管理層發言
Greetings. Welcome to the Quaker Houghton Third Quarter 2025 Earnings Conference Call. As a reminder, this conference is being recorded. I would now like to turn the call over to Jeffrey Schnell, Vice President of Investor Relations. Mr. Schnell, you may begin.
Thank you. Good morning, and welcome to Quaker Houghton's Third Quarter 2025 Earnings Conference Call. Joining us on the call today are Joe Berquist, our President and Chief Executive Officer; Tom Coler, our Executive Vice President and Chief Financial Officer; and Robert Traub, our General Counsel. Our comments relate to the financial information released after the close of the U.S. markets yesterday, October 30, 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 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, and good morning, everyone. We had a strong performance in the third quarter with adjusted EBITDA up 5% and adjusted earnings per share up 10% year-over-year. Our results were highlighted by another consecutive quarter of organic volume growth across all regions. This was amplified by ongoing strength in Asia Pacific and strong new business wins of 5% globally, enabling Quaker Houghton to outperform its underlying end markets. Our earnings growth reflects the increase in organic sales, contribution from acquisitions, especially Dipsol, and a sequential expansion in operating margins as we better leverage our scale. The organization is balancing both operational discipline and strategic execution while advancing our key objectives. This is resulting in an acceleration of new business wins at appropriate levels of profitability across the portfolio. These actions are building on our solid foundation and give us confidence in our ability to drive sustainable long-term outperformance.
Cash generation and capital discipline also remain strong. In the third quarter, we generated $51 million of operating cash flow and made progress on our capital allocation strategy, including reducing our net leverage to 2.4x and returning cash to shareholders through share repurchases and dividends. Our business continues to perform well, and we remain focused on what we can control while navigating the dynamic and uncertain environment. I am proud of the team's performance in 2025 as well as the organization's renewed focus on delivering meaningful productivity and results for our customers through innovation, technical expertise, and service. Third quarter results were in line with our expectations despite markets being softer than anticipated. Uncertainty around tariffs continues to weigh on customer operating plans. We estimate end market activity declined a low single-digit percentage compared to the prior year.
And on a year-to-date basis, production levels across our major end markets, including steel, automotive, internal combustion engines, and industrial products are down a low single-digit percentage globally compared to 2024. Relative to our markets, we are outperforming. In the third quarter, we delivered a 7% year-over-year increase in sales on a 3% increase in organic sales volumes. This was most notable in Asia Pacific, which delivered another 8% increase in organic sales volumes. Net share gains were also strong at 5% globally as the team is successfully executing our commercial strategy, capitalizing on the pipeline of cross-selling opportunities, reducing churn, and solving complex customer needs. These wins and the evolution of the pipeline should provide continued benefit to the organization as we wrap into 2026. Our organic growth was complemented by a contribution from acquisitions, namely Dipsol, which we closed in the second quarter.
We are pleased with the ongoing integration of Dipsol. The business is performing in line with our expectations, and we are excited by the commercial opportunities it provides the combined organization. Gross profit dollars increased compared to both the prior year and prior quarter. Importantly, gross margins improved from the second quarter and are within our targeted range, which promotes growth at solid levels of profitability. We generated $83 million of adjusted EBITDA, an increase of approximately 5% year-over-year and 10% sequentially. This reflects the top line growth and operational improvements, including ongoing cost controls. Adjusted EBITDA margins of 16.8% continue to improve towards our targeted range. When I stepped into the role a year ago, I set out 3 key priorities, underpinned by several initiatives aimed at strengthening the core of our organization. Our strategy is working, and these actions are yielding results as demonstrated in the resilience of our earnings profile.
From a commercial standpoint, we have doubled down on our commitment to serving the customer. We have taken a focused strategic approach to customer segmentation and are advancing key initiatives to improve service levels and optimize our portfolio, scaling the organization to have the capabilities to deliver the right solutions and services to meet and exceed our customers' needs. We have also increased our discipline in pursuing new business opportunities, leveraging innovation. For instance, in aluminum, where we recently introduced new products, cross-selling our leading portfolio and being more intentional with pricing. Our teams are working diligently to reduce churn, which I am pleased has trended back to historic low single-digit levels and winning back previously lost business. These efforts are paying off with positive year-to-date organic volume growth and new business wins, which are at the high end of our targeted range.
