Quaker Houghton's Record Quarter: Pricing Power, Share Gains, and the Road to 18% EBITDA
Despite raw material inflation, the specialty chemicals maker delivered its best-ever EBITDA, driven by volume growth, pricing actions, and a disciplined cost transformation.
KWR · Earnings Call · 2026-07-31
A Record Quarter Built on Share Gains and Pricing Discipline
Quaker Houghton delivered a standout second quarter, punctuated by record profitability. Adjusted EBITDA reached $85 million, and the company celebrated its strongest three months in over a century. “We achieved our fourth consecutive quarter of year-over-year profitability growth in the second quarter, highlighted by a 7% increase in sales volumes. This resulted in the highest quarterly adjusted EBITDA in our company's 160-plus years history.” — Joseph Berquist, President and Chief Executive Officer · 2026-07-31 The growth was broad-based, with all regions contributing to volume gains. Crucially, this outperformance came despite sharp increases in raw material costs linked to the Middle East conflict. The company leaned on pricing action to mitigate margin pressure, implementing two rounds of price increases during the quarter. “We implemented price increases throughout the quarter, and we'll see further adjustments from our index pricing in the third quarter.” — Joseph Berquist, President and Chief Executive Officer · 2026-07-31 This pricing power, combined with operating leverage from higher volumes and benefits from the closure of the Dortmund plant, allowed the company to expand adjusted EBITDA margin by 40 basis points year-over-year even as gross margin declined to 35.5%. The margin pressure is expected to ease; management sees gross margins returning to 36-37% by year-end. As the CEO noted, “Raw material container costs, pretty significant for us in the quarter. We think that those impacts really peaked in June and even early this month in July.” — Joseph Berquist, President and Chief Executive Officer · 2026-07-31
Asia Pacific: The Growth Engine
Asia Pacific was again the standout, delivering 10% organic volume growth for the second consecutive quarter. The region's success is anchored in new business wins, particularly with electric vehicle manufacturers and component makers. These wins have consistently exceeded the company's 2–4% share-gain target, and the pipeline remains robust. The opening of the new manufacturing facility in Zhangjiagang, China, is a strategic milestone, enabling local-for-local production and enhancing service responsiveness. Additionally, the company's fluid intelligence equipment is gaining traction as a differentiator, helping to win business in hard-to-crack accounts across Europe and the Americas. CEO Joe Berquist noted, "Our fluid intelligence play... got us in the door" for several new customers. The combination of market growth in India and Southeast Asia, along with share gains, positions Asia Pacific as a durable growth engine.
Cost Transformation and the Path to 18% EBITDA
Beyond top-line strength, Quaker Houghton is executing a multi-faceted cost transformation. The company closed a plant in Germany, simplified its organizational structure, and is improving master data and business processes. These actions are expected to deliver $10 million in run-rate savings, with benefits already reflected in Q2. Management reiterated its long-term goal of achieving EBITDA margins above 18% from the current 16%. “Our consistent ability to generate share gains, our commitment to execute pricing actions and improve our cost structure and the advantages derived from our global operating network position us well to steadily navigate uncertainty while creating long-term value.” — Joseph Berquist, President and Chief Executive Officer · 2026-07-31 The company also enhanced shareholder returns, announcing a new $250 million buyback authorization and increasing the dividend for the 17th consecutive year. Operating income in the first quarter of 2026 reached $34 million, up 22% year-over-year, and the company’s full-year guidance of mid- to high-single-digit adjusted EBITDA growth underscores confidence in continued operational leverage.
Outlook: Sustainability Amid Uncertainty
Looking ahead, management expects Q3 to be similar to Q2, with normal seasonal patterns and the Americas improving. While Europe may see summer slowdowns, demand in Asia remains robust. The company anticipates gross margins will return to their 36–37% target range by year-end as pricing actions and index adjustments flow through. The Middle East conflict continues to be a wildcard, but Quaker Houghton's diversified global network and strong customer relationships have so far ensured supply continuity. As Berquist concluded, "We expect to deliver meaningful revenue and mid- to high single-digit adjusted EBITDA growth for the full year 2026." With record results, a clear strategy, and a favorable demand environment, the company appears well-positioned to sustain its momentum.