acquisition Activity: The funding and integration of the Dipsol acquisition during 2025 could provide further growth opportunities, though the company’s ability to realize synergies will be closely watched by the market.
• Guidance and Market Outlook: No forward guidance was provided for 2026 due to macroeconomic uncertainty and the potential for further non-recurring items, which increases uncertainty for shareholders.

Conclusion

Quaker Houghton’s Q4 and full-year 2025 results reflect a company navigating a challenging environment with resilient operational execution and a focus on strategic transformation. Key positives include improved Q4 profitability, solid cash flow, healthy leverage, and continued acquisition activity. However, significant impairment and restructuring charges, as well as macroeconomic uncertainty, may weigh on investor sentiment and share price volatility in the near term. Shareholders should closely monitor further disclosures about cost reductions, acquisition integration, and management’s outlook in upcoming quarters.

Disclaimer: This summary is for informational purposes only and does not constitute investment advice. Investors should review the full financial statements, risk disclosures, and consult with professional advisors before making any investment decisions. The company’s actual future results may differ materially from the forward-looking statements discussed herein.

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