To give some context to these actions, we are leveraging our global scale, footprint, and R&D capabilities. We have localized or transferred production of select products, for instance, in forging and specialty greases. This flexible sourcing provides greater consistency, speed, and cost efficiency, enhancing our competitiveness. When aggregated, these smaller wins add up and are meaningful contributors to the strong organic volume growth that we have delivered for the past 9 consecutive quarters in Asia Pacific. We believe we are well positioned to continue to capitalize on the growth in China, India, and Southeast Asia and will further benefit as our new China facility comes online in 2026. Our new R&D lab in Brazil expands our global innovation network, strengthens technical capabilities for local customers, and supports the growth of Advanced Solutions in the region. These enhancements highlight some of the swift targeted actions we're taking to accelerate growth and provide the full portfolio in all regions.
Our team is hyper-focused on growing our portfolio of Advanced Solutions. In the third quarter, we delivered our fourth consecutive quarter of high single-digit or low double-digit organic volume growth in the product segment with a strong contribution across all regions. We have significant opportunities ahead to continue to align the business towards these attractive areas of the portfolio, especially as we leverage our increased scale with Dipsol. We have also maintained a clear emphasis on controlling what we can control. From a cost perspective, on a year-to-date basis, organic SG&A is down approximately 3% as we make progress on our cost and efficiency actions announced earlier this year. We began to put in motion further network optimization actions aimed at unlocking the leverage in our model. We have closed one manufacturing facility year-to-date in the Americas, and we consider further actions in our manufacturing footprint will be needed to improve our asset utilization, reduce manufacturing costs while maintaining the quality and service levels customers expect from us.
These actions support our ability to deliver adjusted EBITDA margins in the high teens as a percentage of sales over time. We will continue to benefit from the ongoing cost actions in the fourth quarter and 2026. And lastly, we are fully committed to executing on our disciplined capital allocation strategy. In the quarter, our outstanding debt balance was reduced by $62 million, and our net leverage ratio is below our targeted range of 2.5x. Year-to-date, we have returned approximately $62 million to shareholders through dividends and share repurchases while maintaining our balance sheet flexibility to execute on strategic acquisitions. The team is energized. We are executing on our strategy to deliver growth, reduce complexity, and efficiently deploy capital to unlock our potential. Turning to outlook. Macroeconomic trends have remained soft through 2025, and we expect them to remain so at least through Q4.
We also expect a return to normal seasonal trends in the fourth quarter, and there is lingering uncertainty that continues to weigh on customer operating rates from tariffs and global trade. We anticipate continued momentum driven by share gains and our ongoing cost actions will help mitigate these impacts. Based on our current visibility in the fourth quarter, we expect to deliver another quarter of revenue and adjusted EBITDA growth on a year-over-year basis and should generate solid cash flow. We have conviction in our strategy and are balancing the near-term and long-term needs of the organization. We have delivered strong results year-to-date despite a softer macro backdrop, and current data suggests markets could begin to stabilize in 2026. Irrespective, the share gains and cost actions we are delivering give me confidence that we are well positioned to return to growth in 2026 and beyond. With that, I'd like to pass it to Tom to discuss the financials in more detail.
Thank you, Joe, and good morning, everyone. Third quarter net sales were $494 million, a 7% increase from the prior year. Organic volumes increased 3% and were strong across all segments, driven by share gains of approximately 5%. Acquisitions contributed an additional 5% to sales, primarily related to Dipsol, which closed in the second quarter of 2025. Selling price and product mix were 2% lower than the prior year. This consists of impacts from both product, service, and geographic mix as well as pricing largely associated with indexes. Gross profit dollars increased year-over-year and sequentially on a non-GAAP basis. Gross margins were 36.8% compared to 37.3% in the third quarter of 2024 and are comfortably within our targeted range. Gross margins increased compared to the second quarter of 2025 due to some modest raw material cost favorability and productivity actions, partially offset by higher manufacturing costs and the impact of mix.
On a non-GAAP basis, SG&A increased approximately $5 million or 4% compared to the prior year. Excluding acquisitions, SG&A is approximately 3% lower on a year-to-date basis as we effectively manage costs. We are making good progress on our previously announced cost actions without sacrificing our ability to serve customers and invest in our strategic initiatives as we expect more benefit in Q4 and 2026. We delivered $83 million of adjusted EBITDA in the third quarter, an increase of 5% compared to the prior year and 10% sequentially. Adjusted EBITDA margins of 16.8% are trending toward our targeted range driven by the top line growth and disciplined cost management. Switching to our segment results. The momentum in our Asia Pacific segment is evident, and the business is consistently outperforming its markets. The Asia Pacific segment has delivered positive organic sales growth in 8 of the last 9 quarters, including approximately 3% in the third quarter of 2025.
