Quaker Houghton

assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the call over to Jeffrey Snell, Vice President, Investor Relations. Mr. Snell, you may begin.

Thank you. Good morning, and welcome to our first quarter 2025 earnings conference call. On the call today are Joe Berkwist, our President and Chief Executive Officer, Tom Kohler, our Executive Vice President and Chief Financial Officer, and Robert Traum, our general counsel. Our comments relate to the financial information released after the close of the U.S. markets yesterday, May 1st, 2025. Our press release and accompanying slides can be found on our investor relations website. Both the prepared commentary and discussion during this call may contain forward-looking statements reflecting the company's current view of future events and their potential effect on Quaker Houghton's operating and financial performance. These statements involve uncertainties and risks, which may cause actual results to differ. The company is under no obligation to provide subsequent updates to these forward-looking statements. This presentation also contains certain non-GAAP financial measures, and the company has provided reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures in the appendix of the presentation materials, which are available on our website. For additional information, please refer to our filings with the SEC. Now it's my pleasure to hand the call over to Joe. Thank you, Jeff.

I'd like to welcome everyone to Quaker Houghton's first quarter 2025 earnings call. First quarter results were directionally in line with our expectations, despite end market demand being softer than we had anticipated. While our volumes declined one and a half percent, we estimate our markets were down in aggregate a low to mid single digit percentage compared to the prior year. due to a continuation of soft industrial activity and uncertainty regarding tariffs, which impacted customer decision-making and order patterns. The team performed well, successfully gaining additional market share across all segments, despite the challenging global macroeconomic environment. Our results once again displayed the resilience in our business that comes from operating across diverse geographic end markets with a robust, and Advantage portfolio. We continue to maintain our focus on delivering the best outcomes for our customers and affirm a steadfast commitment to managing items within our control. We are advancing our previously announced $20 million cost program, which will be substantially complete in the first half of 2025. We also made important strategic investments, including acquiring three companies, which further enhance our portfolio and will expand our addressable market, while providing more avenues to serve our customers and accelerate our growth. Quaker Houghton is in a strong financial position. While tariffs have caused volatility, we are confident that we are well-situated within our markets due to our local-for-local strategy and our position to mitigate most of the potential direct impacts to our supply chain. We continue to take steps to minimize impacts to our customers that may arise from tariffs as we work together to navigate adverse conditions in the global supply chain. I will say a few words about the quarter, then provide some comments on the outlook for 2025. Then I will hand the call over to Tom to discuss our financials in more detail. First quarter net sales were $443 million. 6% below the prior year, or 3% lower on a constant currency basis. We continue to outperform the aggregate of the end markets in which we operate, which we estimate declined by a low to mid-single-digit percentage compared to the prior year. Our total volumes, inclusive of acquisitions, declined approximately 1.5% compared to the prior year. This was a positive result, As a continuation of growth in the Asia Pacific segment and new business wins globally, mostly offset softer market conditions, primarily in the Americas and EMEA regions. I am pleased with our ability to gain new business despite the challenging market conditions. This is especially evident in our metals business, which is contributing to the relative outperformance compared to market rates. our net new business wins are trending at the high end of our targeted annual range of 2% to 4%. And we are encouraged by a strong pipeline of ongoing trials and business development opportunities. These gains are made possible by our diversified portfolio of products and services, our cross-selling capabilities, and our service model. Gross margins improved 120 basis points to 36.4% compared to the lows in the fourth quarter of 2024. Gross margins are within our long-term range, but are below the prior year due to the timing of raw material cost increases and product and geographic mix. As a result of the team's operational performance, we generated $69 million of adjusted EBITDA in the first quarter, an increase of $4 million sequentially, and adjusted EBITDA margins of 15.6%, reflecting our disciplined cost management. Our company's growth strategy is aligned with industries, customers, and businesses that, despite near-term challenges, have positive long-term growth characteristics. We aim to enhance our customer intimacy model and build on our leadership position in our chosen markets. We serve many industries, each with unique, often niche applications and needs, and believe our ability to provide the best value to our customers is one of our key competitive advantages. Last quarter, I highlighted our top priorities, which are, one, returning to growth, two, reducing complexity, and three, effectively deploying capital. We have a lot of work to do, but we have made progress advancing our strategy. For example, we have taken actions to recenter and strengthen leadership around our portfolio of advanced and operating solutions. We are improving the visibility of these and other technologies throughout our regions to accelerate our cross-selling and globalize the full suite of Quaker Houghton products and services. I recently spent time traveling across our sites and customer operations in Asia. I am confident in the potential and believe we are taking the right steps to continue to build our team's product capabilities and pipeline to capitalize on higher growth geographies like Asia Pacific, where we continue to show volume expansion in a highly competitive region. We have launched several