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News Release


Quaker Chemical Corporation Announces First Quarter 2010 Results

- Q1 2010 diluted EPS of $0.84 vs. breakeven Q1 2009 - Product volumes up 35% from Q1 2009 - Net debt-to-total capital ratio improved to 24% vs. 31% at March 31, 2009

CONSHOHOCKEN, Pa., April 27, 2010 /PRNewswire via COMTEX/ --Quaker Chemical Corporation (NYSE: KWR) today announced first quarter 2010 net sales of $128.3 million and earnings per diluted share of $0.84, compared to net sales of $98.5 million and breakeven results for the first quarter of 2009. The first quarter 2010 results include a tax benefit of approximately $0.11 per diluted share reflecting the expiration of applicable statutes of limitations for several uncertain tax positions.

Michael F. Barry, Chairman, Chief Executive Officer and President, commented, "Our strong first quarter results were driven by high steel industry demand in China, Brazil, India and Russia while industrial demand in North America and Europe continues to gradually recover from depressed levels. In addition, the aggressive actions we have taken over the past year and an unusually low tax rate also contributed to these results."

Mr. Barry added, "While we continue to pick up new business and will benefit from continued improvement in key steel and automotive markets, we do anticipate somewhat lower product volume in the second half of the year compared with the first half. This is primarily due to credit-tightening actions in China, seasonal factors relating to the timing of shipments to certain customers, the ending of inventory restocking in our end-use markets and the conclusion of tax incentives for automotive purchases in several countries. The combination of somewhat lower expected demand in the second half, the lag effects as we recover our margins due to the higher raw material costs and our continued investment in key growth initiatives will likely dampen earnings over the remaining quarters for 2010. However, we expect to deliver strong earnings over the rest of 2010 as the remaining quarters are still expected to equal or exceed the earnings we achieved in 2008 before the global crisis began. In summary, I am confident in our future given that we are well positioned in the fastest growing economies as well as the above normal growth we expect in the more mature markets as they recover over the next few years."

First Quarter 2010 Summary

Net sales for the first quarter were $128.3 million, up 30% from $98.5 million for the first quarter of 2009. The increase in net sales was a result of higher volumes across the globe as the Company continues to recover from the economic downturn. Product volumes increased 35%, partially offset by a 5% decline in selling price and mix. Foreign exchange rates increased revenues by approximately 7%, which was offset by lower automotive chemical management services ("CMS") revenue as a result of lower revenue reported on a gross basis. On a sequential quarterly basis, product volumes increased by approximately 3%.

The gross margin percentage of 36.9% represents considerable improvement over the 29.1% reported in the first quarter of 2009. This margin expansion was primarily the result of cost reduction actions taken, a more favorable raw material cost environment and the reduced automotive CMS revenues reported on a gross basis. The increase in gross margin percentage from the fourth quarter of 2009 was due to reduced CMS revenues reported on a gross basis, partially offset by higher costs related to the start-up of the Middletown, Ohio plant expansion, as well as increasing raw material prices and mix.

Selling, general and administrative expenses increased $7.0 million, or 26%, compared to the first quarter of 2009. Higher incentive compensation in the first quarter of 2010, compared to reductions of incentive compensation accruals in the first quarter of 2009 and foreign exchange rate increases, were the primary drivers of the increase, representing 82% of the increase. Higher commissions on improved sales and increased travel and other costs accounted for the remainder of the increase.

In the first quarter of 2009, the Company implemented a restructuring program totaling $2.3 million or approximately $0.14 per diluted share. The Company completed the initiatives under this program during 2009.

The decrease in other income is primarily due to the first quarter 2009 gain related to the disposition of land in Europe of approximately $0.11 per diluted share. Equity in net loss of associated companies includes a charge of approximately $0.03 per diluted share related to the first quarter 2010 devaluation of the Venezuelan Bolivar Fuerte. The increase in net income attributable to noncontrolling interests is due to stronger financial performances from those affiliates as they continue to recover from the global economic downturn.