This is driven by a strong contribution from new business wins, winning trials with new and existing customers in higher-growth geographies like India, through cross-selling and in new areas of our portfolio like Advanced Solutions. Asia Pacific segment sales increased 18% year-over-year as organic growth was amplified by a contribution from our acquisition of Dipsol, which is performing in line with expectations despite the challenging end market environment, particularly in automotive. Sales and organic volumes increased approximately 4% in Asia Pacific sequentially. We are improving operating leverage in Asia Pacific as segment earnings increased 16% year-over-year on the improvement in sales and modest raw material deflation. Segment earnings also increased more than 20% sequentially as we had some onetime acquisition-related items impacting margins in the prior quarter, which did not repeat.
We continue to have opportunities for growth across the region. While end market conditions remain the most challenged in EMEA, net sales grew compared to the prior year and prior quarter for the second consecutive quarter. Organic sales grew 2% compared to the prior year across most product categories and once again delivered double-digit growth in Advanced Solutions. Segment earnings in EMEA also improved due to the increase in net sales and consistent segment operating margins. Net sales in the Americas increased 1% year-over-year. Organic volumes were flat as new business wins, especially in Advanced and Operating Solutions, offset softer-than-expected end market activity, which we estimate declined a low single-digit percentage in the quarter, primarily in metalworking applications. Americas segment earnings declined $3 million or 5% compared to the prior year, primarily driven by lower margins due to higher raw material and manufacturing costs as well as the impact of mix.
Segment margins were consistent with the second quarter of 2025. Overall, we delivered sales growth and an increase in organic sales volumes in all segments in the third quarter. Our initiatives to return to growth and reduce complexity are gaining traction. Share gains are strong, and we are maintaining discipline around costs to better leverage our scale and footprint to drive adjusted EBITDA margins towards our targeted range. Turning to non-operating costs. Our interest expense was $11 million in the third quarter. Our cost of debt remained approximately 5% in the quarter. Our effective tax rate, excluding nonrecurring and noncore items, was approximately 28%, and we expect our full-year effective tax rate will be approximately 28%. In the third quarter, our GAAP diluted earnings per share were $1.75. Our non-GAAP diluted earnings per share were $2.08, a 10% year-over-year increase. Cash generated from operations was $51 million in the third quarter.
Working capital was a modest use of cash as expected as we built some inventory related to ongoing manufacturing and network optimization actions. We also had approximately $6 million of incremental restructuring-related cash outflows. Despite these items, cash conversion was within our targeted range, and we continue to expect to deliver another solid year of cash flow in 2025. Capital expenditures in the third quarter were approximately $13 million, reflecting the timing of the construction of our new facility in China, which is expected to be online in the second half of 2026. CapEx is expected to be between 2.5% and 3% of sales in 2025 as we make progress on the construction of our new China facility and consolidate our headquarters and labs in Pennsylvania. In the quarter, we prioritized debt repayment, reducing our outstanding debt by $62 million. Our net debt at quarter end declined to $703 million, and our net leverage ratio improved to 2.4x our trailing 12 months adjusted EBITDA.
Our consistent cash generation capabilities provide ample balance sheet flexibility to support our growth aspirations. We have also returned to shareholders approximately $62 million year-to-date through dividends and share repurchases. The third quarter was a positive reflection of our execution, improving our cost competitiveness, responsiveness, and delivering value for customers. While we expect macroeconomic conditions to remain soft in the fourth quarter, we are confident in our strategy and our ability to outperform underlying end market conditions by capitalizing on our pipeline, managing costs, improving margins, and generating strong cash flow. With that, I'll turn it back over to Joe.
Thank you, Tom. I am proud of the global Quaker Houghton team who continue to execute for our customers, our company, and our shareholders. We are making progress on our strategic initiatives and positioning the company for long-term above-market profitable growth. With that, we'd be happy to address your questions.
分析師問答
Our first question is from Mike Harrison with Seaport Research Partners.
