2018 Letter to Shareholders

Quaker Chemical Corporation | 2018 Letter to Shareholders A Message from Michael F. Barry, Chairman, Chief Executive Officer and President

Dear Shareholders, Customers and Associates:

2018 was another strong year for Quaker.

We achieved record sales and marked nine straight years of records for non-GAAP earnings and adjusted EBITDA. In addition, we completed robust integration plans to ensure our combination with Houghton International will be smooth and successful. On the first day after closing the deal, we are prepared to move forward as one company.

A Record Year.

2018 was another strong year for Quaker. We achieved record sales and marked nine straight years of records for non-GAAP earnings and adjusted EBITDA. These achievements were despite a challenging environment, including foreign exchange rate headwinds and a slowdown in global automotive markets.

Quaker’s non-GAAP earnings per diluted share increased 21% to $6.04, Michael F. Barry

compared to $5.01 in 2017, and adjusted EBITDA increased 9% to

Chairman of the Board,

$125.6 million. Sales were $867.5 million, up 6% from the prior year.

Chief Executive Officer

Quaker’s balance sheet remains strong. At the end of the year, our cash

and President

exceeded our debt by $67.5 million with a record net operating cash flow of $78.8 million. We saw good growth in our product volumes and increased our share in key markets. Furthermore, we had year-over-year profitability improvement in all regions except South America.

Our total shareholder return in 2018 was 19% and our average share price rose to $168.20, another historic high for Quaker, representing an 18% increase over the $142.29 average share price in 2017. Delivering value to shareholders is always a top priority, so reaching these milestones is especially rewarding. We increased our dividend in July, making this the 47th consecutive year Quaker has maintained or increased the dividend paid to our shareholders.

“

We achieved record

Our performance in 2018 further bolsters our confidence that our strategy

sales and marked

is working. Our customer-intimacy approach continues to help us expand

nine straight years

into new markets—and to increase our market share. We have consistently

of records for non-

achieved organic volume growth of at least 2% above the underlying

GAAP earnings and

growth in our markets. And we achieved this once again in 2018. Looking

adjusted EBITDA.

forward, as we double in size through our combination with Houghton, we expect our above-market growth to continue. This is due in part to the many new cross-selling opportunities that will be generated by our different, but complementary, customers and product lines.

Our Upcoming Combination.

With the upcoming combination of Quaker and Houghton—two already strong companies—we will build a new organization that will be united and transformed by the strengths of both. We are working together to select the best from each company—practices, systems and innovations—so we can become “the best of the best.” Our aim is to offer customer solutions that are supported by the best talent and technologies available anywhere.

We expect the regulatory approvals for the transaction to be completed within the next few months. Shortly after closing the transaction, we will communicate our plans for creating value in more detail, including updates on estimated cost synergies.

”

A Strong History, a Stronger Future.

I would like to take a moment to note that 2018 marked the 100th anniversary of Quaker Chemical Corporation, reaching a milestone few businesses ever attain. Today, we are stronger than ever because of the tireless efforts of our associates, who continue to deliver for our customers.

As we begin a new century in our history, we are excited to be combining with such a complementary partner as Houghton International—with their

“

I continue to be confident in Quaker’s future and excited about the benefits we

more than 150 years of experience. I look forward to what we can accomplish

will achieve through our

together as a single company, transformed by the strengths that we each

upcoming combination

bring into the relationship. As always, our priority will be to create value for our

with Houghton.

customers, our shareholders, our associates and our communities.

I extend my thanks to all associates for delivering another year of record financial performance and preparing us for our combination with Houghton.

Best regards,

Michael F. Barry Chairman of the Board, Chief Executive Officer and President

”

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Base Period Dec11 100 100 100

2015 INDEXED RETURNS Years Ending Dec12 Company / Index 141.44 Quaker Chemical Corporation 116.33 S&P SmallCap 600 Index 125.30 S&P 600 Materials Group Index

Dec13 205.51 164.38 170.16

2015 INDEXED RETURNS Years Ending

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Our adjusted EBITDA grew to a record level—$125.6 million in 2018 compared to $115.2 million in 2017.

*For reconciliation of non-GAAP items, see the Non-GAAP Measures section of Item 7 in Form 10-K for the years ended December 31, 2018, 2017 and 2016.

A Rigorous Integration Planning Process.

Integration planning began in July 2017 with the support and guidance of one of the world’s leading M&A consulting firms. A longer-than-expected regulatory approval process allowed us to plan the integration of the two companies thoughtfully and strategically. Once the closing is complete, we will be in an excellent position to hit the ground running. We are ready to execute our strategies to integrate our people, systems and processes in ways that will allow us to capture the full benefits of the combination in the coming years.

“

Many associates

from both Quaker and Houghton have participated actively in the integration planning process.

”

Quaker Chemical Corporation One Quaker Park 901 E. Hector Street Conshohocken, PA 19428-2380 +1.610.832.4000 quakerchem.com