cross-functional commercial strategic, supply chain, and operations initiatives. These initiatives empower us to capitalize on opportunities to gain share in the white space in our addressable markets. We are taking steps to improve customer satisfaction. For instance, through reducing lead times and improving our cost competitiveness as we help our customers navigate the market turbulence. These initiatives have stirred a lot of excitement in the organization harnessing the energy to leverage our technical expertise, industry knowledge, financial strength, and global scale. Our fluid intelligence platform is another way we will provide a step change in automation efficiency for customers. We have reprioritized R&D resources to accelerate this and other development initiatives that have performance advantages compared to current technology. The interest in these efficiency plays and customer's acceptance is strong and growing. The $20 million of cost actions announced is progressing, and we continue to expect this will deliver approximately $15 million of in-year benefit, primarily in SG&A. We are also encouraging our teams to increase their focus on customer needs, streamlining decision-making processes, and improving our reaction time. Meanwhile, we are continuing to invest in our future. Our facility in China is under construction and will enable us to supply the region with our full portfolio of solutions and further enhance our ability to be local for local. We have also continued to invest in our multi-channel approach with the intention of making it easier to do business with Quaker Houghton. We're making investments to improve our overall customer interface through e-commerce, building our inside sales channels, leveraging our distribution network and partnerships, and strengthening our direct sales model. And we are initiating another phase of product simplification program, harmonizing our business processes and organizing our brands to reduce complexity and raise brand awareness. These actions are bringing a sharper focus to our customer intimacy model. They will take time to fully develop, but we are making progress putting more rigor around these processes, which is also informing how we can better develop talent and enhance our customers' operations. Our business model and execution has resulted in our strong financial profile, delivering predictable cash flows. We look to deploy capital in a disciplined and prudent manner based on a long-term framework of value creation, which considers all factors, including organic investments, debt reduction, M&A, and shareholder returns through dividend growth and share repurchases. The three strategic acquisitions we made so far this year are the exact definitions of what we look for when deploying capital. For instance, Dipsol. Dipsol is a leading provider of surface treatment solutions, primarily electroplating, to the automotive and other industrial segments. Dipsol has market-leading positions, long-term customer relationships, strong margins and cash flows, and have consistently demonstrated above-market organic growth. Importantly, Dipsol has a strong cultural fit with our company and is a great addition to Quaker Houghton. This transaction was valued at approximately 10 and a half times its trailing 12 months adjusted EBITDA and below nine times on a post synergy basis. We are pleased to make the attractive acquisition of Dipsol a strong company with solid underlying growth and strong cashflow. Through innovation and acquisitions, our portfolio has become much more diverse, expanding our basket of solutions we can provide our customers in elevating our ability to be a full solution provider. They also provide opportunities to increase our addressable markets and are accretive to margins. Quaker Houghton has a long tradition of outpacing its end markets by deploying its differentiated customer intimate model and building trust with customers through our best in class products, services, people, and expertise. During this period of heightened uncertainty, we believe it is even more critical that we reemphasize our commitment to our customer success. The actions we are taking all support our ability to respond to customer needs and advance our strategy. Turning to our outlook, Quaker Houghton is well positioned. We have a pipeline of trials underway to gain new business with customers which we expect will support our ability to drive above-market growth in 2025 in line with our long-term annual expectation of 2% to 4%. Quaker Houghton is a global company, and the uncertainty around trade and tariffs has impacted the end markets we serve. Absent additional information or clarity in taking into account some tariff impacts, we now expect our underlying market growth rates will decline a low single-digit percentage in 2025 compared to 2024 levels. We are excited by our recent acquisitions, including DIPSOL, which should add a few percentage points of growth in 2025, helping to offset the expected countervailing trends in automotive, transportation, and industrial markets. Based on our current visibility, and despite the increased uncertainty caused by tariffs and trade dynamics, We expect revenue and earnings will be in line with 2024 levels. This view considers the current state of uncertainty and reduced sentiment across our end markets. Because we operate locally with sourcing, manufacturing, and our technical expertise close to the customer, and due to the criticality of our products and services to our customers' operations, we believe we can offset most of the direct impact of tariffs on our cost structure. it is more difficult to assess the implications of the tariffs on end market demand. However, we are in close communication with our customers and will remain nimble and use our scale as an advantage. We are also prepared to take additional cost actions should it be warranted. The long-term fundamentals of our industry are positive. We are effectively managing what we can control improving our capabilities and strengthening our business. We have demonstrated our ability to manage through other periods of volatility, generate cash flow, and become stronger. Switching to the second quarter, we expect a modest seasonal improvement in demand across all our segments and a benefit from recent acquisitions, while potential uncertainty related to tariffs remains. With that, I'd like to pass it to Tom to discuss the financials in more detail.