Congrats on a nice volume quarter in a challenging environment. I was hoping that you could maybe give us some details on the Asia Pacific business and specifically on the margin performance. I think last quarter, there were some mix issues. You mentioned the acquisition, maybe some initial integration costs there as well as oleochemical raw materials that were dragging last quarter. Really nice sequential improvement this quarter, even though you still seem to be showing some negative price/mix. So I'm wondering, are there still some margin pressures that are happening even with the improvement that you saw? I think we're just trying to get a sense of whether we could still see some further improvement in Asia Pacific margin over the next few quarters.
Yes. Thanks, Mike. Thanks for the question. Overall, Asia Pacific, I think, has been a really bright spot for the company. We continue to win new business. We're selling the whole portfolio, right? And in that portfolio, I think there's a mix of things across the margin range. Not all of them are on the high end; not all of them are on the low end, somewhere in the medium. So there's some lumpiness at times. We have thought, I think, for a big part of the year, oleochemicals, especially in that part of the world. And we tend to lag getting some pricing in. We do expect some of that is still coming in here toward the back part of the year. But overall, it's been a really good story for us. There's some geographic things that come into play as well. I think our growth in India is also part of the story in Asia Pacific. It's not just a China thing. So again, some lumpiness. I think overall, like targeted range of where we want to be in that business. We think we're in a good place to grow profitably, continue to win share in that part of the world.
Yes. And Mike, this is Tom. I would just add to Joe's comments. I think he highlighted that we're really pleased with the growth in Asia Pacific and our opportunity to continue winning new business there, particularly in India. Regarding segment margins in the quarter, there are two components to consider. Joe mentioned the impact of raw materials, and we observed a slight deflationary effect in Q3. Additionally, we had some nonrecurring one-time items in Q2 related to the acquisition of Dipsol, which also contributed to the margin improvement from Q2 to Q3.
All right. Very helpful. And then you mentioned a couple of times, Joe, the Advanced Solutions strength, and you recently expanded that offering with Dipsol. There's also just within the industry, one of the major players in surface treatment is going to be transitioning into private equity ownership, which can sometimes lead to disruption. So I was just wondering, can you talk about how you're seeing the opportunity going forward to pick up further market share in Advanced Solutions and particularly in surface treatment and some of the metal treatment that you acquired with Dipsol?
Yes, Mike. We're really excited about that segment of our business because our customers are not only interested in purchasing lubricants from us; they are also looking for a range of solutions to improve their manufacturing processes. Our foray into the Advanced Solutions arena and our investments there provide a significant opportunity for us to expand our presence with customers and in areas of their operations that might be experiencing stronger growth than some of our traditional products. From Quaker Houghton’s viewpoint, we are still in the early stages with some of these acquisitions, including Norman Hay, which we acquired in 2019 as we work to globalize it. It takes time to integrate technology with our sales force and to establish a competitive supply chain in various regions. Dipsol has been performing as we anticipated, perhaps even exceeding expectations, especially given their strong presence in Japan and with the automotive sector, which has been quite challenging. We are eager to continue expanding that offering across other regions and enhancing our market presence, which will provide us with growth opportunities moving forward.
All right. And then I was just looking for a little bit of clarification on the Q4 outlook. Last Q4, I believe there were some strike-related issues and downtime, some unusual margin weakness associated with that. And then in the meantime, you've taken out costs. You've also done an acquisition. So I guess just in terms of the view that Q4 should be up revenue and earnings year-on-year. Can you give us maybe a little more precision on how you're thinking about organic growth year-on-year in the fourth quarter and maybe on margin improvement year-on-year?
Thank you, Mike. We have strong momentum as we approach Q4. We are confident in the net business wins we've achieved this year, which should support us in Q4, along with ongoing conversions from our pipeline. There is a typical seasonality returning to our business, especially during the holidays, mainly in Europe and the Americas, where we anticipate fewer working days and some holiday outages. We expect to encounter this again this year. As mentioned, our costs remain under control as we continue working on the cost management program, with more to do there, and we expect that to carry into Q4. While there may be some slight pressure on margins due to lower volume and capacity utilization, we have made progress, and I expect stability based on what I see today. Overall, with the inclusion of Dipsol—which we didn't have in last year's fourth quarter—we feel positive about Q4. However, we do recognize that we will experience the usual seasonality this year, similar to last year, which was further affected by other factors.