The Company's low first quarter 2010 effective tax rate of 24% reflects the expiration of applicable statutes of limitations for several uncertain tax positions of approximately $0.11 per diluted share. The tax benefit recorded in the first quarter of 2009 reflects no tax provided for the land sale gain due to the utilization of net operating losses not previously benefited. The Company has experienced and expects to experience further volatility in its quarterly effective tax rates due to the varying timing of tax audits and the expiration of applicable statutes of limitations as they relate to uncertain tax positions. However, the Company expects a higher effective tax rate for the full year 2010 as compared to the first quarter 2010 rate.

Balance Sheet and Cash Flow Items

The Company's net debt-to-total-capital ratio improved to 24% as of March 31, 2010, compared to 31% as of March 31, 2009. Debt increased from December 31, 2009 due to higher working capital as a result of improved business activity, as well as the timing of payments related to incentive compensation.

Forward-Looking Statements

This release contains forward-looking statements that 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 the Company's demand is largely derived from the demand for its customers' products, which subjects the Company 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, and future terrorist attacks such as those that occurred on September 11, 2001. Other factors could also adversely affect us. 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.

Conference Call

As previously announced, Quaker Chemical's investor conference call to discuss first quarter results is scheduled for April 28, 2010 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 Web site at http://www.quakerchem.com. You can also access the conference call by dialing 877-269-7756.

About Quaker

Quaker Chemical Corporation is a leading global provider of process chemicals, chemical specialties, services, and technical expertise to a wide range of industries - including steel, automotive, mining, aerospace, tube and pipe, coatings and construction materials. Our products, technical solutions and chemical management services enhance our customers' processes, improve their product quality and lower their costs. Quaker's headquarters is located near Philadelphia in Conshohocken, Pennsylvania.



                           Quaker Chemical Corporation
                           ---------------------------
                    Condensed Consolidated Statement of Income
                    ------------------------------------------
         (Dollars in thousands, except per share data and share amounts)
         ---------------------------------------------------------------


                                                         (Unaudited)
                                                         -----------

                                                Three Months Ended March
                                                             31,
                                                 -------------------------
                                                       2010            2009
                                                       ----            ----

    Net sales                                      $128,320         $98,507

    Cost of goods sold                               80,980          69,793
                                                     ------          ------

    Gross margin                                     47,340          28,714
    %                                                  36.9%           29.1%

    Selling, general and administrative
     expenses                                        33,669          26,697
    Restructuring and related charges                     -           2,289
                                                        ---           -----

    Operating income (loss)                          13,671            (272)
    %                                                  10.7%           -0.3%

    Other income, net                                   763           1,454
    Interest expense, net                            (1,127)         (1,089)
                                                     ------          ------
    Income before taxes and equity in net
     loss of associated companies                    13,307              93

    Taxes (tax benefit) on income before
     equity in net loss of associated
     companies                                        3,181            (251)
                                                      -----            ----
    Income before equity in net loss of
     associated companies                            10,126             344

    Equity in net loss of associated
     companies                                          (89)           (142)
                                                        ---            ----

    Net income                                       10,037             202

    Less: Net income attributable to
     noncontrolling interest                            618             200
                                                        ---             ---

    Net income attributable to Quaker
     Chemical Corporation                            $9,419              $2
                                                     ======             ===
    %                                                   7.3%            0.0%

    Per share data:
    ---------------
    Net income attributable to Quaker
     Chemical Corporation Common Shareholders
     -basic                                           $0.85              $-
    Net income attributable to Quaker
     Chemical Corporation Common Shareholders
     -diluted                                         $0.84              $-



                           Quaker Chemical Corporation
                           ---------------------------
                       Condensed Consolidated Balance Sheet
                       ------------------------------------
            (Dollars in thousands, except par value and share amounts)
            ----------------------------------------------------------

                                                          (Unaudited)
                                                          -----------

                                                 March 31,     December 31,
                                                      2010              2009
                                                      ----              ----
    ASSETS

    Current assets
      Cash and cash equivalents                    $24,820           $25,051
      Construction fund (restricted cash)              407             2,358
      Accounts receivable, net                     110,587           108,793
      Inventories, net                              54,458            50,040
      Prepaid expenses and other current assets     12,929            12,656

        Total current assets                       203,201           198,898

    Property, plant and equipment, net              65,561            67,426
    Goodwill                                        45,509            46,515
    Other intangible assets, net                     5,272             5,579
    Investments in associated companies              8,836             8,824
    Deferred income taxes                           31,510            31,692
    Other assets                                    46,941            39,537