Our next questions come from the line of Laurence Alexander with Jefferies.
I guess, first, just a short-term one. You mentioned sort of some optimism on 2026. Are there areas where you're hearing that from customers, either directly or indirectly, like they're seeing their customers do investments that they then now have to gear up production to satisfy or support? Or is that more just a general macro comment?
I believe this is more of a general observation, Laurence. Regarding the market outlook for next year, we have pointed out several times that the markets we are currently in are showing low single-digit declines. Even maintaining stability next year would be seen as a positive outcome. No one is predicting significant market growth for next year, yet we are not witnessing any further deterioration either. As we approach the year, we are focused on our potential to achieve gains in market share along with the visibility from the acquisitions we made this year and the plans we have in place to manage costs. This underpins our optimism for 2026. It doesn't really revolve around market improvement or any noticeable turning point just yet. Asia is expected to remain strong, while Europe might have reached a low point, so stability there would benefit us. The situation in the Americas remains uncertain, but we are not anticipating any major shifts, either positive or negative, at this time.
When considering what's driving the share gain dynamic, if the end markets accelerate, do you expect the rate of share gains to increase as well, leading to a more significant effect? Or do you anticipate shifting your focus to support the end markets while the rate of share gains slows down because the end markets are healthier, allowing you to concentrate more on new business opportunities? Can you help us understand how to model a potential recovery scenario?
Yes. No, great question, Laurence. Look, I think over the long haul, I feel really good about our sales model, how we're going to market. I think one of the things that we've really focused on is reducing our churn and getting our churn back to this low single-digit number and sort of stop shooting ourselves in the foot, and we've done that and feel really good about how we're serving our customers, number one. Number two, returning to the customer, just really doubling down on this customer intimate model, making sure the whole organization is focused and pointed in that direction, that we're acting with a sense of urgency. I think we're doing that as well. And I've been really pleased that the new business wins are coming in at that high end of our range. We talked about 2% to 4%. We've actually been a little bit above that. I think it's possible, Laurence, with the mix and the new business that we've acquired that we could continue to grow on the top end of that range. These are still competitive markets. There's still a long sales cycle. So there can be lumpiness as well over time. We're going to try to get as much as we can with responsible levels of profitability. But I think we feel really good right now about sustaining at least kind of the levels that we're at into the next few quarters.
I understand this might be a somewhat unclear question or may require a vague response. However, considering the trends in the industrial markets related to robotics and additive manufacturing, do you have an awareness of how important these are for your current operations? More importantly, do you believe you have the appropriate sales mix to remain relevant in those markets, or will you need to incorporate additional packages or technologies?
No, I think the good news is that we haven't quantified the impact yet. We're focused on understanding it better from a strategic standpoint. The positive aspect, Laurence, is that we've been compiling some of these technologies through acquisitions. You mentioned additive manufacturing and our Ultraseal business, which is linked to both die-casted products and 3D printed sealing products. This is a strong area for us. Our presence with specialty greases worldwide is expanding, and some of these greases are already contributing significantly to the robotics sector. As the robotics market continues to grow, we see a promising opportunity for our specialty greases. Our products are involved in the processing of all metal items. With the addition of Dipsol, we are now also engaging in the plating of components, fasteners, and anodizing parts, all of which we believe will benefit us moving forward. While we haven't specifically quantified the long-term benefit, we consider it a positive development.
Our next question is from the line of John Tanwanteng with CJS Securities.
Congratulations on a strong quarter. First, could you discuss the sustainability of the share gains in new business that you mentioned? Are you expecting it to stay above the 2% to 4% range that you have historically experienced? Secondly, how much have pricing and the margin you are willing to accept on that new business contributed to gaining that share? Have you been operating with slightly lower margins, or are you still maintaining a higher margin compared to your typical target range?
Yes, that's a great question, John. Overall, I still believe our long-term range is 2% to 4%. I'm really pleased that we've been performing better than that and it's possible we can maintain it. However, it's difficult to predict since the market remains competitive and our sales cycle is somewhat longer. That said, we feel confident in the 2% to 4% range as we've consistently achieved that and I expect to continue moving in that direction. Regarding pricing, it's a complex issue. We've strategically repositioned our portfolio to offer a good, better, best option, providing our customers with choices, particularly as they face challenging conditions. Our intention is not to aggressively lower prices for the sake of gaining market share; that approach is not part of our strategy. Instead, we focus on being strategic with our product offerings, ensuring we can sell not just top-tier technology, but also options in the good and better categories, which aids our discussions with customers.
Got it. That's helpful, Joe. And then just a question on the outlook. I know you've guided to growth for Q4, but I noticed you declined to update, I think, the prior language around guidance, which was in the range of 2024 for earnings. Can you just help us understand where you stand relative to the prior outlook and if that's still valid?
Yes, we believe that our fourth quarter will perform better than last year. In the third quarter, we achieved our overall expectations, though the path to getting there was slightly different; while volume increased, we faced some challenges with price and mix. I feel we are within a reasonable range, although it’s difficult to provide a precise quantification. We are very confident that our fourth quarter will exceed last year’s performance. Additionally, the second half of this year is expected to outperform the first half, especially considering our Dipsol acquisition, which was not included in last year's fourth quarter, along with the cost actions we have implemented. Overall, we still expect to come within the range of last year.
Our next question is from the line of Arun Viswanathan with RBC.
I'm curious about the recent performance in the APAC region over the past couple of quarters. Does this indicate potential outcomes for other regions? What factors are contributing to your success there? Is it a mix of gaining market share and overall market growth, or is it primarily one of those? Additionally, do you anticipate a similar growth trajectory in other regions as you move forward?
Yes, that's a valuable observation. It's a combination of factors, as those markets are stronger and experiencing growth, leading to increased investment in those areas. We are focusing not only on executing our margin gains but also on securing new business wins. Therefore, it’s a mix of a robust market and effective sales pipeline execution.
Regarding pricing, I apologize if this has been addressed, but do you believe you have finished adjusting prices related to lower raw material costs? Looking ahead, what are your expectations for raw materials? If you anticipate continued deflation, will that lead to further price adjustments? Could this potentially result in an increase in volume, or might you maintain the 3% growth? Please discuss the interplay between price and volume.
Yes. Thanks, Arun. This is Tom. I'll discuss that a bit. When we consider the price/mix dynamic, we observed an impact of about 2% in Q3, which is continuing to moderate as we move through the year. On a sequential basis, there was essentially no impact on our top line. As Joe mentioned earlier, some of the pricing dynamic was not as intentional as we focus on the breadth of our portfolio and our ability to provide customers with options at different levels. We also have some targeted pricing strategies that are fit-for-purpose in specific areas of our portfolio across various regions. Looking at Q3, I would say that the price/mix was roughly equally divided between price and mix. The mix component is influenced by our portfolio dynamics and how we present those to end customers, along with the associated mix. Not all of our products share the same margin profile, and there are also regional variations. Therefore, as we look ahead to 2026, we expect the impact of these factors to diminish as we address some of these issues. However, it remains a dynamic market environment, and we are striving to be responsive to our customers regarding our product offerings and how we categorize them as good, better, or best.
Great. Lastly, I'm curious about your exposure to ICE vehicles in relation to EVs. Are you expanding your EV offerings? If I remember correctly, your performance might be better with ICE vehicles. Could you reiterate which option is more advantageous for your business? I'm interested because we've seen stronger growth on the EV side. Are you increasing your exposure to that market or not necessarily?
Yes, I find the Asia story particularly exciting because we're experiencing growth alongside some new leaders in the electric vehicle market. This was a trend we anticipated, and it's certainly gaining momentum in that region, although it may be slowing down elsewhere. It's crucial for us to align our growth with these emerging leaders, and we are indeed doing that. We've expanded our portfolio to better position ourselves for the electric vehicle sector. When considering vehicles, traditional internal combustion engine vehicles use slightly less of our conventional metalworking fluids compared to electric vehicles. Hybrid engines consume a bit more. Overall, we view automotive production as a whole, and our opportunities in both internal combustion engines and electric vehicles are equally promising and comparable.
At this time, we've reached the end of our question-and-answer session. I'd like to turn the floor back over to Joe Berquist for closing comments.
Thank you. Thank you for joining our call today. We are excited about our future and excited for Quaker Houghton and all of our employees. Appreciate your continued interest in our company. And please reach out to Jeff if you have any additional follow-up questions. Thank you.
This will conclude today's conference. You may disconnect your lines at this time and have a wonderful day.