        Total assets                              $406,830          $398,471
                                                  ========          ========

    LIABILITIES AND EQUITY

    Current liabilities
      Short-term borrowings and current portion
       of long-term debt                            $2,485            $2,431
      Accounts and other payables                   56,949            60,939
      Accrued compensation                          10,443            16,656
      Accrued pension and postretirement
       benefits                                      4,702             4,717
      Other current liabilities                     16,700            15,224

        Total current liabilities                   91,279            99,967
      Long-term debt                                71,099            63,685
      Deferred income taxes                          8,613             8,605
      Accrued pension and postretirement
       benefits                                     26,865            27,602
      Other non-current liabilities                 45,859            42,317

        Total liabilities                          243,715           242,176
                                                         -

    Equity
      Common stock, $1 par value; authorized
       30,000,000 shares; issued 11,151,787         11,152            11,086
      Capital in excess of par value                30,277            27,527
      Retained earnings                            129,994           123,140
      Accumulated other comprehensive loss         (14,058)          (10,439)
                                                   -------           -------
        Total Quaker shareholders' equity          157,365           151,314
                                                         -
    Noncontrolling interest                          5,750             4,981
    Total equity                                   163,115           156,295

        Total liabilities and equity              $406,830          $398,471
                                                  ========          ========




                            Quaker Chemical Corporation
                            ---------------------------
                  Condensed Consolidated Statement of Cash Flows
                  ----------------------------------------------
                       For the three months ended March 31,
                       ------------------------------------
                              (Dollars in thousands)
                              ----------------------


                                                            (Unaudited)
                                                          -----------
                                                         2010           2009
                                                         ----           ----
    Cash flows from operating activities
      Net income                                      $10,037           $202
      Adjustments to reconcile net income to
       net cash (used in) provided by
       operating activities:
         Depreciation                                   2,593          2,458
         Amortization                                     254            257
         Equity in net loss of associated
          companies, net of dividends                      89            142
         Deferred compensation and other, net             289         (2,852)
         Stock-based compensation                         727            352
         Restructuring and related charges                  -          2,289
         Gain on disposal of property, plant
          and equipment                                   (32)        (1,193)
         Insurance settlement realized                   (345)          (144)
         Pension and other postretirement
          benefits                                     (2,265)        (1,907)
      Increase (decrease) in cash from
       changes in current assets and current
       liabilities, net of acquisitions:
         Accounts receivable                           (3,606)         7,196
         Inventories                                   (5,332)        10,060
         Prepaid expenses and other current
          assets                                       (1,360)            34
         Accounts payable and accrued
          liabilities                                  (5,818)        (6,045)
         Change in restructuring liabilities                -         (2,652)
             Net cash (used in) provided by
              operating activities                     (4,769)         8,197
                                                       ------          -----

    Cash flows from investing activities
         Capital expenditures                          (2,042)        (2,375)
         Payments related to acquisitions                   -         (1,000)
         Proceeds from disposition of assets               41          1,605
         Insurance settlement received and
          interest earned                               5,038          5,056
         Change in restricted cash, net                (2,742)        (4,086)
             Net cash provided by (used in)
              investing activities                        295           (800)
                                                          ---           ----

    Cash flows from financing activities
         Net decrease in short-term borrowings              -         (1,619)
         Proceeds from long-term debt                   7,583          1,584
         Repayments of long-term debt                    (122)        (7,728)
         Dividends paid                                (2,550)        (2,492)
         Stock options exercised, other                   135             69
         Excess tax benefit related to stock
          option exercises                                321              -
                                                          ---            ---
             Net cash provided by (used in)
              financing activities                      5,367        (10,186)
                                                        -----        -------

    Effect of exchange rate changes on
     cash                                              (1,124)          (126)
    Net decrease in cash and cash
     equivalents                                         (231)        (2,915)
    Cash and cash equivalents at the
     beginning of the period                           25,051         20,892
                                                       ------         ------
    Cash and cash equivalents at the end
     of the period                                    $24,820        $17,977
                                                      =======        =======




SOURCE Quaker Chemical Corporation